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Regulatory Litigation in the Innovator Pharmaceutical Industry. FDLI’s Conference on Hatch-Waxman: Past, Present & Future Washington, D.C. Kathleen M. Sanzo, Esq. Morgan, Lewis & Bockius LLP December 11, 2000. Paths to Litigation -- Parties. Innovator Companies Generic Companies FDA FTC

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Regulatory Litigation in the Innovator Pharmaceutical Industry

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Regulatory Litigation in the Innovator Pharmaceutical Industry

FDLI’s Conference on Hatch-Waxman: Past, Present & Future

Washington, D.C.

Kathleen M. Sanzo, Esq.

Morgan, Lewis & Bockius LLP

December 11, 2000


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Paths to Litigation -- Parties

  • Innovator Companies

  • Generic Companies

  • FDA

  • FTC

  • States (Mylan Laboratories action)

  • Consumer Class Actions (Synthroid, Coumadin)


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Innovator Companies -- Litigation Issues

  • Generic Product Approvals

  • Product / Label Withdrawals

  • Listing Issues

  • Exclusivity Issues (5 yr., 3 yr., or none)

  • Orphan Drug Exclusivity

  • Pediatric Exclusivity


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FTC -- Litigation Issues

  • Anticompetitive Patent Agreements

    • Recent FTC Challenges (Abbott; Aventis)

  • Anticompetitive Practices

    • Current FTC investigations/litigation (SmithKline; Bristol-Myers Squibb)


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Administrative Precursors to Litigation

  • Informal Meetings / Submissions to FDA/FTC

  • Citizen / Stay Petitions


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Pros

Non-Adversarial

Informal (No Lawyers?)

Helps Clarify Scientific Issues

Conserves Resources

Cons

No Obligation for Agency to Meet or Respond

May Delay Overall Strategy

Is Usually Not A Successful Strategy

Pros and Cons of Informal Meetings/Submissions


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Pros

Requires Response

Identifies Scientific/Policy Issues for FDA

Expands Record

May Present Significant Issues Delaying FDA Action

Can be disseminated

Provides “Exhaustion” Requirement

Cons

Requires Resources (Time and $)

FDA Dislikes

May be Perceived as Anticompetitive

Usually Unsuccessful

Pros and Cons of Citizen / Stay Petitions


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Product-Specific Citizen Petitions may soon be a thing of the past -- 64 Fed. Reg. 66822 (November 30, 1999); Seealso Federal Trade Commission Comments, InreCitizen Petitions (March 2000)

Citizen Petitions (cont’d)


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Initiating Regulatory Litigation


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Reasons for Regulatory Litigation

  • Company has Weak or No Basis for Patent-based Litigation

  • If Company Believes its Positions are Correct

  • To Publicly Disseminate Litigation Positions


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Economic Consequences of Regulatory Action/Patent Based-Delay

  • BuSpar  patent-based delay results in $1.9 billion (F-D-C Reports Nov. 27, 2000)

  • Taxol  patent-based delay results in estimated $20 million/week (F-D-C Reports Sept.18, 2000)

  • Neurontin  patent-based delay results in $2.5 billion (F-D-C Reports July 31, 2000)

  • Zantac  GATT-extended exclusivity results in estimated $4 billion and patent-based three week delay results in $100 million (F-D-C Reports June 4, 1998, Aug. 4 1997)

  • Coumadin  90 day citizen petition delay estimated to result in $120 million(F-D-C Reports May 26, 1997)


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Potential Obstacles to Success


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Non-Legal Obstacles

  • FDA’s Pro Generic Drug Regulatory Agenda

  • USP Assisting FDA to Standardize and Streamline Generic Product Approvals

  • Congressional Concerns Over Drug Benefit/Prices


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Legal Obstacles

  • Standing

  • Requirements for TRO/Preliminary Injunction

  • Limited Access to Record


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Standing

  • Zeneca, Inc v. Shalala, 213 F.3d 161(4th Cir. 2000)

  • Bristol-Myers Squibb v. Shalala, 91 F.3d 1493 (D.C. Cir. 1996)

  • Berlex v. FDA, 942 F.Supp. 19(D.D.C. 1996) (standing under PHS Act)


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Requirements for TRO / Preliminary Injunction

  • Likelihood of Success on the Merits

  • Irreparable Harm to the Plaintiff if Injunction Not Granted

  • Irreparable Harm to Defendant if Injunction is Granted

  • Public Interest


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Likelihood of Success on Merits

  • Two General Allegations of FDA Violations

    • Improper Statutory Interpretation by FDA (FFDCA § 505(b) and § 505(j))

    • Arbitrary and Capricious Decision-Making on Product Approval under Administrative Procedure Act (5 U.S.C. 706(2)(A) & (C)


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Improper Statutory Interpretation of FFDCA

  • Because § 505 and its legislative history are ambiguous, courts conduct Chevron analysis (Chevron USA, Inc. v. National Resources Defense Council, 467 US 832 (1984)

  • Chevron analysis poses following questions:


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Improper Statutory Interpretation of FFDCA (cont’d)

  • Did Congress Manifest an Unambiguously Expressed Intent in the Statute?

  • If not, is FDA’s Interpretation/Construction Reasonable?

  • If reasonable, Courts will defer to FDA’s interpretation.

