(c) 2007 renita rathinam authorized generics practice and the battle over generic exclusivity in the...

(c) 2007 Renita Rathinam (c) 2007 Renita Rathinam

Authorized Generics Practice and the Battle Authorized Generics Practice and the Battle

Over Generic Exclusivity in the U.S. MarketOver Generic Exclusivity in the U.S. Market

Renita S. RathinamRenita S. Rathinam([email protected])([email protected])Sughrue Mion, PLLCSughrue Mion, PLLCWashington, D.C.Washington, D.C.


Lecture OverviewLecture Overview

I.I. Practice Overview Practice Overview II.II. Statutory Background Statutory Background III.III. Policy DebatePolicy DebateIV.IV. FDA PositionFDA PositionV.V. Challenging the Legality of AG Practice Challenging the Legality of AG Practice

in U.S. courtsin U.S. courtsVI.VI. FTC InvolvementFTC InvolvementVII.VII. LegislationLegislation


Authorized Generics Practice OverviewAuthorized Generics Practice Overview

Authorized Generics (AGs) DefinedAuthorized Generics (AGs) DefinedGenerallyGenerally: pharmaceuticals marketed by or on : pharmaceuticals marketed by or on behalf of an innovator drug co., but sold under a behalf of an innovator drug co., but sold under a generic namegeneric name

*a.k.a- “branded.” “pseudo” or “flanking” *a.k.a- “branded.” “pseudo” or “flanking” generic generic

Typical timing of AG market entryTypical timing of AG market entry: : – end of the NDA holder’s exclusivity periodend of the NDA holder’s exclusivity period

before generic competition or with the introduction before generic competition or with the introduction of a generic version of the brand name drugof a generic version of the brand name drug



Historical Overview and Current practiceHistorical Overview and Current practice

Practice can be traced back to the 1990’sPractice can be traced back to the 1990’s--CRS Report for Congress (Aug. 8, 2006) (“CRS Report”)CRS Report for Congress (Aug. 8, 2006) (“CRS Report”)

Authorized generics practice did not become Authorized generics practice did not become prominent until recent years prominent until recent years

-Id; see also FDA Response, Docket Nos. 2004P-0075 & -Id; see also FDA Response, Docket Nos. 2004P-0075 & 2004P-0261, at 6-72004P-0261, at 6-7

Today, AG practice for extending brand name Today, AG practice for extending brand name drug life cycles is significantly more widespreaddrug life cycles is significantly more widespread



Bradley Pharmaceuticals- Pamine® (methscopolamine Bromide)Bradley Pharmaceuticals- Pamine® (methscopolamine Bromide)

"While Pamine "While Pamine ®®represented approximately 7% of Bradley Net represented approximately 7% of Bradley Net Sales, during the nine months ended September 30, 2006,Sales, during the nine months ended September 30, 2006, we we proactively planned for this introduction and are pleased to be proactively planned for this introduction and are pleased to be in a position to successfully execute our strategy of extending in a position to successfully execute our strategy of extending the life cycles of our established brands.the life cycles of our established brands. The introduction of the The introduction of the Pamine® generic expands the A. Aarons line of generic products Pamine® generic expands the A. Aarons line of generic products offered to the wholesale and chain pharmacy distribution channels. offered to the wholesale and chain pharmacy distribution channels. The A. Aarons subsidiary was launched in January of 2006 and its The A. Aarons subsidiary was launched in January of 2006 and its presence in the generic market is beginning to grow both in volume presence in the generic market is beginning to grow both in volume and acceptance. Consistent with other products that have and acceptance. Consistent with other products that have experienced generic competition in our portfolio, experienced generic competition in our portfolio, we will continue to we will continue to manufacture and distribute branded Pamine®.manufacture and distribute branded Pamine®.""

Statement by Statement by Bradley Pharmaceuticals Chairman, Bradley Pharmaceuticals Chairman, President and CEO, Daniel Glassman (January President and CEO, Daniel Glassman (January

2007),2007),emphasis addedemphasis added



Examples of AG ArrangementsExamples of AG Arrangements

Proctor & Gamble –generic Macrobid ®:Proctor & Gamble –generic Macrobid ®:– Mylan Pharmaceuticals reportedly lost tens of Mylan Pharmaceuticals reportedly lost tens of

millions in generic sales when NDA holder millions in generic sales when NDA holder Proctor & Gamble licensed a third party to sell Proctor & Gamble licensed a third party to sell an authorized generic version of Macrobid an authorized generic version of Macrobid (nitrofurantoin) during Mylan’s exclusivity (nitrofurantoin) during Mylan’s exclusivity period.period.

