Effective Date of Approval of an Abbreviated New Drug Application

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 314

[Docket No. 85N-0214]

Effective Date of Approval of an Abbreviated New Drug Application

AGENCY: Food and Drug Administration, HHS.

ACTION: Interim rule; opportunity for public comment.

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SUMMARY: The Food and Drug Administration (FDA) is issuing an interim

rule to amend its regulations establishing the effective date of

approval of abbreviated new drug applications (ANDA's). The interim

rule eliminates the requirement that an ANDA applicant successfully

defend a patent infringement suit to be eligible for 180 days of

marketing exclusivity.

DATES: The interim rule is effective November 10, 1998. Submit written

comments by February 3, 1999.

ADDRESSES: Submit written comments to the Dockets Management Branch

(HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061,

Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Virginia G. Beakes or Wayne H.

Mitchell, Center for Drug Evaluation and Research (HFD-7), Food and

Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-594-

2041.

SUPPLEMENTARY INFORMATION:

I. Background

The Drug Price Competition and Patent Term Restoration Act of 1984

(Pub. L. 98-417) (the Hatch-Waxman Amendments) amended the Federal

Food, Drug, and Cosmetic Act (the act). The Hatch-Waxman Amendments

created section 505(j) of the act (21 U.S.C. 355(j)). Section 505(j)

created the current ANDA approval process, which allows lower-priced

generic versions of previously approved innovator drugs to be approved

and brought on the market.

Innovator drug applicants must include in their new drug

application (NDA) information about patents that claim the drug product

that is the subject of the NDA. FDA publishes this patent information

as part of the ``Approved Drug Products With Therapeutic Equivalence

Evaluations,'' which is generally known as the ``Orange Book.''

An ANDA applicant must include in the ANDA a patent certification

described in section 505(j)(2)(A)(vii) of the act. The certification

must make one of the following statements: (1) That no patent

information on the drug product that is the subject of the ANDA has

been submitted to FDA; (2) that such patent has expired; (3) the date

on which such patent expires; or (4) that such patent is invalid or

will not be infringed by the manufacture, use, or sale of the new drug

for which the ANDA is submitted. This last certification is known as a

``paragraph IV certification.'' A notice of the paragraph IV

certification must be provided to each owner of the patent which is the

subject of the certification and to the holder of the approved NDA to

which the ANDA refers. The submission of an ANDA for a drug product

that is claimed in a patent is an infringing act, if that drug product

is intended to be marketed before the expiration of the patent, and may

be the basis for patent litigation.

Section 505(j)(5)(B)(iv)\1\ of the act provides an incentive for

generic manufacturers to challenge patents that may be invalid or

unenforceable by filing paragraph IV certifications, thereby inviting a

patent action against them by the patent owner. Section

505(j)(5)(B)(iv) of the act states that:

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\1\ Prior to the enactment of the Food and Drug Administration

Modernization Act (the Modernization Act) of 1997, 180-day

exclusivity was described at section 505(j)(4)(B)(iv) of the act.

The Modernization Act added new provisions to section 505(j) that

resulted in a renumbering of the sections.

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If the [ANDA] contains a [paragraph IV certification] and is for

a drug for which a previous application has been submitted under

this subsection continuing [sic] such a certification, the

application shall be made

[[Page 59711]]

effective not earlier than one hundred and eighty days after--

(I) the date the Secretary receives notice from the applicant

under the previous [ANDA] of the first commercial marketing of the

drug under the previous [ANDA] or

(II) the date of a decision of a court\2\ in [a patent

infringement action] holding the patent which is the subject of the

certification to be invalid or not infringed, whichever is earlier.

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\2\ The agency interprets the term ``court'' to refer to the

court that enters final judgment from which no appeal can be or has

been taken (Sec. 314.107(e)).

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This means that an ANDA applicant whose application contains a

paragraph IV certification is protected from competition from

subsequent generic versions of the same drug product for 180 days after

either the first commercial marketing of the first ANDA applicant's

drug or a decision of a court holding the patent that is the subject of

the paragraph IV certification to be invalid or not infringed. This

marketing protection is commonly known as ``180-day exclusivity'' and

was created as an incentive to generic manufacturers to challenge

patents that may be invalid, not infringed, or unenforceable.

In the Federal Register of October 3, 1994 (59 FR 50338 at 50367),

FDA published the final rule for implementing the patent and marketing

exclusivity provisions of the Hatch-Waxman Amendments. Section

314.107(c)(1) (21 CFR 314.107(c)(1)), the regulation implementing

section 505(j)(5)(B)(iv) of the act, provides:

If an abbreviated new drug application contains a certification

that a relevant patent is invalid, unenforceable, or will not be

infringed and the application is for a generic copy of the same

listed drug for which one or more substantially complete abbreviated

new drug applications were previously submitted containing a

certification that the same patent was invalid, unenforceable, or

would not be infringed and the applicant submitting the first

application has successfully defended against a suit for patent

infringement brought within 45 days of the patent owner's receipt of

notice submitted under Sec. 314.95, approval of the subsequent

abbreviated new drug application will be made effective no sooner

than 180 days from whichever of the following dates is earlier:

(i) The date the applicant submitting the first application

first commences commercial marketing of its drug product; or

(ii) The date of a decision of the court holding the relevant

patent invalid, unenforceable, or not infringed.

