Convergence: Recent Court Actions and Pressure From FDA May Mean the Sun is Finally Setting on the Premature Paragraph IV Notice Strategy

By Kurt R. Karst –    

It’s been many months since we last posted on the issue of so-called “premature notice” (and over a year since we first posted on the issue).  Premature notice is notice – ineffective notice – of a Paragraph IV certification sent to the NDA holder and patent owner prior to FDA’s acceptance of an original ANDA, and is apparently intended to jump-start patent infringement litigation, potentially resulting in quicker ANDA approval actions.  FDA has addressed the issue (disapprovingly) in letter correspondence (here and here), and several courts have found that premature notice is improper, null, void, and without legal effect – see SB Pharmco Puerto Rico, Inc. v. Mutual Pharm. Co., 552 F. Supp. 2d. 500 (E.D. Pa. 2008) (here); Merck & Cie v. Watson Pharms., Inc., C.A. No. 12-161-RGA (D. Del. Sept. 25, 2012) (here); and Otsuka Pharm. Co. v. Par Pharm., Inc., C.A. No. 13-1979 (RGA) (D. Del. Mar. 10, 2014) (here).  Nevertheless, as detailed in a previous post, the practice has continued and spread among companies.  But some recent events in court, as well as some action by FDA with respect to the company some have considered the major proponent of premature notice – Par Pharmaceutical, Inc. (“Par”) – may signal the demise of the disfavored practive. 

On December 23, 2014, the U.S. District Court for the Eastern District of Texas granted in part a Motion for Summary Judgment stemming from a Complaint (later amended) Allergan, Inc. (“Allergan”) filed alleging premature notice concerning generic RESTASIS (cyclosporine ophthalmic emulsion) 0.05%.  Allergan was seeking, among other things, a “Declaratory Judgment of False Paragraph IV Notification” based on notice letter sent regarding an ANDA that was initially submitted to – and that was later the subject of a Refuse-to-Receive action by – FDA. 

After finding that there was specific personal jurisdiction, the District Court delved into the premature notice issue.  Citing to SB Pharmco, the District Court pointed out the similarities between the two cases, noting that in both SB Phamco and this case:

• the defendants submitted an ANDA, followed by an “amendment” to said ANDA;
• concurrently with (SB Phamco) or shortly after (this case) said amendment, the defendants sent the plaintiff a paragraph IV notice letter; 
• the FDA refused to receive said ANDA (this case) or had not received the ANDA at the time that the paragraph IV notice was sent (SB Phamco); 
• and the plaintiffs filed a complaint seeking declaratory judgment that the paragraph IV notices were deficient, or in the alternative seeking relief under 35 U.S.C. § 271(e)(2).

And the Court agreed with the SB Phamco holdings: that the defendants’ Paragraph IV notice was premature and improper under 21 U.S.C. § 355(j)(2)(B)(ii)(I) and 21 C.F.R. § 314.95(b), and that “the term ‘submit’ in § 271(e)(2) clearly means that an ANDA has been received, not merely delivered” (552 F. Supp. 2d at 511).  “To hold otherwise,” wrote Disctirc Court Judge Rodney Gilstrap, “would invite generic manufacturers to submit incomplete or otherwise deficient applications, in order to secure their position as the first-filed generic.  They could then attempt to remedy any deficiencies through an amendment to their premature application, while claiming priority to the original application for purposes of securing exclusive access to the market and other benefits.”

Judge Gilstrap didn’t buy Defendants’ argument that the statutory notice provisions at FDC Act § 505(j)(2)(B)(ii), and, in particular, FDC Act § 505 (j)(2)(B)(ii)(II) concerning ANDA amendments/supplements and the requirement to simultaneously send notice with a Paragraph IV certification, establish that FDA acceptance (i.e., receipt) of an ANDA is irrelevant with respect to compliance with 35 U.S.C. § 271(e)(2).  That patent law provision provides that it is an act of infringement to: “submit . . . an [ANDA or 505(b)(2) application] for a drug claimed in a patent or the use of which is claimed in a patent.”  This patent provision, wrote Judge Gilstrap

protects the property rights of name brand drug manufactures, and stands as a counterbalance to the expedited approval process and “safe harbor” provisions that dramatically decrease the cost of bringing a generic drug to market. . . .  In this context, Defendants’ argument is clearly flawed.  It would essentially eviscerate “the cardinal rule that a statute is to be read as a whole, . . . since the meaning of statutory language, plain or not, depends on context,”  King v. St. Vincent's Hosp., 502 U.S. 215, 221 (1991).

Moreover, noted Judge Gilstrap, citing to a letter FDA sent to Allergan, “FDA has expressly rejected this interpretation of the relevant statutes in the past.”

Reading the statute as a whole, the Court finds the FDA’s interpretation to be persuasive; 21 U.S.C. § 355(j)(2)(B)(ii)(II) clearly permits that the notice be sent concurrently with the amendment only if the amendment is submitted for an ANDA that has already been received for filing by the FDA.

