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

8

required to invoke the jurisdiction of the federal courts. The

ruling below moreover conflicts with decisions of other cir-

cuits that faithfully apply this Court’s decisions. The question

is also of indisputable importance. This Court has in the past

granted certiorari to review important rulings of the Federal

Circuit on questions of patent law, and it should do so here.‘

This case also is an ideal vehicle to resolve the question

presented. Teva’s claim against Pfizer presents two distinct

injuries that, in amicus’s submission, give rise to an Article

III case or controversy. Teva is both (a) precluded from se-

curing FDA approval, and (b) deterred from entering the mar-

ket as a consequence of the prospect of patent liability. By

granting the petition, the Court can efficiently address in one

case whether either or both injuries are sufficient to trigger

the jurisdiction of the federal courts.

Finally, it is important to recognize that the number of

opportunities for this Court to resolve the question presented

will diminish rapidly if certiorari is denied. The Federal Cir-

cuit’s ruling precludes generic drug manufacturers from insti-

tuting litigation in the circumstances presented in this case. If

this Court were to deny certiorari in this case, other similarly

situated generic manufacturers would be hard-pressed to incur

the costs of instituting new suits, appeal to the Federal Cir-

cuit, and petition for certiorari based merely on the prospect

that in a later case the Court would reverse course and grant

veview.

Certiorari accordingly should be granted. At the least,

the Court should invite the Solicitor General to file a. brief

expressing the views of the United States.

* For recent examples, see, e.g., Merck KGaA v. Integra

Lifesciences I, 125 S. Ct. 2372 (2005), vacating and remanding 331

F.3d 860 (2003); Holmes Group v. Vornado Air Cir. Sys., 535 U.S.

826 (2002), vacating and remanding 13 Fed. Appx. 961 (2001);

Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S.

722 (2002), vacating and remanding 234 F.3d 558 (2000).

9

The Decision Below Is Contrary To This Court’s

Precedents Defining The “Case Or Controversy” Re-

quired By Article II] Of The U.S. Constitution And

Conflicts With The Precedent Of Other Circuits.

Congress has granted the federal courts jurisdiction to

decide declaratory judgment suits brought by generic drug

manufacturers against brand manufacturers to resolve patent

claims to the fullest “extent consistent with the Constitution.”

35 U.S.C. 271(e)(5). The Federal Circuit held that the Consti-

tution prohibits such a suit unless the generic manufacturer

“has a reasonable apprehension of [an] imminent suit” by the

brand manufacturer. Pet. App. 16a (emphasis in original).

That ruling cannot be reconciled with this Court’s prece-

dents. “The irreducible constitutional minimum of stand-

ing,’” this Court has held, “contains three requirements”:

First and foremost, there must be alleged (and ulti-

mately proved) an “injury in fact” — a harm suffered

by the plaintiff that is “concrete” and “actual or im-

minent, not ‘conjectural’ or ‘hypothetical.’” Second,

there must be causation — a fairly traceable connec-

tion between the plaintiff's injury and the com-

plained-of conduct of the defendant. And _ third,

there must be redressability — a likelihood that the

requested relief will redress the alleged injury.

Steel Co. v. Citizens for a Better Env’t, 523 US. 83, 103

(1988) (citations omitted).

The court of appeals held that Teva failed to meet the first

standing requirement because the only injury it was willing to

recognize — a suit by Pfizer — was insufficiently “imminent.”

That holding is clearly wrong. This Court’s precedents re-

quire that the injury be “imminent,” as opposed to “conjec-

tural” or “hypothetical.” There is no requirement that Jitiga-

< tion filed by the other side must be imminent. Put another

way, Article III provides for jurisdiction not merely when

there is a “case” but also when there is a “controversy.” That

requirement is satisfied in these circumstances.

10 .

The Federal Circuit’s contrary holding is flatly at odds

with this Court’s decision in Cardinal Chemical Co. v. Mor-

ton International, 508 U.S. 83 (1993), addressing the circum-

stances in which Article III permits a declaratory judgment

action with respect to a patent infringement claim. Recogniz-

ing that “a party seeking a declaratory judgment has the bur-

den of establishing the existence of an actual controversy,”

_ this Court explained that “[i]n patent litigation, a party may

satisfy that burden, and seek a declaratory judgment, even if

the patentee has not filed an infringement action.” Jd. at 95.

In support, it quoted with approval Judge Markey’s recogni-

tion in Arrowhead Industrial Water v. Ecolochem, 846 F.2d

731, 734-35 (CAFC 1988), that cases such as this present

the sad and saddening scenario that led to enactment

of the Declaratory Judgment Act * * * . In the patent

version of that Scenario, a patent owner engages in a

danse macabre, brandishing a Damoclean threat with

a sheathed sword. * * * Before the Act, competitors

victimized by that tactic were rendered helpless and

immobile so long as the patent owner refused to

grasp the nettle and sue. After the Act, those com-

petitors were no longer restricted to an in terrorem

choice between the incurrence of a growing potential

liability for patent infringement and abandonment of

their enterprises; they could clear the air by suing for

a judgment that would settle the conflict of interests.

The sole requirement for jurisdiction under the Act is

that the conflict be real and immediate, i.e., that

there be a true, actual “controversy” required by the

Act.

