Recent Developments in Hatch-Waxman Law

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The marcus evans 5th Product and Pipeline Enhancement for Generics Conference hosted industry leaders within the Generic Pharmaceutical, Branded Pharmaceutical and API industries operating globally. These leaders shared best practices, strategies and tools on portfolio management and business strategy, as well as legal, intellectual property and patent issues.

Knobbe Martens' attorneys presented on the following topic:

*Analyzing Recent Updates to the Hatch-Waxman Act to Grasp Future Impacts and Challenges
*Studying recent changes that could impact the industry, including 180-day exclusivity and complications regarding patent listings
*Drawing lessons from the close relationship between the patenting of generic products and FDA regulatory approval to pinpoint areas of improvement
*Considering the impact biosimilar products could have on market entry and patent strategies
*Reviewing both real-life rulings and hypotheticals regarding Hatch-Waxman litigation to identify future strategies

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Recent Developments in Hatch-Waxman Law

  1. 1. Recent Developments In Hatch-Waxman Law
  2. 2. Areas of Significant Legal Developments I. Settlement – Monday’s 3rd Cir. K-Dur Decision II. Induced Infringement – Method of Use Claims III. New Bite of “Effective” Claim Terms In Obviousness IV. You Can Be Enjoined Even If You Win© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 2
  3. 3. I. Developments In Settlement: Monday’s K-Dur Decision By The Third Circuit©2012 Knobbe, Martens, Olson & LLP all rights reserved.©2012 Knobbe Martens, Olson & Bear, Bear, LLP all rights reserved. 3
  4. 4. I. Settlement: K-Dur Decision In re: K-Dur Antitrust Litigation No. 10-2079 (3rd Cir. July 16, 2012) Issue: What is the proper legal test for whether a Hatch Waxman litigation settlement including a payment to the generic is an unreasonable restraint of trade under the Sherman Act ? Holding: Such payment is prima facie evidence of an unreasonable restraint, which it is up to the settling parties to rebut “by showing that the payment (1) was for a purpose other than delayed entry or (2) offers some pro-competitive benefit.”© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 4
  5. 5. I. Settlement: K-Dur Decision Why is This a Big Deal ? • It isn’t . . . if your business model depends on date-only settlements without no-authorized generic provisions (which the FTC views as a form of reverse payment). • Because the “scope of the patent” test adopted by the 2nd, 11th and Federal Circuits allowed for summary judgment or dismissal on the pleadings. • The K-Dur “quick look” reasonableness analysis is likely to lead to issues of fact, precluding summary judgment and requiring trial. – The FTC and Private Plaintiffs – Expense of Antitrust Litigation – Potential Antitrust Damages© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 5
  6. 6. I. Settlement: K-Dur Decision Scope of the Patent Test – 2nd, 11th and Federal Circuits Reverse payments are permitted so long as: (1) the exclusion does not exceed the scope of the patent; (2) the infringement claim was not objectively baseless; and (2) the patent was not procured by fraud. No antitrust claim subject to this test has ever been permitted to proceed to trial. Per Se Test in 6th and DC Circuits? In re Cardizem CD Antitrust Litig. (6th Cir. 2003)© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 6
  7. 7. I. Settlement: K-Dur Decision K-Dur Quick Look Test – Law of the 3rd Circuit • Reverse payment settlements are unreasonable restraints, unless the settling parties can prove: - Payment for purpose other than delay; or - Pro-competitive benefit of payment. • How and how likely to meet burden of rebuttal? - Merits of underlying patent case irrelevant - Can attempt to prove payment for something else - Can attempt to prove benefit, such as allowing cash- starved generic to avoid bankruptcy and compete© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 7
  8. 8. I. Settlement: K-Dur DecisionShort Term: • Petition for rehearing en banc. • Settling cases pending in New Jersey and Delaware courts gets harder right away; likely slows down for a little while. • Check your files, especially for no-AG agreements.Medium Term: • Brand companies may think twice before filing in those districts -- at least their tough cases. “Our hands are tied.” • Increased attention to settlement provisions regarding who does and pays what in the event of FTC investigation or private antitrust litigation. • More FTC enforcement actions in 3rd Circuit.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 8