Accordingly, the Court is persuaded that “submission” of an ANDA under 35 U.S.C. § 271(e)(2) requires said ANDA to be received by the FDA.  Mere transmission of an application cannot satisfy the statutory requirements for infringement.  Were transmission alone the test, such a result would unavoidably promote a flood of “hit and run” filings in which glaring deficiencies would be no impediment to gaining the benefits properly reserved for those applicants who now survive the FDA’s careful review and obtain its certification as “received” . . . .  Accordingly, because the FDA has not received Defendants’ ANDA, the Court is persuaded that Defendants’ ANDA cannot trigger infringement under 35 U.S.C. § 271(e)(2), as a matter of law.

Despite this initial holding, however, Judge Gilstrap did decine to declare, as Allergan requested, whether or not the premature notice triggered the statutory 45-day period for Allergan to timely file a patent infringement lawsuit, and whether or not a 30-month litigation stay would begin only with a lawsuit based on a valid Paragraph IV notice.  Citing to a 2001 decision from the U.S. Court of Appeals for the Federal Circuit in Minnesota Mfg. and Mining v. Barr Labs., 289 F.3d 775 (Fed. Cir. 2001), in which that Court clarified, in the context of a dispute about compliance with the Paragraph IV certification requirements of the statute, that there is no private right of action under the Hatch-Waxman Amendments, Judge Gilstrap wrote that

at least with respect to Allergan’s request for an order declaring that Defendants’ paragraph IV notices would not trigger the [45]-day countdown and/or the 30-month stay provided for in § 355(j)(5)(B)(iii)[,] [s]uch an order would go too far, effectively constituting a mandate that compells the FDA to take specific action with respect to Defendants’ ANDA.

But that District Court decision is not the end of our story for today; it’s only part of our offering. . . . 

Next, we turn to ongoing litigation in the U.S. District Court for the District of Delaware concerning a premature notice from Par with respect to that company’s ANDA for a generic version of Reckitt Benckiser Pharmaceuticals, Inc.’s (“RB’s”) SUBOXONE (buprenorphine and naloxone) Sublingual Film.  We’ve been following this case for a while.  Given a convergence of events – i.e., the RESTASIS premature notice decision and some recent filings in the SUBXONE premature notice case – it’s the perfect time to blog about the SUBOXONE case, even though there’s not yet a court decision on the pending issue of the potential consequences of premature notice.

We’ll spare you all of the details (you’re welcome), but suffice it to say that the litigation is premised on a fact pattern similar to that encountered in other premature notice cases.   Par filed a premature notice that RB challenged.  Last April, RB filed a Motion to Dismiss the case, which Par opposed (RB’s Reply Brief is available here).  In a May 17, 2014 Order, the Delaware District Court granted RB’s Motion to Dismiss.  And in a handwritten footnote, District Court Judge Richard G. Andrews said the following, referring to two other cases involving ANDAs for generic SUBOXONE Sublingual Film, including Par’s ANDA: “the Court will issue a separate order in regard to scheduling.”

That scheduling Order was handed down on May 28, 2014 and includes an interesting footnote concerning how the case should be scheduled in light of RB’s argument that Par “should not benefit from wrongdoing in triggering the litigation before the statutory requirements were met.”  Judge Andrews commented that “I
expect at some point when I have a better handle on the case, for example, at the Markman hearing, I will entertain a request from Plaintiffs for a later trial and pretrial date for some or all of the issues in No. 14-422 [(i.e., Par’s case)],” and dropped a footnote providing one potential remedy:

For example, if there is going to be a trial on infringement in No. 14-422, I might sever that issue and try it separately.  On the other hand, to the extent the Defendants in both cases have the same invalidity arguments, there is a lot to be said for trying them together.  Possibly, we might try all issues at the same time, and I would issue the No. 13-1674 opinion separately and before the No. 14-422 opinion.  I am sure the parties can come up with some other suggestions for how to avoid rewarding the 14-422 Defendants for their dubious conduct while at the same time minimizing the extra work that might otherwise be required of the Court and the Plaintiffs.

Fast-forward several months to the December 3, 2014 Markman hearing in the action.  At the hearing, RB reminded Judge Andrews of his invitation for RB to request a later trial and pretrial date vis-à-vis Par’s case.  In a subsequent letter to the court, Par laid out its reasons for Par’s case to remain consolidated with other Paragraph IV defendants:

Par’s actions in sending its first Notice Letter to Plaintiffs were done based on a good faith belief that it was required to do so under statute.  Additionally, Par has not gained any unfair advantage, nor have Plaintiffs . . . been prejudiced by Par’s consolidation.  ANDA cases filed on similar schedules . . . are routinely consolidated and tried together, and accordingly doing so here would not cause prejudice to any party. 