Cardinal Chem., 508 U.S. at 95-96 (emphasis added). Ac-

cord 10B Charles Alan Wright et al., FEDERAL PRACTICE &

PROCEDURE § 2751 (3d ed. 1988).

As this case demonstrates, the Federal Circuit refuses to

heed Cardinal Chemical. Instead, it insists that a declaratory

judgment plaintiff have not only a real and immediate contro-

11

versy with the defendant, but also the prospect of an immi-

nent suit.

Outside the patent context, this Court’s seminal ruling

“upholding the [declaratory judgment] statute” involved, as

Judge Dyk explained in his opinion dissenting from the denial

of rehearing en banc, a situation precisely analogous to the

one here — “one in which there was no imminent risk of suit

because the potential plaintiff declined to sue.” Pet. App.

61a. In Aetna Life Insurance Co. v. Haworth, 300 U.S. 227

(1937), the plaintiff insurance company sought a declaration

of its obligations to the policyholders. Not only had the poli-

cyholders “not instituted any action wherein the plaintiff

would have an opportunity to prove the absence of the alleged

disability,” id. at 239, but Aetna sued for the very reason that

there was no present prospect of the parties’ rights being ad-

judicated. This Court nonetheless found a sufficient contro-

versy because the case involved a “definite and concrete dis-

pute” relating to the parties’ “legal rights and obligations.”

Id. at 242. “Where there is such a concrete case admitting of

an immediate and definitive determination of the legal rights

of the parties in an adversary proceeding upon the facts al-

leged, the judicial function may be appropriately exercised

although the adjudication of the rights of the litigants may not

require the award of process or the payment of damages.” Jd.

at 240-41.

Prior to the transfer of exclusive jurisdiction of such

questions to the Federal Circuit, the regional circuits faith-

fully applied this Court’s precedents in analogous circum-

stances. The Eighth and District of Columbia Circuits con-

* This Court’s practice of reviewing Federal Circuit decisions

when “other courts have held or assumed” the contrary, Pfaff v.

Wells Electronics, 525 U.S. 55, 60 (1998), recognizes that conflicts

between the Federal Circuit’s decisions and those of other circuits

on “patent issues” are “useful in identifying questions that merit

this Court’s attention,” Holmes Group v. Vornado Air Circulation

Sys., 535 U.S. 826, 839 (2002) (Stevens, J., concurring).

12

sidered not whether the plaintiff has a reasonable apprehen-

sion of an imminent suit, but instead whether the plaintiff had

a reasonable apprehension that it will face either an infringe-

ment suit or the threat of one. See, e.g., United Christian Sci-

entists v. Christian Science Bd. of Directors, First Church of

Christ, Scientist, 829 F.2d 1152, 1158 (CADC 1987); Sher-

wood Medical Indus., Inc. v. Deknatel, Inc., 512 F.2d 724,

727-28 (CA8 1975). That standard is met here, as Teva un-

questionably faced a reasonable threat of suit given that Pfizer

listed the ‘699 patent in the Orange Book, refused to provide

Teva with a covenant not to sue, and sued Ivax for patent in-

fringement.°

Two other circuits similarly applied a less stringent stan-

dard than the Federal Circuit’s. The Ninth Circuit enquires

whether “the plaintiff has a real and reasonable apprehension

that he will be subject to liability” — a fact-based determina-

tion that looks at “[t]he acts of the defendant * * * in view of

their likely impact on competition and the risks imposed upon

the plaintiff, to determine if the threat perceived by the plain-

tiff [is] real and reasonable.” Chesebrough-Pond’s, Inc. v.

Faberge, Inc., 666 F.2d 393, 396 (1982). And while the First

Circuit — which considered the question in the context of a

dispute over which it had jurisdiction under World Trade Or-

ganization procedures — expressly holds that the “reasonable

° In reviewing the totality of the circumstances to determine -

whether such a reasonable apprehension exists, the Eighth and Dis-

trict of Columbia Circuits have accorded weight to the fact that the

patentee has previously brought infringement actions, just as Pfizer

previously sued Ivax. See Sherwood Medical, 512 F.2d at 728 (al-

though past infringement action, standing alone, not dispositive,

patentee’s entire course of conduct, including past action, gave rise

to “reascnable apprehension”); United Christian Scientists, 829

F.2d at 1159 n.25 (noting that “prior record of infringement charges

against the declaratory plaintiff or others similarly situated” is one

of the factors “which courts have regularly recognized as buttress-

ing a reasonable apprehension of impending litigation”).

13

apprehension of suit” standard “is not the only way” to estab- ©

lish Article III jurisdiction unless “the only controversy sur-

rounds a potential, future lawsuit,” it holds that, even in the

absence of such a potential suit, the facts of a particular case

may demonstrate that such a controversy exists. See Sallen v.

Corinthians, 273 F.3d 14, 25 (2001).

