[Federal Register Volume 67, Number 206 (Thursday, October 24, 2002)]
[Proposed Rules]
[Pages 65448-65465]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-27082]



[[Page 65447]]

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Part III





Department of Health and Human Services





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Food and Drug Administration



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21 CFR Part 314



Applications for FDA Approval to Market a New Drug: Patent Listing 
Requirements and Application of 30-Month Stays on Approval of 
Abbreviated New Drug Applications Certifying That a Patent Claiming a 
Drug is Invalid or Will Not be Infringed; Proposed Rule

  Federal Register / Vol. 67, No. 206 / Thursday, October 24, 2002 / 
Proposed Rules  

[[Page 65448]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 314

[Docket No. 02N-0417]
RIN 0910-AC48


Applications for FDA Approval to Market a New Drug: Patent 
Listing Requirements and Application of 30-Month Stays on Approval of 
Abbreviated New Drug Applications Certifying That a Patent Claiming a 
Drug Is Invalid or Will Not be Infringed

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: The Food and Drug Administration (FDA) is proposing to amend 
its patent listing requirements for new drug applications (NDAs). The 
proposal would clarify the types of patents that must and must not be 
listed and revise the declaration that NDA applicants must provide 
regarding their patents to help ensure that NDA applicants list only 
appropriate patents. The proposal would also revise the regulations 
regarding the effective date of approval for certain abbreviated new 
drug applications (ANDAs) and certain applications submitted under 
section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act (the act) 
(505(b)(2) applications). In certain situations, Federal law bars FDA 
from making the approval of an ANDA or 505(b)(2) application effective 
for 30 months if the applicant certified that the patent claiming a 
drug is invalid or will not be infringed, and the patent owner or NDA 
holder brings suit for patent infringement. The proposal also would 
state that there will be only one opportunity for a 30-month stay in 
the approval date of each ANDA or 505(b)(2) application. The proposal 
is designed to make the patent listing process more efficient and to 
enhance the ANDA and 505(b)(2) application approval processes.

DATES: Submit written or electronic comments by December 23, 2002. 
Submit written comments on the information collection requirements by 
November 25, 2002.

ADDRESSES: Submit written comments to the Dockets Management Branch 
(HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, 
Rockville, MD 20852. Submit electronic comments to http://www.fda.gov/dockets/ecomments. Submit written comments on the information 
collection provisions to the Office of Information and Regulatory 
Affairs, Office of Management and Budget (OMB), New Executive Office 
Bldg., 725 17th St. NW., rm. 10235, Washington, DC 20503, Attn: Stuart 
Shapiro, Desk Officer for FDA.

FOR FURTHER INFORMATION CONTACT: Jarilyn Dupont, Office of Policy, 
Planning, and Legislation (HFW-14), Food and Drug Administration, 5600 
Fishers Lane, Rockville, MD 20857, 301-827-3360.

SUPPLEMENTARY INFORMATION:

I. Background

A. What Is the Relationship Between Patent Listing, Patent 
Certification, and the Date of Approval for Certain Applications?

    Title I of the Drug Price Competition and Patent Term Restoration 
Act (Public Law 98-417, 98 Stat. 1585 (1984) (``Hatch-Waxman 
amendments'')) amended the act to authorize the approval of duplicate 
or ``generic'' versions of approved drug products. Title I also amended 
section 505(b)(1) of the act (21 U.S.C. 355(b)(1)) by requiring all NDA 
applicants to file, as part of the NDA, ``the patent number and the 
expiration date of any patent which claims the drug for which the 
applicant submitted the application or which claims a method of using 
such drug and with respect to which a claim of patent infringement 
could reasonably be asserted if a person not licensed by the owner 
engaged in the manufacture, use, or sale of the drug.'' Section 
505(c)(2) of the act imposes a similar patent listing obligation on 
persons whose NDAs we have approved when the NDA holder could not have 
filed the patent information with its application (either because the 
application was filed before the act required NDA applicants to submit 
patent information or because the patent issued after we had approved 
the NDA).
    We publish patent information in our approved drug products list 
entitled ``Approved Drug Products With Therapeutic Equivalence 
Evaluations.'' The list is known popularly as the ``Orange Book'' 
because of its orange-colored cover.
    The Hatch-Waxman amendments also require persons submitting a 
505(b)(2) application or ANDA to make certifications regarding the 
listed patents pertaining to the drug which they intend to duplicate 
(see sections 505(b)(2)(A)(i) through (b)(2)(A)(iv) and 
505(j)(2)(A)(vii)(I) through (j)(2)(A)(vii)(IV) of the act). In brief, 
these certifications state that:
    [sbull] Patent information has not been filed;
    [sbull] The patent has expired;
    [sbull] The patent will expire on a specific date; or
    [sbull] The patent is invalid or will not be infringed.
    If the ANDA or 505(b)(2) application applicant certifies that the 
patent is invalid or will not be infringed (a certification known as a 
``paragraph IV'' certification because it is the fourth type of patent 
certification described in the act), the act requires the applicant to 
notify the patent owner and NDA holder (see sections 505(b)(3) and 
505(j)(2)(B) of the act.) In general, the notice states that an 
abbreviated application has been submitted for the drug with respect to 
which the paragraph IV certification is made and also includes a 
``detailed statement of the factual and legal basis of the applicant's 
opinion that the patent is not valid or will not be infringed'' (id.). 
If an action for patent infringement is brought within 45 days after 
the paragraph IV certification has been received, then we may not make 
the approval of an abbreviated application effective for 30 months, or 
such shorter or longer period as a court may order or the date of a 
court decision (see sections 505(c)(3)(C) and 505(j)(4)(B)(iii) of the 
act).
    These statutory provisions reflect the Hatch-Waxman amendments' 
attempt to balance two competing interests: Promoting competition 
between ``brand-name'' and ``generic'' drugs and encouraging research 
and innovation. The act promotes competition by creating a process to 
expedite the filing and approval of ANDAs and 505(b)(2) applications 
and for resolving challenges to patents before marketing begins. At the 
same time, the act seeks to protect the patent owner's or NDA holder's 
interests by giving it the opportunity to list patents, to receive 
paragraph IV certifications, and to delay an ANDA's or 505(b)(2) 
application's effective date of approval during patent infringement 
litigation. (We will refer to the date the approval is made effective 
as the ``approval date'' throughout the remainder of this preamble.)
    We published regulations pertaining to patent listing and patent 
certifications in the Federal Register on October 3, 1994 (59 FR 
50338). The regulations regarding the submission of patent information 
are at Sec. Sec.  314.50(h) and 314.53 (21 CFR 314.50(h) and 314.53), 
while the patent certification requirements are at Sec. Sec.  314.50(i) 
and 314.94(a)(12) for 505(b)(2) applications and ANDAs respectively.

[[Page 65449]]

B. What Events Led to This Proposal?

    In recent years, we have seen NDA applicants list new patents 
shortly before other listed patents for the same drug product are 
scheduled to expire. Some listings, such as those for BuSpar (buspirone 
hydrochloride), Paxil (paroxetine hydrochloride), Tiazac (diltiazem 
hydrochloride), and Prilosec (omeprazole), have resulted in high 
profile litigation. (We discuss some of these cases in section II.A of 
this document.) A number of disputes over recently listed patents have 
addressed whether the patent meets the regulatory requirements for 
listing in the Orange Book and have sometimes resulted in decisions 
that are not entirely consistent with our regulatory policy or our 
interpretation of our regulations.
    Additionally, on May 16, 2001, the Bureau of Competition and the 
Policy Planning Staff of the Federal Trade Commission (FTC) submitted a 
citizen petition (FDA docket number 01P-0248) (FTC Citizen Petition) 
that requested our guidance concerning the criteria that a patent must 
meet before it is listed in the Orange Book. The FTC Citizen Petition 
asked us to clarify several patent listing issues and indicated that 
FTC was conducting an extensive study of generic drug competition. FTC 
issued the study in July 2002, in a report entitled Generic Drug Entry 
Prior to Patent Expiration: An FTC Study (FTC Report). The FTC Report 
focused on the procedures used to facilitate a generic drug's entry 
into the market before the expiration of a patent or patents that 
pertain to the brand-name drug product. The FTC Report noted that FTC 
had submitted a citizen petition to us. FTC also recommended that the 
law be changed to ``permit only one automatic 30-month stay per drug 
product per ANDA to resolve infringement disputes over patents listed 
in the Orange Book prior to the filing date of the generic applicant's 
ANDA'' (see FTC Report at page ii). The FTC Report explained, ``To 
permit only one 30-month stay per drug product per ANDA should 
eliminate most of the potential for improper Orange Book listings to 
generate unwarranted 30-month stays'' (id. at page v (footnote 
omitted)). In an appendix to its report, FTC asked that we issue a 
regulation or guidance clarifying whether an NDA holder could list 
various types of patents in the Orange Book. The types of patents for 
which FTC sought clarification were patents that claimed metabolites, 
polymorphs, or intermediates, product by process patents, and double 
patents (see FTC Report at pages A-39-A-45).

II. Description of the Proposed Rule

    Given these patent listing issues, the FTC citizen petition, and 
the FTC Report, we decided to issue this proposed rule to help NDA 
applicants and NDA holders determine whether specific patents must be 
submitted to us for listing and to help 505(b)(2) application 
applicants, ANDA applicants, and other interested parties determine 
whether a patent listing is proper. This proposed rule will address:
    [sbull] The types of patents that must and must not be listed;
    [sbull] The patent certification statement that NDA applicants must 
submit as part of an NDA, an amendment to an NDA, or a supplement to an 
NDA; and
    [sbull] The 30-month stay in effective dates of approval for a 
505(b)(2) application or an ANDA.

A. Proposed Sec.  314.53(b)--What Patents Must Be Listed in the Orange 
Book?

    1. What Does the Current Regulation Say?
    Our patent listing regulation, at Sec.  314.53, applies to persons 
submitting an NDA, an amendment to an NDA, or a supplement to an NDA. 
Section 314.53(b) describes the patents for which information must be 
submitted and states, in part, that the applicant:
    * * * shall submit information on each patent that claims the 
drug that is the subject of the new drug application or amendment or 
supplement to it and with respect to which a claim of patent 
infringement could reasonably be asserted if a person not licensed 
by the owner of the patent engaged in the manufacture, use, or sale 
of the drug product. For purposes of this part, such patents consist 
of drug substance (ingredient) patents, drug product (formulation 
and composition) patents, and method of use patents. Process patents 
are not covered by this section and information on process patents 
may not be submitted to FDA.
    Section 314.53 reflects the statutory provision that requires NDA 
applicants to file the patent number and expiration date of any patent 
which ``claims the drug for which the applicant submitted the 
application or which claims a method of using such drug and with 
respect to which a claim of patent infringement could reasonably be 
asserted if a person not licensed by the owner engaged in the 
manufacture[,] use, or sale of the drug'' (see section 505(b)(1) of the 
act). Thus, both the act and our regulations establish two distinct 
criteria for a patent intended for listing in the Orange Book: (1) The 
patent must claim the approved drug product or a method of using the 
approved drug product; and (2) the patent must be one with respect to 
which a claim of patent infringement could reasonably be asserted if a 
person not licensed by the patent owner sought to engage in the drug's 
manufacture, use, or sale.
    2. How Have We Interpreted the Regulation?
    As we mentioned earlier in section I.B of this preamble, the FTC 
Citizen Petition sought our guidance on whether an NDA holder can list 
a patent claiming an unapproved aspect of an approved drug. The 
petition maintained that the act and our regulations do not allow 
listing of a patent that claimed ``only an unapproved component, an 
unapproved formulation, or an unapproved use of a drug product'' (see 
FTC Citizen Petition at page 3).
    Our longstanding interpretation is that the term ``drug'' in the 
patent listing provisions means the approved drug product. We 
successfully argued in Pfizer v. FDA, 753 F. Supp. 171 (D. Md. 1990), 
that the term ``drug'' as used in sections 505(b)(1) and 505(c)(2) of 
the act refers to the ``drug product'' for which the NDA was filed. 
Pfizer had maintained that ``drug'' meant both the drug substance 
(active ingredient) and the drug product, and thus any patent claiming 
any drug product which contained the active ingredient that was the 
subject of the approved NDA must be submitted, regardless of whether 
the patent claims the approved drug product itself. This case began 
with our refusal to list a patent in the Orange Book because Pfizer did 
not certify that the drug and the formulation or composition of the 
drug claimed by the patent were currently approved. The drug dosage 
form covered by Pfizer's approved NDA was a capsule, but the patent 
Pfizer had sought to list claimed a tablet.
    The court upheld our position that: (1) An NDA approval covers a 
specific drug product; (2) the approved drug product becomes the listed 
drug; and (3) ANDA applicants must certify only to patents claiming 
that listed drug. The court found that ``FDA's interpretation is not 
only reasonable but also consistent with the language of the statute, 
Congressional intent, prior judicial interpretations of [21 U.S.C.] 
Sec.  355, and the agency's own regulations'' (see 753 F. Supp. at 171-
72). It also found that section 505(b)(1) of the act modifies the 
statutory definition of ``drug'' at section 201(g)(1) of the Act (21 
U.S.C. 321(g)(1)) to allow listing only of patents which claim the drug 
``for which the applicant submitted the application.'' Further, the 
court noted that sections 505(b)(1)(B) and (C) of the act require that 
an NDA application contain ``a full list of the articles used as 
components of such drug'' and ``a full statement of the

