Amicus Curiae Brief — Teva Pharmaceuticals USA, Inc. v. Pfizer, Inc.

6-

149 Cong. Rec. $15882-03 at S15884 (Nov. 25, 2003)

(remarks of Sen. Kennedy during consideration of the

Conference Report on the MMA).

Second, in § 1102, Congress restructured the 180-day

exclusivity period granted to a generic company when it was

the first to file an ANDA challenging a patent (known as

paragraph IV certification) and it established that its product

did not infringe. Congress now requires the generic

company to forfeit exclusivity if it does not begin producing

the product within 75 days of an event resolving the patent

dispute, either through settlement, court decision or

dismissal. This eliminated the incentive under the old law

for name-brand and generic manufacturers to “park’’ the

exclusivity period granted to first-to-apply generics through

an agreement not to market the generic thereby blocking all

other generic companies from coming tc the market. 149

Cong. Rec. $15670-03 at S15746 €Nov. 24, 2003)(remarks

of Sen. Schumer during consideration of the Conference

Report for the MMA).

Third, in § 1101(a)(C) of Title XI, Congress clarified

that generic manufacturers could bring a declaratory

judgment action to “seek a prompt resolution of . . . patent

issues” where the patent holder has not initiated a patent

infringement action within 45 days after receiving notice of a

patent challenge. 149 Cong. Rec. $15882-03 at $15884-5

(Nov. 25, 2003)(remarks of Sen. Kennedy during

consideration of the Conference Report for the MMA). This

is an essential provision because it is the legal proceedings

surrounding resolution of the patent issues which trigger all

of the other threshold events under the Federal Food, Drug

and Cosmetic Act that determines when and whether a

generic can come to market. Leaving the initiation of such

proceedings solely to the discretion of the patent holder

By

allows the patent holder to control when competition could

commence, and to defer commencement as long as possible.

B. Congress Intended That Courts Should Exercise

their Declaratory Judgment Jurisdiction to the

Limits of their Article III Power.

The language, structure, and history of § 1101(a)(C)

reveal Congress’ intent that couris favor declaratory

judgment jurisdiction to promptly resolve patent issues that

might delay generic competitors to brand name drugs. While

general declaratory judgment authority for federal courts was

already authorized under 28 U.S.C. § 2201 to resolve “a case

of actual controversy,” § 1101(a)(C) of the MMA expressly

provides for “a civil action to obtain patent certainty” where

the patent owner or brand name manufacturer has not

brought suit within 45 days of the generics’ challenge to the

patent. Section 1101(a)(C)(i), “Declaratory Judgment

Absent Infringement” corrects an imbalance created by

Hatch-Waxman provisions which allowed the brand name

~ drug company to extend patent life and control competition

by controlling the timing of infringement/invalidity disputes.

Section 1101(d) provides that “the courts of the United

States shall, to the extent consistent with the Constitution,

have subject matter jurisdiction . . . [over] a declaratory

judgment that such patent is invalid or not infninged.” 35

U.S.C. § 271(e)(5). The new provisions simply make clear

what the old law implied: that courts should resolve patent

disputes whether or not the patent holder has initiated suit.

The Joint Explanatory Text to the Conference Agreement on

the law explains that:

The conferees expect that courts will find

jurisdiction, where appropniate, to prevent an

improper effort to delay infringement litigation

-8-

between generic drug manufacturers and pioneer drug

companies. . . .The conferees expect the courts to

examine as part of their analysis the particular

policies served by the Hatch-Waxman Act....

H.R. Conf. Rep. No. 108-391, at 836 (2003). Congress

made explicit that the courts should exercise their authority

to resolve patent disputes to the limit of their Article I

power specifically recognizing that an ANDA has been filed

with a paragraph iv certification and that the patentee has not

filed an infringement suit -- the very circumstances of this

case -- in determining jurisdiction. Jd As Senator Kennedy

recognized, the “clarification of a generic applicants nght to

bring a declaratory judgment action is crucial to ensuring

prompt resolution of patent issues, which is essential to

achieve our goal of speeding generic drugs to market.” 149

Cong. Rec. $15882-03 at $15885 (Nov. 25, 2003).

