180-Day Generic Drug Exclusivity for Abbreviated New Drug Applications

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 314

[Docket No. 85N-0214]

180-Day Generic Drug Exclusivity for Abbreviated New Drug

Applications

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: The Food and Drug Administration (FDA) is proposing to amend

its regulations governing 180-day generic drug exclusivity under the

Federal Food, Drug, and Cosmetic Act (the act). The proposed rule

clarifies existing eligibility requirements for abbreviated new drug

application (ANDA) sponsors and describes new eligibility requirements.

The proposed changes to the regulations are necessary because of recent

court decisions invalidating portions of FDA's current regulations. The

proposed regulations are intended to permit the prompt entry of generic

drug products into the market while maintaining the incentive of market

exclusivity for generic drug manufacturers.

DATES: Submit written comments by November 4, 1999. Submit written

comments on the information collection requirements by September 7,

1999. See section VIII of this document for the effective date of a

final rule based on this document.

ADDRESSES: Submit written comments to the Dockets Management Branch

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

Rockville, MD 20852. Submit written comments on the information

collection requirements to the Office of Information and Regulatory

Affairs, OMB, New Executive Office Bldg., 725 17th St. NW., rm. 10235,

Washington, DC 20503, Attn: Desk Officer for FDA.

FOR FURTHER INFORMATION CONTACT: Virginia G. Beakes, 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

(Public Law 98-417) (the Hatch-Waxman Amendments) created section

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

ANDA approval process, which allows a generic version of a previously

approved innovator drug to be approved without submission of a full new

drug application (NDA). An ANDA refers to a previously approved new

drug application (the ``listed drug'') and relies upon the agency's

finding of safety and effectiveness for that drug product.

Innovator drug applicants must include in an NDA information about

patents for the drug product that is the subject of the NDA. FDA

publishes this patent information as part of the agency's publication

``Approved Drug

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Products with Therapeutic Equivalence Evaluations'' (the Orange Book).

Generic drug applicants must include in an ANDA a patent

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

each patent listed in the Orange Book for the listed drug. The

applicant must certify one of the following for each patent: (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 drug product for which the ANDA is submitted. These certifications

are known as ``paragraph I,'' ``paragraph II,'' ``paragraph III,'' and

``paragraph IV'' certifications, respectively.

Notice of a paragraph IV certification must be provided to each

owner of the patent (patent owner) that is the subject of the

certification and to the holder of the approved NDA (NDA holder) to

which the ANDA refers. The terms ``patent owner'' and ``NDA holder'' as

used throughout this proposed regulation mean either those parties or

their representatives, including exclusive licensees. The agency

recognizes that different terms are used throughout other sections of

the regulations for the idea expressed in section 505(j)(2)(B)(i)(I)

and (j)(2)(B)(i)(II) of the act that notice must be given to the

principals (patent owner and NDA holder) or their representatives. The

agency has added a definitions section to the proposed regulation to

clarify the meaning of these terms, as well as other terms, as used in

this section.

The submission of an ANDA for a drug product that is claimed in a

patent is an infringing act if the ANDA product is intended to be

marketed before expiration of the patent. (See 35 U.S.C. 271(e)(2).)

Therefore, the submission of an ANDA with a paragraph IV certification

may be the basis for patent infringement litigation.

Given this risk of patent infringement litigation, section

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

applicants to file paragraph IV certifications challenging patents that

may be invalid, unenforceable, or not infringed by the product that is

the subject of the ANDA.

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\1\ Section 505(j)(5)(B)(iv) of the act states that:

If the application contains a certification described in

subclause (IV) of paragraph (2)(A)(vii) 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

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

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

under the previous application of the first commercial marketing of

the drug under the previous application, or

(II) the date of a decision of a court in action described in

clause (iii) holding the patent which is the subject of the

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

Prior to the enactment of the Food and Drug Administration

Modernization Act of 1997 (the Modernization Act), 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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In certain circumstances, the first applicant whose ANDA contains

a paragraph IV certification is protected from competition from

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

either the date the first applicant's drug product is first

commercially marketed or the date of a final court decision holding the

patent that is the subject of the paragraph IV certification invalid,

unenforceable, or not infringed. This marketing protection is commonly

known as ``180-day exclusivity.''

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

published the final rule 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, provided:

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)

FDA's requirements for 180-day exclusivity were successfully

challenged in the courts in Mova Pharmaceutical Corp. v. Shalala, 140

F.3d 1060 (D.C. Cir. 1998), and Granutec, Inc. v. Shalala, No. 97-1873

and No. 97-1874, 1998 U.S. App. LEXIS 6685 (4th Cir. Apr. 3, 1998).

Following the Mova circuit court decision, on June 1, 1998, the

district court entered an order stating that the successful defense

requirement of Sec. 314.107(c)(1) is invalid and permanently enjoined

FDA from enforcing it. In the Federal Register of July 14, 1998 (63 FR

37890), FDA published a guidance for industry entitled ``180-Day

Generic Drug Exclusivity Under the Hatch-Waxman Amendments to the

Federal Food, Drug, and Cosmetic Act'' (June 1998), describing its

approach to 180-day exclusivity in light of the court decisions. In the

Federal Register of November 5, 1998 (63 FR 59710), the agency

published an interim rule revoking the ``successful defense''

requirement. Since that time the agency has regulated directly from the

statute when making exclusivity decisions on a case-by-case basis.

The agency is proposing new regulations to address the issues that

have arisen as a result of the Mova and Granutec decisions and to

respond to other matters related to 180-day exclusivity not currently

addressed by the regulations. Consistent with the legislative purpose

of section 505(j)(5)(B)(iv) of the act, the proposed regulations

continue to provide an incentive for challenging a listed patent, while

at the same time preventing prolonged or indefinite delays in the

availability of generic drug products.

During litigation of the many cases related to 180-day

exclusivity, the parties and courts have recognized the potential for

the 180-day exclusivity process to substantially delay the entry of

competitive generic drug products into the market. This situation can

occur when the marketing of any subsequent generic drug product is

contingent upon the occurrence of an event that is within the first

ANDA applicant's control. Such delays could result, for example, from

the inability of the first ANDA applicant with a paragraph IV

certification to obtain timely approval of its application and begin

commercial marketing of its product.

Licensing agreements and other arrangements between an innovator

company and the generic drug company who is the first ANDA applicant to

file a paragraph IV certification can be of considerable financial

benefit to the companies involved, but also may contribute to delayed

generic competition by forestalling the beginning, or triggering, of

the 180-day exclusivity period. These arrangements can create almost

insurmountable barriers to the final approval and marketing of generic

drug products that are otherwise ready for final approval. These

barriers thwart a major congressional goal underlying the

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passage of the Hatch-Waxman Amendments.

In developing the approach described in this proposal, the agency

has been guided by the text of the statute, opinions rendered by courts

that have addressed these issues, and concerns expressed to the agency

in submissions commenting on the June 1998 guidance and November 1998

interim rule. The agency has also been guided by its 15 years of

experience with the 180-day exclusivity provisions. This experience has

provided FDA with valuable information regarding the influence of the

180-day exclusivity provisions on the ANDA approval process and the

marketing of generic drug products.

II. Description of the Proposed Rule

This proposed rule would revise Sec. 314.107 to clarify and modify

eligibility requirements for ANDA applicants seeking 180-day marketing

exclusivity for a generic drug product. This new approach is offered in

light of the courts' rejection of the previous requirement that an ANDA

applicant successfully defend against a patent infringement lawsuit

before it is eligible for exclusivity.

A. 180-Day Exclusivity Eligibility

1. Only First Applicant is Eligible

The statutory language describing which applications are eligible

for 180-day generic drug exclusivity is ambiguous. The current

regulation interprets the statute as allowing eligibility for

exclusivity only for the applicant that submits the first substantially

complete ANDA with a paragraph IV certification. Although the agency

has considered alternative interpretations, such as ``rolling

exclusivity'' in which the next-in-line applicant is eligible for

exclusivity should the previous applicant become ineligible, FDA

proposes to maintain the current interpretation. The agency, however,

invites comments related to exclusivity eligibility, both those

supporting this interpretation and those suggesting other

possibilities.

Under this proposed rule, only the applicant submitting the first

substantially complete ANDA for a listed drug with a paragraph IV

certification to any patent in the Orange Book for the listed drug

(first applicant) would be eligible for exclusivity. A substantially

complete application must contain all of the information required under

section 505(j)(2)(A) of the act and under 21 CFR 314.50 and 314.94.

These requirements include the submission of the results of any

required bioequivalence studies, or, if appropriate, a request for a

waiver of such studies. In order for an ANDA to be considered

substantially complete for purposes of exclusivity, the bioequivalence

studies submitted in the ANDA at the time it is initially submitted

must, upon review by the agency, meet the appropriate standards for

approval. If the applicant must conduct a new bioequivalence study to

obtain approval of the ANDA, the application will not be considered to

be substantially complete and the applicant will not be eligible for

exclusivity. No other applicant with a paragraph IV certification will

be eligible for exclusivity for that drug product. The agency is

adopting this position out of concern that, in the rush to be the first

ANDA with a paragraph IV, applicants will submit the results of the

first completed bioequivalence study, whether or not the results meet

the standards for approval. The bioequivalence study is a crucial

component of the ANDA and conduct of the studies can be time consuming.

In order to prevent the granting of exclusivity on the basis of

submission of an inadequate bioequivalence study, FDA has determined

that to be eligible for exclusivity, the ANDA applicant must submit, as

part of the initial application, a bioequivalence study that meets the

standards for approval.

To be eligible for exclusivity, an applicant must be the first to

submit ANDA that is both substantially complete and contains a

paragraph IV certification to any listed patent. The first applicant

can be an applicant that submits an ANDA that initially contains a

paragraph III certification, but later amends the certification to a

paragraph IV certification, if at the time of the amendment that

applicant's ANDA is the first substantially complete ANDA to contain a

paragraph IV certification. If the first applicant subsequently

withdraws its application or changes or withdraws its paragraph IV

certification, either voluntarily or as a result of a settlement or

defeat in patent litigation, no ANDA applicant will be eligible for

180-day exclusivity.

