Small Business Assistance: New 180-Day Generic Drug Exclusivity Regulations
[Federal Register: August 6, 1999 (Volume 64, Number 151)]
[Proposed Rules]
[Page 42873-42887]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au99-27]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 314
[Docket No. 85N-0214]
180-Day Generic Drug Exclusivity for Abbreviated New Drug
Applications
AGENCY: Food and Drug Administration, HHS.
ACTION: Proposed rule.
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SUMMARY: The Food and Drug Administration (FDA) is proposing to amend
its regulations governing 180-day generic drug exclusivity under the
Federal Food, Drug, and Cosmetic Act (the act). The proposed rule
clarifies existing eligibility requirements for abbreviated new drug
application (ANDA) sponsors and describes new eligibility requirements.
The proposed changes to the regulations are necessary because of recent
court decisions invalidating portions of FDA's current regulations. The
proposed regulations are intended to permit the prompt entry of generic
drug products into the market while maintaining the incentive of market
exclusivity for generic drug manufacturers.
DATES: Submit written comments by November 4, 1999. Submit written
comments on the information collection requirements by September 7,
1999. See section VIII of this document for the effective date of a
final rule based on this document.
ADDRESSES: Submit written comments to the Dockets Management Branch
(HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061,
Rockville, MD 20852. Submit written comments on the information
collection requirements to the Office of Information and Regulatory
Affairs, OMB, New Executive Office Bldg., 725 17th St. NW., rm. 10235,
Washington, DC 20503, Attn: Desk Officer for FDA.
FOR FURTHER INFORMATION CONTACT: Virginia G. Beakes, Center for Drug
Evaluation and Research (HFD-7), Food and Drug Administration, 5600
Fishers Lane, Rockville, MD 20857, 301-594-2041.
SUPPLEMENTARY INFORMATION:
I. Background
The Drug Price Competition and Patent Term Restoration Act of 1984
(Public Law 98-417) (the Hatch-Waxman Amendments) created section
505(j) of the act (21 U.S.C. 355(j)). Section 505(j) established the
ANDA approval process, which allows a generic version of a previously
approved innovator drug to be approved without submission of a full new
drug application (NDA). An ANDA refers to a previously approved new
drug application (the ``listed drug'') and relies upon the agency's
finding of safety and effectiveness for that drug product.
Innovator drug applicants must include in an NDA information about
patents for the drug product that is the subject of the NDA. FDA
publishes this patent information as part of the agency's publication
``Approved Drug
[Page 42874]
Products with Therapeutic Equivalence Evaluations'' (the Orange Book).
Generic drug applicants must include in an ANDA a patent
certification described in section 505(j)(2)(A)(vii) of the act for
each patent listed in the Orange Book for the listed drug. The
applicant must certify one of the following for each patent: (1) that
no patent information on the drug product that is the subject of the
ANDA has been submitted to FDA; (2) that such patent has expired; (3)
the date on which such patent expires; or (4) that such patent is
invalid or will not be infringed by the manufacture, use, or sale of
the drug product for which the ANDA is submitted. These certifications
are known as ``paragraph I,'' ``paragraph II,'' ``paragraph III,'' and
``paragraph IV'' certifications, respectively.
Notice of a paragraph IV certification must be provided to each
owner of the patent (patent owner) that is the subject of the
certification and to the holder of the approved NDA (NDA holder) to
which the ANDA refers. The terms ``patent owner'' and ``NDA holder'' as
used throughout this proposed regulation mean either those parties or
their representatives, including exclusive licensees. The agency
recognizes that different terms are used throughout other sections of
the regulations for the idea expressed in section 505(j)(2)(B)(i)(I)
and (j)(2)(B)(i)(II) of the act that notice must be given to the
principals (patent owner and NDA holder) or their representatives. The
agency has added a definitions section to the proposed regulation to
clarify the meaning of these terms, as well as other terms, as used in
this section.
The submission of an ANDA for a drug product that is claimed in a
patent is an infringing act if the ANDA product is intended to be
marketed before expiration of the patent. (See 35 U.S.C. 271(e)(2).)
Therefore, the submission of an ANDA with a paragraph IV certification
may be the basis for patent infringement litigation.
Given this risk of patent infringement litigation, section
505(j)(5)(B)(iv)\1\ of the act provides an incentive for generic drug
applicants to file paragraph IV certifications challenging patents that
may be invalid, unenforceable, or not infringed by the product that is
the subject of the ANDA.
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\1\ Section 505(j)(5)(B)(iv) of the act states that:
If the application contains a certification described in
subclause (IV) of paragraph (2)(A)(vii) and is for a drug for which
a previous application has been submitted under this subsection
continuing [sic] such a certification, the application shall be made
effective not earlier than one hundred and eighty days after--
(I) the date the Secretary receives notice from the applicant
under the previous application of the first commercial marketing of
the drug under the previous application, or
(II) the date of a decision of a court in action described in
clause (iii) holding the patent which is the subject of the
certification to be invalid or not infringed, whichever is earlier.
Prior to the enactment of the Food and Drug Administration
Modernization Act of 1997 (the Modernization Act), 180-day
exclusivity was described at section 505(j)(4)(B)(iv) of the act.
The Modernization Act added new provisions to section 505(j) that
resulted in a renumbering of the sections.
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In certain circumstances, the first applicant whose ANDA contains
a paragraph IV certification is protected from competition from
subsequent generic versions of the same drug product for 180 days from
either the date the first applicant's drug product is first
commercially marketed or the date of a final court decision holding the
patent that is the subject of the paragraph IV certification invalid,
unenforceable, or not infringed. This marketing protection is commonly
known as ``180-day exclusivity.''
In the Federal Register of October 3, 1994 (59 FR 50338), FDA
published the final rule implementing the patent and marketing
exclusivity provisions of the Hatch-Waxman Amendments. Section
314.107(c)(1) (21 CFR 314.107(c)(1)), the regulation implementing
section 505(j)(5)(B)(iv) of the act, provided:
If an abbreviated new drug application contains a certification
that a relevant patent is invalid, unenforceable, or will not be
infringed and the application is for a generic copy of the same
listed drug for which one or more substantially complete abbreviated
new drug applications were previously submitted containing a
certification that the same patent was invalid, unenforceable, or
would not be infringed and the applicant submitting the first
application has successfully defended against a suit for patent
infringement brought within 45 days of the patent owner's receipt of
notice submitted under Sec. 314.95, approval of the subsequent
abbreviated new drug application will be made effective no sooner
than 180 days from whichever of the following dates is earlier:
(i) The date the applicant submitting the first application
first commences commercial marketing of its drug product; or
(ii) The date of a decision of the court holding the relevant
patent invalid, unenforceable, or not infringed.
(Emphasis added)
FDA's requirements for 180-day exclusivity were successfully
challenged in the courts in Mova Pharmaceutical Corp. v. Shalala, 140
F.3d 1060 (D.C. Cir. 1998), and Granutec, Inc. v. Shalala, No. 97-1873
and No. 97-1874, 1998 U.S. App. LEXIS 6685 (4th Cir. Apr. 3, 1998).
Following the Mova circuit court decision, on June 1, 1998, the
district court entered an order stating that the successful defense
requirement of Sec. 314.107(c)(1) is invalid and permanently enjoined
FDA from enforcing it. In the Federal Register of July 14, 1998 (63 FR
37890), FDA published a guidance for industry entitled ``180-Day
Generic Drug Exclusivity Under the Hatch-Waxman Amendments to the
Federal Food, Drug, and Cosmetic Act'' (June 1998), describing its
approach to 180-day exclusivity in light of the court decisions. In the
Federal Register of November 5, 1998 (63 FR 59710), the agency
published an interim rule revoking the ``successful defense''
requirement. Since that time the agency has regulated directly from the
statute when making exclusivity decisions on a case-by-case basis.
The agency is proposing new regulations to address the issues that
have arisen as a result of the Mova and Granutec decisions and to
respond to other matters related to 180-day exclusivity not currently
addressed by the regulations. Consistent with the legislative purpose
of section 505(j)(5)(B)(iv) of the act, the proposed regulations
continue to provide an incentive for challenging a listed patent, while
at the same time preventing prolonged or indefinite delays in the
availability of generic drug products.
During litigation of the many cases related to 180-day
exclusivity, the parties and courts have recognized the potential for
the 180-day exclusivity process to substantially delay the entry of
competitive generic drug products into the market. This situation can
occur when the marketing of any subsequent generic drug product is
contingent upon the occurrence of an event that is within the first
ANDA applicant's control. Such delays could result, for example, from
the inability of the first ANDA applicant with a paragraph IV
certification to obtain timely approval of its application and begin
commercial marketing of its product.
Licensing agreements and other arrangements between an innovator
company and the generic drug company who is the first ANDA applicant to
file a paragraph IV certification can be of considerable financial
benefit to the companies involved, but also may contribute to delayed
generic competition by forestalling the beginning, or triggering, of
the 180-day exclusivity period. These arrangements can create almost
insurmountable barriers to the final approval and marketing of generic
drug products that are otherwise ready for final approval. These
barriers thwart a major congressional goal underlying the
[Page 42875]
passage of the Hatch-Waxman Amendments.
In developing the approach described in this proposal, the agency
has been guided by the text of the statute, opinions rendered by courts
that have addressed these issues, and concerns expressed to the agency
in submissions commenting on the June 1998 guidance and November 1998
interim rule. The agency has also been guided by its 15 years of
experience with the 180-day exclusivity provisions. This experience has
provided FDA with valuable information regarding the influence of the
180-day exclusivity provisions on the ANDA approval process and the
marketing of generic drug products.
II. Description of the Proposed Rule
This proposed rule would revise Sec. 314.107 to clarify and modify
eligibility requirements for ANDA applicants seeking 180-day marketing
exclusivity for a generic drug product. This new approach is offered in
light of the courts' rejection of the previous requirement that an ANDA
applicant successfully defend against a patent infringement lawsuit
before it is eligible for exclusivity.
A. 180-Day Exclusivity Eligibility
1. Only First Applicant is Eligible
The statutory language describing which applications are eligible
for 180-day generic drug exclusivity is ambiguous. The current
regulation interprets the statute as allowing eligibility for
exclusivity only for the applicant that submits the first substantially
complete ANDA with a paragraph IV certification. Although the agency
has considered alternative interpretations, such as ``rolling
exclusivity'' in which the next-in-line applicant is eligible for
exclusivity should the previous applicant become ineligible, FDA
proposes to maintain the current interpretation. The agency, however,
invites comments related to exclusivity eligibility, both those
supporting this interpretation and those suggesting other
possibilities.
Under this proposed rule, only the applicant submitting the first
substantially complete ANDA for a listed drug with a paragraph IV
certification to any patent in the Orange Book for the listed drug
(first applicant) would be eligible for exclusivity. A substantially
complete application must contain all of the information required under
section 505(j)(2)(A) of the act and under 21 CFR 314.50 and 314.94.
These requirements include the submission of the results of any
required bioequivalence studies, or, if appropriate, a request for a
waiver of such studies. In order for an ANDA to be considered
substantially complete for purposes of exclusivity, the bioequivalence
studies submitted in the ANDA at the time it is initially submitted
must, upon review by the agency, meet the appropriate standards for
approval. If the applicant must conduct a new bioequivalence study to
obtain approval of the ANDA, the application will not be considered to
be substantially complete and the applicant will not be eligible for
exclusivity. No other applicant with a paragraph IV certification will
be eligible for exclusivity for that drug product. The agency is
adopting this position out of concern that, in the rush to be the first
ANDA with a paragraph IV, applicants will submit the results of the
first completed bioequivalence study, whether or not the results meet
the standards for approval. The bioequivalence study is a crucial
component of the ANDA and conduct of the studies can be time consuming.
In order to prevent the granting of exclusivity on the basis of
submission of an inadequate bioequivalence study, FDA has determined
that to be eligible for exclusivity, the ANDA applicant must submit, as
part of the initial application, a bioequivalence study that meets the
standards for approval.
To be eligible for exclusivity, an applicant must be the first to
submit ANDA that is both substantially complete and contains a
paragraph IV certification to any listed patent. The first applicant
can be an applicant that submits an ANDA that initially contains a
paragraph III certification, but later amends the certification to a
paragraph IV certification, if at the time of the amendment that
applicant's ANDA is the first substantially complete ANDA to contain a
paragraph IV certification. If the first applicant subsequently
withdraws its application or changes or withdraws its paragraph IV
certification, either voluntarily or as a result of a settlement or
defeat in patent litigation, no ANDA applicant will be eligible for
180-day exclusivity.
Limiting eligibility for exclusivity to the first applicant to
submit a substantially complete ANDA with a paragraph IV certification
is consistent with the goal of permitting earlier entry into the market
of generic competitor products by encouraging prompt challenges to
innovator patents. Granting exclusivity to a later applicant that
submits a patent challenge, and that only becomes first in line because
another applicant(s) has withdrawn its application or paragraph IV
certification, would further delay the entry into the market of generic
drug products with no countervailing public benefit.
In addition, if the first applicant submits a new paragraph IV
certification because, for example, it makes a formulation change
requiring a supplement or an amendment to its ANDA, it may no longer be
accorded first applicant status. If there is another applicant with a
paragraph IV certification for the same drug product, the first
applicant will no longer be eligible for 180-day exclusivity. Also, no
other applicant will be eligible for 180-day exclusivity.
As described in the preamble to the 1994 final rule (59 FR 50338
at 50348), there is one exception to this principle. If the agency
accepted for filing a substantially complete ANDA prior to the NDA
holder's submission of a late (untimely) filed patent, the ANDA
applicant is not required to certify to this patent. However, if the
ANDA applicant amends its ANDA to include a paragraph IV certification
to the untimely filed patent, and the ANDA applicant later withdraws
that paragraph IV certification, the next applicant to file a paragraph
IV certification to the untimely filed patent will be eligible for
exclusivity. The agency believes that in this situation it is
appropriate to grant exclusivity to an applicant who was required to
file a paragraph IV certification because the applicant filed its ANDA
after the NDA holder submitted the patent information.
If there are multiple patents for the listed drug, the applicant
submitting the first paragraph IV certification to any of the listed
patents will be the only ANDA applicant eligible for exclusivity for
that drug. The agency considered an approach that could have made
multiple applicants eligible for exclusivity based upon the order of
submission of paragraph IV certifications for each patent. Different
ANDA's are most likely to have the first paragraph IV certifications to
different patents when new patents are listed for the innovator drug
after the submission of the first ANDA. Although the statute would
support granting multiple exclusivities, the agency has determined that
such multiple exclusivities for a single drug could further delay the
entry of generic drugs onto the market. For example, if two different
applicants were eligible for exclusivity because each was the first to
file a paragraph IV certification for a different listed patent, and
neither exclusivity could begin to run until first commercial marketing
or a favorable court decision, it is possible that each exclusivity
would block the final
[Page 42876]
approval of the other application for a substantial period of time.
Moreover, the large number of patents listed for many drugs, the real
possibility that different ANDA applicants may submit first paragraph
IV certifications for these patents, and the relative ease with which
an applicant now becomes eligible for exclusivity could combine to
create an exclusivity program that is virtually unworkable in its
complexity and which would create even more uncertainty for the
industry.
If the ANDA applicant submitting the first substantially complete
ANDA with a paragraph IV certification submits paragraph IV
certifications to multiple patents at that time, any of those
certifications will render the applicant eligible for exclusivity. The
first court decision finding one of the patents invalid, not infringed,
or unenforceable will trigger the running of the applicant's
exclusivity.
2. First Applicant Eligible if Not Sued
The agency is proposing to amend Sec. 314.107(c)(1) to state that
the first applicant would be eligible for 180 days of market
exclusivity even if the applicant is not sued for patent infringement
by the patent owner or NDA holder. This is consistent with the policy
established in FDA's June 1998 guidance. It is also consistent with the
decision in Purepac v. Friedman, 162 F.3d 1201 (D.C. Cir. 1998), in
which the court noted that section 505(j)(5)(B)(iv) of the act does not
require the first applicant to be sued to be eligible for exclusivity.
The agency recognizes that neither the Purepac nor the Mova
opinion expressly foreclosed the agency from adopting a requirement
that an applicant be sued, and that in the 1989 proposed rule FDA
considered a ``litigation'' requirement as a prerequisite for
exclusivity eligibility. (See 54 FR 28872 at 28929, July 10, 1989.)
However, in light of the removal of the ``successful defense''
requirement and subsequent reconsideration of the statutory language,
the agency proposes that an applicant would be eligible for 180-day
exclusivity even if it is not sued by a patent owner or NDA holder.
FDA believes that if the first applicant avoids a lawsuit and the
related 30-month stay of final approval (see section 505(j)(5)(B)(iii)
of the act), for example, by designing around a patent in such a way
that its drug product is clearly noninfringing, then that applicant
should not be denied eligibility for exclusivity. In addition, an ANDA
applicant should not be encouraged to file a frivolous certification
that invites litigation so as to qualify for exclusivity. Permitting an
applicant who avoids a lawsuit to be eligible for exclusivity is
consistent with the statutory language and goal of facilitating prompt
entry of generic drug products into the market.
3. First Applicant Not Eligible if Sued and Loses Lawsuit
If the first applicant is sued and loses the patent litigation,
proposed Sec. 314.107(c)(4) would require the applicant to change its
certification from a paragraph IV to a paragraph III. Upon the required
certification change, the applicant would lose any claim to exclusivity
eligibility.
Nothing in the statute or the regulations supports an award of
exclusivity to an ANDA applicant that loses its lawsuit. In fact, such
an award would run counter to the statutory goal of promoting earlier
entry of generic drug products into the market.
If the agency were to interpret the statute to permit exclusivity
for an ANDA applicant that lost its patent litigation, a subsequent
applicant that is not sued for patent infringement because it managed
to design around the patent nonetheless would not be able to enter the
market until after patent expiration. The court decision trigger for
the beginning of exclusivity would be unavailable to this subsequent
applicant because it applies only when there has been patent litigation
as a result of the paragraph IV certification and an ANDA applicant has
won.
Additionally, if the agency permitted exclusivity for an applicant
that lost its litigation and therefore could not market its product,
the innovator might avoid generic competition for the life of its
patent merely by refusing to sue any subsequent ANDA applicant. This
outcome would not be justified by the first applicant's unsuccessful
challenge to the patent.
The declaratory judgment provision discussed in section II.F of
this document could prevent an innovator company from using this
strategy to completely block ANDA approvals in some cases. However, it
is unreasonable to expect subsequent ANDA applicants to obtain a
declaratory judgment that triggers exclusivity for a first applicant
who has not provided any benefit to the public, merely because the
subsequent applicant wants to avoid being blocked for the life of the
patent.
If a first applicant that loses its patent suit is not eligible
for exclusivity, generic drug products may be able to enter the market
prior to expiration of the innovator's patent in several situations.
Market entry can occur if a subsequent ANDA applicant with a paragraph
IV certification prevails in its patent litigation, settles its patent
litigation, or is not sued as a result of the paragraph IV
certification.
The agency recognizes that this approach requires a new
interpretation of Sec. 314.94(a)(12)(viii)(A). That provision states
that when an applicant changes its paragraph certification from a IV to
a III after losing a patent infringement suit, ``the application will
no longer be considered to be one containing a [paragraph IV]
certification.'' Previously the agency had described that regulatory
provision as fulfilling only the ``housekeeping'' function of informing
the agency that the ANDA would not be approved until the patent
expired, and explained that the provision had no implications for
exclusivity eligibility. That interpretation was consistent with the
entire regulatory scheme that was built around the successful defense
requirement.
The removal of the successful defense requirement has resulted in
a fragmented regulatory framework, forcing the agency to modify not
only the regulatory language in certain parts but also, as in this
case, its interpretation of language that is to remain. Under the new
proposed approach, when a first applicant loses its patent litigation
and changes its certification from a paragraph IV to a paragraph III
under Sec. 314.94(a)(12)(viii)(A), it would not be eligible for
exclusivity. In addition, a voluntary change in patent certification
from a IV to a III as described in Sec. 314.94(a)(12)(viii) also would
have the effect of rendering the first ANDA applicant ineligible for
180-day exclusivity. After the first applicant changed its patent
certification to a III, no applicant would be eligible for exclusivity,
and the agency could approve eligible subsequent applications.
