EXAMINING THE 271(E)(1) SAFE HARBOR OF THE HATCH-WAXMAN ACT: A LEGISLATIVE PROPOSAL GRANTING MANDATORY POST- MARKETING EXCEPTIONS

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1 EXAMINING THE 271(E)(1) SAFE HARBOR OF THE HATCH-WAXMAN ACT: A LEGISLATIVE PROPOSAL GRANTING MANDATORY POST- MARKETING EXCEPTIONS INTRODUCTION I. HISTORY OF THE HATCH-WAXMAN ACT AND THE ENACTMENT OF THE SAFE HARBOR EXCEPTION OF 35 U.S.C 271(E)(1) A. The Pharmaceutical Drug Development Process B. Background of the 35 U.S.C. 271(e)(1) Research Use Exception The Hatch-Waxman Act: Provisions for Expediting Generic Entry The Hatch-Waxman Safe Harbor: 35 U.S.C. 271(e)(1) The Legislative History of the Hatch-Waxman Act II. AN ANALYSIS OF LITIGATION SURROUNDING OTHERWISE INFRINGING ACTIVITY ENCOMPASSED BY THE 35 U.S.C. 271(E)(1) SAFE HARBOR A. Before the 271(e)(1) Safe Harbor: The Narrow View of the Research Use Exception B. Moving Toward a Broader Reading of the 271(e)(1) Safe Harbor C. The Federal Circuit s Narrow Interpretation of 271(e)(1) D. Returning to a Broad Interpretation of 271(e)(1): Granting Post-Marketing Uses III. A LEGISLATIVE PROPOSAL: GRANTING LIMITED POST- MARKETING ACTIVITY UNDER THE SAFE HARBOR UMBRELLA OF 35 U.S.C. 271 (E)(1) A. The Federal Circuit s Contribution: Protection for Mandatory Post-Marketing Activity The Classen Dissent and Majority: Both Post- Marketing and Pre-Marketing Activity Merit Permission is hereby granted for noncommercial reproduction of this Note in whole or in part for education or research purposes, including the making of multiple copies for classroom use, subject only to the condition that the name of the author, a complete citation, and this copyright notice and grant of permission be included in all copies. 651

2 652 CARDOZO ARTS & ENTERTAINMENT [Vol. 32:651 Inclusion C. The Addition of Momenta: Direct Inclusion of Post- Marketing Activities; Examples of Permissible and Impermissible Post-Marketing Uses CONCLUSION INTRODUCTION Almost eighty percent of the pharmaceutical prescriptions in the United States are for generic drugs, which cost approximately eighty to eighty-five percent less than their branded equivalents. 1 Enhancing consumer access to these affordable generic medicines is therefore a key congressional objective, as the Hatch-Waxman Act demonstrates U.S.C. 271(e)(1) of the Act established a safe harbor to promote expedited generic drug development by granting generic entrants an exception to patent infringement when their experimental uses of patented drugs relate closely to regulatory approval. 3 To maintain the continued FDA approval of their drugs, generic drug companies often conduct comparative post-marketing studies involving the patented drug equivalents. 4 Thus, express protection of costly FDA-mandated studies to monitor generic drugs after they are sold to the public will aid the congressional goals of incentivizing generic drug development. The Supreme Court has continued to expand the safe harbor scope, aligning with these aims. 5 In the most recent rulings on the 271(e)(1) safe harbor for post-marketing uses, the closely-divided Federal Circuit issued contradictory opinions in Classen Immunotherapies, Inc. v. Biogen Idec and Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc. 6 Classen denied safe harbor to post-marketing 1 Facts About Generic Drugs, U.S. FOOD & DRUG ADMIN., resourcesforyou/consumers/buyingusingmedicinesafely/understandinggenericdrugs/ucm h tm (last updated Sept. 9, 2012). 2 See H.R. REP. NO , at (1984), reprinted in 1984 U.S.C.C.A.N. 2647, , 1984 WL (stating that the purpose of the Hatch-Waxman Act is to enhance the availability of low cost generic drugs through the abbreviated generic drug approval process and to limit the regulatory delay for companies that require federal pre-marketing approval) U.S.C. 271(e)(1) (2012). 4 See Momenta Pharmaceuticals v. Amphastar Pharmaceuticals, 686 F.3d 1348, 1358 (Fed. Cir. 2012) (describing the conditions for continued approval of the generic counterpart set out by 21 U.S.C. 335a(g), 355(e) that mandated bioequivalence testing with the branded drug under 21 C.F.R (a), , , and ); see also Abbreviated New Drug Application (ANDA): Generics, U.S. FOOD & DRUG ADMIN., /DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ ApprovalApplications/AbbreviatedNewDrugApplicationANDAGenerics (last updated July 17, 2013). 5 See Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990) (expanding the safe harbor to include medical devices); Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193 (2005) (expanding the safe harbor to include preclinical studies). 6 See Classen Immunotherapies, Inc. v. Biogen Idec, 659 F.3d 1057 (Fed. Cir. 2011); Momenta,