Limiting eligibility for exclusivity to the first applicant to

submit a substantially complete ANDA with a paragraph IV certification

is consistent with the goal of permitting earlier entry into the market

of generic competitor products by encouraging prompt challenges to

innovator patents. Granting exclusivity to a later applicant that

submits a patent challenge, and that only becomes first in line because

another applicant(s) has withdrawn its application or paragraph IV

certification, would further delay the entry into the market of generic

drug products with no countervailing public benefit.

In addition, if the first applicant submits a new paragraph IV

certification because, for example, it makes a formulation change

requiring a supplement or an amendment to its ANDA, it may no longer be

accorded first applicant status. If there is another applicant with a

paragraph IV certification for the same drug product, the first

applicant will no longer be eligible for 180-day exclusivity. Also, no

other applicant will be eligible for 180-day exclusivity.

As described in the preamble to the 1994 final rule (59 FR 50338

at 50348), there is one exception to this principle. If the agency

accepted for filing a substantially complete ANDA prior to the NDA

holder's submission of a late (untimely) filed patent, the ANDA

applicant is not required to certify to this patent. However, if the

ANDA applicant amends its ANDA to include a paragraph IV certification

to the untimely filed patent, and the ANDA applicant later withdraws

that paragraph IV certification, the next applicant to file a paragraph

IV certification to the untimely filed patent will be eligible for

exclusivity. The agency believes that in this situation it is

appropriate to grant exclusivity to an applicant who was required to

file a paragraph IV certification because the applicant filed its ANDA

after the NDA holder submitted the patent information.

If there are multiple patents for the listed drug, the applicant

submitting the first paragraph IV certification to any of the listed

patents will be the only ANDA applicant eligible for exclusivity for

that drug. The agency considered an approach that could have made

multiple applicants eligible for exclusivity based upon the order of

submission of paragraph IV certifications for each patent. Different

ANDA's are most likely to have the first paragraph IV certifications to

different patents when new patents are listed for the innovator drug

after the submission of the first ANDA. Although the statute would

support granting multiple exclusivities, the agency has determined that

such multiple exclusivities for a single drug could further delay the

entry of generic drugs onto the market. For example, if two different

applicants were eligible for exclusivity because each was the first to

file a paragraph IV certification for a different listed patent, and

neither exclusivity could begin to run until first commercial marketing

or a favorable court decision, it is possible that each exclusivity

would block the final

[[Page 42876]]

approval of the other application for a substantial period of time.

Moreover, the large number of patents listed for many drugs, the real

possibility that different ANDA applicants may submit first paragraph

IV certifications for these patents, and the relative ease with which

an applicant now becomes eligible for exclusivity could combine to

create an exclusivity program that is virtually unworkable in its

complexity and which would create even more uncertainty for the

industry.

If the ANDA applicant submitting the first substantially complete

ANDA with a paragraph IV certification submits paragraph IV

certifications to multiple patents at that time, any of those

certifications will render the applicant eligible for exclusivity. The

first court decision finding one of the patents invalid, not infringed,

or unenforceable will trigger the running of the applicant's

exclusivity.

2. First Applicant Eligible if Not Sued

The agency is proposing to amend Sec. 314.107(c)(1) to state that

the first applicant would be eligible for 180 days of market

exclusivity even if the applicant is not sued for patent infringement

by the patent owner or NDA holder. This is consistent with the policy

established in FDA's June 1998 guidance. It is also consistent with the

decision in Purepac v. Friedman, 162 F.3d 1201 (D.C. Cir. 1998), in

which the court noted that section 505(j)(5)(B)(iv) of the act does not

require the first applicant to be sued to be eligible for exclusivity.

The agency recognizes that neither the Purepac nor the Mova

opinion expressly foreclosed the agency from adopting a requirement

that an applicant be sued, and that in the 1989 proposed rule FDA

considered a ``litigation'' requirement as a prerequisite for

exclusivity eligibility. (See 54 FR 28872 at 28929, July 10, 1989.)

However, in light of the removal of the ``successful defense''

requirement and subsequent reconsideration of the statutory language,

the agency proposes that an applicant would be eligible for 180-day

exclusivity even if it is not sued by a patent owner or NDA holder.

FDA believes that if the first applicant avoids a lawsuit and the

related 30-month stay of final approval (see section 505(j)(5)(B)(iii)

of the act), for example, by designing around a patent in such a way

that its drug product is clearly noninfringing, then that applicant

should not be denied eligibility for exclusivity. In addition, an ANDA

applicant should not be encouraged to file a frivolous certification

that invites litigation so as to qualify for exclusivity. Permitting an

applicant who avoids a lawsuit to be eligible for exclusivity is

consistent with the statutory language and goal of facilitating prompt

entry of generic drug products into the market.

3. First Applicant Not Eligible if Sued and Loses Lawsuit

If the first applicant is sued and loses the patent litigation,

proposed Sec. 314.107(c)(4) would require the applicant to change its

certification from a paragraph IV to a paragraph III. Upon the required

certification change, the applicant would lose any claim to exclusivity

eligibility.

Nothing in the statute or the regulations supports an award of

exclusivity to an ANDA applicant that loses its lawsuit. In fact, such

an award would run counter to the statutory goal of promoting earlier

entry of generic drug products into the market.

If the agency were to interpret the statute to permit exclusivity

for an ANDA applicant that lost its patent litigation, a subsequent

applicant that is not sued for patent infringement because it managed

to design around the patent nonetheless would not be able to enter the

market until after patent expiration. The court decision trigger for

the beginning of exclusivity would be unavailable to this subsequent

applicant because it applies only when there has been patent litigation

as a result of the paragraph IV certification and an ANDA applicant has

won.

Additionally, if the agency permitted exclusivity for an applicant

that lost its litigation and therefore could not market its product,

the innovator might avoid generic competition for the life of its

patent merely by refusing to sue any subsequent ANDA applicant. This

outcome would not be justified by the first applicant's unsuccessful

challenge to the patent.

The declaratory judgment provision discussed in section II.F of

this document could prevent an innovator company from using this

strategy to completely block ANDA approvals in some cases. However, it

is unreasonable to expect subsequent ANDA applicants to obtain a

declaratory judgment that triggers exclusivity for a first applicant

who has not provided any benefit to the public, merely because the

subsequent applicant wants to avoid being blocked for the life of the

patent.

If a first applicant that loses its patent suit is not eligible

for exclusivity, generic drug products may be able to enter the market

prior to expiration of the innovator's patent in several situations.

Market entry can occur if a subsequent ANDA applicant with a paragraph

IV certification prevails in its patent litigation, settles its patent

litigation, or is not sued as a result of the paragraph IV

certification.

The agency recognizes that this approach requires a new

interpretation of Sec. 314.94(a)(12)(viii)(A). That provision states

that when an applicant changes its paragraph certification from a IV to

a III after losing a patent infringement suit, ``the application will

no longer be considered to be one containing a [paragraph IV]

certification.'' Previously the agency had described that regulatory

provision as fulfilling only the ``housekeeping'' function of informing

the agency that the ANDA would not be approved until the patent

expired, and explained that the provision had no implications for

exclusivity eligibility. That interpretation was consistent with the

entire regulatory scheme that was built around the successful defense

requirement.

The removal of the successful defense requirement has resulted in

a fragmented regulatory framework, forcing the agency to modify not

only the regulatory language in certain parts but also, as in this

case, its interpretation of language that is to remain. Under the new

proposed approach, when a first applicant loses its patent litigation

and changes its certification from a paragraph IV to a paragraph III

under Sec. 314.94(a)(12)(viii)(A), it would not be eligible for

exclusivity. In addition, a voluntary change in patent certification

from a IV to a III as described in Sec. 314.94(a)(12)(viii) also would

have the effect of rendering the first ANDA applicant ineligible for

180-day exclusivity. After the first applicant changed its patent

certification to a III, no applicant would be eligible for exclusivity,

and the agency could approve eligible subsequent applications.

4. Shared Exclusivity for Multiple ANDA's Filed on the Same Day

The agency is proposing that all applicants for ANDA's containing

paragraph IV certifications for a particular drug product that are

received on the same day will be eligible for exclusivity if no other

ANDA with a paragraph IV certification for the drug product has been

previously filed. All such applicants would be considered first

applicants. Submission of ANDA's on the same day is most likely to

occur when an innovator's 5-year exclusivity barring FDA acceptance of

ANDA's expires, or when ANDA applicants wish to challenge a patent

listed for an innovator product with 5 years of exclusivity and file

ANDA's at the end of 4 years of exclusivity (see section

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505(j)(5)(D)(ii) of the act). The applicable periods would be 5 1/2

years or 4 1/2 years when pediatric exclusivity has been granted (see

section 505A(a) of the act (21 U.S.C. 355a(a)).

Under this proposal, the exclusivity period would be shared by all

first applicants. Once the exclusivity period begins, it would run for

all first applicants, protecting the group of first applicants from

competition from later applicants during the 180-day period. The

application of the triggering period, discussed in section II.B.1 of

this document, would remain essentially the same, with a slight

modification. After a triggering event (described in section II.B of

this document) occurred, all eligible first applicants could be

approved and would be eligible to share the 180-day exclusivity. Once

the 180 days of exclusivity has run following the first triggering

event, any ANDA that was not among the group of first applicants also

would be eligible for final approval.

The agency believes the statutory language supports this approach,

which would protect the incentive created by Congress for ANDA

applicants to challenge patents. Further, this approach is preferable

to alternative approaches. One alternative approach, which the agency

does not propose because it does not preserve the incentive to

challenge patents, would be for the agency to determine that no ANDA

applicant is eligible for 180-day exclusivity if, on the same day, the

agency receives more than one ANDA with a paragraph IV certification

for the same drug product and no other ANDA with a paragraph IV

certification for the drug product has been previously filed.