~ As of August 1, 2005, generic drug manufactures

have 303 pending ANDAs containing paragraph IV patent

certifications, certifying that their generic version will not

infringe a brand name manufacturer’s listed patent or that

such patent is invalid.” While we do not know the factual

background on each of these patent disputes and the various

incentives the patent holder has to promptly bring suit or not,

~ we do know well enough that this scenario results in concrete

> Section § 1101(d), codified at 35 U.S.C. § 271(e)(5). The

constitutional authority of the federal courts to decide declaratory

judgment actions where there has been a paragraph IV ANDA

certification was discussed extensively in the Congressional] Record. 149

Cong. Rec. $15751-55 (Nov. 24, —

© U.S. Food & Drug Administration, Center for Drug Evaluation and

Research, Paragraph IV Patent Certifications As of August 1, 2005

at www.fda.gov/cder/ogd/ppiv.htm.

-9-

controversies where an affirmative remedy is needed. See, In

re Cardizem CD Antitrust Litigation, 332 F.3d 896 (6" Cir.

2003); Valley Drug Co. v. Geneva Pharm. Inc., 344 F.3d

1294 (11 Cir. 2003); In re Ciprofloxacin Hydrochloride

Antitrust Litigation, 166 F.3d 740 (E.D. N.Y. 2001). The

sooner the invalidity or non-infringement can be conclusively

established for any of these drugs, the sooner consumers

benefit from lower cost generics. But if a court does not

resolve the issue of patent validity because the patent holder

does not initiate suit, it effectively blocks generic entry.”

In this case, there has been an assertion by the patent

holder that it intends to exclude al] those who would seek to

copy its product, made in the form of a representation to the

government by its listing its patent in the FDA’s Orange

book.” There is a challenge to the legitimacy of those patent

” See 149 Cong. Rec. $15885-86 (Nov. 25, 2003)(Sens. McCain,

Schumer and Kennedy discussing courts exercising jurisdiction over

declaratory judgments actions involving paragraph IV ANDA

certifications and introducing letter from the Federal Trade Commission

to Sen. Hatch stating “‘[w]ithout the right to seek a declaratory judgment,

a subsequent generic applicant that develops a clearly non-infringing

product cannot trigger the first generic applicant’s exclusivity because the

subsequent generic applicant will not be sued for patent infringement by

the brand-name company.”’)

© See 21 U.S.C. § 355(b)(1) (requiring that a new drug applicant “shall

file with the application the patent number and the expiration date of 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.””)(emphasis added). See also Minnesota Mining and

Mfg. v. Barr Labs., 289 F.3d 775, 791(Fed. Cir. 2002)(Gajarsa, J.

concurring in the judgment) (stating a declaratory judgment suit is

available for ANDA filers not sued by the NDA patentee within the 45-

day period and “[t)he two acts of (1) a patentee listing a patent in the

-10-

claims made by a would-be competitor, who has prepared to

come to market, made 1 in the form of a certification to the

FDA that the generic does not infringe the listed patent. The

parties’ legal positions are in conflict; both businesses have

taken steps averring that the other has no nght to do what it

seeks to do. Despite this, the Federal Circuit found there was

no actual controversy because Teva does not have a

reasonable apprehension that Pfizer will bring suit

imminently if Teva attempts to market the generic. Teva

Pharmaceuticals, Inc. v. Pfizer, 395 F.3d 1324 (Fed. Cir.

2005.

As the following discussion makes clear, where

generic competition is likely to result in the brand name drug

losing substantial market share, the economics of the

situation compels the conclusion that Teva not only has a

reasonable apprehension of suit, but that it has every basis to

believe that Pfizer will bring a patent infringement action at a

time designed to protect its lucrative product as long as

possible. If the drug patent existed in a vacuum, the court’s

decision below might make some sense. However, under the

legal framework of drug approval, and the realities of the

pharmaceutical industry’s profitability and pricing structure,

there is more than a theoretical question before the court.

cs Pharmaceutical Economics Demonstrate Why

Congress Sought to Encourage the Exercise of -

Declaratory Judgment Jurisdiction.

Legislation was badly needed: “[a]s the Federal

Trade Commission has shown, however, in recent years both

Orange Book through the filing of a NDA, and (2) a generic manufacturer

filing an ANDA, together meet the case or controversy requirement so as

to allow a declaratory judgment action of non-infringement.”)

xy

brand-name and generic drug companies have exploited

certain aspects of the Hatch-Waxman Act to delay generic

competition.” 149 Cong. Rec. $15882-03 at S$15884 (Nov.

