This article summarizes information taken from the following sources:  FDA’s Draft Guidance for Industry on Bioequivalence Studies With Pharmacokinetic Endpoints for Drugs Submitted Under an Abbreviated New Drug Application (ANDA) (Dec. 2013) & information set forth in the following link: https://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/ucm075207.htm

In order to launch a generic version of an approved reference listed drug (“RLD”), an applicant must file an abbreviated new drug application (“ANDA”) generally demonstrating, among other things, that a proposed generic drug product is bioequivalent (“BE”) to the RLD.[1] Continue Reading FDA Provides New Product Specific Guidance for Development of Certain Generic Drug Products

The America Invents Act (“AIA”) provides for post grant challenges of U.S. patents in the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office. One type of AIA proceeding, Inter Partes Review (“IPR”), came into effect in September 2012, and provides a process for relatively quick determination of invalidity of challenged patent claims based on published prior art. [1] IPR decisions rendered in the past five years have created a body of law addressing a variety of issues related to invalidity challenges before the PTAB. In a recent IPR proceeding, a novel strategy has arisen that posts an interesting question of first impression, whether the assignment of a patent involved in an IPR proceeding to a U.S. Indian tribe can avoid an IPR proceeding based on a sovereign immunity defense. The present blog post summarizes the new issue that the PTAB will be required to decide in the IPR. Continue Reading Indian Tribal Sovereign Immunity Asserted in an IPR

Less than two months after oral argument, the Supreme Court issued a unanimous decision on Monday, May 22, 2017, in TC Heartland LLC v. Kraft Foods Group Brands LLC, uprooting long-standing Federal Circuit precedent regarding proper venue for patent infringement cases.  While the TC Heartland decision certainly portends a shift away from certain district courts, its effects may very well be minimal with respect to Paragraph IV litigation.

Evolution of Patent Venue Laws

The issue in TC Heartland can be traced back to the creation of a separate venue statute in 1897 for patent infringement cases.  Prior to the amendments of 1897, patent litigation cases were treated just like any other federal matter for venue purposes.

Venue refers to the proper or most convenient location for a case or trial — it is designed to keep litigation near the defendant or the site of the action that gave rise to the suit.  In 1897, Congress approved a separate patent venue statute, which defined venue to include (1) where the alleged infringer was an “inhabitant” or (2) where the defendant both committed the act(s) of infringement and maintained a “regular and established place of business.”  In 1948, Congress made a slight non-substantive revision to the patent venue statute, replacing “inhabit[]” with “resides.”  Supreme Court decisions relating to the pre-1948 and post-1948 patent venue statute determined that the patent venue statute was the exclusive venue provision for patent infringement actions and that both “inhabit” and “resides” meant the place of incorporation of the alleged infringer. Stonite Products Co. v. Melvin Lloyd Co., 315 U.S. 561, 563-66 (1942); Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222, 224-229 (1957).

The 1948 patent venue statute, 28 U.S.C. § 1400(b), has not been modified since its enactment.  It reads:

28 U.S.C. § 1400(b):  Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.

In contrast to the patent venue statute, the generally applicable venue statute, 28 U.S.C. § 1391, has undergone more recent revisions.  For example, in 1988, Congress expanded the location where a defendant can and should be sued.  The general venue statute modified the definition of “resides” by expanding residence to include “any judicial district in which such defendant is subject to the court’s personal jurisdiction.”  28 U.S.C. § 1391(c).  Personal jurisdiction can include places where the defendant has directed its actions, for example, where the product at issue is in the stream of commerce.

Two years after the 1988 amendment, the Federal Circuit evaluated whether the 1988 change to the general venue statute affected the patent-specific venue provision, 28 U.S.C. § 1400(b).  In VE Holding Corp. v. Johnson Gas Appliance Co., the Federal Circuit held that the term “resides” in Section 1400(b) should be interpreted using the new definition of “resides” in Section 1391(c).  The end result was to make venue proper for patent litigation anywhere the defendant is subject to personal jurisdiction rather than the more restricted definition of resides as the place of incorporation. VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574 (Fed. Cir. 1990).  The Supreme Court denied certiorari. Johnson Gas Appliance Co. v. VE Holding Corp., 499 U.S. 922 (1991).

