The Veloxis Case: Uncut, Unrated, and Unsealed!

By Kurt R. Karst –

It’s been almost seven weeks since the U.S. District Court for the District of Columbia issued its Opinion in Veloxis Pharmaceuticals. Inc. v. FDA, ___ F.Supp.3d ___, 2015 WL 3750672 (June 12, 2015), a challenge concerning the scope of 3-year new clinical investigation exclusivity under the Hatch-Waxman Amendments.  As we previously reported (here and here) Veloxis Pharmaceuticals, Inc. (“Veloxis”) sued FDA after the Agency tentatively approved the company’s 505(b)(2) NDA 206406 for ENVARSUS XR (tacrolimus extended-release tablets), 0.75 mg, 1 mg, and 4 mg, for prophylaxis of organ rejection in kidney transplant patients.  FDA cited a period of 3-year exclusivity expiring on July 19, 2016 for another drug – Astellas Pharma US, Inc.’s (“Astellas’s”) 505(b)(1) NDA 204096 for ASTAGRAF XL (tacrolimus extended-release capsules), 0.5 mg, 1 mg, 5 mg, approved on July 19, 2013 for prophylaxis of organ rejection in adult patients receiving kidney transplants – as the basis for the ENVARSUS XR tentative approval.  Veloxis lost the case, and, as we predicted, the company has not appealed the decision to the U.S. Court of Appeals for the District of Columbia Circuit.  Instead, Veloxis settled for approval of NDA 206406 for an indication outside the scope of ASTAGRAF XL’s 3-year exclusivity – i.e., “for prophylaxis of organ rejection in kidney transplant patients converted from tacrolimus immediate-release formulations in combination with other immunosuppressants. ”

One thing that frustrated us to no end during the litigation was the lack of access to briefs and FDA decisions.  Almost everything in the case was filed under seal, including, according to a Joint Appendix Index, an Administrative Record that exceeded 6,100 pages.  But we believe many of the documents filed in the case are important and should be made available so that folks in the pharmaceutical industry know exactly where FDA stands on interpreting the Hatch-Waxman Amendments.  After all, the Veloxis decision may live on for a long time, and it has already formed the basis for at least one Citizen Petition (Docket No. FDA-2015-P-2482).  Fortunately, the seal in the case was lifted last week, and a treasure trove of documents was made available. 

While the various briefs filed in the case provided some good weekend reading – see FDA’s Motion to Dismiss/Motion for Summary Judgment, Veloxis’ Motion for Summary Judgment, and Reply/Opposition briefs (here and here) – what we really wanted to see was FDA’s rationale as explained in letter decisions and correspondence.  We were not disappointed. 

In a 53-page General Advice Letter, a largely identical 59-page internal FDA Exclusivity Evaluation, and a 6-page Memorandum penned by the CDER Exclusivity Board – all from from January 2015 – FDA lays out the Agency’s rational for granting 3-year exclusivity for ASTAGRAF XL and the blocking effect of that exclusivity on ENVARSUS XR.  We’ll leave it to our readers to fully explore and digest on their own this exclusivity bounty, but suffice it to say that this blogger (and Hatch-Waxman junkie) found the documents to make for scintillating reading.  For example, with respect to whether a 505(b)(2) applicant must rely on a listed drug for 3-year exclusivity on that listed drug to apply to the 505(b)(2) applicant, FDA states:

The scope of 3-year exclusivity for Astagraf XL does not depend on whether Envarsus XR relies on Astagraf XL for approval.  Veloxis’ assertion is misplaced because the phrase “relied upon,” in section 505(c)(3)(E)(iii) of the FD&C Act, does not indicate that only drugs that rely on a particular drug with exclusivity are blocked; it simply distinguishes a 505(b)(2) NDA from a stand-alone NDA (and thereby identifies 505(b)(2) NDAs as those that have the potential to be blocked under that provision).  This is plain from a review of the statutory text. . . . 

Similarly, in FDA regulations, the use of the words “relies on” in 21 CFR 314.108(b)(4)(iv) only modifies ANDAs submitted under suitability petitions pursuant to section 505(j)(2)(C) of the FD&C Act.  Neither the statute nor the regulation requires a 505(b)(2) NDA to rely on a drug with exclusivity for that 505(b)(2) NDA to be blocked.  To the contrary, the operative statutory term for the scope of exclusivity is “conditions of approval”; this phrase and others in section 505(c)(3)(E)(iii) and in the sections of the regulation at 314.108(b)(4)(iv) that apply to 505(b)(2) NDAs do not refer to any such reliance. . . .

Even assuming arguendo that the statute is ambiguous, the Agency’s interpretation is reasonable; the Agency interprets 3-year exclusivity to protect the change supported by the new clinical investigations regardless of reliance, thereby preserving the incentive to make exclusivity-protected changes.

