Case Name: Teva Pharms. U.S.A., Inc. v. Azar, C.A. No. 18-2394 (RDM), 2019 U.S. Dist. LEXIS 30346 (D.D.C. Feb 26, 2019) (Moss, J.)
Drug Product and Patent(s)-in-Suit: Restasis® (cyclosporine); U.S. Patent No. 8,629,111 (“the ’111 patent”)
Nature of the Case and Issue(s) Presented: The case concerned the 180-day exclusivity period for the generic version of Restasis and whether the FDA’s interpretation of “first applicant” would have harmed Teva, who asserted first-applicant status. Teva filed suit against the FDA and immediately filed a motion for a preliminary injunction to bar the FDA from “depriving Teva of its statutory right to 180 days of marketing exclusivity for its generic version of the brand-name drug Restasis®.” The court determined that Teva did not have standing and denied its motion for a preliminary injunction, and granted defendants’ motion to dismiss the suit for lack of standing.
Why FDA Prevailed: Teva filed a declaratory judgment action seeking a declaration that the FDA’s interpretation of “first applicant” in a letter decision relating to a different drug, Suboxone, (i) was invalid under the Administrative Procedures Act (“APA”) and (ii) that Teva was entitled to the 180-day exclusivity period. Teva also sought to enjoin the FDA from “approving any ANDA that references Restasis® … other than Teva’s ANDA” during the pendency of its declaratory judgment action.
Teva filed its ANDA for cyclosporine in January 2012. At that time, only one patent was listed in the Orange Book for Restasis – U.S. Patent No. 5,474,979 (“the ’979 patent”), which was due to expire in May 2014. Teva filed a Paragraph III certification on the ’979 patent. The FDA issued a letter in which it refused to receive Teva’s ANDA. While Teva was considering its response to the letter, new patents issued including the ’111 patent. The same day that the ’111 patent issued—January 14, 2014—Teva amended its ANDA to include a Paragraph IV certification to the ’111 patent. Once Teva received a formal acknowledgement from the FDA on July 9, 2015 that its ANDA had been received as of January 23, 2012, Teva sent its notice letter to the NDA holder, Allergan. Teva also filed Paragraph IV certifications for five other Orange Book-listed patents that had issued since its original ANDA filing and timely effected notice.
In August 2015, Allergan sued Teva for infringing the six unexpired Orange Book-listed patents. Allergan granted a covenant not to sue on two of the patents and the district court invalidated the remaining four patents, including the ’111 patent. Allergan appealed and the Federal Circuit summarily affirmed the district court’s decision. Allergan then petitioned for panel rehearing and rehearing en banc. That petition was pending at the time of the present decision.
One central dispute concerned whether the FDA should apply the “first effective” or “first submitted” approach to determining first applicant status. The “first effective approach,” which the FDA applied before the enactment of the Medicare Modernization Act of 2003 (the MMA) (which included a definition of “first applicant”), awarded exclusivity to the first generic to file a substantially complete ANDA containing a Paragraph IV certification and to effect notice. The “first submitted approach” would award first applicant status to the first generic to file a substantially complete ANDA containing a Paragraph IV certification.
In July 2018, the FDA issued a letter decision in an unrelated matter regarding Suboxone that addressed this question. In that matter, one or more first applicant(s) submitted a substantially complete ANDA with a Paragraph IV certification on May 14, 2013 but subsequently withdrew the application(s) and informed the FDA that they had not given notice to the NDA holder. At least one other applicant submitted a substantially complete ANDA with Paragraph IV certification after May 14, 2013. The FDA concluded that the May 14 applicant(s) were entitled to 180-day exclusivity, but forfeited it when they withdrew their application(s). The FDA noted that exclusivity did not roll over to the subsequent applicant. The FDA explained that prior to the MMA the agency applied the “first effective approach” but concluded that after the enactment of the MMA, the “first submitted approach” was more consistent with the statutory definition.
At the time of the present decision, no ANDA for cyclosporine had received final or tentative approval. Teva alleged that the FDA was poised to grant final approval to Mylan’s ANDA. Teva also alleged that it had spent significant resources preparing for its launch and that its own final approval was imminent.
Teva challenged the FDA’s interpretation of “first applicant” in the Suboxone letter and argued that if allowed to stand, it would deprive Teva of its statutory right to 180 days of generic exclusivity. Teva contended that the letter decision must be set aside under the Administrative Procedure Act (APA). The court, however, explained that it could not reach the merits of Teva’s APA challenge or its motion for preliminary injunction without first addressing standing. Teva argued that it pled two injuries sufficient to confer standing: (1) that the Suboxone letter decision already divested Teva of its statutory right to exclusivity and that it had adequately alleged that it would suffer greater harms when the FDA formally applied that decision and approved ANDAs in violation of that right; and (2) that by applying the “first submitted approach” the FDA deprived Teva of procedural rights under the APA, including the right to participate in notice-and-comment rulemaking.
