[Federal Register Volume 65, Number 135 (Thursday, July 13, 2000)]
[Rules and Regulations]
[Pages 43233-43235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-17652]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 314

[Docket No. 85N-0214]


Court Decisions, ANDA Approvals, and 180-Day Exclusivity

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 governing the definition of court 
decisions that affect the timing of certain abbreviated new drug 
application (ANDA) approvals and the beginning of 180-day exclusivity 
under the Federal Food, Drug, and Cosmetic Act (the act). The interim 
rule eliminates the current definition of the court decision. This 
change is necessitated by recent court decisions on these issues.

DATES: This interim rule is effective July 18, 2000. Submit written 
comments by October 11, 2000.

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, Center for Drug 
Evaluation and Research (HFD-7), Food and Drug Administration, 5600 
Fishers Lane, Rockville, MD 20857, 301-594-2041.

SUPPLEMENTARY INFORMATION:

[[Page 43234]]

I. Background

    The Drug Price Competition and Patent Term Restoration Act of 1984 
(Public Law 98-417) (the Hatch-Waxman Amendments) amended the act. The 
Hatch-Waxman Amendments created section 505(j) of the act (21 U.S.C. 
355(j)), which established the ANDA approval procedures. These 
procedures allow for the approval and marketing of lower priced generic 
drug products through a process that includes, among other elements, a 
listing of innovator drug patents, a procedure for certification to 
listed patents and judicial review of patent claims, and a period of 
180 days of marketing exclusivity for certain ANDA applicants who 
challenge innovator patents.
    FDA's interpretation of two provisions of section 505(j) of the act 
have been affected by recent court decisions interpreting the phrase 
``decision of a court'' or ``court decision.'' Section 
505(j)(5)(B)(iii) of the act governs the approval of ANDA's when a 
patent owner or new drug application (NDA) holder has brought a timely 
patent infringement action in response to an ANDA applicant's notice of 
filing of a paragraph IV certification to a listed patent. Section 
505(j)(5)(B)(iv) of the act governs the eligibility for and timing of 
180-day exclusivity. The regulations implementing these statutory 
provisions are found in Sec. 314.107 (21 CFR 314.107). Certain aspects 
of these regulations have been successfully challenged in TorPharm, 
Inc., v. Shalala, No. 97-1925, 1997 U.S. Dist. LEXIS 21983 (D.D.C. 
Sept. 15, 1997), appeal withdrawn and remanded, 1998 U.S. App. LEXIS 
4681 (D.C. Cir. Feb. 5, 1998); vacated No. 97-1925 (D.D.C. Apr. 9, 
1998); and Mylan Pharmaceuticals, Inc., v. Shalala, No. 99-2995, slip 
op. (D.D.C. Jan. 4, 2000). In response to this litigation, FDA is 
issuing this interim rule withdrawing from Sec. 314.107 the definitions 
related to court decisions.
    The statutory provisions at issue in the TorPharm and Mylan cases 
apply the concept of a court decision to the timing of certain ANDA 
approvals and to the start of 180-day exclusivity. There is a 30-month 
statutory bar to approval of an ANDA that is the subject of patent 
infringement litigation except if ``before the expiration of such 
period the court decides that such patent is invalid or not infringed, 
the approval will be made effective on the date of the court decision'' 
(section 505(j)(5)(B)(iii)(I) of the act (emphasis added)). In 
implementing this provision in current Sec. 314.107(e)(1), FDA 
interpreted ``court'' to mean ``the court that enters final judgment 
from which no appeal can be or has been taken.'' The agency's reasons 
for adopting this interpretation are discussed in the preambles to the 
proposed and final rules implementing the 1984 Drug Price Competition 
and Patent Term Restoration Act (54 FR 28872 at 28893 through 28895, 
July 10, 1989, and 59 FR 50338 at 50352 through 50354, October 3, 
1994).
    Certain court decisions are also important for 180-day generic drug 
exclusivity. FDA's interpretation of ``court'' in the court decision 
described in section 505(j)(5)(B)(iii)(I) of the act was influenced by 