[[Page 65450]]

composition of such drug,'' and that these requirements made sense only 
for a drug product and not for a drug substance that was independent of 
the approved NDA. Because Pfizer's NDA covered a specific drug product 
in capsule form (as opposed to covering the drug product's active 
ingredient alone or covering other dosage forms that contain the active 
ingredient), the court held that Pfizer could not list the patent 
covering the tablets.
    In 1994, after the Pfizer decision had issued, we published a final 
rule that codified the patent listing requirement at 21 CFR 314.53 (see 
59 FR 50338 (October 3, 1994)). Although the rule repeated the 
statutory requirement that the patent must claim the drug that is the 
subject of the NDA, the final rule replaced the proposed rule's 
reference to patents consisting of ``drug (ingredient) patents'' with 
patents consisting of ``drug substance (ingredient) patents'' (see 59 
FR 50338 at 50343) (emphasis added). We also replaced ``patents that 
claim a drug or drug product'' with ``patents that claim a drug 
substance or drug product'' (id.) (emphasis added). Our intent was to 
clarify that the rule's reference to ``drug'' in the phrase ``drug or 
drug product'' was intended to mean ``drug substance'' rather than 
``drug product.'' (The rule mentioned drug products separately.) We 
made this change because some patents claim the approved drug product's 
active ingredient rather than the entire drug product (i.e., the drug 
product's active and inactive ingredients). In other words, if the 
patent claims the drug substance that was approved in the NDA, it must 
be listed.
    However, some courts interpreted Sec.  314.53 differently than we 
had intended. In Zenith Laboratories, Inc. v. Abbott Laboratories, 
Inc., 1996 WL 33344963 (D. N.J. 1996), Abbott had listed patents for 
the dihydrate form of terazosin hydrochloride (the drug substance in 
the NDA-approved product whose trade name was Hytrin) and also for the 
anhydrous form of terazosin hydrochloride that differed from Hytrin's 
drug substance only in its crystalline forms. (An anhydrous form of a 
chemical contains no water molecules, whereas a dihydrous form contains 
two water molecules.) Zenith had filed an ANDA to market a drug product 
containing a different form of terazosin hydrochloride, and claimed 
that the active ingredient in its product had a different crystalline 
structure from Hytrin, did not infringe the patent on Hytrin, and that 
Abbott's patents on the anhydrous form of the active ingredient did not 
cover the approved drug product. The court found that the patents at 
issue did claim the approved drug product. The court interpreted Sec.  
314.53(b) to mean that, if a patent claims the drug substance of an 
approved drug product, then the patent is covered by the approved drug 
product and may be listed in the Orange Book even if the patent claims 
a form of the drug substance that is different than the form in the 
approved drug product. Moreover, the court indicated that we may 
approve an ANDA for a drug product that contains the patented form of 
the active ingredient. The court also cited two statements from the 
Orange Book to support its ruling that different forms of the same 
active ingredient may be considered pharmaceutically equivalent if 
their dissolution, solubility, and absorption are the same as the 
listed drug. The court concluded that the patents were likely to be 
construed as claiming the drug substance for the NDA-approved drug 
regardless of the differences in hydration.
    In Ben Venue Laboratories, Inc. v. Novartis Pharmaceutical Corp., 
10 F. Supp.2d 446 (D.N.J. 1998), Novartis had listed a patent which 
claimed the crystalline pentahydrate form of Aredia (pamidronate 
disodium). The ANDA applicant argued that the appropriateness of the 
patent listing turned on whether Novartis' approved product contained a 
crystalline hydrate of pamidronate (id. at page 453). The parties did 
not dispute that the final drug product did not contain the 
pentahydrate form of pamidronate. Novartis admitted that its dosage 
form contained an anhydrous form of pamidronate, but argued that patent 
was properly submitted because the patent covered the ``drug 
substance'' and because Sec.  314.53 required the listing of such 
patents (id.). The court found that it was proper to list a patent that 
claims a component of the approved drug product even when that 
component does not appear in the exact same form in the final drug 
product (id. at pages 453-457). The court distinguished the Pfizer 
opinion as depending largely on the applicant's attempt to list a 
patent for a new, unapproved tablet (id. at page 455).
    The court also noted that Pfizer predated our 1994 final rule and 
stated that:
    The statute governing listing of patents merely states that NDA 
applicants shall file ``any patent which claims the drug.'' 21 
U.S.C. Sec.  355(b)(1). The regulations clearly indicate that the 
FDA interprets the ambiguous term ``drug'' in 21 U.S.C. Sec.  
355(b)(1) to include certain drug substances or active ingredient 
patents, and requires their listing in the Orange Book. The Court 
concludes that the FDA's construction of the statute to require 
listing of certain drug substance patents as well as drug product 
patents is a permissible reading of the statute, and the parties do 
not argue otherwise. See Chevron, U.S.A., Inc. v. Natural Resources 
Defense Counsel [sic], 467 U.S. 837 (1984). Therefore Ben Venue's 
assertion that ``the drug substance or active ingredient does not 
determine proper listing'' and that ``the drug product--and it 
alone--controls the proper listing,''* * * are inaccurate. See 10 F. 
Supp.2d at page 455.
    Although we were not a party to the litigation, we implicitly did 
not accept the conclusion or reasoning of the Zenith Laboratories and 
Ben Venue Laboratories decisions. On February 7, 2001, we wrote to 
Biovail Laboratories to confirm the propriety of a corrected patent 
listing under Sec.  314.53(f). Biovail had changed its manufacturing 
process for Tiazac (diltiazem hydrochloride), but had not sought our 
approval before making those changes. The approved product contained 
diltiazem hydrochloride in time-release coated beads, whereas Biovail's 
changed product contained both immediate release diltiazem 
hydrochloride powder and time-release coated beads. Biovail asserted 
that the changes were within the scope of its approved NDA, yet we 
learned about the changes only through litigation between Biovail and 
another company. In our letter to Biovail, we stated that, ``FDA does 
not list patents for drug substances, compositions, formulations and 
methods of use that are not approved for the listed drug'' (see Letter 
from Ralph Lillie, Director, Office of Information Technology, Center 
for Drug Evaluation and Research, to Biovail Laboratories, Inc., dated 
March 23, 2001). We also took the position that Biovail had to submit a 
supplement to its NDA to cover the immediate release diltiazem 
component and stated that:
    Patents for drug substances, composition, formulations, and 
methods of use that are not approved for the listed drug are not 
listed in the Orange Book. A patent submitted in an application or 
supplement that is not yet approved will be listed in the Orange 
Book only if, and when the drug product is approved.
(See id. at page 2.)
    On November 21, 2000, we responded to a citizen petition (FDA 
docket number 00P-0499) submitted by Lord, Bissell & Brook on behalf of 
Apotex, Inc. The petition asserted, in part, that two patents claiming 
anhydrous forms of paroxetine hydrochloride did not claim the 
hemihydrate listed drug. (An anhydrous form of paroxetine hydrochloride 
has no water molecules associated with it, whereas a hemihydrate form 
has one water

[[Page 65451]]

molecule associated with every two paroxetine molecules.) Relying on 
the NDA holder's representations that the patents claimed the approved 
drug product, we concluded that the patents had been correctly 
submitted for listing. We stated that, ``Patents must be listed if they 
claim the drug substance, or active ingredient, of an approved drug 
product, or if they claim a drug substance that is the component of 
such a product'' (Response from Janet Woodcock, M.D., Director, Center 
for Drug Evaluation and Research, to Hugh L. Moore et al., Lord, 
Bissell & Brook, dated November 21, 2000, at page 6 (footnote 
omitted)). In a footnote, we noted that our position was ``fully 
consistent with Pfizer'' because the Pfizer case ``involved the 
question of the listing of patents for a drug in a dosage form other 
than the dosage form approved by FDA'' (id. at page 6, note 18), 
whereas the paroxetine situation involved a patent which, according to 
the NDA holder, claimed the approved drug product. We further stated 
that we considered anhydrous and hemihydrous forms of drug substances 
to be pharmaceutical equivalents and to contain the same active 
ingredient (id. at page 6, note 16). We cited Zenith Laboratories and 
Ben Venue Laboratories for the proposition that courts, rather than 
FDA, would resolve whether the patent covered the approved drug. Our 
letter did not take issue with the holdings of those courts (id. at 
page 5, note 13).
    Recently, in Andrx Pharmaceuticals, Inc. v. Biovail Corp., 276 F.3d 
1368 (Fed. Cir. 2002), a case involving the patent listing 
correspondence with Biovail Laboratories described in a preceding 
paragraph, the court held that ``the critical question is the 
relationship of the patent to the drug products and drug substances 
covered by the NDA'' (id. at page 1376). The issue in the Andrx 
Pharmaceuticals case was Biovail's listing of a patent that claimed an 
extended release formulation of diltiazem that was different from the 
one we had approved. In a footnote, the Court of Appeals for the 
Federal Circuit cited our 1994 final rule and interpreted the final 
rule as changing our patent listing procedures (id. at page 1377, note 
5). The court stated that our supposed change in position was a ``more 
liberal construction'' of the statute and led to more patents being 
listed in the Orange Book (id.).
    3. Which Patents Would the Proposal Require to Be Listed or Not 
Listed?
    Given these court decisions which are not entirely consistent with 
our policies, the FTC Report, the FTC Citizen Petition, and other 
documents questioning patent listing requirements, we decided to 
clarify our regulations to describe the types of patents that must and 
must not be listed. Consequently, proposed Sec.  314.53(b) would state, 
in relevant part, that an applicant submitting an NDA, amending an NDA, 
or submitting a supplement to an NDA:
    * * * shall submit information on each patent that claims the 
drug or a method of using the drug that is the subject of the new 
drug application or amendment or supplement to it and with respect 
to which a claim of patent infringement could reasonably be asserted 
if a person not licensed by the owner of the patent engaged in the 
manufacture, use, or sale of the drug product. For purposes of this 
part, such patents consist of drug substance (ingredient) patents, 
drug product (formulation and composition) patents, product by 
process patents, and method of use patents. Process patents, patents 
claiming packaging, patents claiming metabolites, and patents 
claiming intermediates are not covered by this section, and 
information on these patents may not be submitted to FDA. For 
patents that claim the drug substance, the applicant shall submit 
information only on those patents that claim the drug substance that 
is the subject of the pending or approved application or that claim 
a drug substance that is the same as the active ingredient that is 
the subject of the approved or pending application within the 
meaning of section 505(j)(2)(A)(ii) of the Act. For patents that 
claim a drug product, the applicant shall submit information only on 
those patents that claim a drug product that is the subject of a 
pending or approved application. For patents that claim a method of 
use, the applicant shall submit information only on those patents 
that claim indications or other conditions of use that are the 
subject of a pending or approved application. For approved 
applications, the applicant shall identify the indication or other 
condition of use in the approved labeling that corresponds to the 
listed patent and claim identified. * * *
We have italicized the new or revised regulatory language to make it 
more readily identifiable for this preamble discussion. We explain the 
proposed changes in more detail in the following paragraph.
    a. What Patents Must Not Be Listed Under the Proposal?
    Proposed Sec.  314.53(a) would expressly state that information on 
patents claiming packaging, patents claiming metabolites, and patents 
claiming intermediates must not be submitted. In general, we find that 
these patents fail to meet the two prong criteria for listing because 
they do not claim the approved drug product.
    Patents claiming a drug product's packaging or container may not be 
listed. We find that, although information regarding a drug's packaging 
or container is part of an NDA (see 21 CFR 314.50(d)(1)(ii)(a)), we do 
not approve that packaging or container per se. The packaging or 
container is therefore distinct from the approved drug product, so a 
patent that claims a type of packaging or container fails to satisfy 
the first prong because the patent does not claim the drug. In 
addition, in contrast to the active ingredient, inactive ingredients, 
and conditions of use, the Hatch-Waxman amendments do not identify a 
listed drug's packaging or container as an element for us to review or 
consider in determining whether to approve an ANDA or 505(b)(2) 
application.
    The failure to claim the approved product is especially apparent 
for patents claiming metabolites because those metabolites exist only 
after a person has taken the drug and his or her body has broken the 
drug down into the metabolite. While there have been no court decisions 
regarding the listing of patents claiming a metabolite, one court has 
examined whether a person can seek patent term restoration for a patent 
claiming a metabolite rather than the approved drug itself. In Hoechst-
Roussel Pharmaceuticals, Inc. v. Lehman, 103 F.3d 756 (Fed. Cir. 1997), 
a court had to decide whether the Patent and Trademark Office correctly 
interpreted the patent term extension provisions at 35 U.S.C. 156. The 
patent term extension provisions were part of the Hatch-Waxman 
amendments (as Title II of the Hatch-Waxman amendments). The patent 
term extension provisions require that the patent for which an extended 
term is sought to ``claim'' the approved drug (see 35 U.S.C. 156(a) and 
156(g)(1)(B) (discussing how a product must have been subject to a 
regulatory review period before its commercial marketing or use and 
defining the regulatory review period, in part, in terms of an NDA 
approval)). However, the patent in question claimed a metabolite rather 
than the approved drug itself. The court considered the meaning of the 
term ``claim,'' and the term's relationship to the concept of 
infringement, and concluded that a patent claiming a metabolite or the 
use of a metabolite does not claim the approved drug product. The 
court's reasoning and conclusion are equally applicable to patent 
listings. Therefore, we conclude that a patent claiming a metabolite 
does not claim an approved drug and does not meet the statutory 
requirements for listing in the Orange Book.
    The proposal would also instruct applicants not to submit patent 
information if the patent claims an intermediate. Intermediates are 
materials that are produced during the steps of the processing of 
active pharmaceutical ingredient, but are not

