Life sciences patent and FDA law had its fair share of events in 2022. We highlight several interesting areas in 2022 and then profile some upcoming issues in 2023. Some of the issues are related to drug policy, some about FDA’s operations, and some about patents.
Supreme Court Updates
The US Supreme Court was silent last year on patent law issues. The American Axle case was expected to be heard. It concerned Section 101’s patentable subject matter. After the cert petition was filed, the Court asked the Solicitor General to pipe in. The SG suggested the Court grant the petition, but the Court denied the petition. Many practitioners bemoan the lack of clarity on Section 101 patentable subject matter and the courts perceived inability to provide that clarity. We address solutions below.
Patent litigator watchers also expected the Supreme Court to pipe in on a procedural (versus substantive) issue in the Personalweb case relating to the Kessler Doctrine. The Federal Circuit expanded the Kessler Doctrine to apply to withdrawn lawsuits that didn’t go the full distance on the merits. Normally the Kessler Doctrine (about claim preclusion) bars lawsuits against buyers when a seller has already been found to be non-infringing. After a failed suit against the seller, the patentee can’t go after the seller’s customers. So even on a patent procedural law, the Supreme Court ducked the issue.
The Supreme Court will not be completely silent in 2023. Many branded pharma companies filed cert petitions, mostly related to 35 U.S.C. 112(a) on written description and enablement. We discussed the written description cases in a previous article HERE. https://ipfdalaw.com/billion-dollar-verdicts-wiped-out-due-to-patent-laws-written-description/
Late last year the Supreme Court granted cert in the Amgen v. Sanofi case on enablement. The last time the Supreme Court discussed enablement was about 70 years ago. The Supreme Court will address whether enablement requires that the specification enable the “full scope” of the claimed invention. This is relevant for may pharma-biotech companies because many patents are very broadly claimed but only have limited disclosures. Will the Court worry about a potential monopolization of large technological fields based on limited disclosure or will the Court attempt to re-define what is a full scope or narrow scope of a claim?
A cert petition was filed in the Novartis v. HEC case on fingolimod. The petition raised two issues, the first on procedure (the propriety of judge switching) and the second on the substance relating to the written description of negative limitations. Recall that the dosing regimen patent has gone through some interesting turn of events. The procedural issue for the Supreme Court is whether the substitution of a judge during the panel rehearing was improper. This is a weak argument. I had said before, that there aren’t soap operas in patent law, because nothing we do is that sexy but if there was one, maybe this would be a good candidate for the ‘Patent Law Soap Opera Digest.’ The negative limitation issue is about how much written description is needed to support a negative limitation.
Another pending cert petition in 2023 relates to the GSK v. Teva so-called “skinny label” or Section viii case. Many pharma companies are watching this case to understand how Section viii and skinny labels are impacted. Practitioners in this area query whether this is really a Section viii carve out case for which the FDA statutes are squarely at issue, or whether this case is really about post-approval marketing activities that in the aggregate supported patent infringement of the method of use claim.
A few COVID related issues were in play in 2022 and will remain into 2023. On a public policy basis, many countries wanted to invoke a TRIPS waiver to circumvent patent rights in local areas so that those countries could develop vaccines. The waiver allowed the country to bypass myriad patent rights with just one license, granted compulsory licensing with any prior discussions, to bypass any domestic data exclusivity, and force patentees to accept nominal payments. A challenge with the TRIPS waiver is that many of the requesting countries just don’t have the resources to domestically develop, manufacture, and supply vaccines. A lot of pressure was placed on the US government to support waivers and the public relations aspect of it.
Vaccine makers saved millions of people with vaccine R&D, manufacture, and approvals. Typical pharma-biotech companies have patents on the technology and these companies had to make a strategic decision whether to enforce patents, balancing the public relations aspect, and whether the affected governments will march in to block enforcement. We did not see much patent litigation during the heart of COVID, but we saw the beginnings of it at the end. In 2022, we saw the launch of patent litigations based on the mRNA technology. We are seeing lawsuits related to the core mRNA technology, methods of manufacture or methods of use, etc. An interesting issue in upcoming patent litigation will be whether an implied license exists. At the beginning of COVID, various manufactures pledged not to enforce patents, but now that COVID is over, whether the pledges can be construed as an implied license, akin to intervening rights. Can the patentees now recover for past damages or only going forward? Would a court enforce patents through injunctive relief too? Cases to watch include the Moderna, Arbutus, Pfizer, and Alynlam.
