A New Hatch-Waxman DJ Jurisdiction Decision . . . . And an Added Twist

By Kurt R. Karst –      

In a recent Hatch-Waxman decision from the U.S. District Court for the Northern District of Illinois (Eastern Division), the court denied Plaintiffs’ Seattle Children’s Hospital, Novartis Vaccines and Diagnostics, Inc., and Novartis Pharmaceuticals Corporation (collectively “Novartis”) Motion to Dismiss the lawsuit that they brought against Akorn, Inc. (“Akorn”) for lack of subject matter jurisdiction and granted Akorn’s Motion to Amend its Answer to include a claim for a declaratory judgment of noninfringement of U.S. Patent No. 5,508,269 (“the ‘269 patent”).  The ‘269 patent, which expires on October 19, 2014, is the only patent listed in the Orange Book for TOBI (tobramycin solution for inhalation), 300 mg/5 mL (NDA No. 050753).  The court’s decision sets up the possibility of a subsequent ANDA sponsor causing a 180-day exclusivity forfeiture event for a first applicant under the failure-to-market provisions at FDC Act § 505(j)(5)(D)(i)(I).

Akorn appears to have submitted ANDA No. 201422 to FDA back in 2010 seeking approval for a generic version of TOBI.  Akorn’s ANDA, which FDA has not yet tentatively approved, contains a Paragraph IV certification to the ‘269 patent; however, according to the court, non-party Teva Pharmaceuticals USA, Inc. (“Teva”) submitted the first ANDA containing a Paragraph IV certification to the ‘269 patent, making Teva a first applicant eligible for 180-day exclusivity.  (FDA’s Paragraph IV Certification List shows June 29, 2009 as the date of the first ANDA submission.)  In June 2011, Novartis granted Akorn a covenant not to sue with respect to infringement of the ‘269 patent, and subsequently argued that the court lost subject matter jurisdiction since the covenant not to sue moots the patent infringement lawsuit.  Although Akorn admitted that the covenant not to sue “resolves the infringement issue,” the company has maintained that the covenant does not resolve the “regulatory issue;” namely, approval of ANDA No. 201422.

Enter the now familiar Federal Circuit decisions in Caraco Pharm. Labs. v. Forest Labs., 527 F.3d 1278 (Fed. Cir. 2008) and Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353 (Fed. Cir. 2008) which analyzed whether an Article III controversy exists in a declaratory judgment action arising under the Hatch-Waxman Amendments.  As the Illinois District Court notes, “Caraco holds that the exclusion of non-infringing generic drugs from the market can be a judicially cognizable injury-in-fact,” and “Janssen reaffirms Caraco’s holding that the injury-in-fact must stem from the actions of the company that listed the patents in the Orange Book, not the inherent framework of the Hatch-Waxman Act.”

Holding that the TOBI case presents an actual controversy, and that as in Caraco, a favorable judgment for Akorn “would eliminate the potential for the [‘269 patent] to exclude [Akorn] from the drug market,” the court stated:

Notwithstanding Plaintiffs’ unilateral covenant not to sue, the case or controversy between the parties here endures because of the continued listing of the ‘269 Patent in the FDA’s Orange Book in connection with NDA No. 50-753 for Novartis’ TOBI drug product, which bears on Akorn’s efforts to obtain FDA approval to market a generic version of Novartis’ TOBI.  In these circumstances, guidance from the Federal Circuit, admittedly decided under the pre-2003 version of the Hatch-Waxman Act, suggests that Akorn may pursue a court judgment in order to advance the regulatory issues surrounding Akorn’s efforts to obtain FDA approval to market a generic version of Novartis’ TOBI in light of Akorn’s status as a subsequent filer.

Moreover, the court made its decision notwithstanding the fact that FDA had not yet tentatively approved Akorn’s ANDA No. 201422:

Notably, such a [civil action to obtain patent certainty] would have been authorized by statute even though Akorn had not received tentative approval for its ANDA at that time and even if Plaintiffs had not threatened suit.  The case law and the expression of congressional intent . . . , as well as the realities and time commitments associated with complex litigation, support Akorn’s attempt to pursue tentative approval of its ANDA with the FDA while simultaneously seeking “a favorable judgment in this action [to] eliminate the potential for the [listed] patent to exclude [Akorn] from the drug market.”  See Caraco, 527 F.3d at 1293; see also Pfizer, 726 F. Supp. 2d at 930 (denying motion to dismiss even though applicant’s ANDA had not yet been approved and its Paragraph III certification independently precluded approval at the time it filed its claims).

Undeterred by the district court’s decision, Novartis promptly filed a Renewed Motion to Dismiss the case and Akorn’s counterclaim for lack of subject matter jurisdction.  According to Novartis, since the court issued its decision “any possible remaining case or controversy has been mooted by the statutorily mandated forfeiture of any 180-day exclusivity” available with respect to Teva’s ANDA. 

Novartis points to the faiure to obtain tentative ANDA approval forfeiture provision at FDC Act § 505(j)(5)(D)(i)(IV) and alleges that Teva’s failure to obtain tentative approval by December 29, 2011 (“30 months after the June 29, 2009 submission of its ANDA”) means that exclusivity was forfeited and that there is no barrier to FDA approving Akorn’s ANDA No. 201422, and therefore, no Article III controversy supporting subject matter jurisdiction in the case.  (Novartis says in a footnote that this is the same issue recently raised in another Illinois District Court Hatch-Waxman case involving generic FOSRENOL (lanthanum carbonate) 500 mg, 750 mg, and 1000 mg Chewable Tablets – Shire Canada Inc. v. Alkem Laboratories, Ltd., Case No. 11-cv-00206 (N.D. Ill.).) 

Interestingly, Novartis asserts that the exception provision under the tentative approval forfeiture provision – that failure to obtain timely tentative approval results in forfeiture unless such failure “is caused by a change in or a review of the requirements for approval of the application imposed after the date on which the application is filed” – “is inapplicable here as there is no evidence that there was any change in the requirements for ANDA approval that resulted in Teva’s failure to obtain tentative approval by December 29, 2011.”  Of course, only FDA really knows the answer to the question of whether there has been a change in or review of ANDA approval requirements.  In our experience, it is a fact-intensive and case-specific analysis.  Whether the court will effectively step into FDA’s shoes on the matter remains to be seen.