[[Page 65452]]

present in the final drug product themselves (see Food and Drug 
Administration, ``Guidance for Industry: Q7A--Good Manufacturing 
Practice Guidance for Active Pharmaceutical Ingredients'' (August 
2001)). Under existing FDA regulations, intermediates are ``in-process 
materials'' rather than drug substances or even drug components (see 21 
CFR 210.3(b)(9); 211.110). Thus, patents that claim intermediates do 
not claim the approved drug product and, for that reason, fail the 
first prong for listing.
    We note that, as is currently the case, patents that claim methods 
of use that are not approved for the listed drug or are not the subject 
of a pending application may not be submitted.
    b. What Additional Patents Would the Proposal Require to be Listed?
1. Product by Process Patents
    The proposal would include ``product by process patents'' in the 
class of patents that must be listed because product by process patents 
are a type of product patent. In brief, a product by process patent 
claims a product by using or listing process steps to wholly or 
partially define the claimed product (see In re Luck, 476 F.2d 650 
(C.C.P.A. 1973); In re Brown, 459 F.2d 531, 535 (C.C.P.A. 1972)). In a 
product by process patent, the claims must particularly point out and 
distinctly claim the product or genus of products for which patent 
protection is sought (see In re Brown, 459 F.2d at page 535). These 
patents, therefore, meet the two-prong criteria for patent listing 
because they claim the approved drug product and are of a type with 
respect to which a claim of patent infringement could reasonably be 
made if a person not licensed by the patent owner engaged in the 
manufacture, use, or sale of the drug; consequently, including product 
by process patents in the class of patents that must be listed is 
appropriate.
    We must emphasize that product by process patents differ from 
process patents because, in a product by process patent, the patented 
invention is the product (as opposed to the process used to make the 
product) (see In re Bridgeford, 357 F.2d 679, 682 (C.C.P.A. 1966)). 
Section 505(b)(1) of the act does not require information on process 
patents, and we do not list process patents in the Orange Book (see 
Sec. Sec.  314.50(i)(2) and 314.53(b)).
    We are concerned, however, that persons unfamiliar with patent law 
might confuse product by process patents with process patents, and seek 
to list process patents with us. Therefore, we invite comment on ways 
to ensure that only appropriate product by process patents are listed, 
while maintaining the act's restriction against listing process 
patents.
2. Patents Claiming a Different Form of the Drug Substance
    Section 314.53(b) currently states, ``For patents that claim a drug 
substance or drug product, the applicant shall submit information only 
on those patents that claim a drug product that is the subject of a 
pending or approved application.'' The proposal would revise this 
sentence to read as follows:
    For patents that claim the drug substance, the applicant shall 
submit information only on those patents that claim the drug 
substance that is the subject of the pending or approved application 
or that claim a drug substance that is the same as the active 
ingredient that is the subject of the approved or pending 
application within the meaning of section 505(j)(2)(A)(ii) of the 
act. For patents that claim a drug product, the applicant shall 
submit information only on those patents that claim a drug product 
that is the subject of a pending or approved application.
This would mean that an applicant would be able to submit patent 
information on a drug substance even when the patented drug substance 
was a different form than the drug substance that is the subject of the 
pending or approved NDA as long as the drug substances are the ``same'' 
active ingredient under section 505(j)(2)(A)(ii) of the act. Whether 
two different drug substances are the ``same'' active ingredient is a 
scientific determination based upon the specific characteristics of the 
drug substances involved. We have, for example, determined that 
anhydrous and hydrated entities, and different polymorphs (different 
crystalline forms of the same substance), may be the ``same'' active 
ingredient (see Food and Drug Administration, ``Approved Drug Products 
With Therapeutic Equivalence Evaluations,'' 22nd Ed., section 1.7 at 
page xv (2002)). Therefore, for example, if the approved drug substance 
was an anhyrdrate, and the patent claimed a hemihydrate, proposed Sec.  
314.53(b) would allow the applicant to submit patent information for 
the hemihydrate if the anhydrate and hemihydrate are the ``same'' 
active ingredient.
    In making a determination that two drug substances are the same 
active ingredient, the NDA holder should consider whether the drug 
substances can be expected to perform the same with respect to such 
characteristics as dissolution, solubility, and bioavailability. We 
invite comment on whether we should revise the codified language to 
require the NDA holder to submit additional information regarding the 
basis for the assertion that the drug substances are the same active 
ingredient.
    We recognize that allowing NDA applicants and NDA holders to submit 
such patent information appears to conflict with our longstanding 
position that the patent must claim the approved drug product or the 
drug product that is the subject of the application. However, we 
believe this change in our patent listing policy is both reasonable and 
appropriate, and may even conserve agency and industry resources. Our 
rationale for allowing such drug substance patents to be listed 
depends, in large part, on our position concerning pharmaceutical and 
therapeutic equivalence. We consider drug products to be 
pharmaceutically equivalent if they have the same active ingredient(s), 
the same dosage form, the same route of administration, and are 
identical in strength or concentration. We consider drug products to be 
therapeutically equivalent if they are pharmaceutically equivalent and 
can be expected to have the same clinical effect and safety profile 
when administered to patients under the conditions specified in the 
labeling. A major premise in the ANDA approval system is that the ANDA 
drug is therapeutically equivalent to the brand-name or ``reference 
listed drug.'' In assessing whether the active ingredients in the 
reference listed drug and the generic drug product are the ``same,'' 
and would support a determination of therapeutic equivalence, we have 
concluded that, in certain instances, the generic drug's active 
ingredient does not have to have the exact physical form as the 
reference listed drug's active ingredient (see Letter from Dennis 
Baker, Associate Commissioner for Regulatory Affairs, FDA, to Donald O. 
Beers and David C. Korn, Arnold & Porter, and to William J. McNichol, 
Jr., Marc J. Scheineson, and Tracy Zurzolo Frisch, Reed Smith LLP, 
dated February 15, 2002, at pages 3-4, 7, 9-11). We have approved ANDAs 
when the drug substance in the generic drug product was a different 
polymorph than the drug substance in the listed drug. These products 
are therapeutically equivalent.
    If a generic drug product can be the ``same'' as the reference 
listed drug, notwithstanding differences in the drug substances' 
physical form, then it is consistent to interpret ``drug substance,'' 
for purposes of listing patent information, as including drug 
substances having different physical forms. We note that the Hatch-
Waxman amendments contained the patent listing and ANDA provisions in 
the same title, so it would be logical for us to interpret these two 
provisions of the act in a consistent manner (see Ben

[[Page 65453]]

Venue Laboratories, 10 F.Supp.2d, at page 457).
    Additionally, it is conceivable that an ANDA applicant may file an 
ANDA for a drug product that contains a drug substance that does not 
share the same chemical structure as the NDA-approved drug, but is 
nevertheless covered by a patent. For example, assume that the NDA drug 
is a hydrated form of the drug substance, and the ANDA drug substance 
would be an anhydrate. If the patent for the NDA drug claims the 
hydrated drug substance, the ANDA applicant would be able to certify, 
correctly under current FDA regulations, that it was not infringing the 
patent and file a paragraph IV certification. However, if the patent 
owner also had a patent on the anhydrous form and the NDA holder were 
not allowed to submit patent information on the anhydrate because the 
patent does not claim the approved drug product, the ANDA applicant 
consulting the Orange Book would have no notice of the patent claiming 
the anhydrate. The missing patent information could mislead potential 
ANDA applicants into submitting ANDAs containing the anhydrate and 
unknowingly infringing the patent claiming the anhydrate. We, in turn, 
could expend resources on reviewing an ANDA for a drug that is covered 
by the unlisted patent, and the patent owner could expend resources in 
defending the patent. This waste in agency and industry resources could 
be avoided if we require NDA applicants and NDA holders to submit 
information on patents that claim drug substances that are the same 
active ingredient as that in the listed drug product.
    Again, we recognize that requiring the submission of patent 
information on drug substances that are the same active ingredient, 
even when those drug substances are in a form that differs from the 
drug substance in the approved drug product, appears to be a change 
from our previous position. As discussed previously, we believe this 
change is justified by our position on pharmaceutical and therapeutic 
equivalence. We invite comment as to the potential impact of this 
change on the submission of ANDAs and 505(b)(2) applications.
    We also acknowledge that the interaction between the act's 
requirements, our pre-existing regulations, and our positions in court 
cases and elsewhere can make it difficult to interpret the act's patent 
listing requirements and ANDA and 505(b)(2) application approval 
requirements in a simple, harmonious manner. Although patents on 
different forms of an active ingredient are properly listed, and a 
pending ANDA containing a different form of the drug substance may be 
considered to have the ``same'' active ingredient as the reference 
listed drug, we must emphasize that this proposed rule does not alter 
the requirement for NDA holders to submit a supplement before changes 
are made to the synthesis of the drug substance (see 21 CFR 
314.70(b)(1)(iv)). If an NDA holder wishes to use an active ingredient 
whose form is different from the active ingredient described in the 
approved NDA, the NDA holder must seek our approval before it uses the 
different form of the active ingredient. Changes in the form of an 
active ingredient warrant the filing of a supplemental NDA because of 
the possible health consequences associated with the new form of the 
drug substance.

B. Proposed Sec.  314.53(c)(2)(i)--What Does the Patent Declaration 
Say?

    Section 314.53(c)(2)(i) requires a person submitting an NDA, an 
amendment to an NDA, or an NDA supplement, to submit a signed 
declaration as part of its submission of patent information if the 
patent covers the drug's formulation, composition, and/or method of 
use. The declaration states:
    The undersigned declares that Patent No. ---------- covers the 
formulation, composition, and/or method of use of (name of drug 
product). This product is (currently approved under section 505 of 
the Federal Food, Drug, and Cosmetic Act) [or] (the subject of this 
application for which approval is being sought).
(Emphases in original.) We designed this declaration to help ensure 
that appropriate patents are listed and to preclude any need on our 
part to decide patent issues because we lack the patent expertise, 
resources, and statutory mandate to scrutinize patent listings (see 54 
FR 28872 at 28909 (July 10, 1989)).
    This declaration may be insufficient in practice to prevent NDA 
applicants and NDA holders from attempting to list inappropriate 
patents. The FTC Report suggested that ``many of the later-issued 
patents do not appear to claim the approved drug product or an approved 
use of the drug'' (see FTC Report at 37), but recognized that we lack 
the expertise and resources to review or decide patents disputes (id. 
at page 41; see also aai Pharma v. Thompson, 296 F.3d 227 (4th Cir. 
2002) (``the FDA has no expertise in making patent law judgments'')). 
The courts have also concurred in our view that we lack the authority 
to review the ``listability'' of patents (see American Biosci. v. 
Thompson, 269 F.3d 1077, 1084 (D.C. Cir. 2001); In re Buspirone Patent 
Litigation, 185 F.Supp.2d 363, 371 (S.D.N.Y. 2002); Watson Pharm., Inc. 
v. Henney, Civ. No. U.S. Dist. LEXIS 2477, at 7-8 (D. Md. Jan. 17, 
2001); Mylan Pharm., Inc. v. Thompson, 139 F.Supp.2d 1, 10-11 (D.D.C.) 
rev'd on other grounds, 268 F.3d 1323 (Fed. Cir. 2001)). The FTC Report 
also noted that ANDA applicants must certify to a listed patent even if 
they dispute the appropriateness of the listing (see FTC Report at 37; 
see also 21 CFR 314.94(a)(12)(vii)). Although we continue to lack the 
expertise, resources, and legal authority to examine patent issues, we 
can ask NDA applicants and NDA holders to provide more patent 
information to help ensure that only appropriate patents are listed. 
The proposed rule, if finalized, will prompt NDA holders and NDA 
applicants to make careful and well-considered representations in their 
patent declarations and produce greater compliance with our patent 
listing requirements.
    The proposed rule would, therefore, revise Sec.  314.53(c)(1) and 
(c)(2) by rewording the general patent declaration requirement in 
paragraph (c)(1) and by replacing the existing, general declaration at 
paragraph (c)(2)(i) with a more detailed declaration that would act as 
a ``checklist'' that would focus on patent claims and would ensure that 
applicants submit only appropriate patent information and stand behind 
the accuracy of that information. Proposed Sec.  314.53(c)(1) and 
(c)(2)(i) would read as follows:
    (1) General requirements. An applicant described in paragraph (a) 
of this section shall submit the declaration described in paragraph 
(c)(2) of this section for each claim of the patent that meets the 
requirements described in paragraph (b) of this section.
    (2) Patent declaration. For each patent that claims a drug 
substance (active ingredient), drug product (formulation and 
composition), and/or method of use, the applicant shall submit the 
following declaration:
This is a submission of patent information for an NDA submitted under 
section 505 of the Federal Food, Drug, and Cosmetic Act (the Act).
Time sensitive patent information pursuant to 21 CFR 314.53 for NDA 
[numsign] ----------
The following is provided in accordance with section 505(b) of the Act:
Trade Name: ------------
Active Ingredient(s): ------------
Strength(s): ------------
Dosage Form(s): ------------

[[Page 65454]]

