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Executive Summary

PMA's board approval May 15 of House Health Subcmte. Chairman Waxman's (D-Calif.) patent restoration/ANDA package is contingent upon changes in the procedure for generic firms to notify brandname companies of the intention to market a me-too version of a still patented pioneer product. Under the most recent compromise worked out between representatives of the brandname and generic industry and the Waxman staff, generic firms must notify patent holders of a challenge to a product's patent validity. The "patent certification" procedure bars FDA from approving the ANDA until a federal court rules against the patent or until two years have passed since the generic firm notifies the brandname firm, whichever comes first ("The Pink Sheet" May 14, p. 7). The final issue that remains to be resolved from the PMA board is the point at which a generic firm may go to court seeking a declaratory judgment to start the two-year time clock prior to marketing. Representatives of PMA and the Generic Pharmaceutical Industry Assn. met May 11 with Waxman and struck an agreement as to the declaratory judgment procedure. A summary of the agreement, prepared by Waxman's staff, states that a generic company can begin the two-year period as soon as it "takes a concrete step toward seeking approval of an ANDA, including the purchase of raw material for a bioequivalence of bioavailability study, but in no event later than the filing of an ANDA." The two-year period may be extended or shortened if the judge determines either party is "unduly" delaying the court proceedings, the summary notes Pre-Expiration Testing Clause May Be Key To Resolving PMA's Concern Over Hearing In Court The May 11 agreement also provides the patent holder 30 days, following notification of the challenge, to file for declaratory judgment; the patent challenger may not file an ANDA until the 30-day period has expired. In addition, the suit must be brought "in the judicial district where the defendant has its 'principal place of business' or a 'regular and established place of business,'" according to the summary. On May 18 patent lawyers representing both the generic and the brandname industries discussed different ways the May 11 agreement could assure that declaratory judgment requests under the compromise will be ripe for judicial review. Although the PMA board at its special meeting agreed in principle to the May 11 arrangement, it reportedly questioned whether patent challenge cases brought to court just after a generic company's purchase of raw material are actually "ripe" for judicial review. The assn. was concerned that the two-year period could end and the me-too could be marketed before a declaratory judgment request could be adjudicated. Consequently, the board suggested the two-year clock should not begin until the ANDA is approved. A possible resolution could involve a redrafting of the section that explicitly allows a generic firm to conduct bioavailability/bioequivalence testing of still-patented brandname products. If such early testing were allowed only when (a) a patent is being challenged or (b) two years or less of patent life remains, the courts would have more grounds for considering the patent challenge ripe. As currently drafted, the compromise package eliminates legal controversy over early testing by okaying pre-expiration testing by competitors. Other concerns PMA expressed before its May 15 meeting involved trade secrets and the "due diligence" section of the compromise package. In a May 11 memorandum, Engman assured the board: "It is clear that Waxman will (1) codify (and clarify) existing FDA regulations prohibiting disclosure of trade secrets prior to approval of all ANDAs, and (2) explicitly recognize that scientific dispute does not constitute lack of due diligence in pursuing" an IND or an NDA. Senate Labor & Human Resources Cmte. Chairman Hatch (R-Utah) sent the assn. a second letter to re-emphasize his support of the compromise legislation. Noting that "there was some confusion among PMA members over Congressman Waxman's and my joint letter to you this past week" ("The Pink Sheet" May 7, p. 3), Hatch said: "I am quite offended that certain members of your organization have questioned my sincerity in this matter." The senator explained that he is "anxious to see the PMA and GPIA [Generic Pharmaceutical Industry Assn.] resolve the few remaining ANDA/patent term restoration differences. You need to know, as we stated in our letter, we will seriously consider moving ahead in Congress in the absence of such agreement. We intend to move on this within the next few weeks." Hatch's cmte. has jurisdiction in the Senate over ANDA legislation. Waxman's compromise legislation is now expected to be subject to a Hill hearing on June 13, before Rep. Kastenmeier's (D-Wisc.) House Judiciary/Courts Subcmte. Kastenmeier, whose subcmte. has jurisdiction over patent legislation in the House, has given the negotiations a tangible deadline. If they are not finally resolved, the compromise legislation will not be added to the hearing agenda (which also includes a bill for patent extension for agricultural chemicals). Reportedly, Kastenmeier would then block any attempts to add the drug bill to the chemical bill through amendments. Hearings on the compromise are said to be necessary because several subcmte. members have concerns about such patent provisions as the 10-year extension for drugs approved between 1982 and enactment and the authorization of FDA to determine instances when monopoly rights should be given to nonpatentable products. HILL STAFF EXPLAINS MAY 11 CHANGES From a description prepared by Rep. Waxman's staff of changes in the patent/ANDA bill worked out May 11. Approval of an ANDA shall be made effective in accordance with the following: Immediately: If the NDA holder failed to file product and use patent information. Patent Expiration: Upon the expiration any product or controlling use patent. Claim of Invalidity or Non-Infringement of Product or Controlling Use Patent: If the generic certifies that a product patent or a controlling use patent (i.e. a use patent covering an indication for which the generic is seeking approval) is invalid or will not be infringed, approval of the ANDA may not be made effective until a decision on the request for a declaratory judgment or 24 months after notification (whichever occurs first) if: (a) the patent owner filed for a declaratory judgment within 30 days of notification (and the generic may not file for a declaratory judgment before the expiration of this period), (b) the suit for declaratory judgment is brought in the judicial district where the defendant has its "principal place of business" or a "regular and established place of business," and (c) the judge has not shortened or extended the 24 month period because either party has unduly delayed discovery or failed to reasonably cooperate in expediting the case for trial. Notification by the generic of a certification of invalidity or non-infringement regarding a product patent or a controlling use patent may be given at any time after the generic takes a concrete step toward seeking approval of an ANDA including the purchase of raw material for a bioequivalence or bioavailability study but in no event later than the filing of an ANDA. Such notification must include a complete statement of the factual and legal reasons for the certification. The above remedy is in addition to any remedy under current law except that: (1) a generic is barred from suing for declaratory judgment before the expiration of the 30 day period during which the patent owner may file for a declaratory judgment; and (2) a suit for declaratory judgment brought by either party after the 30 day period must be brought in the judicial district where the defendant has its "principal place of business" or a "regular and established place of business."

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