Intricacies of the 30-Month Stay in Pharmaceutical Patent Cases

Pharmaceutical patent litigations between branded and generic drug companies often take place before the generic drug is marketed. Under the framework set forth in the Hatch-Waxman Amendments,¹ a generic drug company can challenge patents covering the branded drug by filing a paragraph IV certification with its drug application and providing notice to the branded drug company and patent owner. A suit by the patent owner within 45 days of receiving the notice triggers a 30-month stay of regulatory approval, during which the U.S. Food and Drug Administration (FDA) cannot approve the generic drug.

This 30-month stay is not as straightforward as the name implies and often implicates complicated questions. For example, is the 30-month stay always for a period of 30 months? Is there a 30-month stay if the generic drug company does not give notice of its paragraph IV certification to the branded drug company and all patent owners? Can a branded drug company obtain multiple 30-month stays against the generic drug company? What happens if the 30-month stay expires before the patent litigation is over? What happens to the 30-month stay if the generic drug company also challenges the patent at the U.S. Patent and Trademark Office (USPTO)? The answers to these and related questions are critical, and companies should strategically consider them when preparing for and participating in pharmaceutical patent litigations.

Which Patent Certifications Can Lead to Stays?

Branded drugs are listed in the FDA’s Orange Book, along with patents covering the drugs and methods of using them.² When a company files a 505(b)(2) application or abbreviated new drug application (ANDA) to market a generic version of a branded drug, the company generally must certify that each listed patent (a) has expired (a paragraph II certification), (b) will expire before the generic drug is marketed (a paragraph III certification), or (c) is invalid, unenforceable, or will not be infringed by the generic drug (a paragraph IV certification).³ The company should file a paragraph I certification if the Orange Book does not list a patent that the company believes claims the drug or method of using it.⁴

Only a paragraph IV certification gives rise to a regulatory stay of approval, as the 30-month stay is intended to give the branded and generic drug companies time to resolve their underlying patent dispute.⁵ When a generic drug company files a paragraph IV certification, it must notify the new drug application (NDA) holder for the branded drug and all patent owners.⁶ If the patent owner sues the generic drug company for patent infringement within 45 days of that notice, the 30-month stay is triggered.⁷ If no suit is initiated within the 45-day period, there is no 30-month stay preventing the FDA from approving the generic drug application.

What Are the Requirements for Filing Suit to Trigger the Stay?

The 30-month stay is triggered when a patent infringement action is initiated and the patent information was submitted to the FDA before the generic drug application was submitted.⁸ Generally, the patent owner initiates a patent infringement suit by filing a complaint in a U.S. district court.⁹ While a complaint with minor pleading defects may trigger the 30-month stay as long as it adequately alleges infringement,¹⁰ patent owners should take steps to ensure that their complaints are accurate and complete.

Who Needs to Receive a Paragraph IV Notice and When?

The generic drug company must provide notice of its paragraph IV certification to the NDA holder and each patent owner within 20 days of the FDA's acknowledgment that the application has been filed.¹¹ The notice must state that the company submitted a generic drug application with a paragraph IV certification and provide a detailed statement of the factual and legal bases for the generic drug company’s opinion that the patent is invalid or not infringed.¹² The 45- day period for filing suit does not start until the last of these entities receives this notice.¹³ Once triggered, the 30-month stay also starts from the date that the last of these entities received notice.¹⁴ Notice sent before the FDA indicates that an application has been filed is ineffective, so generic drug companies cannot use an earlier “notice” to obtain an earlier start to the 30-month stay.¹⁵

In 2016, the FDA declined to finalize a proposed administrative consequence for generic drug companies that failed to provide timely notice of their paragraph IV certifications.¹⁶ The FDA wrote that such consequences were unnecessary because generic drug applicants are motivated to provide timely notice to avoid triggering a 30-month stay from the date of an untimely notice.¹⁷ Patent owners may nonetheless consider initiating a patent infringement suit based on a paragraph IV certification even if the generic drug company does not provide adequate or timely notice of its paragraph IV certification to the NDA holder and all patent owners.

In addition, the U.S. Court of Appeals for the Federal Circuit has held that whether a generic drug company’s paragraph IV notice adequately provides the bases for its invalidity or noninfringement opinion cannot be decided in an infringement suit.¹⁸ The court reasoned that, “‘[i]n a case in which neither the statute nor the legislative history reveals a congressional intent to create a private right of action for the benefit of the plaintiff,' the inquiry is at an end.”¹⁹

Can Multiple Stays Be Triggered?