Approval Date (if the submission is a supplement to an approved NDA): 
------------
Please provide the following information for each patent submitted, and 
identify the relevant claim(s) by number.
A. 1. United States patent number: ------------
 2. Expiration date: ------------
 3. Name of the Patent Owner: ------------
 4. Agent (if patent owner or applicant does not reside or have a place 
of business in the United States) ------------
B. For each patent identified in A, please provide the following 
information:
 1. The type of patent claims that apply to the drug substance or drug 
product that is the subject of the application:
2. Drug Substance (Active Ingredient)
    ------ Yes ------ No
    a. Claim number(s): ------------
3. Drug Product (Composition/Formulation):
    ------ Yes ------ No
    a. Claim number(s): ------------
4. Method of Use:
    ------ Yes ------ No
a. Claim number(s): ------------
C. For each drug substance claim identified, please provide the 
following information:
1. Is the claim one that claims the drug substance that is the active 
ingredient in the approved or pending NDA, an amendment to the NDA, or 
a supplement to the NDA?
    ------ Yes ------ No
If ``yes,'' please identify the claim(s) by number.
2. Is the claim one that claims a drug substance that is the ``same'' 
active ingredient as the active ingredient in the pending or approved 
NDA, amendment to the NDA, or a supplement to the NDA?
    ------ Yes ------ No
If ``yes,'' please identify the claim(s) by number.
3. If the answer to question C.1 or C.2 is ``yes,'' do you acknowledge 
that an ANDA or 505(b)(2) application containing the same active 
ingredient that is claimed by the patent is the ``same'' for ANDA or 
505(b)(2) approval purposes?
    ------ Yes ------ No
[If the answers to questions C.1, and C.2, or C.3 is ``no,'' stop here. 
The patent may not be listed in the Orange Book as a patent that claims 
the drug substance.]
D. For each drug product claim identified, please provide the following 
information:
1. Is the claim one that claims the approved formulation or composition 
and/or the formulation or composition for which approval is being 
sought?
    ------ Yes ------ No
If ``yes,'' please identify the claim(s) by number.
[If the answer to question D.1 is ``no'' in every instance, stop here. 
The patent may not be listed in the Orange Book as a patent that claims 
the drug product.]
E. For each method of use claim identified, please provide the 
following information:
1. Is the claim one that claims:
    (a) an approved method of use of the approved drug product? If 
``yes,'' please identify the use with reference to the approved 
labeling for the drug product and identify the relevant patent claim 
number(s);
    ------ Yes ------ No
    (b) a method of use of the approved drug product for which use 
approval is being sought; or
    ------ Yes ------ No
    (c) a method of use of the drug product for which approval is being 
sought?
    ------ Yes ------ No
If the answer to questions E.1(b) or (c) is ``yes'', please identify 
the use with reference to the proposed labeling for the drug product 
and identify relevant patent claim number(s).
[If the answers to questions E.1(a) through (c) are ``no,'' stop here. 
The patent may not be listed in the Orange Book as a patent that claims 
a method of use.]
    Note that the proposed declaration would emphasize identification 
of the relevant patent claims by number. The number would correspond to 
the patent claim number in the patent itself. Precise identification of 
the relevant patent claims will help all parties focus on the same 
claim and may prevent arguments as to whether a particular claim 
pertained to the approved drug product or was infringed by the product 
described in an ANDA or 505(b)(2) application.
    We are also proposing to require NDA holders and NDA applicants to 
identify the specific pending or approved use claimed by a method of 
use patent. This information will assist parties in assessing patent 
infringement matters and should expedite our approval of ANDAs and 
505(b)(2) applications that do not seek approval for the protected use.
    The proposal would also amend Sec.  314.53(c)(2)(ii) to place more 
emphasis on patent claims rather than on the patent generally. Section 
314.53(c)(2)(ii) currently instructs an NDA holder to amend its patent 
declaration within 30 days after approval of its application.
    Current FDA regulations also address the content of the notice of 
certification of invalidity or noninfringement of patent that ANDA and 
505(b)(2) application applicants must submit if their applications 
contain a paragraph IV certification (see Sec. Sec.  314.95(c) and 
314.52(c) respectively (21 CFR 314.95(c) and 314.53(c))). Section 
505(j)(2)(A) of the act, however, states that we may ``not require that 
an abbreviated application contain information in addition to that 
required by clauses (i) through (viii).'' (No comparable statutory 
restriction exists for 505(b)(2) applications.) We invite comment on 
whether our current regulations regarding notice to the NDA holder and 
patent owner by ANDA applicants and 505(b)(2) application applicants 
could or should be amended.
    C. Proposed Sec. Sec.  314.94(a) and 314.52(a)--How Many Times Can 
an Application's Approval Date Be Delayed for a 30-Month Period?
    We have consistently maintained that the Hatch-Waxman amendments 
create the opportunity for multiple 30-month stays to an ANDA's or 
505(b)(2) application's approval date if those applicants submitted a 
paragraph IV certification and an action is brought for patent 
infringement within the statutory 45-day period. For example, assume 
that an ANDA applicant submitted a paragraph IV certification, provided 
the proper notice to the NDA holder and patent owner, and was sued for 
patent infringement within 45 days after providing the notice. Under 
section 505(j)(4)(B)(iii) of the act, we would be obliged to not 
approve the ANDA for a 30-month period beginning on the date of the 
receipt of the notice provided by the ANDA applicant to the NDA holder 
and patent owner, although the 30-month period could be longer or 
shorter depending on a court order or resolution of the litigation. If 
the NDA holder submitted new patent information to us, and the new 
patent information resulted in another paragraph IV certification and 
another action for patent infringement, our position has been that 
another 30-month stay in the effective date of ANDA approval could 
result.
    We recently stated our position in Andrx Pharmaceuticals, Inc. v. 
Biovail Corp., No. 01-6194-civ-Dimitrouleas/Johnson (S.D. Fla.). We 
argued that the 30-month stay provided by section 505(j)(5)(B)(iii) of 
the act ``is not rendered inapplicable to a patent newly listed in the 
Orange Book simply because the holder of the NDA has already received 
the benefit of such a stay with respect to a previously listed patent 
for the same drug'' (see Memorandum of Federal Defendants in

[[Page 65455]]

Opposition to Plaintiff's Motion for Summary Judgment Declaring 
Additional 30-Month Stay Inapplicable or Eliminated, at page 5). Andrx 
had argued that a 30-month stay in the approval date applies only where 
an ANDA applicant provides notice in the context of an original ANDA 
and not in an amended ANDA. We argued that section 505(j)(5)(B)(iii) of 
the act provides for a stay of up to 30 months regardless of whether 
the paragraph IV certification was part of an original ANDA or an 
amended ANDA. We stated that the act's reference to section 
505(j)(2)(B)(i) of the act, which itself refers to sections 
505(j)(2)(B)(ii) and (B)(iii) of the act, required that section 
505(j)(2)(B) be read as a whole and, as a result, requires us to make a 
30-month stay available whenever a paragraph IV certification was filed 
and timely patent litigation ensued, thereby permitting multiple 30-
month stays of a single ANDA approval.
    We also maintained, in Andrx Pharmaceuticals, Inc., that if the 30-
month stay applied only when an original ANDA contained a paragraph IV 
certification, an applicant could amend an ANDA to include a paragraph 
IV certification, and there would be no notice to the NDA holder or 
patent owner and no opportunity for even a single, 30-month stay. We 
stated that such a result could not be reconciled with the Hatch-Waxman 
amendments' intent to strike a balance between generic drug approval 
and encouraging future innovation (id. at page 9, note 6).
    We note, along with the FTC Report, that the number of 30-month 
stays per product has been increasing. The FTC Report found that, 
before 1998, patent infringement litigation ``generated, at most, one 
30-month stay per drug product per ANDA,'' and most cases (eight out of 
nine) involved alleged infringement of one or two patents (see FTC 
Report at page 36). However, after 1998, FTC found that, for drug 
products with substantial annual net sales, patent litigation was 
increasing, with a growing number of NDA holders or patent owners (five 
out of eight cases) alleging infringement of three or more patents 
(id.). The FTC Report even noted one instance where the NDA holder had 
listed 12 patents in the Orange Book (id. at page 45). The FTC Report 
also found that NDA holders were beginning to list later-issued 
patents, many of which ``do not appear to claim the approved drug 
product or an approved use of the drug,'' after an ANDA had been filed, 
and this resulted in a delay of FDA approval by 4 to 40 months (id. at 
page 36). In some cases, a single ANDA has been subject to as many as 
five stays (id. at page 46). The FTC Report addressed multiple stays in 
the context of a limited number of ``blockbuster'' drugs. The total 
number of stays in ANDA approvals is higher, and we agree with FTC that 
the number of stays appears to be increasing over time.
    Consequently, we examined the act to assess whether requiring 
successive 30-month stays was the only reasonable interpretation of the 
act. We determined that another reasonable interpretation existed. 
Accordingly, through this proposed rule, we intend to adopt a different 
interpretation of the act. Our revised interpretation would limit the 
number of 30-month stays to the opportunity for only one stay per ANDA. 
Our reasoning is as follows:
    [sbull] Section 505(j)(2)(B)(iii) of the act states that if an ANDA 
is amended to ``include'' a paragraph IV certification, then the notice 
to the NDA holder and to the patent owner ``shall be given when the 
amended application is submitted.''
    [sbull] However, if the ANDA contained a paragraph IV 
certification, then any ANDA amendment containing a paragraph IV 
certification does not amend the ANDA to ``include'' a paragraph IV 
certification because the ANDA already contained a paragraph IV 
certification.
    [sbull] In the circumstances described previously, the submission 
of a second paragraph IV certification in an ANDA amendment or 
supplement does not trigger the notice requirement in section 
505(j)(2)(B)(ii) of the act because the ANDA is never amended or 
supplemented to ``include'' (i.e., contain) a paragraph IV 
certification.
    [sbull] Consequently, under section 505(j)(5)(B)(iii) of the act, 
only one 30-month stay in the ANDA's approval date is possible, because 
the subsequent paragraph IV certifications will not have resulted in a 
second notice to the patent owner and NDA holder, and the 45-day period 
for filing a patent infringement suit, as described in section 
505(j)(5)(B)(iii) of the act, will not have run. To put it another way, 
if the ANDA applicant is not obliged to submit the notice to the patent 
owner and NDA holder, then the pre-requisites to trigger the 30-month 
stay in an ANDA's approval date are not met, so the 30-month stay would 
not be available.
    A similar argument for a single, 30-month stay per application can 
be made for 505(b)(2) applications that contain a paragraph IV 
certification.
    Under this interpretation of the act, ANDA and 505(b)(2) 
application applicants would still be required to make paragraph IV 
certifications where applicable, but the addition of a second paragraph 
IV certification to an ANDA or a 505(b)(2) application that had already 
contained at least one paragraph IV certification would not trigger an 
obligation to provide a second notice to the NDA holder or to the 
patent owner and would not result in another opportunity for a 30-month 
stay. Instead, as in the case of paragraph I (no patent information has 
been filed) or paragraph II (patent has expired) certifications, the 
subsequent paragraph IV certification would allow us to approve the 
ANDA or 505(b)(2) application immediately if the Act would otherwise 
permit us to do so.
    The parties would, of course, be free to litigate issues regarding 
patent infringement, but proposed multiple, 30-month stays per ANDA or 
505(b)(2) application would no longer be possible. Our interpretation 
would not adversely affect a patent owner's ability to protect its 
patent rights. If an ANDA or 505(b)(2) application applicant makes one 
paragraph IV certification, the patent owner and the NDA holder would 
always receive notice and would always have the opportunity to protect 
the patented invention. If the NDA holder files another patent later, 
and the ANDA or 505(b)(2) application applicant believes that the 
later-filed patent is invalid or will not be infringed, the patent 
owner and NDA holder are still able to protect the later-filed patent 
because: (1) The notice already alerted the patent owner and NDA holder 
to the existence of the ANDA or 505(b)(2) application; and (2) any 
defense of the later-filed patent will not depend on the existence of a 
subsequent notice to the patent owner or NDA holder. In other words, 
with respect to later-filed or subsequently filed patents, the patent 
owner and NDA holder still have patent infringement and judicial 
remedies available to them even without receiving another notice. The 
patent owner, for example, can still seek an injunction to protect the 
patent on such terms as a court deems reasonable under 35 U.S.C. 283. 
If a court finds that the patent is infringed, the patent owner may be 
entitled to damages under 35 U.S.C. 284.
    We recognize that there are other arguments to support a single, 
30-month stay in each ANDA or 505(b)(2) application's approval date. 
For example, one argument could be that the act contemplates only one 
30-month stay in an ANDA's approval date because section 
505(j)(5)(B)(iii) of the act refers to ``the'' 30-month stay. This 
argument presumes that the original ANDA contained a paragraph IV 
certification and resulted in a 30-month stay. We do not concur with 
this

