Lex Machina recently released a Hatch-Waxman ANDA Litigation 2018 Report which looks at recent trends in patent litigation related to generic pharmaceuticals being introduced to the U.S. marketplace. Key takeaways from the report include a recent rebound in the number of cases related to abbreviated new drug applications (ANDA) filed in U.S. district court as well as a significant increase in ANDA case filings in a particular district currently facing a shortage in its judicial bench.
In 2017, U.S. district courts saw a total of 417 patent infringement suits related to ANDA filings made by drugmakers with the U.S. Food and Drug Administration (FDA) seeking to bring generic versions of brand-name pharmaceuticals to the U.S. market. This total number of ANDA cases was below recent highs set in 2014 (437 cases) and 2015 (475 cases) but it was also a significant increase over the 324 ANDA cases filed in 2016. Going back to 2009, 2017 saw the third-highest number of ANDA cases in a single year. The fact that ANDA litigation is rising is pretty consistent with the number of ANDA applications being received by the FDA. In 2017, the FDA approved a record number of ANDAs with 763 such approvals that year; the agency attributed this uptick to an increased number of agency hires.
The percentage of patent infringement cases triggered by Paragraph IV certifications made by drugmakers filing ANDA applications represents about 10 percent of all patent infringement cases filed in the U.S., according to Lex Machina’s Chief Evangelist Owen Byrd. “The real takeaway from this report is that ANDA practice is a vital growing practice area,” he said. “If I was the head of an IP group at a big law firm looking into trends, I’d be investing in an effort to obtain these cases and market our practice to pharmaceutical firms.” Byrd indicated that increasing ANDA practice could help a firm respond to any loss of business from lower case filings among patent owning non-practicing entities (NPEs).
While ANDA case filings in the District of New Jersey remained relatively flat, dropping from 112 cases in 2016 to 111 cases in 2017, ANDA lawsuits filed in the District of Delaware increased by 60 percent, from 151 cases in 2016 up to 241 cases in 2017. The fact that New Jersey and Delaware are the top two districts for ANDA lawsuits makes a great deal of sense according to Byrd. “First, many or most pharmaceutical companies are incorporated in Delaware. Second, many have their headquarters in New Jersey. More broadly, both branded and generic pharmaceutical makers bring cases in jurisdictions where they know the judges have considerable expertise in these cases.”
“I think that a very interesting part of this report is that the increase in ANDA filings in Delaware comes at the same time that Delaware is short-staffed,” Byrd said, noting that only two of the four judgeships within that district are fully staffed. And yet, Delaware still had a faster time to trial when compared to ANDA filings in New Jersey; the median time to trial in Delaware cases was 731 days, or just about two years, whereas the median time to trial in New Jersey was 795 days. Delaware did have a longer time to termination than New Jersey, which saw a median time to termination of 271 days compared to Delaware’s median of 484 days. “When you come up out of the weeds of the data, there’s a question of whether the volume of cases in Delaware combined with the short bench will have a material effect on time to trial or the behavior of either party,” Byrd said.
Between 2016 and 2017, the pharmaceutical ingredient which was litigated in ANDA cases most frequently was dimethyl fumarate, a multiple sclerosis treatment marketed under the brand name Tecfidera and involved in 32 ANDA cases during those two years. Following dimethyl fumarate are apixaban (Eliquis, 26 cases), cinacalcet hydrochloride (Sensipar, 22 cases), teriflunomide (Aubagio, 21 cases) and tadalafil (Cialis, 21 cases). Compared to a space like product liability, where certain products like medical devices or aircraft attract a higher concentration of cases, ANDA case filings appear to be more widespread across the industry. “When you read the lists of companies involved as either plaintiffs or defendants in ANDA cases together with the list of highly litigated ingredients, it tells me a story that this practice is spread out between many parties and products,” Byrd said.
Lex Machina’s ANDA report notes that there has only been one such case between 2016 and 2017 that resulted in a damages award: Brigham and Women’s Hospital v. Perrigo, where the District of Massachusetts issued a $10.2 million damages award for willful infringement. The fact that ANDA case filings would result in damages which are miniscule compared to all patent infringement cases was not surprising, Byrd said. “The whole Hatch-Waxman statutory framework is designed to generate cases, it’s not constructed to generate damages awards,” he said. “The only issue in these cases is, what day does the generic get to enter the market and the branded version sells for less? That economic event is the only issue in these cases.” Access to data on ANDA case filings which is available through Lex Machina can inform a party’s decisions regarding where to file a case or can inform them of past trial behaviors of opposing parties or judges.
Over at the Patent Trial and Appeal Board (PTAB), inter partes review (IPR) proceedings on patents listed in the FDA’s Orange Book remained relatively flat between 2016 and 2017, only dropping slightly from 96 cases to 94 cases between those two years. This is down from a high of 151 IPR proceedings on Orange Book patents seen in 2015. Between 2016 and 2017, a total of 246 petitions challenging a total of 235 Orange Book patents were filed at the PTAB. 150 of those trials were instituted leading to 37 final written decisions of all claims unpatentable and 31 decisions of all claims upheld. Although PTAB trials involving Orange Book patents were instituted at a higher rate when compared to all PTAB trials terminating during the same two year period, Orange Book patents experienced a lower rate of all claims invalid findings and a higher rate of all claims upheld findings. Although the overwhelming majority of PTAB cases on Orange Book patents are related to ANDA cases in district court, there is the possibility that the PTAB numbers includes patents which might have been asserted in a non-ANDA patent infringement case.