The FDA Reauthorization Act of 2017 (FDARA) created a new type of 180-day exclusivity for ANDA applicants applying for approval of certain drugs designated as Competitive Generic Therapies. The FDARA, according to FDA commissioner, Scott Gottlieb, “is part of our broader effort to foster generic competition and help address the high cost of drugs […] key step in making safe and effective generic drugs available to patients quickly and ensuring there’s adequate competition so patients have affordable access to the treatments they need.” Continue Reading Teva Sues FDA Alleging Unlawful Interpretation of the Definition of “First Applicant”

On June 25, 2018, the Food and Drug Administration (“FDA”) approved Epidiolex (cannabidiol), the first marijuana derived drug for use in the United States, to treat two rare forms of epilepsy. This decision for the FDA could have sweeping effects for the marijuana industry. While the FDA has previously approved drugs comprising synthetic (manufactured) cannabinoids, this is the first FDA approved drug comprised of an active ingredient derived from marijuana. Even with FDA approval, further action is required before Epidiolex can enter the market in the United States.

Epidiolex will be the first pharmaceutical form of the cannabinoid cannabidiol, or “CBD.” CBD is a chemical component of the Cannabis sativa plant commonly known as marijuana. Unlike tetrahydrocannabinol or “THC” (a different and highly discussed cannabinoid found in marijuana), CBD is not known to have psychoactive affects. However, because CBD derived from marijuana is considered part of the marijuana plant, it is currently listed as a Schedule I controlled substance and illegal for all uses in the United States.

The Drug Enforcement Administration (“DEA”) must reclassify CBD in order for Epidiolex to be cleared to enter the market in the United States. This process will likely take months and is currently the topic of much speculation. There are five schedules for controlled substances and each controlled substance is scheduled based on whether there is a current acceptable medical use in the United States, their relative abuse potential, and the likelihood of causing dependence when abused. Schedule I drugs have no accepted medical use. Thus, CBD’s classification as such is clearly contrary to the FDA’s recent decision. It is unclear how the DEA will reschedule CBD or if it will expand reclassification to include the entire marijuana plant (this latter option is highly unlikely).

Once Epidiolex enters the market, it may be prescribed beyond the few FDA approved uses. Epidiolex has been approved for the treatment of two rare and severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome. Doctors, however, generally have the ability to prescribe drugs for unapproved, or “off-label” use. The FDA has generally accepted such procedures for various reasons.

While Epidiolex’s approval is significant, FDA Commissioner Scott Gottlieb made clear in a press release that it is not an approval of marijuana or all of its components. That said, the federal government, through the FDA, has now officially recognized that there are some medical benefits to the marijuana plant, suggesting that there is a path forward leading to the legalization of marijuana at the federal level for healthy, medical-based use of marijuana. Of course, such use has been backed by thorough research, which is essential to any future approvals of similar or new marijuana derived products. In sum, as a result of the FDA’s decision, we are likely to see the DEA reclassify CBD, which may pave the way for more developments and subsequent approval of products with CBD.

The U.S. Patent and Trademark Office (“USPTO”) has renewed the hopes of applicants looking to patent method of treatment claims. A recent memo from the USPTO (the “Memo”) provides guidance on method of treatment claims, suggesting that when correctly drafted, such claims should generally be considered patent eligible subject matter.

The Memo comes in direct response to the Federal Circuit’s decision in Vanda v. West-Ward, issued on April 13, 2018. In Vanda, the Court, inter alia, distinguished certain method of treatment claims as patent eligible from those deemed ineligible by the Supreme Court in the infamous Mayo decision in 2012. The Court in Vanda found that the method of treatment claims at issue passed the first prong of the Mayo test, i.e., they were not directed to patent ineligible subject matter, and thus the claims did not need to be analyzed for an inventive concept under the second prong. To support its decision, the Vanda panel highlighted the specificity of the claims at issue:

At bottom, the claims here are directed to a specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome. They are different from Mayo. They recite more than the natural relationship between CYP2D6 metabolizer genotype and the risk of QTc prolongation. Instead, they recite a method of treating patients based on this relationship that makes iloperidone safer by lowering the risk of QTc prolongation. Accordingly, the claims are patent eligible.

For the reader’s convenience, an illustration from the USPTO on the Mayo test is reproduced to the left and a side-by-side comparison of the claim terms in Vanda and Mayo is set forth in the table below.