– Mylan Pharm. Inc. v. FDA, 454 F.3d 270 (4Mylan Pharm. Inc. v. FDA, 454 F.3d 270 (4thth Cir. 2006) Cir. 2006)


Authorized Generics Practice Authorized Generics Practice Overview: AG Arrangements cont’dOverview: AG Arrangements cont’d

GlaxoSmithKline- Par Pharmaceutical: Generic GlaxoSmithKline- Par Pharmaceutical: Generic Paxil ® (paroxetine hydrochloride): Paxil ® (paroxetine hydrochloride):

Apotex’s expected sales of up to $575 Apotex’s expected sales of up to $575 million cut to $150-$200 millionmillion cut to $150-$200 million

See CRS Report for Congress (Aug. 8, See CRS Report for Congress (Aug. 8, 2006)2006)


Authorized Generics Practice Authorized Generics Practice Overview: AG Arrangements cont’dOverview: AG Arrangements cont’d

Merck- Dr. Reddy’s: Generic Zocor® : Merck- Dr. Reddy’s: Generic Zocor® : – Teva Pharmaceuticals Industries Ltd. Teva Pharmaceuticals Industries Ltd.

attributed 9.5% drop in shares to concerns its attributed 9.5% drop in shares to concerns its generic version of Merck & Co. Inc.'s generic version of Merck & Co. Inc.'s cholesterol drug Zocor. cholesterol drug Zocor. MarketWatch Inc., Dow Jones Online MarketWatch Inc., Dow Jones Online Network (June 21, 2006)Network (June 21, 2006)


Relevant Statutory BackgroundRelevant Statutory Background


Statutory BackgroundStatutory Background

180-day Exclusivity Under Hatch Waxman180-day Exclusivity Under Hatch Waxman

21 U.S.C. 355(j)(5)(B)(iv)- 180-day exclusivity period21 U.S.C. 355(j)(5)(B)(iv)- 180-day exclusivity period

Effectiveness of application.— Subject to subparagraph (D), if Effectiveness of application.— Subject to subparagraph (D), if the application contains a certification described in paragraph the application contains a certification described in paragraph (2)(A)(vii)(IV) and is for a drug for which a first applicant has (2)(A)(vii)(IV) and is for a drug for which a first applicant has submitted an application containing such a certification, the submitted an application containing such a certification, the application shall be made effective on the date that is 180 application shall be made effective on the date that is 180 days after the date of the first commercial marketing of the days after the date of the first commercial marketing of the drug (including the commercial marketing of the listed drug) drug (including the commercial marketing of the listed drug) by any first applicant.by any first applicant.



"increases the economic incentives for a generic "increases the economic incentives for a generic company to be the first to file, because the generic company to be the first to file, because the generic applicant has the potential to reap the reward of applicant has the potential to reap the reward of marketing the only generic product (and, thus, to charge marketing the only generic product (and, thus, to charge a higher price until more generic products enter [the a higher price until more generic products enter [the market])." market])."

Federal Trade Commission, To Promote Innovation: The Proper Federal Trade Commission, To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy, Ch. 3, at 12 Balance of Competition and Patent Law and Policy, Ch. 3, at 12 (Oct. 2003),(Oct. 2003),

– available at http://www.ftc.gov/os/2003/10/innovationrpt.pdf. available at http://www.ftc.gov/os/2003/10/innovationrpt.pdf.



Exclusivity benefit motivates "generic Exclusivity benefit motivates "generic manufacturers to challenge the validity of manufacturers to challenge the validity of listed patents and to 'design around' listed patents and to 'design around' patents to find alternative, non-infringing patents to find alternative, non-infringing forms of patented drugs" so that they can forms of patented drugs" so that they can be the first to file paragraph IV ANDAs. be the first to file paragraph IV ANDAs.

--Teva Pharms. USA, Inc. v. Pfizer, Inc., 395 F.3d Teva Pharms. USA, Inc. v. Pfizer, Inc., 395 F.3d 1324, 1328 (Fed. Cir. 2005).1324, 1328 (Fed. Cir. 2005).



Competing Policy Goals Competing Policy Goals

To expedite arrival of generic drugs to To expedite arrival of generic drugs to marketmarket

To induce name-brand pharmaceutical To induce name-brand pharmaceutical companies to invest in R&D and develop companies to invest in R&D and develop new drug productsnew drug products


Policy DebatePolicy Debate



AG Opponent ViewsAG Opponent Views

Congressional IntentCongressional Intent

““core purpose of Hatch Waxman... is to expedite core purpose of Hatch Waxman... is to expedite and maximize the introduction of cost-saving and maximize the introduction of cost-saving generic drugs, while protecting all generic drugs, while protecting all legitimate legitimate patent rights of drug product innovators...but patent rights of drug product innovators...but without unintended windfalls to crafty without unintended windfalls to crafty companies”companies”

--See See Teva Citizen Petition, Docket No. CP004P-0261 Teva Citizen Petition, Docket No. CP004P-0261 (June 9, 2004)(June 9, 2004)


Policy Debate:Policy Debate:Opponent Views cont’dOpponent Views cont’d

Exclusivity provisions represent the key Exclusivity provisions represent the key mechanism for achieving this goalmechanism for achieving this goalCongress did not intend for brand-name Congress did not intend for brand-name companies to benefit from the 180 companies to benefit from the 180 exclusivity provisionexclusivity provisiononly qualified ANDA applicants are entitled only qualified ANDA applicants are entitled to market and sell generic versions of a to market and sell generic versions of a branded product prior to expiration of a branded product prior to expiration of a 180-day exclusivity period 180-day exclusivity period