Drugs – Pricing and Reforms
Drug pricing is a lightning rod, as if all healthcare costs are solely related to drug pricing. Given the bright red target on drug pricing, several government initiatives are underway in 2023. Congress passed the Inflation Reduction Act, which touches drug pricing. The IRA allows the government to negotiate drug pricing for federal programs. It remains to be seen how aggressive CMS will be in negotiating drug prices and how that presumably reduced sales will impact future R&D spend. Brand companies rely on sales to drive investment into the pipeline of new drugs. Generic companies rely on new branded drugs to drive new generic drug sales. For generic companies, it remains to be seen if the pricing negotiations affect them.
Congress also asked the Patent Office and the FDA to collaborate. Because the Patent Office issues patents and the FDA lists patents against Orange Book entries, it is suggested that the two agencies collaborate to ensure that certain patents are not issued in the first place, that certain patents are not listed in the Orange Book because they don’t actually comply with statutory listing requirements, and patent term extensions are properly granted. There is no framework for how the talks should go and what result should happen. The PTO recently has its first “listening session.”
Many States are also in the drug pricing and regulation business. Many States require drug companies to report prices, price increases, and explanations for price increases. These States require companies to compile massive spreadsheets with information about drug pricing. A pernicious aspect of the State drug reporting laws is that many times manufacturers don’t actually sell products in those States. For example, generic drug companies sell generic products to national wholesalers. The generic drug company doesn’t have any control where the wholesaler then resells the products. Yet somehow if that product ends up in the State, the drug manufacturer itself becomes subject to price reporting. But who’s price is being reported, the company’s price to the wholesaler or the retail price in the local pharmacy? And these States have vicious penalties, usually a flat rate amount per day that the company fails to report. The penalties can be staggering and maybe completely disproportionate to the product sales in that state.
We are closely watching the Supreme Court’s pig farming case to see if the Court strikes down California’s Prop. 12 law on California’s ability to regulate out-of-state pork farming practices. The basic issues in state drug pricing and the pork cases are the same: in the name of State public health policing, how far can a state go to regulate completely out of state conduct? Since 2020, we helped several companies caught in State drug “failure to report” to either eliminate or reduce the penalties owed.
Drugs – Drug Approvals
We will continue to see FDA issue Product Specific Guidance discussing how ANDA applicants should design studies, if any. The FDA, as usual, will suffer bipolar disorder by stating that PSG’s must be followed when dealing with ANDA applicants but when challenged, FDA will say oppositely that PSG’s are not mandatory and do not have force of law. FDA will do about-faces even when the FDA was squarely presented with the question to follow. We represented Nostrum Pharmaceuticals against the FDA in the DC Circuit Court of Appeals. Essentially, Nostrum sought advice from the FDA about what studies and study design regarding theophylline. FDA said that typical 2-way biostudies were needed and provided the relevant Guidances to follow. So, Nostrum did. After filing the ANDA supplement with 2-way study data, FDA ambushed Nostrum saying that 4-way studies were needed instead. It seems that at the same time Nostrum was asking one part of the FDA about the study design for theophylline and getting one answer (here the 2-way study design), years earlier another part of the same FDA had secretly convened a working group to determine if theophylline should be a 2-way versus 4-way study design. How can the FDA have one group working on the exact question yet another group says the opposite? How is that fair? We challenged the arbitrary action of the FDA under the APA. We argued that FDA and Nostrum agreed to a study design under Section 355(j)(3)(C), which forbids FDA from changing BE standards once agreement is reached. Unfortunately, the DC Circuit didn’t touch the APA issue and dismissed the appeal under jurisdictional grounds. It held that a CRL was not a final agency action sufficient to appeal. Sadly this means that the FDA can continue to pummel applicants with PSG’s to follow but when convenient demand something else saying that the about-face is OK because the PSG is not in fact binding. It’s important that applicants ensure that the Administrative Record is fully developed so that the APA challenge will succeed.
