Teva Sues FDA Over Generic RESTASIS 180-Day Exclusivity; Lawsuit Challenges FDA’s New “First Applicant” Interpretation

Few drugs in the history of Hatch-Waxman have as storied a history as RESTASIS (cyclosporine) Ophthalmic Emulsion, 0.05%. First, there was litigation against FDA as to the status of the drug as an “antibiotic” (see here).  Second, there’s the recent fight over whether the St. Regis Mohawk Indian Tribe can use tribal sovereign immunity to shield patents covering RESTASIS from challenges at the U.S. Patent and Trademark Office (see here).  And now there’s a fight over 180-day exclusivity for a generic version of the drug product with Teva Pharmaceuticals USA, Inc.’s (“Teva’s”) October 17, 2018 filing of a Complaint and Motion For a Preliminary Injunction in the U.S. District Court for the District of Columbia alleging that a recent Agency interpretation of the definition of “first applicant” at FDC Act § 505(j)(5)(B)(iv)(II)(bb) is unlawful.

We suspected that a lawsuit against FDA concerning generic RESTASIS 180-day exclusivity might be in the offing when the Agency issued a July 13, 2018 Letter Decision explaining the Agency’s rationale for determining that eligibility for 180-day exclusivity for certain strengths of generic SUBOXONE (buprenorphine and naloxone) Sublingual Film was forfeited (see our previous post here).  But before we go down that road, some background is in order.

FDC Act § 505(j)(5)(B)(iv)(II)(bb) defines the term “first applicant” to mean:

an applicant that, on the first day on which a substantially complete application containing a [Paragraph IV certification] is submitted for approval of a drug, submits a substantially complete application that contains and lawfully maintains a [Paragraph IV certification] for the drug.

FDA has broken this definition down into three prongs:

[1] on the first day on which a substantially complete application containing a [paragraph IV certification] is submitted for approval of a drug [hereinafter the “when” prong],

[2] submits a substantially complete application that contains . . . [a paragraph IV certification for the drug] [hereinafter the “submit” prong] and

[3] lawfully maintains a [paragraph IV certification] for the drug [hereinafter the “lawfully maintains” prong].

Under what FDA terms the “First Effective Approach” in the Agency’s SUBOXONE Letter Decision, which is the approach affirmed in cases such as Purepac Pharmaceutical Co. v. Thompson, 354 F.3d 877 (D.C. Cir. 2004) and TorPharm, Inc. v. Thompson, 260 F.Supp.2d 69 (D.D.C. 2003), the Agency says that it creates a problem under the 2003 Medicare Modernization Act (“MMA”), which, among other things, added the “first applicant” definition to the statute:

When considering the issue prior to enactment of MMA and prior to FDA’s exclusivity determination in this case, FDA has taken an approach to determining eligibility for 180-day exclusivity (termed the “First Effective” approach for purposes of this letter) that when the first paragraph IV certification occurs in an amendment or supplement to an ANDA, the first generic drug applicant that both (1) submits a substantially complete application (amendment or supplement) with a paragraph IV certification and (2) makes it “effective” for the drug by providing notice in a timely fashion, is eligible for 180-day exclusivity.

Under this approach, an applicant who submits an amendment or supplement to a substantially complete application with a paragraph IV certification, but who fails to give timely notice, could lose eligibility for 180-day exclusivity if another applicant submits an amendment or supplement to a substantially complete application with a paragraph IV certification later but gives notice first. Under this approach, the day on which eligibility for 180-day exclusivity is determined would not be fixed; it could change if the first-to-file generic drug applicant submits an amendment or supplement to a substantially complete application with a paragraph IV certification but does not provide notice of that certification before another applicant completed both of those actions. . . .

Presented with questions regarding the meaning of “First Applicant” in this case in the post-MMA context, and upon further review of the relevant statutory and regulatory provisions, FDA has concluded that the “First Effective” approach, which likely grew out of the application of the principles of the pre-MMA statutory framework in the Purepac case, is not consistent with the statutory definition of “First Applicant” as defined by Congress in the MMA. This is so because application of the “First Effective” approach post-MMA effectively writes out of the statutory definition of “First Applicant” the reference to the “first day” in the “when” prong of that definition in cases where notice is not timely given.  Thus, . . . in interpreting the MMA statutory language and applying the post-MMA statutory scheme, FDA rejects the “First Effective” approach to determining which applicants are “First Applicants” and is adopting the interpretation explained below to determine “First Applicant” status and eligibility for exclusivity for ANDAs referencing Suboxone 4 mg/1 mg and 12 mg/3 mg strengths.  This interpretation is most consistent with the text and structure of the MMA.