Listing an additional patent in the Orange Book after the generic drug application is filed does not give rise to a second 30-month stay even if a generic drug company files a paragraph IV certification as to that patent.²⁰ In a 2004 guidance document, the FDA hypothesized that a generic drug application with a paragraph IV certification as to one patent and a paragraph III certification as to another could give rise to two 30-month stays if the paragraph III certification was later converted to a paragraph IV certification.²¹ The FDA has since withdrawn that guidance document, so it is unclear whether the FDA continues to believe that such circumstances would give rise to multiple stays.²²

In at least two instances since 2004, however, the FDA has granted a second 30-month stay based on the generic drug company’s changing its proposed generic drug and then filing a corresponding paragraph IV certification. In 2010, the FDA granted Genzyme Corporation a second 30-month stay when Cobrek Pharmaceuticals, Inc. reformulated its generic drug and filed a paragraph IV certification with regard to the reformulated product.²³ In 2011, the FDA similarly granted a second 30-month stay when Minrad, Inc. changed its container closure system for its proposed generic drug and filed a corresponding paragraph IV certification.²⁴ In 2016, the FDA pointed to these decisions and expressly recognized that a 30-month stay of approval may result from initiation of a patent infringement action in response to a second paragraph IV notice that is provided with an amendment to a generic drug application.²⁵

What if the Stay Expires While the Litigation Is Pending?

If the 30-month stay expires while the patent litigation is pending, the generic drug company can either wait to launch until patent issues are resolved in the litigation, or it can launch at risk as soon as it receives FDA approval. The latter option carries the risk that the generic drug company will amass damages if the patent owner prevails in the litigation. For example, despite ongoing litigation in AstraZeneca AB v. Apotex Corp., the generic drug company launched its generic drug at risk and was ordered to pay the patent owner 50% of the generic drug profits once the patent was found valid and infringed.²⁶ Patent owners facing an expiring 30-month stay while their litigation is pending should consider whether it would be appropriate to move to extend the stay or seek an injunction.

Will Reissue of the Patent During Litigation Affect the Stay?

The FDA considers reissued patents as separate and distinct from the original patent for purposes of administering patent certification requirements and 30-month stays.²⁷ The FDA will thus treat a reissued patent no differently than an original patent, which likely means that the reissued patent must be listed before the generic drug application is filed for a 30-month stay to be triggered.²⁸

Can Stays Endure for Longer Than 30 Months?

While the stay of approval generally lasts 30 months from the last required paragraph IV notice, there are instances where it may be longer or shorter in duration. For example, if the branded drug received status as a new chemical entity and qualified for the related 5 years of exclusive marketing, the 30-month stay is extended to allow 7½ years to elapse from the date that the NDA for the branded drug was approved.²⁹ The court presiding over the patent litigation may also extend the period of the stay beyond 30 months if the generic drug company fails “to reasonably cooperate in expediting the action.”³⁰ For example, district courts have extended the 30-month stay based on the generic drug company's making untimely changes to its proposed drug or missing the deadline for filing expert reports on invalidity.³¹

Can Stays Be Shorter Than 30 Months?

On the other hand, a court may shorten the 30-month stay if the patent owner fails “to reasonably cooperate in expediting the action.”³² The 30-month stay may also be cut short if the district court decides that the patent is invalid or not infringed, including if the court makes a substantive determination that there is no cause of action for patent infringement,³³ or if the district court dismisses the case without a finding of infringement.³⁴ In at least one case, though, the FDA decided to reinstate a 30-month stay where the district court dismissed the case for lack of personal jurisdiction and the dismissal was later vacated.³⁵ The FDA reasoned that reinstating the stay was consistent with Congress’s intent for the stay to give time for the parties to resolve their underlying patent dispute.³⁶

According to a 2010 decision by the U.S. District Court for the District of Columbia, the 30-month stay will not be reinstated if the district court’s decision of invalidity or noninfringement is vacated on appeal.³⁷ However, at that point, the patent would be in effect, the court would order that the effective date of any approval of the infringing drug be no earlier than the patent’s expiration date, and the NDA holder or patent owner could seek an injunction to prevent the generic drug company from entering the market.³⁸ If the FDA already approved the generic drug application, the court order would alter the effective date of the generic application, thereby converting a final approval to a tentative approval.³⁹

If the district court instead decides that the patent is valid and infringed, but that decision is vacated or reversed on appeal, the 30-month stay will be terminated based on that appellate decision.⁴⁰ The 30-month stay may also be shortened if the patent owner agrees that the generic drug application may be approved earlier or if the parties agree during settlement that the patent is invalid, unenforceable, or not infringed.⁴¹

How Do Challenges at the USPTO Affect Stays?

