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February 24, 2009


Generic drug maker Teva has been working to cut into Eli Lilly's profits on its patented drug, Evista®, which treats postmenopausal osteoporosis, a disease exacerbated by poor lifestyle choices. Lilly sued. As is statutory, the judge slapped a stay, delaying Teva's FDA approval, pending trial. Teva fiddled with its formulation, requiring further discovery, so the judge extended the stay. Teva appealed the extension as an abuse of discretion by the judge.

Eli Lilly v. Teva Pharmaceuticals (CAFC 2009-1071)

For those not familiar with the intricacies of weaning drugs off patents, Judge Radar penned a fine primer. In short, a generic maker files for a quickie approval, an ANDA, piggy-backing on the patent holder's testing  for the same drug. To do so, the generic maker  must certify something qualifying it to make the drug in light of patent protection. The hasty pudding approach is Paragraph IV certification, where the generic maker swears that the patent(s) are not infringed, invalid, or otherwise unenforceable.

This case arises under the 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. §§ 355, 360cc (2003); 35 U.S.C. §§ 156 (2002), 271 (2003) (collectively, the "Hatch-Waxman Act"). Plaintiff-Appellee Eli Lilly & Company ("Lilly") sued Teva for patent infringement under 35 U.S.C. § 1 et. seq. and 28 U.S.C. §§ 2201-02.

The Hatch-Waxman Act strikes a balance between the sometimes-competing policy interests of inducing pioneering research and development of new drugs and enabling production of low-cost, generic copies of those drugs. A manufacturer that seeks to market a generic drug may submit an ANDA for approval by the United States Food and Drug Administration ("FDA"), rather than submitting a full New Drug Application ("NDA") showing the safety and efficacy of the generic drug. Thus, the generic manufacturer may rely on safety and efficacy studies of the pioneer manufacturer upon showing the generic drug's bioequivalence with the previously approved drug product. 21 U.S.C. § 355(j)(2)(A) (2003).

The Hatch-Waxman Act also requires a pioneer drug manufacturer to notify the FDA of all patents that "claim[ ] the drug for which the [NDA] applicant submitted the application." 21 U.S.C. §§ 355(b)(1) & (c)(2) (2003). The FDA lists such patents in its Approved Drug Products With Therapeutic Equivalence Evaluations, known as the "Orange Book". Under 35 U.S.C. § 271(e)(2), a generic manufacturer infringes a patent by filing an ANDA to obtain approval for a generic drug product claimed by a valid and unexpired patent.

As part of the approval process, an ANDA applicant must make a certification addressing each patent listed in the Orange Book that claims the drug. 21 U.S.C. § 355(j)(2)(A)(vii). The Hatch-Waxman Act specifies the certification alternatives, (I) no such patent information has been submitted to the FDA; (II) the patent has expired; (III) the patent is set to expire on a certain date; or (IV) the patent is invalid or will not be infringed by the manufacture, use, or sale of the new generic drug for which the ANDA is submitted. 21 U.S.C. § 355(j)(2)(A)(vii)(I-IV) (2003). These are commonly referred to as paragraph I, II, III, and IV certifications.

When an ANDA certifies under paragraph IV, the applicant must provide the patentee a detailed basis for its belief that the patent is not infringed, that it is invalid, or that it is unenforceable. 21 U.S.C. § 355(j)(2)(B) (2003). The patentee then has forty-five days to sue the ANDA applicant for patent infringement. 21 U.S.C. § 355(j)(5)(B)(iii). If the patentee does not sue, the FDA may proceed to approve the ANDA. If the patentee does file suit, the FDA may not approve the ANDA until expiration of the patent, resolution of the suit, or thirty months after the patentee's receipt of notice, whichever is earlier. Id. The court entertaining the suit has discretion under the statute to order a shorter or longer stay if "either party to the action fail[s] to reasonably cooperate in expediting the action." Id.

In this case, Lilly holds the approved NDA for raloxifene hydrochloride ("raloxifene") tablets. This product is marketed under the brand name Evista® for the treatment and prevention of postmenopausal osteoporosis. Lilly lists twelve patents that claim Evista® in the Orange Book.

Teva filed an ANDA with the FDA in early 2006, seeking approval to manufacture and market generic raloxifene. As part of its ANDA, Teva filed paragraph IV certifications. On May 16, 2006, Teva notified Lilly of its paragraph IV certifications.