Instead, FDA’s SUBOXONE Letter Decision adopts what the Agency terms the “First Submitted Interpretation Approach,” which the Agency explains as follows:

[U]nder the statute, a “First Applicant” is “an applicant that, on the first day on which a substantially complete application containing a [paragraph IV certification] is submitted for approval of a drug, submits a substantially complete application that contains . . . [a paragraph IV certification for the drug] and lawfully maintains a [paragraph IV certification] for the drug.” Under the “First Submitted” interpretation, the definition of “First Applicant” is read such that the “when” prong (i.e., “on the first day on which a substantially complete application . . .”) refers to a single specific date on which an application was submitted to qualify its sponsor as a “First Applicant”; whereas the “submit” and “lawfully maintain” prongs describe requirements for specific applications submitted on this single fixed date to maintain eligibility for exclusivity. Under this reading of the statute, there can only ever be one “first day on which a substantially complete application containing a paragraph IV certification [or an amendment to a substantially complete application with a paragraph IV certification] is submitted,” regardless of whether the applicant that submits its application (or an amendment or supplement to its application) on that “first day” gives or fails to give timely notice of and/or otherwise lawfully maintains its paragraph IV certification. Thus, while an applicant must meet all three prongs to obtain 180-day exclusivity, the “when” prong refers to a specific, static date determined by the specific first day on which any applicant submits a substantially complete application (or an amendment or supplement to a substantially complete application) containing a paragraph IV certification to a patent listed for that product. This specific date is fixed and does not change because of subsequent events.

Now back to the RESTASIS story . . . .

In July 2015, FDA issued a “Dear Applicant Letter” (Docket No. FDA-2015-N-2713) requesting comment on a Hatch-Waxman issue concerning generic RESTASIS 180-day exclusivity.  As we discussed in a post back then, FDA explains that “[t]he first patents for Restasis were listed in the Orange Book in late 2008: U.S. Patent Nos. 4,839,342 (the ‘342 patent) and 5,474,979 (the ‘979 patent).”  The ‘342 patent expired on August 2, 2009, and the ‘979 patent expired on May 17, 2014; however, FDA says that “[o]ne or more ANDAs or patent amendments submitted after the ‘342 patent expired but before January 14, 2014 contained a paragraph IV certification to the ‘979 patent, potentially qualifying the ANDA sponsor(s) as a ‘first applicant’ eligible for 180-day exclusivity.” January 14, 2014 is the date on which U.S. Patent No. 8,629,111 (“the ‘111 patent”) was submitted to FDA and listed in the Orange Book for RESTASIS.  Also on that date, “one or more [ANDA] applicants submitted a paragraph IV certification to the ‘111 patent,” according to FDA.

FDA then throws a complicating fact into the mix:

Until the ‘111 patent was listed on January 14, 2014, the ‘979 patent was the only patent listed in the Orange Book for Restasis since expiry of the ‘342 patent in 2009.

The one or more paragraph IV certifications to the ‘979 patent submitted to FDA after the ‘342 patent expired but before January 14, 2014, were the first paragraph IV submissions made for Restasis. But the ‘979 patent expired before FDA issued an Acknowledgement Letter to any applicant with a pending ANDA for this drug product, and before any sponsor had the opportunity to provide notice of the paragraph IV certification to that patent.

Given this complicated scenario, FDA says that there are two issues before the Agency:

(1) the one or more applicants that submitted ANDAs or patent amendments with paragraph IV certifications to the ‘979 patent after the ‘342 patent expired but before January 14, 2014, and that did not receive Acknowledgement Letters until after the ‘979 patent had expired, are “first applicants” under FD&C Act section 505(j)(5)(B)(iv)(II)(bb); and

(2) whether 180-day generic drug exclusivity for this product was forfeited on May 17, 2014, when the ‘979 patent expired, such that no ANDA applicant for Cyclosporine Ophthalmic Emulsion, 0.05%, is eligible for 180-day generic drug exclusivity.

