July 23, 2013

ITC Investigations Faster than Before

ITC Building.pngSection 337 investigations before the International Trade Commission ("ITC" or "Commission") already proceed at a fast pace. But in keeping with its goal of completing investigations expeditiously, on June 24, 2013, the Commission announced its plan to speed up the process. The Commission stated in a press release that it will select certain investigations for inclusion in a new dispositive-issue pilot program. For an investigation that contains potentially case-dispositive issues--including the existence of a domestic industry, whether proof of importation of an accused product exists, and whether the complainant has standing to participate in an investigation--the Commission will direct the assigned Administrative Law Judge ("ALJ") to resolve the dispositive issues within 100 days of institution of the investigation.

Under current ITC practice, an ALJ does not rule on such dispositive issues until the summary-determination stage of an investigation or until he or she issues an initial determination after a trial-type hearing. Both of these events, however, occur after months of discovery have taken place on all issues, dispositive and non-dispositive alike. And in the summary-determination stage, the ALJ may find that issues of fact prevent resolution of the investigation without holding a hearing on all pending issues. By this time, the parties have expended considerable resources litigating the investigation. The pilot program seeks to "limit unnecessary litigation, saving time and costs for all parties involved."

For an investigation assigned to the program, the Commission will direct the ALJ to rule on a specific dispositive issue early in the investigative process. For instance, under 19 U.S.C. § 1337(a)(2)-(3), complainants accusing respondents of importing products that infringe the complainants' intellectual-property rights must establish that a domestic "industry" exists or is in the process of being established in the United States with respect to those rights. If the Commission determines at the institution of the investigation that a particular complainant likely cannot establish the existence of a domestic industry, it will direct the ALJ assigned to that case to "rule on that issue early in the investigation through expedited factfinding and an abbreviated hearing limited to the identified issue."

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July 22, 2013

Patent Troll Legislation Receives Increasing Support

troll.jpgLarge companies have long pointed to non-patent entities ("NPEs") for abusing the patent system by buying patent portfolios and using litigation, or the threat thereof, to force licensing fees and settlements. In contrast, the patent-holding companies argue that they are asserting legally-obtained rights against huge corporations that are using other people's innovations for profit. Based on legislation in Congress, as well as a proposal from President Barack Obama, it appears that the desire for anti-"patent troll" measures is gaining traction by both parties. The legislation has primarily taken a practical approach of targeting problematic tactics used by NPEs. Six pieces of legislation have been introduced or proposed in Congress including the Shield Act, the Patent Abuse Reduction Act, the End Anonymous Patent Act, the Patent Quality Improvement Act, and an act introduced by the leaders of the House and Senate Judiciary Committees.

The Saving High-Tech Innovators from Egregious Legal Disputes Act of 2013, or Shield Act, (H.R. 6245) was introduced in the House in February. It defines a "troll" as a patent owner who did not do the inventing behind the patent and does not exploit it by making a product. A patent owner that fits those criteria and loses an infringement case would be responsible for its opponents' costs under the Bill. The Bill would also allow an accused infringer to move early in the case for a judgment that the patent owner is a NPE required to pay litigation costs if it loses.

The Patent Abuse Reduction Act (S. 1013), introduced in the Senate in May, would mandate that any patent infringement complaint include 14 separate pieces of information that are not currently required. The requirements include identifying each product or feature alleged to infringe the patent, including name or model number; an explanation of how the asserted claim corresponds with the accused function "with detailed specificity," a description of the plaintiff's principal business and right to assert the patent; and a list of every other suit in which the patent has been asserted. To reduce discovery costs, the Bill would require any party in patent litigation to cover the cost of discovery beyond "core documentary evidence," which includes documents that relate to the conception of the patent and potentially invalidating prior art. The Bill would also mandate that the prevailing party in patent litigation be awarded reasonable costs and expenses, including attorneys' fees, unless "the position and conduct of the nonprevailing party were objectively reasonable" or "exceptional circumstances make such an award unjust."