[[Page 65456]]

interpretation of the act because, in certain situations, it could 
result in no notice to the patent owner or NDA holder. For example, if 
the original ANDA contained a paragraph III certification (stating that 
the patent will expire on a specific date), and the ANDA applicant 
later amends the ANDA to contain a paragraph IV certification, one 
could argue that no notice to the patent owner or NDA holder would be 
necessary, and there would not be an opportunity for even a single, 30-
month stay. In contrast, under our proposed interpretation of the act, 
the opportunity for one 30-month stay in the abbreviated application's 
effective date always exists, and the patent owner and NDA holder would 
always receive one notice from the ANDA or 505(b)(2) application 
applicant who challenges at least one of the listed patents. This would 
preserve the balance between encouraging ANDA and 505(b)(2) application 
approvals and encouraging innovation because: (1) The elimination of 
multiple 30-month stays will lead to faster ANDA or 505(b)(2) 
application approvals, and (2) the patent owner and NDA holder will 
still receive notice and will be able to take steps to defend the 
patented invention from alleged patent infringement. As courts have 
observed, ``The Hatch-Waxman Act represented Congress's efforts to 
strike a compromise between the competing interests of pioneer 
pharmaceutical companies and generic manufacturers'' (see Mylan 
Pharmaceuticals, Inc. v. Thompson, 139 F.Supp.2d 1, 4 (D.D.C. 2001); 
see also Mylan Pharmaceuticals, Inc. v. Henney, 94 F.Supp.2d 36, 52-53 
(D.D.C. 2000) (interpretation of Hatch-Waxman must take into account 
the compromise nature of the statute); Fisons Corp. v. Shalala, 860 
F.Supp. 859, 862 (D.D.C. 1994) (``A variety of federal courts have 
recognized that this Act represents a compromise, and aids both sets of 
drug manufacturers; see, e.g., Tri-Bio Laboratories v. United States, 
836 F.2d 136, 139 (3rd Cir. 1987)).'' A maximum of one 30-month stay 
per ANDA or 505(b)(2) application represents a reasonable compromise.
    Additionally, we note that interpreting the act to allow only a 
maximum of one 30-month stay per ANDA or 505(b)(2) application is 
consistent with the specific legislative history that accompanied the 
passage of the Hatch-Waxman amendments.\1\ When the 97th Congress 
considered patent term extension legislation, many members were 
concerned that the bill would not prevent brand-name companies from 
obtaining multiple patent term extensions for patents that claimed a 
drug and, by doing so, inhibit competition from generic drugs (see 128 
Cong. Rec. H6916, H6919 (September 13, 1982) (remarks of Rep. 
Kastenmeier)). Some charged that the bill would extend the effective 
patent life of top-selling drugs for more than 17 years (the patent 
term that existed at the time) through ``pyramiding'' or 
``evergreening'' of patents (id. at page H6922) (remarks of Rep. Gore). 
The House of Representatives, by a vote of 250 to 132, rejected passing 
the bill by suspension of the rules, and so the bill failed to be 
passed despite unanimous support in the Senate and strong support in 
the House. When the Senate revisited the legislation in the next year, 
the President of the Pharmaceutical Manufacturers Association (now 
known as the Pharmaceutical Research and Manufacturers of America) 
testified that, in 1982:
---------------------------------------------------------------------------

    \1\ We further note that, although reliance on legislative 
history may have its perils, its use is more justified where, as in 
this case, the statute is ambiguous (see, e.g., PanAmSat Corp. v. 
FCC, 198 F.3d 890, 895 (D.C. Cir. 1999) (stating that a court does 
not resort to legislative history ``to cloud a statutory text that 
is clear'') (citation omitted).
---------------------------------------------------------------------------

    * * * critics of the bill sought to create the impression that 
innovative firms were acquiring patents in constellation, pyramiding 
one on top of another to extend effective protection. Among people 
not knowledgeable about the intricacies of patent law, this 
understandably occasioned alarm and suspicion.
(See Hearing on S. 1306, Senate Judiciary Cmte., 98th Cong., 1st Sess. 
56-57 (testimony of Lewis A. Engman, President, Pharmaceutical 
Manufacturers Association)).
    The statutory language creating paragraph IV certifications, 
provisions for giving notice of such certifications, and rules 
governing amended applications is identical to language in S. 2748 as 
introduced by Senator Hatch in 1984. The House Judiciary Committee 
reported essentially identical language by voice vote, and the only 
relevant report language states that notice is required under paragraph 
505(j)(2)(B)(iii) when an ANDA ``is subsequently amended so as to bring 
it within this notice requirement'' (see H. Rep. 98-857, Part 2, 98th 
Cong., 2d Sess. 14 (1984) (emphases added)). This understanding by the 
House Judiciary Committee suggests that if an ANDA applicant had 
provided notice to the patent owner and NDA holder, and then amended 
the ANDA to make a patent certification regarding a newly-filed patent, 
then the ANDA applicant would not have to provide another notice 
because, by virtue of its first notice to the patent owner and NDA 
holder, the ANDA applicant was already within the notice requirement. 
Our proposed interpretation is thus consistent with the legislative 
history.
    For all these reasons, we propose to amend Sec. Sec.  314.95(a)(3) 
and 314.52(a)(3) to state that the requirement to provide a notice of 
invalidity or noninfringement of patent:
    * * * does not apply to a use patent that claims no uses for 
which the applicant is seeking approval. This paragraph also does 
not apply if the applicant amends its application to add a 
certification under [Sec.  314.94(a)(12)(i)(A)(4) for an ANDA 
applicants or Sec.  314.50(i)(1)(i)(A)(4) for 505(b)(2) application 
applicants] when the application already contained a certification 
under [Sec.  314.94(a)(12)(i)(A)(4) or Sec.  314.50(i)(1)(i)(A)(4)] 
to another patent.
    The proposed amendments to Sec. Sec.  314.95(a)(3) and 
314.52(a)(3), if made final, will lead to a changed interpretation of 
Sec. Sec.  314.95(d) and 314.52(d) respectively. Sections 314.95(d) and 
314.52(d) state that if an application is amended to include a 
paragraph IV certification, then the ANDA or 505(b)(2) application 
applicant shall send the notice of certification of invalidity or 
noninfringement of patent at the same time that it submits its 
amendment to us. Under the proposed rule, an ANDA or 505(b)(2) 
applicant who is amending its application to include a paragraph IV 
certification must provide notice to the patent owner and NDA holder 
only if the ANDA or 505(b)(2) application did not previously contain a 
paragraph IV certification.

III. Implementation

A. How Would the Rule Affect Notices?

    Under the framework proposed in this rule, the possibility exists 
that if two ANDA applicants file paragraph IV certifications to a 
later-filed patent, and one ANDA applicant has already submitted a 
paragraph IV certification to a previously-filed patent, one ANDA 
applicant could be subject to a 30-month stay with respect to the 
later-filed patent while the other would not. To illustrate this 
problem:
    1. Assume that ANDA applicant [numsign]1 files a paragraph IV 
certification to a patent, while ANDA applicant [numsign]2 files a 
paragraph III certification to the same patent. The patent owner brings 
a suit for patent infringement against ANDA applicant [numsign]1 and 
obtains a 30-month stay in the ANDA's approval date.
    2. Assume that the NDA holder files another patent.
    3. If ANDA applicants [numsign][numsign] 1 and 2 both file 
paragraph IV certifications for the second patent, the proposed rule, 
if finalized, would not require ANDA applicant [numsign]1 to provide 
notice to the

[[Page 65457]]

patent owner and NDA holder, because the ANDA previously contained a 
paragraph IV certification. However, ANDA applicant [numsign]2 is 
subject to a potential 30-month stay in the ANDA approval date because 
it would be required to provide notice to the patent owner and NDA 
holder.
    While this hypothetical situation appears to treat the two ANDA 
applicants differently, we believe that our interpretation does treat 
the ANDA applicants alike, because both ANDA applicants would be 
subject to the possibility of only one 30-month stay in the ANDA 
approval date.
    Our proposed interpretation of the 30-month stay does not affect an 
ANDA applicant's eligibility for 180-day exclusivity. In brief, section 
505(j)(5)(B)(iv) of the act gives the ANDA applicant who files the 
first paragraph IV certification for a listed patent 180 days of 
exclusivity (against other ANDA applicants). We interpret the 180-day 
exclusivity provision as providing 180-day exclusivity to the first 
ANDA applicant whose ANDA contains a paragraph IV certification to a 
patent, even if the paragraph IV certification is one that would not 
result in an obligation to notify the patent owner and NDA holder and 
would not subject the applicant to the risk of patent litigation and a 
30-month stay. The FTC Report suggested that if only a single, 30-month 
stay per ANDA were allowed, the number of patents listed after NDA 
approval might decrease (see FTC Report at page v).

B. How Would the Rule Affect Pending Applications?

    Assuming that we issue a final rule, we intend to apply the rule to 
pending applications as follows:
    [sbull] For patents filed for an NDA that has not been approved by 
the effective date of a final rule, the rule would apply on the 
effective date. For example, if the final rule were to become effective 
60 days after the date of publication in the Federal Register, and an 
NDA was pending on the 60th day after the final rule's publication 
date, the NDA applicant would have to comply with the final rule's 
patent listing and patent declaration requirements. ANDA and 505(b)(2) 
application applicants would be subject to the revised notice 
requirement. Each ANDA or 505(b)(2) application referencing that NDA 
would be subject to the possibility of only one 30-month stay per ANDA 
or 505(b)(2) application.
    [sbull] If we have approved the NDA as of the final rule's 
effective date, and no ANDA has been filed before that date, then any 
patent listed before that date would be subject to the pre-existing 
regulation. For example, if the final rule were to become effective 60 
days after the date of publication in the Federal Register, and we 
approved the NDA on the 59th day after the date of publication, the NDA 
applicant would not have to amend its patent listing and patent 
declaration to comply to the final rule. ANDA and 505(b)(2) 
applications submitted after the effective date would be subject to the 
revised notice requirement. Each ANDA or 505(b)(2) application 
referencing that NDA would be subject to the possibility of only one 
30-month stay per ANDA or 505(b)(2) application.
    [sbull] If we have approved the NDA as of the final rule's 
effective date, and an ANDA or 505(b)(2) application has been filed 
before that date, then any patent listed before that date would be 
subject to the pre-existing regulation, as described in the example 
immediately above. The ANDA or 505(b)(2) application applicant would 
have to provide notice to the patent owner and NDA holder if the ANDA 
or 505(b)(2) application contained a paragraph IV certification. 
Multiple 30-month stays in the approval date would be possible.
    [sbull] If the NDA holder or NDA applicant files patent information 
after the final rule's effective date, then the NDA holder or applicant 
is subject to the final rule's patent listing and patent declaration 
requirements, and ANDA or 505(b)(2) application applicants would not 
have to provide notice if their applications previously contained a 
paragraph IV certification. Only one 30-month stay per each ANDA's or 
505(b)(2) application's approval date would be possible.
    This proposed rule provides sufficient notice to all interested 
parties, whether they are NDA holders, NDA applicants, ANDA applicants, 
or 505(b)(2) application applicants, to adjust their submissions and 
actions by the time we issue a final rule. (This assumes, of course, 
that we issue a final rule.) NDA holders who wish to receive the 
benefits of the pre-existing regulation will have enough time to decide 
whether to pursue additional patents and to list them. ANDA and 
505(b)(2) application applicants will be able to plan their submissions 
more efficiently as they will know whether their applications will be 
subject to the possibility of one or more 30-month stays of approval if 
they make a paragraph IV certification. If we were to adopt an 
alternative implementation plan, we would risk upsetting legitimate 
expectations held by those who had relied on our earlier interpretation 
of the act. However, we invite comments on how a final rule should be 
implemented.

IV. Legal Authority

    Our principal legal authority for the proposed rule exists at 
sections 505 and 701 (21 U.S.C. 371) of the act. Section 505(b) of the 
act describes the contents of an NDA and 505(b)(2) applications, 
including the patent listing and patent certification requirements. 
Section 505(j) of the act describes the contents of an ANDA, including 
patent certification requirements. Both sections 505(b) and 505(j) of 
the act also describe the 30-month stay of approval dates of a 
505(b)(2) application or ANDA if the 505(b)(2) applicant or ANDA 
applicant made a paragraph IV certification and a timely action for 
patent infringement ensues.
    The proposed rule would clarify the types of patents which NDA 
applicants and NDA sponsors must and must not submit to FDA for listing 
in the Orange Book. It would also require a more detailed patent 
declaration from NDA applicants and NDA holders.
    For 505(b)(2) applicants and ANDA applicants, the proposal would 
have the effect of reducing the number of notifications sent to patent 
owners and NDA holders. Sections 505(b)(2)(A) and 505(j)(2)(A)(vii) of 
the act, respectively, require patent certifications, while sections 
505(b)(3)(A) and 505(j)(2)(B) of the act require those applicants who 
have made a paragraph IV certification to provide a notice to the 
patent owner and NDA holder. Because the proposal would not require 
ANDA applicants and 505(b)(2) applicants to provide notice if: (a) the 
original ANDA or 505(b)(2) application contained a paragraph IV 
certification; and (b) the applicants amend their applications to 
include another paragraph IV certification in response to another 
patent listing, fewer notifications of invalidity or noninfringement of 
a patent would result.
    Thus, section 505 of the act, in conjunction with our general 
rulemaking authority in section 701(a) of the act, serves as our 
principal legal authority for this proposal.

V. Environmental Impact

    The agency has determined under 21 CFR 25.30(h) and 25.31(a) 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.

[[Page 65458]]

VI. Executive Order 13132: Federalism

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

VII. Paperwork Reduction Act of 1995

    This proposed rule contains information collection requirements 
that are subject to public comment and review by the Office of 
Management and Budget (OMB) under the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501-3520). We describe these provisions below in this 
section of the document with an estimate of the annual reporting 
burden. Our estimate includes the time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing each collection of information.
    We invite comments on: (1) Whether the collection of information is 
necessary for the proper performance of FDA's functions, including 
whether the information will have practical utility; (2) the accuracy 
of FDA's estimate of the burden of the collection of information, 
including the validity of the methodology and assumptions used; (3) 
ways to enhance the quality, utility, and clarity of the information to 
be collected; and (4) ways to minimize the burden of the collection of 
information on respondents, including through the use of automated 
collection techniques, when appropriate, and other forms of information 
technology.
    Title: Applications for FDA Approval to Market a New Drug: Patent 
Listing Requirements and Application of 30-month Stays on Approval of 
Abbreviated New Drug Applications Certifying That a Patent Claiming a 
Drug Is Invalid or Will Not Be Infringed
    Description: The proposed rule would clarify the types of patent 
information that must and must not be submitted to FDA as part of an 
NDA or as an amendment or supplement to an NDA. The proposal would also 
require persons submitting an NDA or amendment or supplement to such an 
application to make a detailed patent declaration as part of the 
application. The proposal would also permit the possibility of only one 
30-month stay of each ANDA's or 505(b)(2) application's approval date 
in the event of patent infringement litigation because the proposal 
would not require ANDA applicants or 505(b)(2) applicants to provide a 
notice of certification of invalidity or noninfringement of patent if 
their applications already contain such a certification.
    Description of Respondents: Persons submitting, amending, or 
submitting a supplement to an NDA, and persons submitting an ANDA or 
505(b)(2) application containing a patent certification of invalidity 
or noninfringement of patent.
    We estimate the burden of this collection of information as 
follows:

                                 Table 1.--Estimated Annual Reporting Burden\1\
----------------------------------------------------------------------------------------------------------------
                                                Frequency of   Total Annual     Hours per
      21 CFR Section        No. of Respondents    Responses      Responses      Response         Total Hours
----------------------------------------------------------------------------------------------------------------
314.50(a) through (f),             80                1.55         124          1,690           209,560
 (h), and (k)
314.52(a)(3) and                   37                1             37             16               592
 314.95(a)(3)
----------------------------------------------------------------------------------------------------------------
Total                       ..................  ............  ..............  ............     210,152
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.

