[Federal Register Volume 63, Number 214 (Thursday, November 5, 1998)]
[Rules and Regulations]
[Pages 59710-59712]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29610]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 314

[Docket No. 85N-0214]


Effective Date of Approval of an Abbreviated New Drug Application

AGENCY: Food and Drug Administration, HHS.

ACTION: Interim rule; opportunity for public comment.

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SUMMARY: The Food and Drug Administration (FDA) is issuing an interim 
rule to amend its regulations establishing the effective date of 
approval of abbreviated new drug applications (ANDA's). The interim 
rule eliminates the requirement that an ANDA applicant successfully 
defend a patent infringement suit to be eligible for 180 days of 
marketing exclusivity.

DATES: The interim rule is effective November 10, 1998. Submit written 
comments by February 3, 1999.

ADDRESSES: Submit written comments to the Dockets Management Branch 
(HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, 
Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: Virginia G. Beakes or Wayne H. 
Mitchell, Center for Drug Evaluation and Research (HFD-7), Food and 
Drug Administration, 5600 Fishers Lane, Rockville, MD 20857, 301-594-
2041.

SUPPLEMENTARY INFORMATION:

I. Background

    The Drug Price Competition and Patent Term Restoration Act of 1984 
(Pub. L. 98-417) (the Hatch-Waxman Amendments) amended the Federal 
Food, Drug, and Cosmetic Act (the act). The Hatch-Waxman Amendments 
created section 505(j) of the act (21 U.S.C. 355(j)). Section 505(j) 
created the current ANDA approval process, which allows lower-priced 
generic versions of previously approved innovator drugs to be approved 
and brought on the market.
    Innovator drug applicants must include in their new drug 
application (NDA) information about patents that claim the drug product 
that is the subject of the NDA. FDA publishes this patent information 
as part of the ``Approved Drug Products With Therapeutic Equivalence 
Evaluations,'' which is generally known as the ``Orange Book.''
    An ANDA applicant must include in the ANDA a patent certification 
described in section 505(j)(2)(A)(vii) of the act. The certification 
must make one of the following statements: (1) That no patent 
information on the drug product that is the subject of the ANDA has 
been submitted to FDA; (2) that such patent has expired; (3) the date 
on which such patent expires; or (4) that such patent is invalid or 
will not be infringed by the manufacture, use, or sale of the new drug 
for which the ANDA is submitted. This last certification is known as a 
``paragraph IV certification.'' A notice of the paragraph IV 
certification must be provided to each owner of the patent which is the 
subject of the certification and to the holder of the approved NDA to 
which the ANDA refers. The submission of an ANDA for a drug product 
that is claimed in a patent is an infringing act, if that drug product 
is intended to be marketed before the expiration of the patent, and may 
be the basis for patent litigation.
    Section 505(j)(5)(B)(iv)\1\ of the act provides an incentive for 
generic manufacturers to challenge patents that may be invalid or 
unenforceable by filing paragraph IV certifications, thereby inviting a 
patent action against them by the patent owner. Section 
505(j)(5)(B)(iv) of the act states that:
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    \1\ Prior to the enactment of the Food and Drug Administration 
Modernization Act (the Modernization Act) of 1997, 180-day 
exclusivity was described at section 505(j)(4)(B)(iv) of the act. 
The Modernization Act added new provisions to section 505(j) that 
resulted in a renumbering of the sections.
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    If the [ANDA] contains a [paragraph IV certification] and is for 
a drug for which a previous application has been submitted under 
this subsection continuing [sic] such a certification, the 
application shall be made

[[Page 59711]]