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July 18, 2013

Gilotrif® with Therascreen EGFR PCR Kit Approved for Lung Cancer Treatment

lung-cancer-500x360.jpgFriday, FDA approved Boehringer Ingelheim's drug, Gilotrif® (afatinib), to treat patients with late-stage metastatic Non-Small Cell Lung Cancer ("NSCLC"). Gilotrif® is a tyrosine kinase inhibitor that inhibits cancer-causing proteins. NSCLC is any type of epithelial lung cancer other than small cell lung cancer ("SCLC"). The most common types of NSCLC are squamous cell carcinoma, large cell carcinoma, and adenocarcinoma. Although NSCLCs are associated with cigarette smoke, adenocarcinomas may be found in patients who have never smoked. As a class, NSCLCs are relatively insensitive to chemotherapy and radiation therapy compared with SCLC.

Gilotrif® targets specific proteins caused by epidermal growth factor receptor ("EGFR") gene mutations, which are present in about 10 percent of NSCLC patients. Specifically, Gilotrif® targets proteins expressed by EGFR exon 19 deletions and exon 21 L858R substitutions. The drug is being approved concurrently with a companion diagnostic kit that helps determine if a patient's lung cancer cells express EGFR mutations. The kit is called therascreen EGFR RGQ PCR Kit, and is made by Qiagen N.V.

FDA approval of Gilotrif® for NSCLC is a big deal. Lung cancer is the number one cause of cancer-related deaths and NSCLC makes up about 85% of all lung cancers. An estimated 160,000 people will die in the U.S. from lung cancer this year, according to the National Cancer Institute, and 1.38 million deaths worldwide are attributable to lung cancer. Lung cancer is the cause of 18% of all cancer deaths.

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July 17, 2013

Facility Inspection Guidance Issued by FDA: Delaying, Denying, Limiting, or Refusing a Drug Inspection

magnifying glass.jpgOn July 12, 2013 FDA issued new Guidance for Industry: Circumstances that Constitute Delaying, Denying, Limiting, or Refusing a Drug Inspection. The Guidance document illustrates circumstances where the FDA will treat the occurrence as contrary to section 501(j). These are divided into four sections: (1) Delay of Inspection, (2) Denial of Inspection, (3) Limiting of Inspection, and (4) Refusal to Permit Entry.


FDA, under the jurisdiction of the Federal Food, Drug & Cosmetic Act ("FD&C Act") Section 704(a), has the authority to carry out inspections of facilities by duly appointed FDA employees. These inspections are to be undertaken at reasonable times, within reasonable limits and in a reasonable manner.

FDA has not always been able to carry out its tasks. Consequently, in light of the recent Food and Drug Administration Safety and Innovation Act ("FDASIA"), which was signed into law in July 2012, and in particular Section 707 of FDASIA, which added 501(j) to the FD&C Act, the FDA now deems as adulterated a drug that "has been manufactured, processed, packed, or held in any factory, warehouse, or establishment and the owner, operator, or agent of such factory, warehouse, or establishment delays, denies, or limits an inspection, or refuses to permit entry or inspection". (emphasis added)

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July 15, 2013

Q1 Global Risk Management Conference Provides Insight for Upcoming FDA Public REMS Meeting

RISK.jpgOn July 11-12, Q1 Productions hosted a conference, Global Risk Management & Regulatory Policy. In some ways, the conference served as an industry-focused prelude for discussion of many of the topics that plan to be discussed at an upcoming FDA meeting on July 25 and 26 on Standardizing and Evaluating Risk Evaluation and Mitigation Strategies ("REMS"). The Conference featured presenters from industry, academia, consultants, and law, where controversial topics such as REMS assessments and shared REMS could be discussed by both innovator and generic companies in a collaborative setting.

