FDA's Latest ANDA Guidance: Patent Carve Outs Become a Guessing Game


This article appeared in Pharmaceutical Compliance Monitor, June 26, 2015 and is reproduced with permission.

In May 2015, the FDA released its Guidance (Revision 1) on Refuse-to-Receive Standards for Abbreviated New Drug Application (ANDA) submissions, in response to the 2012 Generic Drug User Fee Amendments (GDUFA) that required the FDA to "enhance" these rejection criteria. A refuse-to-receive decision indicates that the ANDA is not sufficiently complete to permit a substantive review, and results in the forfeiture of the GDUFA fee and potential 180 day exclusivity rights if the applicant is eligible for "first to file" status. Under the new Guidance, a major deficiency will trigger a refuse-to-receive decision, as will nine or fewer uncorrected minor deficiencies. In the case of nine or fewer minor deficiencies, the applicant will have seven days to correct the application and, if not remedied within that period of time, the FDA will issue a refuse-to-receive notice, although it may waive this requirement for good cause shown.

In an Appendix to the Guidance, the FDA says that an incorrect section viii carve out will be considered a minor deficiency. The FDA will reject a section viii statement if it determines that the Orange Book use code has not been properly carved out of the generic label. The Appendix goes on to say that the FDA will not tell the ANDA applicant what specifically is the problem with the carve out nor will it offer suggestions on how to fix it.

While the FDA has always taken precautions to stay clear of Orange Book patent disputes, this new refuse-to-receive policy borders on the nonsensical. Under this Guidance, the section viii carve out process can become a guessing game where the ANDA applicant is required to divine what the FDA thinks is the infirmity in the proposed use code carve out and, if it guesses wrong within the seven day window, it receives a refuse-to-receive notice that is exceedingly costly. One has to wonder whether patent-phobia has finally pushed the FDA off the deep end.

Use Codes Play Important Role

Under Hatch-Waxman, the section viii review process was designed to function as a surrogate for determining whether a generic drug might induce infringement of a method patent based on the brand label. When the brand lists a use patent in the Orange Book it is required to draft a use code (240 characters maximum) that describes the language on the brand label that is protected by the patent. Because the FDA operates only in a ministerial capacity when it comes to patent information submitted for an Orange Book listing, it is required to accept the brand's use code at face value. In theory, this means that if the use code language is removed from the label the generic drug will not induce infringement of the brand patent. The only regulatory limitation is that the omitted use code cannot render the "skinny labeled" generic drug less safe or effective than the brand for all remaining conditions of use. If it does, the FDA cannot approve the use code carve out and the generic must certify as to the patent.

For simple use codes — e.g. "method of treating hives" — the section viii process is straightforward and the FDA's role is perfunctory. The generic label would be scrubbed of all references to treating hives and the brand's patent rights would be protected. But for use codes that are complex, the section viii review process becomes more difficult, particularly where protected information appears throughout the label.

Here, unpacking a complex use code from an even more complex label is not so easy for the FDA to administer. In some cases, a section viii carve out will involve the removal of use code information from multiple sections of the label including clinical studies, adverse drug reactions, warnings, medication guides, etc. As a result, the FDA may approve a section viii carve out that appears to be complete only to discover that the generic drug induces infringement of the brand patent, nonetheless. Because the ANDA applicant is not required to notify the brand manufacturer or patent holder as to the section viii carve out, there is no opportunity to litigate the labeling issue prior to launch; moreover, this can also put the generic manufacturer unwittingly at risk of infringement.

This is essentially what happened in AstraZeneca v. Apotex, 633 F.3d 1042 (Fed. Cir. 2010), involving the drug Pulmicort, where the generic tried to carve out label language suggesting once a day dosing but was rebuffed by the FDA, which thought that the carve out went beyond the use code. The generic drug was launched without notice, the brand manufacturer sued and the court enjoined generic marketing based on a construction of the label that the court said "would inevitably lead patients to infringe" the brand patent.

Still a Guessing Game

Thus, the FDA's new Guidance seems to exacerbate an already challenging task by silencing the agency staff and forcing generics to effectively guess what should be taken off the brand label. To confuse matters further, this comes on the heels of the carve out decision involving the sedation drug Precedex, where the FDA held that a "minor overlap" between a use code and a generic label is permissible in some circumstances. Cf. Bayer Schering Pharma v. Lupin. Ltd., 676 F.3d 1316 (Fed. Cir. 2012). In the Bayer Schering case, however, the Federal Circuit said that overlap between a use code and generic label precluded the use of a section viii statement. Beyond the facts in the Precedex example, the FDA offers no guidance as to the kinds of overlaps considered to be minor and those that are not—forcing ANDA applicants to guess again as to what the FDA may be thinking.

And the use code issues do not stop just here. Earlier this year, the FDA released for public comment its proposed rules implementing the 2003 Medicare Modernization Amendments (i.e. better late than never), which, among other things, proposes a new policy to address patent use code disputes. Under existing law, a use code may be questioned by an ANDA applicant and the FDA will ask the brand for clarification but ultimately it is the brand's call. See 21 CFR 314.94(a)(12)(vii). If the ANDA applicant wants to challenge a use code appearing in the Orange Book it can do so by filing a counterclaim in a Paragraph IV Hatch-Waxman litigation pursuant to the statutory procedure added by Congress in 2003 specifically to address use code abuses. However, under the FDA's proposed regulations, if an NDA holder is asked to clarify the scope of an Orange Book patent and it fails to respond to the FDA's request, the ANDA (or 505(b)(2)) application can be reviewed by the FDA "with deference" to the applicant's interpretation of the scope of the brand patent (i.e. the use code).

Where do matters stand for now? An ANDA applicant submitting a section viii statement is required to guess correctly on how to carve out a patent use code or risk the loss of GDUFA fees and possible 180 exclusivity rights. But a minor overlap of the generic label and use code may still be allowed by the FDA under circumstances that are not altogether clear. In the future, if a brand is non-responsive to a request for use code clarification, the FDA may accept the ANDA applicant's carve out notwithstanding the use code listed in the Orange Book.