25, 2003) (remarks of Sen. Kennedy during consideration of

the Conference Report on the MMA). According to IMS

Health (a large pharmaceutical market research firm), the

generic drug share of the total number of prescriptions rose

steadily from 18.6 % in 1984 to 42.4 % in 1996, but declined

in 1998 to 41.3 %. Michie I. Hunt, BlueCross BlueShield

Association, Prescription Drug Costs: Federal Regulation of

the Industry 51 (2000){Hunt (BlueCross)]. Generic drugs’

market share as a percentage of total dollar sales slipped

from a high of 12.2% in 1995 to 8.6% in 1998. Id. The

significance of the decline in generic penetration is a loss for

consumers because the greatest price reduction for a

particular drug only comes with competition among multiple

generic competitors. The more generic versions of the same

drug that are on the market, the lower the price consumers

pay for a generic version, regardless of which generic

company is marketing the drug product.” Studies of pricing

and market share of innovator drugs and their generic

counterparts confirm that substantial savings to the consumer

occur as soon as the generic is substituted for the brand name

/ : . ¢ :

- 2 David A. Balto, Pharmaceutical Patent Settlements: The Antitrust

Risk, 55 Food & Drug L.J. 321, 325-6; see also Keith B. Leffler &

Cristofer I. Leffler, Want to Pay a Competitor to Exit the Market? Settle

a Patent Infringement Case: An Argument for Per Se Condemnation of

Payments by the Patent Holder, ABA Economics Committee Newsletter

35 (Spring 2002); Congressional Budget Office, How Increased

Competition from Generic Drugs Has Affected Prices and Returns in the

Pharmaceutical Industry, Chapter 3 (July 1998) available at

http://www.cbo.gov/showdoc.cfm?Index=655&sequence=0 [CBO];

Henry Grabowski and John Vernon, Longer Patents for Increased

Generic Competition in the US: The Waxman-Hatch Act After One

Decade, 10 PharmacoEconomics 110, 115 (1996); Hunt (BlueCross),

supra, at 61.

-12-

drug, and that even more savings occur over time as other

- generic versions of the drug enter the market.’ Because of

this, the name brand manufacturer has a strong incentive to

limit the number of generic competitors by forestalling any

challenge to its patent monopoly. The fewer the competitors,

the less the cost differential, and therefore, the name brand

keeps a greater market share. But if courts decline to

exercise jurisdiction where name brand manufacturers delay

resolution of patent disputes, Congresses’ intent to balance

the playing field between name brand and generic drug

manufactures in order to bring down escalating prescription

drug costs will be frustrated.

CONCLUSION

The decision over the justiciability over prescription

drug patent disputes is a public policy matter impacting many

people’s health and welfare because it directly affects the

cost of pharmaceuticals. AARP urges the Court to grant the

petition for a writ of certiorari because this important

question of federal law should be settled by this Court.

1°’ Bureau of Competition & of Policy Planning, Federal Trade

Commission, Jn the Matter of 180-Day Generic Drug Exclusivity for

Abbreviated New Drug Applications 4-5 (Nov. 4, 1999) available at

http://www. ftc.gov/be/v990016.htm; CBO, “‘Competition Among Generic

Drugs”; Grabowski, supra, at 115; see also In re Cardizem CD, 200

F.R.D. 326, 327-8 (E.D. Mich. 2001).

-13-

September 7, 2005 Respectfully submitted,

Sarah Lenz Lock*

Bruce Vignery

AARP Foundation Litigation

Michael Schuster

AARP

601 E Street, NW

Washington, DC 20049

(202) 434-2060

Counsel for Amicus Curiae

AARP

*Counsel of Record

FILED

® | SEP 7- 2005.

. 05-48

cashes OFFICE OF THE CLERK

. IN THE is i sie

Supreme Court of the Hnited States

Teva Pharmaceuticals USA, Inc.,

Petitioner,

Pfizer, Inc.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Federal Circuit

BRIEF AMICUS CURIAE OF THE GENERIC

PHARMACEUTICAL ASSOCIATION IN SUPPORT

OF PETITIONER

Thomas C. Goldstein

(Counsel of Record)

Amy Howe

Kevin K. Russell

GOLDSTEIN & Howe, P.C.