The Conference started off with two presentations designed to provide a set of tool kits for optimizing REMS for maximum risk management effectiveness (Barbara Troupin, MD, MBA, Vice President, Scientific Communications & Risk Management, Vivus), and streamlining them for efficiency (Charles Tressler, Senior Director of Safety Surveillance & Risk Management). Christopher Milne, DVM, MPH, JD, Director of Research, Tufts Center for the Study of Drug Development, next presented an overview of a REMS report issued by the Office of Inspector General ("OIG"), Department of Health and Human Resources, entitled, "FDA Lacks Comprehensive Data to Determine Whether Risk Evaluation and Mitigation Strategies Improve Drug Safety" issued in February 2013. Milne explained that the OIG found that FDA's experiment of essentially renaming risk management programs from Risk Minimization Action Plans ("RiskMAPs") to REMS did not appear to be much of an improvement (only 22% thought it was better). The OIG found that sponsors were developing REMS too late in the product development, inconsistently submitting the required assessment reports, and the assessment reports were either incomplete or not useful to determine whether the product's risks were being appreciably reduced by the REMS.

Milne believes that FDA is holding the upcoming public REMS meeting and has proposed a five-year analysis and integration plan to prevent further Congressional attention to REMS in the next prescription drug user fee act ("PDUFA"), expected in 2017. According to Milne, every year FDA plans to carefully review one REMS with Elements to Assure Safe Use ("ETASU"), e.g., restricted pharmacy settings or specialized training for physicians and pharmacies, registries, to improve its efficiency and risk minimization tools. Milne suggested (and various conference attendees agreed) a REMS 101-type of class is likely needed to make REMS more productive. For instance, it would be useful to collect public information about the pros and cons of all REMS tools, as well as consider ways to make REMS implementation less burdensome for physicians and patients alike. Milne noted that there are now case studies demonstrating that REMS place a large burden on patients and the health system, denying patients access to certain needed drugs with a REMS. And at the same time, sponsors are unsure what elements to include in their REMS, because FDA can at the same time complain that a REMS fails to disclose offlabel use risks, while at the same time allege that the REMS misbrands the product by suggesting the offlabel uses.

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July 10, 2013

Compounding Pharmacies Further Regulated by FDA: Senate Bill Proposed

pharmacy.pngCompounding pharmacies have been on FDA's priority list since the 61 deaths and 749 cases of fungal infections from steroid injections contaminated during manufacture by New England Compounding Center ("NECC"), last fall. When appearing before Congress last November, FDA Commissioner Margaret A. Hamburg, M.D. plead a lack of regulatory authority in the wake of the Western States U.S. Supreme Court decision. Arguably, it is unclear if Western States struck down just the regulation of advertisements (as industry has contended) leaving the regulatory structure untouched or if it invalidated the authorization of compounding pharmacies (as FDA has contended, since the 9th circuit held the provisions not-severable and that decision was affirmed), leaving compounding pharmacies technically illegal but ignored by FDA regulatory discretion. Either way, FDA appeared to retain certain regulatory authority over compounding pharmacies, but FDA's scope was unclear.

Congress did not want to leave the deaths resulting from compounded drugs alone, so S. 959 was proposed to fix the problem, despite the lack of clarity what problem needed to be fixed. Among other things, S. 959 would forbid compounding pharmacies to copy FDA-approved but nonpatented medicines. But do we want all medications (including compounded drugs) to require premarketing approval? Do we want more frequent inspections of compounding pharmacies, and if so how do we pay for it? Do we just want someone to be held responsible--who: FDA, pharmacy boards, or someone else?

The basic dilemma is simple: we want safe and effective medicines, but we also want them at a price that we can afford. Compounding pharmacies may provide certain formulations of medicines without the overhead and costs related to commercially-manufactured and regulated medications. In some instances, compounding pharmacies may be able to offer medications with the same active compounds used in conventional drugs but with different inactive ingredients at lower costs than commercial medications. When such pharmacies are too small, few people realize the benefits of customized medications due to availability or cost. When they are too big, they are viewed as traditional drug manufacturers by FDA, leading to questions about what regulatory oversight is appropriate or warranted.