  9. 9. I. Settlement: K-Dur Decision Long Term: • Supreme Court review and resolution of conflict. • Industry adjusts to building rebuttal or accepting date-only settlements. Open Issue: • Will K-Dur test be applied to no-AG provisions? • August 2011 FTC Report: “Authorized Generic Drugs: Short-Term Effects and Long-Term Effects.”© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 9
  10. 10. II. Developments in Induced Infringement©2012 Knobbe, Martens, Olson & LLP all rights reserved.©2012 Knobbe Martens, Olson & Bear, Bear, LLP all rights reserved. 10
  11. 11. II. Induced Infringement: Use Codes Why Use Codes Matter • FDA does not check accuracy of brand-specified use codes for Orange Book listed method of use patents. • FDA will not allow Section viii statement if the use code describes an indication for which the generic challenger seeks approval – i.e., if the label overlaps with the use code. • It does not matter to the FDA whether the patent itself actually does encompass the indication for which approval is sought. • Brand can force Paragraph IV litigation by insisting on misleading use codes.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 11
  12. 12. II. Induced Infringement: Use Codes What the Parties and FDA Did in the Caraco Case • Brand initially provided use code indicating patent covered one of three approved indications: use of API in combination with second API to treat diabetes. • Generic sought to carve out that combination indication from its label, with Section viii statement. Brand challenged carve-out at FDA as rendering drug unsafe. • Brand changed use code to indicate patent covered treatment of diabetes generally, without limiting to combination use of API. • FDA refused carve-out; forced Paragraph IV certification. Generic forced to propose label with combination use, which it stipulated induced infringement of the patent. • Generic brought counterclaim to correct erroneous inclusion of the other two indications in the use code, pursuant to the Act.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 12
  13. 13. II. Induced Infringement: Use Codes What the Courts Held in the Caraco Case • The Act provides that a generic defendant may “assert a counterclaim seeking an order requiring the [brand] to correct or delete the patent information submitted by the [brand] under subsection (b) or (c) [of i 355] on the ground that the patent does not claim . . . an approved method of using the drug.” • The Federal Circuit (Rader) said this means that so long as the patent claims at least one of the approved methods, there can be no counterclaim. And in any event, the Act does not authorize a counterclaim in this case because use codes are not “information submitted . . . Under subsection (b) or (c).” • In April 2012, the Supreme Court rejected both conclusions and affirmed that the counterclaim was available in that case.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 13
  14. 14. II. Induced Infringement: The Right to Not Seek Approval Why the Right to Not Seek Approval is Important • Routine brand lifecycle management to sponsor studies to support new indications or new patient populations for a given drug, which can then be claimed in a method of use patent extending years beyond the compound. • The threat of litigation and liability for at-risk launch in the face of an endless series of new method of use patents in effect shuts down generic competition indefinitely.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 14
  15. 15. II. Induced Infringement: The Right to Not Seek Approval The Federal Circuit in 2012 and the Right to Not Seek Approval AstraZeneca v. Apotex -- Crestor: Motion to Dismiss Bayer Schering Pharma v. Lupin -- Yasmin: Judgment on Pleadings© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 15
  16. 16. II. Induced Infringement: The Right to Not Seek Approval The Facts in AstraZeneca v. Apotex • Brand asserted infringement of two method of use patents covering new approved indications for Crestor. • Generics had filed Section viii statements and carved out both indications from their labeling. • Brand did not allege that current proposed labeling included the claimed uses in the “Indications and Usage” section. • Brand did not allege that Section viii statements were not authorized by law.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 16