4607 Asbury PI., NW

Washington, DC 20016

(202) 237-7543

September 7, 2005

s

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001

TABLE OF CONTENTS

Pe Eee RPT A NIUE ids casesitnsnhasnnsnsincchstbibetenitvsstinciensiescestihagia i

Ee DURE TOME MEM osscicsasdénscesescasnstschspdnsvssscintaasientcasaben il

SOR. OOF AMICUS. CURIA. 0.scscscssncsivcescisiavessosssosncictesses 1

Re RUE CRE SBOE Me acs diicdiccceccctsisspenstesunittedanbiogacesdeben I

I. Background to the Statutory Scheme ...............cceeeeeeeeeeees ]

II. The Instant Litigation And The Lower Court Rulings ........ 4

REASONS FOR GRANTING THE WRIT...............c:ccccceeseeseees 7

I. The Decision Below Is Contrary To This Court’s

Precedents Defining The “Case Or Controversy”

Required By Article III Of The U.S. Constitution And

Conflicts With The Precedent Of Other Circuits................. 9

Ii. The Question Presented Is Vitally Important To

Phharmiaceutical Competition...........:csccsssesscscsesecsnsenseceeesees 16

STG hai varcesniitanseshusisasingivasicesinesxesuassvensnesstnlenincentne 20

li

TABLE OF AUTHORITIES

Cases

Aetna Life Insurance Co. v. Haworth, 300 U.S. 227 (1937).... 11

Apotex v. Pfizer, 125 Fed. Appx. 987 (CAFC Apr. 1],

2005), vacating and remanding as moot Torpharm, Inc.

v. Pfizer, No. 03-CV-990, 2004 U.S. Dist. LEXIS

11,930 (D. Del. Jume 28, 2004).........cccccccescssacsenceesee sicecbaiieases 19

Apotex v. Pfizer, No. 04-CV-02539 (S.D.N.Y. Apr. 1,

2004), appeal pending, No. 05-1199 (CAFC) ....... cee 18

Arrowhead Industrial Water v. Ecolochem, 846 F.2d 731

EPP. RIED Geishncesdiniesseiniicesiinisssdileniiegsmsitetntsierinntenmolaniiienss 10, 15

Bio-Technology Gen. Corp. v. Duramed Pharms., Inc.,

174 F. Supp. 2d 229 (D.N.J. 2001), rev'd, 323 F.3d

Be CdR Ge NEB snisthassacktosnentidcgisdicttiastuamdonmasuminomasocas 17

BP Chems. v. Union Carbide Corp., 4 F.3d 975 (CAFC

og / | oN AACE. ROR IR FTE ONCE HEE IENS DO 8: VOOR 3,15

Cardinal Chemical Co. v. Morton International, 508 U.S.

BF Gi iv inascsbisidcissachipdicatbcabaandusephidnlccatadienusuededaniaanaionidcasacics 10

Chesebrough-Pond’s, Inc. v. Faberge, Inc., 666 F.2d 393 ;

Ie TI aaeisstitesnccanaeaniieac ea eiennn 12

Dr. Reddy’s Laboratories v. Pfizer, No. 03-726, 2003 U.S.

Dist. LEXIS 24,351 (D.N.J. July 8, 2003).............cceeeseeee 18

Eli Lilly & Co. v. Medtronic, 496 U.S. 661, reh’g denied,

TAs ds SE CP iiciiinniicaniaiiasibtianmmatinadndtain 16

EMC Corp. v. Norand Corp., 89 F.3d 807 (CAFC 1996)........ 14

Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co.,

535 U.S. 722 (2002), vacating and remanding 234 F.3d

Fe Is I silences saiigcisahscondacpatsacehca tabinicaimanteinabichetia sauces 8

Geneva Pharm. v. GlaxoSmithKline, 213 F. Supp. 2d 597

(E.D. Va. 2002), aff'd, 349 F.3d 1373 (CAFC 2003)........... 17

Holmes Group v. Vornado Air Cir. Sys., 535 U.S. 826

(2002), vacating and remanding 13 Fed. Appx. 961

Ee I a cnhsacineicadcuianineinniciaadlacidetionnenn 8, 11

ill

Janssen Pharm. N.V. v. Eon Labs, 374 F. Supp. 2d 263

(E.D.N.Y. 2004), aff'd, 134 Fed. Appx. 425 (CAFC

I iin svaleckssisncsiiiges ecb Vedirseiislctcdani spac ucdscunpia Eaaekcaacamaeilbagdoaisibeab 17

Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S.

