Trade Secret Rising: Protecting Equivalency Test Research and Development Investments After Momenta v. Amphastar

• Publication year: 2014
• Citation: Vol. 22 No. 1

Trade Secret Rising: Protecting Equivalency Test Research and Development Investments After Momenta v. Amphastar

Hannah-Alise Rogers

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Rogers: Trade Secret Rising: Protecting Equivalency Test Research and Dev

TRADE SECRET RISING: PROTECTING EQUIVALENCY TEST RESEARCH AND DEVELOPMENT INVESTMENTS AFTER MOMENTA V. AMPHASTAR

Hannah-Alise Rogers^*

TABLE OF CONTENTS

I. INTRODUCTION..........................................................................................210

II. BACKGROUND.............................................................................................213

A. FDA SUBMISSION REQUIREMENTS FOR GENERIC DRUGS............213
B. THE SCOPE OF THE SAFE HARBOR PROVISION OF THE HATCH-WAXMAN ACT.........................................................................215
C. A BRIEF OVERVIEW OF PATENT PROTECTION...............................219
D. A LOOK AT THE STATE OF TRADE SECRET LAW AND THE POTENTIAL THREATS OF DISCLOSURE............................................220

III. ANALYSIS......................................................................................................227

A. THE SCOPE OF THE DEFINITION OF "TRADE SECRET"................228
B. THE THREAT OF DISCLOSURE...........................................................229

1. Overcoming the Threat of Disclosure Via a FOIA Request..............229
2. Overcoming Threats of Disclosure Via the FDA's Use and Disclosure of Trade Secrets................................................................231
3. Overcoming Potential Litigation-Related Threats of Disclosure Right of Public Access.......................................................................234

IV. CONCLUSION...............................................................................................244

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I. INTRODUCTION

The United States has the largest and fastest growing drug market in the world, and the demand for generic drugs is steadily growing.¹ The pharmaceutical industry is responsible for over three million American jobs, and pharmaceutical companies invest millions of dollars in promoting the research and development of new and generic drugs.² In order to retain their competitive advantage, most pharmaceutical drug manufacturers seek patent protection.³ Manufacturers have learned to think creatively, using a variety of patents—including method, design—and research tool patents—in order to fully protect their lucrative inventions. Congress encourages biomedical research and technological innovation through the patent system.⁴ Congress heavily regulates the pharmaceutical industry both directly through status such as the Federal Food, Drug, and Cosmetics Act⁵ and the Drug Price Competition and Patent Term Restoration Act of 1984 (the Hatch-Waxman Act),⁶ and indirectly through regulations promulgated by the Food and Drug Administration (FDA).⁷ Several volumes of the Code of Federal Regulations are specifically dedicated to describing what manufacturers must do in order to market a drug in the United States.⁸

Due to recent congressional legislation and judicial decisions, however, generic drug manufacturers have lost some previously afforded patent protections,⁹ specifically with respect to their bioequivalency test method patents. For example, the safe harbor provision of the Hatch-Waxman Act allows competing drug manufacturers to "borrow" information within the patents of their competitors so long as they agree to use the patents in furtherance of submitting information to the FDA.¹⁰ Competing generic drug manufacturers, for example, can take bioequivalency tests disclosed in the

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applications of their competitors and use the tests to manufacturer their own generic drugs. A bioequivalency test is a method of testing a generic drug that proves that it is equivalent to a name brand drug that has already received FDA approval. All generic drug applications must demonstrate bioequivalency, thus the tests are extremely valuable. Unfortunately, bioequivalency testing methods can be very costly and time consuming to develop, so generic manufacturers patent the tests in an effort to protect them from use by competitors. The safe harbor provision has thus thwarted the protection scheme on which generic manufacturers depended.