  17. 17. II. Induced Infringement: The Right to Not Seek Approval The Facts in AstraZeneca v. Apotex • Brand alleged that FDA ultimately would force generics to include the indications in their labels. • Brand argued that whether other parts of the labeling induced infringement was a factual issue that could not be resolved on the pleadings without discovery. • Brand argued that, as a matter of “market realities,” people will use the generic products for the indications covered by the patents.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 17
  18. 18. II. Induced Infringement: The Right to Not Seek Approval What the Federal Circuit Held in AstraZeneca • Brand failed to state claim for inducement, because it was uncontested that generics were not seeking approval for the claimed indications. • Did not expressly address factual issue of whether the labeling other than “Indications and Usage” induced infringement. • Found claims based on speculation as to what the FDA someday would do to be unripe for resolution. • Found that “market realities” argument would vitiate the Section viii statute, and would lead to de facto infinite exclusivity.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 18
  19. 19. II. Induced Infringement: The Right to Not Seek Approval What the Federal Circuit Held in AstraZeneca “But AstraZeneca does not allege or argue that Appellees’ Section viii statements were erroneous, nor would an unfounded Section viii statement necessarily immunize an ANDA that actually seeks approval for a patented treatment or necessarily leave the patentee without recourse under i 271(e)(2). We do not opine on such a fact situation not before us.”© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 19
  20. 20. II. Induced Infringement: The Right to Not Seek Approval The Facts in Bayer Schering Pharma • Brand asserted infringement of patent claiming method of “simultaneously achieving” (1) a contraceptive effect, (2) an anti androgenic effect, and (3) an anti-aldosterone effect. • That FDA approved use for contraceptive effect only. • Generics sought approval for contraceptive effect only. • Generics sought judgment on the pleadings.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 20
  21. 21. II. Induced Infringement: The Right to Not Seek Approval The Facts in Bayer Schering Pharma • Brand relied on experts to argue that “Clinical Pharmacology” section of label reflected FDA approval of claimed uses, and thus would induce their infringement. • Brand argued that FDA approval of marketing materials mentioning these other uses or effects constituted FDA approval of the claimed uses. • Brand argued that regulations governing listing in Orange Book call not only for patents claiming “indications,” but also for “other conditions of use.”© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 21
  22. 22. II. Induced Infringement: The Right to Not Seek Approval What the Federal Circuit Held in Bayer Schering Pharma • Held for generics. Affirmed dismissal. Rejected all brand arguments. • Split panel. Judge Newman dissenting. • Judge Newman opines that judgment on the pleadings is inappropriate where there were factual issues based on the FDA- approved promotional literature and the parts of the generics’ labels other than “Indications and Usage.”© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 22
  23. 23. II. Induced Infringement: The Right to Not Seek Approval Okay. So what does this mean?© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 23
  24. 24. II. Induced Infringement: The Brand’s Right to Sue Anyone What Is Going On? District Courts in Delaware and New Jersey are expanding the universe of ANDA defendants to include API suppliers, development partners and potentially anyone else who in any way can be said to have contributed to the ANDA and may be in some way affected by the contemplated commercial sale of the proposed generic product. Why does that matter? Control and pace of the litigation; indemnification; surprise.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 24
  25. 25. III. New Bite of “Effective” Claim Language in Obviousness©2012 Knobbe, Martens, Olson & LLP all rights reserved.©2012 Knobbe Martens, Olson & Bear, Bear, LLP all rights reserved. 25
  26. 26. III. “Effective” in Obviousness Two Cases For Consideration AstraZeneca v. Anchen (D.N.J. 2012) -- Seroquel XR and In re Cyclobenzaprine Hydrochloride ER Litigation (Fed. Cir. 2012) -- Amrix© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 26
  27. 27. III. “Effective” in Obviousness: Seroquel XR The Facts in Seroquel XR • Formulation patent covering use of HPMC in gel matrix sustained release formulation of quetiapine: 12 claims to specific formulations 2 claims to processes for making claimed formulations 1 claim to method of treatment using the claimed formulations “A method of treating psychotic states or hyperactivity in a warm- blooded animal which comprises administering to said warm-blooded animal an effective amount of a formulation according to anyone of claims 1-12.”© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 27