the role such a decision plays in 180-day exclusivity. The 180-day 
period of exclusivity can begin on either: (1) The date of first 
commercial marketing; or (2) ``the date of a decision of a court * * * 
holding the patent which is the subject of the [paragraph IV] 
certification to be invalid, or not infringed, whichever is earlier'' 
(section 505(j)(5)(B)(iv) of the act (emphasis added)). As described in 
the preambles to the implementing regulations (54 FR 28893 through 
28895, and 59 FR 50352 through 50354), FDA believed that for the 180-
day exclusivity to have real meaning for the eligible ANDA the court 
decision triggering the exclusivity must be the one that finally 
resolves the patent infringement litigation related to the ANDA. 
Therefore, for purposes of section 505(j)(5)(B)(iv) of the act, FDA 
determined that ``court'' means ``the court that enters final judgment 
from which no appeal can be or has been taken,'' as stated in current 
Sec. 314.107(e)(1).
    FDA's interpretation of the term ``court'' has been successfully 
challenged in the context of both the timing of ANDA approvals and the 
commencement of 180-day exclusivity. In TorPharm v. Shalala, the D.C. 
District Court found FDA's interpretation not supported by the statute 
and directed FDA to approve an ANDA upon a decision of the district 
court finding a patent invalid, unenforceable, or not infringed. When 
the case became moot, FDA's appeal of that decision was withdrawn, and 
the district court opinion was vacated. In the period since the 
TorPharm decision, FDA has continued to apply the definition of 
``court'' set out at Sec. 314.107(e). Recently, in Mylan 
Pharmaceuticals, Inc., v. Shalala, the D.C. District Court found FDA's 
interpretation of court as used in the 180-day exclusivity context 
inconsistent with the statute's plain meaning. However, the court also 
determined that the applicant who relied in good faith on FDA's 
interpretation of the 180-day exclusivity provision should not be 
punished by losing its exclusivity. The court therefore refused to 
order FDA to begin the running of 180-day exclusivity upon the decision 
of the district court in the patent litigation at issue.
    These recent decisions add considerable uncertainty to FDA's 
implementation of the ANDA approval and 180-day generic drug 
exclusivity programs. These regulatory programs already have been 
disrupted by the changes in eligibility for 180-day exclusivity 
necessitated by Mova Pharmaceutical Corp., v. Shalala, 140 F.3d 1060 
(D.C. Cir. 1998), and Granutec, Inc., v. Shalala, 46 U.S.P.Q.2d 1398 
(4th Cir. 1998). Therefore, in determining its response to the TorPharm 
and Mylan decisions, a primary concern for the agency has been to 
identify an approach that will minimize further disruption and provide 
the regulated industry with reasonable guidance for making future 
business decisions.
    The government has not appealed the Mylan decision and will follow 
that court's interpretation of the statute in approving ANDA's and 
calculating the commencement of 180 days of exclusivity. Although the 
agency believes that the statutory provisions at issue may properly be 
interpreted as FDA set out in Sec. 314.107(e), the agency nonetheless 
has determined that because of the confusion and uncertainty created by 
the repetitive litigation of these issues, it is in the interest of the 
regulated industry and the agency to accept the interpretation of the 
TorPharm and Mylan courts. The agency will incorporate the TorPharm and 
Mylan courts' interpretation of the statute into the final rule 
implementing the changes in 180-day exclusivity proposed in the Federal 
Register of August 6, 1999 (64 FR 42873).
    In the period before the final rule implementing changes in 180-day 
exclusivity is completed, the agency is issuing this interim rule to 
remove Sec. 314.107(e)(1) through (e)(2)(iii). FDA issued a guidance 
for industry stating that the agency would continue to apply the 
interpretation set out in Sec. 314.107(e)(1) through (e)(2)(iii) in 
certain circumstances, and that the interpretation urged by the courts 
would be applied prospectively.\1\ This