effective not earlier than one hundred and eighty days after--
    (I) the date the Secretary receives notice from the applicant 
under the previous [ANDA] of the first commercial marketing of the 
drug under the previous [ANDA] or
    (II) the date of a decision of a court\2\ in [a patent 
infringement action] holding the patent which is the subject of the 
certification to be invalid or not infringed, whichever is earlier.
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    \2\ The agency interprets the term ``court'' to refer to the 
court that enters final judgment from which no appeal can be or has 
been taken (Sec. 314.107(e)).
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    This means that an ANDA applicant whose application contains a 
paragraph IV certification is protected from competition from 
subsequent generic versions of the same drug product for 180 days after 
either the first commercial marketing of the first ANDA applicant's 
drug or a decision of a court holding the patent that is the subject of 
the paragraph IV certification to be invalid or not infringed. This 
marketing protection is commonly known as ``180-day exclusivity'' and 
was created as an incentive to generic manufacturers to challenge 
patents that may be invalid, not infringed, or unenforceable.
    In the Federal Register of October 3, 1994 (59 FR 50338 at 50367), 
FDA published the final rule for implementing the patent and marketing 
exclusivity provisions of the Hatch-Waxman Amendments. Section 
314.107(c)(1) (21 CFR 314.107(c)(1)), the regulation implementing 
section 505(j)(5)(B)(iv) of the act, provides:
    If an abbreviated new drug application contains a certification 
that a relevant patent is invalid, unenforceable, or will not be 
infringed and the application is for a generic copy of the same 
listed drug for which one or more substantially complete abbreviated 
new drug applications were previously submitted containing a 
certification that the same patent was invalid, unenforceable, or 
would not be infringed and the applicant submitting the first 
application has successfully defended against a suit for patent 
infringement brought within 45 days of the patent owner's receipt of 
notice submitted under Sec. 314.95, approval of the subsequent 
abbreviated new drug application will be made effective no sooner 
than 180 days from whichever of the following dates is earlier:
    (i) The date the applicant submitting the first application 
first commences commercial marketing of its drug product; or
    (ii) The date of a decision of the court holding the relevant 
patent invalid, unenforceable, or not infringed.
(Emphasis added)
    The proposal containing Sec. 314.107(c)(1), published in the 
Federal Register of July 10, 1989 (54 FR 28872 at 28929), proposing the 
requirement that the first ANDA applicant submitting a paragraph IV 
certification be sued for patent infringement in order to obtain the 
180-day exclusivity. This interpretation was believed to be most 
consistent with the language of the Hatch-Waxman Amendments and 
furthered the congressional intent to encourage challenges to patents 
that may be invalid or unenforceable (54 FR 28872 at 28894). In 
response to a comment on the proposed rule, FDA added a requirement to 
the final rule that the first ANDA applicant submitting a paragraph IV 
certification successfully defend a patent infringement suit to be 
entitled 180-day exclusivity. The ``successful defense'' requirement 
was established to eliminate ``an incentive for frivolous claims of 
patent invalidity or noninfringement because it would give ANDA 
applicants exclusivity even if the applicant was unsuccessful in 
defending against the patent owner's lawsuit'' (59 FR 50338 at 50353).
    FDA's requirements for 180-day exclusivity have been challenged in 
Inwood Laboratories, Inc. v. Young, 723 F. Supp. 1523 (D.D.C. 1989), 
vacated as moot, 43 Fed. 3d 712 (D.C. Cir. 1989); Mova Pharmaceutical 
Corp. v. Shalala, 955 F. Supp. 128 (D.D.C. 1997), and Granutec, Inc. et 
al. v. Shalala et al., No. 5:97-CV-485-BO(1) (E.D.N.C. July 3, 1997). 
The district courts in both Inwood and Mova held that 180 days of 
marketing exclusivity should be granted to the first ANDA applicant who 
files a paragraph IV certification, regardless of whether the applicant 
is subsequently sued for patent infringement. Following the Inwood 
decision and the initial district court decision in Mova, FDA 
determined that it would be appropriate to acquiesce in the courts' 
decisions until the issue was resolved by the appellate courts.
    The Mova decision was upheld in the U.S. Court of Appeals for the 
District of Columbia Circuit, Mova Pharmaceutical Corp. v. Shalala No. 
97-5082, 1998 U.S. App. Lexis 7391 (D.C. Cir. Apr. 14, 1998). Following 
the circuit court decision, on June 1, 1998, the district court in Mova 
entered an order stating that the successful defense requirement of 
Sec. 314.107(c)(1) is invalid and permanently enjoining FDA from 
enforcing it.
     Subsequent to the district court decision in Mova and FDA's 
acquiesence, but prior to the Court of Appeals' decision, the U.S. 
District Court for the Eastern District of North Carolina addressed the 
validity of Sec. 314.107(c)(1) in Granutec v. Shalala and, in a holding 
contrary to the earlier Mova district court decision, ordered FDA to 
follow its regulations in approving ANDA's for ranitidine 
hydrochloride. The Granutec decision was stayed and appealed to the 
U.S. Court of Appeals for the 4th Circuit, which reversed the district 
court's decision.
    Both the U.S. Court of Appeals for the District of Columbia Circuit 
and the U.S. Court of Appeals for the 4th Circuit held that FDA's 
interpretation of section 505(j)(5)(B)(iv) as expressed in 
Sec. 314.107(c)(1) is unsupported by the act. FDA has not appealed 
either decision. The effect of these decisions, together with the June 
1, 1998, order of the district court in Mova, is that FDA will not 
enforce the ``successful defense'' provision of Sec. 314.107(c)(1). 
Accordingly, FDA is instituting this rulemaking procedure to remove the 
``successful defense'' provision from Sec. 314.107(c)(1), and the 
related provision in Sec. 314.107(c)(4).
     Before either court of appeals' decision issued, in the Federal 
Register of November 28, 1997 (62 FR 63268), FDA published a 
clarification stating that FDA would apply Sec. 314.107(c)(1) as 
written, including the ``successful defense'' provision. That 
clarification is hereby withdrawn.
    In the near future, FDA will publish a proposed rule that will more 
extensively address the agency's interpretation of section 
505(j)(5)(B)(iv) of the act in a manner consistent with the Mova and 
Granutec decisions. An opportunity for public comment will be provided 
when the document is published.

II. Environmental Impact

    The agency has determined under 21 CFR 25.30(h) that this action is 
of a type that does not individually or cumulatively have a significant 
effect on the human environment. Therefore, neither an environmental 
assessment nor an environmental impact statement is required.