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July 9, 2013

Q1 Productions to Host Global Clinical Risk Management and Regulatory Policy Conference

globalmap.pngThe Global Clinical Risk Management and Regulatory Policy Conference will take place in Alexandria, Virginia on July 11-12, 2013. Throughout the two-day program, executives from industry will have an opportunity to discuss and debate the many challenges associated with profiling the risk of products as well as minimizing these risks and meeting regulatory expectations. With a well-rounded speaking platform that includes not only industry representation but also regulatory bodies, legal perspectives and the healthcare professional, participants will have an unrivaled opportunity to engage, network and learn from leading executives and corporations.

As with all Q1 programs, the focus of the event will not only lie upon the educational content, but also providing attendees with an opportunity to network and build relationships across this highly dynamic and evolving market. For conference sponsors supporting this program, the event will be an ideal vehicle for both learning more about advanced RMPs, but also an opportunity to disseminate information regarding products and services supporting pharmaceutical risk management.


  • Harmonizing risk management strategies for global markets

  • Measuring the effectiveness of approved REMS & RMP

  • Working with regulatory agencies to revise risk plans

  • Forecasting the FDA's next steps in determining REMS drug safety improvement

  • Strengthening benefit-risk analysis on an international scale

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    July 8, 2013

    Q1 Productions' REMS Session Features FLH Partner Brian J. Malkin

    Q1 ProductionisOn July 11-12, Q1 Productions ("Dedicated to Quality First®) will be hosting in Alexandria, Virginia, its Global Clinical Risk Management & Regulatory Policy Program: Implementation of Advanced Risk Management Plans that Increase the Effectiveness of Risk Assessment and Mitigation, while Increasing Drug Safety and Meeting Regulatory Policy & Guidance on a Global Level. FLH Partner Brian J. Malkin is featured to speak on July 11 with the topic: "Developing a Single, Shared REMS in a Collaborative Setting". The session description for Mr. Malkin's presentation states:

    The FDA approves single, shared REMS for product categories with similar risk management programs to help relieve some of the burden on healthcare providers and pharmacies. The development of shared REMS requires that multiple companies and the FDA work in tandem to unify data and risk minimization systems, a model which some companies have also used to help organize risk management plans internationally. By ensuring a strong cross-corporate collaboration, internal regulatory policies, data analysis and communication systems can be synchronized internationally for advanced risk management programs.

    • Structuring lines of communication within shared REMS network

    • Establishing similar regulatory policies

    • Utilizing data from all companies for international RMP development.

    Q1 Productions' program will provide executives from industry with the opportunity to discuss and debate the many challenges associated with profiling the risk of products, as well as ways to minimize these risks and meet regulatory expectations globally. All Q1 programs not only provide valuable educational content but also include attendees with opportunities to network and build relationships across highly dynamic and evolving markets.

    Mr. Malkin hopes to see you there and welcomes individuals to contact him with related questions in this rapidly evolving field.

    July 3, 2013

    Biotechnology Financing-Raising Capital Presented at MassBio in Cambridge

    DNAMoney.pngOn June 27, the Massachusetts Biotechnology Council ("MassBio") featured its second Forum in the series "Adventures in Biotech: Stories of Success (and Failure): A Six-Part Series: June-October 2013, called "Financing the Dream: Avenues for Raising Capital". The presenters included: Jeff Arnold, President and CEO, Arnold Strategies, LLC; Bernard Davitian, Vice President, Business Development Licensing & Structured Investments, Sanofi-Genzyme BioVentures; Michelle Dipp, M.D., Ph.D., Co-Founder and CEO, OvaScience; and Guy Macdonald, President and CEO, Tetraphase Pharmaceuticals with moderators Marc R. Cote, Chief Operating Officer, Accellient Partners, LLC & Chief Financial Officer, Synchroneuron Inc. and John Hession, Partner, Venture Capital Financings & Emerging Companies Practice Groups, Cooley LLP. Frommer Lawrence & Haug LLP is an active member of MassBio and attended this Forum.