4. Shared Exclusivity for Multiple ANDA's Filed on the Same Day
The agency is proposing that all applicants for ANDA's containing
paragraph IV certifications for a particular drug product that are
received on the same day will be eligible for exclusivity if no other
ANDA with a paragraph IV certification for the drug product has been
previously filed. All such applicants would be considered first
applicants. Submission of ANDA's on the same day is most likely to
occur when an innovator's 5-year exclusivity barring FDA acceptance of
ANDA's expires, or when ANDA applicants wish to challenge a patent
listed for an innovator product with 5 years of exclusivity and file
ANDA's at the end of 4 years of exclusivity (see section
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505(j)(5)(D)(ii) of the act). The applicable periods would be 5 1/2
years or 4 1/2 years when pediatric exclusivity has been granted (see
section 505A(a) of the act (21 U.S.C. 355a(a)).
Under this proposal, the exclusivity period would be shared by all
first applicants. Once the exclusivity period begins, it would run for
all first applicants, protecting the group of first applicants from
competition from later applicants during the 180-day period. The
application of the triggering period, discussed in section II.B.1 of
this document, would remain essentially the same, with a slight
modification. After a triggering event (described in section II.B of
this document) occurred, all eligible first applicants could be
approved and would be eligible to share the 180-day exclusivity. Once
the 180 days of exclusivity has run following the first triggering
event, any ANDA that was not among the group of first applicants also
would be eligible for final approval.
The agency believes the statutory language supports this approach,
which would protect the incentive created by Congress for ANDA
applicants to challenge patents. Further, this approach is preferable
to alternative approaches. One alternative approach, which the agency
does not propose because it does not preserve the incentive to
challenge patents, would be for the agency to determine that no ANDA
applicant is eligible for 180-day exclusivity if, on the same day, the
agency receives more than one ANDA with a paragraph IV certification
for the same drug product and no other ANDA with a paragraph IV
certification for the drug product has been previously filed.
Another option is for the agency to attempt to determine which
application it received first on the same day, an inquiry that is
impractical and may result in an arbitrary ordering of applications. It
may not be possible for the agency to determine which application was
received first. If, for example, the agency received more than one
eligible application in the same mail delivery on a particular day, it
would be impossible to determine which application was received first.
If applications were received by various means throughout the day, when
the applications in the pile were retrieved to date-and time-stamp, the
application that the agency received first might be stamped last.
Although theoretically this particular problem could be avoided by
stamping each document at the time of receipt, this solution is
impractical given agency workload and resource constraints.
5. Patent Expiration and 180-Day Exclusivity
The agency is clarifying that once the patent for which the first
applicant filed a paragraph IV certification expires, the first
applicant is no longer eligible for exclusivity. When the first
applicant is no longer eligible for exclusivity, FDA may approve all
otherwise eligible ANDA's. FDA regulations at Sec. 314.94(a)(12)(viii)
currently provide that exclusivity cannot extend beyond the term of the
patent.
B. The Results of the Patent Challenge
In general, once an ANDA applicant has submitted a paragraph IV
certification and notified the NDA holder and patent owner of the
patent challenge under Sec. 314.95 (21 CFR 314.95), a number of
outcomes are possible including: (1) The NDA holder or patent owner may
sue the ANDA applicant within the 45-day period established by statute
(section 505(j)(5)(B)(iii) of the act) and that suit may be litigated
to final judgment, (2) the parties may reach a settlement either before
or after a patent infringement lawsuit is filed, or (3) the NDA holder
and patent owner may refrain from filing a patent infringement suit.
Which of these events occurs will depend on many factors, including
market considerations and the relative strength of the patent claims.
However, in each of these cases, there is the potential for a
substantial delay in the entry of generic drug products into the
market. The agency is proposing a relatively simple approach to
limiting this delay, one that applies generally to all of the outcomes
described previously.
Under the current 180-day exclusivity approach, delays in the
approval of competitive generic drug products are the result of delays
in the occurrence of one of the two events (triggering events) that
will trigger the beginning of the 180-day exclusivity period--either
the first commercial marketing of the first applicant's product, or a
decision of a court holding the patent invalid, not infringed, or
unenforceable, whichever is earlier. The courts in the Mova and Purepac
decisions suggested that, to prevent unreasonable delay in the final
approval of subsequent generic drug applications, FDA could require
that a first ANDA applicant bring its product to market--and thus begin
the running of exclusivity--within a prescribed time period. The agency
believes that such a requirement is appropriate.
1. Triggering Period
The agency proposes to adopt the approach suggested by the courts
in the Mova and Purepac decisions and set a time limit for the exercise
of exclusivity. The agency is proposing the use of a 180-day
``triggering period,'' during which there must either be a favorable
court decision regarding the patent or the first applicant must begin
commercial marketing of its product. If neither of these events occur
during the triggering period, the first applicant will lose its
eligibility for exclusivity and subsequent ANDA's will be eligible for
immediate approval.
The term ``triggering period'' is used throughout this proposed
rule to refer to the 180-day period described previously; this is
distinct from the 180-day exclusivity period (see section II.B.4 of
this document) that may follow the triggering period. The term
``trigger'' as used throughout this proposed rule refers to the two
statutory conditions, one of which must be met, for exclusivity to
begin (see section 505(j)(5)(B)(iv) of the act). Those conditions, as
discussed in sections I and II.B of this document, are: (1) A court
decision finding the patent to be invalid, unenforceable, or not
infringed by the ANDA product, and (2) first commercial marketing of
the ANDA product. The term ``triggering event'' in this proposed rule
refers to the occurrence of one of the two statutory triggers.
In most cases, the triggering period would begin to run on the day
a subsequent ANDA applicant with a paragraph IV certification receives
a tentative approval stating that but for the first applicant's
exclusivity, the subsequent ANDA would receive final approval. In three
instances the triggering period would not begin to run on the date of
the tentative approval.
First, if the first applicant was sued for patent infringement as
a result of its paragraph IV certification and the litigation is
ongoing, the triggering period would not begin until expiration of the
30-month stay of ANDA approval (see section II.B.3 of this document).
Similarly, if a court issued a preliminary injunction prohibiting the
first applicant from commercially marketing its drug product, the
triggering period would not begin until the injunction expired.
Finally, the triggering period would not begin until expiration of the
statutorily described time period corresponding with any existing
exclusivity periods for the listed drug (see sections 505(j)(5)(D)(ii)
and 505A(a) of the act).
To determine how a triggering period would work, the agency
reviewed its experience with the 180-day exclusivity provision. In the
past, delays in obtaining a court decision, or delays in the first
applicant gaining approval for
[Page 42878]
its ANDA and/or bringing its product to market, have generally become a
matter of concern when at least one subsequent ANDA applicant has
obtained a tentative approval and the only barrier to final approval is
the first applicant's eligibility for 180 days of exclusivity. Every
day after the tentative approval during which the subsequent applicant
can not market its product represents a lost opportunity both for the
subsequent applicant and the consumer. The subsequent applicant can not
benefit from having submitted an ANDA that meets the requirements of
section 505(j) of the act, and the consumer does not have access to one
or more lower cost generic products.
Where the first ANDA applicant is eligible for exclusivity and
only that eligibility is blocking final approval of a subsequent ANDA,
it is appropriate to begin the triggering period on the day that a
subsequent applicant has received tentative approval for its ANDA. This
is the first day that the absence of a generic drug product from the
market is directly linked to the first applicant's eligibility for
exclusivity.
a. Length of triggering period. The agency is proposing that the
triggering period be 180 days. As described previously, the 180-day
period would follow one of the following: (1) The tentative approval of
a subsequent ANDA with a paragraph IV certification for the same drug
product, (2) expiration of a 30-month stay of ANDA approval due to
patent litigation, (3) expiration of a preliminary injunction
prohibiting marketing of an ANDA product, or (4) expiration of the
statutorily described exclusivity periods for the listed drug.
Once the triggering period begins, the ANDA applicant eligible for
exclusivity would have 180 days to trigger its exclusivity. This may be
done by beginning commercial marketing of its drug product or obtaining
a favorable court decision (in its own or other litigation regarding
the same patent). Once triggered, the ANDA applicant's exclusivity
would then run for 180 days. If, within the 180-day triggering period,
the beginning of exclusivity was not triggered, the first applicant
would no longer be eligible for exclusivity and the agency could
approve subsequent ANDA's at the end of the triggering period.
It is possible that there could be no generic drug product
marketed during the triggering period if the first applicant does not
begin commercial marketing of its product. In this case, at least one
generic drug product--the product that had received the tentative
approval--would receive final approval upon expiration of the
triggering period and could begin marketing.
b. Basis for length of triggering period. The 180-day length of
the triggering period is derived from the statutory provision governing
180 days of exclusivity. This provision quite clearly allows (and
Congress, therefore, presumably contemplated) the possibility of a 180-
day period during which there is no generic drug product on the market.
This would occur when the running of the 180-day period of exclusivity
has begun with a court decision finding the patent invalid,
unenforceable, or not infringed, but the applicant that has the
exclusivity does not begin marketing its product because it is not
approved or for another reason.
There is no statutory requirement that the running of the
exclusivity triggered by the court decision described in section
505(j)(5)(B)(iv)(II) of the act be accompanied by the commercial
availability of the generic drug product. Even if no generic drug
product is being marketed, the statute prohibits the agency from
approving another ANDA until the 180-day exclusivity period has
elapsed. After that period, however, the statute permits the approval
of any otherwise eligible ANDA, even if the first applicant never
marketed its product. It is therefore reasonable to assume that
Congress thought that a 180-day period during which no generic drug
product is marketed was acceptable.
At the same time, there is no indication that Congress would
countenance an indefinite delay in the marketing of low cost generic
drug products once the legal barriers to their approval have been
removed. To the contrary, such a scenario directly conflicts with the
goals of the Hatch-Waxman Amendments. Therefore, the agency is
proposing a 180-day triggering period during which a triggering event
must occur to commence the eligible ANDA applicant's period of
exclusivity.
The agency recognizes that in very rare cases there could be a
time period longer than 180 days during which no generic drug product
is available. This may happen if, for example, a court decision
triggering the exclusivity period is issued at the end of the 180-day
triggering period, and the first applicant does not market its product
or waive its right to exclusivity during the resulting 180-day
exclusivity period. In the extreme case, this scenario could result in
the inability of a subsequent ANDA applicant to market its product for
a 360-day period (180-day triggering period plus 180-day exclusivity
period) after its tentative approval.
The agency believes, however, that a first applicant that is
unable to market its own product at the time a subsequent ANDA
applicant receives a tentative approval would ordinarily waive its
exclusivity (see section II.H of this document). This would permit
final approval of the subsequent ANDA. Moreover, in contrast to the
current regulatory structure, under which generic drugs may face almost
insurmountable barriers to market entry, the proposed approach provides
for much earlier market entry. Under the triggering period approach,
there is certainty that one or more generic drug products will be able
to enter the market after the 12-month period described previously, and
in most cases, much more promptly.
2. Alternative Length of Triggering Period in Specific Cases
The agency is also specifically seeking comment on an alternative
approach. The agency is considering shortening the length of the
triggering period to 60 days in some cases. The 60-day triggering
period would apply to an ANDA applicant that already has received final
approval at the time of the tentative approval of a subsequent ANDA,
and either has not been sued as a result of its patent certification,
or has been sued and the case was settled or dismissed without a
decision on the merits of the patent claim. The possible 60-day
triggering period in this case is based upon limited data from a July
1998 Congressional Budget Office study entitled ``How Increased
Competition from Generic Drugs Has Affected Prices and Returns in the
Pharmaceutical Industry,'' and a March 1999 internal FDA study
(available in Docket No. 85N-0214).
FDA does not consider this 60-day timeframe to be burdensome to
ANDA applicants because the data suggest that, since passage of the
Hatch-Waxman Amendments, first generic drug products generally reach
the market promptly after approval. Specifically, the studies indicate
that generic products are routinely marketed within a 2-month period
following ANDA approval.
3. Relationship of Triggering Period to 30-Month Stay
When the first applicant to submit an ANDA with a paragraph IV
certification is sued by the NDA holder or patent owner, it would be
unreasonable to start the triggering period with the tentative approval
of a subsequent applicant if the tentative approval was granted
relatively soon after the first applicant's patent litigation began.
The first
[Page 42879]
applicant could find it difficult or impossible to either obtain a
final court decision in a patent infringement case or begin commercial
marketing of its product within 180 days of the subsequent applicant's
tentative approval. The first applicant who is sued for patent
infringement is, however, provided with a statutory time period, as
discussed in the following paragraphs of this document, during which to
resolve the patent litigation before the triggering period will begin.
The generic drug product approval process described in the Hatch-
Waxman Amendments establishes a 30-month period for resolution of
patent litigation resulting from a patent certification. (See section
505(j)(B)(5)(iii) of the act.) During this period, FDA may not approve
the ANDA that is the subject of the litigation. After the 30-month
period, barring a court order, FDA may grant final approval to the ANDA
that is the subject of the litigation. Therefore, the agency is
proposing that when the first ANDA applicant is sued as a result of its
paragraph IV certification and the patent litigation is ongoing, the
triggering period would not begin at least until the 30-month period
has lapsed. After the 30 months has passed, the triggering period would
begin when a subsequent applicant received a tentative approval. If a
subsequent applicant received a tentative approval during the 30-month
stay, the 180-day triggering period would begin on the day the 30-month
period expired. The first applicant then would have to begin marketing
its product, or obtain a final court decision, during the 180-day
triggering period to obtain its exclusivity.
4. Distinction Between Triggering Period and Exclusivity Period
Although the triggering period would not begin until expiration of
the first applicant's 30-month stay, it is still possible for the
exclusivity period to begin during that 30-month period. If, for
example, a court issues a favorable final decision in litigation over a
subsequent ANDA's patent challenge during the 30-month stay of the
first applicant, the exclusivity period for the first applicant would
start on the date of that decision.
In proposing this interpretation of the statute--that the
triggering period does not begin until expiration of the 30-month
stay--the agency is aware that in some cases patent litigation
resulting from a paragraph IV certification does not result in a final
court decision within 30 months. The agency is also aware that parties
to patent litigation in some cases may not have strong incentives to
resolve the litigation as promptly as possible. This proposed approach
may alter those incentives and encourage swifter resolution of
litigation.
Although the agency is proposing that the general rule will be
that the first ANDA applicant has 30 months in which to resolve its
patent litigation before the triggering period may start, the agency
also would allow for a reasonable extension of this period under
certain circumstances. This would occur when the court hearing the
patent infringement case issues a preliminary injunction prohibiting
the marketing of the drug product that is the subject of the challenged
ANDA until there is a court decision finding the patent invalid, not
infringed, or unenforceable. The issuance of such an order is
contemplated in section 505(j)(5)(B)(iii)(III) of the act.
FDA expects that an injunction would issue upon a finding that it
is warranted by the facts and law in the particular case, and that the
parties have reasonably cooperated in expediting the action. In the
event the court issues an injunction prohibiting the marketing of the
drug product under the first ANDA, the triggering period would not
begin at least until the injunction expires or is lifted by the court.
If the 30-month stay is shortened or lengthened by the court because
either party has failed to reasonably cooperate, the triggering period
will begin with reference to the date ordered by the court.
While the triggering and exclusivity periods are related, they are
also distinct. The exclusivity period starts with either first
commercial marketing of the first applicant's generic drug product or
with a court decision finding the patent invalid, unenforceable, or not
infringed. The triggering period, in contrast, would be tied to the
date of a subsequent ANDA's tentative approval, and in some cases to
the completion of a 30-month stay. The triggering period may not result
in an exclusivity period for the first applicant if no triggering event
occurs during the triggering period. In contrast, an exclusivity period
may begin independent of any triggering period, if no subsequent ANDA
is given a tentative approval to begin the triggering period.
Alternatively, the exclusivity period could begin during the triggering
period.
C. A Decision of a Court
FDA's current regulations state that for purposes of applying the
ANDA approval and exclusivity provisions of the statute, ``the court''
is the court that enters final judgment from which no appeal can be or
has been taken (district or appellate court) (Sec. 314.107(e)). This
interpretation was challenged in TorPharm v. Shalala, No. 97-1925, U.S.
Dist. LEXIS 21983 (D.D.C. Sep. 15, 1997); appeal withdrawn and
remanded, 1998 U.S. App. LEXIS 4681 (D.C. Cir. Feb. 5, 1998); vacated
No. 97-1925 (D.D.C. April 9, 1998).
Plaintiffs in that case maintained that ``the court'' meant the
district court and that final approval could be granted and exclusivity
begin running upon the entry of a district court decision finding a
patent invalid, unenforceable, or not infringed. Because the district
court decision in TorPharm agreeing with plaintiffs was vacated (set
aside or rendered void), the agency will not address it further in this
proposed rule. FDA instead proposes to maintain its current
interpretation. The agency believes this interpretation is most
consistent with the statutory scheme.
The agency is also proposing that the decision of a court that may
begin the running of exclusivity is the final decision of a court
hearing any litigation involving the patent at issue. Current
Sec. 314.107(c)(1)(ii) states that one of the two exclusivity triggers
is the ``date of the decision of the court holding the relevant patent
invalid, unenforceable, or not infringed.'' FDA proposes to modify
Sec. 314.107(c)(1)(ii) to read the ``date of the decision of a court *
* *.''
This modification is consistent with the statutory language in
section 505(j)(5)(B)(iv) of the act. The agency is clarifying that for
purposes of both the modified regulatory provision and section
505(j)(5)(B)(iv)(II) of the act, `` a decision of a court in an action
described in [section 505(j)(5)(B)(iii) of the act] holding the patent
which is the subject of the certification to be invalid or not
infringed'' can be a decision of any court hearing a patent
infringement or declaratory judgment case involving the patent at
issue. The decision triggering exclusivity need not come from the court
hearing the patent litigation involving the first ANDA. (See also
Granutec, Inc. v. Shalala, 1998 U.S. App. LEXIS 6685, Nos. 97-1873, 97-
1874, slip op. at 14-18 (4th Cir. Apr. 3, 1998) (unpublished opinion
discussing the agency's interpretation of ``a'' court decision).)
The use of different language in subsections (I) and (II) of
section 505(j)(5)(B)(iv) of the act supports this interpretation. In
subsection (I), the statutory trigger is specifically tied to the date
that ``the applicant under the previous application'' gives notice that
its product is being commercially marketed. In contrast, the trigger in
subsection (II) relates only to the date of ``a decision of a court''
in patent
[Page 42880]
litigation described in section 505(j)(5)(B)(iii) of the act.
The language of the first trigger refers to a particular
applicant. In contrast, the language of the second trigger does not
attach importance to the specific applicant. It instead refers
generally to a type of court decision. In the absence of specific,
controlling language to the contrary, the agency continues to interpret
``a decision of a court'' in subsection (II) to mean a decision of any
court hearing a patent infringement or declaratory judgment case
involving the patent at issue.
This interpretation of the court decision trigger encourages
prompt litigation of patent issues by all ANDA applicants, and under
some circumstances could result in a corresponding earlier start of the
180-day exclusivity period. This could result in situations where,
although the first applicant was sued first, its litigation is not
completed first, and its exclusivity begins to run while it is still in
litigation.
The agency is aware that in some instances the first applicant may
be unable or unwilling to market its product upon satisfaction of the
court decision trigger involving another applicant. For example, the
first applicant's own patent litigation may be ongoing and its ANDA may
have been finally approved at the completion of a 30-month stay under
section 505(j)(5)(B)(iii) of the act. However, the applicant may be
unwilling to assume the risk of liability for damages by marketing
before patent expiration or a court decision finding the applicant's
product does not infringe the patent. The agency notes, however, that
in such a situation the first applicant may obtain a financial benefit
from the award of exclusivity by waiving its exclusivity with respect
to a subsequent applicant (see section II.H of this document).
A contrary interpretation that required the court decision be a
decision in patent litigation against the first applicant could, under
some circumstances, delay entry into the market of drug products by all
ANDA applicants. For example, the patent owner or NDA holder may elect
not to sue the first ANDA applicant, in which case the court decision
trigger would never apply to that applicant's patent challenge, and
exclusivity could therefore begin running only with the first
applicant's commencement of commercial marketing. If the first
applicant's marketing is delayed because it cannot obtain final
approval of its ANDA or, having obtained final approval, the first
applicant either cannot or will not bring its product to market, there
could be a substantial delay in marketing of any generic drug product.
