Federal Circuit confines the infringement analysis in generic drug cases to the product as described in the defendant's FDA application

The Federal Circuit's recent decision in Sunovion Pharmaceuticals, Inc. v. Teva Pharmaceuticals, Inc. may affect many cases in which a branded drug company has asserted patent infringement against a defendant that has sought FDA approval to sell a generic version of the branded company's drug. These cases are usually brought under the Hatch-Waxman Act, so a brief description of the Act will help put the Federal Circuit's decision in context.

The Hatch-Waxman Act

The Hatch-Waxman Act establishes a framework that was designed to facilitate the approval of new generic drugs while ensuring that branded companies can enforce any patents they have on those drugs, and thereby protect the investment required to create them. In particular, the Act allows applications to sell generic versions of already approved drugs without incurring the expense of running their own clinical trials by filing an "Abbreviated New Drug Application" (ANDA). The ANDA must, among other things, establish the proposed generic product is "bioequivalent" to the existing branded product. The idea is that by establishing bioequivalency the generic applicant will have thus demonstrated that its product has the same effectiveness and safety shown in clinical trials of the branded drug. And by avoiding the expense of developing the drug from scratch and running clinical trials, the generic will be able to sell its product at a much lower price. If there are patents associated with the branded product and the generic wants to try to launch its product before they expire, it must certify that its proposed product does not infringe any valid patent covering the branded product. A branded company that disagrees with that certification may file a patent infringement suit to prevent FDA approval of the generic until after patent expiration. This allows the branded company to use its patent rights to ensure that it can recoup the large investment it made to bring the drug to market before the generic enters and takes its market share.

The Sunovion Decision

Sunovion addressed a frequently disputed issue regarding how to determine infringement in Hatch-Waxman cases. Hatch-Waxman cases differ from most other patent cases because the patentee files suit before the defendant has begun selling its product. As a result, the Hatch-Waxman infringement analysis must examine the product the defendant would sell if it were to obtain FDA approval, rather than a product that is already on the market. This raises a question unique to Hatch-Waxman cases: what sources of information can a court consider to determine what the defendant would sell if it obtained FDA approval?

Sunovion held that if the ANDA describes an aspect of the defendant's product that is determinative of infringement, then the ANDA's description of the product controls, and the defendant may not use extrinsic evidence to argue non-infringement. The patent in Sunovion covered compositions of a drug that include less than a certain percentage (0.25%) of a particular ingredient (the levorotatory isomer of the molecule eszopiclone). The defendant's ANDA sought approval to sell a product with between "0.0-0.6%" of that ingredient a range that overlapped with the patent. But the defendant argued non-infringement by submitting a declaration from one of its employees vowing that the product it would actually market would always be outside the range covered by the claims i.e., would contain 0.3-0.6% of the levorotatory isomer and by submitting internal manufacturing guidelines, which the defendant said showed its product would "contain at least 0.3% of levorotatory isomer." The Federal Circuit rejected these arguments and found infringement as a matter of law, explaining that the defendant's evidence was irrelevant:

What [the defendant] Reddy has asked the FDA to approve as a regulatory matter is the subject matter that determines whether infringement will occur, and the fact that Reddy either tells the court that its manufacturing guidelines will keep it outside the scope of the claims or has even filed a declaration in the court stating that it will stay outside the scope of the claims does not overcome the basic fact that it has asked the FDA to approve, and hopes to receive from the FDA, approval to market a product within the scope of the issued claims. In this case, Reddy's request for approval of levorotatory amounts from 0.0-0.6% is within the scope of the "less than 0.25%" limitation of the '673 patent claims.

The Court then gave several practical reasons supporting its conclusion. It observed that the defendant's pledge was "unenforceable" and remarked that, if the defendant really "had no intent to infringe," it "should not have requested, or should not accept, approval to market a product within the scope of the [patent] claim." The Court rejected the defendant's suggestion that, if some batches of the generic product turned out to fall within the patent, then any harm could be addressed in a later infringement suit, explaining that "it would be practically impossible for Sunovion, the FDA, or any court to monitor Reddy's compliance, particularly in view of the status of eszopiclone as a controlled substance." The Court further added that such an approach would be inconsistent with the Hatch-Waxman Act, which contemplates early resolution of patent issues, before the generic is permitted to begin selling its product.

Future Consequences

Sunovion may have interesting effects on both the litigation and regulatory strategies of generic drug companies. Generic drug companies face competing considerations. On the regulatory side, they want to make their proposed product seem as similar to the branded product as possible to demonstrative bioequivalence and facilitate FDA approval. But, on the litigation side, they often want to make their product seem different from the patent written to cover the branded drug and argue non-infringement. Some of them, perhaps including the defendant in Sunovion, tried to deal with this conflict by copying all or part of the range found in the label for the branded company's product into their ANDA to ease FDA approval, but then argue to the courts that they intended to use a different (often narrower) range in manufacturing their real-world products to avoid infringement. That approach is no longer viable after Sunovion. The result may be that generic companies are forced to pick a single, consistent strategy for both the FDA and litigation, even if that strategy makes prevailing in one of those forums difficult in light of what is necessary to succeed in the other. Or it may instead be that generic companies devise new ways to thread the needle to achieve both regulatory approval and litigation victory.