The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) significantly amended the 180-day marketing exclusivity available to the first generic drug applicants to submit abbreviated new drug applications (ANDAs) challenging innovators’ patents.1 Among the most complex features of the amendments was the enactment of six exclusivity “forfeiture events,” which seem designed to limit the ability of first-filers to “park” themselves as the first generic applicant and thereby delay the approval of later-submitted ANDAs.

The first of these forfeiture events is particularly complicated and subject to several different interpretations. On January 17, 2008, in response to a letter submitted by Teva Parenteral Medicines, Inc. (Teva), FDA for the first time clarified how it will interpret this important provision. FDA’s response – which answers one critical question but raises others – is described below.

The “Failure to Market” Forfeiture Provision

Under the MMA, the first applicant (or applicants)2 to submit a substantially complete ANDA containing a “paragraph IV” certification to any patent listed in FDA’s Orange Book with the innovator drug becomes eligible for 180-day exclusivity. Provided the applicant lawfully maintains at least one paragraph IV certification, it may block the approval of later-submitted ANDAs containing paragraph IV certifications for 180 days from the first commercial marketing of the drug by the first applicant.

If one of the MMA’s forfeiture events takes place, the first applicant forfeits its exclusivity; if all first applicants forfeit the exclusivity FDA may approve later ANDAs whenever they otherwise become eligible for approval. The first forfeiture event – the only one addressed in FDA’s January 17 letter – is provided below:

(I) Failure to market. The first applicant fails to market the drug by the later of –

(aa) the earlier of the date that is –

(AA) 75 days after the date on which the approval of the application of the first applicant is made effective . . . ; or

(BB) 30 months after the date of submission of the application of the first applicant; or

(bb) with respect to the first applicant or any other applicant (which other applicant has received tentative approval), the date that is 75 days after the date as of which, as to each of the patents with respect to which the first applicant submitted and lawfully maintained a certification qualifying the first applicant for the 180-day exclusivity period . . . , at least 1 of the following has occurred:

(AA) In an infringement action brought against that applicant with respect to the patent or in a declaratory judgment action brought by that applicant with respect to the patent, a court enters a final decision from which no appeal (other than a petition to the Supreme Court for a writ of certiorari) has been or can be taken that the patent is invalid or not infringed.

(BB) In an infringement action or a declaratory judgment action described in subitem (AA), a court signs a settlement order or consent decree that enters a final judgment that includes a finding that the patent is invalid or not infringed.

(CC) The patent information submitted under subsection (b) or (c) is withdrawn by the holder of the application approved under subsection (b).3

The pivotal issue stems from the “later of” clause at the threshold. Until now, many have questioned whether and for how long FDA would wait for one of the (bb) events to occur before declaring an exclusivity forfeit under (aa). The plain language of the provision suggests that FDA might be authorized or even required to preserve a first applicant’s exclusivity so long as one of the (bb) events could one day occur. Despite the occurrence of an (aa) event, if there are ever events under (bb), forfeiture should take place only 75 days after the last such event. This would be a particularly likely interpretation if an infringement or declaratory judgment action – which could give rise to a (bb) event – was pending at the time one of the (aa) events occurred.

But what if no such litigation was pending? Forfeiture under (bb) requires a court of appeals decision, settlement, or delisting with regard to each patent that earned the first applicant the exclusivity. And, many innovator drugs have numerous patents listed, requiring applicants to submit multiple paragraph IV certifications. In the absence of litigation on all of these patents, FDA could be required to preserve a first-filer’s exclusivity for many years. At what point might FDA be compelled to declare an exclusivity forfeit? The answer to that question is of critical importance to both generic and innovator companies.

Teva’s ANDA for Generic Kytril®

On September 28, 2007, Teva submitted a letter to FDA requesting an interpretation of this forfeiture provision. According to Teva, the company’s ANDA for a generic version of Kytril (granisetron HCl) injection was due to be approved in December, and its eligibility for 180-day exclusivity depended on FDA’s interpretation. With the company’s permission, the agency published Teva’s letter and established a public docket, soliciting comments from industry on how FDA should interpret the forfeiture provision.

According to Teva’s letter, the company submitted its ANDA for a 1 mg/mL injectable granisetron product on May 28, 2004. The company submitted a different certification for each of the three patents listed with Kytril: It submitted a “paragraph III” certification to Patent No. 4,886,808, indicating that it was not seeking approval until the patent expired on December 29, 2007. It submitted a “section viii” statement to Patent No. 5,952,340, indicating that the patent claimed a method of use for which Teva was not seeking approval. And it submitted a paragraph IV certification to Patent No. 6,294,548, asserting that the patent was invalid or not infringed by Teva’s product. Because Teva was the first to submit an ANDA with a paragraph IV certification to market a generic version of this product, it became eligible for 180-day exclusivity.

Teva’s paragraph III certification to the ’808 patent meant that its ANDA could not be approved until December 28, 2007. On or about November 28, 2006, however, the first forfeiture provision’s initial (aa) event took place, because 30 months had passed since Teva’s submission of its ANDA. Moreover, no litigation regarding the ’548 patent was pending, against Teva or anyone else. Depending how FDA interpreted the MMA, Teva’s 180-day exclusivity could have been forfeit as of late 2006. Or, as Teva argued in its letter, FDA could decide that because a court decision or settlement with regard to the ’548 patent could occur in the future, Teva would remain eligible for the exclusivity.

FDA’s Decision Upholding Teva’s Exclusivity

On December 31, 2007, FDA approved Teva’s ANDA. On January 17, 2008, it responded to Teva’s inquiry and determined that it would not declare the 180-day exclusivity forfeit:

We find that under the plain language of the statute, 180-day exclusivity is not forfeited for failure to market when an event under subpart (aa) has occurred, but – as in this case – none of the events in subpart (bb) has occurred. The “failure to market” provision results in forfeiture when there are two dates on the basis of which FDA may identify the “later” event as described in section 505(j)(5)(D)(i)(I). The provision does not effect a forfeiture when an event under subpart (aa) has occurred, but no event under subpart (bb) has yet occurred.

The agency’s plain language reading of the MMA’s forfeiture provision provides industry with much needed certainty. Under FDA’s interpretation, once a first applicant becomes eligible for 180-day exclusivity, FDA will not forfeit that exclusivity so long as court decisions or settlements – regarding the first applicant or anyone else – remain possible. If the first applicant settles its litigation with the innovator short of a final judgment, then – under FDA’s reading – the agency may be unable to approve later ANDAs, provided the applicant avoids triggering any other forfeiture events.

In its January 17 response, FDA notes such a possibility, but states that there is no evidence that Teva sought to park its exclusivity in this case. The agency also notes in an important footnote that the statute, as written, may compel an indefinite hold on the approval of ANDAs, where the possibility of litigation remains open. As the agency states, “[t]his potential scenario is not one for which the statute currently provides a remedy.” It remains to be seen whether the courts may take a different view; however, for the time being, FDA appears uninterested in taking on this issue.