2. It cannot be seriously argued that Teva’s declaratory

judgment complaint fails to state an Article III case or contro-

versy under this Court’s precedents and the standard articu-

lated by other circuits. There is a concrete legal controversy

between Teva and Pfizer with respect to whether Teva’s

_ product infringes on Pfizer’s patent. Pfizer’s listing of the

‘699 patent in the Orange Book constituted a representation

by it that “a claim of patent infringement could reasonably be

asserted” against a generic equivalent on the basis of the pat-

ent. 21 U.S.C. 355(b)(1), (c)(2). Teva has alleged its inten-

tion to market a drug that, according to the Orange Book list-

ing, Pfizer believes will violate its patent. Under the federal

patent laws, Teva’s filing of an ANDA challenging the valid-

ity or infringement of that patent constitutes a statutory act of

patent infringement as matter of law. 35 U.S.C. 271(e)(2).

Pfizer has further refused Teva’s request that it acknowledge

that Teva’s product is non-infringing. In these circumstances,

only a suit by Teva can resolve the controversy.

Nor is there any serious dispute that the current state of

affairs greatly harms Teva. Even the Federal Circuit did not

doubt in the slightest that Teva had suffered an “injury.” Pet.

App. 26a. Instead, it deemed the fact that “Teva is injured

from a business standpoint” and “finds itself at a competitive

disadvantage” (ibid.) irrelevant as a matter of law.

The legal dispute that Teva seeks to resolve has at least

two definite, adverse consequences for Teva that would be

remedied by a judgment in-its favor — and, indeed, can only be

remedied by such a judgment. First, Teva is deterred by the

prospect of devastating infringement liability from entering

the marketplace. Manufacturers in Teva’s position frequently

14

have massive investments tied up in the development of their

generic equivalents by the time they submit an ANDA. As

Judge Mayer recognized in his dissent, ANDA applicants

such as Teva “suffer a real and defined harm when uncer-

tainty exists as to their rights to manufacture and sell a ge-

neric product free from infringement allegations.” Pet. App.

35a. “[D]eclaratory judgment actions serve an important role

because the [FTC’s] Generic Drug Study showed that no ge-

neric applicant entered the market prior to a district court de-

cision addressing the patents that, at the time of its applica-

tion, were listed in the Orange Book.” FTC Panel Br. 2 n.9

(emphasis added).

Second, even if Teva wanted to market its drug before

adjudicating Pfizer’s patent claim, the FDA cannot approve

Teva’s generic equivalent for at least 180 days after the expi-

ration of Pfizer’s first patent, unless Teva secures an earlier

favorable patent judgment. See supra at 2. Thus, “[t]he con-

troversy is real and immediate, and is between adverse par-

ties, because Pfizer’s conduct creates a bottleneck that just as

surely delays Teva from receiving FDA approval to market a

product as if Pfizer had won a preliminary injunction in an

infringement suit against Teva.” FTC En Banc Br. 9. “Ab-

sent such a decision, Teva (and every other ANDA applicant)

instead must wait for its approval until Ivax has marketed its

product for 180 days, which will not occur until December

2006, at the earliest. Thus, the only way that Teva can ad-

vance the date of the approval of its product is through this

litigation. Absent this action, Teva suffers an injury-in-fact

from the lost opportunity to bring its product to market during

the 180 days.” FTC Panel Br. 21-22.

3. The Federal Circuit’s holding that Teva nonetheless

fails to state a justiciable controversy because it does not face

an “imminent suit” from Pfizer (Pet. App. 16a) is insupport-

able. The “pragmatic” concern (EMC Corp. v. Norand Corp.,

89 F.3d 807, 811-12 (CAFC 1996)) that gave rise to the Fed-

eral Circuit’s reasonable apprehension test is completely

missing here. That requirement was adopted to “protect[}

15

quiescent patent owners against unwarranted litigation” when

they have “done nothing but obtain a patent.” Arrowhead In-

dus. Water v. Ecolochem, Inc., 846 F.2d 731, 736 (CAFC

1988). The prudential standing rule thereby seeks “to deter-

mine whether the need for judicial attention is real and imme-

diate.” BP Chems., 4 F.3d at 978. The rule is “but a prag-

matic attempt to give operational guidance against which pat-

entees can structure their conduct, and control their litigation

costs, in a fact-specific area of the law.” Pet. App. 5la (Ga-

jarsa, J., dissenting). But in this context, “exercising jurisdic-

tion over this action does not force a lawsuit on a ‘quiescent’

patent-owner.” FDA Panel Br. 13. To the contrary, as Judge

Mayer recognized in his dissent, “[b]y listing its patent [in the

Orange Book], Pfizer has informed the world that the ‘699

patent precludes anyone from marketing a generic sertraline

hydrochloride product until it expires.” Pet. App. 32a. Both

the district court (id. 46a) and the court of appeals (id. 16a)

recognized that Pfizer — like other brand manufacturers in its

position — declined to file suit not because of ambivalence

about its patent rights, but instead to prevent generic competi-

tion. Any doubt is resolved by the facts that Pfizer sued Ivax

on an indistinguishable claim and refused to grant Teva a

covenant not to sue.

Thus, the Federal Circuit’s odd rule that litigation must

be imminent before it may be brought “is ill-suited to evaluate

an action brought by a subsequent ANDA applicant when that

applicant requires a court decision so that it can get FDA ap-

proval to bring its product to market.” FDA Panel Br. 12.

The prudential interest in limiting the litigation burdens on

patent holders is simply overborne in this circumstance.