3 2014] THE HATCH-WAXMAN ACT SAFE HARBOR 653 uses, while Momenta subsequently granted safe harbor for postmarketing studies mandated by the FDA, when the studies were required for continued approval of the generic manufacturer s novel pharmaceutical. 7 Following the conflicting readings of the research use exception in Classen and Momenta, Congress should enact a statute limiting the safe harbor to explicitly allow only non-commercial, FDA-mandated postmarketing activity. This legislative solution will provide advance notice to generic companies seeking to patent medical inventions with federal regulatory agencies. Instead of confronting ambiguous Federal Circuit directions regarding the scope of permissible post-marketing uses, generic companies will be able to follow an express legislative framework. Once their generic therapeutics are marketed, the proposed statute will continue to promote generic drug development by enabling systemic post-marketing studies. Through these methods, the proposed statute aims to advance the primary congressional purposes behind 271(e)(1), namely early and continuous generic marketing. This Note analyzes Congressional intent behind 271(e)(1) of the Hatch-Waxman Act, the goals for advancing early marketing of generic drugs, and the ongoing dispute over generic research activities permissible under the 271(e)(1) safe harbor, and concludes by proposing a legislative solution to address the division. Part I of this Note provides an overview of the drug approval process and mechanisms for expediting generic drug approval within the Hatch- Waxman Act, including incentives for challenging the validity of patents held by pioneer, branded entrants through the 355(j) revisions to the Act and through the experimental use exception in 271(e)(1) of the Act. Part II examines litigation that analyzes the 271(e)(1) safe harbor scope, and concludes by raising the need for a legislative proposal to clarify recent Federal Circuit disputes regarding specific post-marketing uses allowed by the safe harbor. Part III addresses the Federal Circuit conflict by suggesting a statute which expressly restricts post-marketing tests solely to studies mandated for continued FDA approval. I. HISTORY OF THE HATCH-WAXMAN ACT AND THE ENACTMENT OF THE SAFE HARBOR EXCEPTION OF 35 U.S.C 271(E)(1) A. The Pharmaceutical Drug Development Process Pharmaceutical drugs pass through an extensive development process before obtaining marketing approval from the Food and Drug 686 F.3d at Classen, 659 F.3d at 1059; Momenta, 686 F.3d at

4 654 CARDOZO ARTS & ENTERTAINMENT [Vol. 32:651 Administration ( FDA ), the chief regulatory agency of pharmaceuticals in the United States. 8 Pharmaceutical drugs are divided into two categories: branded and generic. 9 Branded, pioneer drugmakers must complete the entire drug development process, whereas generic drugmakers do not conduct the compound screening, preclinical trials, and clinical trials required for branded drugmakers and instead enter the drug development process at the drug application step. 10 The drug development process comprises two main stages: 1) compound screening and 2) the FDA approval process. 11 During the compound screening stage, pharmaceutical companies examine large numbers of compounds to identify active compounds that meet baseline efficacy and safety requirements for development into potential therapeutic leads. 12 During the FDA approval process, pharmaceutical companies conduct preclinical and clinical trials to demonstrate the safety and efficacy of their drug candidates. 13 Stage two begins with preclinical studies, where the drug candidate is first tested in the lab and representative animal species. 14 This stage is essential for gaining marketing approval from the FDA. 15 The branded entrant submits an Investigational New Drug ( IND ) application to the FDA for its novel drug, which proceeds onto clinical trials once the IND demonstrates that preclinical trials pass specified thresholds for safety and potency. 16 Before a novel drug is approved, three phases of clinical trials must be conducted, where the therapeutic effects of medicines are tested in human subjects. 17 Phase I tests the impact of the medicine in a small group of people to identify primary adverse effects while Phase II studies the effectiveness in larger groups of human subjects, and Phase 8 See The FDA s Drug Review Process: Ensuring Drugs Are Safe and Effective, U.S. FOOD & DRUG ADMIN., (last updated May 1, 2012). 9 Abbreviated New Drug Application (ANDA): Generics, supra note Id. 11 JP Hughes et al., Principles of Early Drug Discovery, 162 BRIT. J. PHARMACOLOGY 1239, , Fig. 1 (2011) (depicting the two main stages of drug development: 1. Compound screening, which comprises basic research, lead discovery), and 2. the FDA approval process, which comprises preclinical development, clinical development, and FDA filing). 12 Id. at 1239, Fig. 1, , Table 1 (depicting the compound screening stage as the examination of a large number of compounds to identify active compounds with the desired safety and efficacy profiles for further development as drug candidates). 13 The FDA s Drug Review Process: Ensuring Drugs Are Safe and Effective, supra note 8 (describing the FDA drug review process); see How Drugs Are Developed and Approved, U.S. FOOD & DRUG ADMIN., DevelopedandApproved/default.htm (last updated Oct. 18, 2013). 14 The FDA s Drug Review Process: Ensuring Drugs Are Safe and Effective, supra note 8 (stating that the FDA requires preclinical studies of drug candidates in animals before clinical trials in humans). 15 See id. 16 Id. 17 FAQ: ClinicalTrials.gov Clinical Trial Phases, U.S. NAT L LIBR. MED., nlm.nih.gov/services/ctphases.html (last visited Jan. 21, 2013).

5 2014] THE HATCH-WAXMAN ACT SAFE HARBOR 655 III, the most expensive and lengthy phase, 18 collects information to confirm the drug s safety and efficacy in human subjects. 19 After the drug candidate demonstrates sufficient efficacy in the clinical trials of Phases I III, the drug candidate then proceeds onto the novel drug application filing process. 20 Following clinical trials, the branded manufacturer files a New Drug Application ( NDA ) to propose its drug for FDA approval. 21 In contrast, generic drug manufacturers file Abbreviated New Drug Applications ( ANDA ), meaning that these manufacturers are not required to prepare novel safety and efficacy data for their drug candidates. 22 Rather than having to conduct the preclinical studies and clinical trials discussed above, 23 generic manufacturers only need to demonstrate that their generic drug has the same active ingredient, route of administration, dosage form, and strength as its branded counterpart, so that the generic entrant may use the safety and efficacy data of the bioequivalent drug generated by the branded manufacturer. 24 Once the FDA approves the new drug application, for both NDA s and ANDA s, the novel pharmaceutical enters Phase IV, which includes several post-marketing research categories. 25 Phase IV demands consistent monitoring of the new drug s effects, even after the FDA approves use of the pharmaceutical drug in humans, to confirm the drug s safety and effectiveness over long periods of use. 26 Accordingly, mandatory Phase IV research studies are also termed post-marketing studies. 27 Phase IV research comprises three main categories: mandatory post-marketing commitments required by the FDA ( PMC ); commercial, optional drug company PMC s which support continued drug development, and non-commercial, voluntary third party PMC s conducted by independent researchers. 28 Within the first category, the FDA requires that drug manufacturers continue to systematically monitor use of marketed drugs 18 Avik S. A. Roy, Stifling New Cures: The True Cost of Lengthy Clinical Drug Trials, MANHATTAN INSTITUTE FOR POLICY RESEARCH, PROJECT FDA REPORT, (Apr. 2012). 19 Id. 20 See How Drugs Are Developed and Approved, supra note The FDA s Drug Review Process: Ensuring Drugs Are Safe and Effective, supra note Abbreviated New Drug Application (ANDA): Generics, supra note Id. 24 Id. 25 ESSENTIALS OF CLINICAL RESEARCH (Stephen P. Glasser ed., 2008). 26 FAQ, ClinicalTrials.gov Clinical Trial Phases, supra note Rebecca S. Eisenberg, The Role of the FDA in Innovation Policy, 13 MICH. TELECOMM. & TECH. L. REV. 345, 376 (2007); Emily Michiko Morris, The Myth of Generic Pharmaceutical Competition Under the Hatch-Waxman Act, 22 FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 245, 255 (2012); Charles Steenburg, The Food and Drug Administration s Use of Postmarketing (Phase IV) Study Requirements: Exception to the Rule?, 61 FOOD & DRUG L.J. 295, 300 (2006). 28 ESSENTIALS OF CLINICAL RESEARCH, supra note 25, at 76.