Whereupon Lilly sued Teva.

Teva amended its ANDA for a different formulation, changing particle size. Teva then provided batches after the discovery deadline, so Lilly moved for the judge to extend the stay, set by statute, which she did.

Lilly also moved for a temporary restraining order (TRO) and preliminary injunction, to stop Teva from launching its version after the statutory 30-month stay expired. Trial Judge Sarah Evans Baker denied the TRO and preliminary injunction as moot in light of the stay extension.

The issue on appeal was abuse of discretion by the trial judge.

"A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990).

2-1, the CAFC panel affirmed the judge's action as "within its discretion in this area."

In making this determination, the record contained sufficient evidence, not based on clearly erroneous factual findings, upon which the district court rationally based its decision. The court relied on the evidence in the record that Teva altered its proposed generic raloxifene hydrochloride tablets late in the litigation. Specifically, Teva changed the particle size manufacturing specification of its active pharmaceutical ingredient and the method of measuring the particle size. Id. at *2. Teva then delivered its changed samples to Lilly past the court's August 18, 2008, discovery deadline.

In making these findings, the district court acted within its discretion in this area. 21 U.S.C. § 355(j)(5)(B)(iii) grants district courts the discretion to adjust the statutory thirty-month stay of ANDAs if "either party to the action failed to reasonably cooperate in expediting the action." Trial courts, thus, may shorten or extend the thirty-month statutory period based on the parties' uncooperative discovery practices before the court. Allergan, Inc. v. Alcon Labs., Inc., 324 F.3d 1322, 1337 n.5 (Fed. Cir. 2003) (Schall, J., concurring).

Judge Prost disagreed with Rader and Michel, wanting to tie the judge's gavel because "the stay is explicitly tied to a statutory standard."

The district court never made any finding related to the statutory standard, i.e., whether Teva reasonably cooperated in expediting the action.

But Prost is more hard-assed than that.

It is clear from the record, in my view, that the district court never related Teva's conduct to the statutory standard. But even if the court had made a conclusory statement regarding Teva's cooperation, that alone would not suffice. In Gechter v. Davidson, we clarified that although "we review decisions, not opinions," a district court opinion "must contain sufficient findings and reasoning to permit meaningful appellate scrutiny." 116 F.3d 1454, 1458 (Fed. Cir. 1997).

Thus, regardless of whether we review the district court's order de novo or for an abuse of discretion, the order should be vacated.

For a court that regularly takes liberties interpreting the law, Prost strikes a pose as a religious constructionist to statute.

Appropriate findings by the district court are especially important where, as here, Congress set forth a clear statutory timeframe and provided one narrow exception to the general rule.

In short, this court has not previously provided any guidance to the district courts as to what qualifies as a "fail[ure] to reasonably cooperate in expediting the action." To affirm in this case is to effectively eliminate the statutorily required finding, and to prematurely terminate the development of appropriate standards governing modification under 21 U.S.C. § 355(j)(5)(B)(iii).

Posted by Patent Hawk at February 24, 2009 11:13 PM | Case Law


"which treats postmenopausal osteoporosis, a disease exacerbated by poor lifestyle choices."

Nice jab, Hawk. By "poor lifestyle choices" do you mean declining estrogen receptors and estrogen levels, or reduced cholecalciferol synthesis?

Posted by: Babel Boy at February 25, 2009 10:48 AM

hope teva wins the hearings in future and if Eli company only did this because of money and not the best interst of public ..Then Teva even sales more than ever !! dan

Posted by: daniel at February 25, 2009 2:57 PM

Babel Boy,

A reductionist approach (“declining estrogen receptors and estrogen levels, or reduced cholecalciferol synthesis”) is precisely the wrong viewpoint. One needs to look at health and disease holistically.

Advancing age naturally tends to increased fragility. But researchers have already identified “modifiable factors” that increase the occurrence and severity of osteoporosis: lack of exercise (or overdoing exercise: marathon runners are prone to osteoporosis), chronic drinking (alcohol and/or soda pop), smoking, and poor nutrition (most notably, lack of calcium in the diet).

There tends to be genetic predispositions to many diseases, but the way people pollute themselves throughout their lives, and neglect their bodily health through comfort eating and lack of exercise, is a certain trigger to old-age diseases, osteoporosis among them.

Posted by: Patent Hawk at February 25, 2009 8:01 PM