GS nf § WORDA Rees micbt Re TORR RraLaraT tsrD 2 RONEN D SEER OPP MOI ET 6

Merck KGaA v. Integra Lifesciences I, 125 S. Ct. 2372

(2005), vacating and remanding 331 F.3d 860 (CAFC

Bh eae seater ioeashicis ted nacaadedecegsekae nesses 8

Mutual Pharm. Co. v. Pfizer, No. 03-CV-1116, 2004 U.S.

Dist. LEXIS 4846 (D.D.C. Mar. 24, 2004)...........ceeseeseeeeees 19

Mylan v. Merck & Co., No. 05-cv-1416 (SHR) (M.D. Pa.)..... 19

Purdue Pharma L.P. v. Endo Pharmaceuticals, 410 F.3d

FP I ID sisiasipicccdecesinganbids iuansadepidiadaedetidinasbsaensin 17

Bean ST, SAE TB BEE CET vviscsccscsicisisvnkcvennesaasincans 15

Sallen v. Corinthians, 273 F.3d 14 (CAI 2001)..........cceeeseeee 13

Sherwood Medical Indus., Inc. v. Deknatel, Inc., 512 F.2d

Fe IND FIRE ata pietinn patihasicaronusiccehiiatiac wen 12

Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1988)...... 9

United Christian Scientists v. Christian Science Bd. of

Directors, First Church of Christ, Scientist, 829 F.2d

eas I iis sticiclanbhebinauhs ck ncasiiciadsckiieasdddesniantecctian 12

- Statutes

21 U.S.C. 355(b)(1) I a 2,13

OSLER Sit (nC IEee Sm eo p eee grea alee era ae On ere 443

a. l

Be ie. Be PD esis cashes esa es cedlastdaisices : ae

a es 2

Re GL de Rie: RRR ar RR OIE Oe RDP ET UI SO 3

Be a a 2,13

Be eee PID Petia vdasnbhcec pic tichapee casa edekakcanbanbaniibs 4,9, 15

iv

Other Authorities

AARP, Prescription Drug Costs And The Role Of Generic

Drugs (Oct. ‘ 2002), available at

http://assets.aarp.org/rgcenter/health/rx_generic.pdf............ 20

MMMM POUR: FS. BERNIE CLUS) in ccc ccnasaiicicsssscecscicaasancasapececqnensenies 3

Dep’t of Health and Hum. Servs. Task Force on Drug

Importation, REPORT ON PRESCRIPTION DRUG

IMPORTATION (Dec. 2004), available at

http://www.hbhs.gov/importtaskforce/Report1220.pdf

UE MIF BINIEED cic oscasapchencisicncen.annpdssahestiinsaicsngessbacenbeiien 20

Generics Key To Cost Control, UPI, May 19, 2005.............04. 20

Generics: FDA Announces Measures To Improve Generic

Drug Access, DRUG WEEK, Mar. 26, 2004 ....2......ccsessseeseeeees 20

Nat’l Inst. For Health Care Management, A Primer:

Generic Drugs, Patents, and the Pharmaceutical

Marketplace (June 2002), available at

http://www.nihcm.org/GenericsPrimer. pdf ............sccecceeeesees 20

Steven Findlay, Easy Way To Cut Costs Of Drugs:

Generics, USA ToDAY, May 13, 2004, at 23A .......ececeeeeees 20

INTEREST OF AMICUS CURIAE'

Amicus curiae Generic Pharmaceutical Association

(“GPhA”) represents over 120 companies that manufacture

more than ninety percent of all affordable prescriptions dis-

pensed in the United States each year, accounting for more

than one billion prescriptions annually. GPhA accordingly

has a significant interest in the proper construction of the so-

called Hatch-Waxman scheme, which Congress enacted to

speed the marketing of generic drugs while protecting the le-

gitimate patent rights of brand-name drug companies.