6 656 CARDOZO ARTS & ENTERTAINMENT [Vol. 32:651 in patients to produce data on the drugs safety, efficacy and optimal conditions for usage. 29 For example, the FDA may require branded drug manufacturers to report adverse effects that were not observed in the pre-approval clinical studies. 30 Mandatory PMC s often include drugdrug interaction studies, 31 research on novel pill or intravenous drug formulation, and studies of the drug s effect within specific populations to demonstrate the drug s safety and efficacy. 32 For continued ANDA approval of their generic versions of branded drugs, generic drug companies also use data generated by branded manufacturers. 33 In short, the FDA demands Phase IV post-marketing studies to assuage consumer safety concerns, to ensure that currently marketed drugs distributed in mass quantities to the public continue to meet minimum FDA standards for quality. 34 The optional drug company PMC category is primarily commercial; branded drug companies initiate optional PMC s in support of a promotional and marketing strategy. 35 Here, the branded manufacturers start these studies to demonstrate their drug s affordability to differentiate it from competitors while promoting the drug to medical professionals. 36 As a result, these marketing fringe costs can be high for drug manufacturers. 37 The second Phase IV category is distinguished from the first by its commercial and optional nature. Whereas the first category is FDA-mandated, in the second category, branded drug manufacturers often begin PMC s to support aggressive marketing campaigns for selling its novel pharmaceutical to physicians and other medical professionals. 38 The branded drug manufacturer aims to benefit from increased sales as a result of its voluntary, commercial Phase IV post-marketing activities. 39 The third Phase IV category features voluntary post-approval 29 Morris, supra note 27, at See Postmarketing Requirements and Commitments: Introduction, U.S. FOOD & DRUG ADMIN., PhaseIVCommitments, (last updated Feb. 8, 2012) (stating that FDA-mandated post-marketing studies may require the identification of unexpected, serious risk resulting from use of the drug, as indicated by available data); see Steenburg, supra note 27, at 300, n See Drug Interactions: What You Should Know, U.S. FOOD & DRUG ADMIN., (last updated Sept. 25, 2013) (defining drug-drug interactions as the side effects produced when drugs interact). 32 ESSENTIALS OF CLINICAL RESEARCH, supra note 25, at 75, Table 5.3 (listing FDA-mandated post-marketing study examples, including studies of drug-drug interactions, formulation advancement, and special populations comprising the elderly or children). 33 See Momenta Pharms., Inc. v. Amphastar Pharms., Inc., 686 F.3d 1348, 1358 (Fed. Cir. 2012); see Abbreviated New Drug Application (ANDA): Generics, supra note See Postmarketing Requirements and Commitments: Introduction, supra note Steenburg, supra note 27, at Id. 37 Morris, supra note 27, at Steenburg, supra note 27, at Id.

7 2014] THE HATCH-WAXMAN ACT SAFE HARBOR 657 studies of branded drugs executed by independent researchers. 40 Also considered to be post-marketing, this category of Phase IV research is similarly non-mandatory, but it is conducted by a third party, rather than the branded drug manufacturer. 41 Like the FDA-mandated research, independent studies do not have explicit commercial goals. 42 Independent scientific research on branded drugs generally lacks a commercial motive as drug manufacturers do not monitor independent researchers; instead, the research studies are usually supervised by governmental science boards. 43 When adverse drug effects are uncovered during Phase IV studies, the FDA reevaluates its decision to approve the drug and updates the labels of the drug in question. 44 The following section explores the federal statutory provisions for expediting the drug approval and development process outlined above. B. Background of the 35 U.S.C. 271(e)(1) Research Use Exception 1. The Hatch-Waxman Act: Provisions for Expediting Generic Entry Recognizing the competing interests of branded pharmaceutical companies and generic pharmaceutical companies in the FDA approval process, Representative Henry Waxman and Senator Orrin Hatch drafted the Hatch-Waxman Act of 1984 to balance these opposing goals. 45 The Act 46 aimed to simultaneously increase the availability of lower cost generic drugs while providing increased incentives for pharmaceutical research and development, in the hope that generic pharmaceutical companies could quickly market affordable medicines to the public. 47 To win congressional approval of the bill, the sponsors had to include two complementary statutory provisions, sections 201 and 202, each serving the interests of the competing constituencies. 48 Section 40 ESSENTIALS OF CLINICAL RESEARCH, supra note 25, at Id. at See id. at 79, 202 (stating that the investigator dictates the research study s objective and purpose). 43 See id. at 76, (stating that supervision of independent observational studies is not affiliated with the pharmaceutical company). 44 Postmarketing Surveillance Programs, U.S. FOOD & DRUG ADMIN., Drugs/GuidanceComplianceRegulatoryInformation/Surveillance/ucm htm (last updated Aug. 19, 2009). 45 Ann Kotze, Reining In Patent Term Extensions for Related Pharmaceutical Products Post- PhotoCure and Ortho-McNeil, 106 NW. U. L. REV. 1419, (2012). 46 Also known as the Drug Price Competition and Patent Term Restoration Act of Id. at Kotze, supra note 45, at 1424 (describing the history and purpose of the Hatch-Waxman Act); Morris, supra note 27, at See David J. Bloch, If It s Regulated Like a Duck... Uncertainties in Implementing the Patent Exceptions of the Drug Price Competition and Patent Term Restoration Act, 54 FOOD & DRUG L.J. 111, 111, n.1 (1999) (stating that in order to win congressional approval, 201 and 202 of Pub. L. No sought to balance the competing concerns of branded and generic drug