Over the last 27 years, attorneys have associated VE Holding Corp. with an increase in forum shopping — once venue became easier to establish, plaintiffs brought suit in places thought to provide advantages in terms of procedure, outcome, or otherwise.  For example, VE Holding is said to have contributed to the rise of the Eastern District of Texas as a go-to district for patent owners. See, e.g., Alisha Kay Taylor, What does Forum Shopping in the Eastern District of Texas Mean for Patent Reform, 6 J. Marshall Rev. Intell. Prop. L. 570, 575-577 (2007).  The Eastern District of Texas offers streamlined patent litigation procedures and a reputation for patent holder wins.  It is not a populous district, nor a place of incorporation or a principal place of business for most defendants.

After VE Holding, the Federal Circuit continued to field cases about patent venue.  In light of the rise of “troll” litigation, i.e., litigation by non-practicing entities (“NPE”s) filed in plaintiff-friendly forums, the Federal Circuit attempted to limit venue by finding that retaining jurisdiction in certain forums was an abuse of discretion. E.g., In re TS Tech United States Corp., 551 F.3d 1315 (Fed. Cir. 2008) (ordering transfer of case from the Eastern District of Texas to the Southern District of Ohio).  Congress also repeatedly introduced bills specifically designed to limit patent venue in an attempt to curb NPE litigation; those bills were never passed. See, e.g., Venue Equity and Non-Uniformity Elimination Act of 2016, S. 2733, 114th Cong. (2015-2016).

TC Heartland

The TC Heartland litigation allowed the Supreme Court a second chance to evaluate the merits of VE Holding Corp. (and their own opportunity to combat forum-shopping in patent litigation matters). In TC Heartland, Kraft Food Group Brands LLC (“Kraft”) brought suit against TC Heartland, LLC (“TC Heartland”) in the district court of Delaware.  TC Heartland moved to dismiss the suit or at least transfer the case — the company was incorporated in Indiana, maintained headquarters in Indiana, and less than 2% of the allegedly infringing product ended up in Delaware. See In re TC Heartland LLC, 821 F.3d 1338, 1340 (Fed. Cir. 2016).  The Delaware district court denied the motion to dismiss or transfer venue, leading to an appeal to the Federal Circuit.

On appeal, the Federal Circuit addressed the effect of another set of amendments to the general venue statute made in 2011. At that time Congress, inter alia, added language in 28 U.S.C. § 1391(a), stating that the general venue statute applied “[e]xcept as otherwise provided by law.” Id. at 1341.  According to TC Heartland, the additional language made the general venue statute inapplicable where other venue statutes existed, such as the patent venue statute of 28 U.S.C. § 1400(b). Id. The Federal Circuit rejected TC Heartland’s arguments, reaffirming the VE Holding Corp. precedent.  According to the court, the patent venue statute did not define the term “resides” and thus looking to the general venue statute for guidance would not defy the “otherwise provided by law” language added in 2011. Id. at 1341-44.

By an 8-0 vote, the Supreme Court reversed the Federal Circuit’s In re TC Heartland decision, overturning the precedent of VE Holding Corp. In its place, the Supreme Court has determined that the term “resides” for purposes of the patent venue statute should be interpreted in accordance with the Supreme Court’s 1956 decision of Fourco: residence means the state of incorporation of the defendant.  Under TC Heartland, plaintiffs alleging patent infringement must therefore file suit where the defendant resides (i.e., their state of incorporation) rather than wherever personal jurisdiction exists.  Alternatively, a plaintiff can make use of the second location for venue provided by Section 1400(b)–where the defendant has committed acts of infringement and has a regular and established place of business.

Effects of TC Heartland

The most obvious effect predicted from TC Heartland is a shift in patent litigation forums away from places like the Eastern District of Texas, where venue typically relied on very minimal ties to the district, and toward states such as Delaware, where many domestic corporations are incorporated.  An increase in inter partes review and post grant review proceedings before the Patent Trial and Appeal Board (PTAB) also may occur given that venue rules do not apply.

With respect to ANDA litigation, however, TC Heartland may not move the needle.  First, generic companies are already being sued primarily where they are incorporated.  According to recent data from Lex Machina, the vast majority of ANDA litigation matters are heard before the District Court of Delaware and the District Court of New Jersey — more than 10 times as many cases are cited in each of these districts than the next most popular venue.  Lex Machina, Hatch-Waxman/ANDA Litigation Report 2017 at Fig. 5 (showing that from 2015 to Q1 of 2017, there were 324 ANDA filings in New Jersey and 387 in Delaware compared to 30 in the Northern District of West Virginia (home to generic drug company Mylan)).