  • If Agency’s Interpretation is not Reasonable, Courts can Remand to FDA to Try Again


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Decision Violates the Administrative Procedure Act

  • Courts must find that FDA made a “clear error of judgment,” in its decision; Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971).

  • Because of scientific nature of FDA’s decisions, courts defer to FDA. Somerset Pharmaceuticals v. Shalala, 973 F.Supp. 443 (D. Del. 1997)(“FDA is accorded deference when it is evaluating scientific data within its technical expertise”).


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Limited Access to “The Record”

  • Courts Sensitive to Proprietary Nature of Data

  • Courts Only Look Outside “the administrative record” for:

    • Background Information

    • To See if FDA Looked at the “Relevant Factors”

    • To See if FDA Fully Explained its Decision. SeeNorwich Easton Pharmaceutical v. Young, 808 F.2d 486 (6th Cir. 1987).


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Limited Access to “The Record” (cont’d)

  • Therefore, Difficult to Introduce New Evidence / Experts in litigation

    • Zeneca, Inc. v. Shalala, 213 F.3d 161 (4th Cir. 2000)

    • SeeUpjohn v. Kessler, 938 F.Supp. 439 (W.D. Mich. 1996) (“Court is appalled with the gaps in the administrative record” but agrees that a 13 page memo by Dr. Temple is adequate to to determine that company is not entitled to 3 yr. exclusivity for OTC Rogaine)

    • but seeNovartis v. Shalala, 2000 WL 1769589(D.C. 2000) (Administrative record should be supplemented with new evidence concerning recall of SangCya and FDA’s determination of its bioequivalence to Neoral)


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Survey of Existing Cases


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Is the Product “the Same”?

  • Zeneca, Inc. v. Shalala, 213 F.3d 161 (4th Cir. 2000)

  • Serono v. Shalala, 158 F.3d 1313(D.C. Cir. 1999)(FDA can choose test methods to determine sameness)

  • Warner Lambert v. Shalala, 202 F.3d 326 (D.C. Cir. 1999)

  • Pfizer v. Shalala,182 F.3d 975 (D.C. Cir. 1999)(different mechanism of release does not make product different)


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Is the Product “the Same”? (cont’d)

  • Glaxo Wellcome Inc. Stay Petition (Ceftin)(no sameness for crystalline form of Ceftin)

  • Wyeth-Ayerst Citizen Petition (Premarin)(uncharacterized components prevent sameness)


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Is the Labeling “the Same”?

  • Zeneca, Inc.v. Shalala, 213 F.3d 161 (4th Cir. 2000)(adding warning to generic does not prevent sameness)

  • BMS v. Shalala, 892 F.Supp. 295, 91 F.3d 1493 (D.C. Cir. 1996)(labeling does not need to reference all indications)

  • see also, FDA,OGD “Draft Guidance for Industry:Referencing Discontinued Labeling for Listed Drugs (Oct. 2000)


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Is the Labeling “the Same”? (cont’d)

  • but note:

    • SmithKline Beecham v. Watson

    • Novartis v. Shalala,


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Was the Product’s Patent Properly Listed?

  • Apotex Inc. v. Shalala, No. 1:00 CV 00729 (D. D.C. filed April 5, 2000)

  • Watson v. Henney, Civ. Ac. No. S00CV3516 (filed Nov. 30, 2000 D. MD.)

  • Mylan Laboratories v. Shalala, ____ (filed Nov. 30, 2000 D. D.C.)

  • See alsoPfizer Citizen Petition on Neurontin, filed Aug. 17, 2000(all pending ANDAs must certify to newly filed patents)

  • FDA Letter to Apotex denying Citizen Petition to delist late-listed patents)(Nov. 21, 2000)


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Was the Product’s Patent Properly Listed? (cont’d)

  • Note also:

    • Abbott Laboratories v. Baxter Pharmaceutical Products, Civ. Ac. No. 00CV939 (N. D. Ill. filed Sept. 27, 2000)(allegations of improper listing)

    • Wyeth-Ayerst, Civ. Ac. C-1-00-735 (D. Ohio filed Sept. 5, 2000)(allegations of submission of misinformation to FDA)


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Was the Reference Listed Drug Withdrawn for Safety Reasons?

  • Somerset Pharmaceuticals v. Shalala, 973 F.Supp 443 (D. Del. 1997)


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If Challenging A Second Orphan Product Approval, is the New Drug Clinically Superior to the First Drug?

  • Berlex v. FDA, 942 F.Supp. 19 (D. D.C. 1996)


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For 3 yr. Exclusivity, was the Clinical Trial Essential to the Approval?

  • Upjohn v. Kessler, 938 F.Supp. 439 (W.D. Mich. 1996)


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Future Litigation Trends


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Decrease in Product-Specific Actions (except for biologics and orphan drugs)


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Increase in Litigation Involving:

  • Orange Book Listings

  • Intervention in generic drug exclusivity grants

  • “Clinically Superior” Orphan Drug Determinations

  • Pediatric Exclusivity Grants (if extended)

  • Rulemaking Through Guidances

  • Anticompetitive Agreements and Practices


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New Bases for Legal Action?

  • Expansion of 505(b)(2) Product Approvals/Grants of Exclusivity

  • Improper FDA Reliance on Outside Parties (USP?) for Product Approvals, Determinations


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Litigation Scorecard

Extra Innings

Litigation Batting Average

Industry

0

FDA

1000


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