    Our estimates are based on the following assumptions.
    [sbull] According to our earlier information collection estimates 
for Sec. Sec.  314.52 and 314.95, there are an estimated 37 respondents 
who provide a notice of certification of invalidity or noninfringement 
of patent each year, and each respondent submits an estimated 2 
responses, with an estimated 16 burden hours per response. Because the 
proposed rule would allow only one 30-month stay in the effective date 
of approval for each 505(b)(2) application or ANDA, this would mean 
that these 505(b)(2) or ANDA applicants would (if the rule is 
finalized) file only one notice per year (unless they are filing 
multiple applications for different drugs and making paragraph IV 
certifications in more than one case). So, assuming that these 
applicants submit only one 505(b)(2) application or ANDA per year that 
contains a paragraph IV certification, the applicants would submit only 
one notice of certification of invalidity or noninfringement of patent 
each year. Thus, the information collection burden for Sec. Sec.  
314.52 and 314.95 would decrease to 592 hours (37 respondents x 1 
response per respondent x 16 hours per response = 592 hours).
    [sbull] To estimate the number of enhanced patent declarations that 
will be submitted annually, we referred to historical data on 
submissions of NDAs. In 2001 and 2002, we received 94 and 66 NDAs 
respectively. We therefore estimate that there will be 80 ((94 
applications + 66 applications)/2 years = 80 applications/year) annual 
instances where an NDA applicant or NDA holder would be affected by the 
proposed patent listing and patent declaration requirements. According 
to our earlier information collection estimates for Sec.  314.50(h) 
(the provision under which we covered patent listing and patent 
declaration matters as described in Sec.  314.53), there are an 
estimated 1.55 annual responses per respondent. So, using the same 1.55 
ratio, this would mean that 80 NDA applicants and NDA holders would 
submit 124 annual responses (80 respondents x 1.55 responses per 
respondent = 124 responses). However, proposed Sec.  314.53(b) and (c) 
would have different impacts on the hours per response. On the one 
hand, proposed Sec.  314.53(b) might decrease the reporting burden 
because it would specify certain patents that must not be filed in the 
Orange Book and thus discourage NDA applicants and NDA holders from 
submitting information on those patents. On the other hand, proposed 
Sec.  314.53(b) would also require NDA applicants and NDA holders to 
submit patent information on different forms of the drug substance, and 
this could result in more patent information being submitted. We cannot 
determine whether the potential net effect will increase, decrease, or 
not change the overall burden associated with submitting patent 
information, so we

[[Page 65459]]

have not assigned any change in the total reporting burden for the 
proposed change in patent information alone. In contrast, proposed 
Sec.  314.53(c) would make the patent declaration more detailed. The 
change in the declaration would increase the burden hours per response 
in Sec.  314.50(h) (the provision under which we covered patent 
declarations described in Sec.  314.53(c)) because respondents would be 
required to be more precise in their declarations. Based on other rules 
that require respondents to compile and submit information in their 
possession, we estimated that the revised patent declaration will 
result in an additional information collection burden of 24 hours. 
However, the previous burden hour estimate of 1,666 hours for Sec.  
314.50 covered paragraphs (a) through (f), in addition to paragraphs 
(h) and (k). We are unable to determine how many of the 1,666 hours 
were devoted to patent declarations, so, in this table, we simply add 
24 hours to the 1,666 hour estimate for Sec.  314.50(a) through (f), 
(h), and (k), resulting in a burden hour estimate of 1,690 hours (1,666 
hours + 24 hours) to account for a respondent's need for more time to 
make and verify the patent declaration. Thus, the information 
collection burden for Sec.  314.50(a) through (f), (h), and (k) would 
increase to 209,560 hours (124 annual responses x 1,690 hours per 
response = 209,560 hours). We invite comment as to whether we need to 
adjust our estimate of 24 burden hours per response.
    We have submitted the information collection requirements of this 
rule to OMB for review. Interested persons are requested to send 
comments regarding information collection to the Office of Information 
and Regulatory Affairs, OMB (see ADDRESSES).

VIII. Analysis of Impacts

    FDA has examined the impacts of the proposed rule under Executive 
Order 12866, and the Regulatory Flexibility Act (5 U.S.C. 601-612), and 
under the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq.). 
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). Unless the agency 
certifies that the rule is not expected to have a significant economic 
impact on a substantial number of small entities, the Regulatory 
Flexibility Act, as amended by SBREFA, requires agencies to analyze 
regulatory options that would minimize any significant economic impact 
of a rule on small entities. Section 202 of UMRA 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). We have 
conducted analyses of the proposed rule, and have determined that the 
proposed rule is consistent with the principles set forth in the 
Executive order and in these statutes.
    The proposed rule is an economically significant regulatory action 
as defined by the Executive order. With respect to the Regulatory 
Flexibility Act, the agency certifies that this proposed rule is not 
expected to have a significant impact on a substantial number of small 
entities. The proposed rule is also a major rule under the 
Congressional Review Act. The discussion of costs and benefits is 
consistent with the requirements of the Unfunded Mandates Reform Act.

A. Objectives of the Proposed Regulation

    The proposed rule has multiple objectives. We are clarifying the 
types of patents that must and must not be listed and revising the 
declaration that NDA applicants must provide regarding their patents. 
In addition, through this proposal, we are adopting a different 
interpretation of the act that will limit the number of 30-month stays 
to one per ANDA or 505(b)(2) application. This clarification, revision, 
and reinterpretation will help ensure that NDA applicants list 
appropriate patents in the Orange Book while preventing the NDA holders 
from thwarting generic entry through the use of multiple 30-month 
stays. Through these actions, we are preserving the balance struck in 
the Hatch-Waxman Amendments between encouraging innovation and 
encouraging the availability of generic drugs. The estimated 10-year 
total costs of this proposed rule are approximately $51.5 billion and 
the annualized cost is $4.9 billion. The estimated 10-year total 
benefits of this proposed rule are approximately $53.9 billion and the 
annualized benefit is $5.1 billion. These 10-year total benefits 
include consumer savings of approximately $34.8 billion from earlier 
access to less expensive prescription pharmaceuticals. The 10-year 
benefits exceed the costs by approximately $2.4 billion and the 
annualized benefits exceed the annualized costs by approximately $230 
million.
1. The 30-Month Stay
    The Hatch-Waxman Amendments benefit consumers by bringing lower 
priced generic versions of previously approved drugs to market, while 
simultaneously promoting new drug innovation through the restoration of 
patent life lost during regulatory proceedings. A firm wishing to 
market a generic version of a previously approved innovator drug can 
submit an ANDA. An ANDA refers to a previously approved NDA (the 
``listed drug'') and relies upon our finding of safety and 
effectiveness for the listed drug.
    Persons submitting an ANDA or a 505(b)(2) application must make 
certifications regarding the listed patents claiming the drug they wish 
to duplicate. The applicant must certify one of the following for each 
patent: (1) That no patent information on the drug product that is the 
subject of the ANDA has been submitted to us; (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 drug product for which the ANDA is submitted. These 
certifications are known as ``paragraph I,'' ``paragraph II,'' 
``paragraph III,'' and ``paragraph IV'' certifications, respectively.
    A paragraph IV certification begins a process in which the question 
of whether the listed patent is valid or will be infringed by the 
proposed generic product may be answered by the courts prior to the 
expiration of the patent. The ANDA or 505(b)(2) application applicant 
who files a paragraph IV certification to a listed patent must notify 
the patent owner and the NDA holder for the listed drug that it has 
filed an application containing a paragraph IV certification. The 
notice must include a detailed statement of the factual and legal basis 
for the applicant's opinion that the patent is not valid or will not be 
infringed. If the NDA holder or patent owner files a patent 
infringement suit against the ANDA or 505(b)(2) application applicant 
within 45 days of the receipt of notice, we may not give final approval 
to the ANDA or 505(b)(2) application for at least 30 months from the 
date of the notice. This 30-month stay per ANDA or 505(b)(2) 
application will apply unless the court reaches a decision earlier in 
the patent infringement case or otherwise orders a longer or shorter 
period for the stay.
    We recognize that, in recent years, NDA holders have been able to 
use multiple 30-month stays to delay

[[Page 65460]]

generic competition. Under current regulations, the patent 
certification process allows for one or more 30-month stays of an ANDA 
or 505(b)(2) application's approval. NDA holders can prevent FDA 
approval of ANDAs or 505(b)(2) applications beyond the initial 30-month 
stay by listing an additional patent in the Orange Book after the 
applicant has filed its ANDA or 505(b)(2) application. These applicants 
would be required to re-certify to the newly-listed patent. The NDA 
holder would then be given 45 days to file suit for patent 
infringement, and our approval of the initial ANDA or 505(b)(2) 
application would be delayed for an additional 30-month period from the 
notice date or until a court decision in the newly instituted patent 
litigation.
    According to the FTC Report, from 1992 to 2000, NDA holders have 
listed patents in the Orange Book after an ANDA has been filed for a 
drug product on eight occasions. Six of these eight occasions have 
occurred since 1998. In all eight of these instances, the subsequent 
patent resulted in a delay to generic access to markets beyond the 
initial 30-month stay. We are not aware of any case in which a court 
has decided that the ANDA infringed upon the subsequent listed patent. 
According to the FTC Report, in the four instances of multiple stays in 
which a court has decided on the validity or infringement of a later-
listed patent, the patent has been found either invalid or not 
infringed by the ANDA.\2\
---------------------------------------------------------------------------

    \2\ FTC Report, p. iv.
---------------------------------------------------------------------------

2. The Economic Impact of Generic Competition
    The generic drug industry plays an important role in the economics 
of the healthcare industry. According to Caves, Whinston, and Hurwitz 
(1991), generic drug prices can be as little as 20 percent of the 
brand-name price for the same product.\3\ Laws encouraging doctors to 
prescribe generic drugs when available are a part of the current effort 
to hold down the cost of healthcare.\4\ A report from the Congressional 
Budget Office (CBO) report estimated that in 1994 (when the generic 
drug market was smaller than its current size) consumers saved between 
$8 and $10 billion by substituting generic for brand-name drugs in 
pharmacy sales.\5\ While the first 30-month stay enhances the incentive 
to innovate, subsequent stays generated by later-listed patents do not 
seem to give rise to the same incentives in most cases. By using 
multiple 30-month stays, NDA holders are able to delay competition from 
generic drugs. Delaying generic competition harms consumers by slowing 
the introduction of lower priced products to the market and thwarts the 
intent of the Hatch-Waxman Amendments.
---------------------------------------------------------------------------

    \3\ Caves, Richard, M. D. Whinston, and M. A. Hurwitz, 1991. 
``Patent Expiration, Entry, and Competition in the U.S. 
Pharmaceutical Industry,'' Brookings Papers in Economic Activity: 
Microeconomics, p. 36.
    \4\ Hellerstein, Judith K. 1994. ``The Importance of the 
Physician in the Generic Versus Trade-Name Prescription Decision,'' 
RAND Journal of Economics: 29:1:108-136.
    \5\ Congressional Budget Office, How Increased Competition From 
Generic Drugs Has Affected Prices and Returns in the Pharmaceutical 
Industry (July 1998). Note that the sale of drugs through pharmacies 
is a subset of all drug sales so total savings to consumers would be 
expected to be higher than the given figure.
---------------------------------------------------------------------------

    The agency considered potential impacts on innovation and believes 
any negative effect to be minimal. While the initial 30-month stay is 
part of the balance struck in the Hatch-Waxman amendments to reward 
innovation, the subsequent stays are not part of this balance. The 
patents that form the basis for these subsequent stays do not appear to 
warrant automatic protection from generic competition.
    According to the FTC report, every court ruling involving a 
subsequent 30-month stay has found the underlying patent to be either 
invalid or not infringed. Also according to the FTC report, extending 
patents through multiple stays is a strategy that has become popular in 
the last few years and is not a longstanding universally-recognized 
source of research funding. Subsequent stays could actually hinder 
innovation through the replacement effect, in that they provide a 
disincentive for an NDA holder to improve upon its own product. 
Moreover, to the extent that subsequent 30-month stays might be 
associated with increases in spending on research, these increases do 
not necessarily improve social welfare.\6\
---------------------------------------------------------------------------

    \6\ A more detailed discussion of the replacement effect and of 
the relationship between research and social welfare can be found in 
Jean Tirole, The Theory of Industrial Organization (Cambridge: MIT 
Press, 1988), pp. 392, 399-400.
---------------------------------------------------------------------------

