Orange Book Blog

At the intersection of Patent and FDA Law

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  • Apotex Accuses Cephalon and Four Generic Drug Companies of Monopolizing the U.S. Market for Provigil

    Generic drug-maker Apotex filed a complaint on June 26, 2006 in the U.S. District Court for the Eastern District of Pennsylvania accusing Cephalon Inc. and its licensees, generic drug-makers Barr Laboratories, Mylan Laboratories, Teva Pharmaceuticals, and Ranbaxy Laboratories, with monopolization under the Clayton Act and the Sherman Act, and intent to monopolize under the Sherman Act.  The claims are based on patent infringement reverse payment settlement agreements between the parties under which none of the four generic licensees will commercialize a Provigil generic before April 2012.

    Cephalon markets Provigil (modafinil) for treating narcolepsy, and listed U.S Patent Nos. 4,927,855 (expires May 22, 2007) and RE 37,516 (expires October 6, 2014) in the Orange Book for Provigil. According to the Apotex complaint, exclusivity for Provigil as a new chemical entity expired December 24, 2003.  Each of Cephalon's generic licensees filed ANDAs on December 24, 2002 containing a Paragraph IV certification with respect to RE 37,516.  As a result, each of the four will share the 180 day marketing exclusivity for generic Provigil

    Cephalon filed suit in the U.S. District Court for the District of New Jersey on March 28, 2003, charging each of the generic licensees with infringement of RE 37,516.  The 30 month automatic stay against marketing of a Provigil generic expired September 28, 2005.  Cephalon subsequently received Orphan Drug exclusivity for Provigil, which extended until December 25, 2005.  Apotex later filed its ANDA for generic Provigil, meaning that it could not enter the market until after the 180 day exclusivity period lapsed.

    Apotex asserted in its complaint that, during discovery, Cephalon's generic licensees concluded that RE 37,516 had been obtained through inequitable conduct.  Apotex further asserted that Barr, Mylan, Teva, and Ranbaxy each had received tentative approval for their generic versions of Provigil prior to December 24, 2005 and that, in fear of imminent market entry by the generics based on their conclusion that RE 37,516 was invalid due to inequitable conduct (among other reasons), Cephalon entered into the disputed settlement agreements with each of the parties. Apotex thus based its monopolization arguments, at least in part, on assertions of: (a) fraudulent conduct by Cephalon in obtaining RE 37,516; (b) patent misuse in listing RE 37,516 in the Orange Book (or in not delisting it after settlement of the litigation); and (c) anti-competitive reverse payment agreements with Barr, Mylan, Teva, and Ranbaxy that keep generic Provigil off the market through until 2012, when in the absence of such agreements generic Provigil would have entered the market in late 2005 or early 2006.

    Apotex argued that this delay in generic entry, and the resulting delay in triggering of the 180 day exclusivity, caused it specific harm in not being able to market its own generic Provigil, and also caused harm to consumers by keeping the price of Provigil artificially high.

    Cephalon has also been sued for alleged antitrust violations arising out of the same settlement agreements in multiple class actions.  On June 30, 2006, the Pennsylvania Employees Benefit Trust Fund (PEBTF) filed a nationwide class action suit against Cephalon on behalf of end-payors.

    In addition to the Apotex and PEBTF suits, at east eight other suits have been filed against Cephalon in the U.S. District Court for the Eastern District of Pennsylvania relating to the Provigil settlement agreements.

  • Fourth Circuit Reaffirms Legality of Authorized Generics

    The Court of Appeals for the Fourth Circuit today affirmed a district court decision dismissing a lawsuit brought by Mylan Pharmaceuticals against the FDA, in which Mylan asserted that the FDA did not have the authority to approve an authorized generic of Proctor & Gamble’s Macrobid (nitrofurantoin).  The decision is consistent with Teva v. Crawford, which was decided last year by the Court of Appeals for the D.C. Circuit.

    In the case decided today, Mylan held rights to the 180 day exclusivity period for marketing generic nitrofurantoin, a drug used to treat urinary tract infections, with annual sales of $80 million.  A third party licensed by Procter & Gamble launched an authorized generic just as Mylan began marketing its own generic version of Macrobid.

    In the opinion, written by Judge M. Blane Michael for a unanimous panel, the court first observed:

    Mylan concedes that the language of section 355 (j)(5)(B)(iv) is plain.  The provision makes no mention of drugs under approved NDAs.  It speaks only about the rights of the paragraph IV ANDA applicant who files first as against all subsequent paragraph IV ANDA applicants.

