One of the most consistent themes discussed throughout the Association for Accessible Medicines’ conference was centered on the supply chain, whether it was about the fact that many key starting materials (KSMs) come from only a single foreign supplier, whether large scale active pharmaceutical ingredients manufacturing was feasible in the US, or whether container closure systems were readily available.  While most of the discussion was focused on foreign suppliers, also covered was the fact that you just can’t flip a switch and expect US manufacturing to pick up the slack needed in these industries.  In the “CEOs Unplugged” session, the discussion focused on the cost consideration of onshoring as well as the need to rely on redundant sources to stabilize the global supply chain.  It can’t all be done here in the US and we need to rely on our other world partners. There is a need for redundancy in the system.

In addition, many of the presenters at this year’s meeting noted that it not only takes a long time to build and commission a manufacturing facility, the costs of a new facility can far exceed the savings from the America First incentives like tariffs, a user fee waiver, or even a shorter review time.

Switching gears to regulatory issues, there was a very interesting panel discussion on 180-day exclusivity and other topics lead by our own Marty Shimer and including Brian McCormick, JD, Vice President and Chief Regulatory Counsel, Teva Pharmaceuticals, Jessica Greenbaum, JD, Senior Director Regulatory Affairs Policy at Sandoz Inc., Scott Tomsky M.S., Vice President and Global Head of Regulatory, Biocon Biologics, and Chad Landmon JD, Shareholder and Chair of the Hatch-Waxman and Biologics Practice at Polsinelli.

In response to a question regarding how the FDA delay’s in making 180-day exclusivity        determinations causes companies great angst, the group noted that it has historically been FDA’s position that it would not make a forfeiture decision until the decision needed to be made.  The group acknowledged that the FDA’s required forfeiture analysis related to180-day exclusivity is resource intensive and FDA’s position has consistently been that there is no benefit to the Agency analyzing the facts at the end of the 30-month period because other factors may change over time which may render the forfeiture analysis moot. While the industry recognizes these obstacles, making business decisions without having a clear understanding of who will be eligible for exclusivity and when or if it will be granted places firms in a difficult or even untenable position.

The group also focused on a recent court decision in the rifaximin case. There is a general understanding in the industry that the first filer of an ANDA with a paragraph IV certification sits in the exclusivity seat.  An ANDA sponsor that receives either approval or tentative approval within 30 months needn’t be concerned with the “Failure to Timely Obtain Tentative Approval” forfeiture provision and an application that receives Tentative Approval or Final Approval after 30 months may still be eligible for 180-day exclusivity if the Agency determines there was a change in or review of the requirements for approval that could have caused the forfeiture.  While there are a number of other forfeiture possibilities, the one of interest in this case centers on the provision that refers to “a change in or review of the requirements for approval by FDA (e.g. requires a new study or data based on a new requirement) during the application review”. When a First Applicant does not obtain Tentative Approval or Final Approval within the 30-month period, FDA may have to analyze whether there was “a change in or review of the requirements for approval” when a subsequent applicant could receive Final Approval but-for blocking 180-day exclusivity. When administering this forfeiture provision, FDA has consistently applied a standard that “but-for” causation is not required for FDA to determine that there was an exception to forfeiture because of “a change in, or review of the requirements for approval.” The easiest way to conceptualize the “but-for” causation standard applied by FDA is that the change in or review of approval requirements that FDA identifies does not need to be to sole cause of an applicant’s ability to obtain Tentative Approval or Final Approval, there could be other related or completely independent causes.  However, in cases where FDA has identified “a change in or review of the requirements for approval” that may be causally related, and this is enough for a determination that 180-day exclusivity has not been forfeited.

The courts, under the Chevron decision, have typically given deference to the FDA’s interpretation of the law when that decision is a reasonable interpretation of the statute. However, under the Loper Bright decision, that all changed, and the court decided that a judge should be making the decision that the FDA’s interpretation of the statutory language is correct.  And while this specific case has many twists and turns (and I will try to give you the Readers Digest version of this case), the court decided that the FDA’s position to continue to apply an interpretation of the statute that but-for causation is not required was not the interpretation most consistent with the statutory language. The Court said, “There is no reason to think Congress intended to grant deficient ANDAs that kind of windfall” (i.e. a lucrative 180-day period of market exclusivity).

So, the issue centered on what would be the qualifying issues for exception to forfeiture of 180-day exclusivity and what would be the non-qualifying issues.  “FDA regulations and the GDUFA process render all qualifying and non-qualifying issues “related” —non-qualifying issues are not “independent” if they needed to await identification to the applicant and then resubmission by the applicant AT THE SAME TIME AS THE QUALIFYING ISSUES”. How do you separate the issues to make a reasonable determination of non-forfeiture? What happens if there is a non-qualifying issue included in an amendment with a qualifying issue?  What happens when a firm must amend an application for a labeling change or a change to a specification? How will it impact other applications pending with the same issue, or worse- how will it impact applications that were awarded exclusivity based on FDA’s interpretation which is currently under review?  It could make for a helter-skelter situation! Personally, I believe FDA will not take a retrospective evaluation of previous exclusivity decisions, but I suppose there is always the chance that firms disadvantaged by FDA’s past decision could seek judicial action.

The Court remanded the case back to the FDA for further review, saying: “We are confident the agency’s experience with such applications will enable it to devise an administrable framework for assessing causation.”  As Teva has sought further judicial review, any immediate decision by FDA under the remand has been delayed, but this still may end up back in FDA’s lap. Whatever way the cookie crumbles, any decision could certainly upset the apple cart in how exclusivity award and forfeiture occurs.  In addition, it could also limit the value of 180-day exclusivity unless the FDA comes up with a workable alternative. Brian McCormick felt that there could be a simple fix, but it would require a slight change in the legislation.  Good luck with this one, FDA.

In my opinion, this could be the biggest court loss the FDA has had in its regulatory interpretation of the Act since early in Hatch-Waxman existence when the court ruled that that FDA’s reading of the statute related to qualify for 180-day exclusivity the ANDA applicant had to be both sued and win in a patent challenge.  The court indicated that there was no provision in the statute requiring that the generic firm had to be sued or a win the patent challenge. The reward of exclusivity was solely for the challenge to the patent. Under FDA previous sue and win interpretation there were very few periods of exclusivity awarded. Let’s hope that FDA can craft a solution that is workable and does not eviscerate the 180-day exclusivity’s value.