Kurt R. Karst provides regulatory counsel to pharmaceutical manufacturers on Hatch-Waxman patent and exclusivity, drug development, pediatric testing, and orphan drugs. He helps clients develop strategies for product lifecycle management, obtaining approval, managing post-marketing issues, and defining periods of exclusivity. As the co-founder and primary author of Hyman, Phelps & McNamara’s FDA Law Blog, Mr. Karst often leads the response to new rules and regulations, sharing his interpretation with the broader legal community.
CP: Kurt, thank you for taking the time to talk with us. There have been a number of proposals for changes to the 180-day exclusivity grant for generic drug paragraph IV challenges. Can you tell us a little about the proposals and how likely you think it is that the changes will be implemented?
Kurt: There have been two proposals, one has been introduced in Congress. It has a bit of a long history and goes back to 2009. The one that has received all the attention though is one in the Trump Administration's budget proposal. It would alter the 180-day exclusivity regime in certain circumstances.
We have not yet seen any legislative language. It is simply in the budget proposal as well as in the FDA's budget proposal. It appears to be aimed at a situation where a second filer is being blocked by a first filer's 180-day exclusivity because of the deficiencies or at least alleged deficiencies in the first filer's application that are preventing the first filer from marketing the product.
The situation came up a few years ago in the context of Ranbaxy Laboratories and involved several big brand-name drugs. A lot of litigation ensued and the FDA and the Trump Administration appear to be trying to avoid a similar situation. The devil will be in the details in terms of how the legislation gets written. The concern is, depending on how it gets written, is that it could have a broader effect than intended and could further cheapen the value of 180-day exclusivity.
CP: As you have written, in the attempt to improve the situation it could actually makes things worse and discourage paragraph IV certifications. Is that accurate?
Kurt: That is the concern. In particular because in the proposal, there is a provision that states 180-day exclusivity would automatically be triggered by the tentative approval of a subsequent filed paragraph IV ANDA. And nobody knows when that could happen. There is no notification provided to the first applicant, no chance to remedy pending issues in the first filer's application. The exclusivity period would simply be triggered by the tentative approval of the subsequent applicant. And that is concerning to a lot of folks in the industry.
CP: Are there concerns that there are instances where the first filer has some incentive to delay making changes to a filing or remedying a filing because of some agreement with the patent holder to delay marketing the drug? Is that part of what the government is trying to address?
Kurt: I don't believe that this has anything to do with patent settlement agreements. Not at all. There are already various forfeiture provisions in the law that could address the situation where a first applicant isn't triggering its 180-day exclusivity. So, to a large extent, I think the law already deals with that type of situation.
CP: With respect to paragraph IV certifications are there certain types of patents that are more likely to be challenged?
Kurt: I should preface this with: I am not a patent attorney. But I will say that there are three types of patents that can be submitted to the FDA for Orange Book listing: Drug product patents, drug substance patents, and method of use patents. Typically drug substance patents, the actual active ingredient, tend to be more difficult to beat than the other two types of patents. Though quite honestly, it all depends on how strong the patent is as to whether or not it is going to fall or stand.
CP: It looks like some of the patents I have seen successfully challenged are method of use patents. What makes one of those types of patents a strong or weak patent?
Kurt: I think without getting into patent law, I couldn't address those types of issues. But there are certainly situations where companies will try to avoid method of use patents by trying to omit or carve out from their labeling uses protected by those patents and they simply get approval for other uses of the drug that may not be patent protected.
CP: What is the typical range of expense to mount a paragraph IV certification and patent challenge?
Kurt: That can vary depending on the number of patents involved and the types of patents involved. Also the number of filers makes a difference because when there are a number of filers, litigation may be consolidated. So to some extent there may be some cost sharing. But you typically are talking about several million dollars to litigate these patent infringement cases.
Of course cost is also a function of how long the litigation goes on. Is it going to go past the district court up to the federal circuit? Are the companies going to settle and therefore terminate litigation? So there are lots of variables that go into determining costs.
CP: And I guess it is the same on the other side – that there is a typical range of expense that companies have to plan to spend to defend against a paragraph IV challenge?
Kurt: The same would go for the brand side as well.
CP: In recent years there have been cases where the prevailing party has been awarded attorney's fees. Have these decisions had any effect on paragraph IV certifications?
Kurt: Not that I'm aware of. I don't know it is a determining factor in a company's decision to submit an ANDA with a paragraph IV certification. Those determinations are based on the number of other potential filers, the profits that can be made, and obviously the ability to manufacture and produce that product.
CP: Is there any way that an investor or someone interested in the pharmaceutical industry for whatever reason can follow one of these cases and make a determination of how well or how poorly it is going?
Kurt: It is possible. There is a service called PACER which is essentially the website for following cases and obtaining documents and filings in litigation in federal court. So one could sign up for an account there (there is a cost) and follow litigation. Some of these cases have many twists and turns and it terms of the strengths of the arguments being made, you really have to talk with a patent attorney to understand the strength of the arguments.
CP: With respect to Citizen Petitions, is there anything non-obvious that an investor or the general public may learn from reading those. Obviously if a company is seeking to file an ANDA on a particular NDA then that company wishes to bring a generic to the market. But is there anything that wouldn't be obvious that could be learned from reading petitions?
Kurt: Perhaps. Certainly there are some petitions that are extremely detailed and provide a lot of good information. There can certainly be something gleaned at times, maybe a company's plans, maybe determining if the strength of an argument by a petitioner might have some repercussions industry wide or therapeutic category wide or with respect to specific companies. It is kind of like looking over SEC filings you find certain information there and petitions are somewhat similar in that respect.
CP: I guess there is not any particular class or category of information that the public might look for in petitions?
Kurt: Petitions can cover a wide range of topics. One might be potential competitors, maybe what their specific plans are, it will vary.
CP: I know that over the years that have been a number of changes to Hatch-Waxman. Is there anything on the horizon that you think Congress may try to address or the you think should be addressed?
Kurt: Well we have potential for 180-day exclusivity legislation as we discussed. And once you crack open the door to Hatch-Waxman you risk a flood of possible changes that could happen to the statute. So that is something that could happen. We will have to see if that will be the case.
But certainly the potential is there to address some lingering issues whether on the brand or the generic side.
CP: Any particular lingering issues that may be addressed?
Kurt: I know there has been talk on the brand side of the fence that the period of five years of exclusivity may not be sufficient to compensate them. So there has been, for several years now, this thought that maybe that period should be increased. We will have to see if that Pandora’s box will be opened or not.
CP: That is all of the questions that we have. Thank you again for taking the time to talk with us.