This delay would result even if a subsequent applicant is successful in
challenging the patent, either in a lawsuit brought by the innovator or
in a declaratory judgment action.
As described in section II.B.3 of this document, under the
approach proposed in this rule, the triggering period would not apply
when a subsequent applicant obtains a court decision that begins the
period of exclusivity. In such cases the first applicant's exclusivity
would begin to run on the date of the final court decision in the
subsequent applicant's litigation. The triggering period applies only
when a subsequent applicant has obtained a tentative approval where
final approval is blocked by the first ANDA applicant's eligibility for
exclusivity. Under these circumstances, the subsequent applicant would
have been eligible for final approval because either: (1) It wasn't
sued by the innovator, (2) it was sued but the litigation was settled
or dismissed without a favorable court decision, or (3) it was sued and
the 30-month stay had elapsed.
D. Settlement Agreements
Settlement agreements are not addressed in current regulations but
were discussed in the preamble to the proposed rule of July 10, 1989
(54 FR 28872). In the preamble, FDA explained that the ``date of a
decision of a court holding the patent invalid or not infringed'' in
Sec. 314.107(c)(1)(ii) is the ``date of a final decision of a court
from which no appeal can or has been taken, or the date of a settlement
order or consent decree signed by a Federal judge, which enters final
judgment and includes a finding that the patent is invalid or not
infringed'' (54 FR 28872 at 28895 (emphasis added)).
FDA is proposing regulations in part to address the most
challenging issue with respect to 180-day exclusivity: settlement and
licensing agreements between innovator and generic drug companies.
These agreements potentially can be made at any stage in the ANDA
process, including before an ANDA is filed, after ANDA filing but
during the 45-day period within which a patent infringement suit must
be brought, after the 45-day period expires but before the first
applicant commences commercial marketing, or during patent litigation.
The proposed regulations, by applying the triggering period, would
reduce the delay in market entry of generic drug products that can
result from such agreements. Although agreements may still be made,
their effect on generic competition would be limited by the requirement
that, within 180 days of the first tentative approval of a subsequent
ANDA, the first ANDA applicant begin commercially marketing its own
product or obtain a favorable court decision.
The agency has seriously considered the suggestions made in
comments on the November 1998 interim rule (Docket No. 85N-0214) and
the June 1998 guidance (Docket No. 98D-0481). Comments suggested that
the agency require that it be promptly notified of a settlement or
other agreement that either alters the adversarial relationship between
the first ANDA applicant and the patent owner or NDA holder, or from
which the first ANDA applicant derives an economic benefit. A number of
comments suggested that the agency consider such arrangements as either
rendering the first applicant ineligible for exclusivity, or triggering
the running of the exclusivity period on the theory that such
agreements are akin to commercial marketing.
The agency, however, believes the ``triggering period'' approach
is preferable. This approach would not require FDA to inquire into the
business arrangements between pharmaceutical companies, it would not
require the submission of any additional information by the ANDA
applicant, and it is a clear and definite approach that relies upon
publicly available information, i.e., the issuing of a tentative
approval letter.
E. Prompt Approval and Marketing
Current Sec. 314.107(c)(3) requires a first applicant to actively
pursue approval of its ANDA, or the agency may immediately approve any
subsequent ANDA eligible for final approval. The agency proposes to
delete this requirement because it is unnecessary under the regulatory
scheme described in this proposed rule. The new scheme would provide a
specific, clearly defined 180-day triggering period, during which the
first ANDA applicant must either: (1) Commercially market its drug
product, or (2) obtain a favorable court decision regarding the patent.
Given this approach, the issue of whether an ANDA applicant
actively pursues approval of its product would not be relevant. The
proposed approach, therefore, also has the advantage of eliminating the
requirement for the agency to scrutinize applicants' progress and
responses during the ANDA approval process, as well as to maintain a
standard for active pursuit of approval.
[Page 42881]
F. Declaratory Judgment
Current regulations implementing the Hatch-Waxman Amendments do
not address the application of section 505(j)(5)(B)(iv) of the act to
declaratory judgment actions as referred to in section
505(j)(5)(B)(iii) of the act. These proposed regulations address the
issue of whether a ruling in a declaratory judgment action brought by
the ANDA applicant is a ``decision of a court in [an] action described
in [section 505(j)(5)(B)(iii)] holding the patent which is the subject
of the certification to be invalid or not infringed'' (section
505(j)(5)(B)(iv) of the act).
FDA proposes in Sec. 314.107(f)(2)(ii) that a ``decision of a
court'' should include a nonappealable decision of a court in a
declaratory judgment action finding the patent invalid, unenforceable,
or not infringed.
The agency has considered the suggestion that a dismissal of a
declaratory judgment action under certain circumstances be treated as a
decision of a court and trigger the 180-day exclusivity period under
section 505(j)(5)(B)(iv)(II) of the act. Specifically, the agency
considered whether dismissal for lack of jurisdiction on the grounds
that no ``case or controversy'' exists because, for example, a party
has no reasonable apprehension of a patent infringement action, could
be considered a triggering court decision. The agency has rejected this
interpretation of the statute. It places a burden on the agency to
inquire into the facts underlying the dismissal of a case, and would be
unnecessary under the ``triggering period'' approach. With the
application of the 180-day triggering period, a subsequent applicant
who is not sued for patent infringement and obtains a tentative
approval with just the first applicant's eligibility for exclusivity
serving as a bar to final approval will not be blocked indefinitely
from approval.
G. Effect of Dismissal of Litigation
Proposed Sec. 314.107(g) states that the 30-month stay of ANDA
approval would not apply once paragraph IV related patent litigation
involving the ANDA applicant and patent owner or NDA holder is
dismissed without a court decision on the merits of the patent claim,
regardless of whether such dismissal is with or without prejudice
(whether the claims may be relitigated). The 30-month period, described
in section 505(j)(5)(B)(iii) of the act and Sec. 314.107(b)(3)(A) of
the regulations, is intended to give innovator companies assurance that
generic manufacturers would not file ANDA's with paragraph IV
certifications and then immediately market the approved generic drug
product. (See 130 Congressional Record H9118 (daily ed. Sept. 6, 1984)
(statement of Rep. Waxman).)
The legislative history of the amendments makes clear that the 30-
month stay of approval was intended to correspond as closely as
possible with the expected duration of a patent infringement suit, and
to provide protection to innovator companies during that time. (See 130
Congressional Record S10504 (daily ed. Aug. 10, 1984) (statement of
Sen. Hatch). Those concerns are not implicated when the litigation is
dismissed either as a result of a settlement or licensing agreement, or
because the patent owner or NDA holder has determined not to pursue the
litigation. Once the litigation is settled, the application can be
approved immediately.
H. Waiver of 180-Day Exclusivity and Relinquishing Eligibility
Although current regulations do not address an ANDA applicant's
ability to waive its 180-day exclusivity to permit approval of the ANDA
of a subsequent applicant(s), the general issue of exclusivity waivers
was addressed in the preamble to the 1994 final rule with respect to
analogous provisions. There the agency stated that new drug exclusivity
under the Hatch-Waxman Amendments can be waived by the holder of the
exclusivity (59 FR 50338 at 50359).
Since publication of the 1994 regulations addressing 180-day
exclusivity, FDA has been asked to determine whether an applicant who
has obtained 180 days of exclusivity can waive such exclusivity to
permit approval during the exclusivity period of a subsequent ANDA, or
ANDA's, containing a paragraph IV certification. The agency has
determined that waiver of 180-day exclusivity, like waiver of new drug
exclusivity, is permitted under the act and at least one ANDA applicant
has successfully effected a waiver. That waiver was challenged
unsuccessfully in Boehringer Ingelheim Corp. v. Shalala, 993 F. Supp. 1
(D.D.C. 1997).
Proposed Sec. 314.107(e) would permit the ANDA applicant that has
obtained 180 days of exclusivity with the occurrence of a triggering
event under section 505(j)(5)(B)(iv)(I) or (j)(5)(B)(iv)(II) of the act
to notify FDA during the period of exclusivity that it will waive its
exclusivity in favor of a subsequent ANDA or ANDA's containing a
paragraph IV certification. After receiving such notification, the
agency may approve the eligible named ANDA or ANDA's as of the date(s)
identified in the notice. Waiver of exclusivity permits ANDA applicants
that have been awarded exclusivity, but are either unwilling or unable
to market their products, to nonetheless obtain a benefit from that
exclusivity. A waiver may be particularly appropriate, for instance,
when the first ANDA applicant is sued and, while its litigation is
ongoing, a favorable court decision is rendered in a case involving a
subsequent applicant. Exclusivity would be awarded to the first
applicant, with the 180-day period starting on the date of a final
court decision in the subsequent applicant's litigation. The first
applicant's ANDA may not be finally approved, however, and the
applicant could not market its product. Under these circumstances, the
first applicant may obtain a benefit by waiving its exclusivity period
in favor of a subsequent applicant.
It should be noted that an applicant may selectively waive its
exclusivity only after the 180-day exclusivity period has begun to run
with the occurrence of one of the triggering events described in
section 505(j)(5)(B)(iv) of the act and in the regulations. Before that
time, the first applicant is only eligible for exclusivity and might
not obtain exclusivity if, for example, it failed to trigger the
exclusivity before the expiration of the triggering period.
Prior to the occurrence of a triggering event, the first applicant
may relinquish its eligibility for exclusivity entirely, and by so
doing would permit the agency to approve immediately any subsequent
ANDA's that are eligible for approval. It may not, however, waive its
exclusivity in favor of a specific applicant(s).
I. Multiple Strength/Drug Product Exclusivity
The question of whether the agency will grant a separate period of
exclusivity for each strength of a drug product is not addressed in the
preambles to the 1989 proposed or 1994 final rules, or in current
regulations. A citizen petition (Docket No. 99P-0792) that pertains to
this issue was filed on March 31, 1999. The agency has determined that
each strength of a drug product can be independently eligible for
exclusivity. Applicants may be eligible for a separate exclusivity
period for each particular strength of the drug product in an ANDA when
each strength refers to a different listed drug.
FDA believes that this form of exclusivity is consistent with the
statutory framework and public policy. Under the Hatch-Waxman
Amendments, the agency requires that
[Page 42882]
an ANDA reference a particular listed drug product. Among other
requirements, an ANDA applicant must include in the ANDA ``information
to show that the route of administration, the dosage form, and the
strength of the new drug are the same as those of the listed drug * *
*'' (section 505(j)(2)(A)(iii) of the act, emphasis added). The agency,
therefore, has determined that each strength of a drug product is
itself a listed drug.
FDA's current regulations treat each strength of a drug product as
a separate listed drug. Section 314.92(a)(1) (21 CFR 314.92 (a)(1))
states that ANDA's are suitable for ``drug products that are the same
as a listed drug.'' The regulation further explains that ``the term
`same as' means identical in active ingredient(s), dosage form,
strength, route of administration, and conditions of use * * *.''
FDA recognizes that different strengths of the same drug product
in the same dosage form may be formulated differently for a variety of
reasons. Varying formulations of the different strengths may provide
separate and distinct bases for patent challenges. Consequently, the
result of patent infringement litigation related to one strength of a
particular drug product may not be applicable to another strength of
the same drug product, even for the same ANDA applicant.
When the agency grants exclusivity to an ANDA applicant under the
provisions of section 505(j)(5)(B)(iv) of the act, it may not grant
final approval to other ANDA applicants for a period of 180 days.
Exclusivity, therefore, affects the remaining applicants by essentially
imposing a block on their immediate entry into the market.
The agency's interpretation of the statute to render ANDA's
eligible for exclusivity for each particular strength of a drug product
would have two results. First, it would encourage applicants vying for
submission of the first application, and the concomitant reward of
exclusivity, to submit ANDA's that cover the greatest number of
strengths in an attempt to obtain maximum protection from other generic
competitors. Second, it would prevent an ANDA applicant for only one
strength of a drug product from blocking subsequent applicants with
other strengths of the drug product from entering the market. Thus,
FDA's interpretation would encourage prompt entry into the market of
the greatest number of strengths of a particular drug product.
FDA has also determined that when the submission of a new strength
of a drug is approved as a result of a suitability petition, the first
ANDA referring to the approved petition that contains a paragraph IV
certification to any patent for the listed drug referred to in the
petition under Sec. 314.93(d) will be eligible for exclusivity. The new
strength of the drug product may have an independent basis for
challenging the applicability of a listed patent and therefore should
be eligible for the incentive provided by exclusivity.
III. Proposed Implementation Plan
The agency proposes that any final rule based on this proposal
take effect 30 days after its publication in the Federal Register. The
agency proposes to apply the provisions of any final rule to ANDA's
pending as of the effective date and to ANDA's that are submitted after
that date.
IV. Environmental Impact
The agency has determined under 21 CFR 25.30(h) that this action
is of a type that does not individually or cumulatively have a
significant effect on the human environment. Therefore, neither an
environmental assessment nor an environmental impact statement is
required.
V. Analysis of Impacts
FDA has examined the impacts of the proposed rule under Executive
Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the
Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq.). Executive Order
12866 directs agencies to assess all costs and benefits of available
regulatory alternatives and, when regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity). Under the Regulatory
Flexibility Act, if a rule has a significant impact on a substantial
number of small entities, an agency must analyze regulatory options
that would minimize any significant impact of the rule on small
entities. Title II of the Unfunded Mandates Reform Act requires that
agencies prepare a written assessment and economic analysis of
anticipated costs and benefits before proposing any rule that may
result in an expenditure by State, local, and tribal governments, in
the aggregate, or by the private sector, of $100 million (adjusted
annually for inflation) in any one year.
The agency believes that this proposed rule is consistent with the
regulatory philosophy and principles set out in the Executive Order.
Because the proposed rule does not impose any mandates on State, local,
or tribal governments or the private sector, that will result in an
expenditure in any one year of $100 million or more, FDA is not
required to perform a cost/ benefit analysis according to the Unfunded
Mandates Reform Act. With respect to the Regulatory Flexibility Act,
because this proposed rule may have a significant economic effect on a
substantial number of small entities, the analysis set forth below
constitutes the agency's Initial Regulatory Flexibility Analysis.
Discussion of the expected aggregate costs of this proposed rule and
the anticipated impact of the rule on small entities is provided in the
analysis. FDA has not identified any other Federal rules that
duplicate, overlap, or conflict with the proposed rule.
A. Background
The Hatch-Waxman Amendments benefit consumers by bringing lower
priced generic versions of previously approved drugs to market, while
simultaneously promoting new drug innovation through the restoration of
patent life lost during regulatory proceedings. The award of a 180-day
period of market exclusivity for certain ANDA applicants with paragraph
IV certifications was designed to maintain this balance by rewarding
generic firms for their willingness to challenge unenforceable and
invalid innovator patents, or design noninfringing drug products.
Recently, however, this balance has been upset and generic competition
impeded, in part through the establishment of certain licensing
agreements or other commercial arrangements between generic and
innovator companies.
Under current regulatory provisions, the first generic applicant
to file a substantially complete ANDA with a paragraph IV certification
can delay generic competition by entering into certain commercial
arrangements with an innovator company. The result may be that,
notwithstanding the intent of the Hatch-Waxman Amendments, rewards are
directed to generic companies for hindering rather than speeding
generic competition. A necessary condition for such arrangements is
that the economic gains to the innovator from delaying generic
competition exceed the potential economic gains to the generic
applicant from 180 days of market exclusivity. Such instances are
becoming more frequent because a successful strategy to extend market
exclusivity can mean tens of millions of dollars in increased revenue
for an innovator firm. Under such circumstances, it can be mutually
beneficial for the innovator and the generic company that is awarded
180
[Page 42883]
days of generic exclusivity to enter into agreements that block generic
competition for extended periods. This delayed competition harms
consumers by slowing the introduction of lower priced products into the
market and thwarts the intent of the Hatch-Waxman Amendments.
FDA's proposal to establish a 180-day triggering period addresses
this problem in several ways. In most cases, the first generic
applicant with a paragraph IV certification would lose its claim to
180-day exclusivity if it withheld its drug product from the market, or
failed to obtain a favorable court decision, for more than 180 days
after the tentative approval of a subsequent generic applicant for the
same drug product. Also, a subsequent generic applicant could not be
blocked from marketing its drug product for longer than, at most, 1
year from when it received tentative approval (the 180-day triggering
period plus the 180-day exclusivity period). As a result, the potential
economic losses to consumers from the increased unavailability of lower
priced generic products would be reduced significantly.
Moreover, decreasing the length of time that these commercial
arrangements could block generic competition lessens the market
incentive for entering into such agreements. Limiting the period during
which an agreement between an innovator and the first generic ANDA
applicant with a paragraph IV certification could block generic
competition provides less incentive, and therefore makes it less
likely, that an innovator and a generic company would enter into such
an agreement. Consequently, consumers would benefit because commercial
arrangements to block generic competition would be not only less
damaging, but would be less likely to occur.
B. Affected Entities
FDA does not know the precise number of businesses, either large
or small, that engage in the types of business arrangements that would
be significantly affected by the proposed rule. According to standards
established by the Small Business Administration, a small
pharmaceutical manufacturer employs fewer than 750 employees. While the
innovator firms that are affected by the rule are likely to be large
businesses, some of the affected generic firms may be small businesses.
In 1997, 431 generic product approvals (including different product
strengths) were distributed among 96 pharmaceutical companies. The 64
applications that became first generic approvals for a specific brand
name drug, however, were submitted by only 30 firms. Moreover, the 14
first generic approvals that included a paragraph IV certification were
submitted by only 5 firms. Therefore, FDA estimates that up to five
generic firms and a similar number of innovator firms per year could be
financially harmed by the accelerated competition brought about by this
rule. Based on a sample of 150 generic firms, the agency could identify
fewer than 10 percent that employed over 750 employees. Thus, FDA
tentatively projects that approximately five small firms per year,
those with first generic approvals containing paragraph IV
certifications, could be adversely affected by the increased generic
competition. Because this estimate is uncertain, however, FDA invites
comments from firms that believe they would be affected by the proposed
rule.
C. Compliance Requirements and Costs
To comply with this rule, affected firms will need to learn the
new regulatory approach described in this proposed rule. The cost of
this proposed rule is difficult to estimate because the number of firms
affected is uncertain.
The agency expects, however, that many more firms would benefit
from this new approach than would be adversely affected. Because the
primary result of the rule would be to speed the start of the 180-day
exclusivity period, only those relatively few innovator and generic
firms that would profit from delayed competition would be
disadvantaged. In contrast, a substantial number of generic competitors
would benefit from the earlier sales revenues generated by the quicker
introduction of generic competition.
Any professional skills necessary for implementation of this
proposal should already exist within the firms and should not need to
be newly acquired.
D. Minimizing the Impact on Small Entities
FDA has considered alternatives to regulating 180-day generic drug
marketing exclusivity that may have a lesser or different impact on
small businesses. Specifically, the agency considered continuing to
regulate directly from the statute as it has done since June 1, 1998,
when the D.C. District Court enjoined FDA from enforcing its
``successful defense'' regulation. The agency also considered proposing
several modifications to the existing regulations to limit the ability
of innovator and generic drug companies to enter into agreements that
could thwart congressional intent to facilitate prompt entry of generic
drugs into the market.
The agency considered retaining its current regulations and
addressing new regulatory issues by reference directly to the statute.
Because of the significant disadvantages associated with this
alternative, the agency has rejected it. This alternative would create
uncertainty in the generic drug manufacturing industry because the
agency anticipates it may take years to provide sufficient guidance
while addressing each scenario on an individual basis.
Regulating from the statute on a case-by-case basis also could
result in significant delays in entry of generic drug products into the
market, because it could limit the means for FDA to prevent such
delays. For example, in cases where the first ANDA applicant with a
paragraph IV certification was sued by the patent owner or NDA holder,
the ANDA applicant and the patent owner/NDA holder could enter into an
agreement that resulted in delayed resolution of the patent litigation.
If the patent owner/NDA holder did not sue subsequent applicants, there
would not be another court decision to act as an exclusivity trigger.
The first applicant might not get a court decision for a long time and
also might not market its product. Under these circumstances, no
triggering events would occur and the first ANDA would block entry of
subsequent ANDA applicants into the market.
The same blocking effect could occur even if the patent owner/NDA
holder chose not to sue the first applicant with the paragraph IV
certification, but instead entered into an agreement under which the
first applicant would not market its product and trigger exclusivity.