In analyzing the Vanda decision, the memo highlights three points:

  • First, claims should be evaluated as a whole. Thus, a claim should not be deemed patent ineligible simply because a claim requires a conventional step.
  • Second, patent eligible claims apply a natural relationship rather than claim such a relationship. For example, the claims in Mayo were deemed to be “directed to” the natural relationships of how the body interacts with certain drugs – “[a] method of optimizing therapeutic efficacy” – while the claims in Vanda apply a natural relationship through specific actions to treat a specific disease – “[a] method for treating a patient with iloperidone, [for treating] schizophrenia” and lowering adverse risks of such treatment.
  • Third, if a method of treatment claim is patent eligible under the first prong, of the Mayo test, the Court should not further proceed to the second prong of the Mayo test, i.e., analyzing the claims for something “more,” also known as the illusive “inventive concept.”.

With respect to the second point above, the Memo further explained that correctly drafted claims claim the application of a natural relationship rather than being directed to The Memo highlighted the order of the “primary steps” of “determining” the natural relationship then “administering” a specific quantity to “treat a particular disease.” A rule of thumb thus could be whether the following can be stated after reading a method of treatment claim: “The claim is directed to a method of using _______ [drug] to treat _______ [condition] comprising the following steps . . .”

The claims in Mayo, however, administered a drug and then analyzed the body’s natural reaction in order to provide advice on whether to increase or decrease dosage. In contrast, the claims in Vanda first determined the body’s natural reaction to a drug, then administered the drug in a specific dosage range to treat a particular disease.

While the Memo and the Vanda case signal good news for patentees, there is still a chance, as there always is with the Federal Circuit and the Supreme Court, that future decision may change these interpretations yet again. The Vanda decision was not unanimous. Chief Judge Prost of the Federal Circuit dissenting in Vanda believes that the claims were merely “drafting efforts designed to monopolize the law of nature itself.” According to Chief Judge Prost, “[t]he fact that a reduction of iloperidone dosage in poor metabolizers to the [sic] may reduce QTc prolongation is both the means and the ends of this claim..” A petition for rehearing en banc is currently pending before the Federal Circuit; a Supreme Court petition will likely follow.

Mayo: US Patent 6,355,623
Vanda: US Patent 8,586,610
1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointestinal disorder, comprising:

(a) administering a drug providing 6-thioguanine to a subject having said immune-mediated gastrointestinal disorder; and

(b) determining the level of 6-thioguanine in said subject having said immune-mediated gastrointestinal disorder,

wherein the level of 6-thioguanine less than about 230 pmol per 8×108 red blood cells indicates a need to increase the amount of said drug subsequently administered to said subject and

wherein the level of 6-thioguanine greater than about 400 pmol per 8×108 red blood cells indicates a need to decrease the amount of said drug subsequently administered to said subject.

1. A method for treating a patient with iloperidone, wherein the patient is suffering from schizophrenia, the method comprising the steps of:

determining whether the patient is a CYP2D6 poor metabolizer by:

obtaining or having obtained a biological sample from the patient;

and

performing or having performed a genotyping assay on the biological sample to determine if the patient has a CYP2D6 poor metabolizer genotype; and

if the patient has a CYP2D6 poor metabolizer genotype, then internally administering iloperidone to the patient in an amount of 12 mg/day or less, and

if the patient does not have a CYP2D6 poor metabolizer genotype, then internally administering iloperidone to the patient in an amount that is greater than 12 mg/day, up to 24 mg/day,

wherein a risk of QTc prolongation for a patient having a CYP2D6 poor metabolizer genotype is lower following the internal administration of 12 mg/day or less than it would be if the iloperidone were administered in an amount of greater than 12 mg/day, up to 24 mg/day.

The Hatch-Waxman Act was enacted in 1984 to address two main congressional goals: (1) to encourage innovation in pharmaceutical research and development; and (2) to help generic drugs reach the market more quickly. Through amendments to both the patent and the food and drug laws, the Act established several practices intended to provide brand-name firms with incentives to innovate while facilitating the marketing of generic pharmaceuticals. Whether or not it was envisioned at the time, the use of generic drugs in the US has seen a tremendous increase since the enactment of the Act. From about 13% (of all prescriptions) in 1984, use of generic drugs grew to 50% by the late 1990s and currently constitute well over 80% of all prescriptions in the US.

Among other things, the Act included elaborate provisions governing the mechanisms through which a potential generic manufacturer may obtain marketing approval for a drug that has been patented by another party. It also put in place an expedited approval processes for generic drugs. In doing so, the Act launched a new type of litigation, “Hatch-Waxman” or “ANDA” litigation. The evolution of the US generic drug industry has been shaped, in part, as a result of such litigation proceedings that unfolded many questions critical to understanding the generic approval process.