    Arnold described the process how "angels do drugs," for example, repurposing previously-approved therapies for new uses, which may involve lower risk and capital and a clear opportunity for exit. An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. With angel investing, opportunities generally require financings under $5 million with no venture capital in the plan and value-creating milestones early on. Some advantages of angel investing, Arnold explained, are rolling closes with easy follow-ons and more is typically owned at exit. Angel investing, however, requires more investors (40+) that have more involvement than a board member on a venture capital fund. Building a syndicate requires finding a champion and applying to several groups simultaneously with drug candidates in one or more incubators for development. The angel investors are looking for a clear exit strategy, typically within 3-6 years, which often takes longer for pharmaceutical/biotechnology products. On angel money, clinical studies may get as far as phase 2 but never go to all phase 3 studies; at this stage, the projects require big pharmaceutical manufacturer support to continue.

    Arnold noted that grant funding, such as grants from the National Institutes of Health ("NIH"), will help to generate interest in the product(s) but obtaining angel money requires frequent and continuous networking. Many prospects will not advance to a true diligence, e.g., there are 8 Mass Medical meetings a year with about a dozen new plans a month; at each meeting there are about 200 proposals evaluated, and three proposals are presented at each meeting with only one advancing to a true diligence.

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    July 2, 2013

    DIA's 49th Annual Meeting - CDER Town Hall (Part Three)

    On June 27, 2013, the Center for Drug Evaluation and Research ("CDER") held its popular two-part "CDER Town Hall" at the Drug Information Association's ("DIA's") 49th Annual Meeting at the Boston Convention and Exhibition Center. Highlights of the first day are provided here; highlights of other selected other leading up to the CDER Town Hall on the final day are provided here.

    During the CDER Town Hall, key leaders from CDER were on deck to answer questions from the audience. Below are some of the topics addressed in the second part, which featured from FDA: Gerald J. Dal Pan, M.D., Director, Office of Surveillance and Epidemiology, CDER; John K. Jenkins, M.D., Director, Office of New Drugs, CDER; Justina A. Molzon, J.D., M.Pharm., CAPT, USPHS, Associate Center Director for International Programs, CDER; Christine M.V. Moore, Ph.D., Acting Director, Office of New Drug Quality Assessment, Office of Pharmaceutical Science, CDER, Robert T. O'Neill, Ph.D., Senior Statistical Advisor, Office of Translational Sciences, CDER; and Robert J. Temple, M.D., Deputy Center Director for Clinical Science, CDER.

    Clinical Trials

    Regarding increasing patient involvement in clinical trials, O'Neill thought that it was long overdue to have patients more involved in the clinical trial process but acknowledged there would be potential logistical issues. For example, current informed consent forms may need to be reevaluated. In addition, the role of subjects needs to be better understood, including provisions for follow up information. Right now, he explained, it is unclear to the extent there are "trial hoppers", i.e., subjects who drop out and try other experimental products or unblind the study by discovering they are taking the test drug or placebo, and how this affects trial outcomes. Getting patients more involved in the clinical trial process could help to identify these individuals across studies for treatment products for the same indications.

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    July 1, 2013

    DIA's 49th Annual Meeting - Selected Additional Topics (Part Two)

    Boston Convention Center and Exposition Hall.pngOn June 24-27, 2013, the Drug Information Association ("DIA") held its 49th Annual Meeting at the Boston Convention and Exhibition Center. Highlights of the first day are provided here. DIA's Annual Meeting continued with a variety of other presentations on topics such as personalized medicine, orphan drugs, developing treatments for Alzheimer's Disease, biosimilars, and more. Some of topics covered are described below.