Unlike a decision by a district court, a decision by the USPTO during post-grant proceedings that patent claims are unpatentable does not terminate the 30-month stay. However, a challenge by a generic drug company at the USPTO may render the 30-month stay ineffective if the district court stays the litigation pending completion of the USPTO proceedings without also tolling the 30-month stay.

At least two courts that have stayed a case upon a motion by the generic drug company (and not based on post-grant proceedings before the USPTO) also tolled the 30-month stay. In Abbott Laboratories v. Matrix Laboratories, the U.S. District Court for the Northern District of Illinois granted the generic drug company’s motion to stay the case for five years and to toll the 30-month stay during that time.⁴² The court “conclude[d] that the combination of its inherent authority to exercise control over cases pending on its docket and the statutory authority to adjust the thirty-month period to take into account the particular circumstances of ‘the particular infringement action’—here, that Defendants have recognized that they may not launch their generic products [for five years]—weigh in favor of entering a stay.”⁴³

In Novartis Corp. v. Dr. Reddy’s Laboratories, Ltd., the U.S. District Court for the Southern District of New York granted the generic drug company’s motion to stay the case pending a decision by the FDA on a different drug application that could moot the action.⁴⁴ The patent owner argued that a litigation stay would be “prejudicial to its right to seek a court determination of its patent rights within the thirty-month period,” unless the 30-month stay were also extended.⁴⁵ The court granted the litigation stay and tolled the 30-month stay, reasoning that the generic drug company did not object to tolling the 30-month stay and that the court had discretion to extend the stay since the generic drug company’s request for a litigation stay meant that it was not reasonably cooperating in expediting the action.⁴⁶

However, there are also at least two more recent cases where courts declined to toll the 30-month stay when staying the litigation. In Eli Lilly & Co. v. Accord Healthcare Inc., the U.S. District Court for the Southern District of Indiana granted the generic drug company’s motion to stay the case pending resolution of an inter partes review (IPR) at the USPTO.⁴⁷ The court reasoned that the stay would allow the IPR to streamline the case and narrow the issues for trial, avoid the court reaching a decision inconsistent with a decision by the USPTO, and reduce the burdens on the parties and the court.⁴⁸ The court rejected the patent owner’s request to concurrently extend or toll the 30-month stay, writing that “[t]here is no law that justifies this request.”⁴⁹ The court continued, “The only basis that courts have relied on to extend the regulatory stay is the violation of the statutory requirement…that a party has failed to reasonably cooperate in expediting the litigation. There is no basis to make such a finding in this case.”⁵⁰

In Alcon Laboratories, Inc. v. Akorn, Inc., the U.S. District Court for the District of New Jersey stayed the case pending resolution of an IPR.⁵¹ The court reasoned that the stay would simplify issues in question and that fact discovery was not yet complete.⁵² In response to the patent owner’s contention that the court should also extend or toll the 30-month stay, the court wrote that it was “without the authority to do so” because neither party failed to reasonably cooperate with expediting the proceedings.⁵³ According to the court, “[t]o the extent that prejudice may arise if this stay results in the matter continuing beyond the 30-month stay, Plaintiffs will have the opportunity to seek an injunction to prevent an at-risk launch.”⁵⁴ The difference between the outcomes in the Abbott and Novartis cases versus the Lilly and Alcon cases could be that the litigation stays in the first two were unrelated to post-grant proceedings, but it is also possible that they differed in outcome because they differed in fact.

Conclusion

Congress created the 30-month stay to allow time for branded and generic drug companies to resolve patent disputes before the generic drug enters the market. More than 30 years later, the stay continues to involve complex intricacies that often depend on the facts of a case. Companies should strategically consider these complexities and how they may affect the companies’ objectives when preparing for and participating in pharmaceutical patent litigations.