In any event, even if it otherwise applied, the Federal

Circuit’s prudential standing rule did not survive Congress’s

enactment of a specific directive that the federal courts shall

exercise jurisdiction over suits such as Teva to the fullest ex-

tent consistent with the Constitution. See 35 U.S.C.

271(e)(5); Raines v. Byrd, 521 U.S. 811, 820 n3 (1997)

(Congress may eliminate prudential standing rules by siatute).

16

Ii. The Question Presented Is Vitaily Important To

Pharmaceutical Competition.

The petition for certiorari should also be granted because

it presents a question of fundamental importance to competi-

tion in the pharmaceutical industry and, accordingly, to the

American public that relies so heavily on lower-priced ge-

neric drugs to combat the skyrocketing costs of healthcare.

1. Because the Federal Circuit has exclusive jurisdiction

over patent disputes, the ruling below governs every attempt

in the nation by generic pharmaceutical companies to resolve

patent disputes with brand manufacturers. The decision be-

low provides a roadmap for brand manufacturers to preclude

litigation of all such disputes. “No incumbent will ever make

the threat [of litigation], if it can simply ride out the term in

the listed patent.” Pet. App. 57a (Gajarsa, J., dissenting).

As this Court has previously recognized Congress en-

acted the statutory provisions of the Hatch-Waxman scheme

at issue here “to enable new drugs to be marketed more

cheaply and quickly.” Eli Lilly & Co. v. Medtronic, 496 U.S.

661, 676 (1990). “Quite obviously, the purpose of [these

provisions] is to enable the judicial adjudication upon which

the ANDA and paper NDA schemes depend.” /d. at 678.

And just as “[t]he scheme will not work, of course, if the

holder of the patent pertaining to the pioneer drug is disabled_

from establishing in court that there has been an act of in-

fringement” (ibid.), so too it “will not work” if the patent

holder can prevent generic manufacturers from establishing in

court that there has been no patent infringement.

The FTC concurs that “[d]eclaratory judgment actions by

ANDA applicants concerning listed patents play a vital role in

the Hatch-Waxman regime” (FDA Panel Br. 12), helping to

“further[] competitive pharmaceutical markets and [lower]

health care costs” (FTC En Banc Br. 2). Indeed, it concludes,

“even a modest delay tn the entry of subsequent ANDA ap-

plicants may impose substantial costs on consumers because

17

competition among generic manufacturers has a strong impact

on the price of a drug.” FTC Panel Br. 8.

In the course of preparing this brief, amicus GPhA sur-

veyed its membership to determine the significance of the

question presented. The responses confirm that the Federal

Circuit’s decision fundamentally affects competition through-

out the pharmaceutical industry. The survey conclusively es-

tablished two facts: (i) the FTC and the dissenting judges be-

low are correct in their conclusion that these circumstances

present a concrete controversy; and (ii) the number of drugs

affected by the ruling is large and constantly growing.

GPhA’s members report that they regularly defer launch-

ing a product until they can litigate the question of patent in-

fringement to at least a district court judgment.’ By not

bringing suit, brand companies perpetuate paralyzing uncer-

tainty that allows them to continue selling their branded drugs

’ To cite just a few examples,

e@ Endo Pharmaceuticals launched its equivalent to Oxycon-

tin® only after a favorable Federal Circuit ruling. Purdue Pharma

L.P. vy. Endo Pharmaceuticals, 410 F.3d 690 (2005).

@ Eon Labs launched its equivalent to Sporanox® (produced

by Johnson & Johnson affiliate Janssen) only after a favorable dis-

trict court judgment. Janssen Pharm. N.V. v. Eon Labs, 374 F.

Supp. 2d 263 (E.D.N.Y. 2004), aff'd, 134 Fed. Appx. 425 (CAFC

2005).

e Geneva launched its equivalent to Augmentin® only after a

favorable district court judgment; other manufacturers then fol-

lowed suit. Geneva Pharm. v. GlaxoSmithKline, 213 F. Supp. 2d_

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

e@ Barr Labs launched its equivalent to Mircette® only after a

favorable district court judgment. Bio-Technology Gen. Corp. v.

Duramed Pharms., Inc., 174 F. Supp. 2d 229, 232 (D.N.J. 2001),

rev'd, 323 F.3d 1356 (CAFC 2003).

e Conversely Eon Labs has been precluded from litigating

with respect to its generic equivalent to Pfizer’s Accupril® and has

not entered the market despite having final approval.

18

at monopoly prices. The decision below is particularly perni-

cious because it is the drugs that the public most frequently

uses — and hence that give rise to the greatest possible in-

fringement liability — that will suffer reduced competition.

Infringement damages for blockbuster drugs such as Zoloft®

(which generates revenues for Pfizer well in excess of $2 bil-

lion annually) would ruin most generic companies.

GPhA’s members also report that the ruling below would

have a sweeping effect. Generic manufacturers-regularly seek

to market generic equivalents and represent in their ANDAs

that the patents listed in connection with the innovator drug

are either invalid or will not be infringed. The most recent

data published by the FDA indicates that generic manufactur-

ers have filed such ANDA certifications for 314 drugs. See

http://www.fda.gov/cder/ogd/ppiv.htm (last visited Sept. 7,

2005). More than seventy were submitted in the last two-and-

a-half years alone. /bid. Many of those drugs are likely to

present patent issues that ought to be resolved promptly but,

under the Federal Circuit’s ruling, cannot.

