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The federal government is tackling a thorny legal issue that affects the pocketbooks of millions of consumers who use prescription drugs: how to bring low-cost generic drugs to the marketplace more quickly while protecting the interests of brand-name drug makers, who invest millions in research, development and testing. Last summer, the Federal Trade Commission issued a report summarizing the findings of its study which sought to determine if the current law governing generic drug entry into the marketplace serves as barriers to entry. Specifically, the study looked at situations where generic companies tried to enter the market before the expiration of a brand-name pharmaceutical company’s patent covering the drug for which generic approval was sought. The study found that certain provisions of the law were susceptible to manipulation or “gaming” and delayed the availability of generic drugs. Since the report issued, there has been a flurry of activity both in Congress and at the Food and Drug Administration, including new proposed FDA guidelines to address some of the issues raised in the report. Congress first addressed the issues in 1984. At that time brand-name companies were losing much of their patent term because of the long FDA approval process required for bringing a new drug to market. Generic companies were reluctant to conduct research and development on promising compounds for fear of infringing a brand-name company’s patents. In addition, generic companies were required to submit safety and efficacy studies to the FDA to obtain approval of the generic drug, even though the brand-name maker had already carried out these kinds of studies on the drug to win FDA approval. This testing was a significant barrier to the development of generic versions of many drugs. The FDA estimated that by 1984, there were 150 brand-name drugs whose patents had expired, for which there was still no generic equivalent. Congress passed the Drug Price Competition and Patent Term Extension Act, also known as the Hatch-Waxman Act, to balance the competing interests of brand-name and generic pharmaceutical companies and to eliminate perceived inequities in the patent and drug approval process. It takes an average of 12 years from initial testing of a drug to FDA approval. Fewer than one percent of drug compounds make it through this long and costly process. To reward the “pioneer” companies for their efforts in developing new drugs, and yet clear the path for generic drug entry, the Hatch-Waxman Act contained several key provisions. One provision allowed for a patent term extension if any part of the term was lost due to regulatory delay. The act also provided an expedited approval process for generic drugs known as the “abbreviated new drug application” (ANDA) that allowed generic companies to show bioequivalence to the brand-name drug, without the requirement for safety and efficacy testing. One requirement for submission of an ANDA is that the drug for which approval is sought be listed in the FDA’s Orange Book (“Approved Drug Products with Therapeutic Equivalence”), which lists all U.S. patents covering approved drug products. Pharmaceutical companies seeking approval of a new drug are required to submit to the FDA information on the patents covering the new drug and its method of use. The FDA does not currently evaluate the correctness of the listings, and there is no mechanism for removing erroneous listings or administrative procedure by which a third party can challenge them. Efforts to challenge the correctness of an Orange Book listing through the courts have been largely unsuccessful ( see, e.g., Mylan Pharmaceuticals v. Thompson, 268 F. 3d 1323 (Fed. Cir. 2001)). As part of the ANDA filing, a generic company must “certify” as to one of four patent positions: 1) that there is no patent covering the drug, 2) that the patent covering the drug has expired, 3) that the generic company will wait until the relevant patent(s) has expired, or 4) that the patent covering the drug is either invalid or not infringed by the generic company’s activities, or is otherwise unenforceable. Generic companies pursuing drug approval under this last option, referred to as a “Paragraph IV certification,” was the focus of the FTC study. Under the provisions of the Hatch-Waxman Act, when a generic company files an ANDA with a paragraph IV certification, notice is sent to the brand-name pharmaceutical company stating that an ANDA referencing the brand-name company’s patent has been filed. The brand-name company then has 45 days within which to file suit for patent infringement. If it files suit, the FDA automatically puts approval of the generic drug on hold for a period of 30 months (referred to as the “30-month stay”). The FDA cannot approve the generic drug until 30 months elapse, the patent expires or the infringement action is resolved in favor of the ANDA submitter. The FTC study found that the 30-month stay provisions were susceptible to manipulation in the following manner. A generic company would file an ANDA with a paragraph IV certification, the brand-name company would sue within the requisite 45-day period and a 30-month stay would be triggered. Then the brand-name company would list an additional patent in the Orange Book, which forced the generic company to “re-certify” its patent position. Notice would be sent, suit filed, and an additional 30-month stay triggered. In the case of the drug Paxil, the brand-name company obtained five 30-month stays, each related to a patent listed after the original paragraph IV certification. In