Rehearing Sought in Hatch-Waxman “Safe Harbor” Case; Plaintiffs-Appellees Contend that the Federal Circuit’s Panel Decision Expands “Safe Harbor” Into a “Safe Ocean”

By Kurt R. Karst –      

We were hardly surprised when we learned that Momenta Pharmaceuticals, Inc. and Sandoz Inc. (“Plaintiffs-Appellees”) filed a Petition for Rehearing en banc seeking reconsideration of an August 3, 2012 decision by a divided (2-1) panel of judges from the U.S. Court of Appeals for the Federal Circuit in Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc. (Docket Nos. 2012-1062, -1103, -1104) concernng the scope of the Hatch-Waxman “safe harbor” provision at 35 U.S.C. § 271(e)(1).  After all, Chief Judge Rader, who lodged a blistering 29-page dissent in the case, urged rehearing by the full court, saying that the “decision should instead request the entire court to resolve the issue en banc.”

By way of background, 35 U.S.C. § 271(e)(1), which was added to the patent laws by the Hatch-Waxman Amendments, states:

It shall not be an act of infringement to make, use, offer to sell, or sell within the United States or import into the United States a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs or veterinary biological products.

As we previously reported, Momenta Pharmaceuticals, Inc. (“Momenta”) sued Amphastar for patent infringement alleging that Amphastar infringed U.S. Patent No. 7,575,866 (“the ‘866 patent”) assigned to Momenta and that generally relates “to methods for analyzing heterogeneous populations of sulfated polysaccharides” such as enoxaparin sodium (marketed as LOVENOX by Sanofi, and generic versions of which Sandoz and Amphastar have approval for under ANDAs).  The U.S. District Court for the District of Massachusetts granted Momenta a preliminary injunction and denied two emergency motions filed by Amphastar for relief from the preliminary injunction.  According to the District Court, Amphastar’s activity fell outside of the “safe harbor” provision at 35 U.S.C. § 271(e)(1), because “the alleged infringing activity involves use of plaintiffs’ patented quality control testing methods on each commercial batch of enoxaparin that will be sold after FDA approval,” and while the “safe harbor” provision “permits otherwise infringing activity that is conducted to obtain regulatory approval of a product, it does not permit a generic manufacturer to continue in that otherwise infringing activity after obtaining such approval.”  Amphastar subsequently appealed each of the District Court’s preliminary injunction decisions to the Federal Circuit.

The Federal Circuit panel, after ascertaining the scope of 35 U.S.C. § 271(e)(1), ruled that the District Court “applied an unduly narrow interpretation of the Hatch-Waxman safe harbor,” vacated the grant of a preliminary injunction, and remanded the case for further proceedings consistent with the Court’s decision.  According to the majority panel decision, the information at issue in the case falls under the 35 U.S.C. § 271(e)(1) umbrella, “because the information submitted is necessary both to the continued approval of the ANDA and to the ability to market the generic drug.”  Moreover, “[h]ere, the submissions are not ‘routine submissions’ to the FDA, but instead are submissions that are required to maintain FDA approval,” according to the panel decision.

In coming to a decision, the Federal Circuit was faced with the Court’s prior decision in Classen Immunotherapies v. Biogen IDEC, 659 F.3d 1057 (Fed. Cir. 2011), which is on appeal to the U.S. Supreme Court (Docket No. 11-1078).  In Classen, the Federal Circuit held, among other things, that 35 U.S.C. § 271(e)(1) “does not apply to information that may be routinely reported to the FDA, long after marketing approval has been obtained.”  According to the Federal Circuit’s majority panel, Amphastar’s activities fit within the “safe harbor” provision: 

Under a proper construction of 35 U.S.C. § 271(e)(1), the fact that Amphastar’s testing is carried out to “satisfy the FDA’s requirements” means it falls within the scope of the safe harbor, even though the activity is carried out after approval.  Unlike Classen, where the allegedly infringing activity “may” have eventually led to an FDA submission, there is no dispute in this case that Amphastar’s allegedly infringing activities are carried out to “satisfy the FDA’s requirements.” 

