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Seattle Children's Hospital, et al v. Akorn

December 20, 2011

SEATTLE CHILDREN'S HOSPITAL, ET AL., PLAINTIFFS,
v.
AKORN, INC.,
DEFENDANT.



The opinion of the court was delivered by: Judge Robert M. Dow, Jr.,

MEMORANDUM OPINION AND ORDER

This action relates to Defendant Akorn, Inc.'s efforts to obtain FDA approval to market a generic version of Novartis Pharmaceuticals' Tobramycin Inhalation Solution ("TOBI"). Plaintiffs Seattle Children's Hospital, Novartis Vaccines and Diagnostics, Inc., and Novartis Pharmaceuticals Corporation have moved to dismiss [36] the lawsuit that they brought for (i) lack of subject matter jurisdiction, or (ii) in the alternative, for dismissal without prejudice pursuant to Federal Rule of Civil Procedure 41(a)(2). In turn, Defendant Akorn has moved to amend its answer to include a claim for a declaratory judgment of noninfringement. For the reasons set forth below, the Court grants Defendant's motion to amend [39] and denies Plaintiffs' motion to dismiss [36].

I. Background

A. Statutory Framework

The approval of prescription drugs is governed by the applicable provisions of the Federal Food, Drug, and Cosmetic Act ("FFDCA"), 21 U.S.C. § 301 et seq., as amended by the Drug Price Competition and Patent Term Restoration Act of 1984 (known as the "Hatch-Waxman Act"), and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ("MMA"). The Hatch-Waxman Act requires pharmaceutical companies seeking to market new, previously unapproved drugs to file a New Drug Application ("NDA") with the FDA. 21 U.S.C. § 355(a), (b). As part of its NDA, an applicant must provide certain information to the FDA about "any patent which claims the drug for which the applicant submitted the application or which claims a method of using such drug and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug." 21 U.S.C. § 355(b)(1). The FDA publishes the patent information in the Approved Drug Products With Therapeutic Equivalence Evaluations, which is commonly referred to as the "Orange Book." 21 U.S.C. § 355(j)(7)(A). Drugs approved by the FDA are known as "listed drugs." 21 U.S.C. § 355(j)(2)(A)(i).

In 1984, with the enactment of the Hatch-Waxman Act, Congress created "an expedited approval process known as an Abbreviated New Drug Application (ANDA)" in order "[t]o encourage the development of generic versions of listed drugs." Janssen Pharmaceutica, N.V. v. Apotex, Inc., 540 F.3d 1353, 1355-56 (Fed. Cir. 2008); see also 21 U.S.C. § 355(j). The Hatch-Waxman Act allows generic drug companies to rely on the FDA's previous approval of a listed drug if the generic drug company demonstrates in its ANDA that its generic drug product is bioequivalent to the NDA drug. 21 U.S.C. § 355(j)(2)(A). An ANDA applicant also must include a certification to each patent listed in the Orange Book covering the listed drug. 21 U.S.C. § 355(j)(2)(A)(vii). There are four types of patent certifications: (I) no patent information has been filed with the FDA; (II) the patent has expired; (III) the patent will expire on a particular date and approval of the ANDA should be deferred until expiration; and (IV) in the opinion of the ANDA applicant, the patent is invalid or will not be infringed by the manufacture, use, or sale of the generic drug. See 21 U.S.C. § 355(j)(2)(A)(vii); Janssen, 540 F.3d at 1356.

The timing of ANDA approval by the FDA depends on the types of certifications contained in the ANDA. An ANDA with a Paragraph III certification cannot be approved until the expiration of the last to expire of any patent that is the subject of that certification. 21 U.S.C. § 355(j)(5)(B)(ii). Where an ANDA contains a Paragraph IV certification, the timing of approval depends on two events: (i) whether the holder of the listed patent brings an infringement suit within 45 days of receiving notice of the ANDA filing, and (ii) whether the company seeking approval was the first to file an ANDA with a Paragraph IV certification to the listed patent. 21 U.S.C. § 355(j)(5)(B)(iii).