If the patent owner/NDA holder did not sue subsequent applicants, there
also would not be a possibility of a favorable court decision to start
the exclusivity period running.
The second alternative, proposing several regulatory
modifications, was also rejected by the agency. Satisfactorily
accomplishing the goal of promoting prompt entry of generic drug
products into the market by inhibiting entry barriers would require
many changes to the regulations. Additionally, it would impose a
significant paperwork burden on applicants not present in the proposed
rule.
The regulatory modifications would include provisions as follows:
(1) An ANDA applicant would be required to notify the agency of a
settlement agreement with a patent owner/NDA holder and whether it
permitted immediate marketing of the drug
[Page 42884]
product; (2) an ANDA applicant would be required to market its drug
product within 60 days of final approval or the agency would determine
the exclusivity period commenced on the date of final approval; (3) the
agency would determine that if the first applicant entered into an
agreement with the patent owner/NDA holder under which it received a
commercial benefit, the applicant had commercially marketed its drug
product; and (4) if an ANDA applicant brought a declaratory judgment
action against the patent owner/NDA holder that was dismissed for lack
or case or controversy, the agency would determine that the court
decision exclusivity trigger was satisfied.
These proposed regulatory modifications all have the advantage of
limiting barriers to entry of generic drug products into the market by
permitting earlier satisfaction of the exclusivity triggers in some
cases. However, they also are associated with significant
disadvantages. This alternative would impose a substantial paperwork
burden on ANDA applicants by requiring them to notify the agency of
settlements and submit documents relevant to settlement and declaratory
judgment actions. Additionally, the approach would require the agency
to collect and assess paperwork associated with financial agreements
between an ANDA applicant and patent owner/NDA holder to determine if
the applicant received a commercial benefit.
VI. Paperwork Reduction Act of 1995
This proposed rule contains information collection provisions that
are subject to review by the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). A
description of the provisions is given below with an estimate of the
annual reporting burden. Included in the estimate is the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing each
collection of information.
FDA invites comments on: (1) Whether the proposed collection of
information is necessary for proper performance of FDA's functions,
including whether the information will have practical utility; (2) the
accuracy of FDA's estimate of the burden of the proposed collection of
information, including the validity of the methodology and assumptions
used; (3) ways to enhance the quality, utility, and clarity of the
information to be collected; and (4) ways to minimize the burden of the
collection of information on respondents, including through the use of
automated collection techniques, when appropriate, and other forms of
information technology.
Title: 180-Day Generic Drug Exclusivity for Abbreviated New Drug
Applications.
Description: FDA regulations at Sec. 314.107 govern 180-day generic
drug exclusivity under the act. This proposed rule would revise
Sec. 314.107 to clarify and modify eligibility requirements for ANDA
applicants seeking 180-day marketing exclusivity for a generic drug
product. This new approach is necessary because of recent court
decisions rejecting the previous requirement that an ANDA applicant
successfully defend against a patent infringement lawsuit before it is
eligible for exclusivity.
Under proposed Sec. 314.107(e), if the first ANDA applicant for
which 180-day exclusivity has sarted wants to waive its exclusivity in
favor of a subsequent ANDA applicant, it must so notify the agency in
writing before the agency would approve the subsequent application. The
first applicant would be required to notify the agency as to which
subsequent applicant(s) it wants to waive the exclusivity in favor of
and the effective date(s) of the waiver.
The only new information collection requirement in this proposed
rule is in Sec. 314.107(e). The industry burden for all other
information collection requirements under these regulations has been
estimated by FDA and approved under OMB Control Numbers 0910-0001
(approval expires November 30, 2001) and 0910-0305 (approval expires
May 31, 2001).
Description of Respondents: Business or other for-profit
organizations.
In 1997, 431 generic drug product approvals (including different
product strengths) were distributed among 96 pharmaceutical companies.
The 64 applications that became first generic approvals for a specific
brand name drug, however, were submitted by only 30 firms. Moreover,
the 14 first generic approvals that included a paragraph IV
certification were submitted by only 5 firms. Based on this data
concerning the number of first generic approvals with paragraph IV
certifications for a particular drug product received by the agency in
1997, FDA estimates that approximately 14 waivers may be submitted
annually under proposed Sec. 314.70(e). FDA estimates that
approximately five applicants may submit such waivers and that it will
take approximately 2 hours to prepare and submit each waiver to FDA.
The following table indicates the estimated annual reporting burden for
the preparation of notices of exclusivity waivers.
Table 1.--Estimated Annual Reporting Burden1
----------------------------------------------------------------------------------------------------------------
Number of
21 CFR Section Number of Responses Per Total Annual Hours per Total Hours
Respondents Respondent Responses Response
----------------------------------------------------------------------------------------------------------------
314.107(e) 5 approx. 3 14 2 28
Total 28
----------------------------------------------------------------------------------------------------------------
\1\There are no capital costs associated with this collection of information.
In compliance with section 3507(d) of the Paperwork Reduction Act
of 1995 (44 U.S.C. 3507(d)), the agency has submitted a copy of this
proposed rule to OMB for its review and approval of these information
collections. Interested persons are requested to send comments
regarding this information collection, including suggestions for
reducing this burden, to the Office of Information and Regulatory
Affairs (address above). Submit written comments on the information
collection by September 7, 1999.
VII. Request for Comments
Interested persons may, on or before November 4, 1999, submit to
the Dockets Management Branch (address above) written comments on this
proposal. Two copies of any comments are to be submitted, except that
individuals may submit one copy. Comments are to be identified with the
docket number found in brackets in the heading of this document.
Received comments may be seen in the office above between 9 a.m. and 4
p.m., Monday through Friday.
[Page 42885]
VIII. Proposed Effective Date
FDA proposes that any final rule that may issue based on this
proposal become effective 30 days from publication of the final rule.
IX. References
The following references are on display in the Dockets Management
Branch (address above) and may be seen by interested persons between 9
a.m. and 4 p.m., Monday through Friday.
1. Congressional Budget Office, How Increased Competition from
Generic Drugs Has Affected Prices and Returns in the Pharmaceutical
Industry, 1998. Also available on the Congressional Budget Office
web site at: ``http://www.cbo.gov''.
2. FDA, Internal FDA Study, 1999.
List of Subjects in 21 CFR Part 314
Administrative practice and procedure, Confidential business
information, Drugs, Reporting and recordkeeping requirements.
Therefore, under the Federal Food, Drug, and Cosmetic Act and
under authority delegated to the Commissioner of Food and Drugs, it is
proposed that 21 CFR part 314 be amended as follows:
PART 314--APPLICATIONS FOR FDA APPROVAL TO MARKET A NEW DRUG
1. The authority citation for 21 CFR part 314 continues to read as
follows:
Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 371, 374,
379e.
2. In Sec. 314.107, redesignate paragraph (e) as paragraph (f) and
paragraph (f) as paragraph (h); revise paragraphs (a), (b) introductory
text, (b)(3)(i), (c), (d) and newly redesignated paragraphs (f) and
(h); and add new paragraphs (e) and (g) to read as follows:
Sec. 314.107 Effective date of approval of a 505(b)(2) application or
abbreviated new drug application under section 505(j) of the act.
(a) General. (1) A drug product may be introduced or delivered for
introduction into interstate commerce when approval of the application
or abbreviated application for the drug product becomes effective.
Except as provided in this section, approval of an application or
abbreviated application for a drug product becomes effective on the
date FDA issues an approval letter under Sec. 314.105 for the
application or abbreviated application.
(2) Definitions. The following definitions of terms apply to this
section:
180-day exclusivity means the 180-day period, under section
505(j)(5)(B)(iv) of the act, during which the first applicant is
protected from competition of subsequent applicants.
ANDA means an abbreviated application, as defined under Sec. 314.3.
Decision of a court refers to a final court decision finding the
patent to be invalid, unenforceable, or not infringed, resulting from
patent litigation brought against the first applicant or against any
subsequent applicant. This includes a final court decision in a
declaratory judgment action finding the patent to be invalid,
unenforceable, or not infringed.
Final court decision means a final judgment from which no appeal
can be or has been taken.
First applicant means the applicant submitting the first
substantially complete abbreviated new drug application (ANDA) for a
particular listed drug that contains ``a paragraph IV
certification''\1\ to any patent for the listed drug submitted to FDA
and published under section 505(b) of the act. The first applicant
includes all applicants filing substantially complete ANDA's with
paragraph IV certifications for the same drug product on the first day
that the agency receives applications with a paragraph IV certification
for the drug product.
---------------------------------------------------------------------------
\1\ As defined elsewhere in this section.
---------------------------------------------------------------------------
NDA means a new drug application approved under section 505(c) of
the act.
NDA holder means the applicant that owns an approved NDA, or its
representative or exclusive licensee. An NDA holder may also be the
exclusive licensee or representative of the patent owner.
Obtains a favorable court decision means either a first applicant
receives a final court decision in its patent litigation that the
patent is invalid, unenforceable, or not infringed; or in litigation of
a subsequent applicant involving the same patent there is a final court
decision that the patent is invalid, unenforceable, or not infringed.
Paragraph IV certification means a certification under section
505(j)(2)(A)(vii) of the act that a relevant patent is invalid,
unenforceable, or will not be infringed.
Patent owner means the owner of the patent which is the subject of
the paragraph IV certification, or the patent owner's representative or
exclusive licensee.
Subsequent applicant means any applicant filing a subsequent ANDA.
Subsequent ANDA means an ANDA that contains a paragraph IV
certification and refers to the same listed drug as the first
substantially complete ANDA containing a paragraph IV certification.
Substantially complete means an ANDA that contains information
required by section 505(j)(2)(A) of the act and Secs. 314.50 and
314.94, including the results of any required bioequivalence studies
or, if applicable, a request for a waiver of such studies, and a
complete statistical analysis of required bioequivalence studies
demonstrating that the drug product proposed in the ANDA meets the
appropriate bioequivalence standard.
A triggering event occurs when, during a triggering period, a first
applicant commercially markets its drug product or obtains a favorable
court decision.
Triggering period means a 180-day time period, usually beginning on
the date of the tentative approval of a subsequent ANDA, during which
180-day exclusivity may begin for the first applicant if a triggering
event occurs.
(b) Effect of patent on the listed drug. If approval of an ANDA
submitted under section 505(j) of the act or of a 505(b)(2) application
is granted, that approval will become effective in accordance with the
following:
* * * * *
(3) Disposition of patent litigation. (i)(A) Except as provided
in paragraphs (b)(3)(ii), (b)(3)(iii), and (b)(3)(iv) of this section,
if the applicant certifies under Sec. 314.50(i) or Sec. 314.94(a)(12)
that the relevant patent is invalid, unenforceable, or will not be
infringed, and the patent owner or NDA holder brings suit for patent
infringement within 45 days of receipt by the patent owner or NDA
holder of the notice of certification from the applicant under
Sec. 314.52 or Sec. 314.95, approval may be made effective 30 months
after the date of the receipt of the notice of certification by the
patent owner or NDA holder unless the court has extended or reduced the
period because of a failure of either the plaintiff or defendant to
cooperate reasonably in expediting the action; or
(B) If the patented drug product qualifies for 5 years of
exclusive marketing under section Sec. 314.108(b)(2) and the patent
owner or NDA holder brings suit for patent infringement during the 1-
year period beginning 4 years after the date the patented drug was
approved and within 45 days of receipt by the patent owner or NDA
holder of the notice of certification, the approval may be made
effective at the expiration of 7 1/2 years from the date of approval of
the application for the patented drug product.
* * * * *
(c) Exclusivity and triggering period for ANDAs. (1) Approval of
a subsequent ANDA will be made effective no sooner than 180 days from
[Page 42886]
whichever of the following dates occurs first:
(i) The date the first applicant first commences commercial
marketing of its drug product; or
(ii) The date of a decision of a court holding the relevant patent
invalid, unenforceable, or not infringed.
(2) For purposes of paragraph (c)(1) of this section, FDA will
delay the effective date of approval of a subsequent ANDA for up to 180
days from the date described in paragraph (c)(1) of this section only
when the first applicant is eligible for 180-day exclusivity. FDA will
not award 180-day exclusivity to any applicant if the first applicant
is no longer eligible to receive 180-day exclusivity.
(3) If the patent owner or NDA holder sues the first applicant
within 45 days of receipt of the first applicant's notice of paragraph
IV certification under Sec. 314.95, and the first applicant loses the
patent litigation, the first applicant must amend its certification in
accordance with Sec. 314.94(a)(12)(viii)(A) within 10 working days of
the court decision finding the patent infringed. The first applicant's
ANDA then no longer contains a paragraph IV certification and is not
eligible for 180-day exclusivity. Immediately after such an amendment,
FDA may approve eligible subsequent ANDA's.
(4) The first applicant must notify FDA of the date it commences
commercial marketing of its drug product. Commercial marketing
commences with the first date of introduction or delivery for
introduction into interstate commerce outside the control of the
manufacturer of a drug product, except for investigational use under
part 312 of this chapter, but does not include transfer of the drug
product for reasons other than sale within the control of the
manufacturer or application holder. If the first applicant does not
notify FDA within 10 working days of the date on which it began
commercial marketing of its drug product, FDA may regard the effective
date of approval as the date of the commencement of first commercial
marketing.
(5)(i) If, before the 180-day exclusivity period for the first
applicant has started, a subsequent applicant receives a tentative
approval letter for its drug product stating that the first applicant's
eligibility for 180-day exclusivity is the only obstacle to final
approval of the subsequent ANDA, the first applicant will receive the
180-day exclusivity for which it is eligible if any of the following
circumstances apply:
(A) The first applicant has received approval for its drug
product, and, within 180 days from the date of the subsequent
applicant's tentative approval, a triggering event occurs.
(B) The first applicant has not received approval for its drug
product; and the first applicant was not sued by the patent owner or
NDA holder for patent infringement; and, within 180 days from the date
of the subsequent applicant's tentative approval, a triggering event
occurs.
(C) The first applicant's drug product is not yet eligible for
approval because the first applicant was sued by the patent owner or
NDA holder for patent infringement; and, under paragraph (b)(3)(i)(A)
of this section, 30 months have not elapsed since the date the patent
owner or NDA holder received notice of the patent certification; and,
within 180 days after the expiration of the 30 months described in
paragraph (b)(3)(i)(A) of this section, a triggering event occurs.
(D) The first applicant's drug product is not yet eligible for
approval because the first applicant was sued by the patent owner or
NDA holder for patent infringement and a court granted a preliminary
injunction, as described in paragraph (b)(3)(iv) of this section,
prohibiting the first applicant from engaging in the commercial
manufacture or sale of the drug product; and, within 180 days from the
date the injunction expires, a triggering event occurs.
(E) The first applicant does not have a full approval for its drug
product; and the first applicant was sued by the patent owner or NDA
holder for patent infringement and is eligible for approval under
paragraph (b)(3) of this section; and, within 180 days from the date of
the subsequent applicant's tentative approval, a triggering event
occurs.
(ii) If the first applicant does not begin its period of 180-day
exclusivity by the end of the appropriate 180-day period (triggering
period) described in paragraphs (c)(5)(i)(A) through (c)(5)(i)(E) of
this section, FDA will approve otherwise eligible ANDA's for the drug
product.
(d) Delay due to Sec. 314.108 exclusivity. The agency will delay
the effective date of the approval of an ANDA or a 505(b)(2)
application if delay is required by the exclusivity provisions in
Sec. 314.108. When the effective date of an application is delayed
under both this section and Sec. 314.108, the effective date will be
the later of the two dates specified under this section and
Sec. 314.108.
(e) Waivers of exclusivity by abbreviated new drug applicants. For
purposes of paragraph (c)(1) of this section, a first applicant for
which the 180-day exclusivity has started with a triggering event may
waive its exclusivity to permit FDA to approve one or more subsequent
ANDA's during the 180-day exclusivity period. FDA may approve a
subsequent applicant's ANDA only after the first applicant notifies the
agency in writing that it is waiving its 180-day exclusivity with
respect to a particular subsequent applicant(s) or application(s), and
identifies the effective date(s) of the waiver.
(f) Court actions. (1) For purposes of establishing the effective
date of approval based on a court judgment, the following dates will be
deemed to be the date of the final court decision on the patent issues:
(i) If the district court enters a decision that the patent is
invalid, unenforceable, or not infringed, and the decision is not
appealed, the date on which the right to appeal lapses;
(ii) If the district court enters a decision that the patent is
invalid, unenforceable, or not infringed, and the decision is appealed,
the date of the first decision or order by a higher court holding or
affirming the decision of the district court that the patent is
invalid, unenforceable, or not infringed;
(iii) If the district court enters a decision that the patent is
infringed, and the decision is appealed, the date on which the district
court enters a judgment that the patent is invalid, unenforceable, or
not infringed under a mandate issued by a court of appeals; and
(iv) The date of a settlement order or consent decree signed by a
Federal judge that enters final judgment and includes a finding that
the patent is invalid, unenforceable, or not infringed.
(2) The applicant must submit a copy of the entry of the order or
judgment to the Office of Generic Drugs (HFD-600) or to the appropriate
division in the Office of Review Management (HFD-20) within 10 working
days of a final judgment. The patent owner and NDA holder may also
submit this information.
(g) Effect of dismissal of litigation on 30-month stay. If the
patent litigation between the ANDA applicant and the patent owner or
NDA holder described in paragraph (b)(3)(A) of this section is
dismissed without a court decision on the merits of the patent claim,
whether the dismissal is with or without prejudice, the agency may
immediately approve the ANDA that was the subject of the litigation, if
it is otherwise eligible for approval.
(h) Computation of 45-day time clock. (1) The 45-day clock
described in paragraph (b)(3) of this section begins
[Page 42887]
on the day after the date of receipt of the applicant's notice of
certification by the patent owner or NDA holder, whichever date is
later. When the 45th day falls on Saturday, Sunday, or a Federal
holiday, the 45th day will be the next day that is not a Saturday,
Sunday, or Federal holiday.
(2) The ANDA applicant or 505(b)(2) applicant must notify FDA
immediately in writing of the filing of any legal action for patent
infringement filed within 45 days of receipt of the notice of
certification. If FDA is not so notified by the ANDA or 505(b)(2)
applicant, or by the patent owner or NDA holder, before the expiration
of the 45-day time period or the completion of the agency's review of
the application, whichever occurs later, approval of the ANDA or the
505(b)(2) application will be made effective immediately upon
expiration of the 45 days or completion of the agency's review and
approval of the application, whichever date is later. The notification
to FDA of the legal action must include the information in paragraphs
(h)(2)(i) through (h)(2)(iv) of this section and be submitted according
to paragraph (h)(2)(v) of this section as follows:
(i) The ANDA or 505(b)(2) application number;
(ii) The name of the applicant;
(iii) The established name of the drug product or, if no
established name exists, the name(s) of the active ingredient(s), the
drug product's strength, and the dosage form;
(iv) A certification that an action for patent infringement,
identified by number, has been filed in an appropriate court on a
specified date; and
(v) An ANDA applicant must notify FDA's Office of Generic Drugs
(HFD-600). A 505(b)(2) applicant must notify the appropriate review
division in the Center for Drug Evaluation and Research or the Office
of Generic Drugs if it is reviewing the application. A patent owner or
NDA holder may also notify FDA of the filing of any legal action for
patent infringement.
(3) If the patent owner or NDA holder waives its opportunity to
file a legal action for patent infringement within 45 days of a receipt
of the notice of certification and the patent owner or NDA holder
submits to FDA a valid waiver before the 45 days elapse, approval of
the ANDA or the 505(b)(2) application will be made effective upon
completion of the agency's review and approval of the application. FDA
will only accept a waiver in the following form:
(Name of patent owner or NDA holder) has received notice from
(name of applicant) under (section 505(b)(3) or (j)(2)(B) of the
act) and does not intend to file an action for patent infringement
against (name of applicant) concerning the drug (name of drug)
before (date on which 45 days elapses). (Name of patent owner or NDA
holder) waives the opportunity provided by (section 505(c)(3)(C) or
(j)(B)(2)(iii) of the act) and does not object to FDA's approval of
(name of applicant)'s (505(b)(2) or ANDA) for (name of drug) with an
immediate effective date on or after the date of this letter.
Dated: July 29, 1999.
Margaret M. Dotzel,
Acting Associate Commissioner for Policy.