(Emphasis added)

The proposal containing Sec. 314.107(c)(1), published in the

Federal Register of July 10, 1989 (54 FR 28872 at 28929), proposing the

requirement that the first ANDA applicant submitting a paragraph IV

certification be sued for patent infringement in order to obtain the

180-day exclusivity. This interpretation was believed to be most

consistent with the language of the Hatch-Waxman Amendments and

furthered the congressional intent to encourage challenges to patents

that may be invalid or unenforceable (54 FR 28872 at 28894). In

response to a comment on the proposed rule, FDA added a requirement to

the final rule that the first ANDA applicant submitting a paragraph IV

certification successfully defend a patent infringement suit to be

entitled 180-day exclusivity. The ``successful defense'' requirement

was established to eliminate ``an incentive for frivolous claims of

patent invalidity or noninfringement because it would give ANDA

applicants exclusivity even if the applicant was unsuccessful in

defending against the patent owner's lawsuit'' (59 FR 50338 at 50353).

FDA's requirements for 180-day exclusivity have been challenged in

Inwood Laboratories, Inc. v. Young, 723 F. Supp. 1523 (D.D.C. 1989),

vacated as moot, 43 Fed. 3d 712 (D.C. Cir. 1989); Mova Pharmaceutical

Corp. v. Shalala, 955 F. Supp. 128 (D.D.C. 1997), and Granutec, Inc. et

al. v. Shalala et al., No. 5:97-CV-485-BO(1) (E.D.N.C. July 3, 1997).

The district courts in both Inwood and Mova held that 180 days of

marketing exclusivity should be granted to the first ANDA applicant who

files a paragraph IV certification, regardless of whether the applicant

is subsequently sued for patent infringement. Following the Inwood

decision and the initial district court decision in Mova, FDA

determined that it would be appropriate to acquiesce in the courts'

decisions until the issue was resolved by the appellate courts.

The Mova decision was upheld in the U.S. Court of Appeals for the

District of Columbia Circuit, Mova Pharmaceutical Corp. v. Shalala No.

97-5082, 1998 U.S. App. Lexis 7391 (D.C. Cir. Apr. 14, 1998). Following

the circuit court decision, on June 1, 1998, the district court in Mova

entered an order stating that the successful defense requirement of

Sec. 314.107(c)(1) is invalid and permanently enjoining FDA from

enforcing it.

Subsequent to the district court decision in Mova and FDA's

acquiesence, but prior to the Court of Appeals' decision, the U.S.

District Court for the Eastern District of North Carolina addressed the

validity of Sec. 314.107(c)(1) in Granutec v. Shalala and, in a holding

contrary to the earlier Mova district court decision, ordered FDA to

follow its regulations in approving ANDA's for ranitidine

hydrochloride. The Granutec decision was stayed and appealed to the

U.S. Court of Appeals for the 4th Circuit, which reversed the district

court's decision.

Both the U.S. Court of Appeals for the District of Columbia Circuit

and the U.S. Court of Appeals for the 4th Circuit held that FDA's

interpretation of section 505(j)(5)(B)(iv) as expressed in

Sec. 314.107(c)(1) is unsupported by the act. FDA has not appealed

either decision. The effect of these decisions, together with the June

1, 1998, order of the district court in Mova, is that FDA will not

enforce the ``successful defense'' provision of Sec. 314.107(c)(1).

Accordingly, FDA is instituting this rulemaking procedure to remove the

``successful defense'' provision from Sec. 314.107(c)(1), and the

related provision in Sec. 314.107(c)(4).

Before either court of appeals' decision issued, in the Federal

Register of November 28, 1997 (62 FR 63268), FDA published a

clarification stating that FDA would apply Sec. 314.107(c)(1) as

written, including the ``successful defense'' provision. That

clarification is hereby withdrawn.

In the near future, FDA will publish a proposed rule that will more

extensively address the agency's interpretation of section

505(j)(5)(B)(iv) of the act in a manner consistent with the Mova and

Granutec decisions. An opportunity for public comment will be provided

when the document is published.

II. Environmental Impact

The agency has determined under 21 CFR 25.30(h) that this action is

of a type that does not individually or cumulatively have a significant

effect on the human environment. Therefore, neither an environmental

assessment nor an environmental impact statement is required.