Policy Debate: Policy Debate: Opponent Views cont’dOpponent Views cont’d

AG practice represents a strategy devised to AG practice represents a strategy devised to destroy the incentives offered by 180-day destroy the incentives offered by 180-day exclusivity provisionsexclusivity provisions

brand name companies market AGs as if they are brand name companies market AGs as if they are ANDA ANDA approvedapproved generic products, at times pricing them generic products, at times pricing them substantially lower than the competing generic version substantially lower than the competing generic version and causing customer confusionand causing customer confusion

Generic firms unable to recoup substantial costsGeneric firms unable to recoup substantial costs-Generic Drug Entry: Prior to Patent Expiration,-Generic Drug Entry: Prior to Patent Expiration,

An FTC Study (July 2002)An FTC Study (July 2002)



costs associated with generic drug development are costs associated with generic drug development are no longer adequately recoupedno longer adequately recoupedevaluation of relevant IP, R&D, equivalence testing, FDA evaluation of relevant IP, R&D, equivalence testing, FDA submissions and certifications, litigationsubmissions and certifications, litigationreduction in returns of 180-day exclusivity profits reduction in returns of 180-day exclusivity profits discourage generic companies from filing paragraph IV discourage generic companies from filing paragraph IV challengeschallengesreduced incentive to incur risk associated with patent reduced incentive to incur risk associated with patent challengeschallenges



*intrusion of branded generics during *intrusion of branded generics during 180-exclusivity destroys Hatch 180-exclusivity destroys Hatch Waxman incentives and threatens the Waxman incentives and threatens the entire existence paragraph IV generic entire existence paragraph IV generic drug approval process.drug approval process.

→→→ →→→ irreparable harm to first ANDA irreparable harm to first ANDA filers and the public.filers and the public.



AG Proponent ViewsAG Proponent Views

Congressional IntentCongressional Intent::

a central goal of Hatch Waxman is to promote a central goal of Hatch Waxman is to promote price competition in prescription drugs upon price competition in prescription drugs upon expiration or resolution of an NDA holder’s expiration or resolution of an NDA holder’s patent rightspatent rights

- Comments of Pfizer Inc on Docket No. - Comments of Pfizer Inc on Docket No. C1 2004P-0261 C1 2004P-0261 (June 23, 2004); (June 23, 2004); See also In re Barr Labs. Inc., 930 F.2d 72, 76 See also In re Barr Labs. Inc., 930 F.2d 72, 76 (D.C. Cir.)(D.C. Cir.)


Policy Debate: Policy Debate: Proponent Views cont’dProponent Views cont’d

Congress intended that first ANDA filers would receive a Congress intended that first ANDA filers would receive a limited competitive advantage over subsequent ANDA limited competitive advantage over subsequent ANDA filers but would be forced to compete with the approved filers but would be forced to compete with the approved NDA product. NDA product.

- - Id.Id.(505(j)(B)(iv) imposes no limitations on NDA holders)(505(j)(B)(iv) imposes no limitations on NDA holders)

Congress intended to encourage generic firms to filedCongress intended to encourage generic firms to filedANDA and challenge existing patents, but did not intend ANDA and challenge existing patents, but did not intend to give FDA authority to regulate competition between to give FDA authority to regulate competition between ANDA and NDA HoldersANDA and NDA Holders

--Id.Id.


Policy Debate:Policy Debate:Proponent Views cont’dProponent Views cont’dAGs do not discourage patent challengesAGs do not discourage patent challenges

AnAn authorized generic is only one of many authorized generic is only one of many possible competitors possible competitors

21 U.S.C. § 355 (j)(5)(B)(iv)(II)(bb) 21 U.S.C. § 355 (j)(5)(B)(iv)(II)(bb) provides provides for for multiple multiple first applicants.first applicants.

First ANDA applicants already choose to bear First ANDA applicants already choose to bear litigation costs, with no guarantee of monopoly litigation costs, with no guarantee of monopoly profits during the 180-day period of exclusivity.profits during the 180-day period of exclusivity.


Policy Debate:Policy Debate:Proponent Views cont’dProponent Views cont’d

AG Practice promotes competition and AG Practice promotes competition and consumer welfareconsumer welfare

AG arrangements promote early introduction of multiple AG arrangements promote early introduction of multiple competitively priced products an provide consumers with competitively priced products an provide consumers with faster access to lower priced drugs consistent with faster access to lower priced drugs consistent with Congressional intent underlying Hatch WaxmanCongressional intent underlying Hatch Waxman


Policy Debate:Policy Debate:Proponent Views cont’d Proponent Views cont’d

absent authorized generics, during 180 day absent authorized generics, during 180 day exclusivity periods, generic drugs are typically exclusivity periods, generic drugs are typically priced substantially higher than after subsequent priced substantially higher than after subsequent generic products enter the market. generic products enter the market.

SeeSee FDA Supports Broader Access to Lower Priced FDA Supports Broader Access to Lower Priced Drugs, FDA Talk Paper (July 2, 2004).Drugs, FDA Talk Paper (July 2, 2004).