[FR Doc. 99-20353 Filed 8-5-99; 8:45 am]
BILLING CODE 4160-01-F
[Proposed Rules]
[Page 42873-42887]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06au99-27]
=======================================----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 314
[Docket No. 85N-0214]
180-Day Generic Drug Exclusivity for Abbreviated New Drug
Applications
AGENCY: Food and Drug Administration, HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is proposing to amend
its regulations governing 180-day generic drug exclusivity under the
Federal Food, Drug, and Cosmetic Act (the act). The proposed rule
clarifies existing eligibility requirements for abbreviated new drug
application (ANDA) sponsors and describes new eligibility requirements.
The proposed changes to the regulations are necessary because of recent
court decisions invalidating portions of FDA's current regulations. The
proposed regulations are intended to permit the prompt entry of generic
drug products into the market while maintaining the incentive of market
exclusivity for generic drug manufacturers.
DATES: Submit written comments by November 4, 1999. Submit written
comments on the information collection requirements by September 7,
1999. See section VIII of this document for the effective date of a
final rule based on this document.
ADDRESSES: Submit written comments to the Dockets Management Branch
(HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061,
Rockville, MD 20852. Submit written comments on the information
collection requirements to the Office of Information and Regulatory
Affairs, OMB, New Executive Office Bldg., 725 17th St. NW., rm. 10235,
Washington, DC 20503, Attn: Desk Officer for FDA.
FOR FURTHER INFORMATION CONTACT: Virginia G. Beakes, Center for Drug
Evaluation and Research (HFD-7), Food and Drug Administration, 5600
Fishers Lane, Rockville, MD 20857, 301-594-2041.
SUPPLEMENTARY INFORMATION:
I. Background
The Drug Price Competition and Patent Term Restoration Act of 1984
(Public Law 98-417) (the Hatch-Waxman Amendments) created section
505(j) of the act (21 U.S.C. 355(j)). Section 505(j) established the
ANDA approval process, which allows a generic version of a previously
approved innovator drug to be approved without submission of a full new
drug application (NDA). An ANDA refers to a previously approved new
drug application (the ``listed drug'') and relies upon the agency's
finding of safety and effectiveness for that drug product.
Innovator drug applicants must include in an NDA information about
patents for the drug product that is the subject of the NDA. FDA
publishes this patent information as part of the agency's publication
``Approved Drug
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Products with Therapeutic Equivalence Evaluations'' (the Orange Book).
Generic drug applicants must include in an ANDA a patent
certification described in section 505(j)(2)(A)(vii) of the act for
each patent listed in the Orange Book for the listed drug. The
applicant must certify one of the following for each patent: (1) that
no patent information on the drug product that is the subject of the
ANDA has been submitted to FDA; (2) that such patent has expired; (3)
the date on which such patent expires; or (4) that such patent is
invalid or will not be infringed by the manufacture, use, or sale of
the drug product for which the ANDA is submitted. These certifications
are known as ``paragraph I,'' ``paragraph II,'' ``paragraph III,'' and
``paragraph IV'' certifications, respectively.
Notice of a paragraph IV certification must be provided to each
owner of the patent (patent owner) that is the subject of the
certification and to the holder of the approved NDA (NDA holder) to
which the ANDA refers. The terms ``patent owner'' and ``NDA holder'' as
used throughout this proposed regulation mean either those parties or
their representatives, including exclusive licensees. The agency
recognizes that different terms are used throughout other sections of
the regulations for the idea expressed in section 505(j)(2)(B)(i)(I)
and (j)(2)(B)(i)(II) of the act that notice must be given to the
principals (patent owner and NDA holder) or their representatives. The
agency has added a definitions section to the proposed regulation to
clarify the meaning of these terms, as well as other terms, as used in
this section.
The submission of an ANDA for a drug product that is claimed in a
patent is an infringing act if the ANDA product is intended to be
marketed before expiration of the patent. (See 35 U.S.C. 271(e)(2).)
Therefore, the submission of an ANDA with a paragraph IV certification
may be the basis for patent infringement litigation.
Given this risk of patent infringement litigation, section
505(j)(5)(B)(iv)\1\ of the act provides an incentive for generic drug
applicants to file paragraph IV certifications challenging patents that
may be invalid, unenforceable, or not infringed by the product that is
the subject of the ANDA.
---------------------------------------------------------------------------
\1\ Section 505(j)(5)(B)(iv) of the act states that:
If the application contains a certification described in
subclause (IV) of paragraph (2)(A)(vii) and is for a drug for which
a previous application has been submitted under this subsection
continuing [sic] such a certification, the application shall be made
effective not earlier than one hundred and eighty days after--
(I) the date the Secretary receives notice from the applicant
under the previous application of the first commercial marketing of
the drug under the previous application, or
(II) the date of a decision of a court in action described in
clause (iii) holding the patent which is the subject of the
certification to be invalid or not infringed, whichever is earlier.
Prior to the enactment of the Food and Drug Administration
Modernization Act of 1997 (the Modernization Act), 180-day
exclusivity was described at section 505(j)(4)(B)(iv) of the act.
The Modernization Act added new provisions to section 505(j) that
resulted in a renumbering of the sections.
---------------------------------------------------------------------------
In certain circumstances, the first applicant whose ANDA contains
a paragraph IV certification is protected from competition from
subsequent generic versions of the same drug product for 180 days from
either the date the first applicant's drug product is first
commercially marketed or the date of a final court decision holding the
patent that is the subject of the paragraph IV certification invalid,
unenforceable, or not infringed. This marketing protection is commonly
known as ``180-day exclusivity.''
In the Federal Register of October 3, 1994 (59 FR 50338), FDA
published the final rule implementing the patent and marketing
exclusivity provisions of the Hatch-Waxman Amendments. Section
314.107(c)(1) (21 CFR 314.107(c)(1)), the regulation implementing
section 505(j)(5)(B)(iv) of the act, provided:
If an abbreviated new drug application contains a certification
that a relevant patent is invalid, unenforceable, or will not be
infringed and the application is for a generic copy of the same
listed drug for which one or more substantially complete abbreviated
new drug applications were previously submitted containing a
certification that the same patent was invalid, unenforceable, or
would not be infringed and the applicant submitting the first
application has successfully defended against a suit for patent
infringement brought within 45 days of the patent owner's receipt of
notice submitted under Sec. 314.95, approval of the subsequent
abbreviated new drug application will be made effective no sooner
than 180 days from whichever of the following dates is earlier:
(i) The date the applicant submitting the first application
first commences commercial marketing of its drug product; or
(ii) The date of a decision of the court holding the relevant
patent invalid, unenforceable, or not infringed.
(Emphasis added)
FDA's requirements for 180-day exclusivity were successfully
challenged in the courts in Mova Pharmaceutical Corp. v. Shalala, 140
F.3d 1060 (D.C. Cir. 1998), and Granutec, Inc. v. Shalala, No. 97-1873
and No. 97-1874, 1998 U.S. App. LEXIS 6685 (4th Cir. Apr. 3, 1998).
Following the Mova circuit court decision, on June 1, 1998, the
district court entered an order stating that the successful defense
requirement of Sec. 314.107(c)(1) is invalid and permanently enjoined
FDA from enforcing it. In the Federal Register of July 14, 1998 (63 FR
37890), FDA published a guidance for industry entitled ``180-Day
Generic Drug Exclusivity Under the Hatch-Waxman Amendments to the
Federal Food, Drug, and Cosmetic Act'' (June 1998), describing its
approach to 180-day exclusivity in light of the court decisions. In the
Federal Register of November 5, 1998 (63 FR 59710), the agency
published an interim rule revoking the ``successful defense''
requirement. Since that time the agency has regulated directly from the
statute when making exclusivity decisions on a case-by-case basis.
The agency is proposing new regulations to address the issues that
have arisen as a result of the Mova and Granutec decisions and to
respond to other matters related to 180-day exclusivity not currently
addressed by the regulations. Consistent with the legislative purpose
of section 505(j)(5)(B)(iv) of the act, the proposed regulations
continue to provide an incentive for challenging a listed patent, while
at the same time preventing prolonged or indefinite delays in the
availability of generic drug products.
During litigation of the many cases related to 180-day
exclusivity, the parties and courts have recognized the potential for
the 180-day exclusivity process to substantially delay the entry of
competitive generic drug products into the market. This situation can
occur when the marketing of any subsequent generic drug product is
contingent upon the occurrence of an event that is within the first
ANDA applicant's control. Such delays could result, for example, from
the inability of the first ANDA applicant with a paragraph IV
certification to obtain timely approval of its application and begin
commercial marketing of its product.
Licensing agreements and other arrangements between an innovator
company and the generic drug company who is the first ANDA applicant to
file a paragraph IV certification can be of considerable financial
benefit to the companies involved, but also may contribute to delayed
generic competition by forestalling the beginning, or triggering, of
the 180-day exclusivity period. These arrangements can create almost
insurmountable barriers to the final approval and marketing of generic
drug products that are otherwise ready for final approval. These
barriers thwart a major congressional goal underlying the
[Page 42875]
passage of the Hatch-Waxman Amendments.
In developing the approach described in this proposal, the agency
has been guided by the text of the statute, opinions rendered by courts
that have addressed these issues, and concerns expressed to the agency
in submissions commenting on the June 1998 guidance and November 1998
interim rule. The agency has also been guided by its 15 years of
experience with the 180-day exclusivity provisions. This experience has
provided FDA with valuable information regarding the influence of the
180-day exclusivity provisions on the ANDA approval process and the
marketing of generic drug products.
II. Description of the Proposed Rule
This proposed rule would revise Sec. 314.107 to clarify and modify
eligibility requirements for ANDA applicants seeking 180-day marketing
exclusivity for a generic drug product. This new approach is offered in
light of the courts' rejection of the previous requirement that an ANDA
applicant successfully defend against a patent infringement lawsuit
before it is eligible for exclusivity.
A. 180-Day Exclusivity Eligibility
1. Only First Applicant is Eligible
The statutory language describing which applications are eligible
for 180-day generic drug exclusivity is ambiguous. The current
regulation interprets the statute as allowing eligibility for
exclusivity only for the applicant that submits the first substantially
complete ANDA with a paragraph IV certification. Although the agency
has considered alternative interpretations, such as ``rolling
exclusivity'' in which the next-in-line applicant is eligible for
exclusivity should the previous applicant become ineligible, FDA
proposes to maintain the current interpretation. The agency, however,
invites comments related to exclusivity eligibility, both those
supporting this interpretation and those suggesting other
possibilities.
Under this proposed rule, only the applicant submitting the first
substantially complete ANDA for a listed drug with a paragraph IV
certification to any patent in the Orange Book for the listed drug
(first applicant) would be eligible for exclusivity. A substantially
complete application must contain all of the information required under
section 505(j)(2)(A) of the act and under 21 CFR 314.50 and 314.94.
These requirements include the submission of the results of any
required bioequivalence studies, or, if appropriate, a request for a
waiver of such studies. In order for an ANDA to be considered
substantially complete for purposes of exclusivity, the bioequivalence
studies submitted in the ANDA at the time it is initially submitted
must, upon review by the agency, meet the appropriate standards for
approval. If the applicant must conduct a new bioequivalence study to
obtain approval of the ANDA, the application will not be considered to
be substantially complete and the applicant will not be eligible for
exclusivity. No other applicant with a paragraph IV certification will
be eligible for exclusivity for that drug product. The agency is
adopting this position out of concern that, in the rush to be the first
ANDA with a paragraph IV, applicants will submit the results of the
first completed bioequivalence study, whether or not the results meet
the standards for approval. The bioequivalence study is a crucial
component of the ANDA and conduct of the studies can be time consuming.
In order to prevent the granting of exclusivity on the basis of
submission of an inadequate bioequivalence study, FDA has determined
that to be eligible for exclusivity, the ANDA applicant must submit, as
part of the initial application, a bioequivalence study that meets the
standards for approval.
To be eligible for exclusivity, an applicant must be the first to
submit ANDA that is both substantially complete and contains a
paragraph IV certification to any listed patent. The first applicant
can be an applicant that submits an ANDA that initially contains a
paragraph III certification, but later amends the certification to a
paragraph IV certification, if at the time of the amendment that
applicant's ANDA is the first substantially complete ANDA to contain a
paragraph IV certification. If the first applicant subsequently
withdraws its application or changes or withdraws its paragraph IV
certification, either voluntarily or as a result of a settlement or
defeat in patent litigation, no ANDA applicant will be eligible for
180-day exclusivity.
Limiting eligibility for exclusivity to the first applicant to
submit a substantially complete ANDA with a paragraph IV certification
is consistent with the goal of permitting earlier entry into the market
of generic competitor products by encouraging prompt challenges to
innovator patents. Granting exclusivity to a later applicant that
submits a patent challenge, and that only becomes first in line because
another applicant(s) has withdrawn its application or paragraph IV
certification, would further delay the entry into the market of generic
drug products with no countervailing public benefit.
In addition, if the first applicant submits a new paragraph IV
certification because, for example, it makes a formulation change
requiring a supplement or an amendment to its ANDA, it may no longer be
accorded first applicant status. If there is another applicant with a
paragraph IV certification for the same drug product, the first
applicant will no longer be eligible for 180-day exclusivity. Also, no
other applicant will be eligible for 180-day exclusivity.
As described in the preamble to the 1994 final rule (59 FR 50338
at 50348), there is one exception to this principle. If the agency
accepted for filing a substantially complete ANDA prior to the NDA
holder's submission of a late (untimely) filed patent, the ANDA
applicant is not required to certify to this patent. However, if the
ANDA applicant amends its ANDA to include a paragraph IV certification
to the untimely filed patent, and the ANDA applicant later withdraws
that paragraph IV certification, the next applicant to file a paragraph
IV certification to the untimely filed patent will be eligible for
exclusivity. The agency believes that in this situation it is
appropriate to grant exclusivity to an applicant who was required to
file a paragraph IV certification because the applicant filed its ANDA
after the NDA holder submitted the patent information.
If there are multiple patents for the listed drug, the applicant
submitting the first paragraph IV certification to any of the listed
patents will be the only ANDA applicant eligible for exclusivity for
that drug. The agency considered an approach that could have made
multiple applicants eligible for exclusivity based upon the order of
submission of paragraph IV certifications for each patent. Different
ANDA's are most likely to have the first paragraph IV certifications to
different patents when new patents are listed for the innovator drug
after the submission of the first ANDA. Although the statute would
support granting multiple exclusivities, the agency has determined that
such multiple exclusivities for a single drug could further delay the
entry of generic drugs onto the market. For example, if two different
applicants were eligible for exclusivity because each was the first to
file a paragraph IV certification for a different listed patent, and
neither exclusivity could begin to run until first commercial marketing
or a favorable court decision, it is possible that each exclusivity
would block the final
[Page 42876]
approval of the other application for a substantial period of time.
Moreover, the large number of patents listed for many drugs, the real
possibility that different ANDA applicants may submit first paragraph
IV certifications for these patents, and the relative ease with which
an applicant now becomes eligible for exclusivity could combine to
create an exclusivity program that is virtually unworkable in its
complexity and which would create even more uncertainty for the
industry.
If the ANDA applicant submitting the first substantially complete
ANDA with a paragraph IV certification submits paragraph IV
certifications to multiple patents at that time, any of those
certifications will render the applicant eligible for exclusivity. The
first court decision finding one of the patents invalid, not infringed,
or unenforceable will trigger the running of the applicant's
exclusivity.
2. First Applicant Eligible if Not Sued
The agency is proposing to amend Sec. 314.107(c)(1) to state that
the first applicant would be eligible for 180 days of market
exclusivity even if the applicant is not sued for patent infringement
by the patent owner or NDA holder. This is consistent with the policy
established in FDA's June 1998 guidance. It is also consistent with the
decision in Purepac v. Friedman, 162 F.3d 1201 (D.C. Cir. 1998), in
which the court noted that section 505(j)(5)(B)(iv) of the act does not
require the first applicant to be sued to be eligible for exclusivity.
The agency recognizes that neither the Purepac nor the Mova
opinion expressly foreclosed the agency from adopting a requirement
that an applicant be sued, and that in the 1989 proposed rule FDA
considered a ``litigation'' requirement as a prerequisite for
exclusivity eligibility. (See 54 FR 28872 at 28929, July 10, 1989.)
However, in light of the removal of the ``successful defense''
requirement and subsequent reconsideration of the statutory language,
the agency proposes that an applicant would be eligible for 180-day
exclusivity even if it is not sued by a patent owner or NDA holder.
FDA believes that if the first applicant avoids a lawsuit and the
related 30-month stay of final approval (see section 505(j)(5)(B)(iii)
of the act), for example, by designing around a patent in such a way
that its drug product is clearly noninfringing, then that applicant
should not be denied eligibility for exclusivity. In addition, an ANDA
applicant should not be encouraged to file a frivolous certification
that invites litigation so as to qualify for exclusivity. Permitting an
applicant who avoids a lawsuit to be eligible for exclusivity is
consistent with the statutory language and goal of facilitating prompt
entry of generic drug products into the market.
3. First Applicant Not Eligible if Sued and Loses Lawsuit
If the first applicant is sued and loses the patent litigation,
proposed Sec. 314.107(c)(4) would require the applicant to change its
certification from a paragraph IV to a paragraph III. Upon the required
certification change, the applicant would lose any claim to exclusivity
eligibility.
Nothing in the statute or the regulations supports an award of
exclusivity to an ANDA applicant that loses its lawsuit. In fact, such
an award would run counter to the statutory goal of promoting earlier
entry of generic drug products into the market.
If the agency were to interpret the statute to permit exclusivity
for an ANDA applicant that lost its patent litigation, a subsequent
applicant that is not sued for patent infringement because it managed
to design around the patent nonetheless would not be able to enter the
market until after patent expiration. The court decision trigger for
the beginning of exclusivity would be unavailable to this subsequent
applicant because it applies only when there has been patent litigation
as a result of the paragraph IV certification and an ANDA applicant has
won.
Additionally, if the agency permitted exclusivity for an applicant
that lost its litigation and therefore could not market its product,
the innovator might avoid generic competition for the life of its
patent merely by refusing to sue any subsequent ANDA applicant. This
outcome would not be justified by the first applicant's unsuccessful
challenge to the patent.
The declaratory judgment provision discussed in section II.F of
this document could prevent an innovator company from using this
strategy to completely block ANDA approvals in some cases. However, it
is unreasonable to expect subsequent ANDA applicants to obtain a
declaratory judgment that triggers exclusivity for a first applicant
who has not provided any benefit to the public, merely because the
subsequent applicant wants to avoid being blocked for the life of the
patent.
If a first applicant that loses its patent suit is not eligible
for exclusivity, generic drug products may be able to enter the market
prior to expiration of the innovator's patent in several situations.
Market entry can occur if a subsequent ANDA applicant with a paragraph
IV certification prevails in its patent litigation, settles its patent
litigation, or is not sued as a result of the paragraph IV
certification.
The agency recognizes that this approach requires a new
interpretation of Sec. 314.94(a)(12)(viii)(A). That provision states
that when an applicant changes its paragraph certification from a IV to
a III after losing a patent infringement suit, ``the application will
no longer be considered to be one containing a [paragraph IV]
certification.'' Previously the agency had described that regulatory
provision as fulfilling only the ``housekeeping'' function of informing
the agency that the ANDA would not be approved until the patent
expired, and explained that the provision had no implications for
exclusivity eligibility. That interpretation was consistent with the
entire regulatory scheme that was built around the successful defense
requirement.
The removal of the successful defense requirement has resulted in
a fragmented regulatory framework, forcing the agency to modify not
only the regulatory language in certain parts but also, as in this
case, its interpretation of language that is to remain. Under the new
proposed approach, when a first applicant loses its patent litigation
and changes its certification from a paragraph IV to a paragraph III
under Sec. 314.94(a)(12)(viii)(A), it would not be eligible for
exclusivity. In addition, a voluntary change in patent certification
from a IV to a III as described in Sec. 314.94(a)(12)(viii) also would
have the effect of rendering the first ANDA applicant ineligible for
180-day exclusivity. After the first applicant changed its patent
certification to a III, no applicant would be eligible for exclusivity,
and the agency could approve eligible subsequent applications.