Another option is for the agency to attempt to determine which

application it received first on the same day, an inquiry that is

impractical and may result in an arbitrary ordering of applications. It

may not be possible for the agency to determine which application was

received first. If, for example, the agency received more than one

eligible application in the same mail delivery on a particular day, it

would be impossible to determine which application was received first.

If applications were received by various means throughout the day, when

the applications in the pile were retrieved to date-and time-stamp, the

application that the agency received first might be stamped last.

Although theoretically this particular problem could be avoided by

stamping each document at the time of receipt, this solution is

impractical given agency workload and resource constraints.

5. Patent Expiration and 180-Day Exclusivity

The agency is clarifying that once the patent for which the first

applicant filed a paragraph IV certification expires, the first

applicant is no longer eligible for exclusivity. When the first

applicant is no longer eligible for exclusivity, FDA may approve all

otherwise eligible ANDA's. FDA regulations at Sec. 314.94(a)(12)(viii)

currently provide that exclusivity cannot extend beyond the term of the

patent.

B. The Results of the Patent Challenge

In general, once an ANDA applicant has submitted a paragraph IV

certification and notified the NDA holder and patent owner of the

patent challenge under Sec. 314.95 (21 CFR 314.95), a number of

outcomes are possible including: (1) The NDA holder or patent owner may

sue the ANDA applicant within the 45-day period established by statute

(section 505(j)(5)(B)(iii) of the act) and that suit may be litigated

to final judgment, (2) the parties may reach a settlement either before

or after a patent infringement lawsuit is filed, or (3) the NDA holder

and patent owner may refrain from filing a patent infringement suit.

Which of these events occurs will depend on many factors, including

market considerations and the relative strength of the patent claims.

However, in each of these cases, there is the potential for a

substantial delay in the entry of generic drug products into the

market. The agency is proposing a relatively simple approach to

limiting this delay, one that applies generally to all of the outcomes

described previously.

Under the current 180-day exclusivity approach, delays in the

approval of competitive generic drug products are the result of delays

in the occurrence of one of the two events (triggering events) that

will trigger the beginning of the 180-day exclusivity period--either

the first commercial marketing of the first applicant's product, or a

decision of a court holding the patent invalid, not infringed, or

unenforceable, whichever is earlier. The courts in the Mova and Purepac

decisions suggested that, to prevent unreasonable delay in the final

approval of subsequent generic drug applications, FDA could require

that a first ANDA applicant bring its product to market--and thus begin

the running of exclusivity--within a prescribed time period. The agency

believes that such a requirement is appropriate.

1. Triggering Period

The agency proposes to adopt the approach suggested by the courts

in the Mova and Purepac decisions and set a time limit for the exercise

of exclusivity. The agency is proposing the use of a 180-day

``triggering period,'' during which there must either be a favorable

court decision regarding the patent or the first applicant must begin

commercial marketing of its product. If neither of these events occur

during the triggering period, the first applicant will lose its

eligibility for exclusivity and subsequent ANDA's will be eligible for

immediate approval.

The term ``triggering period'' is used throughout this proposed

rule to refer to the 180-day period described previously; this is

distinct from the 180-day exclusivity period (see section II.B.4 of

this document) that may follow the triggering period. The term

``trigger'' as used throughout this proposed rule refers to the two

statutory conditions, one of which must be met, for exclusivity to

begin (see section 505(j)(5)(B)(iv) of the act). Those conditions, as

discussed in sections I and II.B of this document, are: (1) A court

decision finding the patent to be invalid, unenforceable, or not

infringed by the ANDA product, and (2) first commercial marketing of

the ANDA product. The term ``triggering event'' in this proposed rule

refers to the occurrence of one of the two statutory triggers.

In most cases, the triggering period would begin to run on the day

a subsequent ANDA applicant with a paragraph IV certification receives

a tentative approval stating that but for the first applicant's

exclusivity, the subsequent ANDA would receive final approval. In three

instances the triggering period would not begin to run on the date of

the tentative approval.

First, if the first applicant was sued for patent infringement as

a result of its paragraph IV certification and the litigation is

ongoing, the triggering period would not begin until expiration of the

30-month stay of ANDA approval (see section II.B.3 of this document).

Similarly, if a court issued a preliminary injunction prohibiting the

first applicant from commercially marketing its drug product, the

triggering period would not begin until the injunction expired.

Finally, the triggering period would not begin until expiration of the

statutorily described time period corresponding with any existing

exclusivity periods for the listed drug (see sections 505(j)(5)(D)(ii)

and 505A(a) of the act).

To determine how a triggering period would work, the agency

reviewed its experience with the 180-day exclusivity provision. In the

past, delays in obtaining a court decision, or delays in the first

applicant gaining approval for

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its ANDA and/or bringing its product to market, have generally become a

matter of concern when at least one subsequent ANDA applicant has

obtained a tentative approval and the only barrier to final approval is

the first applicant's eligibility for 180 days of exclusivity. Every

day after the tentative approval during which the subsequent applicant

can not market its product represents a lost opportunity both for the

subsequent applicant and the consumer. The subsequent applicant can not

benefit from having submitted an ANDA that meets the requirements of

section 505(j) of the act, and the consumer does not have access to one

or more lower cost generic products.

Where the first ANDA applicant is eligible for exclusivity and

only that eligibility is blocking final approval of a subsequent ANDA,

it is appropriate to begin the triggering period on the day that a

subsequent applicant has received tentative approval for its ANDA. This

is the first day that the absence of a generic drug product from the

market is directly linked to the first applicant's eligibility for

exclusivity.

a. Length of triggering period. The agency is proposing that the

triggering period be 180 days. As described previously, the 180-day

period would follow one of the following: (1) The tentative approval of

a subsequent ANDA with a paragraph IV certification for the same drug

product, (2) expiration of a 30-month stay of ANDA approval due to

patent litigation, (3) expiration of a preliminary injunction

prohibiting marketing of an ANDA product, or (4) expiration of the

statutorily described exclusivity periods for the listed drug.

Once the triggering period begins, the ANDA applicant eligible for

exclusivity would have 180 days to trigger its exclusivity. This may be

done by beginning commercial marketing of its drug product or obtaining

a favorable court decision (in its own or other litigation regarding

the same patent). Once triggered, the ANDA applicant's exclusivity

would then run for 180 days. If, within the 180-day triggering period,

the beginning of exclusivity was not triggered, the first applicant

would no longer be eligible for exclusivity and the agency could

approve subsequent ANDA's at the end of the triggering period.

It is possible that there could be no generic drug product

marketed during the triggering period if the first applicant does not

begin commercial marketing of its product. In this case, at least one

generic drug product--the product that had received the tentative

approval--would receive final approval upon expiration of the

triggering period and could begin marketing.

b. Basis for length of triggering period. The 180-day length of

the triggering period is derived from the statutory provision governing

180 days of exclusivity. This provision quite clearly allows (and

Congress, therefore, presumably contemplated) the possibility of a 180-

day period during which there is no generic drug product on the market.

This would occur when the running of the 180-day period of exclusivity

has begun with a court decision finding the patent invalid,

unenforceable, or not infringed, but the applicant that has the

exclusivity does not begin marketing its product because it is not

approved or for another reason.

There is no statutory requirement that the running of the

exclusivity triggered by the court decision described in section

505(j)(5)(B)(iv)(II) of the act be accompanied by the commercial

availability of the generic drug product. Even if no generic drug

product is being marketed, the statute prohibits the agency from

approving another ANDA until the 180-day exclusivity period has

elapsed. After that period, however, the statute permits the approval

of any otherwise eligible ANDA, even if the first applicant never

marketed its product. It is therefore reasonable to assume that

Congress thought that a 180-day period during which no generic drug

product is marketed was acceptable.

At the same time, there is no indication that Congress would

countenance an indefinite delay in the marketing of low cost generic

drug products once the legal barriers to their approval have been

removed. To the contrary, such a scenario directly conflicts with the

goals of the Hatch-Waxman Amendments. Therefore, the agency is

proposing a 180-day triggering period during which a triggering event

must occur to commence the eligible ANDA applicant's period of

exclusivity.

The agency recognizes that in very rare cases there could be a

time period longer than 180 days during which no generic drug product

is available. This may happen if, for example, a court decision

triggering the exclusivity period is issued at the end of the 180-day

triggering period, and the first applicant does not market its product

or waive its right to exclusivity during the resulting 180-day

exclusivity period. In the extreme case, this scenario could result in

the inability of a subsequent ANDA applicant to market its product for

a 360-day period (180-day triggering period plus 180-day exclusivity

period) after its tentative approval.

The agency believes, however, that a first applicant that is

unable to market its own product at the time a subsequent ANDA

applicant receives a tentative approval would ordinarily waive its

exclusivity (see section II.H of this document). This would permit

final approval of the subsequent ANDA. Moreover, in contrast to the

current regulatory structure, under which generic drugs may face almost

insurmountable barriers to market entry, the proposed approach provides

for much earlier market entry. Under the triggering period approach,

there is certainty that one or more generic drug products will be able

to enter the market after the 12-month period described previously, and

in most cases, much more promptly.

2. Alternative Length of Triggering Period in Specific Cases

The agency is also specifically seeking comment on an alternative

approach. The agency is considering shortening the length of the

triggering period to 60 days in some cases. The 60-day triggering

period would apply to an ANDA applicant that already has received final

approval at the time of the tentative approval of a subsequent ANDA,

and either has not been sued as a result of its patent certification,

or has been sued and the case was settled or dismissed without a

decision on the merits of the patent claim. The possible 60-day

triggering period in this case is based upon limited data from a July

1998 Congressional Budget Office study entitled ``How Increased

Competition from Generic Drugs Has Affected Prices and Returns in the

Pharmaceutical Industry,'' and a March 1999 internal FDA study

(available in Docket No. 85N-0214).

