United States District Court, N.D. California
ORDER GRANTING MOTIONS TO DISMISS
WILLIAM ALSUP, UNITED STATES DISTRICT JUDGE
action claiming antitrust violations and patent invalidity
involving pharmaceutical treatments for human
immunodeficiency virus, defendants move to dismiss. For the
reasons stated below, defendants' motions are Granted.
case concerns the compound tenofovir, which was discovered in
1984 and is useful in treating human immunodeficiency virus
("HIV"). Plaintiff AIDS Healthcare Foundation,
Inc., is a non-profit purchaser of drugs that contain
"prodrugs" of tenofovir, which are compounds that
are converted into their active ingredient once metabolized
in the human body. AIDS Healthcare contends that defendant
Gilead Sciences, Inc., improperly used the complex regulatory
regime of the Food and Drug Administration that governs
pharmaceutical drugs to protect its position in the market
for prodrugs of tenofovir. This order first explains the
pharmaceutical drugs, such as those containing tenofovir
prodrugs, can only be sold or marketed upon approval by the
FDA. A company seeking approval for a new drug must conduct
extensive research and clinical testing to establish the
safety and efficacy of the drug and submit the results of
that research as part of a "new drug application"
("NDA") before winning approval. A manufacturer
seeking approval for a drug via an NDA must identify all
patents (regardless of the patent owner) that it believes
cover the drug in question, which the FDA lists in a
publication called the "Orange Book."
1984, the Hatch-Waxman Act introduced a new procedure
intended to encourage the entry of safe, effective, and
affordable generic versions of drugs. Pursuant to the
Hatch-Waxman Act, a manufacturer that wishes to make an
identical copy of a drug that has already been approved can
avoid duplicating the expense of research and clinical
testing required as part of an NDA by filing an
"abbreviated new drug application"
("ANDA"), which can be approved based on the
clinical data from the original NDA. The filer of an ANDA
must assure the FDA that its generic drug will not infringe
the patents listed in the Orange Book for that drug. It can
do so by stating, for each listed patent, that it will not
market the generic version until the patent expires (if it
has not already expired) or by stating that the patent is
invalid or not infringed by the generic product.
latter certification (invalidity/non-infringement) is known
as a Paragraph IV certification and constitutes an artificial
act of patent infringement. If the patent owner initiates
litigation against the ANDA filer within forty-five days, the
FDA cannot approve that ANDA's drug for thirty months or
until a court issues final judgment invalidating the patent
or finding that the ANDA's product will not infringe,
whichever is earlier.
Hatch-Waxman Act provides incentives to the first generic
manufacturer to file a Paragraph IV certification for a given
drug. Specifically, it guarantees (subject to limited
exceptions) that the first-filing manufacturer will receive
180 days of exclusivity during which the FDA may not approve
any other ANDAs covering that drug. In other words, it
guarantees a period of duopoly between the brand-name
manufacturer and the first generic manufacturer to file an
ANDA with a Paragraph IV certification.
first-filing generic manufacturer is guaranteed that
exclusivity period even if it settles litigation with a
patent owner without resolving the invalidity or
non-infringement issues. No later-filing manufacturer can
obtain that exclusivity right from the FDA. Thus, when a
patent owner settles litigation with the first generic
manufacturer to file an ANDA with a Paragraph IV
certification, the incentive for a later-filing generic
manufacturer to press a challenge to the validity or scope of
the patents listed in the Orange Book is significantly
diminished. This is because, unlike the first filer, later
filers will need to wait until the first filer has exhausted
its exclusivity period before any later filers' ANDAs can
be approved. The later filers would face competition from any
other later filers, driving the margins on the generic
products toward zero.
drug manufacturers may alternatively seek approval of a
modified generic version of a drug if the original drug has
already won FDA approval. (Brand-name manufacturers may also
use this process for modifications to their own drugs.) A
modification might involve a substitution of certain
ingredients, a change in dosage, or approval for a new
indication. Although the modifications on the approved drug
preclude a generic manufacturer from winning approval with an
ANDA, the generic manufacturer may use a special kind of NDA
under Section 505(b)(2) of the Hatch-Waxman Act.