These examples illustrate the sweep of the ruling below:

@ The ruling below does not merely affect Teva even

with respect to Zoloft®. Two other manufacturers filed AN-

DAs seeking to market generic Zoloft® products and brought

similar declaratory judgment actions. Both were dismissed

on the same ground as the Federal Circuit’s ruling here. Dr.

Reddy’s Labs. v. Pfizer, No. 03-726, 2003 U.S. Dist. LEXIS

24,351 (D.N.J. July 8, 2003) (order); Apotex v. Pfizer, No. 04-

CV-02539 (S.D.N.Y. Apr. 1, 2004) (order), appeal pending,

No. 05-1199 (CAFC).

e@ The ruling below affects numerous drugs other than

Zoloft®. For example, there are the attempts to litigate the

patent validity/non-infringement of generic equivalents to

Pfizer’s Accupril® (which generates nearly $600 million in

annual U.S. sales). Various generic manufacturers have filed

ANDAs for Accupri]®. When Pfizer failed to file suit, two of

those manufacturers sought a declaratory judgment. Their

19

cases were dismissed, on the same rationale as the ruling be-

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

U.S. Dist. LEXIS 4846 (D.D.C. Mar. 24, 2004); Apotex v.

Pfizer, No. 03-CV-990-SLR, 2004 U.S. Dist. LEXIS 11,930

(D. Del. June 28, 2004).

e@ Teva and Mylan Laboratories have filed ANDAs with

respect to Merck & Co.’s Proscar®. Merck did not file suit

against either. Mylan has a pending declaratory judgment

action against Merck. Mylan v. Merck & Co., No. 05-cv-

1416 (SHR) (M.D. Pa.).

@ Teva has a pending declaratory judgment with respect

to SmithKline Beecham’s Famvir®.

2. By substantially inmipeding generic competition, the

Federal Circuit’s ruling will directly injure consumers and the

public health. Because generic drugs are generally sold for a

fraction of the prices of their brand counterparts, the substitu-

tion of generic drugs for brand drugs results in billions of dol-

lars in savings each year.* A one-percent increase in the sub-

stitution of generic drugs for brand drugs could result in a

savings of up to $2 billion per year, while the widespread sub-

stitution of generic drugs for brand drugs whenever possible

could save U.S. consumers as much as $17 billion per year.

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

tation, REPORT ON PRESCRIPTION DRUG IMPORTATION 68

(Dec. 2004), available at http://www.hhs.gov/importtaskforce/

Report1220.pdf (visited Sept. 7, 2005); Steven Findlay, Easy

* See FDA, FDA White Paper: New FDA Initiative on Im-

proving Access to Generic Drugs (June 12, 2003), available at

http://www. fda.gov/oc/initiatives/generics/whitepaper.htm! (visited

Sept. 7, 2005) (average price of a brand drug is $72, compared with

$17 for its generic counterpart); Statement of the FTC on Competi-

tion in the Pharmaceutical Marketplace: Antitrust Implications of

Patent Settlements, Before the Comm. on the Judiciary of the U.S.

Senate (May 24, 2001), available at http://www.fic.gov/

os/2001/05/pharmstmy.htm (estimating that consumers saved $8 to

$10 billion in 1994 by substituting generics for brand drugs).

20

Way To Cut Costs Of Drugs: Generics, USA TODAY, May

13, 2004, at 23A.

Access to generic pharmaceuticals is thus “perhaps the

single most important route to lower personal and national

drug costs during the next decade.” Findlay, supra. Indeed, ___

the cost savings created by generic pharmaceuticals translates

directly into improved public health and, thus, lives saved.

As the FDA Commissioner has explained, generic drugs “are

an increasingly important way to provide the American peo-

ple with safe, effective and affordable medical treatment.”

Generics: FDA Announces Measures To Improve Generic

Drug Access, DRUG WEEK, Mar. 26, 2004, at 231. See also

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

Drugs, Patents, and the Pharmaceutical Marketplace 19

(June 2002), available at http://www.nihcm.org/Generic-

sPrimer.pdf (positing that “[t}he advent of [the generic

equivalent of the anti-depressant Prozac]” may help rectify

the “persistent under-diagnosis and under-treatment of de-

pression in the U.S.”). %

The high costs of prescription are a significant — and in

some cases, insuperable — barrier to proper treatment for

many Americans, particularly the elderly. See Generics Key

To Cost Control, UPI, May 19, 2005 (quoting Dr. Jan Berger,

chief clinical officer of Caremark Rx Inc.: “the No. 1 reason

why patients do not take their medicine is because it is too

expensive”); AARP, Prescription Drug Costs And The Role

Of Generic Drugs 2 (Oct. 1, 2002), available at

http://assets.aarp.org/rgcenter/health/rx_generic.pdf (“[N]ear-

ly one in four Americans 45 and older (24%) reported not be-

ing able to afford a prescription drug because no generic ver-

sion was available.”) (emphasis in original). :

CONCLUSION

The petition for a writ of ceztiorari should be granted or,

at a minimum, the Court should invite the Solicitor General to

file a brief expressing the views of the United States.