References

1. Drug Price Competition and Patent Term Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585, (1984) (codified at 21 U.S.C. § 301 et seq.) (Hatch-Waxman Amendments).
2. 21 U.S.C. § 355(b)(1); FDA, Orange Book: Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book), available at https://www.accessdata.fda.gov/ scripts/cder/ob/index.cfm (last accessed Feb. 21, 2018).
3. 21 U.S.C. §§ 355(b)(2)(A)(ii)-(iv), (j)(2)(A)(vii)(II)-(IV).
4. Id. §§ 355(b)(2)(A)(i), (j)(2)(A)(vii)(I).
5. Ben Venue Labs., Inc. v. Novartis Pharm. Corp., 146 F. Supp. 2d 572, 579 (D.N.J. 2001) (“[T]he purpose of the 30-month stay is…to create an adequate window of time during which to litigate the question of whether a generic will infringe the patented product, without actually having to introduce the generic product to the market.’’ (citing 130 Cong. Rec. H9118 (daily ed. Sept. 6, 1984) (statement of Rep. Waxman); 130 Cong. Rec. S10504 (daily ed. Aug. 10, 1984) (statement of Sen. Hatch))).
6. Id. 21 U.S.C. §§ 355(b)(3)(C), (j)(2)(B)(iii).
7. Id. 21 U.S.C. §§ 355(c)(3)(C), (j)(5)(B)(iii).
8. Id. 21 U.S.C. §§ 355(c)(3)(C), (j)(5)(B)(iii).
9. 28 U.S.C. § 1338(a) (“The district courts shall have original jurisdiction of any civil action arising under any Act of Congress relating to patents….”); 35 U.S.C. § 271(e)(2) (“It shall be an act of infringement to submit…an [ANDA or 505(b)(2) application] for a drug claimed in a patent or the use of which is claimed in a patent….”).
10. Endo Pharm. Inc. v. Mylan Techs. Inc., No. 11-220-GMS, 2013 WL 936452, at *5 (D. Del. Mar. 11, 2013) (“While Endo’s Complaint suffered from certain pleading defects, there is no dispute that it was brought within the forty-five day timeframe, and, despite its pleading defect, the court believes it represents ‘an action…brought for infringement of the patent that is the subject of the certification’ within the meaning of statutory language.” (quoting 21 U.S.C. § 355(j)(5)(B) (iii))).
11. 21 U.S.C. §§ 355(b)(3)(B), (b)(3)(C), (j)(2)(B)(ii), (j)(2)(B)(iii).
12. Id. §§ 355(b)(3)(D), (j)(2)(B)(iv).
13. Id. §§ 355(c)(3)(C), (j)(5)(B)(iii).
14. Id. §§ 355(c)(3)(C), (j)(5)(B)(iii).
15. 21 C.F.R. §§ 314.52(b)(1), 314.95(b)(1); see also Pharmco P.R., Inc. v. Mutual Pharm. Co., 552 F. Supp. 2d 500, 508 (E.D. Pa. 2008) (“Since [the] ANDA...had not been accepted as received when the notice was sent, the litigation process was prematurely sparked at a time when the danger existed that the ANDA was in fact incomplete.”).
16. FDA, Abbreviated New Drug Applications and 505(b)(2) Applications, 81 Fed. Reg. 69,580, 69,623 (Oct. 6, 2016) (codified at 21 C.F.R. pts. 314, 320) (2016 ANDA and 505(b)(2) Rule).
17. Id.
18. Minn. Mining & Mfg. Co. v. Barr Labs., Inc., 289 F.3d 775, 782 (Fed. Cir. 2002).
19. Id. at 783 (citation omitted)
20. 21 U.S.C. §§ 355(c)(3)(C), (j)(5)(B)(iii).
21. FDA, Draft Guidance for Industry on Listed Drugs, 30-Month Stays, and Approval of ANDAs and 505(b)(2) Applications Under Hatch-Waxman, as Amended by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Questions and Answers , at 8-9 (2004), available at https://www.fda.gov/OHRMS/DOCKETS/98fr/2004n-0087-gdl0001.pdf (last accessed Feb. 21, 2018).
22. FDA, Retrospective Review of Draft Guidance Documents Issued Before 2010; Withdrawal of Guidances, 78 Fed. Reg. 48,175, 48,176 (Aug. 7, 2013), available at https://www.gpo.gov/fdsys/ pkg/FR-2013-08-07/pdf/2013-19051.pdf (last accessed Feb. 21, 2018).
