Senators Introduce Another Bill to Ban Reverse Payment Settlement Agreements

Washington - Capitol #5Last week, Senator Al Franken (D-MN) was joined by Senators David Vitter (R-LA), Dick Durbin (D-IL), Jeanne Shaheen (D-NH), and Bernie Sanders (I-VT) in introducing S. 204, the "Fair and Immediate Release of Generic Drugs Act."  Like many of its predecessors, it is aimed at banning settlement agreements of ANDA litigation between innovator drug companies and generic drug manufacturers.

The bill contains provisions that preclude the 180-day exclusivity period granted to the first ANDA filer from any party that has entered into a "disqualifying agreement."  Another provision limits agreements on deferring commercial marketing, which are defined as being between a first ANDA filer and NDA holder (or owner of an Orange Book listed patent that was the subject of a Paragraph IV certification) and wherein the first filer agrees "not to seek an approval of its application that is made effective on the earliest possible date" or "not to begin the commercial marketing of its drug on the earliest possible date after receiving an approval of its application" or both.  More specifically:

An agreement described in this subclause is an agreement between an applicant and the holder of the application for the listed drug or an owner of one or more of the patents as to which any applicant submitted a certification qualifying such applicant for the 180-day exclusivity period whereby that applicant agrees, directly or indirectly, not to seek an approval of its application or not to begin the commercial marketing of its drug until a date that is after the expiration of the 180-day exclusivity period awarded to another applicant with respect to such drug (without regard to whether such 180-day exclusivity period is awarded before or after the date of the agreement).

If there is more than one possible date where an applicant can either "seek an approval of its application or begin the commercial marketing of its drug," then the ANDA applicant can seek approval or begin commercial marketing on the earlier of the latest date set forth in the agreement or 180 days after "another first applicant" begins commercial marketing.  That latest date in an agreement "shall be the date used to determine whether an applicant is disqualified from first applicant status."

The bill also contains a notice provision to the FDA that requires that the "text" of any agreement "that has been reduced to writing" (or a "written detailed description" of any agreement not reduced to writing) be submitted to the Secretary of HHS "not more than 10 business days after execution of the agreement."  And the bill contains a confidentiality clause providing that "[a]ny information or documentary material filed with the Secretary pursuant to this paragraph shall be exempt from disclosure []and no such information or documentary material may be made public, except as may be relevant to any administrative or judicial action or proceeding (although another provision states that there is "nothing" to prevent disclosure to either body of the Congress or to any duly authorized committee or subcommittee of the Congress).

35 U.S.C. § 271(e) is also amended to recite:

(7) The exclusive remedy under this section for an infringement of a patent for which the Secretary of Health and Human Services has published information pursuant to subsection (b)(1) or (c)(2) of section 505 of the Federal Food, Drug, and Cosmetic Act shall be an action brought under this subsection within the 45-day period described in subsection (j)(5)(B)(iii) or (c)(3)(C) of section 505 of the Federal Food, Drug, and Cosmetic Act.

Application of these provisions is limited to agreements subject to the amendments made by the Medicare Prescription Drug, Improvement and Modernization Act of 2003.

It is the responsibility of the prevailing party in the litigation to notify the FDA.

For those keeping track, the Supreme Court will decide FTC v. Activis this term, perhaps rendering the bill moot.  The proximity of the bill and the Court's deliberations suggest that these Senators may be expressing their displeasure with "pay for delay" agreements and that they recognize the political capital that can be garnered by taking this stance.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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