[[Page 43235]]

guidance will apply until revoked or revised by the agency.
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    \1\ Guidance for industry, ``Court Decisions, ANDA Approvals, 
and 180-Day Exclusivity Under the Hatch-Waxman Amendments to the 
Federal Food, Drug, and Cosmetic Act,'' March 2000. This guidance is 
available on the Internet at http://www.fda.gov/cder/guidance/index.htm.
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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 
impact 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 (Public Law 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 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 agencies to analyze 
regulatory options that would minimize any significant impact of a rule 
on small entities. Because good cause exists under 5 U.S.C. 553(d)(3) 
for making this interim rule effective in less than 30 days, the agency 
is not required to analyze regulatory options under the Regulatory 
Flexibility Act (see 5 U.S.C. 604(a)). Therefore, under the Regulatory 
Flexibility Act, no further analysis is required.
    Section 202(a) of the Unfunded Mandates Reform Act requires that 
agencies prepare a written statement of anticipated costs and benefits 
before proposing any rule that may result in an expenditure by State, 
local, and tribal governments, in the aggregate, or by the private 
sector, of $100 million in any one year (adjusted annually for 
inflation). The elimination of the definition of ``court'' in 
Sec. 314.107(e)(1) through (e)(2)(iii) will not result in any 
significant increased expenditures by State, local, and tribal 
governments or the private sector. The Unfunded Mandates Reform Act 
does not require FDA to prepare a statement of costs and benefits for 
the interim rule, because the interim rule is not expected to result in 
any 1-year expenditure that would exceed $100 million adjusted for 
inflation. The current inflation-adjusted statutory threshold is $110 
million.
    This interim rule is intended to bring FDA's regulations into 
conformance with the TorPharm and Mylan court decisions. The agency 
believes that this interim rule is necessary and that: (1) It is 
consistent with the principles of Executive Order 12866, (2) it is not 
a significant regulatory action under that Order, (3) an analysis is 
not required under the Regulatory Flexibility Act, and (4) it is not 
likely to result in an annual expenditure in excess of $100 million.

IV. Federalism

    FDA has analyzed this interim rule in accordance with the 
principles set forth in Executive Order 13132. FDA has determined that 
the interim rule does not contain policies that have substantial direct 
effects on the States, on the relationship between the National 
Government and the States, or on the distribution of power and 
responsibilities among the various levels of government. Accordingly, 
the agency has concluded that the interim rule does not contain 
policies that have federalism implications as defined in the order and, 
consequently, a federalism summary impact statement is not required.

V. Paperwork Reduction Act of 1995

    This interim rule contains no collections of information, and 
clearance by the Office of Management and Budget under the Paperwork 
Reduction Act of 1995 (Public Law 104-13) is not required.

VI. Effective Date

    The agency is issuing these amendments as an interim rule effective 
July 18, 2000. This action is being taken to remove the provisions of 
Sec. 314.107(e)(1) through (e)(2)(iii), which were determined by the 
TorPharm and Mylan courts to be unsupported by the act. These decisions 
have rendered the regulatory provisions unenforceable, and the agency 
can find no good reasons to retain the provisions in the 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)(3)(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.

VII. Opportunity for Public Comment

    Interested persons may submit to the Dockets Management Branch 
(address above) written comments regarding this interim rule, on or 
before October 11, 2000. 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 
are available for public examination 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

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

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

    2. Section 314.107 is amended by removing paragraphs (e)(1) through 
(e)(2)(iii); by redesignating paragraph (e)(2)(iv) as paragraph (e); 
and by revising the heading for newly redesignated paragraph (e) to 
read as follows:


Sec. 314.107  Effective date of approval of a 505(b)(2) application or 
abbreviated new drug application under section 505(j) of the act.

* * * * *
    (e) Notification of court actions. * * *
* * * * *

    Dated: June 27, 2000.
Margaret M. Dotzel,
Associate Commissioner for Policy.
[FR Doc. 00-17652 Filed 7-12-00; 8:45 am]
BILLING CODE 4160-01-F