Opponents seek to insulate generic companies from Opponents seek to insulate generic companies from competition altogether competition altogether

See e.g.See e.g. Comments of Pfizer Inc on Docket No. C1 2004P-0261 Comments of Pfizer Inc on Docket No. C1 2004P-0261 (June 23, 2004)(June 23, 2004)



AG Practice permits brand-name firms to recoup the AG Practice permits brand-name firms to recoup the costs of drug development and may fuel innovationcosts of drug development and may fuel innovation

process of bringing a pioneer drug to market takes about process of bringing a pioneer drug to market takes about 12 years12 years

average associated costs associated with new drug average associated costs associated with new drug development have been estimated at $802 million development have been estimated at $802 million ““Policy and New Drug Development “ (December 2006) available Policy and New Drug Development “ (December 2006) available

at at http://www.ftc.gov/be/workshops/pharmaceutical/Lutter.pdfhttp://www.ftc.gov/be/workshops/pharmaceutical/Lutter.pdf



revenue from authorized generics may support additional revenue from authorized generics may support additional pharmaceutical innovationpharmaceutical innovation

settlements resulting in authorization of an ANDA settlements resulting in authorization of an ANDA applicant to produce and AG may allow brand name applicant to produce and AG may allow brand name firms to stabilize risk associated with litigation, also firms to stabilize risk associated with litigation, also supporting future innovative activity supporting future innovative activity

-CRS Report for Congress (Aug. 8, 2006)-CRS Report for Congress (Aug. 8, 2006)


Citizen Petitions and FDA Citizen Petitions and FDA PositionsPositions


Citizen PetitionsCitizen Petitions

Teva Citizen Petition, Docket No. 2004P-0261 Teva Citizen Petition, Docket No. 2004P-0261 (June 9, 2004)(June 9, 2004)

Teva petitioned the FDA to prohibit Pfizer Inc. from Teva petitioned the FDA to prohibit Pfizer Inc. from marketing a generic version of Accupril (R) until after marketing a generic version of Accupril (R) until after Teva’s 180-day exclusivityTeva’s 180-day exclusivity

-Pfizer’s launch of its own AG would undermine -Pfizer’s launch of its own AG would undermine congressional intent of the 180-day exclusivity congressional intent of the 180-day exclusivity

provisionsprovisions-“FDA is authorized, and indeed compelled, by -“FDA is authorized, and indeed compelled, by

current law, regulations, policy to take the action current law, regulations, policy to take the action requested herein.”requested herein.”

Ruling: DeniedRuling: Denied


Citizen PetitionsCitizen Petitions

Mylan Citizen Petition, Docket No. 2004P-0075 Mylan Citizen Petition, Docket No. 2004P-0075

(February 7, 2004)(February 7, 2004)

Mylan petitioned the FDA to prohibit marketing Mylan petitioned the FDA to prohibit marketing and distribution of AGs until the expiration of the and distribution of AGs until the expiration of the 180-exclusivity period.180-exclusivity period.

urged that the FDA implement an approval urged that the FDA implement an approval requirement for AGs which would prevent the requirement for AGs which would prevent the sale of an authorized generic until the expiration sale of an authorized generic until the expiration of an ANDA first filer’s exclusivity periodof an ANDA first filer’s exclusivity period


Mylan Petition cont’dMylan Petition cont’d

The FDA has viewed authorized generics as generics The FDA has viewed authorized generics as generics and acted in prior rulings to convert an NDA into and and acted in prior rulings to convert an NDA into and ANDA.ANDA.FDA has ample authority to prohibit marketing of AGs.FDA has ample authority to prohibit marketing of AGs.

-All AB-rated generic drugs must be approved by -All AB-rated generic drugs must be approved by the the FDA as bioequivalent to the reference listed drug FDA as bioequivalent to the reference listed drug

prior to marketing (21 U.S.C. 355 (j))prior to marketing (21 U.S.C. 355 (j))-though AGs lack the AB -rating, they are -though AGs lack the AB -rating, they are

permitted permitted to be marketed in the same manner as an to be marketed in the same manner as an AB-rated AB-rated generic and marketed as such generic and marketed as such

Ruling: DeniedRuling: Denied


FDA Positions and Current PolicyFDA Positions and Current Policy

to deny petitions to prohibit the sale of an AG during 180to deny petitions to prohibit the sale of an AG during 180day exclusivity periods. day exclusivity periods.

- FDA Response, Docket Nos. 2004P-0075 & 2004P-0261 (2 July - FDA Response, Docket Nos. 2004P-0075 & 2004P-0261 (2 July 2004), denying petition by Mylan Pharmaceuticals, Docket No. 2004), denying petition by Mylan Pharmaceuticals, Docket No.

2004P-2004P- 0075/CP1, and by Teva Pharmaceuticals, U.S.A., Docket0075/CP1, and by Teva Pharmaceuticals, U.S.A., DocketNo. 2004P-0261/CP1).No. 2004P-0261/CP1).