    Orphan Drugs

    One of the themes of the conference was orphan drugs and personalized medicine. To those ends, several speakers advocated for FDA guidance on designing clinical trials for orphan drugs, going from a handful of patients to approval, as well as designing clinical trials for personalized therapies.


    While there are biosimilars in emerging markets, it remains unclear how useful the information would be for product development in the United States. First, many of the biosimilars in emerging markets were approved prior to regulatory rules or guidance in those markets. Second, most of the biosimilar manufacturers in emerging markets have since designed or are working on modifications to their biosimilars, in particular their clinical development plans, to meet the requirements of FDA, the European Medicines Agency ("EMA"), and similar industrialized, regulatory authorities. To the extent biosimilars marketed in emerging countries have been analyzed, there were potency variations in tested epoetins from 48-163% in mice, many had high amount of aggregates, and many failed to meet EMA specifications. But in emerging markets, the innovator counterpart to biosimilars may not be available for comparison, leading to higher patient acceptance and government support, e.g., China has had biosimilars for more than 20 years. In China, however, biosimilars were regulated similar to small molecules until 2007, when China established a China FDA in 2007, which is currently creating a defined pathway for biosimilars under the new regime. Brazil, Mexico, Argentina, India, and Korea also have marketed biosimilar products with varying degrees of regulation and standardization.

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    June 26, 2013

    DIA's 49th Annual Meeting Delivers Promise for Exponential Healthcare Growth - Day One

    On June 24-27, 2013, the Drug Information Association ("DIA") held its 49th Annual Meeting at the Boston Convention and Exhibition Center. The DIA President for the coming year, Minnie Baylor-Henry, Worldwide Vice President, Regulatory Affairs, Johnson & Johnson Medical Devices & Diagnostics, described 2013 as the year of the patient, and she hopes to see the focus on patients driving medicine to transform medical care in the coming years. DIA's Annual Meeting Chair, Susan A. Milligan, J.D., M.D., Vice President, Global Regulatory Therapeutic Area Head, Genentech, Inc. A Member of the Roche Group, challenged meeting attendees to "step out of your comfort zone" and volunteer and think innovatively, act collaboratively, network to build new relationships, and help to improve patient care.

    Along these lines and following the introductory comments, the Annual Meeting kicked off with a Keynote from Daniel Kraft, M.D., Executive Director, FutureMed. Kraft has over 20 years of experience in clinical practice, biomedical research, and healthcare innovation, including some of his own inventions. FutureMed is a program that explores convergent, exponentially, developing technologies and their potential in biomedicine and healthcare. Kraft also recently founded IntelliMedicine, focused on enabling connected, data-driven, and integerated personalized medicine. Kraft's message to the attendees was that technology is moving medical care exponentially, principally from an information technology perspective.

    From Kraft's perspective, we have already reached the option of personalized medicine by virtue of the types of devices that can be used to collect real-time information from patients to create "dashboards" of information for vital signs to adjust medical care. Kraft demonstrated an example where a heart-rate monitor can provide information to smartphones and a physician's office to determine what type and dose of medication is appropriate for a particular patient without the need to visit a doctor following periodic consultations. As additional examples, Kraft explained that toy drones can be used to deliver medicine, especially in hard-to-reach areas, and Skype can be used to conduct "mini physicals" via the Internet. In the works, and to some extent already being utilized, are smartpills that can see real-time images of a patient's gastrointestinal tract and deliver medicine via a smarphone application at precise times rather than relying on previous drug delivery mechanisms such as resident time or pH in the gastrointestinal tract.

    Continue reading "DIA's 49th Annual Meeting Delivers Promise for Exponential Healthcare Growth - Day One" »

    June 26, 2013

    Court Denies Bartlett Relief for Generic Drug Design "Defects"

    Thumbnail image for supreme court.jpgOn June 24, the U.S. Supreme Court decided to shield generic manufacturers from product liability suits in Mutual Pharmaceutical v. Bartlett. The Court held that a generic manufacturer could not be held liable for a design-defect claim on a small molecule, pharmaceutical product, because the claim was preempted by the Federal Food, Drug, and Cosmetic Act ("FD&C Act").