Although generic drug usage is over 80% of all prescriptions in the US, as of 2015 the sale of generics were only a quarter as large as those of patented drugs. In the past several years, the number of ANDA litigations has significantly increased. As an active member of the legal community within the ANDA space, we took a look at the latest developments in the field and now share our observations. In the article titled “Hatch-Waxman And Biosimilars Litigation: 2017 Year-in-Review,” we provide a brief overview of the Hatch-Waxman Act, a summary of the recently released FDA Draft Guidance, a general timeline of Hatch-Waxman and Biosimilars litigation, and summaries of some of the related decisions issued by the U.S. Supreme Court and Court of Appeals for the Federal Circuit in the year 2017. If you would like to order a hard copy of the Year in Review, please see our blog post.

BioLoquitur has reported on legislative developments in the past, but never did we expect to discuss a tax bill. Last week, however, the U.S. House of Representatives passed the “Tax Cut and Jobs Act” Bill (H.R. 1) and H.R. 1 deserves a spotlight. After all, one of our goals is to provide the life science industry with the latest news that could affect the industry.

Below are a few provisions that could affect U.S. pharma and biotechnology companies and others investing in those companies.[1]

  • Section 3001 reduces the U.S. corporate tax rate from 35% to 20%. If the bill goes into law, the reduction will be the largest corporate tax cut in over 100 years.
  • Under Title IV, the U.S. will only tax the U.S. income of a corporation and exempt most or all foreign income. Currently, a corporation headquartered in the U.S. pays corporate income tax on all income, both U.S. and foreign income that has been brought back into the U.S.
  • Section 3401 eliminates the Orphan Drug Tax Credit (“ODTC”). Currently, the U.S. provides an orphan drug manufacturer a tax credit of 50% of qualified clinical research costs incurred between the date of approval for the drug and the date that the U.S. Food and Drug Administration (“FDA”) designates the drug as an orphan drug. According to the U.S. Department of the Treasury, the tax expenditures attributable to the ODTC credit are expected to be $2.3 billion in 2017 and would grow substantially over the next ten years; eliminating the credit would thus generate billions in revenue for the United States.
  • After December 31, 2022, Section 3315 provides that research and experimental expenditures are not deductible unless they are charged to a capital account, where they must be amortized over a five year period. Currently, the tax code allows such research and experimental expenses as a deduction without requiring amortization under 26 U.S.C. § 174(a).
  • Section 3312 changes the tax treatment for self-created patents, taxing the gains from sales of such patents as ordinary income rather than capital gains.
  • Section 3307 narrows the ability to deduct certain business expense, eliminating deductions for membership dues, any payments relating to “entertainment, amusement, or recreation,” and on-premises athletic facilities, among others.
  • Section 1308 repeals the deduction for medical expenses. The tax code provides for the deduction of medical expenses that exceed 10% of an individual’s adjusted gross income. H.R. 1 eliminates this deduction. Critics suggest the elimination may potentially leading to reduced consumer spending on medical needs and/or increased reliance on government healthcare resources.

At 450 pages, H.R. 1 is a complex and dense bill — the list above is not exhaustive, of course.  We will keep you updated as tax reform continues.

 

[1]          Title V amends several provisions relating to exempt organization that are beyond the scope of this article, but may be of interest to research universities and foundations. If you have questions on the potential impact of Title V, please contact us and we will refer you to our tax and benefits colleagues for further information.

Finding against the Federal Circuit once again on a patent case, the Supreme Court issued a unanimous decision in Sandoz v. Amgen relating to the interpretation of the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”) in its first decision on the Act.  The Supreme Court’s decision firmly establishes the availability of a third biosimilar “dance,” at least as far as Federal law is concerned.

The BPCIA provides the mechanism by which companies can bring to market “biosimilar” compounds, i.e., products that can compete with biological drugs much the same way as generic drugs compete with traditional “brand” pharmaceutical products.  On appeal, the Supreme Court considered two issues.  First, the biosimilar applicant, Sandoz, challenged the Federal Circuit’s interpretation of the BPCIA as requiring an applicant to wait until after the FDA approved its biosimilar application before providing the requisite 180-day notice of commercial marketing to the brand company.  This meant that a biosimilar applicant had to wait an additional 180 days after its application was granted before it could launch a competing product.  The FDA cannot approve (“license”) a biosimilar product until twelve years after the biologic was first approved by the agency.  Thus, the Federal Circuit’s decision effectively provided the brand manufacturer with 12½ years rather than 12 years of market exclusivity.

The Supreme Court reversed the Federal Circuit and explicitly determined that applicants can provide notice before or after FDA approval. According to the Supreme Court, the pertinent statutory language in the BPCIA has two separate requirements:  (1) that the biosimilar application is “licensed” before it is marketed; and (2) that the biosimilar applicant gives notice 180 days before marketing occurs.  The Federal Circuit thus erred in requiring licensure before notice could be given.