Loss of Exclusivity: The parties agreed that loss of exclusivity is a concrete injury sufficient to confer standing. The issue, however, was whether Teva had sufficiently shown actual or imminent injury traceable to the Suboxone letter. Teva first argued that the FDA’s issuance of the Suboxone letter decision stripped the company of its 180-day exclusivity. Teva argued that “first applicant status” is a property right akin to a patent, that the right is “alienable,” and that the first applicant may waive or relinquish exclusivity for valuable consideration. Therefore, according to Teva, the Suboxone decision deprived it of a property right and its embedded value. The immediate nature of the loss foreclosed the defendants’ argument that it must establish that another ANDA would be approved to establish concrete injury. The court disagreed. First, the court explained that a patent differs from first-applicant status because, for example, a patent confers the ability to bring an infringement action against anyone who practices the invention without permission. Moreover, the Patent Act says that a patent has the “attributes of personal property.” 35 U.S.C. § 261. First-applicant status, on the other hand, only dictates in what order the FDA can approve ANDAs. And a first applicant’s rights are enforceable only against the FDA. The court went on to say that nothing suggests Congress intended to give first applicants an immediate property interest.
The court was further unconvinced that a putative first applicant obtains an alienable interest in its status immediately upon submitting its ANDA. In a prior letter decision, FDA explained that before the exclusivity period is triggered, a first applicant can relinquish only its claim to exclusivity. But after the period is triggered, a first applicant can either relinquish entirely or can selectively waive its exclusivity in favor of a particular ANDA. The FDA limited the availability of selective waiver before the trigger date because (i) an ANDA applicant might lose its eligibility, and (ii) allowing selective waiver prior to the trigger date might encourage filers to submit marginal ANDAs only to obtain the benefit of waiving exclusivity to a filer with a more viable ANDA. The court also noted that none of the cases Teva cited held that a first applicant can selectively waive and therefore monetize the right to exclusivity before the trigger date. Thus, Teva failed to show that it sustained any injury or was in immediate danger of sustaining a direct injury because of the Suboxone letter.
Future Loss of Right to Exclude: In the alternative, Teva argued that it would suffer tens of millions of dollars in lost sales if the FDA were to approve competitors during Teva’s exclusivity period. The court noted that Teva cited two lines of cases, but remained unpersuaded that Teva had met the standing threshold. First, Teva argued that based on Bennett v. Spear, it was sufficient at the pleading stage to allege future agency action and resulting harm. The court, however, explained that Teva’s reading of Bennett was overly broad and that the Supreme Court merely held that in that case, the plaintiffs had alleged an imminent and redressable injury.
Next, Teva relied on Teva Pharms. USA, Inc. v. Sebelius, 595 F.3d 1303 (D.C. Cir. 2010), for the proposition that “courts in this circuit routinely reach the merits of generic manufacturers’ claims to exclusivity before the FDA has granted final approval to any ANDA concerning the drug at issue.” While that may be true, the court also explained that “courts in this circuit have routinely declined to reach the merits of disputes of this type because the plaintiff lacks standing or because its claim is unripe.” The court then addressed two leading D.C. Circuit cases: Pfizer Inc. v. Shalala, 182 F.3d 975 (D.C. Cir. 1999) and Teva v. Sebelius, 595 F.3d 1303. But the court explained that neither case was controlling here. Pfizer differed from the instant case because Teva was suing with respect to its own exclusivity. Thus, the court concluded that uncertainty about whether the ANDA would be approved was not dispositive. Teva differed because there Teva had already received tentative approval and there was no reason to doubt that Teva was the first applicant. Moreover, the FDA’s policy would have almost certainly forfeited Teva’s exclusivity in that case.
Here, the court noted that there was no guarantee that the FDA would approve any existing ANDA. None of the filers had tentative approval as an indicator of the status of the FDA’s review. Next, the court said it was possible that Teva’s ANDA would be rejected before the FDA were to issue its first approval. And finally, a dispositive factor of Teva was the ability to demonstrate no forfeiture event would occur. The court went on to explain that Teva had not cleared that hurdle with respect to two forfeiture events. First it was too soon to tell if Teva would fail to obtain approval of its ANDA within thirty months of its receipt by the FDA. Second, Teva may not be able to market its drug within 75 days after the entry of a final court decision of patent invalidity or non-infringement from which no appeal is taken. The Orange Book-listed patents had been invalidated by a district court and that decision was affirmed on appeal. Allergan moved for rehearing. The court explained that if the Federal Circuit were to reverse the district court’s decision invalidating the patents, Teva would forfeit exclusivity because it would need to amend its ANDA to assert a Paragraph III certification for the ’111 patent. If the Federal Circuit were to deny rehearing, Teva would have to market its drug within 75 days, or would forfeit exclusivity. The court therefore concluded that Teva failed to satisfy the causation and redressability requirements for Article III standing.
APA Violation: The court next addressed Teva’s second claim to standing, which was that the FDA failed to abide by the procedural requirements of the APA. The court noted that the Supreme Court has held that the allegation of “a bare procedural violation, divorced of any concrete harm” did not “satisfy the injury-in-fact requirement of Article III.” Spokeo, Inc., v. Robins, 136 S. Ct. 1540, 1549 (2016). The injury Teva alleged was loss of exclusivity. The court held that, for the reasons addressed above, causation between the Suboxone letter and Teva’s alleged loss of exclusivity was “speculative at best,” and therefore Teva had failed to satisfy the constitutional minimum for standing on this procedural issue as well.
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