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A new FDA Q&A document released on Jan. 12, 2016 describes 180-day exclusivity for generic-drug manufacturers and explains the number of conditions under which an abbreviated new drug applicant (ANDA) submitting a paragraph IV certification would forfeit eligibility to be the authorized generic manufacturer of a drug.
A new FDA Q&A document released on Jan. 12, 2016 describes 180-day exclusivity for generic-drug manufacturers and explains the number of conditions under which an abbreviated new drug applicant (ANDA) submitting a paragraph IV certification would forfeit eligibility to be the authorized generic manufacturer of a drug. The 180-day provision, which was originally a part of the Hatch-Waxman Amendments, was meant to provide an incentive for generic-drug manufacturers to challenge the patents that are covered in an originator’s ANDA as invalid, unenforceable, or not being infringed.
Although the goal of the 180 days of exclusivity was originally to encourage potential generic-drug manufacturers to release competitors into the market, some say that the actual effect of the provision is that it keeps all generic versions of drugs off the market for longer periods of time. This could be because the authorized generic-drug manufacturer strikes a reverse payment deal with the originator manufacturer (through deals often called pay-to-delay or pay-for-delay agreements) to agree to not bring the generic to market for a certain period of time.
Isn’t pay-for-delay considered an “agreement”?
The conditions in which a generic manufacturer would “forfeit” the right to the 180-day marketing period would be, as FDA writes in the Q&A document, “(1) failure to market; (2) withdrawal of application; (3) amendment of certification; (4) failure to obtain tentative approval; (5) entry into agreement with another applicant, the listed drug application holder, or a patent owner; and (6) expiration of all patents.”
It would seem that entering into a pay-for-delay agreement with the patent holder would merit immediate forfeiture of the 180-day marketing exclusivity. But, as Suchira Ghosh, counsel at Axinn, Veltrop & Harkrider LLP, tells BioPharm International, for a forfeiture to happen, the Attorney General (AG) or the Federal Trade Commission (FTC) would have to make a formal complaint about the reverse payment agreement and that agreement would have to be found in violation of antitrust laws. Only then could FDA revoke the right to the 180-day period of marketing exclusivity. Ghosh says that FDA has never once revoked this privilege.
"Although FDA states in the draft guidance that it has not yet applied this forfeiture provision to any ANDA applicants, presumably FDA could use this provision to strip a first applicant of its 180-day exclusivity if they enter into a pay-for-delay agreement that is held to be a violation of antitrust laws in a final decision by FTC or a court in a case brought by an AG or FTC," notes Ghosh. She says that even if an authorized generic-drug manufacturer settles a patent case, it will still seek to "hang onto their 180-day exclusivity."
The problem? The FTC has not been able to successfully prove in court that reverse payments are illegal. As a result, these payments continue, and authorized generic-drug manufacturers are able to collect money from originator companies via reverse payments as well as secure revenue as a result of providing the first authorized generic to a drug.
Timing is everything
So, why hasn’t FDA gotten more involved and stripped the marketing privileges away from an authorized generic-drug manufacturer for entering into a reverse payment? For a few important reasons, says Ghosh: “The 180-day exclusivity period has often been triggered by the first applicant and run by the time the antitrust merits get decided by a court. That’s probably the main reason why this forfeiture provision has not been used by FDA-the 180-day exclusivity period no longer exists by the time the suit is getting decided by court or by the time the drugmakers and FTC are in settlement talks.”
Additionally, FDA has made fewer forfeiture decisions as time has passed. “FDA is basically saying they will not make a forfeiture determination unless a subsequent applicant is ready for final approval within the first applicant’s 180-day window. It may be difficult for the stars to align so that a later filer is ready for final approval within that 180-day period,” she adds. Lastly, if a forfeiture would occur, it would likely be because of another provision: “The most common is the applicant’s failure to receive tentative or final approval within 30 months after ANDA submission,” says Ghosh. “It is very likely that this forfeiture provision could kick in to strip an applicant of its exclusivity before a final decision has been rendered in any antitrust action brought by the government.”