The second issue tackled by the Supreme Court relates to the “patent dance” provisions of the BPCIA. The “patent dance” is a statutory scheme through which the biosimilar applicant and the brand manufacturer exchange information and legal theories until deciding upon which patents to litigate first.  Sandoz refused to provide the biosimilar application and manufacturing information contemplated in the dance, leading Amgen to seek an injunction under federal and state law to compel participation.  The district court and Federal Circuit determined that an injunction was not available.

On cross-appeal, the Supreme Court agreed with the Federal Circuit that injunctions under federal law are not permitted, but remanded the case to review state law remedies.  According to the Court, the BPCIA allows the brand company immediately to bring a declaratory judgment action against the biosimilar applicant if they do not provide their application and manufacturing information.  This remedy deprives the applicant of the ability to control the scope of the litigation (i.e., which patents to litigate) and the timing of the suit.  The Supreme Court determined that the remedy of immediate suit was the only federal remedy contemplated for an applicant’s failure to dance.  The Supreme Court remanded the case to address whether non-compliance with the BPCIA can be considered a violation of California law entitling Amgen to an injunction and/or whether the BPCIA’s remedy pre-empts any state law remedies.

Seyfarth will be closely monitoring the remand of Sandoz in the coming months.

The SANDOZ Dance

Step 1:   Skip
42 U.S.C. § 262(l)(2)(A)

 BIOSIM good Applicant refuses to provide aBLA and information describing manufacturing

Step 2: File Suit
42 U.S.C. § 262(l)(9)(C)

 BRAND good Reference sponsor chooses what patents to sue upon and when to bring suit against Applicant

 

The FAST BPCIA Dance

Step 1:   Disclose
42 U.S.C. § 262(l)(2)(A) – 20 days

BIOSIM good Applicant provides a copy of aBLA and information describing manufacturing

Step 2: Disclose
42 U.S.C. § 262(l)(3)(A) – 60 days

 BRAND good Reference sponsor provides list of assertable patents and identifies any patents it is willing to license

Step 3:   Disclose
42 U.S.C. § 262(l)(3)(B) – 60 days

BIOSIM good Applicant provides its own list of assertable patents, responds to licensing offer, and gives “detailed statements” why all listed patents are invalid, unenforceable, or will not be infringed

Step 4: Disclose
42 U.S.C. § 262(l)(3)(C) – 60 days

 BRAND good Reference sponsor gives “detailed statements” why the claims of all listed patents are infringed and responds to Applicant’s detailed statements

Step 5: Negotiate
42 U.S.C. § 262(l)(4)(A)

NEG SUCCESS Applicant and Reference sponsor negotiate to develop a final and complete list of patents for the initial patent infringement lawsuit and agree

Step 6:  File Suit
42 U.S.C. § 262(l)(6)(A) – 30 days

 BRAND good Reference sponsor files suit on agreed-upon patents

 

The SLOW BPCIA Dance

Step 1:   Disclose
42 U.S.C. § 262(l)(2)(A) – 20 days

BIOSIM good Applicant provides a copy of aBLA and information describing manufacturing

Step 2: Disclose
42 U.S.C. § 262(l)(3)(A) – 60 days

 BRAND good Reference sponsor provides list of assertable patents and identifies any patents it is willing to license

Step 3:   Disclose
42 U.S.C. § 262(l)(3)(B) – 60 days

BIOSIM good Applicant provides its own list of assertable patents, responds to licensing offer, and gives “detailed statements” why all listed patents are invalid, unenforceable, or will not be infringed

Step 4: Disclose
42 U.S.C. § 262(l)(3)(C) – 60 days

 BRAND good Reference sponsor gives “detailed statements” why the claims of all listed patents are infringed and responds to Applicant’s detailed statements

Step 5: Negotiate
42 U.S.C. § 262(l)(4)(B) – 15 days

NEG FAILS

Applicant and Reference sponsor negotiate to develop a final and complete list of patents for the initial patent infringement lawsuit but FAIL TO agree

Step 6:  Choose
42 U.S.C. § 262(l)(5)(A)

 BIOSIM good Applicant gives reference sponsor the number of patents it proposes to litigate

Step 7:  Exchange
42 U.S.C. § 262(l)(5)(B) – 5 days

Exchange Applicant and Reference sponsor simultaneously exchange list of patents that should be part of infringement action; Reference sponsor’s list limited to same number given by Applicant

Step 8:  File Suit
42 U.S.C. § 262(l)(6)(B) – 30 days

BRAND good Reference sponsor files suit on all patents on lists.

 

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.