September 7, 2005

21

Respectfully submitted,

Thomas C. Goldstein

(Counsel of Record)

Amy Howe

Kevin K. Russell

GOLDSTEIN & HOwE, P.C.

4607 Asbury Pl., NW

Washington, DC 20016

(202) 237-7543

. FILED

wy) SEP 16 2005

No. 05-48 OFFICE OF THE CLERK

——- SO COOH, U.S.

IN THE

Supreme Court of the United States

TEVA PHARMACEUTICALS USA, INC.,

Petitioner,

Vv.

PFIZER, INC.,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

REPLY BRIEF FOR THE PETITIONER

WILLIAM F. SHEEHAN Henry C. Dincer, P.C.

GOODWIN PROCTER LLP Counsel of Record

901 New York Avenue, N.W. GOODWIN PROCTER LLP

Washington, DC 20001 Exchange Place

(202) 346-4000 Boston, MA 02109

THomas L. Cree, P.C. (617) 570-1000

Mark I. KOFFSKY

GOopwINn PROCTER LLP

599 Lexington Avenue

New York, NY 10022

(212) 813-8800

TABLE OF CONTENTS

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I. The Issues Presented for Review Will Continue to

Affect Many ANDA Applicants Under the Medicare

II. Teva’s Claim for Declaratory Relief Was Ripe. ............ ~

III. The Ruling of the Federal Circuit Conflicts With the

Rulings of This Court and Other Circuits. .................0.. 7

eA ON cus ihns snk chveuacbiecnveaischensorbennssncnensicepebictacbests 10

li

TABLE OF AUTHORITIES

Cases

Abbott Labs. v. Gardner,

SOFUS TMI) a

Aetna Life Ins. Co. v. Haworth,

WOES O87 NT: es

Arrowhead Industrial Water, Inc. v. Ecolochem, Inc.,

S46 F.2d 731 (Fed. Cig, 1988)... cise cecsisscosstsceseves

Boyle v. Landry,

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Brief of United States Senators Edward M. Kennedy,

John S. McCain, and Charles E. Schumer

as Amici Curiae in Support of Petition of Teva

Pharmaceuticals USA, Inc. for Rehearing

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1

INTRODUCTION

The Federal Circuit has grafted onto Article III a

limitation on the subject matter jurisdiction of federal courts

in declaratory judgment actions that this Court has never

articulated and that other circuits have rejected. By its ruling,

the court of appeals denied jurisdiction throughout the

country in a class of cases in which Congress specifically

authorized declaratory judgments in order to accelerate the

introduction of generic drugs and thereby moderate the

explosive growth in expenditures on prescription drugs.

Pfizer’s opposition to certiorari ignores this Court’s

settled Article III jurisprudence, the decisions of other

circuits, and the importance of the questions presented for

national health care policy. The petition for a writ of

certiorari should be granted.

ARGUMENT ;

I. The Issues Presented for Review Will Continue to

Affect Many ANDA Applic ints Under the Medicare

Amendments.

Pfizer suggests that the enactment of Title [X of the

Medicare Prescription Drug, Improvement, and

Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat.

2066 (the “Medicare Amendments”), so altered the

regulatory scheme of the Hatch-Waxman Act that the

questions presented in Teva’s petition will not arise in the

future. Nothing could be further from the truth. If anything,

the Medicare Amendments have increased the stakes.

Before the Medicare Amendments, a judgment of

invalidity or noninfringement of an Orange Book patent

2

triggered the first ANDA filer’s 180-day exclusivity period.

The Medicare Amendments removed that trigger but

replaced it with a provision of arguably greater consequence.

Now, if the first ANDA filer does not launch its generic

product within 75 days of such a judgment, the first filer

forfeits its exclusivity altogether, 21 USC. §

355(j)(5)(D)(i)(D(bb), (j)(5)(D\ii).' Pfizer’s suggestion that

the Medicare Amendments have eliminated the “concern”

that led to Teva’s declaratory judgment suit 1s, therefore,

simply incorrect. That suggestion is particularly implausible

because it leaves unexplained why Congress would

specifically provide for a declaratory judgment remedy for

generic companies in the very amendments that, according to

Pfizer, eliminated the need for the remedy.’

Moreover, as Congress recognized,° there are various

circumstances in which the owner of a patent listed in the

Orange Book would choose not to commence litigation

against a generic company in furtherance of a strategy to

delay generic competition. For example, it is very common

for companies to list multiple patents in the Orange Book

While only a judgment obtained by a subsequent applicant with

“tentative approval” can result in a forfeiture, such approval is

commonly given if the drug described in the ANDA is found to

satisfy the bioequivalency and other statutory requirements for

generic drugs set forth in 21 U.S.C. § 355(j)(2){A).

2 Indeed, one searches Pfizer's opposition (and the decision below) in

vain for any explanation at all why Congress would go to the trouble

of amending the Hatch-Waxman Act specifically to authorize

declaratory judgment actions if, as Pfizer contends, Congress simply

intended to maintain the legal status quo.