8 658 CARDOZO ARTS & ENTERTAINMENT [Vol. 32: , enacted as 35 U.S.C. 156, aimed to protect the interests of branded manufacturers by reducing the harm from front end distortion, the loss of patent protection during the beginning of the patent period, which results from marketing prohibitions on branded pharmaceutical products during regulatory review. 49 With the intent of remedying this regulatory delay, section 201 was created to provide patent term extensions for branded drug manufacturers. 50 Meanwhile, section 202, amending 271(e)(1) of the Hatch-Waxman Act, 51 reduces back end distortion, the de facto patent term extension created when generic competitors experience a delay while bringing their products to market, since they cannot test branded drugs during the patent term. 52 In short, 271(e)(1) was added to shield generic drug companies when their activities merely involve tests of branded drug equivalents closely tied to the regulatory approval process, 53 thereby expediting generic drug approval. The ANDA, the separate new drug application specifically designed for generic manufacturers, further maximizes the efficiency of the generic drug approval process U.S.C. 355(j) codified the Hatch-Waxman Act revisions that established ANDA s. 55 An ANDA limits the patent monopoly branded manufacturers hold over their novel pharmaceuticals, since generic manufacturers face a lower burden of proof for demonstrating bioequivalence, safety, and potency of their products. 56 In the ANDA, generic entrants only need to demonstrate that their generic versions have the same active ingredient and general pharmacokinetics of the branded drug, rather than having to perform safety and potency tests already conducted by the senior, branded manufacturer, as would be required in a branded new drug application. 57 Practically speaking, this means that the generic manufacturer simply must prove its generic drug has the same active ingredient, route of administration, dosage form, strength, and labeling as the branded counterpart. 58 The ANDA allows generic manufacturers with limited resources to bring generic drugs to the market more quickly. manufacturers). 49 Id. at 112, 114 ( [S]ection 201 was intended to eliminate front end distortion whereby a patent began to run while a product was still undergoing regulatory review and could not be sold by the manufacturer. ). 50 Id. at See id. (stating that Section 202 amended 271(e)(1) of the Hatch-Waxman Act). 52 Id.; see also id. at 114 (defining back end distortion as an unintended patent extension where competitors cannot use patented invention in tests for regulatory approval). 53 Id. at See Abbreviated New Drug Application (ANDA): Generics, supra note See Kotze, supra note 45, at 1430 n See id. at See id. at 1431 & n.65 (citing 21 U.S.C. 355(j)(2)(A)(iv) (2012)). 58 See 21 U.S.C. 355(j)(2)(A)(ii)-(v) (2012).

9 2014] THE HATCH-WAXMAN ACT SAFE HARBOR U.S.C. 271 identifies various types of patent infringement, defined as the unauthorized use of a competitor s patented invention. 59 Congress created two provisions within the Hatch-Waxman Act to encourage generic entrants to challenge branded patents: 1) incentives for successful Paragraph IV infringement challenges, and 2) the 271(e)(1) safe harbor for generic infringers. 60 As for the first provision, the Hatch-Waxman Act creates benefits for generic drug manufacturers when they file Paragraph IV certifications in their ANDA s, which state that the branded patent is invalid under patent law or that their drug does not infringe the branded equivalent. 61 For example, section 355(j) incentivizes generic entrants when they successfully question the patent validity of branded drugs by filing successful Paragraph IV ANDA challenges. 62 These successful Paragraph IV challenges grant generic drug plaintiffs a 180-day exclusivity advantage over other generic companies when their invalidity claims succeed, so that the successful generic plaintiffs gain a 180-day hold on the FDA approval of generic, bioequivalent competitors The Hatch-Waxman Safe Harbor: 35 U.S.C. 271(e)(1) Patent infringement arises during ANDA filings when the generic manufacturer uses pharmacokinetic data of the bioequivalent patented drug in the ANDA. 64 Within the Hatch-Waxman Act, 271(e)(1) is a second means of encouraging generic challenges to branded patents. Section 271(e)(1) creates a statutory safe harbor for limited types of infringing experimental activity, when the activity is conducted to gain regulatory approval. 65 While 271 bars most uses of patented products without the patent holder s consent, the safe harbor amendment in 271(e)(1) grants protection for generic infringers of pharmaceutical U.S.C. 271 (2012); see Richard L. Rainey & Paul M. Schoenhard, Awards of Attorney Fees in ANDA Infringement Suits, INT L LAW OFFICE (Sept ), internationallawoffice.com/newsletters/detail.aspx?g=d741eaae-954c-4fe bb566ff8e5d3#background (defining patent infringement and illustrating artificial infringement with ANDA filing as a common example). 60 Paragraph Four Explained, PARAGRAPH FOUR REP. /explained/process.html (last visited Mar. 7, 2013); Kotze, supra note 45, at (stating that both the generic use safe harbor and the ANDA provisions encourage generic companies to challenge patented products). 61 Id. 62 See Kotze, supra note 45, at (citing 21 U.S.C. 355(j)(5)(B)(iv)). 63 See id. at 1432; see also 21 U.S.C. 355(j)(5)(B)(iv) (2012). 64 Rainey & Schoenhard, supra note 59 (citing an abbreviated new drug application, ANDA, as one major example of artificial patent infringement, as exemplified in Eli Lilly & Co. v. Medtronic, Inc.) (last visited Sept. 21, 2013). 65 Drug Price Competition and Patent Term Restoration Act of 1984, PUB. L. NO , 98 Stat (1984) (amending 35 U.S.C. 271) (establishing an exception for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs) (Hatch Waxman Act of 1984).