III. Analysis of Impacts

    FDA has examined the impacts of the interim rule under Executive 
Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the 
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Order 
12866 directs agencies to assess all costs and benefits of available 
regulatory alternatives and, when regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity). Executive Order 12866 
classifies a rule as significant if it meets any one of a number of 
specified conditions, including having an annual effect on the economy 
of $100 million or adversely

[[Page 59712]]

affecting in a material way a sector of the economy, competition, or 
jobs, or if it raises novel legal or policy issues. The agency believes 
that this interim rule is consistent with the regulatory philosophy and 
principles identified in the Executive Order. In addition, the interim 
rule is not a significant regulatory action as defined by the Executive 
Order and so is not subject to review under the Executive Order.
    The Regulatory Flexibility Act requires that if a rule has a 
significant economic impact on a substantial number of small entities, 
the agency must analyze regulatory options to minimize the economic 
impact on small entities. The agency certifies that this interim rule 
will not have a significant economic impact on a substantial number of 
small entities. Therefore, under the Regulatory Flexibility Act, no 
further analysis is required.
    The Unfunded Mandates Reform Act requires an agency to prepare a 
budgetary impact statement before promulgating any rule likely to 
result in a Federal mandate that may result in expenditures by State, 
local, and tribal governments or the private sector of $100 million 
(adjusted annually for inflation) in any 1 year. The elimination of the 
``successful defense'' provision of Sec. 314.107(c)(1), and the related 
provision in Sec. 314.107(c)(4), will not result in any significant 
increased expenditures by State, local, and tribal governments or the 
private sector. Because this interim rule will not result in an 
expenditure of $100 million or more on any governmental entity or the 
private sector, no budgetary impact statement is required.
    This interim rule is intended to bring FDA's regulations into 
conformance with the Granutec and Mova court decisions. The agency 
believes that this interim rule is necessary and that it is consistent 
with the principles of Executive Order 12866; that it is not a 
significant regulatory action under that Order; that it will not have a 
significant economic impact on a substantial number of small entities; 
and that it is not likely to result in an annual expenditure in excess 
of $100 million.

IV. Paperwork Reduction Act of 1995

    This interim rule contains no collections of information, 
therefore, clearance by the Office of Management and Budget under the 
Paperwork Reduction Act of 1995 is not required.

V. Effective Date

    The agency is issuing these amendments as an interim rule effective 
November 10, 1998. This action is being issued to remove the 
``successful defense'' provision of Sec. 314.107(c)(1), and the related 
provision in Sec. 314.107(c)(4). This action is necessary because both 
the Granutec and Mova courts have found the ``successful defense'' 
provision to be without support in the act. Indeed, the Mova court has 
ordered FDA not to enforce the ``successful defense'' provision of 
Sec. 314.107(c)(1). These decisions have rendered the ``successful 
defense'' provision, and the related provision in Sec. 314.107(c)(4), a 
nullity, and FDA can find no reason to retain the provisions in its 
regulations. For the foregoing reasons, FDA finds, for good cause, that 
notice and public procedure would be impracticable, unnecessary, and 
contrary to the public interest; therefore, a public comment period 
before the establishment of this interim rule may be dispensed with 
under 5 U.S.C. 553(b)(B) and Sec. 10.40(e)(1) (21 CFR 10.40(e)(1)). In 
addition, the Commissioner of Food and Drugs finds good cause under 5 
U.S.C. 553(d)(3) and Sec. 10.40(c)(4)(ii) for making this interim rule 
effective in less than 30 days.

VI. Opportunity for Public Comment

    Interested persons may, on or before February 3, 1999, submit to 
the Dockets Management Branch (address above) written comments 
regarding this interim rule. FDA will use any comments received to 
determine whether this interim rule should be modified or revoked. Two 
copies of any comments are to be submitted, except that individuals may 
submit one copy. Comments are to be identified with the docket number 
found in brackets in the heading of this document. Received comments 
may be seen in the Dockets Management Branch between 9 a.m. and 4 p.m., 
Monday through Friday.

List of Subjects in 21 CFR Part 314

    Administrative practice and procedure, Confidential business 
information, Drugs, Reporting and recordkeeping requirements.
    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, 21 CFR part 
314 is amended as follows:

PART 314--APPLICATIONS FOR FDA APPROVAL TO MARKET A NEW DRUG OR AN 
ANTIBIOTIC DRUG

    1. The authority citation for 21 CFR part 314 is revised to read as 
follows:

    Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 371, 374, 
379e.


Sec. 314.107  [Amended]

    2. Section 314.107 Effective date of approval of a 505(b)(2) 
application or abbreviated new drug application under section 505(j) of 
the act is amended in paragraph (c)(1) by removing the phrase ``and the 
applicant submitting the first application has successfully defended 
against a suit for patent infringement brought within 45 days of the 
patent owner's receipt of notice submitted under Sec. 314.95'' and in 
paragraph (c)(4) by removing the phrase ``if sued for patent 
infringement''.

    Dated: October 30, 1998.
William B. Schultz,
Deputy Commissioner for Policy.
[FR Doc. 98-29610 Filed 11-2-98; 11:57 am]
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