Second, the Supreme Court declined to review the Federal Circuit’s decision last year on ANDA jurisdiction. In Acorda Therapeutics Inc. v. Mylan Pharm. Inc., 817 F.3d 755 (Fed. Cir. 2016), the Federal Circuit determined that ANDA filers are subject to specific jurisdiction, a form of personal jurisdiction, in any state where they plan to market their generic product.  While TC Heartland eliminates the ability to use personal jurisdiction to establish venue, Acorda’s reasoning has implications for the second ground for venue under Section 1400(b):  where the acts of infringement have occurred and the defendant has a regular and established place of business.  In Acorda, the Federal Circuit determined that the “real world market injury” for an ANDA filing is where the generic product will be sold.  This suggests that in evaluating where the acts of infringement have occurred, the Federal Circuit may take into account the intent of an ANDA filing to infringe nationwide rather than focusing on just the filing of an ANDA with a Paragraph IV certification as the act of infringement.  This could keep litigation in more forums than simply where the Paragraph IV certification was drafted or submitted.

A third reason that TC Heartland may have a limited impact on ANDA litigation is that it explicitly did not reach any decision on where a foreign company can be sued for purposes of 28 U.S.C. § 1400(b).  Plaintiffs often file suit against both the domestic generic company and its foreign parents or subsidiaries who may have developed the product or plan to produce it.  Under such circumstances, TC Heartland is silent as to how venue should be determined in such cases.

Finally, because many ANDA litigations involve multiple generic companies, ANDA litigation may still end up in a less convenient forum. Under 28 U.S.C. § 1407, if civil actions that “involv[e] one or more common questions of fact” are pending in different districts, the actions can be transferred by the Judicial Panel on Multidistrict Litigation (“JPML”) or consolidated pretrial proceedings. Any party can request consolidation.

Overall, the distribution of patent litigation in the United States in TC Heartland likely will change to favor districts more amenable to defendants, such as where the alleged infringer has chosen to incorporate.  We will be closely monitoring ANDA forum choices, however, including the activity of the JPML, in the coming months to see if a similar shift occurs for ANDA litigation.

 

 

If you would like further information, please contact Jamaica P. Szeliga at jszeliga@seyfarth.com, Dean L. Fanelli, Ph.D., at dfanelli@seyfarth.com, or Thomas A. Haag, Ph.D., at thaag@seyfarth.com. 

 

shutterstock_279495203One goal of BioLoquitur is to provide commentary and analysis on important developments in U.S. law affecting the pharmaceutical and biologics industry. It can be easy to forget that legal developments are not limited to the latest court decisions or agency actions, however.  The most profound changes in U.S. law arise from legislation.   This post thus provides a snapshot of relevant legislative proposals for the first quarter in 2017.

While the bills highlighted in this post have yet to make significant progress in the legislative process, they provide insight into what issues Congress is concerned about and how they might address such issues.

Currently, there over a dozen bills pending in the House of Representatives and Senate relevant to pharmaceutical and biologics companies. Common themes include (1) expediting the market entry of generic drugs and biosimilar products; (2) addressing drug shortages; and (3) discouraging certain settlement provisions between brands and generic companies that are thought to have anti-competitive effects, such as “pay-for-delay” requirements.  Below is a short summary of key bills and their status to date.  For a Quick View table, click here.

“Improving Access to Affordable Prescription Drugs Act,” H.R. 1776; S. 771. On March 29, 2017, Representative Janice Schakowsky and Senator Al Franken, both democrats, introduced identical bills that would enact comprehensive reforms relating to pharmaceutical drugs and biologics products. Provisions of the bills would impose reporting requirements, levy taxes and eliminate tax deductions for certain actions, reduce market exclusivity periods, and imposing de facto limits on settlements between generic drug companies and brand companies. The bills have been referred to committees. Significant provisions include:

  • Sec. 101. Requiring Mandatory reporting for drug and biologic manufacturers, including disclosure of sales volume, gross and net revenue and profit, drug pricing, information executive compensation, and a breakdown of expenditures for research and development, costs of goods sold, acquisition and licensing costs, and marketing and advertising spend.
  • Sec. 202. Imposing a tax on revenue earned because of any “price spike” in prescription drug pricing.
  • Sec. 204. Permitting the importation and sale of drugs by foreign wholesale distributors and licensed foreign. pharmacies, starting initially with Canadian pharmacies.
  • Sec. 303 (a)(1). Allowing the early submission of an abbreviated new drug application (ANDA) for a new chemical entity (NCE) (three years after approval) and shortening the approval time for ANDAs under certain conditions. Currently, the earliest date for submitting an ANDA is four years after the approval of the NCE.
  • Sec. 303(a)(2). Restricting the current three year supplementary regulatory exclusivity granted for new indications, formulations, dosages and the like to only those approvals that show a “significant clinical benefit over existing therapies.
  • Sec. 303(a)(3). Slashing the market exclusivity afforded to new biologic drugs from 12 years to 7 years.
  • Sec. 304. Revoking market exclusivities for drugs and biologics for certain violations, including misbranding, illegal marketing, kickbacks, and other acts of fraud.
  • Sec. 404. Creating a legal presumption that the Federal Trade Commission (FTC) can rely on that the following settlements between brand companies and ANDA filers have an anticompetitive effect:
    • Settlements that provide the ANDA filer with anything of value, including an exclusive license, other than the right to market before the expiration of the patents covering the drug, payment of legal expenses up to $7.5 million, and/or a covenant not to sue;
    • Settlements where the ANDA filer agrees to limit or forego research and development, manufacturing, marketing or sales of the ANDA product for any period of time.
  • Sec. 405. Preventing deductions for direct-to-consumer advertising of prescription drugs.
  • Sec. 406. Requiring the FTC to prepare a report accessing the impact of “product hopping,” where “product hopping” refers to when a manufacturer develops a new formulation of a known drug or biologic product for a particular indication and then acts to reduce or eliminate demand for the original product,

“Medical Innovation Prize Fund Act,” S.495. Introduced by Independent Senator Bernie Sanders on March 2, 2017, this bill would broadly eliminate patent and market exclusivity provisions for drugs and biologics and instead establish a fund to award prizes and payments for medical innovations. The bill has been referred to committee.

Affordable and Safe Prescription Drug Importation Act, H.R. 1245; S. 469. On February 28, 2017, Democratic Representative Elijah Cummings and Independent Senator Bernie Sanders introduced identical bills to permit importation of drugs from foreign wholesales and foreign pharmacies. The provisions of these bills are largely subsumed within the more comprehensive “Improving Access to Affordable Prescription Drugs Act.” The bills are currently in committee.

The “OPEN ACT,” H.R. 1223. On February 27, 2017, Republican Representative Gus Bilirakis introduced the OPEN ACT, i.e., the Orphan Products Extension Now Accelerating Cures and Treatments Act of 2017. The OPEN ACT would grant an additional 6 months of market exclusivity for an approval of a new indication treating rare diseases and conditions. This exclusivity would extend any existing market exclusivity, such as the five-year exclusivity period for NCE products. The bill has been referred to committee.

“Increasing Competition in Pharmaceuticals Act,” S. 297; “Lower Drug Costs through Competition Act,” H.R. 749. Senator Susan Collins, Republican, and Representative Kurt Schrader, Democrat, introduced these related bills on February 2, 2017 and January 30, 2017 respectively. The legislation requires the FDA to prioritize and complete an expedited review of ANDA applications for generic drugs where there is a shortage or where there is only one current manufacturer and no more than two tentative approvals for other manufacturers. The bills also authorize a study on the REMS program, which allows the FDA to require Risk Evaluation and Mitigation Strategies from manufacturers of drugs or biological products that have known or potential serious risks. The bill is currently referred to committee.

“Short on Competition Act,” S. 183. Introduced by Democratic Senator Amy Klobuchar on January 20, 2017, the Short on Competition Act also addresses drug shortages. In addition to authorizing expedited reviews of ANDA applications, the Act would permit temporary importation of drugs from foreign countries. The bill is currently referred to committee.

“Preserve Access to Affordable Generics Act,” S. 124. On January 12, 2017, Senator Klobuchar (D) introduced a bill directed to prohibiting certain settlement agreements provisions between brand and generic drug companies. The provisions of this Act are mostly subsumed within the more comprehensive “Improving Access to Affordable Prescription Drugs Act.” Senator Klobuchar’s bill has been referred to committee.

Bioloquitur will continue to track legislative proposals throughout the year and report on any relevant developments.