FDA does not consider this 60-day timeframe to be burdensome to

ANDA applicants because the data suggest that, since passage of the

Hatch-Waxman Amendments, first generic drug products generally reach

the market promptly after approval. Specifically, the studies indicate

that generic products are routinely marketed within a 2-month period

following ANDA approval.

3. Relationship of Triggering Period to 30-Month Stay

When the first applicant to submit an ANDA with a paragraph IV

certification is sued by the NDA holder or patent owner, it would be

unreasonable to start the triggering period with the tentative approval

of a subsequent applicant if the tentative approval was granted

relatively soon after the first applicant's patent litigation began.

The first

[[Page 42879]]

applicant could find it difficult or impossible to either obtain a

final court decision in a patent infringement case or begin commercial

marketing of its product within 180 days of the subsequent applicant's

tentative approval. The first applicant who is sued for patent

infringement is, however, provided with a statutory time period, as

discussed in the following paragraphs of this document, during which to

resolve the patent litigation before the triggering period will begin.

The generic drug product approval process described in the Hatch-

Waxman Amendments establishes a 30-month period for resolution of

patent litigation resulting from a patent certification. (See section

505(j)(B)(5)(iii) of the act.) During this period, FDA may not approve

the ANDA that is the subject of the litigation. After the 30-month

period, barring a court order, FDA may grant final approval to the ANDA

that is the subject of the litigation. Therefore, the agency is

proposing that when the first ANDA applicant is sued as a result of its

paragraph IV certification and the patent litigation is ongoing, the

triggering period would not begin at least until the 30-month period

has lapsed. After the 30 months has passed, the triggering period would

begin when a subsequent applicant received a tentative approval. If a

subsequent applicant received a tentative approval during the 30-month

stay, the 180-day triggering period would begin on the day the 30-month

period expired. The first applicant then would have to begin marketing

its product, or obtain a final court decision, during the 180-day

triggering period to obtain its exclusivity.

4. Distinction Between Triggering Period and Exclusivity Period

Although the triggering period would not begin until expiration of

the first applicant's 30-month stay, it is still possible for the

exclusivity period to begin during that 30-month period. If, for

example, a court issues a favorable final decision in litigation over a

subsequent ANDA's patent challenge during the 30-month stay of the

first applicant, the exclusivity period for the first applicant would

start on the date of that decision.

In proposing this interpretation of the statute--that the

triggering period does not begin until expiration of the 30-month

stay--the agency is aware that in some cases patent litigation

resulting from a paragraph IV certification does not result in a final

court decision within 30 months. The agency is also aware that parties

to patent litigation in some cases may not have strong incentives to

resolve the litigation as promptly as possible. This proposed approach

may alter those incentives and encourage swifter resolution of

litigation.

Although the agency is proposing that the general rule will be

that the first ANDA applicant has 30 months in which to resolve its

patent litigation before the triggering period may start, the agency

also would allow for a reasonable extension of this period under

certain circumstances. This would occur when the court hearing the

patent infringement case issues a preliminary injunction prohibiting

the marketing of the drug product that is the subject of the challenged

ANDA until there is a court decision finding the patent invalid, not

infringed, or unenforceable. The issuance of such an order is

contemplated in section 505(j)(5)(B)(iii)(III) of the act.

FDA expects that an injunction would issue upon a finding that it

is warranted by the facts and law in the particular case, and that the

parties have reasonably cooperated in expediting the action. In the

event the court issues an injunction prohibiting the marketing of the

drug product under the first ANDA, the triggering period would not

begin at least until the injunction expires or is lifted by the court.

If the 30-month stay is shortened or lengthened by the court because

either party has failed to reasonably cooperate, the triggering period

will begin with reference to the date ordered by the court.

While the triggering and exclusivity periods are related, they are

also distinct. The exclusivity period starts with either first

commercial marketing of the first applicant's generic drug product or

with a court decision finding the patent invalid, unenforceable, or not

infringed. The triggering period, in contrast, would be tied to the

date of a subsequent ANDA's tentative approval, and in some cases to

the completion of a 30-month stay. The triggering period may not result

in an exclusivity period for the first applicant if no triggering event

occurs during the triggering period. In contrast, an exclusivity period

may begin independent of any triggering period, if no subsequent ANDA

is given a tentative approval to begin the triggering period.

Alternatively, the exclusivity period could begin during the triggering

period.

C. A Decision of a Court

FDA's current regulations state that for purposes of applying the

ANDA approval and exclusivity provisions of the statute, ``the court''

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

has been taken (district or appellate court) (Sec. 314.107(e)). This

interpretation was challenged in TorPharm v. Shalala, No. 97-1925, U.S.

Dist. LEXIS 21983 (D.D.C. Sep. 15, 1997); appeal withdrawn and

remanded, 1998 U.S. App. LEXIS 4681 (D.C. Cir. Feb. 5, 1998); vacated

No. 97-1925 (D.D.C. April 9, 1998).

Plaintiffs in that case maintained that ``the court'' meant the

district court and that final approval could be granted and exclusivity

begin running upon the entry of a district court decision finding a

patent invalid, unenforceable, or not infringed. Because the district

court decision in TorPharm agreeing with plaintiffs was vacated (set

aside or rendered void), the agency will not address it further in this

proposed rule. FDA instead proposes to maintain its current

interpretation. The agency believes this interpretation is most

consistent with the statutory scheme.

The agency is also proposing that the decision of a court that may

begin the running of exclusivity is the final decision of a court

hearing any litigation involving the patent at issue. Current

Sec. 314.107(c)(1)(ii) states that one of the two exclusivity triggers

is the ``date of the decision of the court holding the relevant patent

invalid, unenforceable, or not infringed.'' FDA proposes to modify

Sec. 314.107(c)(1)(ii) to read the ``date of the decision of a court *

* *.''

This modification is consistent with the statutory language in

section 505(j)(5)(B)(iv) of the act. The agency is clarifying that for

purposes of both the modified regulatory provision and section

505(j)(5)(B)(iv)(II) of the act, `` a decision of a court in an action

described in [section 505(j)(5)(B)(iii) of the act] holding the patent

which is the subject of the certification to be invalid or not

infringed'' can be a decision of any court hearing a patent

infringement or declaratory judgment case involving the patent at

issue. The decision triggering exclusivity need not come from the court

hearing the patent litigation involving the first ANDA. (See also

Granutec, Inc. v. Shalala, 1998 U.S. App. LEXIS 6685, Nos. 97-1873, 97-

1874, slip op. at 14-18 (4th Cir. Apr. 3, 1998) (unpublished opinion

discussing the agency's interpretation of ``a'' court decision).)

The use of different language in subsections (I) and (II) of

section 505(j)(5)(B)(iv) of the act supports this interpretation. In

subsection (I), the statutory trigger is specifically tied to the date

that ``the applicant under the previous application'' gives notice that

its product is being commercially marketed. In contrast, the trigger in

subsection (II) relates only to the date of ``a decision of a court''

in patent

[[Page 42880]]

litigation described in section 505(j)(5)(B)(iii) of the act.

The language of the first trigger refers to a particular

applicant. In contrast, the language of the second trigger does not

attach importance to the specific applicant. It instead refers

generally to a type of court decision. In the absence of specific,

controlling language to the contrary, the agency continues to interpret

``a decision of a court'' in subsection (II) to mean a decision of any

court hearing a patent infringement or declaratory judgment case

involving the patent at issue.

This interpretation of the court decision trigger encourages

prompt litigation of patent issues by all ANDA applicants, and under

some circumstances could result in a corresponding earlier start of the

180-day exclusivity period. This could result in situations where,

although the first applicant was sued first, its litigation is not

completed first, and its exclusivity begins to run while it is still in

litigation.

The agency is aware that in some instances the first applicant may

be unable or unwilling to market its product upon satisfaction of the

court decision trigger involving another applicant. For example, the

first applicant's own patent litigation may be ongoing and its ANDA may

have been finally approved at the completion of a 30-month stay under

section 505(j)(5)(B)(iii) of the act. However, the applicant may be

unwilling to assume the risk of liability for damages by marketing

before patent expiration or a court decision finding the applicant's

product does not infringe the patent. The agency notes, however, that

in such a situation the first applicant may obtain a financial benefit

from the award of exclusivity by waiving its exclusivity with respect

to a subsequent applicant (see section II.H of this document).

A contrary interpretation that required the court decision be a

decision in patent litigation against the first applicant could, under

some circumstances, delay entry into the market of drug products by all

ANDA applicants. For example, the patent owner or NDA holder may elect

not to sue the first ANDA applicant, in which case the court decision

trigger would never apply to that applicant's patent challenge, and

exclusivity could therefore begin running only with the first

applicant's commencement of commercial marketing. If the first

applicant's marketing is delayed because it cannot obtain final

approval of its ANDA or, having obtained final approval, the first

applicant either cannot or will not bring its product to market, there

could be a substantial delay in marketing of any generic drug product.

This delay would result even if a subsequent applicant is successful in

challenging the patent, either in a lawsuit brought by the innovator or

in a declaratory judgment action.

As described in section II.B.3 of this document, under the

approach proposed in this rule, the triggering period would not apply

when a subsequent applicant obtains a court decision that begins the

period of exclusivity. In such cases the first applicant's exclusivity

would begin to run on the date of the final court decision in the

subsequent applicant's litigation. The triggering period applies only

when a subsequent applicant has obtained a tentative approval where

final approval is blocked by the first ANDA applicant's eligibility for

exclusivity. Under these circumstances, the subsequent applicant would

have been eligible for final approval because either: (1) It wasn't

sued by the innovator, (2) it was sued but the litigation was settled

or dismissed without a favorable court decision, or (3) it was sued and

the 30-month stay had elapsed.