The Federal Circuit recently expanded the scope of the safe harbor provision in 2012 in Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc.¹¹ A majority of the Federal Circuit in Momenta held that via the safe harbor provision, competing generic pharmaceutical manufacturers could use each other's patented bioequivalency testing methods for pre-clinical research and manufacturing without incurring infringement liability.¹² In 2003, Amphastar became the first generic manufacturer to submit an Abbreviated New Drug Application (ANDA) to the FDA to market Enoxaparin, a generic version of the name brand drug Lovenox, which is used to prevent blood clots.¹³ As a result of submitting the ANDA, Aventis, the manufacturer of Lovenox, sued Amphastar; after several years of expensive patent litigation, the FDA granted Amphastar's ANDA, allowing it to manufacture enoxaparin.¹⁴ In the meantime, however, before the FDA granted Amphastar's ANDA for enoxaparin, Momenta "borrowed" Amphastar's bioequivalency test, which was publicly disclosed in Amphastar's ANDA and used the test to beat Amphastar to the market by more than a year.¹⁵ This one year boost resulting from "borrowing" Amphastar's patent for bioequivalency allowed Momenta a monopoly on the generic market, resulting in profits of over $260 million per quarter.¹⁶

This Note argues that the Federal Circuit's holding in Momenta threatens manufacturers with a devastating loss of previously available patent protection for measuring the bioequivalency of generic drugs. The Note concludes that trade secret law is the best alternative to patent protection until Congress decides to narrow the scope of the Hatch-Waxman Act's safe harbor provision. Due to the high cost of submitting a New Drug Application or an ANDA to

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the FDA, generic drug manufacturers want to seek protection for their bioequivalency tests so that consumers can reap the benefits of competition. In other words, giving generic manufacturers the ability to protect their bioequivalency tests would incentivize the production of generic drugs, which would in turn benefit consumers. However, in light of Momenta, this protection is no longer available through patent law.¹⁷ Additionally, the Federal Circuit's interpretation of Hatch-Waxman's safe harbor provision has frustrated the generic drug manufacturer's ability to protect its research and development investments. Fortunately, a solution exists for generic drug manufacturers who wish to shield their tests and methods for bioequivalency from the hungry eyes of their competitors. Despite the numerous regulations governing disclosure of information submitted to the FDA, including most notably the Freedom of Information Act (FOIA), generic drug manufacturers, using a heightened degree of care, can protect bioequivalency tests as trade secrets.

Part II of this Note first describes the FDA's method of regulating generic drugs, including the process of submitting an ANDA, to demonstrate why this process is important to the patent protection which Momenta has recently frustrated for manufacturers. This section then explains how some of the information submitted to the FDA in furtherance of the ANDA can be protected through trade secret law instead of through patent law.

Part II next reviews the relevant parts of the Hatch-Waxman Act and specifically focuses on the evolution of the safe harbor provision, codified at 35 U.S.C. § 271(e)(1). Moreover, this Part explores prior United States Supreme Court opinions leading up to Momenta which have interpreted the safe harbor provision and demonstrates that the scope of the safe harbor provision has been expanded to such an extent that protection via method patents for bioequivalency tests is no longer available.

Additionally, Part II summarizes the current state of trade secret law and demonstrates how a bioequivalency test could qualify as a trade secret. This part also discusses the four potential threats of disclosure that a bioequivalency test trade secret could face, including FOIA requests, FDA use, and litigation; related threats, including the common law right of public access and discovery requests.

Part III argues that trade secret law is not only available to generic manufacturers but is ultimately a better alternative to protecting bioequivalency tests than patent law. Part III demonstrates how generic manufacturers can overcome threats of disclosure of their trade secrets presentation FOIA requests, FDA use and disclosure, and litigation.

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II. BACKGROUND

A. FDA SUBMISSION REQUIREMENTS FOR GENERIC DRUGS

Under the Food, Drug and Cosmetics Act of 1938, Congress delegated to the FDA the power to enact specific regulations concerning requirements for marketing new and generic drugs.¹⁸ A new drug or generic bioequivalent may not be placed on the market without prior FDA approval.¹⁹ The process for gaining FDA approval is quite extensive, so this Note only discusses the most relevant and important requirements relating to generic drugs.

First, in order to gain FDA approval to manufacture a generic drug, the manufacturer must submit an ANDA. The application must be within one of the FDA's delineated categories of acceptable drug products.²⁰ ANDAs may be submitted for "[d]rug products that are bioequivalent, or the same as a listed [i.e. name brand] drug. For determining the suitability of an [ANDA], the term 'same as' means identical in active ingredient(s), dosage form, strength, route of administration, and conditions of use."²¹ Within sixty days of receiving an ANDA, the FDA will conduct a preliminary review of the application to determine whether it may be filed.²² If the filing of an...