10 660 CARDOZO ARTS & ENTERTAINMENT [Vol. 32:651 patents when the infringing use relates closely to research purposes. 66 Legislators hoped to promote early marketing of generic pharmaceuticals with this generic research exception. 67 In particular, Congress intended to limit the patent monopoly of branded manufacturers by complementing section 201 of the Hatch-Waxman Act with section 202, which included the safe harbor exception for generic manufacturers of pharmaceuticals and medical devices. 68 Section 271(e)(1) protects infringing activities under the research exception when they reasonably relate to the regulatory approval of drugs: It shall not be an act of infringement to make, use, offer to sell, or sell... a patented invention (other than a new animal drug or veterinary biological product (as those terms are used in the Federal Food, Drug, and Cosmetic Act and the Act of March 4, 1913) which is primarily manufactured using recombinant DNA, recombinant RNA, hybridoma technology, or other processes involving site specific genetic manipulation techniques) solely for uses reasonably related to the development and submission of information under a Federal law which regulates the manufacture, use, or sale of drugs Before the statutory revision, the use of experimental data created by branded manufacturers was considered infringing activity. 70 However, the revision created a safe harbor provision that lowers the barriers to early generic marketing in two main ways: 1) expediting generic market entry and 2) lowering the burden for demonstrating drug bioequivalence. 71 As to the first, 35 U.S.C. 271(e)(1) hastens market entry for generic drugs, by allowing generic companies to use regulatory data generated by branded pharmaceutical manufacturers in their ANDA s. This makes it easier to enter the generic market, since the production of drug safety and efficacy data is expensive and timeconsuming. 72 Under 271(e)(1), generic manufacturers no longer need to produce their own, often expensive, safety and efficacy studies for FDA regulatory approval. In short, 271(e)(1) grants generic manufacturers an exception for uses of research produced by branded 66 See Kotze, supra note 45, at See H.R. REP. NO , at (1984) (stating that the research use exception provisions aimed to increase the research and development of products delayed by mandatory government pre-market approval). 68 See Bloch, supra note 48, at 111, n U.S.C. 271(e)(1) (2012) (emphasis added). 70 See Roche Prods., Inc. v. Bolar Pharm. Co., 733 F.2d 858 (Fed. Cir. 1984) (holding that generic manufacturers cannot use patented active compounds to produce data used for FDA approval of its own generic version of the drug). 71 See Morris, supra note 27, at See id.

11 2014] THE HATCH-WAXMAN ACT SAFE HARBOR 661 entrants, when the studies are used for FDA submissions. 73 Pioneer drug manufacturers can no longer receive extended patent monopolies on their branded drugs, the side effect formerly created by the regulatory delay for generic entry. 74 Since generic entrants previously needed to generate the same detailed tests of drug potency and safety as their branded counterparts, while constrained by fewer financial resources, without section 271(e)(1) generic approval was significantly delayed. As a counterpart to the safe harbor, 271(e)(2) explicitly does not protect an application for federal regulatory approval for a patented drug s bioequivalent when the application employs the patented drug in anticipation of a commercial manufacture, use, or sale of the infringing drug: It shall be an act of infringement to submit... an application under section 505(j) of the Federal Food, Drug, and Cosmetic Act or described in section 505(b)(2) of such Act for a drug claimed in a patent or the use of which is claimed in a patent... if the purpose of such submission is to obtain approval under such Act to engage in the commercial manufacture, use, or sale of a drug... claimed in a patent or the use of which is claimed in a patent before the expiration of such patent. 75 Section 271(e)(2) establishes that commercial uses employed during ANDA s do not qualify for the research protection of 271(e)(1). 76 Read literally, the statute appears to suggest that postmarketing activities with commercial motivations might be entirely excluded under 271(e)(2), but the increasingly broad judicial interpretations of 271(e)(1) provide room for a more lucid, novel legislative approach to post-marketing studies that might include commercial potential The Legislative History of the Hatch-Waxman Act Courts have turned to the legislative history of the Hatch-Waxman Act to define the scope of expansive 271(e)(1) protection for activities reasonably related to the regulatory approval process. 78 The courts are divided on the particular federal regulatory processes that are protected, since 271(e)(1) protects what might otherwise be considered infringement during submissions for the regulatory approval of U.S.C. 271(e)(1). 74 See Kotze, supra note U.S.C. 271(e)(2) (2012) (emphasis added). 76 See id. 77 See Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, (1990); see also Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 203 (2005); Momenta Pharms., Inc. v. Amphastar Pharms., Inc., 686 F.3d 1348, (Fed. Cir. 2012). 78 See Classen Immunotherapies, Inc. v. Biogen Idec (Classen), 659 F.3d 1057, 1071 (Fed. Cir. 2011); see also Momenta, 686 F.3d at

