Chapter §18.01 Drug Marketing Application Filings Under 35 U.S.C. §271(e)

• Jurisdiction: United States

§18.01 Drug Marketing Application Filings Under 35 U.S.C. §271(e)

[A] Introduction

Section 271(e) of Title 35 was enacted in 1984 pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984,³ popularly known as the Hatch-Waxman Act. Section 271(e) is particularly pertinent to allegations of infringement in the pharmaceutical industry. In recent years an increasing number of firms that manufacture generic equivalent drugs have sought entry onto the market before the expiration of the patents covering those drugs, which are owned by brand-name pharmaceutical manufacturers.⁴ These efforts frequently lead to patent infringement/validity litigation between the brand-name and generic firms, as described below.

[B] Technical Infringement Under §271(e)(2)

The Hatch-Waxman Act added, inter alia, §271(e)(2) to the Patent Act. This subsection provides that it is an act of patent infringement to submit an Abbreviated New Drug Application (ANDA)⁵ to the U.S. Food and Drug Administration (FDA) if the generic applicant is seeking approval to engage in the commercial manufacture, use, or sale of a patented drug before the expiration of the patent. The statute provides in pertinent part:

It shall be an act of infringement to submit—

(A) an application under section 505(j) of the Federal Food, Drug, and Cosmetic Act [21 U.S.C. §355(j)] or described in section 505(b)(2) of such Act [21 U.S.C. §355(b)(2)] for a drug claimed in a patent or the use of which is claimed in a patent,

. . . . if the purpose of such submission is to obtain approval under such Act to engage in the commercial manufacture, use, or sale of a drug or veterinary biological product claimed in a patent or the use of which is claimed in a patent before the expiration of such patent. ⁶

The mere act of submitting the ANDA to the FDA is considered an act of infringement, even though the generic firm has not yet engaged in any commercial manufacture or sale of the drug (because it does not yet have FDA approval to do so).⁷ Because the generic firm has not yet engaged in traditional "making" or "selling" that would qualify as direct infringement under §271(a), the generic firm's act of filing the ANDA is sometimes referred to as "technical infringement."⁸

Generic drug manufacturers submitting an ANDA must certify one of four things: (1) that the drug for which the ANDA is submitted has not been patented (a "paragraph I" certification); (2) that any patent on such drug has expired (a "paragraph II" certification); (3) the date on which the patent on such drug will expire, if it has not yet expired (a "paragraph III" certification); or (4) that the patent on such drug "is invalid or that it will not be infringed by the manufacture, use, or sale of the new drug" for which the ANDA is submitted (a "paragraph IV" certification).⁹ Hatch-Waxman litigation most often involves paragraph IV certifications.

[1] Paragraph IV Certifications

Paragraph IV certifications typically trigger Hatch-Waxman patent infringement litigation. A generic firm that submits a paragraph IV certification to the FDA also must give notice to the owner of the relevant patent.¹⁰ This notice triggers a 45-day period in which the patentee (brand-name manufacturer) can initiate an action against the generic firm for technical infringement under 35 U.S.C. §271(e)(2). If the patentee does not sue within this period, then approval of the ANDA "shall be made effective immediately" (assuming that the ANDA meets all applicable scientific and regulatory requirements).¹¹

[2] Automatic Stay

If, however, the patent owner brings an infringement action under §271(e)(2) within the required time period, the FDA must suspend approval of the ANDA.¹² The suspension continues—and the FDA cannot approve the ANDA—until the earliest of three dates: (1) if the district court hearing the lawsuit decides that the patent is invalid or not infringed, the date of the court's decision; (2) if the court decides that the patent has been infringed, the date that the patent expires; or (3) subject to modification by the court, the date that is 30 months from the date on which the patent owner received notice of the generic firm's paragraph IV certification.¹³

Summarizing the above statutory scheme, the Federal Circuit has concluded that

the Hatch-Waxman Act strikes a balance between the interests of a party seeking approval of an ANDA and the owner of a drug patent. On the one hand, the manufacture, use, or sale of a patented drug is not an act of infringement, to the extent it is necessary for the preparation and submission of an ANDA. On the other hand, once it is clear that a party seeking approval of an ANDA wants to market a patented drug prior to the expiration of the patent, the patent owner can seek to prevent approval of the ANDA by bringing a patent infringement suit. While it is pending, such a suit can have the effect of barring ANDA approval for two and a half years [i.e., 30 months]. ¹⁴

Some pharmaceutical industry observers questioned whether the statutory framework correctly balanced the interests of patent owners, generic drug manufacturers, and consumers. They contended that the regulatory framework permitted patent owners to postpone competition from generic manufacturers for too long, to the detriment of the consumers who would otherwise benefit from lower drug prices.

