Competitive Generic Therapy 180-Day Exclusivity Gets . . . . Well, Umm . . . Competitive!

If we’ve said it once, we’ve said it a thousand times: timing matters when it comes to pretty much anything concerning Hatch-Waxman. . . especially Paragraph IV 180-day exclusivity. And the new Competitive Generic Therapy (“CGT”) 180-day exclusivity regime created by the 2017 FDA Reauthorization Act (“FDARA”) (see our summary here) is no different in that respect compared to “traditional” Paragraph IV 180-day exclusivity.  But that’s about where the similarity ends, as FDA has opined in a new Letter Decision concerning CGT 180-day exclusivity for Potassium Chloride Oral Solution USP, 20 mEq/15mL (10%) and 40 mEq/15 mL (20%) – the first ever grants of CGT 180-day exclusivity (which we’re now listing under a new tab in our popular 180-Day Exclusivity Tracker.)

As we previously reported, [http://www.fdalawblog.net/2018/08/it-feels-like-the-first-time-fdas-first-competitive-generic-therapy-approval/] FDA designated Apotex, Inc.’s (“Apotex’s”) Potassium Chloride Oral Solution USP, 20 mEq/15 mL (10%) and 40 mEq/15 mL (20%), drug products as “Competitive Generic Therapies” and then approved Apotex ANDA 211067 on August 8, 2018. Both drug products are generic versions of Potassium Chloride Oral Solution, 20 mEq/15 mL (10%) and 40 mEq/15 mL (20%), approved under NDA 206814.  In approving ANDA 211067, FDA noted:

This exclusivity will begin to run from the date of the first commercial marketing of these CGTs (including the commercial marketing of the listed drug) by Apotex, as specified in section 505(j)(5)(B)(v) of the FD&C Act. Furthermore, in accordance with section 505(j)(5)(B)(v)(I) of the FD&C Act, this 180-day CGT exclusivity will not block approval of other applications until Apotex has commenced commercial marketing.  Please submit a correspondence to this ANDA informing the Agency of the date you begin commercial marketing.  Please also submit notice of first commercial marketing via e-mail to the Patent and Exclusivity Team at CDER-OGDPET@fda.hhs.gov.  This e-mail should be sent the same day you commence commercial marketing.  Reference is also made to the Special Forfeiture Rule for Competitive Generic Therapy in section 505(j)(5)(D)(iv) of the FD&C Act.  Please be aware that, pursuant to this forfeiture rule, you will forfeit your eligibility for the 180-day CGT exclusivity period for Potassium Chloride Oral Solution USP, 20 mEq/15 mL (10%) and 40 mEq/15 mL (20%) if you fail to market these CGTs within 75 days after the date on which the approval of this application is made effective. [(Emphasis added)]

Apotex did not begin commercially marketing the drug products until a few weeks later, thus triggering CGT 180-day exclusivity eligibility. (CGT 180-day exclusivity for the 20 mEq/15mL (10%) drug product expires on February 25, 2019, and on March 6, 2019 for the 40 mEq/15 mL (20%) drug product.)  But it’s not what happened after Apotex launched its drug products (thereby triggering exclusivity) that raised some eyebrows at the company, but what happened immediately before FDA received notice from Apotex on August 29, 2018 that commercial marketing had begun for the first of the two launched strengths (20 mEq/15mL (10%)).

Earlier in the day on August 29, 2018 – at 3:44 PM Eastern time – FDA approved Novel Laboratories, Inc’s (“Novel”) ANDA 209786 for Potassium Chloride Oral Solution, 20 mEq/15 mL (10%) and 40 mEq/15 mL (20%). Apotex notified FDA through the Electronic Submission Gateway at 9:03 PM on August 29, 2018 that the company initiated commercial marketing of the 20 mEq/15 mL (10%) drug product and apparently “provided an internal email showing that it ordered shipment of this drug product at 4:26 PM on August 29.”  And that’s when the controversy began . . .

Apotex, in a series of letter submissions to FDA, requested that FDA rescind the approval of Novel ANDA 209786. Apotex argued “that upon CGT designation, CGT exclusivity, unless forfeited, prevents FDA from approving additional ANDAs referencing the same drug product until the end of the exclusivity period;” that “the granting of that [CGT] designation perfected Apotex’s right to the two CGT exclusivity periods (one each for the 10% and 20% dosage strengths);” that “interpreting [FDC Act § 505(j)(5)(B)(v)] to mean that exclusivity blocks subsequent applicants only after the first approved applicant has begun commercial marketing ‘reads [FDC Act § 505(j)(5)(D)(iv)] out of the statute;’” and that, in the alternative, “FDA’s approval of Novel’s potassium chloride 10% product was unlawful because FDA approved Novel’s application on the same day (albeit earlier in the day) that Apotex informed FDA that it had begun commercial marketing of its potassium chloride 10% product, and CGT 180-day exclusivity blocks approval of any application otherwise ready for approval that day.”  Novel, represented by Hyman, Phelps & McNamara, P.C., also sent in letter correspondence to FDA addressing Apotex’s arguments.

In an October 2, 2018 Letter Decision, FDA sided with Novel, concluding that the Agency properly approved ANDA 209786 consistent with FDC Act § 505(j)(5)(B)(v), and declining to rescind the ANDA approval.

As to FDA’s reading of FDC Act § 505(j)(5)(B)(v), the Agency concluded that its interpretation follows the plain language of the statute. According to FDA:

Under the plain language of this provision [(i.e., FDC Act § 505(j)(5)(B)(v)(I))], subsequent applicants are blocked only under the condition that the “first approved applicant has commenced commercial marketing.” In the present case, when FDA approved Novel’s ANDA 209786, Apotex had not begun marketing either strength of potassium chloride under ANDA 211067.  Despite Apotex’s commencement of commercial marketing for potassium chloride 10% later that same day, the threshold condition in the statute (i.e., that “any first approved applicant has commenced commercial marketing”) had not been met when FDA approved Novel’s ANDA. . . .  By arguing that a first approved applicant’s CGT exclusivity prevents FDA from approving a subsequent ANDA from the time of the first applicant’s approval, Apotex reads the “commenced commercial marketing” language out of the statute entirely.

As to Apotex’s alternative argument that even if FDA’s approval of a subsequent application prior to commencement of commercial marketing by the applicant that is eligible for CGT exclusivity is lawful, approval must occur prior to the date of commencement of marketing or after exclusivity has run, FDA also shot down this argument. According to FDA:

Apotex’s argument ignores the statutory language that is relevant to this situation.  The section of the provision on which Apotex relies defines the duration of exclusivity for the subsequent applicants that such exclusivity blocks.  However, as described above, the relevant portion of the provision here is the “commenced commercial marketing” clause, which is the language that determines whether a subsequent application can be approved or whether approval is blocked by CGT exclusivity.  The statute does not state or imply that a “date of” rather than a “time of” approach should be used to determine when an applicant with CGT exclusivity “commenced commercial marketing.”  If a first approved applicant has not “commenced commercial marketing” as of the time a subsequent applicant is ready for approval, approval of that subsequent application is not blocked by CGT exclusivity, and the beginning and ending dates of that exclusivity have no bearing on such applications.

FDA’s Letter Decision includes some additional analysis of the CGT 180-day exclusivity provisions that is helpful in understanding the Agency’s position. We understand that FDA is in the process of drafting guidance to clarify the CGT designation process; however, it is unclear when such guidance might be published in draft form.