    The court thus held that it was not arbitrary or capricious for the FDA to allow marketing of authorized generic drugs, and therefore the district court correctly dismissed the case for failure to state a claim upon which relief can be granted.  The Fourth Circuit concluded:

    Although the introduction of an authorized generic may reduce the economic benefit of the 180 days of exclusivity awarded to the first paragraph IV ANDA applicant, section 355(j)(5)(B)(iv) gives no legal basis for the FDA to prohibit the encroachment of authorized generics on that exclusivity.

  • Pfizer Subsidiary to Launch Authorized Generic Zoloft

    Pfizer announced that its subsidiary, Greenstone Ltd., will begin marketing an authorized generic version of Pfizer's anti-depressant Zoloft as soon as Teva introduces its generic version, which could happen as early as today.  As reported by Reuters, Teva's share price fell 3.9% on the news.  Teva, through its acquisition of Ivax, received 180 days of marketing exclusivity for generic Zoloft.

    The Boston Globe reported that Teva took the news of Pfizer's plans in stride.  According to a spokesperson for Teva, "The use of authorized generics by branded drug makers has been a common practice for years . . . .  Teva always expects to compete against an authorized generic whenever it launches a product within 180 days of exclusivity."

    A much different tone regarding authorized generics was sounded by the Generic Pharmaceutical Association (GPhA).  In response to a report released by the Pharmaceutical Research and Manufacturers of America (PhRMA) concluding that authorized generics can lead to lower drug prices, GPhA issued a press release in which it urged Congress to prevent the introduction of authorized generics during the 180 day exclusivity period.  GPhA asserted that authorized generics have appeared only in the last few years, and they represent "an anti-competitive response designed to deter generic companies from pursuing patent challenges by significantly diminishing the potential incentives" embodied in the 180 day exclusivity period.

    The difference in tone could reflect the fact that individual generic companies currently have options for selling generic drugs during the 180 day exclusivity period: (a) trying to obtain the 180 day period of exclusivity under Hatch-Waxman, or (b) negotiating with brand drug companies to become authorized generic distributors during the 180 exclusivity period.  The GPhA proposal would eliminate the second option, and may not be embraced by all GPhA member generic companies.

  • Teva Pulls Generic Biaxin XL Off the Market Following Emergency Motion Filed by Abbott

    In response to an emergency motion for preliminary injunction enforcement filed by Abbott Laboratories on June 26 in the U.S. District Court for the Northern District of Illinois, Teva Pharmaceuticals USA, Inc. announced on June 27 that it will cease sales of a generic version of Abbott's Biaxin XL (clarithromycin extended release), which Teva had initiated following a June 22 decision by the U.S. Court of Appeals for the Federal Circuit vacating the district court's June 2005 preliminary injunction order.  As previously reported here, a divided Federal Circuit panel held that Teva had raised substantial questions as to the validity of Abbott's patents covering Biaxin XL, and thus vacated the preliminary injunction order.

    Abbott's emergency motion asserted that the preliminary injunction order remained in effect until the Federal Circuit issued a mandate to the District Court, which would generally not occur until at least 21 days following entry of the Federal Circuit's judgment.  Abbott's motion noted that this time period is likely to be further extended, as it intends to file a petition for rehearing, which would automatically stay the mandate until disposition of the petition.  Abbott's motion requests the District Court not only to order Teva to comply with the preliminary injunction order, but also to hold Teva in contempt and sanction it for violating the preliminary injunction order.

    In a June 27 press release, Teva announced that Abbott agreed to a briefing schedule concluding on June 29 and that Teva agreed to refrain from further sales of this product pending the outcome of the motion. Teva's response in pulling its generic Biaxin XL off the market after approximately 3-4 days is puzzling, as one would assume that the issues raised by Abbott in its motion were fully considered by Teva prior to market entry.

    Teva's response also serves to undercut at least one argument made by generic rival Andrx Pharmaceuticals, in its June 26 motion to vacate the District Court's preliminary injunction order entered against it.  Andrx was also sued by Abbott in the Northern District of Illinois over the same Biaxin XL patents that Teva was sued on.  In a consolidated order in November 2005, the district court preliminarily enjoined Andrx and Ranbaxy from selling a generic equivalent of Biaxin XL.  Appeals to the Federal Circuit by Ranbaxy and Andrx are pending.  In its motion to vacate the District Court's preliminary injunction order, Andrx argued (in part) that, given generic entry into the Biaxin XL market by Teva, Abbott was no longer entitled to a presumption of irreparable harm. At least for now, that argument appears unavailing.

