Competitive Generic Therapy Exclusivity Offers Benefits

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Competitive Generic Therapy Exclusivity Offers Benefits

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Sailesh K. Patel, Thomas A. Rammer II

While a recent Law360 guest article addressing competitive generic therapies pointed out potential pitfalls, we believe that generic drug manufacturers can see considerable benefits from CGT with coordinated execution and thoughtful, strategic planning. But as with many opportunity areas, the devil is in the details, as CGT may also present challenges to applicants, particularly those who are not well-prepared or familiar with the statute.

What is CGT? The FDA Reauthorization Act of 2017 lets generic companies ask for expedited review and 180-day exclusivity for a CGT-designated product. That designation is provided to drugs where, at the time the abbreviated new drug application is filed, (1) there are no unexpired patents, (2) there are no unexpired exclusivities, and (3) there is only one approved product for the drug at issue.

Why CGT? Congress originally created the CGT pathway in response to mounting pressure over rising drug prices and in an effort to increase competition among drug products that were subject to “inadequate generic competition,” i.e., drugs with no more than a single approved drug in the active section of the Orange Book.[1] As with Paragraph IV “first filers” under the Hatch-Waxman statute, the 180-day CGT exclusivity provides a significant incentive for companies to file ANDAs for these often “overlooked” products and may help reduce the potential for drug shortages. The U.S. Food and Drug Administration intends to make decisions about CGT designations within 60 days after an ANDA containing a request for designation is accepted.

What could go wrong? To fully understand the opportunity areas, it is critical to have a full grasp of potential pitfalls. For example, a potential pitfall concerning CGT revolves around FDARA’s provision that, unlike Paragraph IV “first filer” exclusivity, CGT exclusivity is obtained upon the “commercial marketing” of the approved CGT product, not FDA approval.[2] Additionally, a manufacturer sacrifices its entitlement to the 180-day exclusivity should they fail to commercially market the drug within 75 days of receiving FDA approval.[3] The “parking” of this exclusivity is thus curtailed.

The idiosyncrasies of CGT exclusivity could also present potential pitfalls to applicants, even those who ultimately receive CGT approval. As at least one CGT applicant has learned the hard way, there is a possibility other competitors may receive ANDA approval even after approval of the first approved CGT, should they receive FDA approval prior to the first approved CGT’s commercial launch.[4]

Still, with careful planning and coordination, CGT presents a useful and potentially lucrative pathway for generic drug manufacturers. Here are five practical tips in order to enable generic manufacturers to take full advantage of the CGT pathway:

1. Decide on Designation Early

At the outset, drug manufacturers should determine whether to seek a CGT designation as early as possible. While FDARA allows CGT applicants to seek a CGT designation at any time — up to and including ANDA submission — an early determination will better allow CGT applicants to develop the coordinated regulatory and commercial strategy necessary to reap the full benefits of potential CGT exclusivity.

2. Be Prepared to Commercially Market Immediately

Drug manufacturers seeking CGT exclusivity should be prepared to commercially market their CGT product as soon as possible after approval, and in any event, no later than the Generic Drug User Fee Amendments goal date. While the FDA’s draft guidance suggests that applicants can use their GDUFA for “planning purposes,”[5] and should be prepared to market their CGT within 75 days of that date, this may be insufficient to ensure that an applicant can successfully utilize their CGT exclusivity to prevent other approvals. Given the FDA’s clarification that CGT exclusivity begins only upon the commercial marketing of an approved CGT product,[6] drug manufacturers should be prepared to commercially market their CGT product as soon as possible after approval.

Given that rapid commercial marketing is necessary to ensure the full benefit of CGT exclusivity, regulatory, manufacturing, and sales departments should closely coordinate along with any third parties in the supply chain to ensure that the company’s commercial marketing effort is ready to proceed immediately upon approval.

The FDA has defined “first commercial marketing” as the date of “introduction or delivery for introduction into interstate commerce outside the control of the manufacturer of a drug product.”[7] Preliminary case law suggests that a manufacturer will have to undertake substantial efforts in order to meet the commercial marketing requirement mandating that a drug product is “outside the [manufacturer’s] control.”

Indeed, a district court considering the issue in the context of Hatch-Waxman determined that shipments to a third-party distributor were not “outside the control of the manufacturer” because the third party distributor halted shipments and sent letters to its customers instructing them to quarantine previously shipped product after a temporary restraining order was ordered.[8] Early collaboration with everyone involved in the commercialization and shipment of the generic product will make sure that “first commercial marketing” can begin immediately once the CGT is approved, and thereby ensure that the company can take full advantage of the exclusivity.

3. Notify the FDA at Start of Commercial Marketing

Further, although not technically required,[9] generic manufacturers should notify the FDA when it commences commercial marketing of a CGT drug product, in order to ensure that they are entitled to the full scope of their CGT exclusivity. The FDA recommends that the first approved CGT applicant send a general correspondence to the FDA informing them that they have commenced commercial marketing, and that a duplicate be submitted to the FDA Office of Generic Drugs' patent and exclusivity team, at CDER-OGDPET@fda.hhs.gov.[10]

4. Consider CGT Despite Potential Competition

Finally, generic manufacturers should also consider seeking a CGT designation despite the presence of potential competition. For example, Apotex Inc. received the first approval for a CGT product, potassium chloride, despite the fact that a generic competitor had already received approval to market potassium chloride. Only Apotex’s product was designated as a CGT, likely because the other generic competitor did not apply for a CGT designation. Thus, generics should consider seeking a CGT designation so long as there is “inadequate generic competition,” even if another generic manufacturer is already seeking approval for such a drug.

Originally published on Law360 (Subscription required)


[1] 21 U.S.C. § 506H(e)(2).

[2] U.S. Food & Drug Administration, Denial-Request to rescind approval of ANDA 209786 (Oct. 2, 2018), available at https://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/AbbreviatedNewDrugApplicationANDAGenerics/UCM623290.pdf.

[3] 21. U.S.C. § 505(j)(5)(D)(iv).

[4] Id.

[5] U.S. Dep’t of Health and Human Services Food and Drug Admin. Center for Drug Evaluation and Research, Competitive Generic Therapies Guidance for Industry Draft Guidance (February 2019) (hereinafter, Draft Guidance) at 15.

[6] U.S. Food & Drug Administration, Denial-Request to rescind approval of ANDA 209786 (Oct. 2, 2018), available at https://www.fda.gov/downloads/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/AbbreviatedNewDrugApplicationANDAGenerics/UCM623290.pdf.

[7] 21 C.F.R. § 314.107(c)(4).

[8] Minnesota Mining & Manufacturing v. Alphapharm Pty. Ltd. , 99-cv-13-MJD-LGL, 2002 WL 1299996, at **5-6 (D. Minn. March 8, 2002).

[9] Draft Guidance at 15, n.50.

[10] Id. at 15-16.