B. Costs of the Regulation

    This section develops estimates of the cost to NDA holders from the 
proposed rule. As previously stated, this proposed rule clarifies those 
types of patents that must or must not be listed and eliminates the use 
of multiple 30-month stays per ANDA to delay generic competition. The 
innovator drug industry, as NDA holders, would be expected to bear the 
costs of the proposed rule. Generic drug companies and consumers would 
be expected to benefit. The impact on these entities that benefit is 
addressed in section III.C of this preamble. We do not estimate a 
specific impact involving those submitting 505(b)(2) applications. We 
recognize these applicants, like those submitting ANDAs, must make 
certifications and would be affected by this proposed rule. We believe 
any benefits would be difficult to quantify with any precision and 
would be quite small, relative to the benefits to generic drug 
companies.
    This proposed rule will be costly to NDA holders because earlier 
generic competition will erode innovator market share. This loss of 
market share to generics will result in reduced revenues to the 
innovator. These reduced revenues would be mitigated somewhat by a 
reduction in the administrative, marketing, and sales expenses.
    To estimate the impact of earlier generic competition, we estimate 
the revenues to NDA holders and generics under a base case scenario 
under which multiple 30-month stays per ANDA are not allowed and a 
scenario in which generic entry may be delayed subject to an additional 
stay. The impact of the proposed rule would be the difference between 
the two scenarios.
1. Delaying Generic Competition
    To estimate the impact of delays to generic competition, we use a 
modified version of the economic model from our report to Congress on 
the pediatric exclusivity provision to the Food and Drug Administration 
Modernization Act.\7\ Generic entry erodes the listed drug's market 
share, typically over a period of several years. At the same time, the 
price of the typical generic drug is also falling. By tracking the 
decline of listed drug's market share and the fall in the price of the 
generic competition, the model calculates changes in sales over time 
for innovator and generic sectors.
---------------------------------------------------------------------------

    \7\ U.S. Food and Drug Administration, The Pediatric Exclusivity 
Provision: Status Report to Congress, January 2001, p. 43
---------------------------------------------------------------------------

    In the model, we assume the reference listed drug's market share 
falls from 100 percent to 60 percent in the first year of generic 
marketing, and then to 45 and 30 percent in years two and three. The 
price of the average generic drug falls with time, and this is also 
captured by the model. The model assumes for each 6-month interval over 
the first 3 years of competition, the generic price as a fraction of 
innovator price falls from 100 percent at introduction, to 80 percent 
after 6 months, and finally 33.5 percent after 3 years.\8\ Several 
studies have

[[Page 65461]]

shown generic competition to have only very small effect on innovators' 
prices.\9\ Innovator prices do frequently rise after generic entry, but 
we lack the data to confidently incorporate an estimate of this into 
this model. If innovator price increases were incorporated into this 
model, the magnitudes of the estimated impacts would be expected to be 
larger. We request comment providing data on price behavior after 
generic entry into the market.
---------------------------------------------------------------------------

    \8\ The decline over 3 years at 6-month intervals is as follows: 
100 percent at introduction (0 months); 80 percent (6 months); 60 
percent (12 months); 52.5 percent (18 months); 45 percent (24 
months); 37.5 percent (30 months); 33.5 percent (36 months). The 
ultimate price ratio of 33.5 percent is consistent with a market 
with 10 generic entrants, per Caves, Whinston, and Hurwitz (1991), 
p. 36, table 9.
    \9\ See Box 4 in Congressional Budget Office (1998), p. 30.
---------------------------------------------------------------------------

    The model calculates the impact on innovator and generic sectors 
each month for a 10-year period. Using immediate generic entry as a 
base case, the model calculates the relative impact of delaying entry 
for a certain number of months. These monthly impacts on each sector 
are converted to present value using a 7 percent discount rate.
    According to appendix H of the FTC report, there have been 8 
multiple 30-month stays, but the frequency of these stays has been 
increasing. Four drugs experienced multiple stays during 2000 and 2001. 
Based on this information, we assume that, absent this proposed rule, 
there would be 2 (4 drugs/2 years) situations with multiple 30-month 
stays each year. Thus, in calculating the annual impact of this 
proposed rule, we multiply the peak annual sales of the average 
affected drug by 2 to account for the frequency of the event. While we 
believe this to be a reasonable estimate, we recognize, as mentioned in 
the FTC Report, that a substantial sales volume of brand-name drug 
products will be coming off patent in the next few years. If there are 
more drugs affected by this rule than we estimate, this would increase 
both the benefits and costs of this rule.
    To develop a profile of the typical drug for which there were 
multiple 30-month delays, we started with the instances in Appendix H 
and table 4-3 of the FTC Report. As two instances from the FTC report 
concern different dosage forms of the same drug, gabapentin, we count 
it only once in our analysis. Generic competition for one of the drugs, 
Cisplatin, was delayed because of a single 30-month stay and an alleged 
double patent. As we do not believe this situation is addressed by this 
proposed rule, we eliminated it from the analysis. The information on 
the six remaining drugs is contained in table 2.

                                        Table 2.--Drugs Used in Analysis
----------------------------------------------------------------------------------------------------------------
                                                            Estimated Additional Stay Period    Estimated Peak
   Active Ingredient         FTC Stay Period (Months)                   (Months)                  Sales (000)
----------------------------------------------------------------------------------------------------------------
Buspirone                           30\1\                                  4                               $700
----------------------------------------------------------------------------------------------------------------
Terazosin                           70\2\                                 46                               $580
----------------------------------------------------------------------------------------------------------------
Gabapentin                             37                                 24                             $1,710
----------------------------------------------------------------------------------------------------------------
Paroxetine                             65                                 34                             $3,780
----------------------------------------------------------------------------------------------------------------
Paclitaxel                          60\1\                                  3                             $1,020
----------------------------------------------------------------------------------------------------------------
Diltiazem                           60\1\                                 28                               $380
----------------------------------------------------------------------------------------------------------------
Average                          50 (+20)                                +23                             $1,360
----------------------------------------------------------------------------------------------------------------
\1\ Potentially, but actually shorter because of a court decision.
\2\ Periods not overlapping.
Sales Data Sources: Buspirone 2000 data, BMS Web site; Terazosin 1999 data, Pharmacy Times Web site; Gabapentin
  2001 data, Drug Topics Web site; Paroxetine 2001 data, Scrip 2737, p. 15; Paclitaxel 2000 data, BMS Web site;
  Ditiazem 2001 data, Forest Form 10K. For data prior to 2001, sales were escalated to the 2001 level using CPI-
  U. For drugs that have not yet reached peak sales, the peak was estimated with a linear projection.

    Table 2 includes the inflation adjusted peak sales and subsequent 
delay for each of the six drugs. As a reference, we include delay 
information from the FTC report. Based on the delay and sales 
information for the six drugs, we find the typical delayed drug to have 
peak annual sales of $1,360 million and subject to a 23-month delay. As 
we do not possess current sales figures for all the drugs involved, we 
invite comment on the accuracy of these estimates.
2. Impact of Delay on the Innovator Sector
    The model results obtained from comparing the no delay and delay 
scenarios are provided in table 3. To account for the frequency of 
occurrence, we multiply the peak sales estimate by 2. To the extent 
that this proposed rule would eliminate multiple 30-month stays per 
ANDA after the first, the estimated impact on innovators would be an 
annual revenue decrease of $3,159.50 million (approximately $3.2 
billion).

                   Table 3.--Results of Delay Analyses
------------------------------------------------------------------------
                                               Impact (In Millions)
 Scenario    Sales     Delay (Months)   --------------------------------
             (000)                        Innovator   Generic   Consumer
------------------------------------------------------------------------
Base Case   $2,720\         23           ($3,160)    $1,120    $2,040
             1\
------------------------------------------------------------------------
\1\ Includes 2.0 frequency factor.


[[Page 65462]]

    The cost impact on innovators is driven by the fact that a delay in 
generic entry extends the time the innovator collects peak sales and 
shortens the time the innovator collects 30 percent of peak sales. 
Absent discounting, the impact on innovators would be the length of the 
delay times 70 percent of the peak innovator drug revenues.
    This impact on innovators may be mitigated to a small degree by 
potential decreases in the administrative, marketing, and sales costs 
associated with the product. A recent study of top pharmaceutical 
companies found that marketing, administrative, and advertising 
expenses averaged 27 percent of revenues.\10\ Part of this figure 
includes certain fixed costs that would not change with a decline in 
revenues. Moreover, to the extent that some of these support costs are 
discretionary, they would most likely be focused on periods of intense 
marketing, such as product roll-outs. Nevertheless, with the erosion of 
market share, the rewards to marketing would decline and the need for 
administrative support would be expected to decrease.
---------------------------------------------------------------------------

    \10\ Families USA, Profiting From Pain: Where Prescription 
Dollars Go, July 2002, p. 3.
---------------------------------------------------------------------------

    Assuming half the 27 percent figure to be discretionary support 
costs, and the discretionary support costs for the product in question 
to be one-third of the average, then discretionary support costs would 
be 4.5 percent of revenues (27 percent/6). The relevant annual cost 
reduction would be $142.2 million ($3.160 billion x 4.5 percent). As we 
lack precise data on the relationship between revenues and support 
costs, we invite comment on the accuracy of this estimate.
3. Other Issues Related to Burdens to Innovators
    The proposed rule would require NDA holders to submit a more 
detailed patent declaration. To estimate the number of enhanced patent 
declarations that will be submitted annually, we referred to historical 
data on submission of NDAs, excluding those for orphan drugs. In 2000 
and 2002, there were 94 and 66 NDAs respectively. We therefore estimate 
that there will be 80 ((94 + 66) / 2) annual instances where an NDA 
holder or NDA applicant will face this additional declaration burden. 
Based on earlier information collection estimates, we assume there to 
be an estimated 1.55 annual responses per respondent. Using this same 
1.55 ratio, this would mean that the 80 NDA applicants and NDA holders 
would submit 124 annual responses (80 respondents x 1.55 responses per 
respondent).
    We believe that, while the NDA holder or NDA applicant possesses 
the additional patent information, there will be a burden in completing 
the more detailed declaration. Based on other rules that require 
respondents to compile and submit information in their possession, we 
estimate the burden to be 24 hours per event. A regulatory affairs 
specialist could perform the tasks associated with this process. Based 
on the total average hourly compensation (including a 40 percent load 
factor for benefits) of $55.72, the cost would be $1,337 ($55.72 per 
hour x 24 hours) per event.\11\ The burden on individual firms would 
depend on the number of declarations they submit. The estimated annual 
burden to all declarants is $165,778 ($1,337 per event x 124 annual 
events).
---------------------------------------------------------------------------

    \11\ Hourly rate for ``lawyer'' from the Bureau of Labor 
Statistics 2000 National Compensation Survey is $38.70, adjusted for 
inflation at 2.85 percent (unadjusted CPI-U) and 40 percent for 
benefits.
---------------------------------------------------------------------------

    We also considered a potential impact due to the numbers of patents 
listed. The proposed rule would require the submission of patent 
information for patents that claim different forms of the drug 
substance, and this would appear to increase the number of patent 
filings. At the same time, the proposed rule would clarify the types of 
patents that must not be submitted, and this would appear to reduce the 
number of patent filings. These two countervailing effects are of 
uncertain magnitude. We cannot quantify an impact, if any, from a 
change in the number of patents listed, but we invite comment.
4. Enforcement Costs
    The proposed rule, if finalized, can be enforced using existing 
resources.
5. Total Costs of the Regulation
    The annual cost of the proposed rule includes the lost revenues to 
innovator firms from the erosion of market share, mitigated by the 
decrease in support costs, and the additional cost of completing the 
more detailed patent declaration. The estimated 1-year loss in revenues 
from erosion of market share is $3,159.50 million, the reduction in 
support costs would reduce this loss by $142.20 million, and the 
estimated annual additional cost of completing the revised declarations 
is approximately $166,000. Thus, the estimated 1-year cost to innovator 
firms is $3,017.47 million (approximately $3.0 billion).
    According to projections produced by the Office of the Actuary at 
the Centers for Medicare and Medicaid Services, expenditures on 
prescription pharmaceuticals are expected to increase dramatically in 
the near future. This $3.0 billion 1-year estimate does not take these 
increases into consideration and must be adjusted to account for them. 
Prescription drug expenditures for 2003, for example, are expected to 
be 12.8 percent greater than for 2002.\12\ After using the average 
annual percent changes in prescription drug expenditures to adjust the 
annual cost, the total reduction in revenues to the innovator sector 
over the 10-year period 2002 through 2011 is estimated to be $51,507.55 
million, or approximately $51.5 billion. Annualizing this impact over 
that 10-year period at a 7 percent discount rate yields an annualized 
cost of $4,863.76 million, or approximately $4.8 billion.
---------------------------------------------------------------------------

    \12\ The annual percent increases in prescription drug 
expenditures for each year, 2003 through 2011, are assumed to be 
12.8 (2003), 12.3 (2004), 11.7 (2005), 11.0 (2006), 10.7 (2007), 
10.5 (2008), 10.3 (2009), 10.2 (2010), and 10.1 (2011). See National 
Health Care Expenditures Projections: 2001-2011, Centers for 
Medicare & Medicaid Services, Office of the Actuary, table 11.
---------------------------------------------------------------------------

C. Benefits of the Regulation

    This section develops estimates of the benefits from the proposed 
rule. Eliminating multiple 30-month stays per ANDA will prevent delays 
in generic drug competition. The 70 percent of the market lost by 
innovators is a gain to both generic drug companies and consumers. 
Generic drug companies gain through additional sales, and, to the 
extent that generic prices are lower than innovator prices, consumers 
benefit from the ``price gap.''
1. Gains to the Generic Drug Industry
    We estimated the increase in sales to generic drug companies using 
the same model used to estimate losses in sales to innovators. Assuming 
typical drug peak sales to be $2.72 billion (including 2.0 frequency 
factor) and a typical delay of 23 months, the estimated increase in 1-
year revenues to generic firms is $1,119 million (approximately $1.1 
billion). After accounting for the baseline increases in pharmaceutical 
expenditures, the total increase in generic industry revenues for the 
period 2002 to 2011 is estimated to be $19,117.47 million or 
approximately $19.1 billion. The annualized cost, using a 7 percent 
discount rate is $1,805.23 million or approximately $1.81 billion.
    While we recognize that the generic drug industry is doing more 
marketing than it used to do, the effort is still substantially smaller 
than what is done by innovator firms, and we do not make adjustments 
for reductions associated support costs.