With respect to the first potential event, the Hatch-Waxman Act provides that the filing of a Paragraph IV certification is an act of patent infringement. 35 U.S.C. § 271(e)(2)(A). If the patentee or NDA holder does not bring suit within 45 days of receiving notice of the Paragraph IV certification, the statute mandates that FDA "shall" approve the ANDA immediately. 21 U.S.C. § 355(j)(5)(B)(iii). If the brand name company does bring suit within 45 days, the FDA may not approve the ANDA for 30 months, unless a court decides that the patent(s)-in-suit are invalid or not infringed. 21 U.S.C. § 355(j)(5)(B)(iii).

With respect to the second potential event, to encourage generic pharmaceutical companies to challenge Orange Book listed patents, the Hatch-Waxman Act grants the first company to submit a Paragraph IV ANDA a 180-day period of generic marketing exclusivity during which time FDA will not approve a later-filed Paragraph IV ANDA based on the same NDA. 21 U.S.C. § 355(j)(5)(B)(iv). Under a prior version of Hatch-Waxman Act, the start of the 180-day exclusivity period was triggered by the earlier of two events: (1) the first-filer's commercial marketing of its generic drug product; or (2) a court decision of non-infringement or invalidity.*fn1 Id. § 355(j)(5)(B)(iv)(I)-(II) (2000). However, in 2003, Congress enacted the MMA, which amended the Hatch-Waxman provisions governing the commencement of the 180-day exclusivity period. With the 2003 amendment, the exclusivity period now can be triggered only through the first filer's marketing. 21 U.S.C. § 355(j)(5)(B)(iv). Under the new regime, when a subsequent filer obtains a final judgment of invalidity or non-infringement, the first filer must begin marketing within 75 days or forfeit its exclusivity period. 21 U.S.C. § 355(j)(5)(D)(i)(I)(bb)(AA).

B. Factual Background

Plaintiff Novartis Pharmaceuticals Corp. ("Novartis") holds NDA No. 50-753 for its brand name Tobramycin Inhalation Solution. Novartis listed the '269 Patent in the Orange Book in connection with NDA No. 50-753. In doing so, Novartis attested to the FDA that "a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug" described in its NDA. See 21 U.S.C. § 355(b)(1), (c)(2). Novartis also invoked the Hatch-Waxman statutory framework to regulate the ability of Abbreviated New Drug Application ("ANDA") applicants to market their generic products. As previously set forth, this statutory framework provides for the creation of several "barriers" to the regulatory approval of such ANDAs.

The second barrier, particularly relevant here, applies only to ANDA filers that are not the first to make a Paragraph IV certification ("subsequent filers") because the Hatch-Waxman Act grants to the first Paragraph IV ANDA filer a 180-day marketing exclusivity period over subsequent filers. Under the statutory framework, the FDA cannot approve the subsequent filer's ANDA until the first filer's 180-day exclusivity period terminates. See Caraco Pharm. Labs. Ltd. v. Forest Labs., Inc., 527 F.3d 1278, 1283-84 (Fed. Cir. 2009). "Importantly, the first Paragraph IV ANDA filer is entitled to the 180-day exclusivity period whether or not it establishes that the NDA holder's Orange-Book-listed patents are invalid or not infringed by the drug described in its ANDA; all that is required is that the first Paragraph IV ANDA filer submit a substantially complete ANDA that contains a Paragraph IV certification." Id. at 1283.

Here, non-party Teva Pharmaceuticals USA, Inc. ("Teva") is the first filer with respect to Novartis's NDA; Akorn is a subsequent filer.*fn2 Thus, pursuant to statute, the FDA may not approve Akorn's ANDA until Teva's exclusivity period is removed as a barrier. To date, Teva's exclusivity period has not begun and has not been forfeited. On June 27, 2011, Plaintiffs gave Akorn a covenant not to sue with respect to infringement of the '269 patent by the proposed generic product described in Akorn's abbreviated new drug application ("ANDA"). Plaintiffs submit that the Court no longer has subject matter jurisdiction because such a covenant not to sue moots the entire controversy between the parties in a patent infringement action and therefore the Court should dismiss this action, without prejudice. In the alternative, Plaintiffs request that the Court dismiss this action without prejudice pursuant to Fed. R. Civ. P. 41(a)(2), given the early stage of these proceedings and the alleged lack of prejudice to Akorn. In response, Akorn contends that the only way for it to remove Teva's exclusivity period as a barrier to the approval of Akorn's ANDA, whether through ...


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