Several comments were submitted to FDA in response to the Agency’s request, including comments submitted on behalf of Teva (here) and Akorn Pharmaceuticals (“Akorn”) (by Hyman, Phelps & McNamara, P.C.) (here).   Akorn took the position that FDA should conclude that any ANDA applicant that certified Paragraph IV to the now-expired ‘979 patent before January 14, 2014, when the ‘111 patent was listed in the Orange Book, and that did not receive an Acknowledgment Letter from FDA until after May 17, 2014, when the ‘979 patent expired, is not a “first applicant” under FDC Act § 5050)(5)(B)(iv)(II)(bb). Instead, any ANDA sponsor that certified Paragraph IV to the ‘111  patent on January 14, 2014, and that timely perfected that certification is a “first applicant” eligible for 180-day exclusivity.  As Akorn noted in its comments, this means:

• the ‘979 patent was not an exclusivity-bearing patent;
• 180-day exclusivity for Cyclosporine Ophthalmic Emulsion, 0.05%, has not been forfeited under FDC Act § 5050)(5)(D)(i)(VI) because of patent expiration; and
• the ANDA sponsor (or sponsors) that certified Paragraph IV to the ‘979 patent, but that did not certify Paragraph IV to the ‘111 patent on January 14, 2014, is not a “first applicant,” but instead “an applicant other than a first applicant” (i.e., a subsequent applicant), id. § 5050)(5)(B)(iv)(II)(aa), subject to a first applicant’s 180-day exclusivity, unless otherwise forfeited.

The Teva and Akorn comments were consistent with FDA’s position at that time; however, FDA’s SUBOXONE Letter Decision and new “First Submitted Interpretation Approach” drastically changed things. According to Teva:

Until now, FDA consistently maintained that eligibility for 180-day exclusivity hinges on a generic applicant submitting a legally valid challenge to the innovator’s patents that complies with all statutory requirements for such challenges—including the requirement to notify the brand manufacturer of any such challenge so that it can evaluate whether to sue the generic applicant for patent infringement. Not surprisingly, both this Court and the D.C. Circuit agreed with that commonsense position. See, e.g., TorPharm, Inc. v. Thompson, 260 F. Supp. 2d 69, 80 (D.D.C. 2003), aff’d sub nom. Purepac Pharm. Co. v. Thompson, 354 F.3d 877, 888-89 (D.C. Cir. 2004).  And while this case arises under a more recent version of the statute, FDA recently promulgated binding regulations—after formal notice-and-comment rulemaking—that not only affirmed its longstanding position, but expressly relied on the court cases upholding that well-settled rule.  Abbreviated New Drug Applications and 505(b)(2) Applications—Final Rule (the “MMA Final Rule”), 81 Fed Reg. 69580, 69609 (Oct. 6, 2016) (adopting proposed rule that applicants must “satisfy the notice requirement of the [Hatch-Waxman] Act … to qualify for 180-day exclusivity”); see also Abbreviated New Drug Applications and 505(b)(2) Applications—Proposed Rule (the “MMA Proposed Rule”), 80 Fed. Reg. 6802, 6835 (Feb. 6, 2015) (citing Purepac to support proposal that a patent challenge is “effective only as of the date that the applicant has both submitted … the paragraph IV certification and sent the notice”).  FDA’s attempt to jettison that rule in the context of a quasi-adjudicatory proceeding is thus as procedurally defective as it is substantively baffling.

Teva is seeking declaratory and injunctive relief, including a declaration that FDA’s SUBOXONE Letter Decision “was issued without observance of procedure required by law and otherwise is arbitrary, capricious, an abuse of discretion and not in accordance with law,” a declaration that Teva’s ANDA for generic RESTASIS (ANDA 203880) is entitled to 180-day exclusivity, and that the court enjoin FDA from approving any ANDA for generic RESTASIS that “was not substantially complete as of January 14, 2014 and/or for which the ANDA’s sponsor did not submit a lawfully-maintained Paragraph IV certification on January 14, 2014.”