3 See Pet. at 16-17; Pet. App. at 772.

3

with respect to a given drug.* A patentee might well sue a

generic company on only one patent, obtain the 30 month

stay of FDA approval, and hold the other patents in reserve to

commence later litigation if the generic company prevails in

the first suit. Such a strategy makes sense even with only

one ANDA filer. The generic drug company can only obtain

“patent certainty,” as Congress intended to encourage the

prompt introduction of generic drugs, by seeking a

declaratory judgment on those other patents. Under the

Federal Circuit’s decision here, however, if the patentee has

taken no steps beyond listing the patents in the Orange Book,

the declaratory judgment action is likely to be dismissed.

Further, as the amicus briefs of the Generic

Pharmaceutical Association and Apotex, Inc. make clear, the

risk of catastrophic damages for launching a generic version

of a blockbuster drug such as Pfizer’s Zoloft® that generates

hundreds of millions of dollars of sales each month is more

than many generic companies can dare to run. The practical

need to obtain patent certainty before launching is

compelling, affects many companies, and continues to exist

even after the first ANDA filer’s exclusivity period has run.”

* A search of the Orange’ Book for drugs for which Pfizer holds the

NDA shows that Pfizer maintains multiple patent listings for a great

many of its drugs. The Orange Book search page is located at

http://www. fda.gov/cder/ob/docs/queryah.htm.

Pfizer points to an earlier version of the Medicare Amendments that

would have deemed an Orange Book patentee’s failure to

commence an infringement suit to “establish an actual controversy...

sufficient to confer subject matter jurisdiction.” Opp. at 27. But

Congress rejected this version, not because it sought to preserve the

“reasonable apprehension” test, as Pfizer argues, but rather because

the Justice Department advised Congress that the attempt to define

an “actual controversy” would usurp the power of the courts to

determine the scope of Article III. See Brief of United States

(continued next page)

4

The issues raised by the petition are not “narrow, fact-

based” issues unsuited for certiorari review. While the

application of the Federal Circuit’s “reasonable apprehension

of imminent litigation” test may at times turn on the

particular facts, whether that test is, as the Federal Circuit

ruled, mandated by Article III is a pure question of law.

Pfizer also contends that Teva’s announced

agreement to acquire the stock of IVAX diminishes the

importance of this case. As the press release that Pfizer cites®

notes, this transaction is contingent on a number of factors,

including regulatory and shareholder approval which have

not yet occurred.

II. Teva’s Claim for Declaratory Relief Was Ripe.

Pfizer tries to cast the decision below as an applica-

tion of settled ripeness principles. Neither the Federal Circuit

nor Pfizer ever characterized the issue here in ripeness terms

or invoked this Court’s ripeness cases in support of the denial

of subject matter jurisdiction. This is not surprising because,

under this Court’s ripeness jurisprudence, Teva’s claim for

declaratory relief was plainly ripe.

The most obvious reason why that is so is that Teva

seeks to resolve a patent infringement claim that has already

accrued. By statute, Teva’s submission of an ANDA with a

Senators Edward M. Kennedy, John S. McCain, and Charles E.

Schumer as Amici Curiae in Support of Petition of Teva

Pharmaceuticals USA, Inc. for Rehearing En Banc, No. 04-1186

(Fed. Cir.). The bill as enacted preserved the proper sphere of

judicial authority by creating a cause of action and directing courts

to exercise jurisdiction unless it would violate Article III to do so.

° _ http://www.tevapharm.com/pr/2005/pr_536.asp

5

“Paragraph IV” certification that Pfizer’s patent is either

invalid or not infringed by Teva’s generic formulation

constitutes an act of infringement. 35 U.S.C. § 271(e)(2).

As this Court has recognized, the purpose of this statute is

precisely to create an actual controversy sufficient to support

judicial resolution of disputes concerning the application of

Orange Book patents to proposed generic drugs. Eli Lilly &

Co. v. Medtronic, Inc., 496 U.S. 661, 678 (1990).

Pfizer cannot deny that an infringement claim in

response to a generic company’s submission of an ANDA

with a Paragraph IV certification would be ripe. Pfizer has

commenced such actions many times, including one against

IVAX on the very patent at issue here. But if Pfizer could

have asserted a ripe claim for patent infringement against

Teva, then it cannot dispute the ripeness of Teva’s

declaratory judgment action to resolve the identical claim.

“It is immaterial that frequently, in the declaratory judgment

suit, the positions of the parties in the conventional suit are

reversed; the [justiciability] inquiry is the same in either

case.” Maryland Casualty Co. v. Pacific Coal & Oil Co.,

312 U.S. 270, 273 (1941). If Teva’s claim is unripe, then so

is the infringement claim authorized by 35 U.S.C.

§ 271(e)(2), without which, as this Court observed, the

Hatch-Waxman Act scheme “will not work.” Eli Lilly, 496

U.S. at 678.

Moreover, unlike the claims in cases such as Texas v.