With respect to Par’s “good faith belief,” the company further stated in its letter that:

Par believed that the express language of the Hatch-Waxman statute required it to send a Notice Letter with its ANDA amendment.  21 U.S.C. § 355(j)(2)(B)(ii).  Par also understood that failure to send notice upon amendment had been held to disqualify an ANDA applicant from first-filer status.  Purepac Pharm. Co. v. Thompson, 354 F.3d 877, 888 (D.C. Cir. 2004).  Par has since reached agreement with the Agency on how to proceed for future products, and therefore Par does not expect that this circumstance will be repeated again. [(Emphasis added)] 

A week later, RB shot back in its own letter to the court: 

The simple fact is that if Par had followed the rules under the Hatch-Waxman statute, Par would not be allowed to reach a potential determination of its case until many months later than under the presently consolidated schedule.  The only reason Par, which has a proposed, non-FDA approved, not yet marketed product, is currently able to litigate any issues of infringement or validity of Plaintiffs’ patents is because of the procedures provided by the Hatch-Waxman regime, which represents a careful, negotiated balance between the interests of brand-name pharmaceutical innovators and the interests of would-be generic competitors.  That balance includes the timing of potential judicial determinations of the issues of validity and infringement.  There is no justification for allowing Par to leapfrog the Hatch-Waxman sequence to schedule a non-entitled, premature trial date, particularly, in the present situation, in regard to infringement, or to otherwise gain any potential and undue strategic advantage by having improperly “cut the line” on the way to the courthouse.

Judge Andrews has not yet decided how to resolve the issue; however, we’ll be watching closely to see if there is any court-imposed sanction for a premature Paragraph IV notice. 

We were particularly intrigued by one sentence in Par’s December 2014 letter to the court (emphasized above): “Par has since reached agreement with the Agency on how to proceed for future products, and therefore Par does not expect that this circumstance will be repeated again.”  Though we don’t know for sure, we suspect that the “agreement” reached with FDA is reflected in a March 11, 2014 letter from FDA to Par.  The letter was issued after the Agency requested a meeting with Par representatives “to discuss Par’s practice of sending premature notifications of paragraph IV certifications in violation of [FDC Act §] 505(j)(2)(B), and 21 C.F.R. 314.95(b).”  That meeting was held on January 24, 2014.

According to FDA:

At the January 24 meeting, Par informed the Agency that it intended to continue its violative practice.  Par’s explanation for its practice was that Par’s premature notification was based on a “literal” reading of section 505(j)(2)(B)(ii)(II) of the FD&C Act and 21 CFR 314.95(d), and was done “in an abundance of caution” in light of Purepac Pharmaceutical Corporation v. Thompson, 354 F.3d 877 (D.C.Cir. 2004).  Par acknowledged that its notice did not comply with 21 CFR 314.95(c) but did not explain why this provision did not apply to Par.  In response to questioning by the agency, Par also acknowledged that it was aware of the court’s decision in SB Pharmco Puerto Rico, Inc. v. Mutual Pharmaceutical Co., 552 F. Supp. 2d 500 (E.D.Pa.), appeal dismissed, 2008 App. LEXIS 27672 (Fed. Cir. 2008).

According to the FDA letter, “Par offered to include in its paragraph IV notifications language that Par believes could help reduce confusion, and distributed an already prepared draft of such language.”  At the time, FDA deferred specific comment on the language provided.  Subsequently, Par shared with FDA revised language.  FDA states in the Agency’s March 11, 2014 letter that:

In implementing 21 U.S.C. 355(j)(2)(B), the regulations at 21 CFR 314.95(c) state what must be included in a notice of certification.  This regulation at 21 CFR 314.95(c)(1) sets forth the requirement that the notice include “a statement that FDA has received an [ANDA] submitted by the applicant.”  FDA’s regulation at 21 CFR 314.101(b)(1) defines the term “received.”  It states that “An [ANDA] will be reviewed after it is submitted to determine whether the [ANDA] may be received. Receipt of an [ANDA] means that FDA has made a threshold determination that the [ANDA] is sufficiently complete to permit a substantive review.”  As FDA has conveyed to Par both in writing and at the January 24 meeting, and regardless of the additional language Par chooses to include, a notice provided before an ANDA is received for filing cannot comply with this regulatory requirement and therefore is invalid on its face.  This regulation does not, however, proscribe inclusion of any additional information or statements.  Indeed, the regulation plainly states that the notice “shall include, but not be limited to” the required information.  The agency, therefore, has no objections to the inclusion of the language above.  We do note, however, that FDA does not agree that the first sentence of your proposed additional language is true, complete, or accurate in light of our reading of the statute and regulations as a whole and the court’s finding in SB Pharmco.

Unfortunately, the language offered by Par is redacted from FDA’s letter; however, we’re pretty sure an NDA holder or patent owner who has recently received a (premature) notice letter from Par can easily identify it.