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Joseph J. Farnan: Secondary ANDA Filer Demonstrates DJ Jurisdiction After Primary Delays Entry into Market

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In an effort to curb collusive extensions of the 180-day exclusivity period between brand drug manufacturers and primary ANDA filers, Congress extended declaratory-judgment jurisdiction to secondary ANDA filers under the 2003 amendments to the Hatch-Waxman Act. Before, delayed-entry settlement agreements often blocked secondary filers from going to market. Now, however, secondary filers can hasten their entry if, among other statutory devices, the primary filer fails to take its generic to market within 75 days after a court judgment of invalidity or non-infringement.

But what happens when a brand manufacturer, after independently settling with the primary filer, offers the secondary filer a covenant not to sue on the very patent that forms the basis for the secondary filer’s declaratory-judgment action (and hence the secondary filer’s only potential means of early entry to the market)?

In a lucid opinion, district judge Joseph J. Farnan Jr. addressed this question by referencing the competing goals of Hatch-Waxman: “balanc[ing] the need for pharmaceutical innovation with the need for generic drug competition.” At the outset, the Court acknowledged that, by accepting jurisdiction, a later judgment for the secondary filer would eliminate the primary’s exclusivity period:

“[B]ecause of the settlement agreement between [the primary filer] and Sepracor, [the primary] may not go to market until August 2012. If, more than 254 days prior to this, [the secondary] were to attain a court judgment of non-infringement or invalidity of Sepracor’s Orange Book patents, [the primary’s] exclusivity period would be completed entirely before [the primary] could go to market.”

Allowing jurisdiction, in other words, would frustrate the exclusivity incentive to challenge brand patents. The competing goal of resolving patent disputes in a timely fashion, however, ultimately took precedence:

“[A] signficant aspect of this [statutory goal structure] is to encourage the early resolution of patent disputes when subsequent Paragraph IV ANDA filers are blocked by a first generic applicant’s 180-day exclusivity.”

Although not explicitly stated, the Court’s decision touches on equitable principles. Implicit in the Court’s analysis is the delayed-entry settlement executed by the primary filer. By voluntarily waiting to launch its generic, the primary undermined its standing to claim the salutary benefits of exclusivity. Rather than reward the primary in this situation, the Court chose the route that actually fulfilled one of the statutory goals. In these circumstances, at least when declaratory-judgment jurisdiction is at stake, it appears that the secondary filer has the edge.

Dey LP v. Sepracor Inc., C.A. No. 08-372-JJF (D. Del. Jan. 30, 2009) (Farnan, J.).

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