D. Settlement Agreements

Settlement agreements are not addressed in current regulations but

were discussed in the preamble to the proposed rule of July 10, 1989

(54 FR 28872). In the preamble, FDA explained that the ``date of a

decision of a court holding the patent invalid or not infringed'' in

Sec. 314.107(c)(1)(ii) is the ``date of a final decision of a court

from which no appeal can or has been taken, or the date of a settlement

order or consent decree signed by a Federal judge, which enters final

judgment and includes a finding that the patent is invalid or not

infringed'' (54 FR 28872 at 28895 (emphasis added)).

FDA is proposing regulations in part to address the most

challenging issue with respect to 180-day exclusivity: settlement and

licensing agreements between innovator and generic drug companies.

These agreements potentially can be made at any stage in the ANDA

process, including before an ANDA is filed, after ANDA filing but

during the 45-day period within which a patent infringement suit must

be brought, after the 45-day period expires but before the first

applicant commences commercial marketing, or during patent litigation.

The proposed regulations, by applying the triggering period, would

reduce the delay in market entry of generic drug products that can

result from such agreements. Although agreements may still be made,

their effect on generic competition would be limited by the requirement

that, within 180 days of the first tentative approval of a subsequent

ANDA, the first ANDA applicant begin commercially marketing its own

product or obtain a favorable court decision.

The agency has seriously considered the suggestions made in

comments on the November 1998 interim rule (Docket No. 85N-0214) and

the June 1998 guidance (Docket No. 98D-0481). Comments suggested that

the agency require that it be promptly notified of a settlement or

other agreement that either alters the adversarial relationship between

the first ANDA applicant and the patent owner or NDA holder, or from

which the first ANDA applicant derives an economic benefit. A number of

comments suggested that the agency consider such arrangements as either

rendering the first applicant ineligible for exclusivity, or triggering

the running of the exclusivity period on the theory that such

agreements are akin to commercial marketing.

The agency, however, believes the ``triggering period'' approach

is preferable. This approach would not require FDA to inquire into the

business arrangements between pharmaceutical companies, it would not

require the submission of any additional information by the ANDA

applicant, and it is a clear and definite approach that relies upon

publicly available information, i.e., the issuing of a tentative

approval letter.

E. Prompt Approval and Marketing

Current Sec. 314.107(c)(3) requires a first applicant to actively

pursue approval of its ANDA, or the agency may immediately approve any

subsequent ANDA eligible for final approval. The agency proposes to

delete this requirement because it is unnecessary under the regulatory

scheme described in this proposed rule. The new scheme would provide a

specific, clearly defined 180-day triggering period, during which the

first ANDA applicant must either: (1) Commercially market its drug

product, or (2) obtain a favorable court decision regarding the patent.

Given this approach, the issue of whether an ANDA applicant

actively pursues approval of its product would not be relevant. The

proposed approach, therefore, also has the advantage of eliminating the

requirement for the agency to scrutinize applicants' progress and

responses during the ANDA approval process, as well as to maintain a

standard for active pursuit of approval.

[[Page 42881]]

F. Declaratory Judgment

Current regulations implementing the Hatch-Waxman Amendments do

not address the application of section 505(j)(5)(B)(iv) of the act to

declaratory judgment actions as referred to in section

505(j)(5)(B)(iii) of the act. These proposed regulations address the

issue of whether a ruling in a declaratory judgment action brought by

the ANDA applicant is a ``decision of a court in [an] action described

in [section 505(j)(5)(B)(iii)] holding the patent which is the subject

of the certification to be invalid or not infringed'' (section

505(j)(5)(B)(iv) of the act).

FDA proposes in Sec. 314.107(f)(2)(ii) that a ``decision of a

court'' should include a nonappealable decision of a court in a

declaratory judgment action finding the patent invalid, unenforceable,

or not infringed.

The agency has considered the suggestion that a dismissal of a

declaratory judgment action under certain circumstances be treated as a

decision of a court and trigger the 180-day exclusivity period under

section 505(j)(5)(B)(iv)(II) of the act. Specifically, the agency

considered whether dismissal for lack of jurisdiction on the grounds

that no ``case or controversy'' exists because, for example, a party

has no reasonable apprehension of a patent infringement action, could

be considered a triggering court decision. The agency has rejected this

interpretation of the statute. It places a burden on the agency to

inquire into the facts underlying the dismissal of a case, and would be

unnecessary under the ``triggering period'' approach. With the

application of the 180-day triggering period, a subsequent applicant

who is not sued for patent infringement and obtains a tentative

approval with just the first applicant's eligibility for exclusivity

serving as a bar to final approval will not be blocked indefinitely

from approval.

G. Effect of Dismissal of Litigation

Proposed Sec. 314.107(g) states that the 30-month stay of ANDA

approval would not apply once paragraph IV related patent litigation

involving the ANDA applicant and patent owner or NDA holder is

dismissed without a court decision on the merits of the patent claim,

regardless of whether such dismissal is with or without prejudice

(whether the claims may be relitigated). The 30-month period, described

in section 505(j)(5)(B)(iii) of the act and Sec. 314.107(b)(3)(A) of

the regulations, is intended to give innovator companies assurance that

generic manufacturers would not file ANDA's with paragraph IV

certifications and then immediately market the approved generic drug

product. (See 130 Congressional Record H9118 (daily ed. Sept. 6, 1984)

(statement of Rep. Waxman).)

The legislative history of the amendments makes clear that the 30-

month stay of approval was intended to correspond as closely as

possible with the expected duration of a patent infringement suit, and

to provide protection to innovator companies during that time. (See 130

Congressional Record S10504 (daily ed. Aug. 10, 1984) (statement of

Sen. Hatch). Those concerns are not implicated when the litigation is

dismissed either as a result of a settlement or licensing agreement, or

because the patent owner or NDA holder has determined not to pursue the

litigation. Once the litigation is settled, the application can be

approved immediately.

H. Waiver of 180-Day Exclusivity and Relinquishing Eligibility

Although current regulations do not address an ANDA applicant's

ability to waive its 180-day exclusivity to permit approval of the ANDA

of a subsequent applicant(s), the general issue of exclusivity waivers

was addressed in the preamble to the 1994 final rule with respect to

analogous provisions. There the agency stated that new drug exclusivity

under the Hatch-Waxman Amendments can be waived by the holder of the

exclusivity (59 FR 50338 at 50359).

Since publication of the 1994 regulations addressing 180-day

exclusivity, FDA has been asked to determine whether an applicant who

has obtained 180 days of exclusivity can waive such exclusivity to

permit approval during the exclusivity period of a subsequent ANDA, or

ANDA's, containing a paragraph IV certification. The agency has

determined that waiver of 180-day exclusivity, like waiver of new drug

exclusivity, is permitted under the act and at least one ANDA applicant

has successfully effected a waiver. That waiver was challenged

unsuccessfully in Boehringer Ingelheim Corp. v. Shalala, 993 F. Supp. 1

(D.D.C. 1997).

Proposed Sec. 314.107(e) would permit the ANDA applicant that has

obtained 180 days of exclusivity with the occurrence of a triggering

event under section 505(j)(5)(B)(iv)(I) or (j)(5)(B)(iv)(II) of the act

to notify FDA during the period of exclusivity that it will waive its

exclusivity in favor of a subsequent ANDA or ANDA's containing a

paragraph IV certification. After receiving such notification, the

agency may approve the eligible named ANDA or ANDA's as of the date(s)

identified in the notice. Waiver of exclusivity permits ANDA applicants

that have been awarded exclusivity, but are either unwilling or unable

to market their products, to nonetheless obtain a benefit from that

exclusivity. A waiver may be particularly appropriate, for instance,

when the first ANDA applicant is sued and, while its litigation is

ongoing, a favorable court decision is rendered in a case involving a

subsequent applicant. Exclusivity would be awarded to the first

applicant, with the 180-day period starting on the date of a final

court decision in the subsequent applicant's litigation. The first

applicant's ANDA may not be finally approved, however, and the

applicant could not market its product. Under these circumstances, the

first applicant may obtain a benefit by waiving its exclusivity period

in favor of a subsequent applicant.

It should be noted that an applicant may selectively waive its

exclusivity only after the 180-day exclusivity period has begun to run

with the occurrence of one of the triggering events described in

section 505(j)(5)(B)(iv) of the act and in the regulations. Before that

time, the first applicant is only eligible for exclusivity and might

not obtain exclusivity if, for example, it failed to trigger the

exclusivity before the expiration of the triggering period.

Prior to the occurrence of a triggering event, the first applicant

may relinquish its eligibility for exclusivity entirely, and by so

doing would permit the agency to approve immediately any subsequent

ANDA's that are eligible for approval. It may not, however, waive its

exclusivity in favor of a specific applicant(s).

I. Multiple Strength/Drug Product Exclusivity

The question of whether the agency will grant a separate period of

exclusivity for each strength of a drug product is not addressed in the

preambles to the 1989 proposed or 1994 final rules, or in current

regulations. A citizen petition (Docket No. 99P-0792) that pertains to

this issue was filed on March 31, 1999. The agency has determined that

each strength of a drug product can be independently eligible for

exclusivity. Applicants may be eligible for a separate exclusivity

period for each particular strength of the drug product in an ANDA when

each strength refers to a different listed drug.

FDA believes that this form of exclusivity is consistent with the

statutory framework and public policy. Under the Hatch-Waxman

Amendments, the agency requires that

[[Page 42882]]

an ANDA reference a particular listed drug product. Among other

requirements, an ANDA applicant must include in the ANDA ``information

to show that the route of administration, the dosage form, and the

strength of the new drug are the same as those of the listed drug * *

*'' (section 505(j)(2)(A)(iii) of the act, emphasis added). The agency,

therefore, has determined that each strength of a drug product is

itself a listed drug.