  28. 28. III. “Effective” in Obviousness: Seroquel XR District Court Found All Claims Valid – Not Obvious • Brand conceded that HPMC formulations well known in prior art, and quetiapine compound likewise well known. • Court found that because of the single claim to administering an “effective amount,” the person of ordinary skill was not limited to formulators, but included clinicians and clinical researchers in the field of psychotic states. • Court found credible brand’s expert testimony that clinicians and researchers would not have been motivated to seek a sustained release formulation of quetiapine to treat certain psychotic states.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 28
  29. 29. III. “Effective” in Obviousness: Seroquel XR District Court Found All Claims Valid – Not Obvious • The Court discounted generics’ expert formulation testimony as not giving due regard to the number of factors with HPMC gel matrix formulations, which in turn made it less likely that a person of ordinary skill in the art, even if motivated, would have had a reasonable expectation of success. • The Court also found that the “unique features” of quetiapine as an API made it less likely that a motivated person of ordinary skill in the art would have had a reasonable expectation of success. • Tension with the Court’s finding of long felt need for formulation that would titrate faster than the quetiapine IR.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 29
  30. 30. III. “Effective” in Obviousness: Cyclobenzaprine ER The Facts In Cyclobenzaprine ER • Formulation patent covering use of beads to release specified amounts of the API at specified rates: “wherein said dosage form provides a therapeutically effective plasma concentration over a period of 24 hours to treat muscle spasm associated with painful musculoskeletal conditions when administered to a patient in need thereof” and “provides a maximum blood plasma concentration (Cmax) within the range of about 80% to 125% of [X] and an AUC within the range of about 80% to 125% of [Y] and a Tmax within the range of 80% to 125% of about [Z] hours.”© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 30
  31. 31. III. “Effective” in Obviousness: Cyclobenzaprine ER The District Court Found The Claims Obvious • Found that it would have been obvious to make an ER formula to produce a pharmacokinetic (PK) profile bioequivalent to the PK profile of the immediate release product. • Concluded that the claimed “therapeutically effective concentration” would necessarily follow from such bioequivalence.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 31
  32. 32. III. “Effective” in Obviousness: Cyclobenzaprine ER The Federal Circuit Reversed • “The district court [] was also required to consider the asserted claims’ limitation requiring therapeutic effectiveness, and whether it would have been obvious to one of ordinary skill in the art at the time of the invention that a bioequivalent PK value would satisfy that limitation.” • “While it may have been obvious to experiment with the use of the same PK profile when contemplating an extended release formulation, there is nothing to indicate that a skilled artisan would have had a reasonable expectation that such an experiment would succeed in being therapeutically effective.” • Key is absence of known PK to pharmacodynamic (PD) relationship.© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 32
  33. 33. III. “Effective” in Obviousness What might this mean for the future? Increased centrality of clinical experts Non-obviousness of old formulation technology Increased importance of Section 112 defenses© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 33
  34. 34. IV. You Can Be Enjoined Even If You Win©2012 Knobbe, Martens, Olson & LLP all rights reserved.©2012 Knobbe Martens, Olson & Bear, Bear, LLP all rights reserved. 34
  35. 35. IV. Enjoined Even If You Win In re Cycobenzaprine ER Litigation • Trial • Sua Sponte TRO Against Generic at End of 30 Months • Ruling Finding Patents Obvious • Mylan Launch • District Court Grants Injunction Pending Appeal • Mylan Moves Federal Circuit for Stay of Injunction • Federal Circuit Denies Stay, With Modification • Federal Circuit Reverses Obviousness© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 35
  36. 36. Thank you.

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