III. Analysis of Impacts

FDA has examined the impacts of the interim rule under Executive

Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the

Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Order

12866 directs agencies to assess all costs and benefits of available

regulatory alternatives and, when regulation is necessary, to select

regulatory approaches that maximize net benefits (including potential

economic, environmental, public health and safety, and other

advantages; distributive impacts; and equity). Executive Order 12866

classifies a rule as significant if it meets any one of a number of

specified conditions, including having an annual effect on the economy

of $100 million or adversely

[[Page 59712]]

affecting in a material way a sector of the economy, competition, or

jobs, or if it raises novel legal or policy issues. The agency believes

that this interim rule is consistent with the regulatory philosophy and

principles identified in the Executive Order. In addition, the interim

rule is not a significant regulatory action as defined by the Executive

Order and so is not subject to review under the Executive Order.

The Regulatory Flexibility Act requires that if a rule has a

significant economic impact on a substantial number of small entities,

the agency must analyze regulatory options to minimize the economic

impact on small entities. The agency certifies that this interim rule

will not have a significant economic impact on a substantial number of

small entities. Therefore, under the Regulatory Flexibility Act, no

further analysis is required.

The Unfunded Mandates Reform Act requires an agency to prepare a

budgetary impact statement before promulgating any rule likely to

result in a Federal mandate that may result in expenditures by State,

local, and tribal governments or the private sector of $100 million

(adjusted annually for inflation) in any 1 year. The elimination of the

``successful defense'' provision of Sec. 314.107(c)(1), and the related

provision in Sec. 314.107(c)(4), will not result in any significant

increased expenditures by State, local, and tribal governments or the

private sector. Because this interim rule will not result in an

expenditure of $100 million or more on any governmental entity or the

private sector, no budgetary impact statement is required.

This interim rule is intended to bring FDA's regulations into

conformance with the Granutec and Mova court decisions. The agency

believes that this interim rule is necessary and that it is consistent

with the principles of Executive Order 12866; that it is not a

significant regulatory action under that Order; that it will not have a

significant economic impact on a substantial number of small entities;

and that it is not likely to result in an annual expenditure in excess

of $100 million.

IV. Paperwork Reduction Act of 1995

This interim rule contains no collections of information,

therefore, clearance by the Office of Management and Budget under the

Paperwork Reduction Act of 1995 is not required.

V. Effective Date

The agency is issuing these amendments as an interim rule effective

November 10, 1998. This action is being issued to remove the

``successful defense'' provision of Sec. 314.107(c)(1), and the related

provision in Sec. 314.107(c)(4). This action is necessary because both

the Granutec and Mova courts have found the ``successful defense''

provision to be without support in the act. Indeed, the Mova court has

ordered FDA not to enforce the ``successful defense'' provision of

Sec. 314.107(c)(1). These decisions have rendered the ``successful

defense'' provision, and the related provision in Sec. 314.107(c)(4), a

nullity, and FDA can find no reason to retain the provisions in its

regulations. For the foregoing reasons, FDA finds, for good cause, that

notice and public procedure would be impracticable, unnecessary, and

contrary to the public interest; therefore, a public comment period

before the establishment of this interim rule may be dispensed with

under 5 U.S.C. 553(b)(B) and Sec. 10.40(e)(1) (21 CFR 10.40(e)(1)). In

addition, the Commissioner of Food and Drugs finds good cause under 5

U.S.C. 553(d)(3) and Sec. 10.40(c)(4)(ii) for making this interim rule

effective in less than 30 days.

VI. Opportunity for Public Comment

Interested persons may, on or before February 3, 1999, submit to

the Dockets Management Branch (address above) written comments

regarding this interim rule. FDA will use any comments received to

determine whether this interim rule should be modified or revoked. Two

copies of any comments are to be submitted, except that individuals may

submit one copy. Comments are to be identified with the docket number

found in brackets in the heading of this document. Received comments

may be seen in the Dockets Management Branch between 9 a.m. and 4 p.m.,

Monday through Friday.

List of Subjects in 21 CFR Part 314

Administrative practice and procedure, Confidential business

information, Drugs, Reporting and recordkeeping requirements.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under

authority delegated to the Commissioner of Food and Drugs, 21 CFR part

314 is amended as follows:

PART 314--APPLICATIONS FOR FDA APPROVAL TO MARKET A NEW DRUG OR AN

ANTIBIOTIC DRUG

1. The authority citation for 21 CFR part 314 is revised to read as

follows:

Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 371, 374,

379e.

Sec. 314.107 [Amended]

2. Section 314.107 Effective date of approval of a 505(b)(2)

application or abbreviated new drug application under section 505(j) of

the act is amended in paragraph (c)(1) by removing the phrase ``and the

applicant submitting the first application has successfully defended

against a suit for patent infringement brought within 45 days of the

patent owner's receipt of notice submitted under Sec. 314.95'' and in

paragraph (c)(4) by removing the phrase ``if sued for patent

infringement''.

Dated: October 30, 1998.

William B. Schultz,

Deputy Commissioner for Policy.

[FR Doc. 98-29610 Filed 11-2-98; 11:57 am]

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