Also illuminating are the examples FDA proffers to support what the Agency says is a long-standing interpretation of the statute’s 3-year exclusivity provisions, and FDA’s discussion of the precedents cited by Veloxis (including one involving Testosterone Gel where FDA says the Agency might have incorrectly classified the application as a 505(b)(2) NDA instead of a stand-alone 505(b)(1) NDA – see here).  “These examples demonstrate that . . . when FDA is aware of exclusivity for a product on which a 505(b)(2) NDA did not rely, FDA has continued to interpret the 3-year exclusivity provisions in a manner consistent with the interpretation set forth in the Agency’s preamble statements and consistent with its position set forth here,” writes FDA.  As to why this issue is coming to a head now, more than 30 years after the enactment of the Hatch-Waxman Amendments, FDA goes on to say that:

Questions about the scope of 3-year exclusivity and its potential to block approval of 505(b)(2) NDAs are not presented often, which can be explained by a combination of several factors, including the rarity of the factual scenario and rational decision-making by knowledgeable industry actors.  Three years is relatively short in relation to the time required to develop an NDA.  It generally takes a longer time for an NDA to be developed, filed, and reviewed.  Therefore, for this question to be presented, two applicants would generally have to proceed on parallel development paths for the same innovation. In addition, the later-in-time application would have to be a 505(b)(2) NDA, which would have to become ready for an approval decision during the pendency of the 3-year exclusivity period of a protected drug on which it did not rely.  Moreover, for the question of reliance to arise, there must also exist another version of the exclusivity-protected drug (or a significant quantity of non-product specific published literature) such that the 505(b)(2) NDA is able to refer to the other drug as its listed drug or rely on the non-product specific published literature to fill gaps in its application, rather than relying on the exclusivity-protected drug product.

Even in the relatively rare cases where a 505(b)(2) NDA has the potential to be blocked by exclusivity for a previously approved application on which it did not rely because it seeks approval for an exclusivity-protected condition of approval, it is likely that sponsors and applicants will strategically avoid situations where FDA must determine whether their applications fall within the scope of another sponsor’s exclusivity.  For example, applicants may shape their NDA submissions to avoid submitting an application that may be delayed by existing exclusivity.  Similarly, because (in contrast to an ANDA) a 505(b)(2) NDA is not required to be the same as any previously approved application in any respect, in many cases a 505(b)(2) applicant can seek approval for conditions of approval that are no longer (or never were) protected by exclusivity. . . .

And as to the examples FDA cites, here they are (with links to relevant documents):

A search of the Agency’s records has not produced another instance where FDA refused to fully approve a 505(b)(2) application due to the 3-year exclusivity of another NDA on which the subsequent application did not rely.  However, in instances where the Agency has considered this situation, it has applied considerations consistent with this interpretation of the scope of 3-year exclusivity. . . .

On May 27, 1999, FDA considered the approvability of Duoneb (NDA 020950), which was a solution for inhalation and also a fixed-combination of albuterol sulfate and ipratropium bromide for the same indication as Combivent. Duoneb had been submitted as a 505(b)(2) application that did not rely on Combivent.  FDA noted that the Duoneb applicant conducted its own clinical trials to establish the safety and effectiveness of the fixed-combination, but FDA concluded that it likely would not be able to fully approve Duoneb’s 505(b)(2) NDA at that time due to Combivent’s existing exclusivity, which was due to expire on October 24, 1999.

Similarly, in May 2010, when considering whether Cipher’s tramadol hydrochloride ER capsules (NDA 022370) were blocked by exclusivity for Labopharm’s Ryzolt (tramadol hydrochloride ER tablets) (NDA 021745), FDA noted that Cipher’s product had the potential to be blocked if it was “seeking the same conditions of approval as are protected for Ryzolt.”  FDA made this observation even though Cipher’s product differed in dosage form from the Labopharm product and Cipher’s product did not rely on Ryzolt for approval.  Although the Agency ultimately concluded that Labopharm’s clinical studies were essential only to approval of the specific titration schedule approved for Ryzolt and that Cipher’s product (which had a different nonprotected titration schedule previously approved for another tramadol product) was not blocked, the Agency’s analysis contemplated that Cipher’s product would have been blocked had it sought approval for the exclusivity-protected titration schedule.  FDA further noted that although Cipher’s tramadol product was an ER capsule and Ryzolt was an ER tablet, “[a] difference in dosage form alone for a proposed product would not necessarily be a basis for concluding that a previous applicant’s exclusivity does not delay approval.”

In the case of colchicine products too, FDA acknowledged that exclusivity for a drug that a 505(b)(2) NDA did not reference nonetheless had the potential to block approval of that 505(b)(2) NDA.  [In a Citizen Petition response,] the Agency found that “the labeling for a single-ingredient colchicine product seeking approval for prophylaxis of gout flares must inform healthcare providers that the lower dose colchicine regimen evaluated in the AGREE trial is adequate to treat an acute gout flare that may occur during chronic colchicine use, and thus the approval of such a product must await expiration of Colcry’s 3-year exclusivity for acute gout flares . . . .”  Thus the Agency recognized that although a 505(b)(2) NDA that was not a duplicate of Colcrys tablets need not reference Colcrys as a listed drug, it might nonetheless be subject to exclusivity for Colcrys and would have to await expiration of that exclusivity before it could obtain approval.  [(Emphasis in original)]

With the popularity of the 505(b)(2) approval route increasing, we’re almost sure to see this issue crop up again.  Of course, we may not know when it comes up, unless another company is willing to challenge FDA publicly.