United States, 523 U.S. 296, 300 (1998), Teva’s claim does

not “rest[] upon contingent future events that may not occur

as anticipated, or indeed may not occur at all.” Teva’s

submission of an ANDA with a paragraph IV certification

constitutes a statutory act of infringing Pfizer’s patent. The

patent’s validity depends on facts antedating its issuance, and

resolution of the infringement claim turns on applying the

6

claims in that patent to a drug product that Teva has already

developed, manufactured and described in great detail in its

ANDA. There is absolutely nothing contingent or

hypothetical about the claim that Teva seeks to resolve. This

is not a case in which “the courts would benefit from further

factual development of the issues presented.” Ohio Forestry

Ass'n, Inc. v. Sierra Club, 523 U.S. 726, 733 (1998).

Nor is Teva seeking to challenge a statute that may

never be enforced or whose enforcement is committed to

other branches of government. Cf Boyle v. Landry, 401 U.S.

77, 80-81 (1971) (declining to enjoin enforcement of

criminal statutes at the behest of individuals who have never

even been threatened with prosecution; companion case to

Younger v. Harris, 401 U.S. 37 (1971)).’ Congress

specifically bestowed sole responsibility on federal courts to

hear declaratory judgment actions brought by ANDA

applicants under the circumstances presented here.

Finally, under this Court’s formulation of the

ordinary test for ripeness — which Pfizer does not even

mention — there is no question that Teva’s declaratory

judgment action is ripe. The ripeness inquiry requires courts

“to evaluate both the fitness of the issues for judicial decision

and the hardship to the parties of withholding court

consideration.” Abbott Labs. v. Gardner, 387 U.S. 136, 149

7 Pfizer’s suggestion that “[t]he Federal Circuit's ‘reasonable

apprehension’ test is a well-established application of the imminent

threat of prosecution standard,” Opp. at 17, is far wide of the mark.

The federalism concerns that underlie cases such as Boyle are

immaterial here. Nor is there any administrative action with which

resolution of Teva’s lawsuit will interfere. On the contrary, under

the Hatch-Waxman Act, the timing of FDA action depends on

judicial resolution of patent disputes.

7

(1967). The infringement and validity issues raised in Teva’s

~complaint are plainly fit for judicial resolution. There is no

further factual development needed to resolve them and there

is nothing hypothetical about them. Moreover, there is no

question that Teva faces hardship if these issues are not

resolved. The court of appeals so held, Pet. App. at 25a-26a,

and Pfizer has not disputed the point.

III. The Ruling of the Federal Circuit Conflicts With the

Rulings of This Court and Other Circuits.

Pfizer fails to reconcile the Federal Circuit’s

“reasonable apprehension of imminent litigation”

requirement with the decisions of this Court and those of

other circuits. For example, Pfizer argues that the

declaratory judgment defendants in Aetna Life Ins. Co. vy.

Haworth, 300 U.S. 687 (1937), had placed Aetna on notice

of an adverse legal position by claiming disability benefits in

1930 and 1931. But the insurance company brought its

declaratory judgment action in 1934 and this Court’s opinion

never suggests that the defendants were on the verge of suing

to enforce a legal position staked out several years before.

This Court found the controversy to be justiciable because

the issues were, as they are here, focused and concrete, and a

decision on them would conclusively resolve an existing

legal dispute.

Pfizer dismisses the decisions of this Court defining

Article III’s “constitutional minimum” in terms of injury in

fact attributable to the defendant’s conduct and redressable

by the relief requested as involving “standing,” and not

“ripeness.” As demonstrated above, shifting the focus to

ripeness does not help Pfizer. Moreover, this Court has

distinguished between the constitutional and prudential

dimensions of ripeness, and the constitutional core of

8

ripeness is essentially the same as it is for standing. See

Duke Power Co. v. Carolina Environmental Study Group,

Inc., 438 U.S. 59, 79-81 (1978); National Treasury

Employees Union v. United States, 101 F.3d 1423, 1427-28

(D.C. Cir. 1996). Where, as here, Congress has specifically

directed federal courts to exercise subject matter jurisdiction

to the constitutional limit, prudential restrictions on subject

matter jurisdiction cannot affect the result.

Pfizer’s attempts to explain away the other circuit

court decisions that reject the Federal Circuit’s “reasonable

apprehension of imminent suit” requirement are not

persuasive. Pfizer does not dispute that in Sallen vy.

Corinthians Licenciamentos LTDA, 273 F.3d 14 (1" Cir.

2001), the court did not require the plaintiff to prove that he

faced a reasonable apprehension of suit. /d. at 25. Pfizer says

that Sallen is different because earlier consideration of the

parties’ trademark dispute by a private body had made the

contours of that “controversy” “certain.” But the contours of

the dispute between Teva and Pfizer are no less certain than

they were in Sallen: the issue is whether Pfizer’s patent is

valid and whether Teva’s generic sertraline product infringes.

Similarly, Pfizer does not dispute that the Sixth

Circuit in Sankyo Corp. v. Nakamura Trading Corp., 2005

U.S. App. LEXIS 4339 (6" Cir. Mar. 15, 2005), held that the

reasonable apprehension of litigation test is not

constitutionally mandated. Pfizer argues that Sankyo applied

an even more restrictive test, declining jurisdiction

notwithstanding an actual threat of litigation by the

defendant. However, the plaintiff in Sankyo did not seek to

resolve the claim that was the subject of the threat but rather

a dispute concerning whether that claim was subject to

arbitration. The court understandably declined to resolve

that dispute before the defendant actually carried through on