ANDAs on Offense

In the world of U.S. pharmaceuticals, brand drug companies have a strong incentive to sue their generic rivals before generic products hit the market. Other than the obvious economic reasons, pre-launch litigation is built in to the very structure of the Hatch-Waxman Amendments (21 U.S.C. § 355). For an aspiring generic entrant, the promise of a 30-month stay before even the prospect of market entry can be daunting. But there are a few countermoves available to generic companies locked in Hatch-Waxman litigation.

1. Civil actions to obtain patent certainty. As noted, the Hatch-Waxman Amendments are set up to favor litigation by brand patentees against generic drug companies. The New Drug Application (NDA) holder (the brand) normally will file suit within 45 days of an Abbreviated New Drug Application (ANDA) by a prospective generic market entrant. But there may be countervailing reasons why the NDA holder might want to wait—money, for one, or maximal interference with the generic’s go-to-market plan. If the NDA holder does not sue, the ANDA applicant can file a declaratory judgment claim that the listed patents are invalid or not infringed. As the Federal Circuit explained, “to prevent patentees from ‘gaming’ the Hatch-Waxman Act,” Congress created a “civil action to obtain patent certainty.”[1] Before filing a civil action to obtain patent certainty, however, the generic must offer the brand the opportunity to confidentially review the generic’s ANDA.[2] The civil action to obtain certainty forces the NDA holder to either sue or waive its rights.

2. Declaratory judgments. But what if the generic is not operating within the strict confines of the Hatch-Waxman Amendments? Regardless of Hatch-Waxman’s civil action provision, Article III of the U.S. Constitution confers jurisdiction over any “case or controversy.” Even if the ANDA does not satisfy all of Hatch-Waxman’s technical requirements, the existence of a request for permission to manufacture an allegedly infringing drug product—and hence the threat of suit by the brand patentee—should be sufficient to trigger declaratory jurisdiction. As far as the Federal Circuit is concerned, a Hatch-Waxman dispute thus is justiciable under Article III any time “(1) the plaintiff has standing, (2) the issues presented are ripe for judicial review, and (3) the case is not rendered moot at any stage of the litigation.”[3]

A brand company can avoid a declaratory judgment claim by unilaterally issuing a covenant not to use. And courts differ on whether there is jurisdiction when the patent in suit has not been identified to FDA as covering the drug sought to be manufactured under the ANDA: Delaware and Eastern Wisconsin say “yes,” New Jersey and the Northern District of Illinois say “no,” and the Northern District of California has ruled that it can exercise jurisdiction, but to date has declined to.[4]

3. Counterclaim to correct patent information. NDA holders are required to submit “patent information” to FDA. FDA uses this information to inform prospective ANDA applicants of what patents apply to what products. But it lacks both the authority and expertise needed to verify the patent information submitted by manufacturers, so it defers to their descriptions. Normally, a generic applicant has no legal route to challenge erroneous patent information. But if it is sued by the NDA holder, it can file a counterclaim to correct erroneous patent use code information. The Supreme Court has held that the counterclaim provision is designed, in part, to avoid the problem of overbroad patent use codes, which the Court held “throws a wrench into FDA’s ability to approve generic drugs as the statute contemplates.”[5] A successful counterclaim results in an order requiring the NDA holder to “correct or delete” erroneous information.[6]

4. Patent misuse or antitrust. The first three remedies allow the generic to push back against brand strategies, but do not offer any direct compensation to the ANDA applicant. However, patent misuse or antitrust counterclaims can give the applicant an affirmative claim to assert against the brand plaintiff. If the claim is framed as “patent misuse,” it can invalidate the brand’s patent. If it is framed as an antitrust violation, it may even bear damages.

Patent misuse occurs where a patentee impermissibly broadens either the coverage or the duration of its patent grant with anti-competitive effect. The concept arose to restrain practices that violate public policy by overstating the coverage of a particular patent right. Several cases hold that the submission of inaccurate patent information to FDA can constitute patent misuse.

Similarly, there is case support for the idea that serially listing invalid patents with the FDA violates antitrust law, and that a patentee who improperly lists patents may be subject to defenses that “include unclean hands, unenforceability of the patent for fraud and inequitable conduct, misuse, and delay in filing suit resulting in laches or estoppel.”[7] An antitrust plaintiff can sometimes obtain damages as well as injunctive relief preventing the brand company’s anti-competitive behaviors.

Thus, though a Hatch-Waxman defendant—a generic drug company holding an Abbreviated New Drug Application—is often at a disadvantage in patent litigation, these four counterclaim options can help to level the playing field.

[1] Teva v. Novartis, 482 F.3d 1330, 1342 (Fed. Cir. 2007).

[2] 21 U.S.C. § 355 (j)(5)(C)(i)(III).

[3] Caraco Pharm. Labs., Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1291 (Fed. Cir. 2008).

[4] Cephalon, Inv. v. Watson Pharmaceuticals, Inc., 629 F.Supp.2d 338, 350-351 (D. Del. 2009); In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Lit., 693 F.Supp.2d 409, 418-419 (D. Del. 2010); Bayer Healthcare LLC v. Norbrook Labs., Ltd., 2009 WL 6337911 (E.D. Wis. Sept. 24, 2009); Abbott Labs. v. Zenith Labs., Inc., 934 F.Supp. 925, 938 (N.D. Ill. 1995); Eisai Co. v. Mut. Pharm. Co., 2007 WL 4556958 (D. N.J., Dec. 20, 2007); Takeda Pharm. Co., Ltd. v. Mylan Inc., 62 F.Supp.3d 1115 (N.D. Cal. 2014).

[5] Novo Nordisk et al. v. Caraco Pharms. et al., 566 U.S. ___, 132 S.Ct. 1670 (2012).

[6] Novo Nordisk v. Caraco Pharms., 688 F.3d 766 (Fed. Cir. 2012).

[7] Mylan Pharmaceuticals, Inc. v. Thompson, 268 F.3d 1323, 1331 (Fed. Cir. 2001).