12 662 CARDOZO ARTS & ENTERTAINMENT [Vol. 32:651 pharmaceuticals. 79 In addition, the inclusion of medical devices and FDA-mandated post-approval studies under the safe harbor were issues for interpretation in cases involving 271(e)(1). 80 The legislative history of the Hatch-Waxman Act provides further insight into the source of the divergent 271(e)(1) interpretations. As the 1984 House Committee on Energy and Commerce Report stated, the Act aims to increase the availability of affordable generic drugs and reduce the regulatory delay for generic entrants. 81 However, narrow court readings of the research exception cited this House Report for allowing experiments that use patented drugs only when the activity does not pose an adverse economic impact on the branded manufacturer s patent monopoly. 82 Under this restricted view of permissible uses, generic experimentation would be allowed only in preparation of commercial sales that begin after the branded patent expires. 83 Moreover, the House Report s language permitting generic experimental use during the final year of the branded patent s life is cited in support of a narrow interpretation allowing generic manufacturers to only conduct bioequivalence tests. 84 As a result of ambiguous language within the legislative history, the scope of the safe harbor likely faces continued litigation in the Supreme Court, the Federal Circuit and the lower courts. 85 The split in authority over the scope of the safe harbor exception centers on two issues: 1) the protection of product categories 86 and 2) 79 See Eli Lilly, 496 U.S. at (1990) (discussing the dispute regarding the safe harbor s inclusion of medical devices and other inventions protected by the Federal Food, Drug, and Cosmetic Act). 80 See id.; Integra, 545 U.S. at 193; Classen, 659 F.3d at 1057; Momenta Pharmaceuticals v. Amphastar Pharmaceuticals, 686 F.3d 1348 (Fed. Cir. 2012). 81 See H.R. REP. NO , supra note 2, at 1, (stating that the purpose of the Hatch- Waxman Act is to enhance the availability of low cost generic drugs through the abbreviated generic drug approval process and to limit the regulatory delay for companies manufacturing products that require federal pre-marketing approval). 82 See Classen, 659 F.3d at 1071 (citing the House Report as protecting certain premarketing research when the generic marketing occurs after expiration of the branded entrant s patent). 83 Anna McMinn, Judicial Interpretation of 35 U.S.C. 271(e)(1): An Improper Expansion Beyond the Legislative Intent, 16 ALB. L.J. SCI. & TECH. 195 (2006). 84 Id. at See Tony Dutra, Supreme Court Gets Another Petition on Hatch-Waxman Safe Harbor Dispute, PHARMACEUTICAL LAW & INDUSTRY REPORT, BLOOMBERG LAW (Mar. 1, 2013), 0eXBlPWJuYXBsaXImaXNzdWU9MjAxMzAyMjYmY2FtcGFpZ249Ym5hZW1haWxsaW5rJn NpdGVuYW1lPWJuYSIsImN0eHQiOiJCQk5BIiwidXVpZCI6IjlmZDdQK0Y4UHNSa041QTN FMGtSK1E9PWM5cjVZT1ZEcU1PdHFuNlVzMmhqUkE9PSIsInRpbWUiOiIxMzYxOTM2MT U1MDMwIiwic2lnIjoiZEFBd3ptRFJLbmRlRlNwL0IrN0VaZkIrZVg0PSIsInYiOiIxIn0=; DOCKET, SUPREME CT. U.S., htm (last visited Sept. 5, 2013). 86 Bloch, supra note 48, at 112 (elaborating on the confusion in interpreting the ambiguous language describing exceptions to infringing activity in 202 of the Hatch-Waxman Act).

13 2014] THE HATCH-WAXMAN ACT SAFE HARBOR 663 the protection of pre-marketing and post-marketing uses. 87 On the issue of product categories, a broad interpretation of the safe harbor might protect all products encompassed in the Food, Drug, and Cosmetic Act ( FDCA ), including cosmetics and medical devices, 88 while a narrower reading might protect only pharmaceuticals and veterinary biological products, as a literal reading of the statute would dictate. 89 As for the second issue, the proposed inclusion of post-marketing studies drives additional litigation, especially since some courts mistakenly view all post-marketing research as profit-driven. 90 However, generic postmarketing research is more nuanced. Some post-marketing studies are voluntary, promotional activities, specifically designed to generate additional revenue for the pharmaceutical company. 91 Other postmarketing studies might even be conducted by independent, third-party researchers with no financial interest in the commercial success of the generic manufacturer. 92 Meanwhile, the FDA and other federal regulatory agencies mandate a significant number of post-marketing studies. 93 These mandatory, ongoing research activities help promote early generic marketing of essential medical inventions, a primary Congressional goal driving the passage of the research use exception. 94 The following section examines key Supreme Court and Federal Circuit cases that analyze the scope of 271(e)(1) protection. II. AN ANALYSIS OF LITIGATION SURROUNDING OTHERWISE INFRINGING ACTIVITY ENCOMPASSED BY THE 35 U.S.C. 271(E)(1) SAFE HARBOR As mentioned earlier, the use of a patented invention without a formal agreement, for example, a licensing agreement, constitutes patent infringement. 95 In the pharmaceutical arena, when the infringing use is primarily research based, the Hatch-Waxman Act creates a research exception through 35 U.S.C. 271(e)(1) for otherwise infringing activity that reasonably relate[s] to the development and submission of information for the approval of the FDA and other 87 See Momenta, 686 F.3d 1348 (Fed. Cir. 2012) (debating the inclusion of specific postmarketing studies in the research use exception); Classen, 659 F.3d See Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990) (debating the inclusion of medical devices under the safe harbor, as the text of the safe harbor only expressly identifies protected uses of drug research used in submissions for federal regulatory approval). 89 Bloch, supra note 48, at See Classen, 659 F.3d at See Steenburg, supra note 27, at ESSENTIALS OF CLINICAL RESEARCH, supra note 25, at See Morris, supra note 27, at See H.R. REP. NO , supra note 2, at (stating that one purpose of the Hatch- Waxman Act is to limit the regulatory delay for companies that require federal pre-marketing approval). 95 See Rainey & Schoenhard, supra note 59.

