FTC Backs Single 30-Month Stay On Generic Rx Approvals In Patent Litigation

The Federal Trade Commission supports a limit of one 30-month stay of approval on generic drugs in patent litigation.

The law should "permit only one automatic 30-month stay per drug product per ANDA to resolve infringement disputes over patents listed in the Orange Book prior to the filing date of the generic applicant's ANDA," FTC says in a July 30 report, "Generic Drug Entry Prior to Patent Expiration: An FTC Study."

The proposal is one of two main recommendations for legislation that would "mitigate the possibility of abuse [of the Waxman/Hatch Act] that deters more generic drugs from becoming available."

The generic drug legislation passed by the Senate (S 812) would allow only one 30-month stay, but patents eligible for the stay would be more restricted than under FTC's recommendation. The Senate bill would allow stays only for patents filed within 30 days of an NDA's approval (see ¹ ).

FTC based its recommendation on the "problematic" history of granting 30-month stays based on "later-issued patents." FTC found eight brand-name drug products for which the manufacturer listed a patent after the first ANDA was filed (see chart: " ² Stays From Late-Listed Patents ").

Courts have ruled in four of the cases that the late-listed patents leading to the additional stays were invalid or not infringed. The remaining four "involved patents whose listing in the Orange Book could have been the subject of non-frivolous challenges by the generic applicant, had either the FDA review of listability or a private right of action to challenge listability under Hatch/Waxman been available."

For four of the drugs (Abbott's Hytrin tablets, Bristol-Myers Squibb's BuSpar , GlaxoSmithKline's Paxil and Biovail's Tiazac ), "the brand-name company applied for the patents more than one year after the FDA had approved the drug product covered by the NDA, suggesting that the patents cannot cover the approved drug product and be valid, due to the 'on sale bar' of patent law," the report maintains.

The late-listed patents for Hytrin, Bristol's Platinol , Bristol's Taxol and BuSpar were ruled invalid or not infringed in court, while the suit involving the late-listed Tiazac patent was dismissed following an FTC enforcement action (³ (Also see "FTC/Biovail Tiazac Settlement Blocks Royalties From Andrx On Generic" - Pink Sheet, 29 Apr, 2002.), p. 26). Litigation related to Paxil and Pfizer's Neurontin tablets and capsules is pending.

The brand-name drug industry is presenting a drug-by-drug defense on Capitol Hill for some of the cases mentioned in FTC's report.

The industry is arguing that the Tiazac case is a generic versus generic issue, not a brand-name issue. For Neurontin, the industry claims the late-listed patent eliminated a toxic by-product in the drug, and for Paxil, the industry says GSK is justified in its lawsuits because Apotex tried to bring a generic to the market only five years after the drug came to market.

While FTC's report was published too late to affect the outcome of the Senate vote on S 812, it could influence the debate if the House chooses to consider generic drug legislation.

Although FTC does not explicitly recommend giving generic firms private right of action to challenge Orange Book listings, the report notes that the lack of a mechanism to delist a patent "may have real world consequences....The commission is aware of at least a few instances in which a 30-month stay was generated solely by a patent that raised legitimate listability questions."

FTC noted that "an antitrust suit involving complex elements beyond the propriety of the listing is the only current mechanism to challenge" an Orange Book listing. "At a minimum," FTC suggested, "it appears useful for the FDA to clarify its listing requirements" (see ⁴ (Also see "Paxil Late-Listed Patents Are Questionable For Orange Book Listing – FTC" - Pink Sheet, 5 Aug, 2002.) ).

"Another remedy that may warrant consideration would permit a generic applicant to raise listability issues as a counterclaim in the context of patent infringement litigation already initiated by the brand-name company in response to a paragraph IV notice."

FDA should also have a mechanism to "comment on the scope of an NDA" to help in resolving listing disputes, as it did in Biovail's Tiazac patent suit (⁵ , p. 5).

FTC's other main legislative recommendation relates to disclosing the details of patent litigation settlement agreements to the commission.

Congress should "require brand-name companies and first generic applicants to provide copies of certain agreements" to FTC, the report says. Notifying FTC of settlements would be required under bills by Sens. Patrick Leahy (D-Vt.) (S 754) and John Rockefeller (D-W.Va.) (S 2677) (⁶ (Also see "Rockefeller Generic Rx Bill Would Penalize Brands For Failed Patent Defense" - Pink Sheet, 24 Jun, 2002.), p. 22).

Of the 20 final settlements of patent infringement cases, 14 "had the potential to delay the start of the first generic applicant's 180-day exclusivity," the study found, although in some cases the delay did not occur due to subsequent events. There were also four interim agreements; FTC challenged three because the generic firm received payment not to enter the market.

FTC recently lost a court decision on Schering's reverse payments involving K-Dur , with an administrative judge ruling that they are not an "established" violation (⁷ (Also see "K-Dur Case: Reverse Payments Not “Established” Antitrust Violations – Judge" - Pink Sheet, 8 Jul, 2002.), p. 3).

The commission made three "minor" recommendations related to 180-day exclusivity: "clarify that 'commercial marketing' includes the first generic applicant's marketing of the brand-name product" and that exclusivity is triggered by "the decision of any court on the same patent being litigated by the first generic applicant" or a "decision dismissing a declaratory judgment action for lack of subject matter jurisdiction."

The report also recommends that legislation should "ensure that brand-name companies have recourse to the courts to protect their rights under later-issued patents. Congress may wish to overrule" a federal court ruling in Allergan v. Alcon that questioned that right, FTC said (⁸ (Also see "Alphagan Ruling Would Limit Need For Patent Certifications" - Pink Sheet, 20 May, 2002.), p. 12).