WSGR ALERT

New Law Remedies Partial Loss of Drug Marketing Exclusivity Period Caused by U.S. DEA Scheduling Delays

December 2, 2015

When a new drug is first approved1 by the U.S. Food and Drug Administration (FDA), the drug is entitled to a period of market exclusivity.2 For a subset of these new drugs, the FDA will determine that the product has the potential to be abused3 and make a scheduling recommendation4,5 to the Drug Enforcement Agency (DEA). Scheduling a drug is, among other things, a way of classifying the addictive potential of the drug. The FDA's scheduling recommendation is legally binding on the DEA.

A non-scheduled new drug can be marketed upon FDA approval. Thus, for non-scheduled new drugs, the market exclusivity and drug marketing start and run concurrently with approval. In comparison, for new drugs that must be scheduled, the FDA requires the sponsoring company to attest that it will not market the new drug until the DEA makes a "final scheduling decision"—i.e., until the DEA schedules the drug.6 Traditionally, there has been no deadline for the DEA to make a scheduling decision. Therefore, the "FDA can approve a new drug as safe and effective, but patients and physicians must wait to access the newly approved therapy with no expectation of a reasonable timetable in which access will be granted."7

In addition to DEA scheduling delays denying patient and physician access to a new FDA-approved drug, the DEA's scheduling delay historically meant that the drug's innovator could not market the approved drug until it was scheduled, even though the market-exclusivity clock started upon FDA approval. Thus, in some instances, a company could be forced to wait over a year to market its new drug while the clock ran on its market exclusivity.

H.R. 639

Remedying partial loss of market exclusivity caused by DEA scheduling delays

On November 25, 2015, President Obama signed into law the Improving Regulatory Transparency for New Medical Therapies Act (H.R. 639).8 H.R. 639 amends the Food, Drug, and Cosmetic Act to provide that, in general "with respect to a drug for which the [FDA] provides notice to [the drug's sponsor] that [the FDA] intends to . . . recommend controls [i.e., scheduling] under the [Controlled Substances Act (CSA)], approval of [the drug application] shall not take effect until [the drug is scheduled]."9

H.R. 639 resets the drug approval date to the later of: i) the date of FDA approval of the drug; or ii) the date of issuance of the interim final rule scheduling the drug.10 By resetting the approval date to the later of FDA approval or DEA scheduling, H.R. 639 remedies the situation where drug marketing is delayed while the market-exclusivity clock runs. This is a significant development for innovators developing new drugs that require scheduling. H.R. 639 applies to new small-molecule drugs, biologics, and animal drugs that the FDA determines require scheduling.11

Considerations for generic drug makers

Because H.R. 639 resets the approval date for scheduled new drugs, generic drug manufacturers should consider calibrating their dockets. Otherwise, for instance, abbreviated new drug applications (ANDAs) may end up being filed prematurely.

Extending the deadline for applying for patent term extension

In addition, H.R. 639 modifies the patent term extension (PTE) statute (35 U.S.C. § 156) to provide that the deadline for filing a PTE application is the later of FDA approval of the new drug or "the date of issuance of the interim final rule controlling the drug under Section 201(j) of the Controlled Substances Act"12 (e.g., when the drug is scheduled). This is another significant development for innovators, as it may provide more time to: i) gain allowance of a patent that could be extended; and ii) thereby allow greater flexibility and optimization in life cycle management strategies.

Enhancing new drug development and other changes

H.R. 639 enhances new drug development by setting deadlines for registering applicants who manufacture controlled substances for clinical trials, and issuing notices of applications for registration.13 H.R. 639 also makes changes to the CSA regarding re-importation among members of the European Economic Area,14 and amends the CSA regarding time for issuance of interim final rules for Schedule II, III, IV, and V drugs.15

Retrospective application uncertain

At this time, it is uncertain whether H.R. 639 will be applied retrospectively. If H.R. 639 ends up being retrospectively applied, this could extend some market exclusivities, affecting both branded and generic drug manufacturers.

Conclusion

H.R. 639 is a significant and welcome development for innovators developing new drugs that will require scheduling. Innovators (and generics) should consider and account for the effects of H.R. 639 on life cycle management, exclusivity, patent prosecution timelines, and patent term extension application deadlines.

For questions about H.R. 639, please contact Vern Norviel, David Hoffmeister, or any member of Wilson Sonsini Goodrich & Rosati's patent and innovation strategies or FDA/life sciences practices. Charles Andres contributed to the preparation of this alert.


1 E.g., first approved for safety and efficacy under Section 505 of the Federal Food, Drug, and Cosmetic Act (FDCA).
2 Biologics are entitled to 12 years of market exclusivity, whereas small-molecule drugs receive five years of market exclusivity.
3 The FDA makes its determination using an eight-factor test outlined in Section 201(c) of the Controlled Substances Act (CSA).
4 The eight-factor test is found in 21 U.S.C. § 811(c). The eight factors are:
   (1) [The drug's] actual or relative potential for abuse.
   (2) Scientific evidence of [the drug's] pharmacological effect, if known.
   (3) The state of current scientific knowledge regarding the drug or other substance.
   (4) [The drug's] history and current pattern of abuse.
   (5) The scope, duration, and significance of abuse.
   (6) What, if any, risk there is to the public health.
   (7) [The drug's] psychic or physiological dependence liability.
   (8) Whether the substance is an immediate precursor of a substance already controlled under this subchapter.
5 Potentially addictive drugs are scheduled as Schedule I, II, III, IV, or V substances. Almost all prescription drugs are Schedule III, IV, or V drugs, with abuse potential decreasing from Schedule III to Schedule V. Examples of Schedule III drugs include barbiturates such as talbutal or butalbital. An example of a Schedule IV drug is the pain medication tramadol. A representative Schedule V drug is the appetite suppressant pyrovalerone.
6 See, e.g., the certification box on FDA Form 356(h), available electronically at: http://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Forms/UCM082348.pdf, last accessed December 2, 2015.
7 Improving Regulatory Transparency for New Medical Therapies Act, U.S. House of Representatives Report accompanying H.R. 639, available electronically at: https://www.congress.gov/114/crpt/hrpt41/CRPT-114hrpt41-pt1.pdf, last accessed December 2, 2015.
8 H.R. 639 is available electronically at: https://www.congress.gov/114/bills/hr639/BILLS-114hr639enr.pdf, last accessed December 2, 2015.
9 H.R. 639 at Sec. 2.
10 Id.
11 Id.
12 Id.
13 Id. at Sec. 3.
14 Id. at Sec. 4.
15 Id. at Sec. 2.