  • Senators Introduce Bill to Ban Reverse Payment Settlements of Hatch-Waxman Cases

    In response to the Supreme Court's denial of certiorari in FTC v Schering earlier this week, four senators introduced Senate bill S3582 yesterday, which seeks to prohibit brand name drug companies from entering into "reverse payment" settlements with generic drug companies.  In FTC v. Schering, the FTC had petitioned the Court to decide whether a reverse payment settlement from Schering to generic drug makers was in violation of antitrust laws.  Denial of certiorari by the Supreme Court left standing an Eleventh Circuit decision holding that the settlement did not violate antitrust laws.

    S3582 was introduced by Senator Kohl (D-WI); co-sponsors were Senators Leahy (D-VT), Grassley (R-IA), and Schumer (D-NY).  In Sen. Kohl's press release announcing introduction of the bill, its sponsors decried the effect that reverse payment settlement agreements have on market entry of lower-cost generic drugs, asserting that such settlement agreements undermine true competition, and thus should not be allowed.

    The current version of S3582 would amend Section 5 of the Federal Trade Commission Act (15 U.S.C. 45) by adding a new sub-section making it an unfair method of competition for "a person, in connection with the sale of a drug product, to directly or indirectly be a party to any agreement resolving or settling a 'patent infringement claim' in which (a) an ANDA filer receives anything of value; and (B) the ANDA filer agrees not to research, develop, manufacture, market, or sell the ANDA product for any period of time."

    The proposed bill would exclude from its reach any agreement in which the value paid to an ANDA filer by the NDA holder "includes no more than the right to market the ANDA product prior to expiration of the patent that is the basis for the patent infringement claim." The bill defines "patent infringement claim" to be "any allegation [of possible patent infringement] made to an ANDA filer, whether or not included in a complaint filed with a court of law."  The statute thus seeks to reach beyond reverse payment agreements resolving patent infringement litigation, to include pre-litigation settlement agreements as well.

    S3582 has been referred to the Committee on Commerce, Science, and Transportation.

    NOTE:  Thanks to a Kohl staffer for providing an advance copy of the bill.

  • PhRMA Study Finds Authorized Generics Lead to Lower Drug Prices

    The Pharmaceutical Research and Manufacturers of America (PhRMA), the trade group representing innovator drug companies, released a new study yesterday concluding that authorized generic drugs lead to lower drug prices for consumers.  PhRMA commissioned IMS Consulting to conduct the study.

    According to PhRMA’s press release announcing the study:

    The analysis examined case studies with and without authorized generics and found that with an authorized generic on the market during the exclusivity period, discounts to brand medicines were greater–on average 15.8 percentage points greater–than instances when a generic company did not face competition from an authorized generic.

    The most common criticism of authorized generics is that they reduce incentives for generic drug companies to develop generic drugs in the first place, by diminishing their profits during the 180-day exclusivity period.  Generic drug makers would likely criticize PhRMA’s new study on the basis that it does not examine the long-term effects of authorized generics, which might include fewer generic drugs becoming available.

    As reported previously on this blog, the FTC is undertaking its own study of authorized generics and expects to complete its study sometime next year.

    UPDATE:

  • Supreme Court Denies Certiorari in FTC v. Schering: reverse payment settlement of Hatch-Waxman case avoids antitrust scrutiny by high court

    The Supreme Court this morning denied review of FTC v. Schering, without comment.  The FTC had petitioned the Court to decide whether a "reverse payment" settlement from an innovator drug company to a generic drug maker in a Hatch-Waxman case violated the antitrust laws.  Denial by the Supreme Court leaves standing an Eleventh Circuit ruling that the settlement was legal.

    Earlier, the Court had asked the Department of Justice for its views on the case, and the DOJ filed a brief advising the Court to deny review.  The FTC then filed a supplemental brief asking the Court to at least hold the case pending the outcome of In re Tamoxifen Citrate Antitrust Litigation, which is currently on petition for rehearing en banc in the Second Circuit.  That case involves a similar reverse payment settlement of Hatch-Waxman litigation.

    The FTC is no doubt bitterly disappointed that the Supreme Court denied its cert petition.  Last month, the FTC Commissioner sounded a warning that if the Court denied review, drug companies "will have carte blanche to avoid competition and share resulting profits, and we will see minimal competition before patent expiration."

    RELATED READING:

  • FDA Appeals Omnitrope Case to D.C. Circuit

    The FDA recently appealed the district court case that forced it to make a decision on Sandoz’s drug application for Omnitrope, which later led to FDA to approve Omnitrope.  Sandoz has called Omnitrope the first ever biogeneric drug.