FDA's current regulations treat each strength of a drug product as

a separate listed drug. Section 314.92(a)(1) (21 CFR 314.92 (a)(1))

states that ANDA's are suitable for ``drug products that are the same

as a listed drug.'' The regulation further explains that ``the term

`same as' means identical in active ingredient(s), dosage form,

strength, route of administration, and conditions of use * * *.''

FDA recognizes that different strengths of the same drug product

in the same dosage form may be formulated differently for a variety of

reasons. Varying formulations of the different strengths may provide

separate and distinct bases for patent challenges. Consequently, the

result of patent infringement litigation related to one strength of a

particular drug product may not be applicable to another strength of

the same drug product, even for the same ANDA applicant.

When the agency grants exclusivity to an ANDA applicant under the

provisions of section 505(j)(5)(B)(iv) of the act, it may not grant

final approval to other ANDA applicants for a period of 180 days.

Exclusivity, therefore, affects the remaining applicants by essentially

imposing a block on their immediate entry into the market.

The agency's interpretation of the statute to render ANDA's

eligible for exclusivity for each particular strength of a drug product

would have two results. First, it would encourage applicants vying for

submission of the first application, and the concomitant reward of

exclusivity, to submit ANDA's that cover the greatest number of

strengths in an attempt to obtain maximum protection from other generic

competitors. Second, it would prevent an ANDA applicant for only one

strength of a drug product from blocking subsequent applicants with

other strengths of the drug product from entering the market. Thus,

FDA's interpretation would encourage prompt entry into the market of

the greatest number of strengths of a particular drug product.

FDA has also determined that when the submission of a new strength

of a drug is approved as a result of a suitability petition, the first

ANDA referring to the approved petition that contains a paragraph IV

certification to any patent for the listed drug referred to in the

petition under Sec. 314.93(d) will be eligible for exclusivity. The new

strength of the drug product may have an independent basis for

challenging the applicability of a listed patent and therefore should

be eligible for the incentive provided by exclusivity.

III. Proposed Implementation Plan

The agency proposes that any final rule based on this proposal

take effect 30 days after its publication in the Federal Register. The

agency proposes to apply the provisions of any final rule to ANDA's

pending as of the effective date and to ANDA's that are submitted after

that date.

IV. 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.

V. Analysis of Impacts

FDA has examined the impacts of the proposed rule under Executive

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

Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq.). 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). Under the Regulatory

Flexibility Act, if a rule has a significant impact on a substantial

number of small entities, an agency must analyze regulatory options

that would minimize any significant impact of the rule on small

entities. Title II of the Unfunded Mandates Reform Act requires that

agencies prepare a written assessment and economic analysis of

anticipated costs and benefits before proposing any rule that may

result in an expenditure by State, local, and tribal governments, in

the aggregate, or by the private sector, of $100 million (adjusted

annually for inflation) in any one year.

The agency believes that this proposed rule is consistent with the

regulatory philosophy and principles set out in the Executive Order.

Because the proposed rule does not impose any mandates on State, local,

or tribal governments or the private sector, that will result in an

expenditure in any one year of $100 million or more, FDA is not

required to perform a cost/ benefit analysis according to the Unfunded

Mandates Reform Act. With respect to the Regulatory Flexibility Act,

because this proposed rule may have a significant economic effect on a

substantial number of small entities, the analysis set forth below

constitutes the agency's Initial Regulatory Flexibility Analysis.

Discussion of the expected aggregate costs of this proposed rule and

the anticipated impact of the rule on small entities is provided in the

analysis. FDA has not identified any other Federal rules that

duplicate, overlap, or conflict with the proposed rule.

A. Background

The Hatch-Waxman Amendments benefit consumers by bringing lower

priced generic versions of previously approved drugs to market, while

simultaneously promoting new drug innovation through the restoration of

patent life lost during regulatory proceedings. The award of a 180-day

period of market exclusivity for certain ANDA applicants with paragraph

IV certifications was designed to maintain this balance by rewarding

generic firms for their willingness to challenge unenforceable and

invalid innovator patents, or design noninfringing drug products.

Recently, however, this balance has been upset and generic competition

impeded, in part through the establishment of certain licensing

agreements or other commercial arrangements between generic and

innovator companies.

Under current regulatory provisions, the first generic applicant

to file a substantially complete ANDA with a paragraph IV certification

can delay generic competition by entering into certain commercial

arrangements with an innovator company. The result may be that,

notwithstanding the intent of the Hatch-Waxman Amendments, rewards are

directed to generic companies for hindering rather than speeding

generic competition. A necessary condition for such arrangements is

that the economic gains to the innovator from delaying generic

competition exceed the potential economic gains to the generic

applicant from 180 days of market exclusivity. Such instances are

becoming more frequent because a successful strategy to extend market

exclusivity can mean tens of millions of dollars in increased revenue

for an innovator firm. Under such circumstances, it can be mutually

beneficial for the innovator and the generic company that is awarded

180

[[Page 42883]]

days of generic exclusivity to enter into agreements that block generic

competition for extended periods. This delayed competition harms

consumers by slowing the introduction of lower priced products into the

market and thwarts the intent of the Hatch-Waxman Amendments.

FDA's proposal to establish a 180-day triggering period addresses

this problem in several ways. In most cases, the first generic

applicant with a paragraph IV certification would lose its claim to

180-day exclusivity if it withheld its drug product from the market, or

failed to obtain a favorable court decision, for more than 180 days

after the tentative approval of a subsequent generic applicant for the

same drug product. Also, a subsequent generic applicant could not be

blocked from marketing its drug product for longer than, at most, 1

year from when it received tentative approval (the 180-day triggering

period plus the 180-day exclusivity period). As a result, the potential

economic losses to consumers from the increased unavailability of lower

priced generic products would be reduced significantly.

Moreover, decreasing the length of time that these commercial

arrangements could block generic competition lessens the market

incentive for entering into such agreements. Limiting the period during

which an agreement between an innovator and the first generic ANDA

applicant with a paragraph IV certification could block generic

competition provides less incentive, and therefore makes it less

likely, that an innovator and a generic company would enter into such

an agreement. Consequently, consumers would benefit because commercial

arrangements to block generic competition would be not only less

damaging, but would be less likely to occur.

B. Affected Entities

FDA does not know the precise number of businesses, either large

or small, that engage in the types of business arrangements that would

be significantly affected by the proposed rule. According to standards

established by the Small Business Administration, a small

pharmaceutical manufacturer employs fewer than 750 employees. While the

innovator firms that are affected by the rule are likely to be large

businesses, some of the affected generic firms may be small businesses.

In 1997, 431 generic product approvals (including different product

strengths) were distributed among 96 pharmaceutical companies. The 64

applications that became first generic approvals for a specific brand

name drug, however, were submitted by only 30 firms. Moreover, the 14

first generic approvals that included a paragraph IV certification were

submitted by only 5 firms. Therefore, FDA estimates that up to five

generic firms and a similar number of innovator firms per year could be

financially harmed by the accelerated competition brought about by this

rule. Based on a sample of 150 generic firms, the agency could identify

fewer than 10 percent that employed over 750 employees. Thus, FDA

tentatively projects that approximately five small firms per year,

those with first generic approvals containing paragraph IV

certifications, could be adversely affected by the increased generic

competition. Because this estimate is uncertain, however, FDA invites

comments from firms that believe they would be affected by the proposed

rule.

C. Compliance Requirements and Costs

To comply with this rule, affected firms will need to learn the

new regulatory approach described in this proposed rule. The cost of

this proposed rule is difficult to estimate because the number of firms

affected is uncertain.

The agency expects, however, that many more firms would benefit

from this new approach than would be adversely affected. Because the

primary result of the rule would be to speed the start of the 180-day

exclusivity period, only those relatively few innovator and generic

firms that would profit from delayed competition would be

disadvantaged. In contrast, a substantial number of generic competitors

would benefit from the earlier sales revenues generated by the quicker

introduction of generic competition.

Any professional skills necessary for implementation of this

proposal should already exist within the firms and should not need to

be newly acquired.

D. Minimizing the Impact on Small Entities

FDA has considered alternatives to regulating 180-day generic drug

marketing exclusivity that may have a lesser or different impact on

small businesses. Specifically, the agency considered continuing to

regulate directly from the statute as it has done since June 1, 1998,

when the D.C. District Court enjoined FDA from enforcing its

``successful defense'' regulation. The agency also considered proposing

several modifications to the existing regulations to limit the ability

of innovator and generic drug companies to enter into agreements that

could thwart congressional intent to facilitate prompt entry of generic

drugs into the market.

The agency considered retaining its current regulations and

addressing new regulatory issues by reference directly to the statute.

Because of the significant disadvantages associated with this

alternative, the agency has rejected it. This alternative would create

uncertainty in the generic drug manufacturing industry because the

agency anticipates it may take years to provide sufficient guidance

while addressing each scenario on an individual basis.

Regulating from the statute on a case-by-case basis also could

result in significant delays in entry of generic drug products into the

market, because it could limit the means for FDA to prevent such

delays. For example, in cases where the first ANDA applicant with a

paragraph IV certification was sued by the patent owner or NDA holder,

the ANDA applicant and the patent owner/NDA holder could enter into an

agreement that resulted in delayed resolution of the patent litigation.

If the patent owner/NDA holder did not sue subsequent applicants, there

would not be another court decision to act as an exclusivity trigger.

The first applicant might not get a court decision for a long time and

also might not market its product. Under these circumstances, no

triggering events would occur and the first ANDA would block entry of

subsequent ANDA applicants into the market.

The same blocking effect could occur even if the patent owner/NDA

holder chose not to sue the first applicant with the paragraph IV

certification, but instead entered into an agreement under which the

first applicant would not market its product and trigger exclusivity.

If the patent owner/NDA holder did not sue subsequent applicants, there

also would not be a possibility of a favorable court decision to start

the exclusivity period running.

The second alternative, proposing several regulatory

modifications, was also rejected by the agency. Satisfactorily

accomplishing the goal of promoting prompt entry of generic drug

products into the market by inhibiting entry barriers would require

many changes to the regulations. Additionally, it would impose a

significant paperwork burden on applicants not present in the proposed

rule.