In practice, ANDA applicants should review PSG’s but if the applicant feels there are different ways to conduct studies, the applicant should meet with the FDA ahead of time and get a written commitment (if you can). See 21 C.F.R. §320.21(b), 320.24(b)(6) (the catch-all provision). Applicants should entitle the correspondence and agreement explicitly with the Section 355(j)(3)(C) notice to box FDA in so the FDA doesn’t defend that the Applicant needed to follow some uncertain or unstated formalities. We recognize that applicants may be troubled challenging the FDA when the FDA operates outside its statutes, its regulations, or worse arbitrarily. But applicants should recognize also that sometimes challenging the FDA is necessary. And creating a case law precedent that either curtails the current unbridled agency action or demands the agency follow statutes and regulations is not a bad thing either.
This 2023 year may demonstrate how FDA evaluates therapeutic equivalence (TE) determinations. In July 2022 the FDA issued a draft guidance on how TE ratings could occur. This may allow certain ANDA’s or even 505(b)(2)’s to obtain TE ratings against the RLD. Another draft guidance in April 2022 discussed certain changes to ophthalmic and other parenteral formulations. This may allow ANDA applicants to potentially bypass some patents, yet still be Q1/Q2 or TE to the RLD. We wrote about that guidance HERE: https://ipfdalaw.com/ophthalmic-parenteral-otic-drug-development-does-fdas-draft-guidance-provide-a-vehicle-to-avoid-patent-problems/
Orphan Drug Exclusivity
In Sept. 2021 the 11th Circuit Court of Appeals rejected FDA’s interpretation of Orphan Drug Exclusivity. The case was Catalyst Pharma v. FDA, 14F.4th 1299 (11th Cir. 2021). Many of us wondered how the FDA was going to apply ODE in view of the 11th Circuit’s rejection of the FDA prior interpretation. Briefly, FDA approved Catalyst’s NDA for the treatment of LEMS in adults and awarded ODE to Catalyst for treatment of LEMS in adults. FDA later approved the Jacobus NDA for treatment of LEMS in children, but not in adults. In approving the Jacobus NDA for LEMS in children, the FDA interpreted the ODE statute to mean that ODE only protected the NDA approved indication or use of the designated drug, here treatment of LEMS in adults. And since the Jacobus NDA was treatment of LEMS in children, the approved indications were not the same. See, 21 CFR 316.3(b)(12); 316.31(a)-(b). Catalyst sued arguing that the ODE protectable disease was the treatment of LEMS as a disease condition as a whole, irrespective of the use in adults or children. It argued that the statute controlled. See, 21 USC 360cc(a). On appeal, the 11th Circuit held that the phrase “same disease or condition” in Section 360cc(a) was plain and unambiguous. Therefore, FDA lost and chose not to further appeal the statutory construction.
But we wondered if FDA was going to review all its past ODE related approvals and re-decide if the approval should continue or be revoked. Our wonder is over on what FDA will do but we are left wondering WHY it is doing so. FDA issued a strange statement recently, to be published in the Federal Register. FDA took the 11th Circuit decision literally and revoked the Jacobus NDA approval, but says that in every other case, FDA will continue to apply its “old” and rejected interpretation. In our view, FDA probably didn’t want to do the needed work and review the ODE affected approvals and is likely inviting affected parties to sue the FDA. The FDA likely won’t defend each lawsuit as they come and that would invite a default judgment, thereby revocations of an approval will be because of a Court order, versus FDA decision. After all, affected parties can read the 11th Circuit decision, decide if it affects them, and act. That may indeed be less work for the FDA to handle than affirmatively reviewing each case. And the 11th Circuit plainly said that the statute was clear and unambiguous so we wonder why the FDA says it’s not. In 2023 expect to see lawsuits against the FDA on the ODE interpretation.