14 664 CARDOZO ARTS & ENTERTAINMENT [Vol. 32:651 federal regulatory agencies. 96 Before and after the passage of the statutory research exception, the Federal Circuit has taken a range of approaches while choosing whether to allow specific exceptions to infringements involving experimental use. Meanwhile, the Supreme Court has broadened the safe harbor scope in consecutive cases. 97 The Supreme Court, in 1990, moved toward a generous reading of the 271(e)(1) exception with the Eli Lilly & Co. v. Medtronic, Inc. decision. 98 In 2005, in Merck KGaA v. Integra Lifesciences I, Ltd., the Court also granted a broad research exception for most activity reasonably relating to FDA approval, including preclinical studies. 99 Subsequently, the Federal Circuit addressed permissible post-marketing uses in two contentious cases: Classen Immunotherapies, Inc. v. Biogen Idec, in 2011, which appeared to exclude all post-marketing activity, and Momenta Pharmaceuticals, Inc. v. Amphastar Pharmaceuticals, Inc., in 2012, which granted exceptions for FDA-mandated post-marketing tests, thereby generating confusion as to the scope of post-marketing studies allowed under the safe harbor. 100 A. Before the 271(e)(1) Safe Harbor: The Narrow View of the Research Use Exception When generic drug companies use patented safety tests produced by branded drug manufacturers in their own ANDA s, litigation often results. 101 The branded drug manufacturer may bring suit for infringement when a generic drug manufacturer files an ANDA using the branded entrant s data. 102 In 1984, before the institution of the 271(e)(1) research exception, Roche Products, Inc. v. Bolar Pharmaceutical Co. categorically held that generic manufacturers could not use patented active compounds to produce their own studies in the FDA approval process. 103 Roche barred generic manufacturers from using studies of patented, branded pharmaceuticals in their FDA applications for the generic bioequivalent counterparts. 104 However, the U.S.C. 271(e)(1) (2012). 97 See Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, (1990); see also Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 203 (2005). 98 See Eli Lilly, 496 U.S. at (protecting infringing studies of medical devices as well as drugs). 99 Integra, 545 U.S. at Classen Immunotherapies, Inc. v. Biogen Idec, 659 F.3d 1057 (Fed. Cir. 2011); Momenta Pharms., Inc. v. Amphastar Pharms., Inc., 686 F.3d 1348, , (Fed. Cir. 2012). 101 Morris, supra note 21, at See Alfred B. Engelberg, Special Patent Provisions for Pharmaceuticals: Have They Outlived Their Usefulness?, 39 IDEA 389, (1999); Morris, supra note 27, at 264 (stating that an artificial act of infringement leads to controversy when an ANDA with Paragraph IV certification is filed). 103 See Roche Prods., Inc. v. Bolar Pharm. Co., 733 F.2d 858, 863 (Fed. Cir. 1984). 104 Id.

15 2014] THE HATCH-WAXMAN ACT SAFE HARBOR 665 passage of 271(e)(1) reversed the broad, categorical denial of generic research protection in Roche. 105 In a gesture benefitting generic drug companies, 271(e)(1) directly granted generic manufacturers permission to use data generated by branded manufacturers when their activities were closely tied to federal regulatory approval. 106 Subsequently, however, the Federal Circuit produced contradictory interpretations while attempting to determine the proper degree of reasonable relation to regulatory approval for permissible research activities. 107 B. Moving Toward a Broader Reading of the 271(e)(1) Safe Harbor As the first major test of the research exception in the Federal Circuit, Warner-Lambert Co. v. Apotex Corp. reaffirmed 271(e)(1), upholding the experimental use exception for otherwise infringing activity by generic manufacturers. 108 After Warner-Lambert, the issue of acceptable types of generic drug manufacturer infringement, where a generic manufacturer files an ANDA using the branded drug manufacturer s regulatory approval data, continued to be unsettled in the Federal Circuit. 109 The Supreme Court and the Federal Circuit have diverged while interpreting the scope of permissible generic infringing activities. 110 The Supreme Court s opinions have continued the successive expansion of the safe harbor s scope. In Eli Lilly, the owner of a ventricular defibrillation device patent sought to enjoin a competitor from conducting research with its patented invention for regulatory approval under the FDCA. 111 The Eli Lilly Court considered the structure of the Hatch-Waxman Act, which ultimately led them to take a generous view of the 271(e)(1) safe harbor, holding that the safe harbor also protected uses of medical devices. 112 The Court found that 271(e)(1) does not merely protect otherwise infringing tests that employ branded drugs, but also protects analogous uses of non-pharmaceuticals, 105 McMinn, supra note 83, at U.S.C. 271(e)(1) (2012). 107 Compare Classen Immunotherapies, Inc. v. Biogen Idec, 659 F.3d 1057, 1070 (Fed. Cir. 2011), with Momenta Pharms., Inc. v. Amphastar Pharms., Inc., 686 F.3d 1348, , (Fed. Cir. 2012). 108 Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348 (Fed. Cir. 2003). 109 See Engelberg, supra note 102, at ; Morris, supra note 27, at 264 (establishing that an ANDA filing with Paragraph IV certification constitutes a controversial artificial act of infringement ). 110 Compare Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661 (1990) (protecting infringing studies of medical devices as well as drugs), and Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, (2005) (permitting preclinical studies as well as clinical studies), and Momenta, 686 F.3d at , (protecting mandatory postmarketing studies), with Classen, 659 F.3d at 1070 (barring optional postmarketing studies). 111 Eli Lilly, 496 U.S. at Id. at 661,

