Tag: Drug Manufacturers

DEA Proposed Rule Would Limit Drug Manufacturer’s Annual Opioid Production

In yet another development on the fight to address the opioid epidemic, U.S. Attorney General Jeff Sessions announced on Tuesday, April 17th that the U.S. Drug Enforcement Administration (“DEA”) will issue a Notice of Proposed Rulemaking (“NPRM”) amending the controlled substance quota requirements in 21 C.F.R. Part 1303. The Proposed Rule was published in the Federal Register yesterday and seeks to limit manufacturers’ annual production of opioids in certain circumstances to “strengthen controls over diversion of controlled substances” and to “make other improvements in the quota management regulatory system for the production, manufacturing, and procurement of controlled substances.”[1]

Under the proposed rule, the DEA will consider the extent to which a drug is diverted for abuse when setting annual controlled substance production limits. If the DEA determines that a particular controlled substance or a particular company’s drugs are continuously diverted for misuse, the DEA would have the authority to reduce the allowable production amount for a given year. The objective is that the imposition of such limitations will “encourage vigilance on the part of opioid manufacturers” and incentivize them to take responsibility for how their drugs are used.

The proposed changes to 21 C.F.R. Part 1303 are fairly broad, but could lead to big changes in opioid manufacture if implemented. We have summarized the relevant changes below.

Section 1303.11: Aggregate Production Quotas

Section 1303.11 currently allows the DEA Administrator to use discretion in determining the quota of schedule I and II controlled substances for a given calendar year by weighing five factors, including total net disposal and net disposal trends, inventories and inventory trends, demand, and other factors that the DEA Administrator deems relevant. Now, the proposed rule seeks to add two additional factors to this list, including consideration of the extent to which a controlled substance is diverted, and consideration of U.S. Food and Drug Administration, Centers for Disease Control and Prevention, Centers for Medicare and Medicaid Services, and state data on legitimate and illegitimate controlled substance use. Notably, the proposed rule allows states to object to proposed, potentially excessive aggregate production quota and allows for a hearing when necessary to resolve an issue of material fact raised by a state’s objection.

Section 1303.12 and 1303.22: Procurement Quotas and Procedure for Applying for Individual Manufacturing Quotas

Sections 1303.12 and 13030.22 currently require controlled substance manufactures and individual manufacturing quota applicants to provide the DEA with its intended opioid purpose, the quantity desired, and the actual quantities used during the current and preceding two calendar years. The DEA Administrator uses this information to issue procurement quotas through 21 C.F.R. § 1303.12 and individual manufacturing quotas through 21 C.F.R. § 1303.22. The proposed rule’s amendments would explicitly state that the DEA Administrator may require additional information from both manufacturers and individual manufacturing quota applicants to help detect or prevent diversion. Such information may include customer identities and the amounts of the controlled substances sold to each customer. As noted, the DEA Administrator already can and does request additional information of this nature from current quota applicants. The proposed rule would only provide the DEA Administrator with express regulatory authority to require such information if needed.

Section 1303.13: Adjustments of Aggregate Production Quotas

Section 1303.13 allows the DEA administrator to increase or reduce the aggregate production quotas for basic classes of controlled substances at any time. The proposed rule would allow the DEA Administrator to weigh a controlled substance’s diversion potential, require transmission of adjustment notices and final adjustment orders to a state’s attorney general, and provide a hearing if necessary to resolve material factual issues raise by a state’s objection to a proposed, potentially excessive adjusted quota.

Section 1303.23: Procedures for Fixing Individual Manufacturing Quotas

The proposed rule seeks to amend Section 1303.23 to deem the extent and risk of diversion of controlled substances as relevant factors in the DEA Administrator’s decision to fix individual manufacturing quotas. According to the proposed rule, the DEA has always considered “all available information” in fixing and adjusting the aggregate production quota, or fixing an individual manufacturing quota for a controlled substance. As such, while the proposed rule’s amendment may require manufacturers to provide the DEA with additional information for consideration, it is not expected to have any adverse economic impact or consequences.

