Aia Proceedings: a Prescription for Accelerating the Availability of Generic Drugs

• Publication year: 2017

AIA Proceedings: A Prescription for Accelerating the Availability of Generic Drugs

Nora Xu

AIA PROCEEDINGS: A PRESCRIPTION FOR ACCELERATING THE AVAILABILITY OF GENERIC DRUGSj

Abstract

The Hatch-Waxman Act of 1984 increases patient access to lower-cost generic drugs by incentivizing generic manufacturers to challenge the patents covering successful drug products. The Hatch-Waxman framework creates an automatic stay that blocks the Food and Drug Administration (FDA) from approving a new generic drug for thirty months. The purpose of the thirty-month stay is to provide time for any patent infringement claims to be litigated before the new generic drug is permitted onto the market. The stay may be terminated before the end of the thirty-month period if the generic manufacturer prevails in invalidating the patents blocking generic market entry.

More recently, the America Invents Act (AIA) of 2011 created new administrative proceedings at the U.S. Patent and Trademark Office (USPTO) that replace certain aspects of district court patent litigation. Generic manufacturers are using these administrative proceedings to challenge the validity of drug patents in hopes of expediting the FDA's approval of their new generic drugs. This practice raises some unanticipated questions. Should the USPTO invalidate the relevant drug patents before the related district court litigation is finalized, a question arises as to the effect of that USPTO decision on the thirty-month stay of FDA approval. It is unclear whether the FDA should immediately approve the generic drug for market entry or whether the thirty-month stay should continue after the USPTO's decision of unpatentability.

This Comment examines the relevant statutory provisions of the Hatch-Waxman Act and AIA and explores the scenarios that give rise to uncertainty about the thirty-month stay. It argues that the thirty-month stay should terminate when the Federal Circuit affirms the USPTO's unpatentability determination and issues the formal mandate. Because neither the FDA nor courts are likely to construe the relevant statutory provisions to this effect, this Comment proposes an amendment to incorporate AIA proceedings into the Hatch-Watchman framework.

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Introduction............................................................................................1009

I. The Hatch-Waxman Act .............................................................1011

A. The Regulatory Approval Process for Generic Drugs and Extensions of Exclusivity for Pioneer Drugs........................... 1011
B. Patent Litigation Scheme Under the Hatch-Waxman Act ....... 1015

1. Paragraph IV Certification and the Thirty-Month Stay of FDA Approval ................................................................... 1015
2. Incentives to Challenge the Patents Blocking Generic Market Entry ...................................................................... 1018

II. Challenging Orange Book-Listed Patents via IPR and PGR Review....................................................................................1020

A. Inter Partes Review and Post-Grant Review ........................... 1021
B. Advantages of PTAB Litigation over District Court Litigation 1023

III. PTAB Decision and Federal Circuit Appeal Can Predate the End of the Thirty-month Period.........................................1026

A. Prospective ANDA Filers Can Bring Pre-Suit Patent Challenges at the PTAB............................................................ 1027
B. By Bringing a Pre-Suit IPR or PGR Challenge, the ANDA Filer Can Obtain a PTAB Decision and Federal Circuit Appeal Before the End of the Thirty-Month Period................. 1028

IV. Neither a PTAB Decision of Unpatentability nor the Federal Circuit's Affirmance of That Decision Are Sufficient to Terminate the Thirty-Month Stay of FDA Approval........................................................................................1032

A. Statutory Text of the Hatch-Waxman Act and AIA Does Not Permit a PTAB Decision Affirmed by the Federal Circuit to Terminate the Thirty-Month Stay ............................................ 1032
B. Congressional Intent Indicates that PTAB Decisions Cannot Terminate the Thirty-Month Stay ............................................ 1035

V. ANDA Approval upon Prevailing at the PTAB and Federal Circuit............................................................................................1037

A. Pathways for Terminating the Thirty-Month Stay................... 1038

1. Stay-Terminating Triggers Expressly Recognized by Statute ................................................................................ 1038
2. Extra-Statutory Triggers that Prematurely Terminate the Thirty-Month Stay.............................................................. 1040

B. Statutory Amendment to Integrate IPRs and PGRs into the Thirty-Month Stay Provisions .................................................. 1044

Conclusion................................................................................................1048