    In a decision on April 10, the U.S. District Court for the District of Columbia held, on summary judgment, that 21 U.S.C. 355(c) requires the FDA act on a new drug application within 180 days of receiving it.  More specifically, within 180 days the FDA must either approve the new drug application or give the applicant notice of an opportunity for a hearing.

    The FDA did not deny that it did neither of those things.  Instead, the FDA argued that the statute was aspirational rather than mandatory.  The FDA argued in the alternative that the court should respect the autonomy of the executive branch and let the FDA set its own priorities.

    IN OTHER BIOGENERICS NEWS, FDANews is running a story tomorrow quoting a Senate staffer who said that Congress would likely not take up legislation establishing a regulatory pathway for biogenerics until 2008.

    RELATED READING:

    NOTE:  thanks to Kurt Karst for providing a copy of the FDA’s Notice of Appeal.

  • FDA Grants Final Approval to Ivax and Ranbaxy for Generic Zocor

    The FDA today granted final approval to Ivax and Ranbaxy to market generic versions of Zocor (simvastatin).  Additionally, it appears the FDA has granted generic marketing exclusivity to Ivax and Ranbaxy for the next 180 days.

    The FDA approval comes despite a last-ditch effort by Novartis subsidiary Sandoz to prevent the FDA from granting final approval and marketing exclusivity to Ivax and Ranbaxy.  Earlier today, the U.S. District Court for the District of Columbia refused to grant Sandoz’s request for a temporary restraining order against the FDA.

    In a press release announcing the approval, the FDA stated, "This approval is another example of our agency’s efforts to increase access to safe and effective generic alternatives as soon as the law permits."  The FDA has appealed a district court ruling that required the FDA to grant final approval to Ivax and Ranbaxy today, the day Merck’s final patent on Zocor expired.  That appeal is still pending before the D.C. Circuit.

    RELATED READING:

    UPDATES:

  • Federal Circuit Vacates Preliminary Injunction Against Teva Relating to Generic Version of Abbott’s Biaxin XL (Clarithromycin Extended Release)

    In a 31-page opinion by Judge Prost, joined by Judge Gajarsa, a Federal Circuit panel held yesterday that Teva had raised a substantial question as to the validity of Abbott’s patents covering its extended release clarithromycin product, Biaxin XL, and therefore vacated a preliminary injunction that had been entered against Teva by the U.S. District Court for the Northern District of Illinois.

    Clarithromycin is used to treat bacterial respiratory infections.  Annual sales of Biaxin XL are approximately $255 million.

    The majority opinion found that Teva had raised a substantial question that the patent in suit was obvious.  For example, with respect to two claims covering extended release formulations of clarithromycin, the court held that Abbott’s own prior art patent on azithromycin compositions rendered the clarithromycin claims of the patent in suit obvious.  In reaching this holding, the majority inferred an "admission" from Abbott’s prior art patent (the ‘190 patent):

    We presume that Abbott filed and prosecuted the ‘190 patent respresenting that claim 14 of the ‘190 patent [directed to azithromycin compositions] satisfies the written description and enablement requirements of 35 U.S.C. 112.  See Amgen Inc. v. Hoechst Marion Roussel, Inc., 314 F.3d 1313 (Fed. Cir. 2003) ("We hold a presumption arises that both the claimed and unclaimed disclosures in a prior art patent are enabled.").  Because the ‘190 patent explicitly discloses only clarithromycin controlled release compositions, yet claims azithromycin compositions, we conclude that Abbott has represented to the [patent office] that the differences between clarithromycin and azithromycin were such that azithromycin could be substituted into a controlled release clarithromycin composition by a person of ordinary skill in the art without undue experimentation.

    Judge Newman wrote a 9-page dissent in which she characterized the majority opinion as a "de novo and incorrect contrary ruling."  She stated, "My colleagues ignore the district court’s analysis, offering neither deference nor acknowledgement."  Specifically, Judge Newman said the court should have deferred to the district court’s finding that the substitution of azithromycin with clarithromycin was merely "obvious to try."  She wrote, in summary, "My colleagues conclude that claim 4 of the [patent in suit] is ‘vulnerable to allegations of invalidity,’ and find ‘a substantial argument’ as to other claims.  These are not the criteria of likelihood of success."

    The suit was initiated in March 2005.  A bench trial is scheduled for March of next year.  Teva has yet not indicated when it intends to launch its generic version of Biaxin XL.