4. Shared Exclusivity for Multiple ANDA's Filed on the Same Day
The agency is proposing that all applicants for ANDA's containing
paragraph IV certifications for a particular drug product that are
received on the same day will be eligible for exclusivity if no other
ANDA with a paragraph IV certification for the drug product has been
previously filed. All such applicants would be considered first
applicants. Submission of ANDA's on the same day is most likely to
occur when an innovator's 5-year exclusivity barring FDA acceptance of
ANDA's expires, or when ANDA applicants wish to challenge a patent
listed for an innovator product with 5 years of exclusivity and file
ANDA's at the end of 4 years of exclusivity (see section
[Page 42877]
505(j)(5)(D)(ii) of the act). The applicable periods would be 5 1/2
years or 4 1/2 years when pediatric exclusivity has been granted (see
section 505A(a) of the act (21 U.S.C. 355a(a)).
Under this proposal, the exclusivity period would be shared by all
first applicants. Once the exclusivity period begins, it would run for
all first applicants, protecting the group of first applicants from
competition from later applicants during the 180-day period. The
application of the triggering period, discussed in section II.B.1 of
this document, would remain essentially the same, with a slight
modification. After a triggering event (described in section II.B of
this document) occurred, all eligible first applicants could be
approved and would be eligible to share the 180-day exclusivity. Once
the 180 days of exclusivity has run following the first triggering
event, any ANDA that was not among the group of first applicants also
would be eligible for final approval.
The agency believes the statutory language supports this approach,
which would protect the incentive created by Congress for ANDA
applicants to challenge patents. Further, this approach is preferable
to alternative approaches. One alternative approach, which the agency
does not propose because it does not preserve the incentive to
challenge patents, would be for the agency to determine that no ANDA
applicant is eligible for 180-day exclusivity if, on the same day, the
agency receives more than one ANDA with a paragraph IV certification
for the same drug product and no other ANDA with a paragraph IV
certification for the drug product has been previously filed.
Another option is for the agency to attempt to determine which
application it received first on the same day, an inquiry that is
impractical and may result in an arbitrary ordering of applications. It
may not be possible for the agency to determine which application was
received first. If, for example, the agency received more than one
eligible application in the same mail delivery on a particular day, it
would be impossible to determine which application was received first.
If applications were received by various means throughout the day, when
the applications in the pile were retrieved to date-and time-stamp, the
application that the agency received first might be stamped last.
Although theoretically this particular problem could be avoided by
stamping each document at the time of receipt, this solution is
impractical given agency workload and resource constraints.
5. Patent Expiration and 180-Day Exclusivity
The agency is clarifying that once the patent for which the first
applicant filed a paragraph IV certification expires, the first
applicant is no longer eligible for exclusivity. When the first
applicant is no longer eligible for exclusivity, FDA may approve all
otherwise eligible ANDA's. FDA regulations at Sec. 314.94(a)(12)(viii)
currently provide that exclusivity cannot extend beyond the term of the
patent.
B. The Results of the Patent Challenge
In general, once an ANDA applicant has submitted a paragraph IV
certification and notified the NDA holder and patent owner of the
patent challenge under Sec. 314.95 (21 CFR 314.95), a number of
outcomes are possible including: (1) The NDA holder or patent owner may
sue the ANDA applicant within the 45-day period established by statute
(section 505(j)(5)(B)(iii) of the act) and that suit may be litigated
to final judgment, (2) the parties may reach a settlement either before
or after a patent infringement lawsuit is filed, or (3) the NDA holder
and patent owner may refrain from filing a patent infringement suit.
Which of these events occurs will depend on many factors, including
market considerations and the relative strength of the patent claims.
However, in each of these cases, there is the potential for a
substantial delay in the entry of generic drug products into the
market. The agency is proposing a relatively simple approach to
limiting this delay, one that applies generally to all of the outcomes
described previously.
Under the current 180-day exclusivity approach, delays in the
approval of competitive generic drug products are the result of delays
in the occurrence of one of the two events (triggering events) that
will trigger the beginning of the 180-day exclusivity period--either
the first commercial marketing of the first applicant's product, or a
decision of a court holding the patent invalid, not infringed, or
unenforceable, whichever is earlier. The courts in the Mova and Purepac
decisions suggested that, to prevent unreasonable delay in the final
approval of subsequent generic drug applications, FDA could require
that a first ANDA applicant bring its product to market--and thus begin
the running of exclusivity--within a prescribed time period. The agency
believes that such a requirement is appropriate.
1. Triggering Period
The agency proposes to adopt the approach suggested by the courts
in the Mova and Purepac decisions and set a time limit for the exercise
of exclusivity. The agency is proposing the use of a 180-day
``triggering period,'' during which there must either be a favorable
court decision regarding the patent or the first applicant must begin
commercial marketing of its product. If neither of these events occur
during the triggering period, the first applicant will lose its
eligibility for exclusivity and subsequent ANDA's will be eligible for
immediate approval.
The term ``triggering period'' is used throughout this proposed
rule to refer to the 180-day period described previously; this is
distinct from the 180-day exclusivity period (see section II.B.4 of
this document) that may follow the triggering period. The term
``trigger'' as used throughout this proposed rule refers to the two
statutory conditions, one of which must be met, for exclusivity to
begin (see section 505(j)(5)(B)(iv) of the act). Those conditions, as
discussed in sections I and II.B of this document, are: (1) A court
decision finding the patent to be invalid, unenforceable, or not
infringed by the ANDA product, and (2) first commercial marketing of
the ANDA product. The term ``triggering event'' in this proposed rule
refers to the occurrence of one of the two statutory triggers.
In most cases, the triggering period would begin to run on the day
a subsequent ANDA applicant with a paragraph IV certification receives
a tentative approval stating that but for the first applicant's
exclusivity, the subsequent ANDA would receive final approval. In three
instances the triggering period would not begin to run on the date of
the tentative approval.
First, if the first applicant was sued for patent infringement as
a result of its paragraph IV certification and the litigation is
ongoing, the triggering period would not begin until expiration of the
30-month stay of ANDA approval (see section II.B.3 of this document).
Similarly, if a court issued a preliminary injunction prohibiting the
first applicant from commercially marketing its drug product, the
triggering period would not begin until the injunction expired.
Finally, the triggering period would not begin until expiration of the
statutorily described time period corresponding with any existing
exclusivity periods for the listed drug (see sections 505(j)(5)(D)(ii)
and 505A(a) of the act).
To determine how a triggering period would work, the agency
reviewed its experience with the 180-day exclusivity provision. In the
past, delays in obtaining a court decision, or delays in the first
applicant gaining approval for
[Page 42878]
its ANDA and/or bringing its product to market, have generally become a
matter of concern when at least one subsequent ANDA applicant has
obtained a tentative approval and the only barrier to final approval is
the first applicant's eligibility for 180 days of exclusivity. Every
day after the tentative approval during which the subsequent applicant
can not market its product represents a lost opportunity both for the
subsequent applicant and the consumer. The subsequent applicant can not
benefit from having submitted an ANDA that meets the requirements of
section 505(j) of the act, and the consumer does not have access to one
or more lower cost generic products.
Where the first ANDA applicant is eligible for exclusivity and
only that eligibility is blocking final approval of a subsequent ANDA,
it is appropriate to begin the triggering period on the day that a
subsequent applicant has received tentative approval for its ANDA. This
is the first day that the absence of a generic drug product from the
market is directly linked to the first applicant's eligibility for
exclusivity.
a. Length of triggering period. The agency is proposing that the
triggering period be 180 days. As described previously, the 180-day
period would follow one of the following: (1) The tentative approval of
a subsequent ANDA with a paragraph IV certification for the same drug
product, (2) expiration of a 30-month stay of ANDA approval due to
patent litigation, (3) expiration of a preliminary injunction
prohibiting marketing of an ANDA product, or (4) expiration of the
statutorily described exclusivity periods for the listed drug.
Once the triggering period begins, the ANDA applicant eligible for
exclusivity would have 180 days to trigger its exclusivity. This may be
done by beginning commercial marketing of its drug product or obtaining
a favorable court decision (in its own or other litigation regarding
the same patent). Once triggered, the ANDA applicant's exclusivity
would then run for 180 days. If, within the 180-day triggering period,
the beginning of exclusivity was not triggered, the first applicant
would no longer be eligible for exclusivity and the agency could
approve subsequent ANDA's at the end of the triggering period.
It is possible that there could be no generic drug product
marketed during the triggering period if the first applicant does not
begin commercial marketing of its product. In this case, at least one
generic drug product--the product that had received the tentative
approval--would receive final approval upon expiration of the
triggering period and could begin marketing.
b. Basis for length of triggering period. The 180-day length of
the triggering period is derived from the statutory provision governing
180 days of exclusivity. This provision quite clearly allows (and
Congress, therefore, presumably contemplated) the possibility of a 180-
day period during which there is no generic drug product on the market.
This would occur when the running of the 180-day period of exclusivity
has begun with a court decision finding the patent invalid,
unenforceable, or not infringed, but the applicant that has the
exclusivity does not begin marketing its product because it is not
approved or for another reason.
There is no statutory requirement that the running of the
exclusivity triggered by the court decision described in section
505(j)(5)(B)(iv)(II) of the act be accompanied by the commercial
availability of the generic drug product. Even if no generic drug
product is being marketed, the statute prohibits the agency from
approving another ANDA until the 180-day exclusivity period has
elapsed. After that period, however, the statute permits the approval
of any otherwise eligible ANDA, even if the first applicant never
marketed its product. It is therefore reasonable to assume that
Congress thought that a 180-day period during which no generic drug
product is marketed was acceptable.
At the same time, there is no indication that Congress would
countenance an indefinite delay in the marketing of low cost generic
drug products once the legal barriers to their approval have been
removed. To the contrary, such a scenario directly conflicts with the
goals of the Hatch-Waxman Amendments. Therefore, the agency is
proposing a 180-day triggering period during which a triggering event
must occur to commence the eligible ANDA applicant's period of
exclusivity.
The agency recognizes that in very rare cases there could be a
time period longer than 180 days during which no generic drug product
is available. This may happen if, for example, a court decision
triggering the exclusivity period is issued at the end of the 180-day
triggering period, and the first applicant does not market its product
or waive its right to exclusivity during the resulting 180-day
exclusivity period. In the extreme case, this scenario could result in
the inability of a subsequent ANDA applicant to market its product for
a 360-day period (180-day triggering period plus 180-day exclusivity
period) after its tentative approval.
The agency believes, however, that a first applicant that is
unable to market its own product at the time a subsequent ANDA
applicant receives a tentative approval would ordinarily waive its
exclusivity (see section II.H of this document). This would permit
final approval of the subsequent ANDA. Moreover, in contrast to the
current regulatory structure, under which generic drugs may face almost
insurmountable barriers to market entry, the proposed approach provides
for much earlier market entry. Under the triggering period approach,
there is certainty that one or more generic drug products will be able
to enter the market after the 12-month period described previously, and
in most cases, much more promptly.
2. Alternative Length of Triggering Period in Specific Cases
The agency is also specifically seeking comment on an alternative
approach. The agency is considering shortening the length of the
triggering period to 60 days in some cases. The 60-day triggering
period would apply to an ANDA applicant that already has received final
approval at the time of the tentative approval of a subsequent ANDA,
and either has not been sued as a result of its patent certification,
or has been sued and the case was settled or dismissed without a
decision on the merits of the patent claim. The possible 60-day
triggering period in this case is based upon limited data from a July
1998 Congressional Budget Office study entitled ``How Increased
Competition from Generic Drugs Has Affected Prices and Returns in the
Pharmaceutical Industry,'' and a March 1999 internal FDA study
(available in Docket No. 85N-0214).
FDA does not consider this 60-day timeframe to be burdensome to
ANDA applicants because the data suggest that, since passage of the
Hatch-Waxman Amendments, first generic drug products generally reach
the market promptly after approval. Specifically, the studies indicate
that generic products are routinely marketed within a 2-month period
following ANDA approval.
3. Relationship of Triggering Period to 30-Month Stay
When the first applicant to submit an ANDA with a paragraph IV
certification is sued by the NDA holder or patent owner, it would be
unreasonable to start the triggering period with the tentative approval
of a subsequent applicant if the tentative approval was granted
relatively soon after the first applicant's patent litigation began.
The first
[Page 42879]
applicant could find it difficult or impossible to either obtain a
final court decision in a patent infringement case or begin commercial
marketing of its product within 180 days of the subsequent applicant's
tentative approval. The first applicant who is sued for patent
infringement is, however, provided with a statutory time period, as
discussed in the following paragraphs of this document, during which to
resolve the patent litigation before the triggering period will begin.
The generic drug product approval process described in the Hatch-
Waxman Amendments establishes a 30-month period for resolution of
patent litigation resulting from a patent certification. (See section
505(j)(B)(5)(iii) of the act.) During this period, FDA may not approve
the ANDA that is the subject of the litigation. After the 30-month
period, barring a court order, FDA may grant final approval to the ANDA
that is the subject of the litigation. Therefore, the agency is
proposing that when the first ANDA applicant is sued as a result of its
paragraph IV certification and the patent litigation is ongoing, the
triggering period would not begin at least until the 30-month period
has lapsed. After the 30 months has passed, the triggering period would
begin when a subsequent applicant received a tentative approval. If a
subsequent applicant received a tentative approval during the 30-month
stay, the 180-day triggering period would begin on the day the 30-month
period expired. The first applicant then would have to begin marketing
its product, or obtain a final court decision, during the 180-day
triggering period to obtain its exclusivity.
4. Distinction Between Triggering Period and Exclusivity Period
Although the triggering period would not begin until expiration of
the first applicant's 30-month stay, it is still possible for the
exclusivity period to begin during that 30-month period. If, for
example, a court issues a favorable final decision in litigation over a
subsequent ANDA's patent challenge during the 30-month stay of the
first applicant, the exclusivity period for the first applicant would
start on the date of that decision.
In proposing this interpretation of the statute--that the
triggering period does not begin until expiration of the 30-month
stay--the agency is aware that in some cases patent litigation
resulting from a paragraph IV certification does not result in a final
court decision within 30 months. The agency is also aware that parties
to patent litigation in some cases may not have strong incentives to
resolve the litigation as promptly as possible. This proposed approach
may alter those incentives and encourage swifter resolution of
litigation.
Although the agency is proposing that the general rule will be
that the first ANDA applicant has 30 months in which to resolve its
patent litigation before the triggering period may start, the agency
also would allow for a reasonable extension of this period under
certain circumstances. This would occur when the court hearing the
patent infringement case issues a preliminary injunction prohibiting
the marketing of the drug product that is the subject of the challenged
ANDA until there is a court decision finding the patent invalid, not
infringed, or unenforceable. The issuance of such an order is
contemplated in section 505(j)(5)(B)(iii)(III) of the act.
FDA expects that an injunction would issue upon a finding that it
is warranted by the facts and law in the particular case, and that the
parties have reasonably cooperated in expediting the action. In the
event the court issues an injunction prohibiting the marketing of the
drug product under the first ANDA, the triggering period would not
begin at least until the injunction expires or is lifted by the court.
If the 30-month stay is shortened or lengthened by the court because
either party has failed to reasonably cooperate, the triggering period
will begin with reference to the date ordered by the court.
While the triggering and exclusivity periods are related, they are
also distinct. The exclusivity period starts with either first
commercial marketing of the first applicant's generic drug product or
with a court decision finding the patent invalid, unenforceable, or not
infringed. The triggering period, in contrast, would be tied to the
date of a subsequent ANDA's tentative approval, and in some cases to
the completion of a 30-month stay. The triggering period may not result
in an exclusivity period for the first applicant if no triggering event
occurs during the triggering period. In contrast, an exclusivity period
may begin independent of any triggering period, if no subsequent ANDA
is given a tentative approval to begin the triggering period.
Alternatively, the exclusivity period could begin during the triggering
period.
C. A Decision of a Court
FDA's current regulations state that for purposes of applying the
ANDA approval and exclusivity provisions of the statute, ``the court''
is the court that enters final judgment from which no appeal can be or
has been taken (district or appellate court) (Sec. 314.107(e)). This
interpretation was challenged in TorPharm v. Shalala, No. 97-1925, U.S.
Dist. LEXIS 21983 (D.D.C. Sep. 15, 1997); appeal withdrawn and
remanded, 1998 U.S. App. LEXIS 4681 (D.C. Cir. Feb. 5, 1998); vacated
No. 97-1925 (D.D.C. April 9, 1998).
Plaintiffs in that case maintained that ``the court'' meant the
district court and that final approval could be granted and exclusivity
begin running upon the entry of a district court decision finding a
patent invalid, unenforceable, or not infringed. Because the district
court decision in TorPharm agreeing with plaintiffs was vacated (set
aside or rendered void), the agency will not address it further in this
proposed rule. FDA instead proposes to maintain its current
interpretation. The agency believes this interpretation is most
consistent with the statutory scheme.
The agency is also proposing that the decision of a court that may
begin the running of exclusivity is the final decision of a court
hearing any litigation involving the patent at issue. Current
Sec. 314.107(c)(1)(ii) states that one of the two exclusivity triggers
is the ``date of the decision of the court holding the relevant patent
invalid, unenforceable, or not infringed.'' FDA proposes to modify
Sec. 314.107(c)(1)(ii) to read the ``date of the decision of a court *
* *.''
This modification is consistent with the statutory language in
section 505(j)(5)(B)(iv) of the act. The agency is clarifying that for
purposes of both the modified regulatory provision and section
505(j)(5)(B)(iv)(II) of the act, `` a decision of a court in an action
described in [section 505(j)(5)(B)(iii) of the act] holding the patent
which is the subject of the certification to be invalid or not
infringed'' can be a decision of any court hearing a patent
infringement or declaratory judgment case involving the patent at
issue. The decision triggering exclusivity need not come from the court
hearing the patent litigation involving the first ANDA. (See also
Granutec, Inc. v. Shalala, 1998 U.S. App. LEXIS 6685, Nos. 97-1873, 97-
1874, slip op. at 14-18 (4th Cir. Apr. 3, 1998) (unpublished opinion
discussing the agency's interpretation of ``a'' court decision).)
The use of different language in subsections (I) and (II) of
section 505(j)(5)(B)(iv) of the act supports this interpretation. In
subsection (I), the statutory trigger is specifically tied to the date
that ``the applicant under the previous application'' gives notice that
its product is being commercially marketed. In contrast, the trigger in
subsection (II) relates only to the date of ``a decision of a court''
in patent
[Page 42880]
litigation described in section 505(j)(5)(B)(iii) of the act.
The language of the first trigger refers to a particular
applicant. In contrast, the language of the second trigger does not
attach importance to the specific applicant. It instead refers
generally to a type of court decision. In the absence of specific,
controlling language to the contrary, the agency continues to interpret
``a decision of a court'' in subsection (II) to mean a decision of any
court hearing a patent infringement or declaratory judgment case
involving the patent at issue.
This interpretation of the court decision trigger encourages
prompt litigation of patent issues by all ANDA applicants, and under
some circumstances could result in a corresponding earlier start of the
180-day exclusivity period. This could result in situations where,
although the first applicant was sued first, its litigation is not
completed first, and its exclusivity begins to run while it is still in
litigation.
The agency is aware that in some instances the first applicant may
be unable or unwilling to market its product upon satisfaction of the
court decision trigger involving another applicant. For example, the
first applicant's own patent litigation may be ongoing and its ANDA may
have been finally approved at the completion of a 30-month stay under
section 505(j)(5)(B)(iii) of the act. However, the applicant may be
unwilling to assume the risk of liability for damages by marketing
before patent expiration or a court decision finding the applicant's
product does not infringe the patent. The agency notes, however, that
in such a situation the first applicant may obtain a financial benefit
from the award of exclusivity by waiving its exclusivity with respect
to a subsequent applicant (see section II.H of this document).
A contrary interpretation that required the court decision be a
decision in patent litigation against the first applicant could, under
some circumstances, delay entry into the market of drug products by all
ANDA applicants. For example, the patent owner or NDA holder may elect
not to sue the first ANDA applicant, in which case the court decision
trigger would never apply to that applicant's patent challenge, and
exclusivity could therefore begin running only with the first
applicant's commencement of commercial marketing. If the first
applicant's marketing is delayed because it cannot obtain final
approval of its ANDA or, having obtained final approval, the first
applicant either cannot or will not bring its product to market, there
could be a substantial delay in marketing of any generic drug product.
This delay would result even if a subsequent applicant is successful in
challenging the patent, either in a lawsuit brought by the innovator or
in a declaratory judgment action.
