FDA approval of Allergan PLC’s Lidoderm generic has provided financial clarity for the company and regulatory clarity for subsequent ANDA filers referencing Endo Pharmaceuticals Inc.’s lidocaine patch, but questions remain about 180-day generic marketing exclusivity rights for the drug.

FDA said that although first-filer Watson may be eligible for 180-day exclusivity, the agency would not make a formal determination until another ANDA filer becomes eligible for full approval.

Watson is currently slated to launch its generic in September 2013 under a patent settlement with Endo. However, the first-filer could face competition, and a challenge to its claim on exclusivity rights, from Mylan NV Although Mylan is involved in litigation with Endo, it is unclear whether Mylan’s ANDA is currently subject to a 30-month stay of approval or will be in the future.

If Mylan’s ANDA were ready for approval before or shortly after September 2013 and the application is not subject to a 30-month stay, FDA likely would be forced to make a decision on lidocaine patch generic exclusivity rights that almost certainly would invite a court challenge.

A First Generic Approval …

Launched in September 1999, Lidoderm (lidocaine patch 5%) is Endo’s biggest-selling drug with net sales of $825 million in 2011, which accounted for 30% of the company’s revenues, Endo said in its 10-K filing with the Securities and Exchange Commission.

Lidoderm is indicated for relief of pain associated with post-herpetic neuralgia. The drug has been the focus of investigations by the HHS Office of Inspector General and Department of Justice, which have subpoenaed documents from Endo related to its sale, marketing and promotion of the pain patch Also see "Endo’s Lidoderm Marketing Practices Under HHS OIG Investigation" - Pink Sheet, 17 January, 2007..

Given the commercial importance of Lidoderm to Endo, the company has embarked on a lengthy battle to keep generics off the market.

Endo filed a citizen’s petition in 2006 requesting that FDA require comparative clinical trials, in addition to pharmacokinetic studies, to demonstrate bioequivalence to Lidoderm. Endo amended the petition in August 2007 and March 2012.

In November 2009, Watson submitted an ANDA with a Paragraph IV certification against the ‘529 patent, which covers the Lidoderm formulation and expires in October 2015. Endo sued Watson in February 2010, triggering the 30-month stay of approval for Watson’s application. Watson has previously said the 30-month stay was due to expire on July 15, 2012.

The settlement with Endo allows Watson to launch under its own lidocaine ANDA on Sept. 15, 2013.

A bench trial on the ‘529 patent was conducted in February 2012; however, Endo and Watson settled their litigation before a verdict was rendered. The deal, announced on May 29, allows Watson to launch its Lidoderm generic on Sept. 15, 2013 if approved by FDA. Endo will receive a 25% royalty on Watson’s gross profits until another generic enters the market. The brand company also agreed not to launch an authorized generic until the earlier of a third-party generic launch or 7.5 months after Watson’s market entry.

Additionally, Endo will supply Watson with approximately $96 million in branded Lidoderm for distribution during the first eight months of 2013, prior to Watson’s own generic launch. The agreement included contingencies if Watson failed to receive final ANDA approval by various dates, in which case Watson would continue to receive branded Lidoderm, albeit in smaller amounts, for distribution through September 2015.

In announcing the agreement, Watson President and CEO Paul Bisaro said it “provides a date-certain launch of competition for Endo’s branded Lidoderm, eliminating any risks involving current pending or future patent litigation surrounding the product.” Endo said the agreement protected its intellectual property interests, eliminated the uncertainty of a court decision and reflected the uncertain regulatory pathway for generic versions resulting from Endo’s pending citizen’s petition.

On Aug. 23, FDA approved Watson’s ANDA and concurrently issued a 43-page response denying the actions requested in Endo’s petition (see related story, Also see "Clinical Trials Not Required For Lidoderm Generics, FDA Tells Endo" - Pink Sheet, 3 September, 2012.).

… Sans An Exclusivity Determination

However, FDA’s approval letter punts on the issue of Watson’s eligibility for exclusivity.

The letter points out that Watson failed to obtain tentative ANDA approval within 30 months after the day on which the ANDA was filed, and it references the forfeiture provisions included in the Medicare Modernization Act of 2003. Under the MMA, an ANDA first-filer who does not secure tentative approval within 30 months will forfeit its eligibility for 180-day exclusivity unless the failure to obtain approval was caused by a change in, or a review of, approval requirements.

