Court Orders ANDA Approval in Pre-MMA 180-Day Exclusivity Case; Decision Appears to Have Post-MMA Implications

By Kurt R. Karst –      

When the word came out early last week that Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia ruled against FDA in litigation over 180-day exclusivity for generic versions of ACTOS (pioglitazone HCl) Tablets, we immediately went to the court docket to retrieve a copy of the decision.  After all, the decision is big news: it is the first time a court has ever ordered FDA to approve a marketing application for a drug.  Unfortunately, the decision was placed under seal for a few days, so we had to wait (patiently) to read it.  Meanwhile, the litigation progressed to the U.S. Court of Appeals for the District of Columbia Circuit.  We finally got our hands on a copy of the decision.  The 41-page decision is quite an interesting read.

As we previously reported, 180-day exclusivity for generic ACTOS is governed by the pre-Medicare Modernization Act (“MMA”) version of the statute, under which exclusivity is patent-by-patent and can be shared by cross-Paragraph IV filers to different patents.  At the time the first ANDA containing a Paragraph IV certification could be submitted to FDA for generic ACTOS on July 15, 2003, the Orange Book listed several patents expiring in 2016 that are referred to in court filings as the Composition Patents and the Combination Therapy Patents.

Watson (ANDA No. 076798), Mylan (ANDA No. 076801), and presumably Ranbaxy (ANDA No. 076800) submitted ANDAs to FDA on July 15, 2003 containing Paragraph IV certifications to certain ACTOS patents listed in the Orange Book.  FDA contends that, as submitted, Watson’s ANDA was defective because the ANDA contained Paragraph IV certifications to the Combination Therapy Patents, but also proposed labeling that sought to omit the methods of use protected by the Combination Therapy Patents.  Watson submitted a telephone amendment to FDA on August 27, 2003 amending its ANDA to change its Paragraph IV certifications to the Combination Therapy Patents to “section viii” statements.  But Watson only did so under protest, and in the telephone amendment reserved its right “to reinstate its original Paragraph IV Certifications with the effective date of original submission on July 15th, 2003, should a court or the Agency hold in the future that Paragraph IV Certifications should have been made and/or maintained.”

After FDA received ANDA No. 076798 as of July 15, 2003, Watson provided notice of the Paragraph IV certifications as to the Composition Patents to Takeda and was sued for patent infringement.  Ultimately, the patent infringement litigation was settled and Takeda granted Watson and Mylan a non-exclusive license to the Composition Patents and to the Combination Therapy Patents as of August 17, 2012.  (Mylan’s ANDA presumably included “section viii” statements to the Combination Therapy Patents.)  Under FDA’s regulation at 21 C.F.R. § 314.94(a)(12)(v), “if the [ANDA] is for a drug or method of using a drug claimed by a patent and the applicant has a licensing agreement with the patent owner,” the application must contain a Paragraph IV certification as to that patent “and a statement that it has been granted a patent license.”  Watson and Mylan  amended their respective ANDAs to include Paragraph IV certifications to the Combination Therapy Patents.  Mylan did so first on March 22, 2010.  Watson amended its ANDA on March 7, 2012, and characterized its amendment as “reinstating” the Paragraph IV certifications to the Combination Therapy Patents in its original ANDA.

Watson sued FDA on August 15, 2012 to enjoin FDA from granting final approval (or causing or allowing final approval to be granted) to any ANDA for generic ACTOS prior to granting final approval to Watson’s ANDA No. 076798, or, alternatively, to require FDA to approve ANDA No. 076798 if FDA grants final approval to any other ANDA for generic ACTOS.  (The Complaint and Motion for a Temporary Restraining Order and a Preliminary Injunction are available here and here.)  One day later, the court denied Watson’s Motion for a Temporary Restraining Order based on an apparent deficiency in Watson’s ANDA identified by FDA.  Watson addressed the deficiency and renewed its Motion for a Temporary Restraining Order, which the court denied in a Minute Order on August 17th after finding that Watson did not show a substantial likelihood of success on the merits in the company’s motion.  FDA approved Mylan’s ANDA No. 076801 on August 17th and granted the company 180-day exclusivity. 

On August 24th, Watson filed an Amended Complaint, and on August 27th, Watson filed a Motion for Summary Judgment asking the court to order FDA to: (1) “refrain from denying Watson’s ANDA approval on the basis of FDA’s determination that such approval is barred by exclusivity granted to any other ANDAs” and (2) grant final approval to Watson’s ANDA No. 076798.  FDA opposed Watson’s Motion and filed a Motion to Dismiss or, in the Alternative, for Summary Judgment.  Mylan, which had intervened in the case, also opposed Watson’s Motion for Summary Judgment.  According to FDA, “Watson filed certifications to the relevant patents and patent claims two years after Mylan filed its certifications, and it is Watson’s own delay that led to its loss of a right to exclusivity” (emphasis in original).  According to Watson, however (see Reply Brief):

FDA’s decision to delay approval of Watson’s ANDA is contrary to the governing statute and FDA’s own regulations.  The decision is also inconsistent with FDA’s past practice and statements, and it leads to absurd results inconsistent with Congressional intent.  Watson is a First Filer with respect to all the pioglitazone patents because no other ANDA filer preceded its substantially complete July 15, 2003 filing, which contained Paragraph IV certifications to all patents listed for pioglitazone.  And at minimum, Watson is entitled to shared exclusivity because it is, as FDA does not contest, a First Filer with respect to the composition claims of the Composition Patents.  Finally, to the extent that Watson is not entitled to exclusivity with respect to the Combination Therapy Patents, it is because that exclusivity was rendered unavailable for any party when Watson amended its ANDA, leaving Watson and Mylan as shared First Filers in the remaining claims of the Composition Patents.