half of the cases involving litigation over later-listed patents, the FTC study found that the listed patents were held to be invalid or not infringed, suggesting that the benefits obtained by the brand-name company from the 30-month stays significantly outweighed the costs of patent litigation and provided a strong incentive to list questionable patents in the Orange Book. Overall the FTC study found that manipulation of the 30-month stay provisions in many cases delayed entry of the generic drug, thus ultimately harming consumers, who are denied the benefit of lower-cost drugs. The FTC report issued last July made several recommendations based on the results of its study. One recommendation was legislation to amend the law and limit the number of automatic 30-month stays available to the brand-name company on a generic challenge for a particular drug to one. A number of new bills have been introduced in the House and Senate, including Senate Bill 54, the “Greater Access to Affordable Pharmaceuticals Act of 2003,” which, among other things, follows through on the FTC recommendation and limits the number of 30-month stays to one per ANDA. The FTC report also recommended that the FDA provide additional guidance on the requirements for listing a patent in the Orange Book. Currently, pharmaceutical companies are required to file with a new drug application information on any United States patent 1) having claims which cover the drug, or a method of using the drug, for which approval is sought, and 2) with respect to which a charge of infringement could reasonably be asserted if the party engaged in the manufacture, sale or use of the drug did not have a license (referred to as the “listing requirements”). FDA regulations state that listable patents include those having claims to the active ingredient, to the drug product (e.g. tablet, capsule, or other dosage form), and to methods of using the drug. Patents having process claims (covering the method of making the drug) are not listable. In response to the FTC report, the FDA proposed amending the regulations to clarify the requirements for listing patents in the Orange Book. Specifically, the FDA has proposed that 1) patents covering metabolites, intermediates and packaging of the drug not be listed; 2) patents claiming the drug in a product-by-process typed claim be listed; and 3) patents claiming a different form of the drug substance be listed. Notably, the FDA did not address a concern raised by the FTC report regarding listing of patents that would be, if not for the fact that the same entity owned the patents, considered “double patenting,” i.e., claiming a new patent on an obvious or trivial extension of an existing patent, a practice normally not allowed in patent law. The logic behind the first requirement regarding metabolites, intermediates and packaging is easy to identify. Patent claims covering metabolites or intermediates do not cover the active ingredient. A metabolite is a compound resulting from the body’s metabolism of the active ingredient. An intermediate is a compound made or used during the process of making the active ingredient; it is not the active agent itself. Thus, patents having claims to metabolites, intermediates and packaging fail the first part of the listing requirement and should not be listed in the Orange Book. Requirements 2 and 3 above are more problematic. Product-by-process claims are patent claims that define a product in terms of how it is made. The product itself may not be new or patentable, but if the process of making the product is new the claim may be patentable. As pointed out in the FTC’s response to the FDA’s proposals, however, if a product-by-process claim depends on the process, rather than on the product, for patentability the claim does not literally cover the active ingredient, and thus fails the first part of the listing requirement. The FTC recommends that patents having product-by-process claims should only be listed if the product itself is patentable. Also problematic is the third proposed requirement, that patents claiming a different form of the drug substance be listed. For example, a patent claim covering a different crystalline form of the drug or the drug in a different hydration state, could now be listed in the Orange Book. Patent claims to other forms of the drug substance, however, do not literally cover the drug substance — if they did, they would be invalid! To patent the differing substance, it is necessary to show that it is different from, and not obvious in view of, the claims covering the drug itself. As a result, the FTC has urged the FDA to drop this requirement in its final ruling. As the FTC noted, allowing patents in this latter category to be listed in the Orange Book not only circumvents the plain language of the listing statute, but would provide further barriers to generic entry, as listed patents would be that much harder to design around. Much work remains, both at the legislative and regulatory levels, to address the problems identified in the FTC report. Patent attorneys for both generic and brand-name pharmaceutical companies would be well advised to monitor new developments in the law and regulations closely, as much will be changing in the coming months. Debra Z. Anderson is an intellectual property attorney specializing in chemistry, pharmaceuticals and biotechnology at the national law firm Eckert Seamans Cherin & Mellott ( www.escm.com). Telephone: 412-566-6000. If you are interested in submitting an article to law.com, please click herefor our submission guidelines.

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