Section 1303.32: Purpose of Hearing 

Section 1303.32 currently grants the DEA Administrator to hold a hearing for the purpose of receiving factual evidence regarding issues related to a manufacturer’s aggregate production quota. The proposed rule would amend this section to conform to the amendments to sections 1303.11 and 1303.13 discussed herein, allowing the DEA Administrator to explicitly hold a hearing if he/she deems a hearing to be necessary under sections 1303.11(c) or 1303.13(c) based on a state’s objection to a proposed aggregate production quota.

Industry stakeholders will have an opportunity to submit comments for consideration by the DEA by May 4, 2018.

[1] DEA, NPRM 21 C.F.R. Part 1303 (Apr. 17, 2018).

 

©2018 Epstein Becker & Green, P.C. All rights reserved.

Federal Circuit’s Sandoz Decision Increases Importance of Post-Grant Proceedings to Biosimilar Developers

Sterne Kessler Goldstein Fox

On Friday, December 5, the U.S. Court of Appeals for the Federal Circuit rendered its decision in Sandoz v. Amgen, No. 2014-1693, a case with major implications for the emerging U.S. biosimilars industry. The decision addresses when and how a party seeking to launch a biosimilar product in the U.S. can initiate litigation to challenge the brand company’s potential blocking patents. This is the first instance in which the Federal Circuit has had the opportunity to address the scope and applicability of the Biologics Price Competition and Innovation Act (BPCIA), which established a formal pathway for biosimilar approval in the US.

Background

At issue in Sandoz is a litigation Sandoz, Inc. initiated against Amgen, Inc. and Hoffman-La Roche Inc. on June 24, 2013. Sandoz’s complaint seeks a declaratory judgment (DJ) that two patents owned by Roche and exclusively licensed to Amgen are invalid, unenforceable, and would not be infringed by the commercial marketing of Sandoz’s biosimilar version of Amgen’s blockbuster biologic product Enbrel® (etanercept). The patents at issue extend Amgen’s protection around etanercept an additional 15 years past the original patents. Sandoz filed its complaint against Amgen prior to filing any application with the FDA for approval to market its biosimilar etanercept product, which is currently in Phase III clinical trials. Sandoz will not file with the FDA until the Phase III trial is complete, and of course will not be able to market its version of etanercept in the US without FDA approval. At the time of suit, Amgen had not alleged Sandoz was currently doing anything that exposes it to liability for infringing Amgen’s patents rights around Enbrel®.

The District Court Decision

Amgen moved to dismiss Sandoz’s complaint, asserting that the court lacked jurisdiction to hear the case because no immediate and real controversy between the parties exists. In a brief order, the court granted Amgen’s motion to dismiss on two separate grounds. First, the court ruled that its discretion to enter a DJ in the case is subject to the provisions of the BPCIA, which sets specific limitations on the timing and conduct of any litigation arising from the filing of an application for approval to market a biosimilar. The court concluded that “neither a reference product sponsor, such as Amgen, nor [a biosimilar applicant] such as Sandoz, may file a lawsuit unless and until they have engaged in a series of statutorily–mandated exchanges of information” related to patents potentially in dispute. In this case, Sandoz had not complied with the exchanges as it had not even started the process by filing its application with the FDA.

Second, the court found that Sandoz had not established jurisdiction under traditional grounds because it had not established a real and immediate injury or threat of future injury caused by Amgen. The court noted that Amgen had never advised Sandoz that it intended to sue Sandoz, and that the mere allegation by Sandoz that it intended to file an application for FDA approval in the future was not sufficient to create a case on controversy. Sandoz appealed the district court order dismissing the action.

The Federal Circuit Decision

On appeal, Sandoz argued that the litigation provisions of the BPCIA only govern the statutory patent infringement litigation authorized by the Act after a biosimilar application is filed with the FDA, and do not apply to DJ actions in general. Sandoz further argued that nothing in the BPCIA can be construed to bar or limit in any way the ability to bring DJ actions to resolve patent disputes prior to filing a biosimilar application. Finally, Sandoz argued that the district court erred in concluding that Sandoz had not adequately demonstrated a sufficient actual case or controversy sufficient to allow the DJ action to proceed.