23. Letter from Janet Woodcock, M.D., Director, CDER, to Gerald F. Masoudi regarding Docket No. FDA2010-P-0223 (Oct. 19, 2010), available at https://www.regulations.gov/document?D=FDA2010-P-0223-0010 (last accessed Feb. 21, 2018).
24. Letter from Janet Woodcock, M.D., Director, CDER, to Christina M. Markus regarding Docket No. FDA-2011-P-0127 (June 7, 2011), available at https://www.regulations.gov/document?D=FDA2011-P-0127-0007 (last accessed Feb. 21, 2018).
25. 2016 ANDA and 505(b)(2) Rule at 69,616.
26. AstraZeneca AB v. Apotex Corp., 782 F.3d 1324, 1333-37 (Fed. Cir. 2015).
27. 2016 ANDA and 505(b)(2) Rule at 69,601.
28. Id.
29. 21 U.S.C. §§ 355(c)(3)(E)(ii), (j)(5)(F)(ii).
30. Id. §§ 355(c)(3)(C), (j)(5)(B)(iii).
31. Eli Lilly & Co. v. Teva Pharm. USA, Inc., 557 F.3d 1346 (Fed. Cir. 2009) (holding that the U.S. District Court for the Southern District of Indiana did not abuse its discretion in extending the 30-month stay by 4 months based on the generic drug company’s changing its proposed generic drug late in the litigation and providing samples of the changed drug after the close of discovery); Eli Lilly & Co. v. Zenith Goldline Pharm., Inc., No. IP99-0038-C-H/G, 2001 WL 238090 (S.D. Ind. Mar. 8, 2001) (extending 30-month stay until entry of final judgment based on generic drug company’s missing the deadline for producing expert witness reports on the central issue of invalidity).
32. 21 U.S.C. §§ 355(c)(3)(C), (j)(5)(B)(iii); see also Dey, L.P. v. Ivax Pharm., Inc., 233 F.R.D. 567 (C.D. Cal. 2005) (shortening the 30-month stay based on Dey’s repeatedly changing its position on the key issue of inventorship and failing to produce documents related to a study comparing the invention to alleged prior art).
33. 21 U.S.C. §§ 355(c)(3)(C)(i), (j)(5)(B)(iii)(I).
34. 21 C.F.R. § 314.107(b)(3)(viii).
35. FDA Center for Drug Evaluation and Research, Other Review(s) for NDA 208090, 103-109, at 108 (Oct. 30, 2015), available at https://www.accessdata.fda.gov/drugsatfda_docs/ nda/2016/208090orig1s000otherr.pdf (last accessed Feb. 21, 2018).
36. Id. at 108-09.
37. Sanofi-Aventis v. FDA, 725 F. Supp. 2d 92, 100-01 (D.D.C. 2010) (deciding that a New Jersey district court's decision terminated the 30-month stay even though it was vacated by the U.S. Court of Appeals for the Federal Circuit).
38. 35 U.S.C. § 271(e)(4)(A)-(B) (“For an act of infringement [based on the filing of an ANDA or 505(b)(2) application,] the court shall order the effective date of any approval of the drug… involved in the infringement to be a date which is not earlier than the date of the expiration of the patent which has been infringed, [and] injunctive relief may be granted against an infringer to prevent the commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of an approved drug….”).
39. In re Omeprazole Patent Litig., 536 F.3d 1361, 1367-68 (Fed. Cir. 2008).
40. 21 U.S.C. §§ 355(c)(3)(C)(ii), (j)(5)(B)(iii)(II).
41. Id. §§ 355(c)(3)(C)(i), (c)(3)(C)(ii), (j)(5)(B)(iii)(I), (j)(5)(B)(iii)(II).
42. Abbott Labs. v. Matrix Labs., Inc., No. 09-cv-1586, 2009 WL 3719214, at *1 (N.D. Ill. Nov. 5, 2009).
43. Id. at *3.
44. Novartis Corp. v. Dr. Reddy’s Labs., Ltd., No. 04 Civ.0757 SAS, 2004 WL 2368007, at *1 (S.D.N.Y. Oct. 21, 2004).
45. Id. at *3.
46. Id.
47. Eli Lilly & Co. v. Accord Healthcare, Inc., No. 1:14-cv-00389-SEB-TAB, 2015 WL 8675158, at *1 (S.D. Ind. Dec. 11, 2015).
48. Id. at *1-2
49. Id. at *2.
50. Id.
51. Alcon Labs., Inc. v. Akorn, Inc., No. 15-cv-285 (RMB/JS), 2016 WL 99201, at *1 (D.N.J. Jan. 8, 2016).
52. Id. at *1-2.
53. Id. at *2
54. Id. (citation omitted).

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