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

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_1657%3A5

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2005
- **Citation:** 546 U.S. 958

## Text

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

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TABLE OF AUTHORITIES

Cases

Abbott Labs. v. Gardner,

SOFUS TMI) a

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Statutes

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Other Authorities

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_1657%3A5. Public record. Not legal advice.