[[Page 65463]]

2. Gains to Consumers
    The model assumes that after generic entry, the market will 
eventually stabilize where the price of a generic drug will be 33.5 
percent of the equivalent innovator drug. The gain to consumers would 
be the difference between the generic and innovator price. This price 
gap is equal to 66.5 percent of the innovator price. Under our 
assumptions, the estimated consumer impact of the proposed rule is a 1-
year gain of $2,040 million (approximately $2 billion). This gain would 
be from the elimination of multiple 30-month stays per ANDA that delay 
the availability of less expensive drugs.
    After increasing this 1-year estimate to account for the annual 
expected increases in baseline pharmaceutical expenditures, the total 
expected benefit to consumers for the period 2002 to 2011 is $34,822.35 
or approximately $34.8 billion. The annualized benefit to consumers, 
using a 7 percent discount rate, would be $3,288.21 or approximately 
$3.3 billion.
    It is difficult to determine which subgroups of consumers will 
benefit most from access to generic drugs. The previously cited report 
on Pediatric Exclusivity noted that about 21 percent of pharmaceutical 
spending came from public sources (Federal, State & Local, Medicare and 
Medicaid) and that this figure was expected to rise. The report also 
noted that cheaper drugs would disproportionately benefit lower income 
consumers in that these consumers would be less likely to have 
insurance.
3. Other Issues Related to Benefits
    In the past, some studies have allocated a portion of the gains to 
generic drugs to the distribution sector (e.g., retail drug stores). 
These studies typically based this approach on the belief that generic 
drugs carried a substantially larger retail markup, in absolute dollar 
terms, than did innovator drugs.
    This belief appears to be based on literature using limited data 
from the mid-1980s, a period when the generic drug industry was 
substantially different from its current state. For this analysis, we 
referred to more recent information, such as that found in the CBO 
report, and found no evidence of substantially larger absolute retail 
markup for generic drugs. While we believe recent data supports our 
belief that the absolute markups are approximately the same, we invite 
comment on this issue.
4. Total Benefits of the Regulation
    The 1-year benefits of the regulation will include the increase in 
revenues to generic firms and the savings to consumers from the earlier 
availability of less expensive pharmaceuticals. The estimated total 1-
year benefit is $3,159 million (approximately $3.2 billion). Adjusting 
this benefit to account for the expected increase in baseline 
pharmaceutical expenditures, the total benefit for the years 2002 
through 2011 is expected to be $53,931.97 million or approximately 
$53.9 billion. Annualizing this stream of benefits over that 10-year 
period at a 7 percent discount rate yields an annualized cost of $5,093 
million or approximately $5.1 billion.

                        Table 4.--Benefits of the Proposed Rule to Generics and Consumers
----------------------------------------------------------------------------------------------------------------
               Issue                                         One-Year Impact (Millions)
----------------------------------------------------------------------------------------------------------------
Generic Earlier Access to Market                                      $1,119.96
----------------------------------------------------------------------------------------------------------------
Consumer Drug Savings                                                 $2,039.54
----------------------------------------------------------------------------------------------------------------
  Total Benefits                                                      $3,159.50
----------------------------------------------------------------------------------------------------------------

D. Comparison of Costs and Benefits

    The estimated 10-year total costs of this proposed rule are $51,508 
million. These costs would be borne by innovator firms in the form of 
reduced revenues, mitigated by a reduction in support costs, and an 
increased cost of completing the revised patent declaration. The 
estimated annualized cost is $4,864 million.
    The estimated 10-year benefits of this proposed rule are $53,932 
million. These benefits would accrue to the generic drug firms and 
consumers in the form of increased revenues and increased income from 
access to cheaper drugs, respectively. The estimated annualized benefit 
is $5,093 million. Absent the additional cost of completing the 
declaration and the reduction in support costs, the costs equal the 
benefits because the economic impact of this proposed rule is a 
transfer, as consumers shift consumption from the products of the 
innovator drug firms to those of generic drug firms. The total 10-year 
quantified benefits exceed the costs by $2,424 million and the 
annualized benefits exceed the annualized costs by $229 million. While 
the quantified benefits do exceed the quantified costs, this proposed 
rule has the additional important benefit of preserving the balance 
struck in the Hatch-Waxman amendments.

E. Regulatory Alternatives

    In creating this proposed rule, we considered several regulatory 
alternatives, including not regulating. We rejected the alternative of 
not regulating because under the current situation, NDA holders are 
able to use multiple 30-month stays to delay generic entry and thwart 
the intent of the Hatch-Waxman amendments. We also considered using the 
current system of patent declarations. This alternative was also 
rejected because the current declaration may be insufficient to prevent 
NDA holders and NDA applicants from listing patents that should not be 
listed under the law. This is particularly important in light of the 
fact that we lack the resources, expertise, and authority to evaluate 
patents to determine whether they should be listed in the Orange Book.

F. Impact on Small Entities

    Unless the agency certifies that the rule is not expected to have a 
significant impact on a substantial number of small entities, the 
Regulatory Flexibility Act, as amended by SBREFA requires agencies to 
analyze regulatory options that would minimize any significant economic 
impact of a rule on small entities. According to standards established 
by the Small Business Administration, a small pharmaceutical 
manufacturer employs fewer than 750 employees. We do not know the 
precise number of innovator companies expected to use multiple 30-month 
stays to delay generic entry. Nevertheless, we do not believe any of 
these innovator companies to be small. Moreover, none of the innovator 
companies identified in the FTC report as having used multiple 30-month 
stays would qualify as a small entity. Therefore, the agency certifies 
that this proposed rule is not expected

[[Page 65464]]

to have a significant impact on a substantial number of small entities.
    Interested persons may submit to the Dockets Management Branch (see 
ADDRESSES) written or electronic comments regarding this proposal. 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, it is 
proposed that 21 CFR part 314 be 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, 355a, 356, 
356a, 356b, 356c, 371, 374, 379e.
    2. Section 314.52 is amended by redesignating paragraph (a)(3) as 
paragraph (a)(4) and by adding new paragraph (a)(3) to read as follows:


Sec.  314.52  Notice of certification of invalidity or noninfringement 
of a patent.

    (a) * * *
    (3) This paragraph does not apply to a use patent that claims no 
uses for which the applicant is seeking approval. This paragraph also 
does not apply if the applicant amends its application to add a 
certification under Sec.  314.50(i)(1)(i)(A)(4) when the application 
already contained a certification under Sec.  314.50(i)(1)(i)(A)(4) to 
another patent.
* * * * *
    3. Section 314.53 is amended by revising paragraphs (b) and (c)(1) 
through (c)(2) to read as follows:


Sec.  314.53  Submission of patent information.

* * * * *
    (b) Patents for which information must be submitted. An applicant 
described in paragraph (a) of this section shall submit information on 
each patent that claims the drug or a method of using the drug that is 
the subject of the new drug application or amendment or supplement to 
it and with respect to which a claim of patent infringement could 
reasonably be asserted if a person not licensed by the owner of the 
patent engaged in the manufacture, use, or sale of the drug product. 
For purposes of this part, such patents consist of patents that claim 
the drug substance (ingredient), patents that claim the drug product 
(formulation and composition), product by process patents, and patents 
that claim a method of use. Process patents, patents claiming 
packaging, patents claiming metabolites, and patents claiming 
intermediates are not covered by this section, and information on these 
patents may not be submitted to FDA. For patents that claim the drug 
substance, the applicant shall submit information only on those patents 
that claim the form of the drug substance that is the subject of the 
pending or approved application or that claim a drug substance that is 
the ``same'' as the active ingredient that is the subject of the 
approved or pending application within the meaning of section 
505(j)(2)(A)(ii) of the act. For patents that claim a drug product, the 
applicant shall submit information only on those patents that claim a 
drug product that is the subject of a pending or approved application. 
For patents that claim a method of use, the applicant shall submit 
information only on those patents that claim indications or other 
conditions of use that are the subject of a pending or approved 
application. For approved applications, the applicant shall identify 
the indication or other condition of use in the approved labeling that 
corresponds to the listed patent and claim identified.
    (c) * * * (1) General requirements. An applicant described in 
paragraph (a) of this section shall submit the declaration described in 
paragraph (c)(2) of this section for each claim of the patent that 
meets the requirements described in paragraph (b) of this section.
    (2) Patent declaration. (i) For each patent that claims a drug 
substance (active ingredient), drug product (formulation and 
composition), and/or method of use, the applicant shall submit the 
following declaration:
    This is a submission of patent information for an NDA submitted 
under section 505 of the Federal Food, Drug, and Cosmetic Act (the 
Act).
Time sensitive patent information pursuant to 21 CFR 314.53 for NDA 
[numsign]------------
The following is provided in accordance with section 505(b) of the 
Act:
Trade Name: ------------
Active Ingredient(s): ------------
Strength(s): ------------
Dosage Form(s): ------------
Approval Date (if the submission is a supplement to an approved 
NDA): ------------
Please provide the following information for each patent submitted, 
and identify the relevant claim(s) by number.
A. 1. United States patent number: ------------
 2. Expiration date: ------------
 3. Name of the Patent Owner: ------------
 4. Agent (if patent owner or applicant does not reside or have a 
place of business in the United States) ------------
B. For each patent identified in A, please provide the following 
information:
 1. The type of patent claims that apply to the drug substance or 
drug product that is the subject of the application:
 2. Drug Substance (Active Ingredient)
     ------ Yes ------ No
    a. Claim number(s): ------------
 3. Drug Product (Composition/Formulation):
     ------ Yes ------ No
    a. Claim number(s): ------------
 4. Method of Use:
     ------ Yes ------ No
    a. Claim number(s): ------------
C. For each drug substance claim identified, please provide the 
following information:
 1. Is the claim one that claims the drug substance that is the 
active ingredient in the approved or pending NDA, an amendment to 
the NDA, or a supplement to the NDA?
     ------ Yes ------ No
If ``yes,'' please identify the claim(s) by number.
 2. Is the claim one that claims a drug substance that is the 
``same'' active ingredient as the active ingredient in the pending 
or approved NDA, amendment to the NDA, or a supplement to the NDA?
     ------ Yes ------ No
If ``yes,'' please identify the claim(s) by number.
 3. If the answer to question C.1 or C.2 is ``yes,'' do you 
acknowledge that an ANDA or 505(b)(2) application containing the 
same active ingredient that is claimed by the patent is the ``same'' 
for ANDA or 505(b)(2) approval purposes?
    ------ Yes ------ No
[If the answers to questions C.1, and C.2, or C.3 is ``no,'' stop 
here. The patent may not be listed in the Orange Book as a patent 
that claims the drug substance.]
D. For each drug product claim identified, please provide the 
following information:
 1. Is the claim one that claims the approved formulation or 
composition and/or the formulation or composition for which approval 
is being sought?
     ------ Yes ------ No
If ``yes,'' please identify the claim(s) by number.
[If the answer to question D.1 is ``no'' in every instance, stop 
here. The patent may not be listed in the Orange Book as a patent 
that claims the drug product.]
E. For each method of use claim identified, please provide the 
following information:
 1. Is the claim one that claims:
    (a) an approved method of use of the approved drug product? If 
``yes,'' please identify the use with reference to the approved 
labeling for the drug product and identify the relevant patent claim 
number(s);
     ------ Yes ------ No
    (b) a method of use of the approved drug product for which use 
approval is being sought; or

[[Page 65465]]

     ------ Yes ------ No
    (c) a method of use of the drug product for which approval is 
being sought?
     ------ Yes ------ No
    If the answer to questions E.1(b) or (c) is ``yes,'' please 
identify the use with reference to the proposed labeling for the 
drug product and identify relevant patent claim number(s).
[If the answers to questions E.1(a) through (c) are ``no,'' stop 
here. The patent may not be listed in the Orange Book as a patent 
that claims a method of use.]
    (ii) Amendment of patent information upon approval. Within 30 days 
after the date of approval of its application, if the application 
contained a declaration required under paragraph (c)(2)(i) of this 
section, the applicant shall, by letter, amend the declaration to 
identify the patent claims that claim the drug substance, drug product, 
or method of use that has been approved.
* * * * *
    4. Section 314.95 is amended by revising paragraph (a)(3) to read 
as follows:


Sec.  314.95  Notice of certification of invalidity or noninfringement 
of a patent.

    (a) * * *
    (3) This paragraph does not apply to a use patent that claims no 
uses for which the applicant is seeking approval. This paragraph also 
does not apply if the applicant amends its application to add a 
certification under Sec.  314.94(a)(12)(i)(A)(4) when the application 
already contained a certification under Sec.  314.94(a)(12)(i)(A)(4) to 
another patent.
* * * * *

    Dated: September 19, 2002.
Lester M. Crawford,
Deputy Commissioner.

Tommy G. Thompson,
Secretary of Health and Human Services.
[FR Doc. 02-27082 Filed 10-14-02; 11:57 am]
BILLING CODE 4160-01-S