Medicare Amendments Preserve Strategic Obstacles for Generics, Morgan Lewis on Life Sciences
August/September 2005

In the 2003 Medicare Prescription Drug, Improvement and Modernization Act (the “Medicare Amendments”), Congress addressed a “critical” issue for generic drug companies —when a company that files an abbreviated new drug application (ANDA) seeking to market a generic formulation can bring an action against the innovator company for a declaratory judgment of patent non-infringement or invalidity. Despite an explicit provision in the legislation authorizing declaratory judgment actions as well as presumed congressional intent to foster such actions, the Federal Circuit, in Teva v. Pfizer, found that Congress did not intend to modify the jurisdictional test applied in a traditional patent infringement suit. Accordingly, the court held that no declaratory judgment action could be brought by the generic company absent a traditional threat of suit for patent infringement. With three judges dissenting, the Federal Circuit recently denied a rehearing and rehearing en banc of that decision. The Federal Circuit has thus thwarted the ability of generic companies to use declaratory judgment actions to clear marketing bottlenecks that can result when an innovator chooses to defer or delay suit.

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