Apotex, Inc. v. Pfizer Inc.

• Decision Date: 03 January 2005
• Docket Number: No. 04 Civ. 2539(DC).,04 Civ. 2539(DC).
• Citation: 385 F.Supp.2d 187
• Parties: APOTEX, INC and Apotex Corp., Plaintiffs, v. PFIZER INC., Defendant.
• Court: U.S. District Court — Southern District of New York

385 F.Supp.2d 187

APOTEX, INC and Apotex Corp., Plaintiffs, v. PFIZER INC., Defendant.

No. 04 Civ. 2539(DC).

United States District Court, S.D. New York.

January 3, 2005.

Rakoczy Molino Mazzochi Siwik LLP, By: William A. Rakoczy, Deanne M. Mazzochi, Amy D. Brody, Chicago, Illinois, for Plaintiffs.

White & Case LLP, By: Dimitrios T. Drivas, Jeffrey J. Oelke, Brendan G. Woodward, New York, New York, for Defendant.

MEMORANDUM DECISION

CHIN, District Judge.

In this patent case, plaintiffs Apotex, Inc. and Apotex Corp. (together, "Apotex") bring a declaratory judgment action for a determination that their generic drug does not infringe U.S. Patent No. 5,248,699 ("the '699 patent"), held by defendant Pfizer Inc. ("Pfizer"). Pfizer moves to dismiss the action, arguing that the Court lacks subject matter jurisdiction because of the absence of an actual controversy between the parties. For the reasons that follow, the motion is granted and the complaint is dismissed, without prejudice.

BACKGROUND

A. Regulatory Background

1. Hatch-Waxman Amendments

This dispute arises under a series of amendments to the Federal Food, Drug, and Cosmetic Act of 1938 (the "FDCA"), 21 U.S.C. § 1 et seq. The "Hatch-Waxman Amendments," enacted as the Drug Price Competition and Patent Term Restoration Act of 1984, Pub.L. No. 98-417, 98 Stat. 1585 (1984), simplified Food and Drug Administration ("FDA") procedures for the approval of generic drugs. Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1063 (D.C.Cir.1998). Under the Hatch-Waxman Amendments, companies that want to market generic versions of pioneer drugs may file with the FDA an Abbreviated New Drug Application ("ANDA"), relying on the FDA's prior determinations that the pioneer drug was safe and effective. See 21 U.S.C. § 355(j)(2)(A); see generally Andrx Pharms., Inc. v. Biovail Corp., 276 F.3d 1368, 1371 (Fed.Cir.2002); Mylan Pharms., Inc. v. Thompson, 268 F.3d 1323, 1325-27 (Fed.Cir.2001); Glaxo Group Ltd. v. Dr. Reddy's Labs., Ltd., 325 F.Supp.2d 502 (D.N.J.2004).

A pioneer drug manufacturer is required to notify the FDA of all patents that cover the pioneer drug. 21 U.S.C. § 355(b)(1), (c)(2). These patents and their expiration dates are listed by the FDA in what is commonly known as the "Orange Book" — the "Approved Drug Products With Therapeutic Equivalence Evaluations." For all applicable patents listed in the Orange Book, ANDA applicants must certify whether the generic drug would infringe the patents. 21 U.S.C. § 355(j)(2)(A)(vii). Specifically, the ANDA applicant may certify that (I) the required patent information has not been submitted to the FDA; (II) the patent has expired; (III) the patent has not expired but is set to expire on a certain date; or (IV) the patent is invalid or will not be infringed by the new generic drug for which the ANDA is submitted. 21 U.S.C. § 355(j)(2)(A)(vii)(I-IV). These are commonly referred to as paragraph I, II, III, and IV certifications. See generally Andrx Pharms., Inc., 276 F.3d at 1371.

If an ANDA applicant makes a paragraph IV certification and the patent holder (the pioneer drug company) sues for patent infringement within forty-five days, the FDA may not approve the ANDA until expiration of the patent, a judicial determination that the patent is invalid or not infringed, or thirty months, whichever is earlier. If the patentee does not sue, the ANDA will be approved. 21 U.S.C. § 355(j)(2)(B)(I), (5)(B)(iii); 21 C.F.R. § 314.95(c)(6).

The first applicant to file an ANDA with a paragraph IV certification is a "first filer," and is eligible for a 180-day exclusivity period during which it is entitled to have the sole generic version of the pioneer drug on the market. 21 U.S.C. § 355(j)(5)(B)(iv). The FDA is prohibited from approving any other ANDA involving the same brand name drug until the end of the exclusivity period, i.e., during that period only the brand name manufacturer and the first filer may market that drug. Id. The marketing exclusivity period does not begin immediately upon FDA approval of the first ANDA, but rather upon the earlier of (1) the first commercial marketing of the drug, or (2) the date of a court decision declaring the patent invalid or not infringed. Id.