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Introduction

The legal framework governing the generic drug industry involves a delicate balance between two opposing policy interests.¹ First, it seeks to increase the availability of generic drugs.² This benefits society by reducing the financial strain caused by illness, promoting patient adherence to medication regimes, and reducing government spending on medical care.³ On the other hand, the legal framework incentivizes the development of new, pioneer drugs.⁴ Pioneer drug developers spend significant upfront expenses on developing and winning administrative approval—around $2.87 billion and twelve years for each new drug—and need a period of marketing exclusivity to recoup the expenses.⁵ In 1984, Congress attempted to balance these opposing policy interests in the Hatch-Waxman Act.⁶

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The Hatch-Waxman Act creates a complex patent litigation scheme that allows generic manufacturers to win earlier market entry by showing that the patents blocking generic entry are invalid or not infringed.⁷ Faster market entry creates competition in the drug market, which ultimately will reduce prices for patients.⁸ The patent litigation scheme provides a stay of thirty months to allow the pioneer drug developer to assert its patent rights before generic market entry.⁹ This stay is important because its end marks the earliest date that a proposed generic drug can be approved by the Food and Drug Administration (FDA) and become available to the American public, with some exceptions.¹⁰ Generic sponsors strive to prevail early in the patent litigation to lift the stay before the end of the thirty-month period.¹¹ Until recently, these patent disputes were litigated in the only available forum: Article III courts.

With the America Invents Act (AIA) in 2011, Congress introduced new administrative proceedings at the U.S. Patent and Trademark Office (USPTO) that effectively replace certain aspects of district court litigation.¹² Generic sponsors have been using the AIA proceedings to attack the drug patents blocking generic entry in hopes of expediting FDA approval and market entry.¹³ This practice raises unanswered questions about the Hatch-Waxman statutory scheme.

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This Comment addresses a question the AIA did not answer: Can the USPTO's finding of unpatentability in an AIA proceeding terminate the stay of FDA approval before the end of the thirty-month period? The courts and agencies have yet to address this question.¹⁴

This Comment, proceeding in five parts, proposes that the thirty-month stay should terminate when the U.S. Court of Appeals for the Federal Circuit affirms the USPTO's unpatentability determination. This proposal furthers the policy goals of the Hatch-Waxman Act and AIA, increases patient access to generic drugs, and protects the innovator's patent rights. Parts I and II examine the relevant provisions of the Hatch-Waxman Act and the AIA. Part III establishes that a Patent Trial and Appeal Board (PTAB) decision affirmed on appeal can occur before the end of the thirty-month period. In those circumstances, however, the relevant statutory provisions do not permit termination of the thirty-month stay, as shown in Part Iv. Part v proposes an amendment to incorporate the AIA proceedings into the Hatch-Waxman Act's thirty-month stay framework.

I. The Hatch-Waxman Act

The Hatch-Waxman Act governs the FDA's approval of generic drugs and sets out a complex procedural scheme for challenging the patents blocking generic market entry. Section A describes the FDA's approval process for generic drugs. Section B examines the procedural scheme for resolving the underlying patent disputes.

A. The Regulatory Approval Process for Generic Drugs and Extensions of Exclusivity for Pioneer Drugs

Before 1984, 65% of drugs with expired patents lacked a generic alternative.¹⁵ As a result of this void, pioneer drug developers could charge

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high prices beyond the drug's patent term.¹⁶ Congress responded to this need for generic competition by enacting the Hatch-Waxman Act of 1984, which spawned a transformation in the American pharmaceutical industry.¹⁷ Between 1984 and 2015, the market share of generic drugs has increased from merely 19% of drugs dispensed to 89%.¹⁸ The Hatch-Waxman Act is designed to balance two competing policy interests—expanding the availability of generic drugs while encouraging the innovation of pioneer drugs.¹⁹

The Hatch-Waxman Act reduces the barriers to generic market entry by creating the Abbreviated New Drug Application (ANDA).²⁰ Prior to the ANDA, generic sponsors were required to submit their own clinical data to the FDA, forcing them to duplicate the clinical investigations already performed by pioneer-drug developers.²¹ For pioneer drugs, these clinical investigations are required to prove that they are "sufficiently safe and effective" to be marketed to the public.²² But...