As described in section II.B.3 of this document, under the
approach proposed in this rule, the triggering period would not apply
when a subsequent applicant obtains a court decision that begins the
period of exclusivity. In such cases the first applicant's exclusivity
would begin to run on the date of the final court decision in the
subsequent applicant's litigation. The triggering period applies only
when a subsequent applicant has obtained a tentative approval where
final approval is blocked by the first ANDA applicant's eligibility for
exclusivity. Under these circumstances, the subsequent applicant would
have been eligible for final approval because either: (1) It wasn't
sued by the innovator, (2) it was sued but the litigation was settled
or dismissed without a favorable court decision, or (3) it was sued and
the 30-month stay had elapsed.
D. Settlement Agreements
Settlement agreements are not addressed in current regulations but
were discussed in the preamble to the proposed rule of July 10, 1989
(54 FR 28872). In the preamble, FDA explained that the ``date of a
decision of a court holding the patent invalid or not infringed'' in
Sec. 314.107(c)(1)(ii) is the ``date of a final decision of a court
from which no appeal can or has been taken, or the date of a settlement
order or consent decree signed by a Federal judge, which enters final
judgment and includes a finding that the patent is invalid or not
infringed'' (54 FR 28872 at 28895 (emphasis added)).
FDA is proposing regulations in part to address the most
challenging issue with respect to 180-day exclusivity: settlement and
licensing agreements between innovator and generic drug companies.
These agreements potentially can be made at any stage in the ANDA
process, including before an ANDA is filed, after ANDA filing but
during the 45-day period within which a patent infringement suit must
be brought, after the 45-day period expires but before the first
applicant commences commercial marketing, or during patent litigation.
The proposed regulations, by applying the triggering period, would
reduce the delay in market entry of generic drug products that can
result from such agreements. Although agreements may still be made,
their effect on generic competition would be limited by the requirement
that, within 180 days of the first tentative approval of a subsequent
ANDA, the first ANDA applicant begin commercially marketing its own
product or obtain a favorable court decision.
The agency has seriously considered the suggestions made in
comments on the November 1998 interim rule (Docket No. 85N-0214) and
the June 1998 guidance (Docket No. 98D-0481). Comments suggested that
the agency require that it be promptly notified of a settlement or
other agreement that either alters the adversarial relationship between
the first ANDA applicant and the patent owner or NDA holder, or from
which the first ANDA applicant derives an economic benefit. A number of
comments suggested that the agency consider such arrangements as either
rendering the first applicant ineligible for exclusivity, or triggering
the running of the exclusivity period on the theory that such
agreements are akin to commercial marketing.
The agency, however, believes the ``triggering period'' approach
is preferable. This approach would not require FDA to inquire into the
business arrangements between pharmaceutical companies, it would not
require the submission of any additional information by the ANDA
applicant, and it is a clear and definite approach that relies upon
publicly available information, i.e., the issuing of a tentative
approval letter.
E. Prompt Approval and Marketing
Current Sec. 314.107(c)(3) requires a first applicant to actively
pursue approval of its ANDA, or the agency may immediately approve any
subsequent ANDA eligible for final approval. The agency proposes to
delete this requirement because it is unnecessary under the regulatory
scheme described in this proposed rule. The new scheme would provide a
specific, clearly defined 180-day triggering period, during which the
first ANDA applicant must either: (1) Commercially market its drug
product, or (2) obtain a favorable court decision regarding the patent.
Given this approach, the issue of whether an ANDA applicant
actively pursues approval of its product would not be relevant. The
proposed approach, therefore, also has the advantage of eliminating the
requirement for the agency to scrutinize applicants' progress and
responses during the ANDA approval process, as well as to maintain a
standard for active pursuit of approval.
[Page 42881]
F. Declaratory Judgment
Current regulations implementing the Hatch-Waxman Amendments do
not address the application of section 505(j)(5)(B)(iv) of the act to
declaratory judgment actions as referred to in section
505(j)(5)(B)(iii) of the act. These proposed regulations address the
issue of whether a ruling in a declaratory judgment action brought by
the ANDA applicant is a ``decision of a court in [an] action described
in [section 505(j)(5)(B)(iii)] holding the patent which is the subject
of the certification to be invalid or not infringed'' (section
505(j)(5)(B)(iv) of the act).
FDA proposes in Sec. 314.107(f)(2)(ii) that a ``decision of a
court'' should include a nonappealable decision of a court in a
declaratory judgment action finding the patent invalid, unenforceable,
or not infringed.
The agency has considered the suggestion that a dismissal of a
declaratory judgment action under certain circumstances be treated as a
decision of a court and trigger the 180-day exclusivity period under
section 505(j)(5)(B)(iv)(II) of the act. Specifically, the agency
considered whether dismissal for lack of jurisdiction on the grounds
that no ``case or controversy'' exists because, for example, a party
has no reasonable apprehension of a patent infringement action, could
be considered a triggering court decision. The agency has rejected this
interpretation of the statute. It places a burden on the agency to
inquire into the facts underlying the dismissal of a case, and would be
unnecessary under the ``triggering period'' approach. With the
application of the 180-day triggering period, a subsequent applicant
who is not sued for patent infringement and obtains a tentative
approval with just the first applicant's eligibility for exclusivity
serving as a bar to final approval will not be blocked indefinitely
from approval.
G. Effect of Dismissal of Litigation
Proposed Sec. 314.107(g) states that the 30-month stay of ANDA
approval would not apply once paragraph IV related patent litigation
involving the ANDA applicant and patent owner or NDA holder is
dismissed without a court decision on the merits of the patent claim,
regardless of whether such dismissal is with or without prejudice
(whether the claims may be relitigated). The 30-month period, described
in section 505(j)(5)(B)(iii) of the act and Sec. 314.107(b)(3)(A) of
the regulations, is intended to give innovator companies assurance that
generic manufacturers would not file ANDA's with paragraph IV
certifications and then immediately market the approved generic drug
product. (See 130 Congressional Record H9118 (daily ed. Sept. 6, 1984)
(statement of Rep. Waxman).)
The legislative history of the amendments makes clear that the 30-
month stay of approval was intended to correspond as closely as
possible with the expected duration of a patent infringement suit, and
to provide protection to innovator companies during that time. (See 130
Congressional Record S10504 (daily ed. Aug. 10, 1984) (statement of
Sen. Hatch). Those concerns are not implicated when the litigation is
dismissed either as a result of a settlement or licensing agreement, or
because the patent owner or NDA holder has determined not to pursue the
litigation. Once the litigation is settled, the application can be
approved immediately.
H. Waiver of 180-Day Exclusivity and Relinquishing Eligibility
Although current regulations do not address an ANDA applicant's
ability to waive its 180-day exclusivity to permit approval of the ANDA
of a subsequent applicant(s), the general issue of exclusivity waivers
was addressed in the preamble to the 1994 final rule with respect to
analogous provisions. There the agency stated that new drug exclusivity
under the Hatch-Waxman Amendments can be waived by the holder of the
exclusivity (59 FR 50338 at 50359).
Since publication of the 1994 regulations addressing 180-day
exclusivity, FDA has been asked to determine whether an applicant who
has obtained 180 days of exclusivity can waive such exclusivity to
permit approval during the exclusivity period of a subsequent ANDA, or
ANDA's, containing a paragraph IV certification. The agency has
determined that waiver of 180-day exclusivity, like waiver of new drug
exclusivity, is permitted under the act and at least one ANDA applicant
has successfully effected a waiver. That waiver was challenged
unsuccessfully in Boehringer Ingelheim Corp. v. Shalala, 993 F. Supp. 1
(D.D.C. 1997).
Proposed Sec. 314.107(e) would permit the ANDA applicant that has
obtained 180 days of exclusivity with the occurrence of a triggering
event under section 505(j)(5)(B)(iv)(I) or (j)(5)(B)(iv)(II) of the act
to notify FDA during the period of exclusivity that it will waive its
exclusivity in favor of a subsequent ANDA or ANDA's containing a
paragraph IV certification. After receiving such notification, the
agency may approve the eligible named ANDA or ANDA's as of the date(s)
identified in the notice. Waiver of exclusivity permits ANDA applicants
that have been awarded exclusivity, but are either unwilling or unable
to market their products, to nonetheless obtain a benefit from that
exclusivity. A waiver may be particularly appropriate, for instance,
when the first ANDA applicant is sued and, while its litigation is
ongoing, a favorable court decision is rendered in a case involving a
subsequent applicant. Exclusivity would be awarded to the first
applicant, with the 180-day period starting on the date of a final
court decision in the subsequent applicant's litigation. The first
applicant's ANDA may not be finally approved, however, and the
applicant could not market its product. Under these circumstances, the
first applicant may obtain a benefit by waiving its exclusivity period
in favor of a subsequent applicant.
It should be noted that an applicant may selectively waive its
exclusivity only after the 180-day exclusivity period has begun to run
with the occurrence of one of the triggering events described in
section 505(j)(5)(B)(iv) of the act and in the regulations. Before that
time, the first applicant is only eligible for exclusivity and might
not obtain exclusivity if, for example, it failed to trigger the
exclusivity before the expiration of the triggering period.
Prior to the occurrence of a triggering event, the first applicant
may relinquish its eligibility for exclusivity entirely, and by so
doing would permit the agency to approve immediately any subsequent
ANDA's that are eligible for approval. It may not, however, waive its
exclusivity in favor of a specific applicant(s).
I. Multiple Strength/Drug Product Exclusivity
The question of whether the agency will grant a separate period of
exclusivity for each strength of a drug product is not addressed in the
preambles to the 1989 proposed or 1994 final rules, or in current
regulations. A citizen petition (Docket No. 99P-0792) that pertains to
this issue was filed on March 31, 1999. The agency has determined that
each strength of a drug product can be independently eligible for
exclusivity. Applicants may be eligible for a separate exclusivity
period for each particular strength of the drug product in an ANDA when
each strength refers to a different listed drug.
FDA believes that this form of exclusivity is consistent with the
statutory framework and public policy. Under the Hatch-Waxman
Amendments, the agency requires that
[Page 42882]
an ANDA reference a particular listed drug product. Among other
requirements, an ANDA applicant must include in the ANDA ``information
to show that the route of administration, the dosage form, and the
strength of the new drug are the same as those of the listed drug * *
*'' (section 505(j)(2)(A)(iii) of the act, emphasis added). The agency,
therefore, has determined that each strength of a drug product is
itself a listed drug.
FDA's current regulations treat each strength of a drug product as
a separate listed drug. Section 314.92(a)(1) (21 CFR 314.92 (a)(1))
states that ANDA's are suitable for ``drug products that are the same
as a listed drug.'' The regulation further explains that ``the term
`same as' means identical in active ingredient(s), dosage form,
strength, route of administration, and conditions of use * * *.''
FDA recognizes that different strengths of the same drug product
in the same dosage form may be formulated differently for a variety of
reasons. Varying formulations of the different strengths may provide
separate and distinct bases for patent challenges. Consequently, the
result of patent infringement litigation related to one strength of a
particular drug product may not be applicable to another strength of
the same drug product, even for the same ANDA applicant.
When the agency grants exclusivity to an ANDA applicant under the
provisions of section 505(j)(5)(B)(iv) of the act, it may not grant
final approval to other ANDA applicants for a period of 180 days.
Exclusivity, therefore, affects the remaining applicants by essentially
imposing a block on their immediate entry into the market.
The agency's interpretation of the statute to render ANDA's
eligible for exclusivity for each particular strength of a drug product
would have two results. First, it would encourage applicants vying for
submission of the first application, and the concomitant reward of
exclusivity, to submit ANDA's that cover the greatest number of
strengths in an attempt to obtain maximum protection from other generic
competitors. Second, it would prevent an ANDA applicant for only one
strength of a drug product from blocking subsequent applicants with
other strengths of the drug product from entering the market. Thus,
FDA's interpretation would encourage prompt entry into the market of
the greatest number of strengths of a particular drug product.
FDA has also determined that when the submission of a new strength
of a drug is approved as a result of a suitability petition, the first
ANDA referring to the approved petition that contains a paragraph IV
certification to any patent for the listed drug referred to in the
petition under Sec. 314.93(d) will be eligible for exclusivity. The new
strength of the drug product may have an independent basis for
challenging the applicability of a listed patent and therefore should
be eligible for the incentive provided by exclusivity.
III. Proposed Implementation Plan
The agency proposes that any final rule based on this proposal
take effect 30 days after its publication in the Federal Register. The
agency proposes to apply the provisions of any final rule to ANDA's
pending as of the effective date and to ANDA's that are submitted after
that date.
IV. Environmental Impact
The agency has determined under 21 CFR 25.30(h) that this action
is of a type that does not individually or cumulatively have a
significant effect on the human environment. Therefore, neither an
environmental assessment nor an environmental impact statement is
required.
V. Analysis of Impacts
FDA has examined the impacts of the proposed rule under Executive
Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the
Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq.). Executive Order
12866 directs agencies to assess all costs and benefits of available
regulatory alternatives and, when regulation is necessary, to select
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity). Under the Regulatory
Flexibility Act, if a rule has a significant impact on a substantial
number of small entities, an agency must analyze regulatory options
that would minimize any significant impact of the rule on small
entities. Title II of the Unfunded Mandates Reform Act requires that
agencies prepare a written assessment and economic analysis of
anticipated costs and benefits before proposing any rule that may
result in an expenditure by State, local, and tribal governments, in
the aggregate, or by the private sector, of $100 million (adjusted
annually for inflation) in any one year.
The agency believes that this proposed rule is consistent with the
regulatory philosophy and principles set out in the Executive Order.
Because the proposed rule does not impose any mandates on State, local,
or tribal governments or the private sector, that will result in an
expenditure in any one year of $100 million or more, FDA is not
required to perform a cost/ benefit analysis according to the Unfunded
Mandates Reform Act. With respect to the Regulatory Flexibility Act,
because this proposed rule may have a significant economic effect on a
substantial number of small entities, the analysis set forth below
constitutes the agency's Initial Regulatory Flexibility Analysis.
Discussion of the expected aggregate costs of this proposed rule and
the anticipated impact of the rule on small entities is provided in the
analysis. FDA has not identified any other Federal rules that
duplicate, overlap, or conflict with the proposed rule.
A. Background
The Hatch-Waxman Amendments benefit consumers by bringing lower
priced generic versions of previously approved drugs to market, while
simultaneously promoting new drug innovation through the restoration of
patent life lost during regulatory proceedings. The award of a 180-day
period of market exclusivity for certain ANDA applicants with paragraph
IV certifications was designed to maintain this balance by rewarding
generic firms for their willingness to challenge unenforceable and
invalid innovator patents, or design noninfringing drug products.
Recently, however, this balance has been upset and generic competition
impeded, in part through the establishment of certain licensing
agreements or other commercial arrangements between generic and
innovator companies.
Under current regulatory provisions, the first generic applicant
to file a substantially complete ANDA with a paragraph IV certification
can delay generic competition by entering into certain commercial
arrangements with an innovator company. The result may be that,
notwithstanding the intent of the Hatch-Waxman Amendments, rewards are
directed to generic companies for hindering rather than speeding
generic competition. A necessary condition for such arrangements is
that the economic gains to the innovator from delaying generic
competition exceed the potential economic gains to the generic
applicant from 180 days of market exclusivity. Such instances are
becoming more frequent because a successful strategy to extend market
exclusivity can mean tens of millions of dollars in increased revenue
for an innovator firm. Under such circumstances, it can be mutually
beneficial for the innovator and the generic company that is awarded
180
[Page 42883]
days of generic exclusivity to enter into agreements that block generic
competition for extended periods. This delayed competition harms
consumers by slowing the introduction of lower priced products into the
market and thwarts the intent of the Hatch-Waxman Amendments.
FDA's proposal to establish a 180-day triggering period addresses
this problem in several ways. In most cases, the first generic
applicant with a paragraph IV certification would lose its claim to
180-day exclusivity if it withheld its drug product from the market, or
failed to obtain a favorable court decision, for more than 180 days
after the tentative approval of a subsequent generic applicant for the
same drug product. Also, a subsequent generic applicant could not be
blocked from marketing its drug product for longer than, at most, 1
year from when it received tentative approval (the 180-day triggering
period plus the 180-day exclusivity period). As a result, the potential
economic losses to consumers from the increased unavailability of lower
priced generic products would be reduced significantly.
Moreover, decreasing the length of time that these commercial
arrangements could block generic competition lessens the market
incentive for entering into such agreements. Limiting the period during
which an agreement between an innovator and the first generic ANDA
applicant with a paragraph IV certification could block generic
competition provides less incentive, and therefore makes it less
likely, that an innovator and a generic company would enter into such
an agreement. Consequently, consumers would benefit because commercial
arrangements to block generic competition would be not only less
damaging, but would be less likely to occur.
B. Affected Entities
FDA does not know the precise number of businesses, either large
or small, that engage in the types of business arrangements that would
be significantly affected by the proposed rule. According to standards
established by the Small Business Administration, a small
pharmaceutical manufacturer employs fewer than 750 employees. While the
innovator firms that are affected by the rule are likely to be large
businesses, some of the affected generic firms may be small businesses.
In 1997, 431 generic product approvals (including different product
strengths) were distributed among 96 pharmaceutical companies. The 64
applications that became first generic approvals for a specific brand
name drug, however, were submitted by only 30 firms. Moreover, the 14
first generic approvals that included a paragraph IV certification were
submitted by only 5 firms. Therefore, FDA estimates that up to five
generic firms and a similar number of innovator firms per year could be
financially harmed by the accelerated competition brought about by this
rule. Based on a sample of 150 generic firms, the agency could identify
fewer than 10 percent that employed over 750 employees. Thus, FDA
tentatively projects that approximately five small firms per year,
those with first generic approvals containing paragraph IV
certifications, could be adversely affected by the increased generic
competition. Because this estimate is uncertain, however, FDA invites
comments from firms that believe they would be affected by the proposed
rule.
C. Compliance Requirements and Costs
To comply with this rule, affected firms will need to learn the
new regulatory approach described in this proposed rule. The cost of
this proposed rule is difficult to estimate because the number of firms
affected is uncertain.
The agency expects, however, that many more firms would benefit
from this new approach than would be adversely affected. Because the
primary result of the rule would be to speed the start of the 180-day
exclusivity period, only those relatively few innovator and generic
firms that would profit from delayed competition would be
disadvantaged. In contrast, a substantial number of generic competitors
would benefit from the earlier sales revenues generated by the quicker
introduction of generic competition.
Any professional skills necessary for implementation of this
proposal should already exist within the firms and should not need to
be newly acquired.
D. Minimizing the Impact on Small Entities
FDA has considered alternatives to regulating 180-day generic drug
marketing exclusivity that may have a lesser or different impact on
small businesses. Specifically, the agency considered continuing to
regulate directly from the statute as it has done since June 1, 1998,
when the D.C. District Court enjoined FDA from enforcing its
``successful defense'' regulation. The agency also considered proposing
several modifications to the existing regulations to limit the ability
of innovator and generic drug companies to enter into agreements that
could thwart congressional intent to facilitate prompt entry of generic
drugs into the market.
The agency considered retaining its current regulations and
addressing new regulatory issues by reference directly to the statute.
Because of the significant disadvantages associated with this
alternative, the agency has rejected it. This alternative would create
uncertainty in the generic drug manufacturing industry because the
agency anticipates it may take years to provide sufficient guidance
while addressing each scenario on an individual basis.
Regulating from the statute on a case-by-case basis also could
result in significant delays in entry of generic drug products into the
market, because it could limit the means for FDA to prevent such
delays. For example, in cases where the first ANDA applicant with a
paragraph IV certification was sued by the patent owner or NDA holder,
the ANDA applicant and the patent owner/NDA holder could enter into an
agreement that resulted in delayed resolution of the patent litigation.
If the patent owner/NDA holder did not sue subsequent applicants, there
would not be another court decision to act as an exclusivity trigger.
The first applicant might not get a court decision for a long time and
also might not market its product. Under these circumstances, no
triggering events would occur and the first ANDA would block entry of
subsequent ANDA applicants into the market.
The same blocking effect could occur even if the patent owner/NDA
holder chose not to sue the first applicant with the paragraph IV
certification, but instead entered into an agreement under which the
first applicant would not market its product and trigger exclusivity.