AG, as currently defined by the FDAAG, as currently defined by the FDA: : “ “[a]ny marketing by an [New Drug Application (NDA)] holder or [a]ny marketing by an [New Drug Application (NDA)] holder or authorized by an NDA holder, including through a third-party authorized by an NDA holder, including through a third-party distributor, of the drug product approved under the NDA in a distributor, of the drug product approved under the NDA in a manner equivalent to the marketing practices of ANDA applicantsmanner equivalent to the marketing practices of ANDA applicants



Hatch Waxman gives the FDA authority to delay entry into the Hatch Waxman gives the FDA authority to delay entry into the market of ANDA generic drugs but not branded generic drugs. market of ANDA generic drugs but not branded generic drugs. – See Teva Pharms Indus. v. FDA, 355 F. Supp. 2d 111, 115 ( D.D.C. See Teva Pharms Indus. v. FDA, 355 F. Supp. 2d 111, 115 ( D.D.C.

2004)2004)

No statutory basis for imposing approval requirements for the No statutory basis for imposing approval requirements for the marketing of authorized generics as a means to prevent their marketing of authorized generics as a means to prevent their marketing during 180-day exclusivity.marketing during 180-day exclusivity. – Id. at 117 (D.D.C. 2004)Id. at 117 (D.D.C. 2004)

Marketing of an authorized generic during the 180-day Marketing of an authorized generic during the 180-day generic exclusivity period is a long-standing pro-competitive generic exclusivity period is a long-standing pro-competitive practice permissible under the statute. practice permissible under the statute. – See FDA Response, Docket Nos. 2004P-0075 & 2004P-0261, at 2, 13See FDA Response, Docket Nos. 2004P-0075 & 2004P-0261, at 2, 13


FDA Positions and current policyFDA Positions and current policy

IIn 2004, Andrx Pharmaceuticals, Inc. petitioned the FDA to n 2004, Andrx Pharmaceuticals, Inc. petitioned the FDA to reexamine its policy with respect to authorized generics reexamine its policy with respect to authorized generics in generalin general and particularly with respect to the marketing of an AG version of and particularly with respect to the marketing of an AG version of Concerta (R) during Andrx’s exclsuivity period, by Patriot Concerta (R) during Andrx’s exclsuivity period, by Patriot Pharmaceuticals, Inc., an affiliate of NDA holder, McNeil Speciality Pharmaceuticals, Inc., an affiliate of NDA holder, McNeil Speciality and Consumer Pharmaceuticalsand Consumer Pharmaceuticals..

– See Andrx Citizen Petition, Docket No. 2004P-0563 (23 December 2004), available at See Andrx Citizen Petition, Docket No. 2004P-0563 (23 December 2004), available at www.fda.gov/ohrms/dockets/dockets/04p0563/04p-0563-cp0000-01-vol1.pdfwww.fda.gov/ohrms/dockets/dockets/04p0563/04p-0563-cp0000-01-vol1.pdf

Andrx also presented an additional statutory based Andrx also presented an additional statutory based argumentargument– FDA authority has authority to prevent misbranding FDA authority has authority to prevent misbranding

under section 502(a) of the FDCA.under section 502(a) of the FDCA.– labeling and marketing of branded drugs as generic labeling and marketing of branded drugs as generic

version is fundamentally misleading. version is fundamentally misleading.


FDA Positions and current policyFDA Positions and current policy

FDA has failed to adequately consider the FDA has failed to adequately consider the potential short-term and long-term effects on potential short-term and long-term effects on competition associated with the use of competition associated with the use of authorized generics to undermine the availability authorized generics to undermine the availability of actual genericsof actual generics

Further, FDA has acknowledged lack of Further, FDA has acknowledged lack of expertise with respect to competition and related expertise with respect to competition and related economic analyses. economic analyses. – Andrx requested that FDA seek comments from FTC Andrx requested that FDA seek comments from FTC

and Department of Justiceand Department of Justice



……still waiting for a response from the FDAstill waiting for a response from the FDA


Challenging the Legality of AGs in Challenging the Legality of AGs in U.S. CourtsU.S. Courts

Hatch Waxman provisions exclude Hatch Waxman provisions exclude generics, authorized or not, from the generics, authorized or not, from the market during the 180-exclusivity period market during the 180-exclusivity period awarded to first to file ANDA applicantsawarded to first to file ANDA applicants

– Literal interpretation cannot defeat the Literal interpretation cannot defeat the statutory purpose to grant the first statutory purpose to grant the first ANDA filers complete exclusivity for 180 ANDA filers complete exclusivity for 180 daysdays

Teva Pharmaceutical Industries, Ltd., v Crawford, 410 Teva Pharmaceutical Industries, Ltd., v Crawford, 410 F.3d 51 (D.C. Cir. 2005)F.3d 51 (D.C. Cir. 2005)


Challenging the Legality of AGs in Challenging the Legality of AGs in U.S. Courts cont’dU.S. Courts cont’d

– Court said: Court said: ““nothing in the statute provides any support for the nothing in the statute provides any support for the argument that the FDA can prohibit NDA holders argument that the FDA can prohibit NDA holders from entering the market with a generic drug from entering the market with a generic drug during the exclusivity period”during the exclusivity period”Hatch Waxman does not specify the manner in Hatch Waxman does not specify the manner in which and NDA holder must market its drug.which and NDA holder must market its drug.Pre Hatch-Waxman, the FDCA did not prevent an Pre Hatch-Waxman, the FDCA did not prevent an NDA holder from marketing an authorized generic.NDA holder from marketing an authorized generic.