The regulatory modifications would include provisions as follows:

(1) An ANDA applicant would be required to notify the agency of a

settlement agreement with a patent owner/NDA holder and whether it

permitted immediate marketing of the drug

[[Page 42884]]

product; (2) an ANDA applicant would be required to market its drug

product within 60 days of final approval or the agency would determine

the exclusivity period commenced on the date of final approval; (3) the

agency would determine that if the first applicant entered into an

agreement with the patent owner/NDA holder under which it received a

commercial benefit, the applicant had commercially marketed its drug

product; and (4) if an ANDA applicant brought a declaratory judgment

action against the patent owner/NDA holder that was dismissed for lack

or case or controversy, the agency would determine that the court

decision exclusivity trigger was satisfied.

These proposed regulatory modifications all have the advantage of

limiting barriers to entry of generic drug products into the market by

permitting earlier satisfaction of the exclusivity triggers in some

cases. However, they also are associated with significant

disadvantages. This alternative would impose a substantial paperwork

burden on ANDA applicants by requiring them to notify the agency of

settlements and submit documents relevant to settlement and declaratory

judgment actions. Additionally, the approach would require the agency

to collect and assess paperwork associated with financial agreements

between an ANDA applicant and patent owner/NDA holder to determine if

the applicant received a commercial benefit.

VI. Paperwork Reduction Act of 1995

This proposed rule contains information collection provisions that

are subject to review by the Office of Management and Budget (OMB)

under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). A

description of the provisions is given below with an estimate of the

annual reporting burden. Included in the estimate is the time for

reviewing instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing each

collection of information.

FDA invites comments on: (1) Whether the proposed collection of

information is necessary for proper performance of FDA's functions,

including whether the information will have practical utility; (2) the

accuracy of FDA's estimate of the burden of the proposed collection of

information, including the validity of the methodology and assumptions

used; (3) ways to enhance the quality, utility, and clarity of the

information to be collected; and (4) ways to minimize the burden of the

collection of information on respondents, including through the use of

automated collection techniques, when appropriate, and other forms of

information technology.

Title: 180-Day Generic Drug Exclusivity for Abbreviated New Drug

Applications.

Description: FDA regulations at Sec. 314.107 govern 180-day generic

drug exclusivity under the act. This proposed rule would revise

Sec. 314.107 to clarify and modify eligibility requirements for ANDA

applicants seeking 180-day marketing exclusivity for a generic drug

product. This new approach is necessary because of recent court

decisions rejecting the previous requirement that an ANDA applicant

successfully defend against a patent infringement lawsuit before it is

eligible for exclusivity.

Under proposed Sec. 314.107(e), if the first ANDA applicant for

which 180-day exclusivity has sarted wants to waive its exclusivity in

favor of a subsequent ANDA applicant, it must so notify the agency in

writing before the agency would approve the subsequent application. The

first applicant would be required to notify the agency as to which

subsequent applicant(s) it wants to waive the exclusivity in favor of

and the effective date(s) of the waiver.

The only new information collection requirement in this proposed

rule is in Sec. 314.107(e). The industry burden for all other

information collection requirements under these regulations has been

estimated by FDA and approved under OMB Control Numbers 0910-0001

(approval expires November 30, 2001) and 0910-0305 (approval expires

May 31, 2001).

Description of Respondents: Business or other for-profit

organizations.

In 1997, 431 generic drug product approvals (including different

product strengths) were distributed among 96 pharmaceutical companies.

The 64 applications that became first generic approvals for a specific

brand name drug, however, were submitted by only 30 firms. Moreover,

the 14 first generic approvals that included a paragraph IV

certification were submitted by only 5 firms. Based on this data

concerning the number of first generic approvals with paragraph IV

certifications for a particular drug product received by the agency in

1997, FDA estimates that approximately 14 waivers may be submitted

annually under proposed Sec. 314.70(e). FDA estimates that

approximately five applicants may submit such waivers and that it will

take approximately 2 hours to prepare and submit each waiver to FDA.

The following table indicates the estimated annual reporting burden for

the preparation of notices of exclusivity waivers.

Table 1.--Estimated Annual Reporting Burden1

----------------------------------------------------------------------------------------------------------------

Number of

21 CFR Section Number of Responses Per Total Annual Hours per Total Hours

Respondents Respondent Responses Response

----------------------------------------------------------------------------------------------------------------

314.107(e) 5 approx. 3 14 2 28

Total 28

----------------------------------------------------------------------------------------------------------------

\1\There are no capital costs associated with this collection of information.

In compliance with section 3507(d) of the Paperwork Reduction Act

of 1995 (44 U.S.C. 3507(d)), the agency has submitted a copy of this

proposed rule to OMB for its review and approval of these information

collections. Interested persons are requested to send comments

regarding this information collection, including suggestions for

reducing this burden, to the Office of Information and Regulatory

Affairs (address above). Submit written comments on the information

collection by September 7, 1999.

VII. Request for Comments

Interested persons may, on or before November 4, 1999, submit to

the Dockets Management Branch (address above) written comments on this

proposal. 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 office above between 9 a.m. and 4

p.m., Monday through Friday.

[[Page 42885]]

VIII. Proposed Effective Date

FDA proposes that any final rule that may issue based on this

proposal become effective 30 days from publication of the final rule.

IX. References

The following references are on display in the Dockets Management

Branch (address above) and may be seen by interested persons between 9

a.m. and 4 p.m., Monday through Friday.

1. Congressional Budget Office, How Increased Competition from

Generic Drugs Has Affected Prices and Returns in the Pharmaceutical

Industry, 1998. Also available on the Congressional Budget Office

web site at: ``http://www.cbo.gov''.

2. FDA, Internal FDA Study, 1999.

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, it is

proposed that 21 CFR part 314 be amended as follows:

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

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

follows:

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

379e.

2. In Sec. 314.107, redesignate paragraph (e) as paragraph (f) and

paragraph (f) as paragraph (h); revise paragraphs (a), (b) introductory

text, (b)(3)(i), (c), (d) and newly redesignated paragraphs (f) and

(h); and add new paragraphs (e) and (g) to read as follows:

Sec. 314.107 Effective date of approval of a 505(b)(2) application or

abbreviated new drug application under section 505(j) of the act.

(a) General. (1) A drug product may be introduced or delivered for

introduction into interstate commerce when approval of the application

or abbreviated application for the drug product becomes effective.

Except as provided in this section, approval of an application or

abbreviated application for a drug product becomes effective on the

date FDA issues an approval letter under Sec. 314.105 for the

application or abbreviated application.

(2) Definitions. The following definitions of terms apply to this

section:

180-day exclusivity means the 180-day period, under section

505(j)(5)(B)(iv) of the act, during which the first applicant is

protected from competition of subsequent applicants.

ANDA means an abbreviated application, as defined under Sec. 314.3.

Decision of a court refers to a final court decision finding the

patent to be invalid, unenforceable, or not infringed, resulting from

patent litigation brought against the first applicant or against any

subsequent applicant. This includes a final court decision in a

declaratory judgment action finding the patent to be invalid,

unenforceable, or not infringed.

Final court decision means a final judgment from which no appeal

can be or has been taken.

First applicant means the applicant submitting the first

substantially complete abbreviated new drug application (ANDA) for a

particular listed drug that contains ``a paragraph IV

certification''\1\ to any patent for the listed drug submitted to FDA

and published under section 505(b) of the act. The first applicant

includes all applicants filing substantially complete ANDA's with

paragraph IV certifications for the same drug product on the first day

that the agency receives applications with a paragraph IV certification

for the drug product.

---------------------------------------------------------------------------

\1\ As defined elsewhere in this section.

---------------------------------------------------------------------------

NDA means a new drug application approved under section 505(c) of

the act.

NDA holder means the applicant that owns an approved NDA, or its

representative or exclusive licensee. An NDA holder may also be the

exclusive licensee or representative of the patent owner.

Obtains a favorable court decision means either a first applicant

receives a final court decision in its patent litigation that the

patent is invalid, unenforceable, or not infringed; or in litigation of

a subsequent applicant involving the same patent there is a final court

decision that the patent is invalid, unenforceable, or not infringed.

Paragraph IV certification means a certification under section

505(j)(2)(A)(vii) of the act that a relevant patent is invalid,

unenforceable, or will not be infringed.

Patent owner means the owner of the patent which is the subject of

the paragraph IV certification, or the patent owner's representative or

exclusive licensee.

Subsequent applicant means any applicant filing a subsequent ANDA.

Subsequent ANDA means an ANDA that contains a paragraph IV

certification and refers to the same listed drug as the first

substantially complete ANDA containing a paragraph IV certification.

Substantially complete means an ANDA that contains information

required by section 505(j)(2)(A) of the act and Secs. 314.50 and

314.94, including the results of any required bioequivalence studies

or, if applicable, a request for a waiver of such studies, and a

complete statistical analysis of required bioequivalence studies

demonstrating that the drug product proposed in the ANDA meets the

appropriate bioequivalence standard.

A triggering event occurs when, during a triggering period, a first

applicant commercially markets its drug product or obtains a favorable

court decision.

Triggering period means a 180-day time period, usually beginning on

the date of the tentative approval of a subsequent ANDA, during which

180-day exclusivity may begin for the first applicant if a triggering

event occurs.