If the patent owner/NDA holder did not sue subsequent applicants, there
also would not be a possibility of a favorable court decision to start
the exclusivity period running.
The second alternative, proposing several regulatory
modifications, was also rejected by the agency. Satisfactorily
accomplishing the goal of promoting prompt entry of generic drug
products into the market by inhibiting entry barriers would require
many changes to the regulations. Additionally, it would impose a
significant paperwork burden on applicants not present in the proposed
rule.
The regulatory modifications would include provisions as follows:
(1) An ANDA applicant would be required to notify the agency of a
settlement agreement with a patent owner/NDA holder and whether it
permitted immediate marketing of the drug
[Page 42884]
product; (2) an ANDA applicant would be required to market its drug
product within 60 days of final approval or the agency would determine
the exclusivity period commenced on the date of final approval; (3) the
agency would determine that if the first applicant entered into an
agreement with the patent owner/NDA holder under which it received a
commercial benefit, the applicant had commercially marketed its drug
product; and (4) if an ANDA applicant brought a declaratory judgment
action against the patent owner/NDA holder that was dismissed for lack
or case or controversy, the agency would determine that the court
decision exclusivity trigger was satisfied.
These proposed regulatory modifications all have the advantage of
limiting barriers to entry of generic drug products into the market by
permitting earlier satisfaction of the exclusivity triggers in some
cases. However, they also are associated with significant
disadvantages. This alternative would impose a substantial paperwork
burden on ANDA applicants by requiring them to notify the agency of
settlements and submit documents relevant to settlement and declaratory
judgment actions. Additionally, the approach would require the agency
to collect and assess paperwork associated with financial agreements
between an ANDA applicant and patent owner/NDA holder to determine if
the applicant received a commercial benefit.
VI. Paperwork Reduction Act of 1995
This proposed rule contains information collection provisions that
are subject to review by the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). A
description of the provisions is given below with an estimate of the
annual reporting burden. Included in the estimate is the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing each
collection of information.
FDA invites comments on: (1) Whether the proposed collection of
information is necessary for proper performance of FDA's functions,
including whether the information will have practical utility; (2) the
accuracy of FDA's estimate of the burden of the proposed collection of
information, including the validity of the methodology and assumptions
used; (3) ways to enhance the quality, utility, and clarity of the
information to be collected; and (4) ways to minimize the burden of the
collection of information on respondents, including through the use of
automated collection techniques, when appropriate, and other forms of
information technology.
Title: 180-Day Generic Drug Exclusivity for Abbreviated New Drug
Applications.
Description: FDA regulations at Sec. 314.107 govern 180-day generic
drug exclusivity under the act. This proposed rule would revise
Sec. 314.107 to clarify and modify eligibility requirements for ANDA
applicants seeking 180-day marketing exclusivity for a generic drug
product. This new approach is necessary because of recent court
decisions rejecting the previous requirement that an ANDA applicant
successfully defend against a patent infringement lawsuit before it is
eligible for exclusivity.
Under proposed Sec. 314.107(e), if the first ANDA applicant for
which 180-day exclusivity has sarted wants to waive its exclusivity in
favor of a subsequent ANDA applicant, it must so notify the agency in
writing before the agency would approve the subsequent application. The
first applicant would be required to notify the agency as to which
subsequent applicant(s) it wants to waive the exclusivity in favor of
and the effective date(s) of the waiver.
The only new information collection requirement in this proposed
rule is in Sec. 314.107(e). The industry burden for all other
information collection requirements under these regulations has been
estimated by FDA and approved under OMB Control Numbers 0910-0001
(approval expires November 30, 2001) and 0910-0305 (approval expires
May 31, 2001).
Description of Respondents: Business or other for-profit
organizations.
In 1997, 431 generic drug product approvals (including different
product strengths) were distributed among 96 pharmaceutical companies.
The 64 applications that became first generic approvals for a specific
brand name drug, however, were submitted by only 30 firms. Moreover,
the 14 first generic approvals that included a paragraph IV
certification were submitted by only 5 firms. Based on this data
concerning the number of first generic approvals with paragraph IV
certifications for a particular drug product received by the agency in
1997, FDA estimates that approximately 14 waivers may be submitted
annually under proposed Sec. 314.70(e). FDA estimates that
approximately five applicants may submit such waivers and that it will
take approximately 2 hours to prepare and submit each waiver to FDA.
The following table indicates the estimated annual reporting burden for
the preparation of notices of exclusivity waivers.
Table 1.--Estimated Annual Reporting Burden1
----------------------------------------------------------------------------------------------------------------
Number of
21 CFR Section Number of Responses Per Total Annual Hours per Total Hours
Respondents Respondent Responses Response
----------------------------------------------------------------------------------------------------------------
314.107(e) 5 approx. 3 14 2 28
Total 28
----------------------------------------------------------------------------------------------------------------
\1\There are no capital costs associated with this collection of information.
In compliance with section 3507(d) of the Paperwork Reduction Act
of 1995 (44 U.S.C. 3507(d)), the agency has submitted a copy of this
proposed rule to OMB for its review and approval of these information
collections. Interested persons are requested to send comments
regarding this information collection, including suggestions for
reducing this burden, to the Office of Information and Regulatory
Affairs (address above). Submit written comments on the information
collection by September 7, 1999.
VII. Request for Comments
Interested persons may, on or before November 4, 1999, submit to
the Dockets Management Branch (address above) written comments on this
proposal. Two copies of any comments are to be submitted, except that
individuals may submit one copy. Comments are to be identified with the
docket number found in brackets in the heading of this document.
Received comments may be seen in the office above between 9 a.m. and 4
p.m., Monday through Friday.
[Page 42885]
VIII. Proposed Effective Date
FDA proposes that any final rule that may issue based on this
proposal become effective 30 days from publication of the final rule.
IX. References
The following references are on display in the Dockets Management
Branch (address above) and may be seen by interested persons between 9
a.m. and 4 p.m., Monday through Friday.
1. Congressional Budget Office, How Increased Competition from
Generic Drugs Has Affected Prices and Returns in the Pharmaceutical
Industry, 1998. Also available on the Congressional Budget Office
web site at: ``http://www.cbo.gov''.
2. FDA, Internal FDA Study, 1999.
List of Subjects in 21 CFR Part 314
Administrative practice and procedure, Confidential business
information, Drugs, Reporting and recordkeeping requirements.
Therefore, under the Federal Food, Drug, and Cosmetic Act and
under authority delegated to the Commissioner of Food and Drugs, it is
proposed that 21 CFR part 314 be amended as follows:
PART 314--APPLICATIONS FOR FDA APPROVAL TO MARKET A NEW DRUG
1. The authority citation for 21 CFR part 314 continues to read as
follows:
Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 371, 374,
379e.
2. In Sec. 314.107, redesignate paragraph (e) as paragraph (f) and
paragraph (f) as paragraph (h); revise paragraphs (a), (b) introductory
text, (b)(3)(i), (c), (d) and newly redesignated paragraphs (f) and
(h); and add new paragraphs (e) and (g) to read as follows:
Sec. 314.107 Effective date of approval of a 505(b)(2) application or
abbreviated new drug application under section 505(j) of the act.
(a) General. (1) A drug product may be introduced or delivered for
introduction into interstate commerce when approval of the application
or abbreviated application for the drug product becomes effective.
Except as provided in this section, approval of an application or
abbreviated application for a drug product becomes effective on the
date FDA issues an approval letter under Sec. 314.105 for the
application or abbreviated application.
(2) Definitions. The following definitions of terms apply to this
section:
180-day exclusivity means the 180-day period, under section
505(j)(5)(B)(iv) of the act, during which the first applicant is
protected from competition of subsequent applicants.
ANDA means an abbreviated application, as defined under Sec. 314.3.
Decision of a court refers to a final court decision finding the
patent to be invalid, unenforceable, or not infringed, resulting from
patent litigation brought against the first applicant or against any
subsequent applicant. This includes a final court decision in a
declaratory judgment action finding the patent to be invalid,
unenforceable, or not infringed.
Final court decision means a final judgment from which no appeal
can be or has been taken.
First applicant means the applicant submitting the first
substantially complete abbreviated new drug application (ANDA) for a
particular listed drug that contains ``a paragraph IV
certification''\1\ to any patent for the listed drug submitted to FDA
and published under section 505(b) of the act. The first applicant
includes all applicants filing substantially complete ANDA's with
paragraph IV certifications for the same drug product on the first day
that the agency receives applications with a paragraph IV certification
for the drug product.
---------------------------------------------------------------------------
\1\ As defined elsewhere in this section.
---------------------------------------------------------------------------
NDA means a new drug application approved under section 505(c) of
the act.
NDA holder means the applicant that owns an approved NDA, or its
representative or exclusive licensee. An NDA holder may also be the
exclusive licensee or representative of the patent owner.
Obtains a favorable court decision means either a first applicant
receives a final court decision in its patent litigation that the
patent is invalid, unenforceable, or not infringed; or in litigation of
a subsequent applicant involving the same patent there is a final court
decision that the patent is invalid, unenforceable, or not infringed.
Paragraph IV certification means a certification under section
505(j)(2)(A)(vii) of the act that a relevant patent is invalid,
unenforceable, or will not be infringed.
Patent owner means the owner of the patent which is the subject of
the paragraph IV certification, or the patent owner's representative or
exclusive licensee.
Subsequent applicant means any applicant filing a subsequent ANDA.
Subsequent ANDA means an ANDA that contains a paragraph IV
certification and refers to the same listed drug as the first
substantially complete ANDA containing a paragraph IV certification.
Substantially complete means an ANDA that contains information
required by section 505(j)(2)(A) of the act and Secs. 314.50 and
314.94, including the results of any required bioequivalence studies
or, if applicable, a request for a waiver of such studies, and a
complete statistical analysis of required bioequivalence studies
demonstrating that the drug product proposed in the ANDA meets the
appropriate bioequivalence standard.
A triggering event occurs when, during a triggering period, a first
applicant commercially markets its drug product or obtains a favorable
court decision.
Triggering period means a 180-day time period, usually beginning on
the date of the tentative approval of a subsequent ANDA, during which
180-day exclusivity may begin for the first applicant if a triggering
event occurs.
(b) Effect of patent on the listed drug. If approval of an ANDA
submitted under section 505(j) of the act or of a 505(b)(2) application
is granted, that approval will become effective in accordance with the
following:
* * * * *
(3) Disposition of patent litigation. (i)(A) Except as provided
in paragraphs (b)(3)(ii), (b)(3)(iii), and (b)(3)(iv) of this section,
if the applicant certifies under Sec. 314.50(i) or Sec. 314.94(a)(12)
that the relevant patent is invalid, unenforceable, or will not be
infringed, and the patent owner or NDA holder brings suit for patent
infringement within 45 days of receipt by the patent owner or NDA
holder of the notice of certification from the applicant under
Sec. 314.52 or Sec. 314.95, approval may be made effective 30 months
after the date of the receipt of the notice of certification by the
patent owner or NDA holder unless the court has extended or reduced the
period because of a failure of either the plaintiff or defendant to
cooperate reasonably in expediting the action; or
(B) If the patented drug product qualifies for 5 years of
exclusive marketing under section Sec. 314.108(b)(2) and the patent
owner or NDA holder brings suit for patent infringement during the 1-
year period beginning 4 years after the date the patented drug was
approved and within 45 days of receipt by the patent owner or NDA
holder of the notice of certification, the approval may be made
effective at the expiration of 7 1/2 years from the date of approval of
the application for the patented drug product.
* * * * *
(c) Exclusivity and triggering period for ANDAs. (1) Approval of
a subsequent ANDA will be made effective no sooner than 180 days from
[Page 42886]
whichever of the following dates occurs first:
(i) The date the first applicant first commences commercial
marketing of its drug product; or
(ii) The date of a decision of a court holding the relevant patent
invalid, unenforceable, or not infringed.
(2) For purposes of paragraph (c)(1) of this section, FDA will
delay the effective date of approval of a subsequent ANDA for up to 180
days from the date described in paragraph (c)(1) of this section only
when the first applicant is eligible for 180-day exclusivity. FDA will
not award 180-day exclusivity to any applicant if the first applicant
is no longer eligible to receive 180-day exclusivity.
(3) If the patent owner or NDA holder sues the first applicant
within 45 days of receipt of the first applicant's notice of paragraph
IV certification under Sec. 314.95, and the first applicant loses the
patent litigation, the first applicant must amend its certification in
accordance with Sec. 314.94(a)(12)(viii)(A) within 10 working days of
the court decision finding the patent infringed. The first applicant's
ANDA then no longer contains a paragraph IV certification and is not
eligible for 180-day exclusivity. Immediately after such an amendment,
FDA may approve eligible subsequent ANDA's.
(4) The first applicant must notify FDA of the date it commences
commercial marketing of its drug product. Commercial marketing
commences with the first date of introduction or delivery for
introduction into interstate commerce outside the control of the
manufacturer of a drug product, except for investigational use under
part 312 of this chapter, but does not include transfer of the drug
product for reasons other than sale within the control of the
manufacturer or application holder. If the first applicant does not
notify FDA within 10 working days of the date on which it began
commercial marketing of its drug product, FDA may regard the effective
date of approval as the date of the commencement of first commercial
marketing.
(5)(i) If, before the 180-day exclusivity period for the first
applicant has started, a subsequent applicant receives a tentative
approval letter for its drug product stating that the first applicant's
eligibility for 180-day exclusivity is the only obstacle to final
approval of the subsequent ANDA, the first applicant will receive the
180-day exclusivity for which it is eligible if any of the following
circumstances apply:
(A) The first applicant has received approval for its drug
product, and, within 180 days from the date of the subsequent
applicant's tentative approval, a triggering event occurs.
(B) The first applicant has not received approval for its drug
product; and the first applicant was not sued by the patent owner or
NDA holder for patent infringement; and, within 180 days from the date
of the subsequent applicant's tentative approval, a triggering event
occurs.
(C) The first applicant's drug product is not yet eligible for
approval because the first applicant was sued by the patent owner or
NDA holder for patent infringement; and, under paragraph (b)(3)(i)(A)
of this section, 30 months have not elapsed since the date the patent
owner or NDA holder received notice of the patent certification; and,
within 180 days after the expiration of the 30 months described in
paragraph (b)(3)(i)(A) of this section, a triggering event occurs.
(D) The first applicant's drug product is not yet eligible for
approval because the first applicant was sued by the patent owner or
NDA holder for patent infringement and a court granted a preliminary
injunction, as described in paragraph (b)(3)(iv) of this section,
prohibiting the first applicant from engaging in the commercial
manufacture or sale of the drug product; and, within 180 days from the
date the injunction expires, a triggering event occurs.
(E) The first applicant does not have a full approval for its drug
product; and the first applicant was sued by the patent owner or NDA
holder for patent infringement and is eligible for approval under
paragraph (b)(3) of this section; and, within 180 days from the date of
the subsequent applicant's tentative approval, a triggering event
occurs.
(ii) If the first applicant does not begin its period of 180-day
exclusivity by the end of the appropriate 180-day period (triggering
period) described in paragraphs (c)(5)(i)(A) through (c)(5)(i)(E) of
this section, FDA will approve otherwise eligible ANDA's for the drug
product.
(d) Delay due to Sec. 314.108 exclusivity. The agency will delay
the effective date of the approval of an ANDA or a 505(b)(2)
application if delay is required by the exclusivity provisions in
Sec. 314.108. When the effective date of an application is delayed
under both this section and Sec. 314.108, the effective date will be
the later of the two dates specified under this section and
Sec. 314.108.
(e) Waivers of exclusivity by abbreviated new drug applicants. For
purposes of paragraph (c)(1) of this section, a first applicant for
which the 180-day exclusivity has started with a triggering event may
waive its exclusivity to permit FDA to approve one or more subsequent
ANDA's during the 180-day exclusivity period. FDA may approve a
subsequent applicant's ANDA only after the first applicant notifies the
agency in writing that it is waiving its 180-day exclusivity with
respect to a particular subsequent applicant(s) or application(s), and
identifies the effective date(s) of the waiver.
(f) Court actions. (1) For purposes of establishing the effective
date of approval based on a court judgment, the following dates will be
deemed to be the date of the final court decision on the patent issues:
(i) If the district court enters a decision that the patent is
invalid, unenforceable, or not infringed, and the decision is not
appealed, the date on which the right to appeal lapses;
(ii) If the district court enters a decision that the patent is
invalid, unenforceable, or not infringed, and the decision is appealed,
the date of the first decision or order by a higher court holding or
affirming the decision of the district court that the patent is
invalid, unenforceable, or not infringed;
(iii) If the district court enters a decision that the patent is
infringed, and the decision is appealed, the date on which the district
court enters a judgment that the patent is invalid, unenforceable, or
not infringed under a mandate issued by a court of appeals; and
(iv) The date of a settlement order or consent decree signed by a
Federal judge that enters final judgment and includes a finding that
the patent is invalid, unenforceable, or not infringed.
(2) The applicant must submit a copy of the entry of the order or
judgment to the Office of Generic Drugs (HFD-600) or to the appropriate
division in the Office of Review Management (HFD-20) within 10 working
days of a final judgment. The patent owner and NDA holder may also
submit this information.
(g) Effect of dismissal of litigation on 30-month stay. If the
patent litigation between the ANDA applicant and the patent owner or
NDA holder described in paragraph (b)(3)(A) of this section is
dismissed without a court decision on the merits of the patent claim,
whether the dismissal is with or without prejudice, the agency may
immediately approve the ANDA that was the subject of the litigation, if
it is otherwise eligible for approval.
(h) Computation of 45-day time clock. (1) The 45-day clock
described in paragraph (b)(3) of this section begins
[Page 42887]
on the day after the date of receipt of the applicant's notice of
certification by the patent owner or NDA holder, whichever date is
later. When the 45th day falls on Saturday, Sunday, or a Federal
holiday, the 45th day will be the next day that is not a Saturday,
Sunday, or Federal holiday.
(2) The ANDA applicant or 505(b)(2) applicant must notify FDA
immediately in writing of the filing of any legal action for patent
infringement filed within 45 days of receipt of the notice of
certification. If FDA is not so notified by the ANDA or 505(b)(2)
applicant, or by the patent owner or NDA holder, before the expiration
of the 45-day time period or the completion of the agency's review of
the application, whichever occurs later, approval of the ANDA or the
505(b)(2) application will be made effective immediately upon
expiration of the 45 days or completion of the agency's review and
approval of the application, whichever date is later. The notification
to FDA of the legal action must include the information in paragraphs
(h)(2)(i) through (h)(2)(iv) of this section and be submitted according
to paragraph (h)(2)(v) of this section as follows:
(i) The ANDA or 505(b)(2) application number;
(ii) The name of the applicant;
(iii) The established name of the drug product or, if no
established name exists, the name(s) of the active ingredient(s), the
drug product's strength, and the dosage form;
(iv) A certification that an action for patent infringement,
identified by number, has been filed in an appropriate court on a
specified date; and
(v) An ANDA applicant must notify FDA's Office of Generic Drugs
(HFD-600). A 505(b)(2) applicant must notify the appropriate review
division in the Center for Drug Evaluation and Research or the Office
of Generic Drugs if it is reviewing the application. A patent owner or
NDA holder may also notify FDA of the filing of any legal action for
patent infringement.
(3) If the patent owner or NDA holder waives its opportunity to
file a legal action for patent infringement within 45 days of a receipt
of the notice of certification and the patent owner or NDA holder
submits to FDA a valid waiver before the 45 days elapse, approval of
the ANDA or the 505(b)(2) application will be made effective upon
completion of the agency's review and approval of the application. FDA
will only accept a waiver in the following form:
(Name of patent owner or NDA holder) has received notice from
(name of applicant) under (section 505(b)(3) or (j)(2)(B) of the
act) and does not intend to file an action for patent infringement
against (name of applicant) concerning the drug (name of drug)
before (date on which 45 days elapses). (Name of patent owner or NDA
holder) waives the opportunity provided by (section 505(c)(3)(C) or
(j)(B)(2)(iii) of the act) and does not object to FDA's approval of
(name of applicant)'s (505(b)(2) or ANDA) for (name of drug) with an
immediate effective date on or after the date of this letter.
Dated: July 29, 1999.
Margaret M. Dotzel,
Acting Associate Commissioner for Policy.
[FR Doc. 99-20353 Filed 8-5-99; 8:45 am]
BILLING CODE 4160-01-F