Settlement of declaratory judgment action based on pre-filing statements insufficient to trigger 180-day exclusivity period

Teva Pharmaceuticals v. FDA (D.D.C. 2005)

Generic manufacturer Teva filed an abbreviated new drug application (ANDA) in 2000 seeking permission to sell generic pravastatin once one of the patents expires in April 2006(paragraph III certification) and an assertion that the generic version would not violate three patents on the drug (paragraph IV certification).  After Teva filed, several other generic manufactures filed parallel applications.

After approving Teva’s application, the FDA determined that Teva’s 180–day exclusivity period was started by the conclusion of a lawsuit between Apotex and BMS involving the same patents. (Under Hatch Waxman, the 180–day exclusivity is triggered by a “decision of a court” or “holding” that has preclusive effect.)

In that case, Apotex had sued BMS for declaratory judgment of noninfringement even though BMS had told Apotex that it would not sue on the patents based on Apotex’s proposed formulation.

BMS & Apotex reached a voluntary dismissal prior to any hearing taking place, and filed a “consensual stipulated dismissal” based on the pre-suit representations by BMS.

Teva argued that the Apotex-BMS settlement was not a “decision of a court” and thus should not have triggered the start of the exclusivity period.

The DC Court agreed with Teva, finding that the stipulated dismissal was insufficient to fulfill the requirements of Hatch Waxman.

The underlying terms of the stipulation are not physically incorporated into the four corners of the dismissal order, and there is no statement of a “good cause” finding on the face of the order. Neither Apotex nor BMS ever asked the district court to look beyond the signed stipulation, and no hearing or argument ever took place. Thus, the district court could only review the voluntary, private settlement agreement: it did not have to weigh evidence, or make any implicit determinations. Indeed, it did not even have to sign the document, and under Second Circuit and D.C. Circuit law, as well as Rule 41(a)(1)(ii), the filing of the signed stipulation of dismissal automatically effectuated the dismissal without any court action. The district court was divested of jurisdiction at the very moment that the stipulation, containing the signatures of both BMS and Apotex, was filed — there cannot have subsequently been any predicate finding of fact as to estoppel or any other issue. And there is nothing in the record to suggest that, notwithstanding this jurisdictional bar, any predicate finding of fact was actually made.

The Apotex-BMS decision was “not a court decision or holding” and “Teva’s 180-day exclusivity clock was never triggered.” As such, the D.C. Court determined that the FDA’s determination was “arbitrary, capricious . . . or otherwise not in accordance with the law” under § 706(2) of the APA.

Read the decision.