Pharmaceutical Business Strategy – A Brand Name Perspective

First Publication Date: 9th February 2010.

In furtherance to Vikram’s post on Paragraph IV certification and its exploitation by generic pharmaceutical companies (ANDA applicant) to enter the market sooner, here is an insight on the NDA holders’ attempt to exploit the same.

Every ANDA application filed by a generic company has to be in a prescribed format and must contain the prescribed content as per 21CFR sec. 314.94 (Contents and Format of an Abbreviated application). Each of these applications will refer to a Reference listed drug (RLD) and the use of such drug by the company in order to get approval for its generic counterpart. RLD is a brand name drug for which the NDA holder holds a patent. The generic company is required to provide the patent number for each of these patents and certify it as paragraph I, II, III or IV in its application, as clearly indicated by Vikram in his post.
Once a generic company provides such certification, the NDA holder has 45 days to file an infringement suit, which follows an automatic 30 months stay on the approval of the generic drug by the FDA. Now, this period acts in favor of the NDA holder. While the stay is intended to give the companies time for preparations for the law suit, the NDA holder still enjoys market exclusivity despite the fair chances of the patent being proved invalid. It is estimated that NDA holders make a net sales of around $100 to $300million during this stay period.
Between the years 1999-2000 it was observed that the NDA holders were beginning to misuse this period. The NDA holders would manage to delay this 30 month time period by ‘late listing’ in the Orange book (Approved drug products and therapeutic equivalence evaluation; FDA’s publication for approved drug products). To achieve this, the NDA holders employed listing of multiple patents to the FDA.Under the provisions of the Hatch Waxman Act it was a rule that if a related patent was listed by the patent holder during the 30 month stay after submission of the ANDA with a paragraph IV certification, the generic company would have to amend their ANDA application and recertify. This would require the FDA to restart the 30 month stay on the same product from the time of recertification. Such strategy to delay the stay, adopted by the NDA holder was highlighted in a study by the Federal trade commission (FTC) in 2002. FTC observed 8 such cases during 1999-2000. In one of the cases, the 30 month stay period had even extended up to a period of 70 months.

On scrutiny of the situation in a report by the FTC in July 2002, the new rule with respect to the interpretation of the Hatch-Waxman Act was brought about which limits the NDA holder to a single 30 month stay period per ANDA. The act requires that the NDA holder be notified if an ANDA is amended to include paragraph IV certification. The rationale to the new rule is that an ANDA containing a paragraph IV certification cannot be amended to “include” paragraph IV certification.

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