While the Hatch-Waxman framework "has saved billions and billions of dollars for consumers[,] ... there [has been] a gaming of the system" by some brand name drug companies. 149 Cong. Rec. S15563 (daily ed. Nov. 22, 2003) (statement of Sen. Hatch); see Congressional Budget Office, "How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry," 27-31 (July 1998). Some brand name drug manufacturers have succeeded in "parking" the 180-day marketing exclusivity period, indefinitely delaying ANDA approvals and bottlenecking the market. Federal Trade Commission, "Generic Drug Entry Prior to Patent Expiration," vi-vii (July 2002). "Parking" occurs when the brand name manufacturer convinces the first filer not to enter the market, often through a settlement agreement concluding a patent infringement suit. Id. Absent an intervening court decision, the first filer's failure to enter the market delays the triggering of the 180-day exclusivity period so that it neither begins nor ends, and subsequently filed ANDAs cannot be approved. Id.

2. Medicare Amendments

To curb these abuses, Congress added another round of amendments to the FDCA in the comprehensive Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (the "Medicare Amendments"). Pub.L. No. 108-173, 117 Stat.2066 (2003). The Medicare Amendments established forfeiture provisions to prevent bottlenecking and revised sections of the patent code authorizing declaratory judgment actions by ANDA filers. Id. In particular, Congress provided that "the courts of the United States shall, to the extent consistent with the Constitution, have subject matter jurisdiction" in any declaratory judgment action by a generic manufacturer who (1) has filed an ANDA with a paragraph IV certification and (2) was not sued by the NDA holder within the forty-five day statutory period. 35 U.S.C. § 271(e)(5).

B. Facts

1. Pfizer

Pfizer markets Zoloft®, the brand name version of setraline hydrochloride approved by the FDA for the treatment of mood and anxiety disorders. Pfizer has listed Zoloft(R) in the Orange Book, associating it with the '699 patent and U.S. Patent No. 4,356,518 ("the '518 patent"). The '699 patent will expire on September 28, 2010, and the '518 patent will expire on June 30, 2006.

2. IVAX

In 1999, Zenith Goldline Pharmaceuticals, Inc., now known as IVAX, filed the first setraline hydrochloride ANDA. IVAX submitted a paragraph IV certification with respect to the '699 patent, i.e., it asserted that the '699 patent was invalid or not infringed by IVAX's product, and a paragraph III certification with respect to the '518 patent, i.e., it asserted that IVAX will not enter the market until the expiration of the '518 patent on June 30, 2006. As the first filer, IVAX was entitled to a 180- day marketing exclusivity period pursuant to 21 U.S.C. § 355(j)(5)(B)(iv). Pfizer responded within forty-five days of receiving notice of the ANDA, initiating a patent infringement action against IVAX in January 2000. Pursuant to 21 U.S.C. § 355(j)(5)(B)(iii), the suit automatically suspended FDA approval of the IVAX ANDA for thirty months. The parties reached a settlement in May 2002 that provided that IVAX would receive a license to the '699 patent and may begin marketing setraline hydrochloride by June 30, 2006.

3. Apotex

On October 27, 2003, Apotex filed an ANDA seeking the FDA's approval to market its version of setraline hydrochloride. Like IVAX, Apotex filed a paragraph III certification with respect to the '518 patent and a paragraph IV certification with respect to the '699 patent. Pursuant to the Hatch-Waxman framework, the FDA cannot approve the Apotex ANDA until 180 days after IVAX enters the market or a court decision decrees the '699 patent invalid or not infringed, whichever is earlier. If neither event occurs, the Apotex ANDA cannot be approved until September 2010, when the last Zoloft-related patent expires. See 21 U.S.C. § 355(j)(5)(B)(ii).

4. Other ANDA Filers

In addition to IVAX and Apotex, at least six other generic drug manufacturers have filed ANDAs for setraline hydrochloride; Pfizer has initiated suit against none of them. (Myers Decl. ¶ 9). Two of these companies, Teva Pharmaceuticals USA, Inc. and Dr. Reddy's Laboratories, Ltd., filed ANDA-related declaratory judgment actions against Pfizer, as Apotex has done here. (Def.'s Mem. at 7-8). Both cases were dismissed for lack of subject matter jurisdiction. Teva Pharms. USA, Inc. v. Pfizer Inc., No. 03-CV-10167 (RGS), 2003 WL 22888848, at *1 (D.Mass. Dec.8, 2003); Dr. Reddy's Labs., Ltd. v. Pfizer Inc., No. 03-CV-726 (JAP), 2003 WL 21638254, at *7 (D.N.J. July 8, 2003).

C. Procedural History

Apotex filed its complaint on April 1, 2004. On June 22, 2004, Pfizer moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction. Pfizer argues that this Court does not have subject matter jurisdiction because of the absence of an actual controversy, as required by the Declaratory Judgment Act. 28 U.S.C. § 2201(a). Apotex contends that there is such a controversy. For the reasons that follow, the motion to dismiss is granted.

DISCUSSION

A. Applicable Law

1. Motion to Dismiss Standard

In considering a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), federal courts "need not accept as true contested jurisdictional allegations." Jarvis v. Cardillo, No. 98 Civ. 5793(RWS), 1999 WL 187205, at *2 (S.D.N.Y. Apr.5, 1999). Rather, a court may resolve disputed jurisdictional facts by referring to evidence outside the pleadings. Zappia Middle E. Constr. Co. v. Emirate of Abu Dhabi, 215 F.3d 247, 253 (2d Cir.2000); Filetech S.A. v. France...