Actavis plc (NYSE: ACT) announced yesterday that it has entered into an agreement with Valeant Pharmaceuticals International (NYSE: VRX) to settle all outstanding patent litigation related to Actavis’ generic version of Acanya® (clindamycin phosphate and benzoyl peroxide) Gel, 1.2%/2.5%. Acanya® Gel is a lincosamide antibiotic and benzoyl peroxide indicated for the topical treatment of acne vulgaris.
Under the terms of the agreement, Valeant will grant Actavis a license to market its generic Acanya® Gel beginning on July 1, 2018 or earlier under certain circumstances. Other details of the settlement were not disclosed.
Launch of Actavis’ product is contingent upon Actavis receiving final approval from the United States Food and Drug Administration (FDA) on its Abbreviated New Drug Application (ANDA) for generic Acanya® Gel.
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Actavis believes it was the first applicant to file an ANDA for the generic version of Acanya® Gel and, should its ANDA be approved, should be entitled to 180 days of generic market exclusivity. The 180-day exclusivity is subject to the FDA’s determination that the product qualifies for an award of exclusivity under the provisions of the Hatch-Waxman Act.
The importance of the 180-day exclusivity cannot be understated. Under Hatch-Waxman, generic manufacturers are encouraged to file paragraph IV certifications in ANDAs and attempt to enter the market prior to the natural expiration of the patent covering the brand name drug. The carrot held out to generic manufacturers is significant — the first generic manufacturer to file a paragraph IV certification receives a 180-day exclusive right to market its generic version of the drug should it prevail. The catch is that only the first filed ANDA with a paragraph IV certification is eligible for the 180-day exclusivity period. Thus, being first really matters.
For the 12 months ending February 28, 2014, Acanya® had a total U.S. sales market of approximately $121 million, according to IMS Health data.