According to the rehearing petition filed by Plaintiffs-Appellees, given the “two conflicting interpretations of the scope of Section 271(e)(l)” in Classen and Momenta, the full Federal Circuit needs to address a precedent-setting question of exceptional importance: “What is the proper scope of Section 27l(e)(1)?” 

Plaintiffs-Appellees contend that a proper interpretation of 35 U.S.C. § 271(e)(1) strikes a balance between patent protection and timely competition by allowing “a potential market entrant to perform the experimental conduct necessary to engage in the development of information to submit to the FDA to obtain FDA approval of commercial sales – conduct that does not impair the value of an unexpired patent – while not sanctioning otherwise infringing commercial conduct that derogates from, or destroys the value of, a patent during its unexpired term.”  The Federal Circuit’s panel decision, however, “expands Section 271(e)(1)’s safe harbor into a safe ocean,” and “calls into question not only all manner of patents claiming methods of manufacturing and formulating drugs but also the viability of many patents claiming the active ingredient in the drugs themselves,” write Plaintiffs-Appellees. 

The Defendants-Appellants in the case, including Amphastar, have urged the Federal Circuit in a Response to deny Plaintiffs’-Appellees’ rehearing petition.  According to them,

The purported conflict in circuit law on which [Plaintiffs-Appellees] hinge their claim for rehearing en banc cannot survive a straightforward reading of the panel’s decision or of [Classen].  Specifically, this safe harbor case involves the unusual situation where both Congress and the FDA have mandated the use of a particular test, specified in the official USP compendium, as a continuing condition of approval pre-marketing for a generic drug.  Classen, by contrast, involved the voluntary use of a research tool patent to obtain information for non-regulatory purposes that might nevertheless be “routinely reported to the FDA, long after marketing approval has been obtained,” and the Court expressly eschewed any ruling governing “submissions for regulatory approval of generic products” or “like policy considerations.” [Emphasis in original; Internal citation omitted.]

“Worse still,” say Defendants-Appellants, Plaintiffs-Appellees ask the Federal Circuit “to adopt en banc an atextual approach to interpreting the safe harbor provision that the Supreme Court has twice considered and twice rejected” in Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990) and Merck KGaA v. Integra Lifesciences, Ltd., 545 U.S. 193 (2005).  In those cases, the U.S. Supreme Court ruled that 35 U.S.C. § 271(e)(1) applies to FDA’s “entire statutory scheme of regulation” (Eli Lilly) and that the “safe harbor” provision did not “create an exemption applicable only to the research relevant to
filing an ANDA for approval of a generic drug” (Merck).

Classen Immunotherapies, Inc. (“Classen”) has filed an amicus brief in support of Plaintiffs’-Appellees’ rehearing petition saying that the Momenta panel decision directly conflicts with the Classen decision.  According to Classen:

Extending the safe harbor to cover post-approval activities, such as safety testing of pharmaceuticals, sounds like a good idea for judicial legislation, which would appear to save lives.  However, the net result of foreclosing this area to patent protection will be the loss of tens of billions of dollars that are annually invested in developing new methods and devices for ensuring the safety of drugs and medical devices which regularly save and improve the lives of countless people. . . .

As was correctly found by this Court in Classen, nothing in the text or purpose of Section 271(e)(1) warrants a wholesale expansion of the safe harbor into the post-marketing approval period, where it would be totally divorced from the balancing of interests, and concerns about distortions to the patent term that the safe harbor was intended to address.  The danger of the unintended consequences described above are too stark to ignore – or to allow to come to pass.

Indeed, the stakes are high.  As we suggested in our previous post, a final decision could affect not only drug development, but the development of biolsimilar versions of biological products licensed under the Public Health Service Act.  In the biosimilars space, method patents – and in particular analytical-method patents claiming FDA-mandated testing methods – are likely to be of great importance.  

UPDATE:

• Plaintiffs’-Appellees’ Reply Brief was filed on October 18th and is available here.