Patents and Patent Policy
As mentioned above, Section 101 patentable subject matter is in dire need of clarification. But the question remains whether it’s for the Supreme Court, the Federal Circuit, or Congress to do so. So far the Supreme Court has ducked the issue. The Federal Circuit is the target of criticism but that’s not fair because the Supreme Court has not provided clarity and it’s not the Federal Circuit’s job to provide that clarity because the Court only reviews existing cases on appeal. Senators Tillis and Coons are co-sponsoring the Patent Eligibility Restoration Act S4734, which should be passed. In life sciences, the Section 101 issues are usually raised in the context of diagnostic versus method of treatment patent claims. Clarity is needed for both branded companies to know what kind of patent protection they can get; and for competitors to know if the patents are invalid.
PTAB proceedings continue to add interesting new developments. In the Cal Tech v. Broadcom case, the Federal Circuit addressed the estoppel effect attached to IPR proceedings. The CAFC decision was originally issued and then corrected in an erratum. In the original decision, the Court said that the IPR estoppel effect applied to all claims and grounds, not in the IPR but which reasonably could have been included. Recognizing that there was confusion in that language, the Court issued the erratum and switched the wording to “all grounds” and eliminated “all claims.” Further, the Court changed other the language stating, “In a regime in which the Board must institute on all grounds asserted…,” the language “grounds asserted” was again switched to “challenged claims.” The Court clarified that IPR estoppel applies to the challenged claims and to all grounds that reasonably could have been asserted. The practical effect of the erratum is clear. This erratum, while clarifying the scope of IPR, again highlights that potential IPR petitioners must exercise caution before filing an IPR petition. They must be mindful when choosing the specific claims to challenge and determine the grounds to invalidate the challenged claims before filing the IPR. Otherwise, they will be unable to raise invalidity arguments against the claims challenged at the PTAB in subsequent or parallel district court litigation. Accused patent infringers may find greater strategic value in asserting invalidity arguments against certain claims at the district court; if that is the case, such claims should not be included in the IPR petition.
The Court also reviewed whether “applicant admitted prior art” can form the prior art basis for an IPR. The Court in Apple v. Qualcomm nuanced the rule. The Court explained that the applicant admitted prior art itself is not prior art within the meaning of the PTAB rules. The underlying prior art is otherwise prior art (if it qualifies as prior art under PTAB rules). But the admissions could provide factual bases as to what the state of the art is/was.
While many patent law decisions were made in 2022, most commentators talked about the main patent law issues on invalidity or infringement. But two Federal Circuit decisions talked about damage calculation methodology. In Apple Inc. v. Wi-LAN Inc., 25 F.4th 960 (Fed. Cir. 2022) and California Inst. of Tech. v. Broadcom Ltd., 25 F.4th 976 (Fed. Cir. 2022), the Court vacated verdicts of $85 million and $1.1 billion, respectively, and remanded both cases for new trials on damages. In the Wi-LAN case (which has been ongoing since 2014) the Court reversed the damages calculation because of the expert witness methodology on using other licenses to arrive at the current licensing royalty rates. The Court said that the expert didn’t account for other licenses that included non-asserted patents and apportioning royalty on the patents in suit. In the Broadcom case, the expert had different damages theories at the chip level and another at the device level. The Court reversed saying that the different theories were not substantiated. While these are electronics cases, not life sciences, we remind our readers that drug pharma litigation is not always brand versus generic Paragraph IV litigation, but often is brand versus brand patent litigation for which damages are sought.
How can we help you?
We help clients in patent litigation, appeals, counseling, opinions of counsel, and PTAB proceedings. When your current firm needs help or the client needs a change of counsel, we can help. We also work with applicants before the FDA to ensure that the FDA fulfills its statutory mandates and does not operate outside the statutes or regulations.
About Upadhye Tang LLP
Upadhye Tang LLP is an IP and FDA boutique firm concentrating on the pharmaceutical, life sciences, and medical device spaces. We help clients with navigating the legal landscape by helping on counseling and litigation. Clients call us to help move drug and device approvals along and to represent them in IP and commercial litigation. Call Shashank Upadhye, 312-327-3326, or by email: firstname.lastname@example.org, for more information.
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