STATEMENT OF THE CASE

I. Background to the Statutory Scheme

In the 1984 Hatch-Waxman Amendments to the federal

patent and drug laws, Congress sought to ameliorate two sub-

stantial obstacles to the efforts of generic pharmaceutical

manufacturers to compete against brand manufacturers. First,

Congress created a streamlined process for FDA approval of

generic drug products through which generic manufacturers

may submit an Abbreviated New Drug Application (ANDA)

demonstrating the bioequivalence of the so-called “pioneer”

product and its generic equivalent. 21 U.S.C. 355(j)(2)(A).

Second, Congress adopted a scheme to expedite the liti-

gation of patent disputes. Generic manufacturers, which seek

to compete with a brand product already in the marketplace,

often face the prospect of a patent infringement suit by the

brand company. Such a suit, if successful, could result in de-

bilitating liability if the generic drug were marketed but later

found to infringe the patent. Thus, as Congress well knew, in

cases of genuine doubt, generic manufacturers may decline to

' Pursuant to S. Ct. R. 37.6, amicus states that no counsel to a

party authored this brief in whole or in part and that no person other

than amicus curiae and its members made a financial contribution

towards the preparation and submission of the brief. Letters re-

flecting the consent of the parties have been lodged with the Court.

2

launch their less-expensive products, even if the brand com-

pany’s patent claims would ultimately have been rejected.

Congress accordingly created a statutory mechanism to

permit early resolution of potential patent infringement claims

against a new generic drug prior to its marketing. Under

Hatch-Waxman, brand manufacturers must identify any pat-

ent for which “a claim of patent infringement could reasona-

bly be asserted” against the maker of a generic equivalent. 21

U.S.C. 355(b)(1), (c)(2). FDA publishes that patent informa-

tion in its “Orange Book.” In turn, a generic manufacturer’s

submission of an ANDA challenging the validity, enforceabil-

ity, or infringement of an Orange Book-listed patent consti-

tutes a statutory act of patent infringement, vesting the federal

courts with subject matter jurisdiction over an infringement

suit. 35 U.S.C. 271(e)(2).

Congress contemplated that these provisions would re-

solve patent disputes soon after the ANDA is filed. To en-

courage generic companies to avail themselves of these new

statutory provisions, Congress amended the statutory scheme

in other ways as well. For example, Congress created an in-

centive for brand companies to bring a patent infringement

claim promptly after learning of the ANDA filing. If a brand

company initiates patent litigation within forty-five days of

receiving notice of an ANDA applicant’s challenge to its pat-

ent, FDA must defer approval of the generic product for thirty

months. 21 U.S.C. 355(j)(5)(B)iii).

Congress also encouraged generic drug development by

providing that the owner of the first ANDA containing a chal-

lenge to a listed patent receives a 180-day period of marketing

exclusivity against other generic competitors. 21 U.S.C.

355(j)(S)(B\(iv). Specifically, the FDA must defer approval

of later-filed applications until 180 days after the earlier of

two specified dates. /bid. Particularly relevant here, a later

generic applicant can trigger the start of this 180-day period

by obtaining a judgment declaring the listed patent invalid,

unenforceable, or not infringed. /bid.

3

The Hatch-Waxman provisions were only a partial suc-

cess, however. Through various tactics, brand manufacturers

could use the exclusivity period granted to first ANDA filers

to dlock later generic competitors out of the marketplace for

years. Despite the thirty-month stay that would result if a

brand company initiated suit within the forty-five-day Hatch-

Waxman window, brand companies often had a substantial

incentive to refrain from instituting litigation before the ge-

neric drug was brought to market. A judicial determination

could backfire by producing a finding of non-infringement

that would trigger the start of the 180-day exclusivity period,

thereby allowing more generic companies to enter the market

sooner. Moreover, declining to institute patent litigation

could leave in place a cloud of patent uncertainty that delayed

generic market entry longer than a patent suit itself.

