Court Dismisses, on Ripeness Grounds, Cephalon Challenge to Generic FENTORA Approval

By Kurt R. Karst –      

Last week, Judge Ellen S. Huvelle of the U.S. District Court for the District of Columbia dismissed without prejudice for lack of subject matter jurisdiction a Complaint filed by Cephalon, Inc. (“Cephalon”) on March 15, 2011 challenging FDA’s January 7, 2011 approval of Watson Laboratories, Inc.’s (“Watson’s”) ANDA No. 079075 for a generic version of FENTORA (fentanyl) buccal tablets (approved under NDA No. 021947).  Watson, represented by Hyman, Phelps & McNamara, P.C. and Crowell & Moring, intervened in the case as an Intervenor-Defendant.  

Cephalon’s lawsuit is related to two citizen petitions – Docket Nos. FDA-2010-P-0383 and FDA-2010-P-0396 – Cephalon submitted to FDA in July 2010.  One petition requests that FDA withdraw its acceptance of Watson’s ANDA and require Watson to submit a 505(b)(2) on the basis that Watson’s generic FENTORA drug product contains two active ingredients – i.e., fentanyl citrate and an additional salt form, fentanyl starch glycolate – whereas FENTORA contains only fentanyl citrate.  The second petition requests that FDA establish certain bioequivalence requirements for the approval of any generic version of FENTORA.  FDA denied both petitions on January 7, 2011 (the same date FDA approved ANDA No. 079075) saying that Cephalon had “not submitted sufficient evidence establishing that the Watson product contains an additional salt form of fentanyl, fentanyl starch glycolate,” and that the additional parameters proposed by Cephalon are not necessary to determine bioequivalence.  Cephalon alleges in its Complaint that FDA’s rejection of the citizen petitions and approval of Watson’s ANDA were unlawful and in violation of the FDC Act and the Administrative Procedure Act. 

Watson’s ANDA contains Paragraph IV certifications to two Orange Book-listed patents – U.S. Patent Nos. 6,200,604 (the ‘604 Patent) and 6,974,590 (the ‘590 Patent) – both of which are scheduled to expire on March 26, 2019.  Cephalon filed a patent infringement lawsuit against Watson in the U.S. District Court for the District of Delaware with respect to both patents, thereby triggering a 30-month stay of ANDA approval.  Cephalon also asserted a third, non-Orange Book-listed patent – U.S. Patent No. 6,264,981 (“the ‘981 Patent”).  FDA approved ANDA No. 079075 once the 30-month stay naturally expired. 

Cephalon filed is Complaint against FDA just four days after the Delaware district court ruled in Watson’s favor on the ‘604 and ‘590 Patents.  Shortly thereafter, however, the court ruled in Cephalon’s favor on the non-Orange Book-listed ‘981 Patent and issued an injunction barring Watson from infringing the patent, which expires in 2019.  Watson filed a notice of appeal with the U.S. Court of Appeals for the Federal Circuit, but the Court has not yet scheduled the case for argument. 

Given the ruling on the ‘981 Patent, FDA filed a Motion to Dismiss Cephalon’s Complaint on the basis that Cephalon lacks standing and that the company’s claims are not ripe.  According to FDA:

Cephalon does not have standing because the injury it cites is not “actual or imminent,” nor is it redressable by the Court.  In its complaint, Cephalon alleges harms purportedly caused by FDA’s approval of Watson’s generic drug: (1) harm to the public because the FDA “will usher into the marketplace a generic drug of untested safety and efficacy,” (2) “rapid and significant erosion of sales [of Fentora] that cannot be recouped,” and (3) harm to Cephalon’s reputation if Watson’s generic fentanyl citrate product is less effective than Fentora because Fentora “will thus be wrongly associated with bad outcomes.”  These purported injuries can exist only if and when Watson’s generic drug enters the market; as noted, Watson is currently enjoined from making, using, or selling its generic product until 2019. [(Internal citations omitted)]

With respect to ripeness, FDA argued that:

although FDA denied Cephalon’s citizen petitions, those agency decisions have had no impact on Cephalon’s day-to-day operations because, despite receiving FDA approval, Watson is nonetheless barred from marketing its generic fentanyl citrate product until the ‘981 patent expires.  Therefore, Cephalon is asking this Court to render a decision that may have no effect on the parties until 2019, or until a speculative appellate decision.  It is a waste of this Court’s resources to undertake review now, especially when Cephalon suffers no hardship. 

FDA further argued that the U.S. Court of Appeals for the District of Columbia Circuit’s decision in Pfizer Inc. v. Shalala, 182 F.3d 975 (D.C. Cir. 1999), is applicable to the instant case.  In Pfizer, the D.C. Circuit considered FDA’s denial of a citizen petition to be final agency action, even though FDA had not finally ruled on the ANDA at issue.  The Court found that Pfizer’s claims were not ripe because the citizen petition denial did not cause any of the economic harm alleged by Pfizer.  Similarly, says FDA in its Motion to Dismiss, “Cephalon’s claims relate to no imminent, certain harm.”

Judge Huvelle agreed with FDA and dismissed the case based on ripeness grounds in a 15-page decision issued on July 14, 2011.  Applying the two-part ripeness analysis – i.e., (1) “the fitness of the issues for judicial decision” and (2) “the hardship to the parties of withholding court consideration” – Judge Huvelle ruled that Cephalon did not meet either prong. 

With respect to fitness, Judge Huvelle wrote that “the fact that the agency has issued final approval of the ANDA submitted by a generic applicant does not establish ripeness,” and noted the D.C. Circuit’s decision in Pfizer “does not undercut this conclusion,” because “[a]lthough the Court reasoned that an eventual FDA approval of a generic ANDA could make the case ripe, it did not establish a per se rule that automatically makes ripe a case involving final agency action.  On the contrary, the Court acknowledged that ‘a final agency action nonetheless can be unripe for judicial review.’”

With respect to hardship, Judge Huvelle wrote that this prong of the ripeness analysis “requires the Court to consider not whether the parties have suffered any direct hardship, but rather whether postponing judicial review would impose an undue burden on them or would benefit the court” (internal quotations and citations omitted).  Judge Huvelle noted that the D.C. Circuit’s March 2, 2010 decision in Teva Pharmaceuticals USA, Inc. v. Sebelius, 595 F.3d 1303 (D.C. Cir. 2010), concerning 180-day exclusivity for generic versions of COZAAR/HYZAAR, and in which the Court reasoned that “where there are no institutional interests favoring postponement of review, a petitioner need not satisfy the hardship prong,” has not changed the hardship test for ripeness.   

According to Judge Huvelle, Cephalon’s assertions that the case is ripe “because postponing review will cause immediate, direct, and significant harm” are “too speculative to establish an undue burden on plaintiff.”  Moreover, “the Court would benefit from postponement of the case,” says Judge Huvelle, “because a number of events could occur that could either make adjudication unnecessary or materially alter the complexion of the case.”