– what basis exists for declaring a previously what basis exists for declaring a previously lawful practice unlawful when Congress in lawful practice unlawful when Congress in passing Hatch Waxman, remained silent with passing Hatch Waxman, remained silent with respect to this practice.respect to this practice.



"brand-generic intrusion [into the exclusivity "brand-generic intrusion [into the exclusivity period] developed only recently as a routine period] developed only recently as a routine brand-company business strategy . Congress brand-company business strategy . Congress had not anticipated the practice and thus had not anticipated the practice and thus remained silent. literal interpretation of the remained silent. literal interpretation of the statute renders the exclusivity granted by Hatch statute renders the exclusivity granted by Hatch Waxman meaningless against later ANDA filers Waxman meaningless against later ANDA filers as opposed to a commercially effective as opposed to a commercially effective exclusivity against NDA holders as well.exclusivity against NDA holders as well.

Teva Pharmaceutical Industries, Ltd., v Teva Pharmaceutical Industries, Ltd., v Crawford, 410 F.3d 51, 54 (D.C. Cir. 2005)Crawford, 410 F.3d 51, 54 (D.C. Cir. 2005)


Challenging the Legality of AGs inChallenging the Legality of AGs inU.S. Courts cont’dU.S. Courts cont’d

D.C Circuit: D.C Circuit: – Hatch Waxman may have created incentive to Hatch Waxman may have created incentive to

challenge brand-drug patents but the Act challenge brand-drug patents but the Act does not provide that that incentive is without does not provide that that incentive is without limitation. limitation.

– Rather, Congress sought to strike a balance Rather, Congress sought to strike a balance between incentives, on the one hand, for between incentives, on the one hand, for innovation, and on the other, for quickly innovation, and on the other, for quickly getting lower-cost generic drugs to market. getting lower-cost generic drugs to market.



Striking that balance is matter of legislative Striking that balance is matter of legislative judgment. Accordingly, the Court must attend judgment. Accordingly, the Court must attend closely to the terms in which the Congress closely to the terms in which the Congress expressed that judgment. expressed that judgment.

the FDA may not revise the specific statutory the FDA may not revise the specific statutory incentive that Congress enacted or ... alter the incentive that Congress enacted or ... alter the means chosen by Congress to implement its means chosen by Congress to implement its purpose by offering a different incentivepurpose by offering a different incentive

The statute is The statute is unambiguousunambiguous



means that Congress "deemed appropriate, and means that Congress "deemed appropriate, and prescribed" to give generic drug makers an incentive to prescribed" to give generic drug makers an incentive to challenge brand-drug patents is unambiguous: challenge brand-drug patents is unambiguous: – That is....That is....

The FDA may not approve a second or later ANDA The FDA may not approve a second or later ANDA containing a containing a paragraph (IV) certification until 180 days after the first filer with paragraph (IV) certification until 180 days after the first filer with such a certification begins commercially marketing the drug or wins such a certification begins commercially marketing the drug or wins a court decision against the patent holder. There is simply no way to a court decision against the patent holder. There is simply no way to read that limitation upon what the FDA may do in such a way as to read that limitation upon what the FDA may do in such a way as to prevent the holder of an approved NDA, which does not need to file prevent the holder of an approved NDA, which does not need to file an ANDA and certainly would not challenge its own patent, from an ANDA and certainly would not challenge its own patent, from marketing a brand-generic product. marketing a brand-generic product.



Further, reading the Act as it is written does not Further, reading the Act as it is written does not render "meaningless" the "specific statutory render "meaningless" the "specific statutory incentive that Congress enacted." incentive that Congress enacted."

– For 180 days the generic market belongs to a first ANDA For 180 days the generic market belongs to a first ANDA filer and the NDA holder; absent an agreement of the filer and the NDA holder; absent an agreement of the sort by which Teva itself entered the market for generic sort by which Teva itself entered the market for generic gabapentin, no other firm may enter and take any part of gabapentin, no other firm may enter and take any part of either company's market share.either company's market share.


Challenging the Legality of AGs in Challenging the Legality of AGs in U.S. Courts U.S. Courts

authorized generics are generic drugs and thus, authorized generics are generic drugs and thus, subject to prohibitions against marketing generic subject to prohibitions against marketing generic drugs during the exclusivity period awarded to a drugs during the exclusivity period awarded to a first ANDA applicantfirst ANDA applicant

branded generics are legal and functional equivalents of branded generics are legal and functional equivalents of ANDA generics for purposes of applying and enforcing the ANDA generics for purposes of applying and enforcing the 180-day exclusivity period under Hatch Waxman180-day exclusivity period under Hatch Waxman

– Mylan Pharm. Inc. v. FDA, 454 F.3d 270 (4Mylan Pharm. Inc. v. FDA, 454 F.3d 270 (4thth Cir. 2006); see Cir. 2006); see also Mylan Pharm. Inc., Citizen Petition 2004P-0075/CP1 also Mylan Pharm. Inc., Citizen Petition 2004P-0075/CP1 (February 4, 2004) citing Mylan v. Thompson, 207 F. Supp. 2d (February 4, 2004) citing Mylan v. Thompson, 207 F. Supp. 2d 476 (N.D.W. Va 2001) 476 (N.D.W. Va 2001)



But are brand generics actually legal and functional equivalents of But are brand generics actually legal and functional equivalents of ANDA generics for purposes of applying and enforcing Hatch ANDA generics for purposes of applying and enforcing Hatch Waxman exclusivity provisions?Waxman exclusivity provisions?