District courts have often ruled that declaratory judgment

actions must be dismissed for failure to satisfy the Federal

Circuit’s “reasonable apprehension” test. Even though Con-

gress clearly contemplated that generic manufacturers would

be permitted to resolve patent claims through a declaratory

judgment suit against the patentee, the Federal Circuit, which

has exclusive jurisdiction over patent appeals, has held that a

declaratory judgment suit was impermissible unless the plain-

tiff itself faced a reasonable apprehension of suit from the pat-

entee. E.g., BP Chems. v. Union Carbide Corp., 4 F.3d 975,

978 (1993). That rule rested on that court’s “pragmatic” con-

cern that merely obtaining a patent should not subject the pat-

entee to litigation. Ibid.

In response to these continuing impediments, Congress

enacted further legislation in 2003 “to prevent an improper

effort to delay infringement litigation between generic drug

manufacturers and pioneer drug companies.” Conf. Rep. No.

108-391, at 836 (2003). As amended, the legislation provides

that, if the brand manufacturer does not bring suit within the

forty-five-day Hatch-Waxman period, the generic competitor

may itself institute a declaratory judgment action. 21 U.S.C.

355G)(S\(C). Recognizing its power to remove the Federal

4

Circuit’s prudential standing barrier, Congress further pro-

vided that the district courts would have jurisdiction over

such a suit to the fullest “extent consistent with the Constitu-

tion.” 35 U.S.C. 271(e)(5).

Il. The Instant Litigation And The Lower Court Rulings

1. This case arises from petitioner Teva’s intention to

market a generic equivalent to respondent Pfizer’s antidepres-

sant Zolofi® (the trade name for the drug sertraline). As is

relevant here, Pfizer listed in the Orange Book two patents

that it claimed could reasonably be asserted against a com-

petitor to Zoloft®. According to Pfizer, one expires in 2006;

the other (known as the “*699 patent”) expires in 2010.

In 2002, Teva filed an ANDA for a generic equivalent to

Zoloft®. The ANDA stated that Teva intended to begin mar-

keting as soon as Pfizer’s first patent expired in 2006. Teva

maintained that the ‘699 patent either would not be infringed

or was invalid.

Teva’s ANDA submission constituted a statutory act of

infringement of the ‘699 patent. Pfizer did not, however, sue

Teva. Pfizer knew that its refusal to bring suit would impede

and delay competition from Teva in two ways. First, it would

leave a cloud of patent uncertainty, threatening Teva with the

prospect of massive patent liability if it brought its drug to

market before the ‘699 patent expired in 2010.

Second, by avoiding a resolution of the patent dispute,

Pfizer prevented FDA from approving Teva’s product until at

least 180 days after Pfizer’s first patent expired in 2006. This

distinct, categorical approval prohibition arose from a side

agreement between Pfizer and another generic manufacturer,

Ivax, which had filed the first ANDA for sertraline and thus

had a right to generic exclusivity for its sertraline product.

Pfizer had sued Ivax for patent infringement in response to

the latter’s ANDA, but then settled in exchange for a share of

the revenues from Ivax’s sales. Teva could avoid or limit this

additional 180-day delay, however, if it secured a court judg-

ment that Pfizer’s ‘699 patent was either invalid or not in-

5

fringed prior to the expiration of Pfizer’s first patent. See 21

U.S.C. 355(j(S5)(B)iii).

2. To remove the cloud of patent uncertainty over its

product, and to avoid the delay in FDA approval occasioned

by the Ivax application and agreement with Pfizer, Teva

brought this declaratory judgment action against Pfizer. The

district court, however, deemed itself bound to hold that

Teva’s claim was not ripe because Teva itself faced no immi-

nent suit from Pfizer. Pet. App. 37a-47a. The district court

notably did not dispute that Pfizer was refusing to sue pre-

cisely to limit generic competition. Instead, it concluded that

this fact ironically deprived Teva of standing, for “Pfizer’s

self-interest in” deferring the resolution of the patent dispute

only “makes the prospects of [it bringing} a lawsuit against

Teva (or anyone else) even more remote.” /d. 46a.

3. Teva appealed, supported by the Federal Trade Com-

mission as amicus curiae.“ The FTC emphasized the “impor-

tant role” this case would play “in furthering competitive

pharmaceutical markets and in lowering health care cost[s].”

FTC Panel Br. 3. “The issue has important ramifications for

the operation of Hatch-Waxman because such a declaratory

judgment” may be “the only means by which a generic drug

maker may be able to” bring a competing product to market.

