It is very unusual for a Hatch-Waxman exclusivity issue to intersect with a Pixar movie. But a recent viewing of The Incredibles got me thinking about FDA’s 2016 final regulation regarding 180-day exclusivity, particularly its new rule that an ANDA applicant cannot submit a paragraph IV certification until the day after a new patent is published in the Orange Book. For those who don’t have kids (or, in my case, young nephews), the Incredibles lived in a world where being special – better, stronger, faster – was discouraged, where everybody got a “participation trophy” just for showing up. As the super villain Syndrome summed it up, “When everyone is super, no one will be.” As a critique of some aspects of American society, it was pretty brutal.
Perhaps I think about exclusivity more than a healthy person should, but this got me wondering whether FDA’s new rule is subject to a similar critique. After all, it seems to create a world where every ANDA applicant is special, where each gets to share in 180-day exclusivity even if they were not, technically speaking, the first to submit a paragraph IV certification to a newly submitted patent. Which raises a related question: is this the type of world Congress wanted to create?
FDA’s Past Practice and New Rule
Initially, FDA did not think so. For years, FDA took the position that the sponsor of an ANDA is required to certify to patents submitted for the relevant Reference Listed Drug (RLD), even if those patents are not yet listed in the Orange Book. According to the Agency at that time, “[i]t is FDA’s long-standing practice to require a certification to a patent recently submitted to FDA (if submitted within the time frame established by section 505(c) of the Act) even if the patent has not yet appeared in the Orange Book in any format.” Citizen Petition Response, Docket No. 2007P-0316 (Feb. 26, 2008) (emphasis added); see 54 Fed. Reg. 28872, 28885 (July 10, 1989) (“The patent information submitted to FDA, whether or not published in the [Orange Book], should be the basis of the applicant’s certification.”).
Thus, the ANDA applicant who submitted its paragraph IV certification the fastest after submission of a new patent to FDA won the prize of 180-day exclusivity, and there were no participation awards. Not surprisingly, this policy resulted in ANDA applicants rushing to submit paragraph IV certifications on the tiniest hint that a new patent might be submitted to FDA in hopes of qualifying as a “first applicant” entitled to 180-day exclusivity. Moreover, when ANDA applicants suspected that a new patent might be listed in the Orange Book, they adopted a strategy of submitting serial paragraph IV certifications every day over the course of days or weeks to ensure that they hit the precise day the NDA holder submitted its new patent.
To put an end to this practice, the Agency revised its regulations in 2016 to provide that an ANDA applicant cannot submit a paragraph IV certification or notice earlier than the first working day after a patent is published in the Orange Book. 21 C.F.R. § 314.94(a)(12)(viii)(C)(1)(ii); see also 21 C.F.R. § 314.95(b)(2) (providing that notice of a paragraph IV certification “is invalid if it is sent … before the first working day after the day the patent is published in the [Orange Book].”). The Agency explained that its new regulations were intended to create “a level playing field for all ANDA applicants” seeking to obtain 180-day exclusivity. 81 Fed. Reg. 69580, 69610 (Oct. 6, 2016).
Problems with FDA’s New Approach
But is FDA really creating a level playing field? Or is it simply rewriting the rules of the game to ensure that everybody crosses the finish line at the same time, and thus that everybody gets a share of the 180-day exclusivity prize?
There are a number of reasons to think it is the latter and that this kind of leveling policy is actually inconsistent with the clear statutory language and with Congressional intent. Because the Hatch-Waxman Act is intended to incentivize early patent challenges – and thus early entry of generic competition – it provides that a paragraph IV certification should be submitted as early as possible after patent information is provided to FDA by the NDA holder. In particular, it states that a paragraph IV certification should be submitted with an application (including an amendment). 21 U.S.C. § 355(j)(2)(A)(vii).
Courts interpreting this language have held that it is clear and unambiguous and requires FDA to determine the validity of patent certifications based on the patent information submitted to FDA, not the patent information published in the Orange Book. In 2008, for example, the D.C. Circuit held that “the statute … compel[s] FDA to rely on the actual status of a patent (as indicated by the NDA holder) and not on the varying contents of a published reference guide [i.e., the Orange Book].” Teva Pharms., USA, Inc. v. Leavitt, 548 F.3d 103, 108 (D.C. Cir. 2008). Notably, the Court determined that this conclusion was compelled by the statute, leaving no discretion for FDA to adopt a contrary interpretation.
FDA’s 2016 regulation, however, conflicts with the clear statutory language and with the intent of Congress by delaying generic competition. By requiring ANDA applicants to wait to submit a paragraph IV certification until the day after a patent is listed in the Orange Book, FDA is creating an unnecessary administrative hurdle that delays the initiation of patent challenges, patent litigation and, ultimately, ANDA approval. These delays may be long and unpredictable because there is no specified deadline for FDA to publish patent information in the Orange Book. Lassman Law+Policy is aware of situations where patent information was not published in the Orange Book for 30 or more days after it had been submitted to FDA. This seems to be inconsistent with one of the primary goals of the Hatch-Waxman Act: to accelerate generic competition.
FDA’s “leveling” policy also seems to reduce the value of 180-day exclusivity in a manner that is inconsistent with Congressional intent. By increasing the likelihood that a first applicant will be required to share its 180-day exclusivity with other first applicants, FDA’s policy diminishes the incentive for companies to challenge patents in the first place. But courts have held that FDA is not free to “change the incentive structure adopted by the Congress, for the agency is bound ‘not only by the ultimate purposes Congress has selected, but by the means it has deemed appropriate, and prescribed, for the pursuit of those purposes.’” Ranbaxy Laboratories Ltd. v. Leavitt, 469 F.3d 120, 126 (D.C. Cir. 2006) (quoting MCI Telecomms. Corp. v. ATT, 512 U.S. 218, 231 n.4 (1994)). While FDA’s rule requiring applicants to delay the submission of paragraph IV certifications and notices may result in more generic products being approved on the first day of generic competition, courts have recognized that the statute “deliberately sacrifices the benefits of full generic competition at the first chance allowed” in favor of a system that promises a reward to the first generic applicant that challenges a patent listed in the Orange Book. Teva Pharmaceuticals USA, Inc. v. Sebelius, 595 F.3d 1303, 1318 (D.C. Cir. 2010). And the incentive system created by Congress works: in 2018, generics made up 90% of the prescriptions filled but only 22% of total drug spending.
Finally, it is worth noting that FDA is only applying this new rule to ANDAs, not 505(b)(2) applications, even though the relevant language regarding paragraph IV certifications is in all material respects identical. It is difficult to see how FDA can justify interpreting identical language one way for ANDAs and a different way for 505(b)(2) applications.
Will FDA Ever Let Dash Win the Race?
We are not aware of anybody yet mounting a legal challenge to FDA’s new regulation regarding the timing of paragraph IV certifications. But in some cases, FDA’s new regulation could deprive an ANDA applicant who submitted a paragraph IV certification before publication of a new patent in the Orange Book of its right to 180-day exclusivity based on the earlier filing date. If forced to share such exclusivity with later-filed ANDAs, the issue may become ripe for a legal challenge – even without a pep talk from Edna Mode.