    Karen Bartlett met with her physician to treat her shoulder pain. Her physician prescribed Clinoril® (suldinac), and she was dispensed a generic version marketed by Mutual Pharmaceuticals ("Mutual"). Unexpectedly, Bartlett suffered a rare and devastating reaction to the drug. Even after months of treatment, she was left severely disfigured and almost entirely blind.

    As we blogged previously, Bartlett sued Mutual in New Hampshire under a state design-defect theory of product liability. Like many states, New Hampshire borrowed its design-defect cause of action from the Restatement (Second) of Torts. Under this theory, Bartlett alleged that the active ingredient sulindac was inherently and unreasonably dangerous.

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    June 20, 2013

    Orphan Drug Regulation Refinements Finalized

    Thumbnail image for Thumbnail image for orphan drug.bmpOn June 12, 2013, FDA issued a Final Rule amending the 1992 Orphan Drug Regulations to implement the Orphan Drug Act. The Final Rule largely reflects the 2011 Proposed Rule (see our previous blog on the draft rule here) to amend the Orphan Drug Regulations with several changes for clarity and accuracy. FDA explicitly stated that the Final Rule has no effect on the scope of, or eligibility for, orphan-drug-exclusive approval, because it merely clarifies existing and longstanding FDA practices. The Final Rule will take effect on August 12, 2013.

    The two most important amendments and clarifications in the final rule are the new definition of "orphan subset" and the various clinical superiority requirements for designation requests and exclusive approvals for a subsequent drug for the same use or indication.

    To qualify as an "orphan subset" drug (21 CFR §316.3(b)(13)), the drug sponsor must show that while the drug is safe and effective in the orphan subset population, the drug is not suitable for use in those persons outside of the orphan subset (i.e., those persons who have the same non-rare disease or condition). Such non-suitability must be based on either a pharmacokinetic property (such as toxicity and mechanism of action), or previous clinical experience with the drug.

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    June 19, 2013

    AndroGel® Reverse Payments Held to "Rule of Reason" Says Supreme Court

    supremecourt.pngOn June 17, the U.S. Supreme Court released its decision in the controversial case regarding Hatch-Waxman patent settlements, FTC v. Actavis . In a 5-3 decision the Court held that lower courts reviewing so-called reverse-payment settlement agreements should apply a "rule of reason" antitrust analysis instead of the scope-of-the-patent test or the "quick look" approach, which had been advocated by the Federal Trade Commission ("FTC"). This was the first time the Court weighed in on whether reverse-payment Hatch-Waxman patent settlements between brand and generic pharmaceutical companies were subject to antitrust scrutiny, and, if so, what that level of scrutiny should be. A previous blog on the oral arguments to this case may be found here.

    The Court acknowledged the policy that settlement of complex patent litigation is generally preferred, yet then identified five reasons why it believes that the Eleventh Circuit was wrong when it held that the FTC should not have the opportunity to prove its antitrust claims. First, a large reverse payment may risk significant anticompetitive effects. Second, a large reverse payment may not be justified given its anticompetitive effects. Third, the patent holder paying a large or unjustified reverse payment may have market power that permits it to cause potential anticompetitive harm. Fourth, even without litigating the case, a court may be able to determine the likely anticompetitive effects or potential justifications caused by the payment by examining the size of the payment. And fifth, parties are able to settle their patent disputes in other ways without using reverse payments.

    FTC brought the case challenging the reverse-payment settlements Solvay (now part of Abbot Laboratories) entered into with a number of generic drug companies that resolved their Hatch-Waxman patent disputes involving Solvay's AndroGel®--a testosterone-replacement drug. The settlement agreements involved the generics' agreement to abandon their patent challenges and thereby delay generic entry for nine years. In addition, Solvay made certain payments to the generic manufacturers in exchange for their manufacturing and marketing support.

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