In October 2002, then-President George W. Bush announced proposed changes to the FDA's rules for approval of ANDAs, targeting patent owners whom the government contended had improperly delayed market entry of generic drugs for up to 40 additional months by obtaining multiple 30-month stays of FDA approval of a given ANDA.¹⁵ The proposed rules limited patent owners to only one 30-month automatic stay per a given ANDA, which the government contended was an appropriate time period for resolution of the infringement case.¹⁶ The proposed rule was made final and effective as of August 2003.¹⁷

Critics including the Federal Trade Commission have also challenged settlement practices in Hatch-Waxman litigation. They targeted potentially anticompetitive so-called "reverse settlements," in which the brand-name patentee pays the generic manufacturer to stay off the market for a certain length of time, effectively shutting down the generic's challenge to what may be an invalid patent. After several years of disparate decisions in the federal appellate courts, the Supreme Court in 2013 took up this antitrust issue as detailed infra.¹⁸

[C] Safe Harbor Under §271(e)(1)

The Hatch-Waxman Act also added §271(e)(1) to the Patent Act, which provides in pertinent part that the use of a patented invention solely for purposes reasonably related to gathering data in support of an application seeking Food and Drug Administration (FDA) approval for the manufacture and sale of a generic version of a previously FDA-approved drug (i.e., an "Abbreviated New Drug Application" or ANDA) is not patent infringement.¹⁹ Without such a provision, generic drug manufacturers would have to wait to begin testing of an equivalent drug until after the relevant patent had expired, and the patentee of the branded drug would receive a de facto extension of the patent term.²⁰

[1] Merck KgaA v. Integra Lifesciences (U.S. 2005)

The §271(e)(1) safe harbor is not limited to testing conducted by generic drug manufacturers, however. The Supreme Court interpreted the scope of §271(e)(1) in Merck KgaA v. Integra Lifesciences I, Ltd.²¹ and held it broad enough to encompass clinical (human) trials as well as pre-clinical (test tube and laboratory animal) testing activity associated with the development of new (or "pioneer") drugs.

The Supreme Court in Merck KgaA concluded that the Federal Circuit had erred in excluding Merck KgaA-sponsored testing at the Scripps Research Institute of patented peptides with potential cancer-fighting activity from the statutory safe harbor on the ground that its purpose was to identify the best drug candidate for future clinical testing and was thus too remote from the safe harbor's purview. According to the Supreme Court, the facts that not all data developed during pre-clinical and clinical testing were ultimately submitted to the FDA, and that some testing involves drugs not ultimately the subject of an FDA application, were not determinative of eligibility for the liability shield. Rather, "[p]roperly construed, §271(e)(1) leaves adequate space for experimentation and failure on the road to regulatory approval: At least where a drugmaker has a reasonable basis for believing that a patented compound may work, through a particular biological process, to produce a particular physiological effect, and uses the compound in research that, if successful, would be appropriate to include in a submission to the FDA, that use is 'reasonably related' to the 'development and submission of information under. . . . Federal law.' §271(e)(1)."²²

Although broad enough to encompass testing of new drugs as well as generic equivalents, the Merck KgaA Court made clear that the statutory safe harbor does have limits; §271(e)(1) is not broad enough to reach back in time to shield "[b]asic scientific research on a particular compound, performed without the intent to develop a particular drug or a reasonable belief that the compound will cause the sort of physiological effect the researcher intends to induce."²³

[2] Federal Circuit Decisions Post-Merck

Federal Circuit decisions in the wake of Merck KgaA continue to explore permutations of the §271(e)(1) safe harbor. For example, the appellate court held in Amgen, Inc. v. Int'l Trade Comm'n²⁴ that the safe harbor applied in §337 proceedings under the Tariff Act relating to process patents as well as product patents, for imported product that is used for exempt purposes.²⁵

In contrast, the Federal Circuit distinguished Merck KgaA and narrowly interpreted the §271(e)(1) safe harbor in Proveris Sci. Corp. v. Innovasystems, Inc....