Applying the familiar two-step Chevron analysis, Judge Jackson ultimately found that “FDA’s decision to deny Watson shared exclusivity was contrary to the plain language of the statute, and that even if the statute is ambiguous and FDA’s interpretation of the relevant provision is reasonable as a general matter, its decision was arbitrary and capricious under the unique factual circumstances of this case.”  In coming to her decision, Judge Jackson covered a lot of ground.  We won’t get into all of the intricacies here, but we note some of the more interesting passages from the decision.  For example, Judge Jackson states the following under her Chevron Step One analysis:

So the question at Chevron step one is: does the FDCA exclusivity provision permit the FDA to use the date that Mylan changed its section viii statements for the use-only patents to paragraph IV certifications as the critical date instead?  Is that when the exclusivity attached? . . .  [O]n its face, the statute refers to the date an application is submitted containing a certification, not the date of any later, additional certifications, and not the date of the amendment of an application (much less the “minor amendment” of an application) to substitute a paragraph IV certification for a section viii statement. . . .

And did FDA properly interpret the statute as commanding it to award exclusivity to the first applicant with paragraph IV certifications for “all” of the patents?  Again, such a decision is not mandated by the language of the [statute]. . . .  [T]he statute is written in terms of the drug, not one or all of the patents.  It does not say that an applicant has to wait 180 days if the application involves any patent that claims the drug for which a previous certification has been submitted; it says if the application contains a paragraph IV certification and is for a drug for which a previous application has been submitted.  Nor does it say: “and is for a drug for which a previous application has been submitted containing paragraph IV certifications for all of the patents.” . . .

The Court concludes that FDA’s decision is contrary to the plain language of the statute.  As noted above, the FDCA says if the application contains a paragraph IV certification and it is for a drug for which there was a previous application containing such a certification, approval of the application is delayed for 180 days.  Here, when Watson filed its application containing a paragraph IV certification for the drug composition/use patents on July 15, 2003, there was no previous application containing such a certification on file for that drug.  Mylan’s application came in on the same day. [(Emphasis in original)]

Under her Chevron Step Two analysis, Judge Jackson writes that “FDA’s reading of the exclusivity provision is reasonable,” but that FDA’s decision was arbitrary and capricious in this particular case:

The Court finds that FDA’s decision to deny Watson shared exclusivity in this circumstance is arbitrary and capricious because it produces absurd results that are contrary to the purpose of the Hatch-Waxman Amendments and the exclusivity provision in particular. . . .  Here, although denial of shared exclusivity to Watson does not mean that generic pioglitazone cannot be marketed at all . . . the result is still at odds with the sole purpose of the exclusivity provision: to encourage generic applicants to file paragraph IV certifications and incur the risks and costs of patent litigation necessary to clear the patents out of the way and facilitate the entry of generics into the market.

It is true that after the litigation was resolved, Mylan amended its original ANDA to include the relevant paragraph IV certifications first, but that was nothing more than a formality.  Filing those certifications did not put the patent holder on notice of anything it did not already know.  Moreover, it did not require Mylan to risk patent litigation.  The litigation was over.  It is thus unfair and inconsistent with the sole purpose of the 180-day exclusivity provision to reward Mylan with sole exclusivity simply because it accomplished the final housekeeping task of amending its ANDA to reflect the results of the litigation first.  Such a decision elevates form over substance.

We found the above-quoted provisions of particular interest not because of their potential to affect the remaining handful or less of drugs governed by the pre-MMA rules on 180-day exclusivity, but because of their portential to affect the post-MMA 180-day exclusivity regime. 

Judge Jackson’s decision seems to say that what is in an amendment to an ANDA does not count for 180-day exclusivity purposes.  Rather, it is the original ANDA submission that counts.  If that is true, then an ANDA sponsor that initially submits an application without a Paragraph IV certification and later amends that application to contain a Paragraph IV certification (because, for example, of a change from a Paragraph III certification to a Paragraph IV certification, or because information on the first patent on the Reference Listed Drug is listed after an original ANDA is received) would not be eligible for 180-day exclusivity.  Taking that example further, what if the sponsor of a pending ANDA amends its application first to contain a Paragraph IV certification, and another ANDA sponsor later includes a Paragraph IV certification in its original application.  Would that later ANDA sponsor, whose original submission includes a Paragraph IV certification, be eligible for 180-day exclusivity, while the first ANDA sponsor (via an amendment) would not be eligible? 

Of course, this all matters only if Judge Jackson’s decision stands.  Last week, after Judge Jackson handed down her Order that FDA approve Watson’s ANDA No. 076798, Mylan filed an Emergency Motion to Stay the Order, in which FDA joined.  Watson opposed the motion, saying that Mylan “seeks to flip this Court’s decision on its head.”  Mylan’s motion was denied a day after it was filed based on Judge Jackson’s determination that Mylan “failed to demonstrate that a stay pending appeal is warranted.”

Mylan then appealed to the DC Circuit (Docket No. 12-5332) and filed for an Emergency Motion for a Stay Pending Appeal and a Motion for an Administrative Stay.  Last Friday, the DC Circuit denied Mylan’s emergency stay motion, saying that Mylan “has not satisfied the stringent requirements for a stay pending appeal,” and dismissed as moot Mylan’s administrative stay motion.  The Court has set a briefing schedule for the case.  FDA has not yet indicated whether the Agency will also appeal Judge Jackson’s decision, but we suspect that will happen soon.  Meanwhile, FDA, consistent with Judge Jackson’s Order, approved Watson’s ANDA No. 076798.  The approval letter is silent on the issue of 180-day exclusivity.