The D.C. Circuit has delivered a significant ruling on how pharmaceutical companies can lose their 180-day market exclusivity periods for generic drugs, raising the bar for what counts as a valid excuse.
In Norwich Pharmaceuticals, Inc. v. Kennedy, decided on August 25, the court held that a first abbreviated new drug application (ANDA) applicant forfeits its 180-day exclusivity unless a change in FDA approval requirements was a but-for cause of missing the tentative approval deadline.
The decision directly rejects the Food and Drug Administration’s longstanding position that such a change need only be one of multiple sufficient causes of the failure to obtain timely tentative approval.
The court applied the Loper Bright standard, declining to defer to the FDA’s interpretation of the statutory phrase “caused by,” noting that the agency’s “technical subject matter expertise” has “little to do with” interpreting that term.
The ruling also confirmed that each Paragraph IV certification in a first applicant’s ANDA is what counts toward a failure-to-market forfeiture, regardless of how a later applicant certified against those same patents.
At the centre of the dispute is rifaximin, marketed by Salix Pharmaceuticals as Xifaxan, with Actavis Laboratories FL, Inc., a wholly-owned subsidiary of Teva Pharmaceuticals USA, Inc., filing the first ANDA for the 550 mg dosage strength in December 2015.
Actavis failed to obtain tentative FDA approval by its June 2018 deadline, with final approval only arriving on March 19, nearly nine years after the ANDA was originally filed.
The FDA had pointed to a March 2017 revised draft product-specific guidance for rifaximin, which likely required Actavis to conduct additional testing, as “one of the causes” of that delay, which under the old standard was sufficient to preserve exclusivity.
The court rejected that reasoning, holding that the statutory exception requires the applicant to show it would have obtained timely tentative approval but for the FDA’s change in requirements, not simply that the change was one contributing factor among several.
On the failure-to-market question, Norwich argued that because it had carved out the hepatic encephalopathy patent under section viii rather than submitting a Paragraph IV certification, Actavis should have forfeited exclusivity with respect to Norwich specifically.
The court rejected that argument, finding the statute grants a single exclusivity period forfeited by a first applicant as to all subsequent applicants or none, with no mechanism for partial forfeiture against individual later filers.
Judge Garcia, joined by Judges Pillard and Walker, affirmed the lower court on the failure-to-market theory but reversed and remanded on the tentative-approval forfeiture question, instructing the FDA to apply the correct but-for causation standard to the facts.
The court was clear that its rejection of the FDA’s multiple sufficient causes test was not a close call, stating “there is no reason to think Congress intended to grant deficient ANDAs that kind of windfall.”
The decision has immediate practical implications for both first and later ANDA filers, who must now reconsider their certification and regulatory strategies in light of the stricter causation standard.
For first filers, any non-forfeiture determination that previously rested on an FDA change being merely one contributing cause now sits on a standard the D.C. Circuit has explicitly rejected.
Later filers may also need to match the Paragraph IV certifications of the first filer more closely to ensure the failure-to-market forfeiture provision can ultimately be triggered.
The court left open whether multiple FDA requirement changes, taken together in aggregate, could collectively constitute a but-for cause of a missed deadline, a question that will likely drive future litigation.