a regular NDA, a Section 505(b)(2) application does not
require an applicant to develop and submit original safety
and efficacy data covering the product as a whole. Instead,
the Section 505(b)(2) applicant may refer to the safety and
efficacy data submitted as part of an NDA for a
previously-approved drug. The applicant may then provide
additional data that demonstrates the safety and efficacy of
the proposed modifications.
an ANDA, a Section 505(b)(2) application requires the
applicant to assure the FDA that the proposed product will
not infringe the relevant patents in the Orange Book. Upon
approval, the applicant for a modified version of a
previously-approved drug is entitled to three years during
which the FDA will not approve an ANDA that relies on the
supplemental safety and efficacy data submitted with the
Section 505(b)(2) application (although a manufacturer could
win approval with its own NDA supported by new data).
offset generic manufacturers' ability to free-ride on the
safety and efficacy data developed by the brand-name
manufacturers via the ANDA and Section 505(b)(2) procedures,
the Hatch-Waxman Act provides an incentive to brand-name
manufacturers to encourage them to develop new products that
contain ingredients never before approved by the FDA.
Specifically, it grants such applicants a five-year period of
"new chemical entity" ("NCE")
exclusivity, which operates independent of any patent
protection. NCE exclusivity bars the FDA from approving any
application for a drug containing the covered new chemical
entity for five years following approval of the first NDA
containing that ingredient. The FDA also cannot receive
applications for drugs containing that ingredient until the
fourth year following the approval of the first NDA.
order now turns to the drugs in question in our case.
Development of Tenofovir Therapies.
initial formulation, tenofovir needed to be injected
intravenously. In 1997, defendant Gilead Sciences, Inc.,
obtained a patent on a "prodrug" of tenofovir,
which could be administered orally and converted into its
active ingredient once metabolized in the human body. That
prodrug was called tenofovir disoproxil fumarate
2001, Gilead received FDA approval to offer TDF as a
standalone drug and as part of several fixed-dose combination
pills that combined TDF with other active ingredients.
Physicians used the fixed-dose combination pills as part of a
multi-drug regimen called highly-active antiretroviral
therapy. That regimen gave physicians flexibility to
prescribe different drug combinations to optimize treatment
for patients with various needs (such as differing symptoms).
side effects involving bone and kidney toxicity. In 2002,
Gilead hired physicians to conduct safety and efficacy
research into an alternative formulation of a tenofovir
prodrug, called tenofovir alafenamide fumarate
("TAF"). Meanwhile, in 2004, Gilead publicly
announced that it had abandoned development of TAF, although
it filed seven patent applications relating to the use of TAF
between 2004 and 2005. Gilead then resumed its clinical
trials in 2011. In 2014, it published a study concluding that
TAF had a higher absorption rate than TDF, thereby reducing
the bone and kidney toxicity side effects.
2015, two years before the expiration of the patents covering
TDF, Gilead sought FDA approval of three new combination
drugs, which were new versions of Gilead's marquee drugs
that substituted TAF for TDF, while keeping the remaining
active ingredients the same. It licensed TAF to defendants
Japan Tobacco, Inc., and Janssen Sciences Ireland UC, for use
in combination with other ingredients for the manufacture of
three new fixed-dose combination drugs.
is a chart of the ingredients in Gilead's new drugs:
elvitefragir, cobicistat, emtricitabine, and TAF
emtricitabine and TAF
rilpivirine, emtricitabine, and TAF
approved the first drug listed, Genvoya, in November 2015.
Because TAF was a new chemical entity, the FDA also granted
Gilead a five-year NCE exclusivity period over any product
containing TAF, which period began in November 2015.
Accordingly, no generic drug containing TAF can be approved
by the FDA until November 2020. (The FDA may not receive
applications until November 2019.) Additionally, Gilead
listed twelve patents in the Orange Book covering Genvoya
with expiration dates ranging from 2015 to 2032. Gilead's
NCE exclusivity bears no relationship to the exclusive rights
conferred by its patents.
approved Descovy and Odefsey in 2016. Because those drugs
also contained TAF, they also fell within the protection of
Gilead's NCE exclusivity period. Thus, the FDA may not