The Federal Circuit panel affirmed the district court’s dismissal of Sandoz’s complaint, concluding that Sandoz had not alleged an injury of sufficient immediacy and reality to create subject matter jurisdiction. The Federal Circuit noted that “a case of actual controversy” is a prerequisite to exercising declaratory judgment jurisdiction. The test for determining whether a case or controversy exists is whether “ there is a substantial controversy . . . of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” The Federal Circuit, however, declined to address the lower court’s interpretation of the BPCIA as barring a lawsuit by either the reference product sponsor or the biosimilar applicant unless and until the parties have engaged in the statutorily-mandated patent information exchanges.

In concluding that Sandoz’s complaint does not present a case or controversy, the Federal Circuit panel noted that there was no prior decision in which the Federal Circuit had found a case or controversy to exist when the only activity that would create exposure to potential infringement liability was a future activity requiring FDA approval that had not yet been sought. The court found the immediacy requirement lacking where the conclusion of Sandoz’s Phase III trial, which was a prerequisite for filing for FDA approval, was still several years away when Sandoz filed suit. The court refused to assume that the Phase III trial would be successful, and noted that the trial could in fact uncover issues with Sandoz’s product that could push the application filing date back even further. Alternatively, the clinical trial could fail resulting in Sandoz never seeking FDA approval, or Sandoz could modify its proposed product and file for approval on the modified product. The court also noted that Sandoz’s complaint lacked specificity as to how Amgen’s patents read or don’t read on Sandoz’s product; and instead relies on prior general assertions by Amgen that the patents at issue cover Enbrel, that Amgen will assert the patents against products that compete with Enbrel, and that Sandoz intends to market a competing product at some point in the future. Ultimately, the court concluded that the events allegedly exposing Sandoz to infringement liability may not occur as anticipated or may not occur at all. The court found that Sandoz also had not shown that it would suffer any “immediate and substantial adverse impact” from not being able to seek or secure a patent adjudication before filing its application for FDA approval.

Unanswered Questions

The Federal Circuit specifically stated that its decision was limited to the particular facts before it, and does not address whether Sandoz would be able to seek declaratory judgment jurisdiction once it files its FDA application, or whether the BPCIA forecloses declaratory judgment actions outside of the statutorily-mandated patent information exchange once the application is accepted by the FDA. The decision also did not clarify the additional issue disputed by the parties concerning what constitutes sufficient “notice of commercial marketing,” which the BPCIA states must be provided by the biosimilar applicant prior to launch.

Increased Important of Post-Grant Proceedings before the USPTO

Although the Sandoz court made a point to limit the scope of its decision to the facts before it, the decision casts substantial doubt on the ability of any biosimilar developer to bring a district court action challenging the reference product sponsor’s patents prior to filing a biosimilar application with the FDA and triggering the patent information exchange provisions of the BPCIA. At the same time, the decision elevates the importance to biosimilar developers of post-grant challenges before the U.S. Patent and Trademark Office, such as inter partes review (IPR) and post-grant review (PGR), as means for obtaining some degree of early patent certainty before initiating the FDA approval process. IPRs in particular have proven to be a potent weapon for generic drug manufacturers in the context of ANDA litigation. The lower standard of proof required to show invalidity, the expedited pace of the proceedings, and the decreased cost in comparison to district court litigation coupled with the extremely high rate in which patent claims are being invalidated provide generic manufacturers with tremendous leverage to obtain favorable settlements with brand companies. We expect that the Sandoz decision should only increase the speed with which post-grant proceedings are adopted in the biosimilar arena.

ARTICLE BY

Timothy J. Shea, Jr., PhD.
Paul A. Calvo
OF
Sterne, Kessler, Goldstein & Fox P.L.L.C.