– Mylan Pharm Inc.v. Thompson,Mylan Pharm Inc.v. Thompson, 207 F. Supp, 2d 476 (N.D.W. Va 207 F. Supp, 2d 476 (N.D.W. Va 2001)2001)

First ANDA filer, Mylan began marketing a brand generic First ANDA filer, Mylan began marketing a brand generic version of Pfizer’s Procardia (nifedipine) pursuant to an version of Pfizer’s Procardia (nifedipine) pursuant to an agreement with Pfizer.agreement with Pfizer.Mylan had not actually sold the product that was subject of Mylan had not actually sold the product that was subject of its ANDAits ANDAMylan asserted that branded generics are not the specific Mylan asserted that branded generics are not the specific subject of an approved ANDA. Accordingly ANDA generics subject of an approved ANDA. Accordingly ANDA generics are legally and functionally distinct in the context of are legally and functionally distinct in the context of exclusivity under Hatch Waxmanexclusivity under Hatch Waxman



Mylan argued: marketing of a branded generic did Mylan argued: marketing of a branded generic did not constitute not constitute “commercial marketing”“commercial marketing” of a of a generic drug for purposes of triggering its 180-day generic drug for purposes of triggering its 180-day exclusivity period.exclusivity period.Subsequent ANDA filer, Teva petitioned the FDA Subsequent ANDA filer, Teva petitioned the FDA to rule that to rule that marketing of a branded generic marketing of a branded generic constituted commercial marketing of Mylan’s constituted commercial marketing of Mylan’s own ANDA productown ANDA product..The FDA agreed, “permitting Mylan to market The FDA agreed, “permitting Mylan to market nifedipine without triggering the beginning of the nifedipine without triggering the beginning of the exclusivity would be inconsistent with the intent of exclusivity would be inconsistent with the intent of the statutory scheme.”the statutory scheme.”



Fourth Circuit response: “Prior agency Fourth Circuit response: “Prior agency interpretation (whether or not it supports interpretation (whether or not it supports Mylan’s reading) is irrelevant because the Mylan’s reading) is irrelevant because the statute unambiguously forecloses that statute unambiguously forecloses that reading.reading.

Mylan v. FDA, 454 F.3d at 276 (4Mylan v. FDA, 454 F.3d at 276 (4thth Cir. 2006) Cir. 2006)


FTC InvolvementFTC Involvement



““introduction of an authorized generic will likely introduction of an authorized generic will likely diminish the incentives for generic firms to diminish the incentives for generic firms to challenge patents and incur substantial challenge patents and incur substantial development and litigation costs.” development and litigation costs.”

FTC Commissioner, Jonathan Liebowitz quoted in Chain Drug FTC Commissioner, Jonathan Liebowitz quoted in Chain Drug Review (June 2005)Review (June 2005)

FTC recognition of:FTC recognition of:– occurrence of authorized generic occurrence of authorized generic

arrangements in increased frequency; andarrangements in increased frequency; and– absence of comprehensive economic studyabsence of comprehensive economic study

http://www.ftc.gov/os/2006/03/P062105AuthorizedGenericDrugStudyFRNotice.pdfhttp://www.ftc.gov/os/2006/03/P062105AuthorizedGenericDrugStudyFRNotice.pdf


FTC Involvement cont’dFTC Involvement cont’d

March 29, 2006 FTC announced it Authorized March 29, 2006 FTC announced it Authorized Generic Drug Study: FTC Project P062105 to Generic Drug Study: FTC Project P062105 to evaluate short and long term effects of evaluate short and long term effects of authorized generics practice and clarify authorized generics practice and clarify competitive impact of AGscompetitive impact of AGs

IdId

Comments were due June 5, 2006Comments were due June 5, 2006IdId

Report expected at some point during 2007Report expected at some point during 2007



Study will include examination of Study will include examination of Actual wholesale prices (including rebates and Actual wholesale prices (including rebates and discounts, etc) for brand name and generic drugs, discounts, etc) for brand name and generic drugs, with and without AG competition;with and without AG competition;

Business decisions that support AG entry;Business decisions that support AG entry;

Factors relevant to generic firms as to whether to Factors relevant to generic firms as to whether to seek entry prior to patent expiry;seek entry prior to patent expiry;

Licensing agreements for AGsLicensing agreements for AGs


Basis for Antitrust claims?Basis for Antitrust claims?


Antitrust claims?Antitrust claims?

If pricing of AGs can be deemed If pricing of AGs can be deemed “predatory pricing” and such is found “predatory pricing” and such is found to destroy competition, public policy to destroy competition, public policy articulated by the Sherman Antitrust articulated by the Sherman Antitrust Act may be violated.Act may be violated.– See Judge Keeley comments, Mylan Pharm. Inc. v. See Judge Keeley comments, Mylan Pharm. Inc. v.