(b) Effect of patent on the listed drug. If approval of an ANDA

submitted under section 505(j) of the act or of a 505(b)(2) application

is granted, that approval will become effective in accordance with the

following:

* * * * *

(3) Disposition of patent litigation. (i)(A) Except as provided

in paragraphs (b)(3)(ii), (b)(3)(iii), and (b)(3)(iv) of this section,

if the applicant certifies under Sec. 314.50(i) or Sec. 314.94(a)(12)

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

infringed, and the patent owner or NDA holder brings suit for patent

infringement within 45 days of receipt by the patent owner or NDA

holder of the notice of certification from the applicant under

Sec. 314.52 or Sec. 314.95, approval may be made effective 30 months

after the date of the receipt of the notice of certification by the

patent owner or NDA holder unless the court has extended or reduced the

period because of a failure of either the plaintiff or defendant to

cooperate reasonably in expediting the action; or

(B) If the patented drug product qualifies for 5 years of

exclusive marketing under section Sec. 314.108(b)(2) and the patent

owner or NDA holder brings suit for patent infringement during the 1-

year period beginning 4 years after the date the patented drug was

approved and within 45 days of receipt by the patent owner or NDA

holder of the notice of certification, the approval may be made

effective at the expiration of 7 1/2 years from the date of approval of

the application for the patented drug product.

* * * * *

(c) Exclusivity and triggering period for ANDAs. (1) Approval of

a subsequent ANDA will be made effective no sooner than 180 days from

[[Page 42886]]

whichever of the following dates occurs first:

(i) The date the first applicant first commences commercial

marketing of its drug product; or

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

invalid, unenforceable, or not infringed.

(2) For purposes of paragraph (c)(1) of this section, FDA will

delay the effective date of approval of a subsequent ANDA for up to 180

days from the date described in paragraph (c)(1) of this section only

when the first applicant is eligible for 180-day exclusivity. FDA will

not award 180-day exclusivity to any applicant if the first applicant

is no longer eligible to receive 180-day exclusivity.

(3) If the patent owner or NDA holder sues the first applicant

within 45 days of receipt of the first applicant's notice of paragraph

IV certification under Sec. 314.95, and the first applicant loses the

patent litigation, the first applicant must amend its certification in

accordance with Sec. 314.94(a)(12)(viii)(A) within 10 working days of

the court decision finding the patent infringed. The first applicant's

ANDA then no longer contains a paragraph IV certification and is not

eligible for 180-day exclusivity. Immediately after such an amendment,

FDA may approve eligible subsequent ANDA's.

(4) The first applicant must notify FDA of the date it commences

commercial marketing of its drug product. Commercial marketing

commences with the first date of introduction or delivery for

introduction into interstate commerce outside the control of the

manufacturer of a drug product, except for investigational use under

part 312 of this chapter, but does not include transfer of the drug

product for reasons other than sale within the control of the

manufacturer or application holder. If the first applicant does not

notify FDA within 10 working days of the date on which it began

commercial marketing of its drug product, FDA may regard the effective

date of approval as the date of the commencement of first commercial

marketing.

(5)(i) If, before the 180-day exclusivity period for the first

applicant has started, a subsequent applicant receives a tentative

approval letter for its drug product stating that the first applicant's

eligibility for 180-day exclusivity is the only obstacle to final

approval of the subsequent ANDA, the first applicant will receive the

180-day exclusivity for which it is eligible if any of the following

circumstances apply:

(A) The first applicant has received approval for its drug

product, and, within 180 days from the date of the subsequent

applicant's tentative approval, a triggering event occurs.

(B) The first applicant has not received approval for its drug

product; and the first applicant was not sued by the patent owner or

NDA holder for patent infringement; and, within 180 days from the date

of the subsequent applicant's tentative approval, a triggering event

occurs.

(C) The first applicant's drug product is not yet eligible for

approval because the first applicant was sued by the patent owner or

NDA holder for patent infringement; and, under paragraph (b)(3)(i)(A)

of this section, 30 months have not elapsed since the date the patent

owner or NDA holder received notice of the patent certification; and,

within 180 days after the expiration of the 30 months described in

paragraph (b)(3)(i)(A) of this section, a triggering event occurs.

(D) The first applicant's drug product is not yet eligible for

approval because the first applicant was sued by the patent owner or

NDA holder for patent infringement and a court granted a preliminary

injunction, as described in paragraph (b)(3)(iv) of this section,

prohibiting the first applicant from engaging in the commercial

manufacture or sale of the drug product; and, within 180 days from the

date the injunction expires, a triggering event occurs.

(E) The first applicant does not have a full approval for its drug

product; and the first applicant was sued by the patent owner or NDA

holder for patent infringement and is eligible for approval under

paragraph (b)(3) of this section; and, within 180 days from the date of

the subsequent applicant's tentative approval, a triggering event

occurs.

(ii) If the first applicant does not begin its period of 180-day

exclusivity by the end of the appropriate 180-day period (triggering

period) described in paragraphs (c)(5)(i)(A) through (c)(5)(i)(E) of

this section, FDA will approve otherwise eligible ANDA's for the drug

product.

(d) Delay due to Sec. 314.108 exclusivity. The agency will delay

the effective date of the approval of an ANDA or a 505(b)(2)

application if delay is required by the exclusivity provisions in

Sec. 314.108. When the effective date of an application is delayed

under both this section and Sec. 314.108, the effective date will be

the later of the two dates specified under this section and

Sec. 314.108.

(e) Waivers of exclusivity by abbreviated new drug applicants. For

purposes of paragraph (c)(1) of this section, a first applicant for

which the 180-day exclusivity has started with a triggering event may

waive its exclusivity to permit FDA to approve one or more subsequent

ANDA's during the 180-day exclusivity period. FDA may approve a

subsequent applicant's ANDA only after the first applicant notifies the

agency in writing that it is waiving its 180-day exclusivity with

respect to a particular subsequent applicant(s) or application(s), and

identifies the effective date(s) of the waiver.

(f) Court actions. (1) For purposes of establishing the effective

date of approval based on a court judgment, the following dates will be

deemed to be the date of the final court decision on the patent issues:

(i) If the district court enters a decision that the patent is

invalid, unenforceable, or not infringed, and the decision is not

appealed, the date on which the right to appeal lapses;

(ii) If the district court enters a decision that the patent is

invalid, unenforceable, or not infringed, and the decision is appealed,

the date of the first decision or order by a higher court holding or

affirming the decision of the district court that the patent is

invalid, unenforceable, or not infringed;

(iii) If the district court enters a decision that the patent is

infringed, and the decision is appealed, the date on which the district

court enters a judgment that the patent is invalid, unenforceable, or

not infringed under a mandate issued by a court of appeals; and

(iv) The date of a settlement order or consent decree signed by a

Federal judge that enters final judgment and includes a finding that

the patent is invalid, unenforceable, or not infringed.

(2) The applicant must submit a copy of the entry of the order or

judgment to the Office of Generic Drugs (HFD-600) or to the appropriate

division in the Office of Review Management (HFD-20) within 10 working

days of a final judgment. The patent owner and NDA holder may also

submit this information.

(g) Effect of dismissal of litigation on 30-month stay. If the

patent litigation between the ANDA applicant and the patent owner or

NDA holder described in paragraph (b)(3)(A) of this section is

dismissed without a court decision on the merits of the patent claim,

whether the dismissal is with or without prejudice, the agency may

immediately approve the ANDA that was the subject of the litigation, if

it is otherwise eligible for approval.

(h) Computation of 45-day time clock. (1) The 45-day clock

described in paragraph (b)(3) of this section begins

[[Page 42887]]

on the day after the date of receipt of the applicant's notice of

certification by the patent owner or NDA holder, whichever date is

later. When the 45th day falls on Saturday, Sunday, or a Federal

holiday, the 45th day will be the next day that is not a Saturday,

Sunday, or Federal holiday.

(2) The ANDA applicant or 505(b)(2) applicant must notify FDA

immediately in writing of the filing of any legal action for patent

infringement filed within 45 days of receipt of the notice of

certification. If FDA is not so notified by the ANDA or 505(b)(2)

applicant, or by the patent owner or NDA holder, before the expiration

of the 45-day time period or the completion of the agency's review of

the application, whichever occurs later, approval of the ANDA or the

505(b)(2) application will be made effective immediately upon

expiration of the 45 days or completion of the agency's review and

approval of the application, whichever date is later. The notification

to FDA of the legal action must include the information in paragraphs

(h)(2)(i) through (h)(2)(iv) of this section and be submitted according

to paragraph (h)(2)(v) of this section as follows:

(i) The ANDA or 505(b)(2) application number;

(ii) The name of the applicant;

(iii) The established name of the drug product or, if no

established name exists, the name(s) of the active ingredient(s), the

drug product's strength, and the dosage form;

(iv) A certification that an action for patent infringement,

identified by number, has been filed in an appropriate court on a

specified date; and

(v) An ANDA applicant must notify FDA's Office of Generic Drugs

(HFD-600). A 505(b)(2) applicant must notify the appropriate review

division in the Center for Drug Evaluation and Research or the Office

of Generic Drugs if it is reviewing the application. A patent owner or

NDA holder may also notify FDA of the filing of any legal action for

patent infringement.

(3) If the patent owner or NDA holder waives its opportunity to

file a legal action for patent infringement within 45 days of a receipt

of the notice of certification and the patent owner or NDA holder

submits to FDA a valid waiver before the 45 days elapse, approval of

the ANDA or the 505(b)(2) application will be made effective upon

completion of the agency's review and approval of the application. FDA

will only accept a waiver in the following form:

(Name of patent owner or NDA holder) has received notice from

(name of applicant) under (section 505(b)(3) or (j)(2)(B) of the

act) and does not intend to file an action for patent infringement

against (name of applicant) concerning the drug (name of drug)

before (date on which 45 days elapses). (Name of patent owner or NDA

holder) waives the opportunity provided by (section 505(c)(3)(C) or

(j)(B)(2)(iii) of the act) and does not object to FDA's approval of

(name of applicant)'s (505(b)(2) or ANDA) for (name of drug) with an

immediate effective date on or after the date of this letter.

Dated: July 29, 1999.

Margaret M. Dotzel,

Acting Associate Commissioner for Policy.

[FR Doc. 99-20353 Filed 8-5-99; 8:45 am]

BILLING CODE 4160-01-F