16 666 CARDOZO ARTS & ENTERTAINMENT [Vol. 32:651 like medical devices, so long as the research is conducted for FDCA regulatory approval. 113 Although the statutory language of 271(e)(1) explicitly protects only research for purposes closely related to regulatory approval of drug manufacture and use, including inventions under Federal law which regulates the manufacture, use, or sale of drugs, 114 the court focused on the public policies underlying the construction of the Hatch-Waxman Act. 115 To arrive at its conclusion, the Eli Lilly Court analyzed 35 U.S.C. 156, the Hatch-Waxman Act s expansive benefits for branded entrants, in comparison with the Act s concessions to generic entrants, including the 271(e)(1) research use exception, 116 finding that the Act sought to strike a measured balance of interests. 117 The Eli Lilly Court recognized that the safe harbor protection awarded to generic drug manufacturers was just as applicable to generic medical device manufacturers; in uses related to regulatory approval, the Court found that the protection of 271(e)(1) extended to all inventions and was not limited to drugrelated inventions alone. 118 Ultimately, the Eli Lilly Court decided that allowing branded medical device manufacturers, providers of inventions regulated by the FDCA, to benefit from the patent term extension, while denying the corresponding safe harbor benefits to their generic counterparts would upset the Hatch-Waxman Act s complementary design. 119 As a result, the Court granted broad 271(e)(1) protection, allowing generic manufacturers to test branded medical devices during the regulatory delay, when they were related to medical device regulation governed by the FDCA. 120 In 2005, in Merck KGaA v. Integra Lifesciences I, Ltd., the Supreme Court continued to expand its interpretation of the 271(e)(1) research use safe harbor by holding that generic competitors could use patented drugs in preclinical tests when the tests might produce information relevant to an NDA, moving even closer to the inclusion of post-marketing studies. 121 There, the owner of a patented peptide with pharmaceutical potential sued a competing research institution, Scripps, for infringement. 122 Scripps used tests of the peptide s efficacy, specificity, and toxicity as a benchmark to evaluate the pharmaceutical 113 Id. at (e)(1). 115 Id. at , 680 (emphasis added). 116 Id. 117 Bloch, supra note 48, at ; Eli Lilly, at , Eli Lilly, 496 U.S. at Id. at See id. at (stating that 271(e)(1) protects all inventions, not just drug-related inventions alone ). 121 See McMinn, supra note 83, at 235; Merck KGaA v. Integra Lifesciences I, Ltd., 545 U.S. 193, 207 (2005). 122 Integra, 545 U.S. at

17 2014] THE HATCH-WAXMAN ACT SAFE HARBOR 667 potential of its own related peptide. 123 In essence, Scripps, in preparing its novel peptide as a drug candidate, used the patented peptide for general comparison, but did not submit an NDA actually including the infringing tests. 124 The Court held that 271(e)(1) protected all uses of patented inventions in manners reasonably related to the development and submission of information submitted for FDA approval and employed for further drug development. 125 Thus, the infringing actions fell within the safe harbor because the infringer merely used the patented peptide as a research benchmark, since the subject of its NDA was a related peptide and not the bioequivalent version of the patented peptide. 126 Despite the indirect link between the preclinical infringing tests and the subsequent FDA submission, the Court believed that the 271(e)(1) safe harbor should be construed generously. 127 Here, the Court concluded that the safe harbor protected the infringer s preclinical tests of the drug s efficacy, mechanism of action, pharmacokinetics, and pharmacology, and thus should be considered reasonably related to information submitted for regulatory approval. 128 The Court held that such tests were permissible uses, 129 and did not find the distinction between preclinical and clinical research as paramount to the decision for inclusion under the research exception. 130 The Court concluded that the infringing tests were closely related to an FDA submission, since preclinical research on a drug candidate s pharmacokinetic effects, like those conducted by Scripps, often lead to an application for a related drug. 131 In supporting its decision, the Integra Court noted that the 271(e)(1) research exception does not categorically exclude experiments on drugs that do not ultimately become the subject of FDA NDA s. 132 The Court s expansive reading of reasonably related broadened the protective reach of 271(e)(1), paving the way for flexible interpretations of research reasonably related to FDA submissions. 133 This broad interpretation places 123 Id. at See id. 125 Id. at See id. at ; Id. at 206 (stating that 271(e)(1) provides broad protection for the use of patented drugs related to FDA regulatory approval). 128 Id. at Id. at Id. at (finding that preclinical studies are also reasonably related to FDA regulatory approval, and subsequently protected by 271(e)(1)). 131 See id. at (protecting an infringer s preclinical, pharmacokinetic studies under 271(e)(1), when the infringer reasonably believes the drug candidate may become the subject of an FDA drug application). 132 Id. at See id. at (stating that 271 (e)(1) leaves adequate room for experimentation on the road to regulatory approval, and the reasonable relation requirement is met when the

18 668 CARDOZO ARTS & ENTERTAINMENT [Vol. 32:651 preclinical research featuring drug candidates with commercial potential squarely under the research protection of 271(e)(1), when the research is likely create information used in a drug s FDA application. 134 As in Eli Lilly, the Integra Court continued to advance a broad interpretation of 271(e)(1). C. The Federal Circuit s Narrow Interpretation of 271(e)(1) In the 2011 decision of Classen Immunotherapies, Inc. v. Biogen Idec, the Federal Circuit barred the protection of a generic company s post-marketing uses of an immunization method developed by the patent holder, in a narrow interpretation of the 271(e)(1) exception. 135 In a divided opinion, the court declined to extend protection to a generic drug manufacturer s routine, voluntary studies following FDA approval of a patented immunization method, which evaluated the link between children s vaccinations and the risk of developing immune disorders. 136 To rationalize the exclusion of the infringer s post-marketing studies on adverse side effects of vaccination from 271(e)(1) protection, the majority emphasized the voluntary nature of the postapproval reports. 137 The court reiterated the need to restrict the research use exception to pre-marketing approval activities and highlighted the commercial nature of post-marketing studies, given the primary legislative purpose behind the research use exception, expediting generic regulatory approval. 138 Since the Classen court stated that the research exception was confined to purely non-commercial purposes, and the post-approval studies were linked to commercial activity, they were found to be indisputably beyond the scope of the research exception. 139 The Classen court found that the Integra holding supported its reasoning, emphasizing the non-commercial impact of the infringer s permissible, voluntary post-approval studies in Integra. 140 The court further distinguished Integra on its facts by noting that the preclinical research protected in Integra would likely lead to an NDA closely linked to the drug candidate under investigation, whereas the post-approval activities barred in Classen would not lead to an drugmaker has a reasonable basis for believing a patented compound may work to produce a particular physiological effect, and uses the compound in research that would likely result in an FDA submission). 134 Id. 135 Classen Immunotherapies, Inc. v. Biogen Idec, 659 F.3d 1057, 1057 (Fed. Cir. 2011). 136 Id. at Id. at Id. 139 Id. at (stating that the research use exception did not apply to activity conducted after FDA marketing approval, by further arguing that the infringer s activity was not research used to produce a new drug application, and beyond the exception s scope). 140 See id. at