Challenging Drug Patents: Does AIDS Healthcare Raise an “Actual Controversy”?

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Manufacturers who want to introduce generic drugs face a special delay and enjoy a corresponding special right to challenge patents on branded drugs based on the great compromise in the Hatch-Waxman Act. Now, purchasers of drugs are challenging that arrangement, seeking to invalidate patents outside the Hatch-Waxman scheme even though they aren’t planning to introduce a generic themselves.

The U.S. Food and Drug Administration (FDA) grants to drug product innovations that contain New Chemical Entities (NCEs) a special five-year marketing exclusivity, which protects against certain competition by market followers. Market followers can, however, file a 505(b)(2) application or Abbreviated New Drug Application (ANDA) (for generic versions of the brand) submission one year before expiry of the NCE exclusivity. 21 C.F.R. § 314.108(b)(2).

Non-profit AIDS Healthcare Foundation, Inc. is seeking the right to challenge patents to an NCE drug without relying on the statutory right granted to FDA applicants. On August 9, 2018, AIDS Healthcare filed a petition for writ of certiorari, requesting the Supreme Court’s review of a ruling by the Federal Circuit blocking the company’s challenge of HIV drug patents (for tenofovir alafenamide (TAF)) with associated NCE exclusivity. AIDS Healthcare’s challenge—which seeks a declaratory judgment that the TAF patents are invalid—is distinct from the typical pharmaceutical patent invalidity suit. AIDS Healthcare is not a 505(b)(2) or ANDA filer trying to compete by offering a generic version of the exclusivity-protected drug; nevertheless, the company asserts it has an “actual controversy” concerning the TAF patents and should be permitted to seek declaratory judgment under 28 U.S.C. § 2201.

The company is more accurately characterized as a drug purchaser (to facilitate its care functions) and seeks to provide its vast patient and client base with access to the life-saving benefits of TAF as soon as possible—as a distributor partner of generic manufacturers. AIDS Healthcare’s core legal argument is that the Federal Circuit improperly treated (and has for some time) SCOTUS precedent applying a reality-based examination to the facts supporting a party’s declaratory judgment standing. See generally MedImmune Inc. v. Genentech, Inc., 549 U.S. 118 (2007). The company argues that its actions are sufficient to establish the actual controversy required by the Declaratory Judgment Act. If the Court agrees with AIDS Healthcare, it will mean that seeking FDA approval may not be a prerequisite in attempting to challenge the brand patents. The generic manufacturers remain prohibited from filing their regulatory submissions because of the 4-year statutory bar. Hatch-Waxman stakeholders will be watching this petition with interest as we are.

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