Ibid. (emphasis added). The FTC explained: “If the district

court’s decision is upheld, it will enable first generic appli-

cants and brand-name drug manufacturers to delay substan-

tially entry by other generic firms, and indeed by any generic

firm (including one that has done a better job of designing

around the patent), into the marketplace for a drug.” Jd. 3-4

(emphasis in original).

A divided panel of the Federal Circuit nonetheless af-

firmed. Pet. App. la-36a. The panel majority acknowledged

this Court’s prior holding that the existence of an “actual con-

? The FTC’s brief (FTC Panel Br.) is available at

http://www. ftc.gov/oge/briefs/teva_v_pfizer.pdf.

6

troversy” sufficient io bring a declaratory judgment action

depends on “whether the facts alleged, under all the circum-

stances, show that there is a substantial controversy, between

parties having adverse legal interests, of sufficient immediacy

and reality to warrant the issuance of a declaratory judgment.”

Pet. App. 12a (quoting Maryland Cas. Co. v. Pacific Coal &

Oil Co., 312 U.S. 270, 273 (1941)).

Teva’s brief demonstrated that there is indeed a concrete

controversy between it and Pfizer. For example, by listing its

patents in the Orange Book, Pfizer had declared that Zoloft®

was protected by the ‘699 patent, whereas Teva contends that

the ‘699 patent did not preclude its market entry. Pfizer had

moreover previously invoked that very patent to sue Ivax

when it sought to introduce a generic equivalent for Zoloft®.

Notwithstanding that Teva’s ability to bring its product to

market was directly precluded by Pfizer’s conduct, Pfizer had

refused Teva’s request for a covenant not to sue.

Despite these undisputed facts, the Federal Circuit con-

cluded that its so-called “reasonable apprehension” test is a

constitutional threshold for bringing a declaratory judgment

action. Pet. App. 20a. The court held that a declaratory

judgment action is justiciable only if there is “an explicit

threat or other action by the patentee which creates a reason-

able apprehension on the part of the declaratory judgment

plaintiff that it will face an infringement suit.” /d. 13a. In-

deed, the plaintiff must “demonstrate that it has a reasonable

apprehension of imminent suit.” Id. 16a.

The panel majority concluded that Teva could not meet

this rigorous standard because the very point of Teva’s claim

is that Pfizer seeks to avoid a court adjudication of the dis-

pute: “Significantly, Teva virtually concedes that Pfizer will

not bring immediate suit for infringement of the ‘699 patent.

According to Teva, Pfizer does not wish to expose the patent

to the possibility of a noninfringment or invalidity determina-

tion * * *.” Pet. App. 16a. The majority found it irrelevant

that Teva was injured by this state of affairs:

7

The fact that Teva is disadvantaged from a business

standpoint * * * and the fact that Pfizer’s decision

not to sue Teva creates an impediment to Teva’s re-

moving that disadvantage are matters separate and

distinct from whether an Article III controversy ex-

ists between Teva and Pfizer. The injury about

which Teva complains is the product of the Hatch-

Waxman scheme and the fact that Pfizer has acted in

a manner permitted under that scheme. /t is not the

product of a threat of suit by Pfizer. That is the

problem that Teva faces in seeking to establish dis-

trict court jurisdiction.

Id. 26a (emphasis added). It continued:

{I}n order to rule in Teva’s favor, we would have to

hold that the Article III requirement of an actual con-

troversy is satisfied, not because Teva is under an

imminent threat of suit by Pfizer, but because the

combined circumstances of the Hatch-Waxman

scheme and Pfizer’s lawful conduct under that

scheme have created a situation in which Teva finds

itself at a competitive disadvantage * * *. Those cir-

cumstances do not amount to an actual controversy

between Teva and Pfizer, however.

Ibid.

4. Teva petitioned for rehearing en banc, again sup-

ported by the FTC as amicus curiae.’ The petition was de-

nied over the dissenting votes of three judges who issued two

dissenting opinions. See Pet. App. 48a.

REASONS FOR GRANTING THE WRIT

The petition for certiorari should be granted for several

reasons. The court of appeals’ decision is flatly contrary to

this Court’s precedents identifying the “case or controversy”

> The FTC’s brief (FTC En Banc Br.) is available at

http://www. fic.gov/oge/briefs/050208teva.pdf.