FDA, Civ. No. 1:04 cv 174(N.D. W. Va.) (filed Aug. 5, FDA, Civ. No. 1:04 cv 174(N.D. W. Va.) (filed Aug. 5, 2005; withdrawn without prejudice Aug. 30, 2004)2005; withdrawn without prejudice Aug. 30, 2004)


Recent and Pending Recent and Pending LegislationLegislation


Pending LegislationPending Legislation

July 24, 2006: July 24, 2006: Senators Rockefeller, Leahy Senators Rockefeller, Leahy and Schumer introduced a U.S. Senate bill, and Schumer introduced a U.S. Senate bill, S. S. 36953695 to amend the Federal Food, Drug, and to amend the Federal Food, Drug, and Cosmetic Act to prohibit the marketing of Cosmetic Act to prohibit the marketing of authorized generic drugs during an ANDA filer’s authorized generic drugs during an ANDA filer’s 180-day exclusivity period.180-day exclusivity period.

January 30, 2007January 30, 2007: The bill, co-sponsored by : The bill, co-sponsored by Senator Kohl was reintroduced as Senator Kohl was reintroduced as S. 438S. 438, "The , "The Fair Prescription Drug Act." Fair Prescription Drug Act."

February 5, 2007: February 5, 2007: Companion bill, Companion bill, H.R. 806 H.R. 806 was introduced in the House of Representativeswas introduced in the House of Representatives


110110thth Congress, 1 Congress, 1stst Session S.438 Session S.438 (Fair Prescription Drug Competition Act) (Fair Prescription Drug Competition Act)

available at available at http://thomas.loc.gov/cgi-bin/qhttp://thomas.loc.gov/cgi-bin/query/D?c110:2:./temp/~c110viuery/D?c110:2:./temp/~c110viu3Ngu3Ng::::

““Section 505 of the Federal Food Section 505 of the Federal Food Drug, and Cosmetic Act (21 Drug, and Cosmetic Act (21 U.S.C.) is amended by adding at U.S.C.) is amended by adding at the end the following:the end the following:


110110thth Congress, 1 Congress, 1stst Session S.438 Session S.438 (Fair Prescription Drug Competition Act cont’d (Fair Prescription Drug Competition Act cont’d


Pending LegislationPending Legislation

Opponents expect greater chances of success Opponents expect greater chances of success for the proposed legislation this year.for the proposed legislation this year.

Generics firms, Mylan and Barr have met with Generics firms, Mylan and Barr have met with lawmakers on Capitol Hill for purposes of lawmakers on Capitol Hill for purposes of educating them on authorized generics practiceeducating them on authorized generics practice– http://www.mysanantonio.com/business/stories/MYSAhttp://www.mysanantonio.com/business/stories/MYSA

030407.3R.sungenerics.23d3c33.html030407.3R.sungenerics.23d3c33.html

FTC Report expect later this year will lend FTC Report expect later this year will lend additional supportadditional support


Recent Legislation: S.1932 Deficit Recent Legislation: S.1932 Deficit Reduction Act of 2005 (DRA)Reduction Act of 2005 (DRA)

Enacted February 8, 2006, text available at Enacted February 8, 2006, text available at

http://www.cbo.gov/ftpdocs/70xx/doc7028/s1932conf.pdfhttp://www.cbo.gov/ftpdocs/70xx/doc7028/s1932conf.pdf

Includes changes in calculation and reporting obligations Includes changes in calculation and reporting obligations with respect to pricing data for determination of Unit with respect to pricing data for determination of Unit Rebate amounts (URA) under the Medicare Drug Rebate Rebate amounts (URA) under the Medicare Drug Rebate StatuteStatute– URAs for NDAs are largely calculated based on the difference in URAs for NDAs are largely calculated based on the difference in

between Average Manufacturer Price and “best price” to any between Average Manufacturer Price and “best price” to any commercial customer.commercial customer.

NDA holders have previously excluded authorized NDA holders have previously excluded authorized generics from the best price or AMPgenerics from the best price or AMP


S.1932 Deficit Reduction Act of 2005 S.1932 Deficit Reduction Act of 2005 (DRA) cont’d(DRA) cont’d

DRA definition of “best price” requires DRA definition of “best price” requires brand manufacturers to include brand manufacturers to include all all prices prices at which it sells its NDA product including at which it sells its NDA product including prices to AG distributors.prices to AG distributors.– Likely to see increase in URA due to lower Likely to see increase in URA due to lower

“best price”“best price”

DRA definition of AMP is inclusive of the DRA definition of AMP is inclusive of the average paid by wholesalers for drugs average paid by wholesalers for drugs distributed for retail, reducing the AMP. distributed for retail, reducing the AMP.


S.1932 Deficit Reduction Act of 2005 S.1932 Deficit Reduction Act of 2005 (DRA) cont’d(DRA) cont’d

Some ambiguities, but overall effect of Some ambiguities, but overall effect of making AG arrangements less desirable making AG arrangements less desirable for innovator companies.for innovator companies.


Thank you.Thank you.

(c) 2007 renita rathinam authorized generics practice and the battle over generic exclusivity in the...

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