However, the FDA Amendments Act of 2007 created an exception to the 30-month forfeiture provision: if approval was delayed because of the time it took the agency to respond to a citizen’s petition, the 30-month period will be extended by the amount of time during which the petition was under review.

Watson “may be eligible” for 180-day exclusivity, which would be triggered by commercial marketing, FDA said.

FDA’s approval letter states that Watson was the first-filer to submit a substantially complete ANDA with a Paragraph IV certification. “Therefore, with this approval, Watson may be eligible for 180 days of generic drug exclusivity for Lidocaine Patch, 5%,” the letter states. “This exclusivity … would begin to run from the date of the commercial marketing.”

However, the letter states that the agency is not making a formal determination “at this time” about Watson’s eligibility for exclusivity. Instead, FDA will make such a determination “only if another paragraph IV applicant becomes eligible for full approval (a) within 180 days after Watson begins commercial marketing of Lidocaine Patch, 5%, or (b) at any time prior to the expiration of the ‘529 patent if Watson has not begun commercial marketing.”

Watson “Believes” It Has 180-Day Rights

The approval letter leaves Watson in the position of professing its belief that it holds exclusivity, but without agency confirmation.

In a press release announcing the ANDA approval, Watson said it plans to launch the generic in September 2013 under its settlement with Endo and “believes that under Hatch-Waxman rules, it will be entitled to 180 days of marketing exclusivity.”

Watson executives appear to be pinning their expectation for exclusivity on the FDAAA provision that protects ANDAs delayed by citizen petitions from the MMA’s forfeiture provisions.

During Watson’s second quarter earnings call July 26, Bisaro was asked whether the company expected to face other generic competition when its lidocaine patch enters the market in September 2013. Bisaro said Watson does not expect to see any generic competition in 2013.

“We believe we maintained our exclusivity because the product was approvable in the form in time for meeting the timeline for getting a tentative approval,” Bisaro said, according to a transcript. “The citizen’s petition was the only outstanding issue. We believe that the citizen’s petition remains the only outstanding issue with respect to our application. So, from our perspective under the law, we have the exclusivity.”

Bisaro acknowledged that the company “won't know with absolute certainty until the agency grants our final approval and tells us that …we have the exclusivity. But right now, we have no reason to believe we don't have it. And so we will … defend that position.”

Analysts appear to share Watson’s view that the company will be awarded 180-day exclusivity.

In an Aug. 24 note, Leerink Swann analysts Jason Gerberry and Seamus Fernandez said the lidocaine ANDA approval eliminates an important risk factor for Watson’s 2013 earnings and addresses investor concerns about the regulatory status of Lidoderm generics.

Although the Endo settlement guaranteed Watson product sales, either through its own generic or branded Lidoderm, from 2013-2015, “the structure of the deal provided greater upside if the WPI ANDA gained approval. WPI's failure to get tentative approval within its 30-month time period had raised questions about exclusivity forfeiture, although we share WPI’s view that ENDP’s citizen’s petitions will provide for extended review ensuring WPI retains 180-day exclusivity.”

The Leerink Swann analysts said they expect Mylan, which has a pending ANDA, will not enter the market until the second quarter of 2014 – a view shared by other Wall Street analysts.

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Mylan, however, does not share this view. The company believes it could come to market as early as the second half of 2013. Legal maneuvering in patent litigation between Endo and Mylan has created questions about the status of a 30-month stay of approval on Mylan’s application (see sidebar).

A Lack Of Precedent

Watson’s predicament shows the risks sponsors face when FDA must interpret statutory provisions and apply them to novel situations.

Watson appears to be relying on the FDAAA citizen’s petition exemption for protection from forfeiture. However, it is unclear whether this exemption extends to citizen’s petitions submitted prior to the 2007 law’s enactment, one drug law attorney told “The Pink Sheet.”

The case for awarding Watson exclusivity does not appear to be helped by FDA’s reference, in its response to Endo’s citizen petition, to the FDAAA provision known as 505(q), which was aimed at preventing ANDA approvals from being held up by citizen’s petitions. The statute requires FDA to take action on citizen’s petitions under 505(q) within 180 days.

In its response to Endo, FDA said the company’s citizen’s petition, “filed in 2006, prior to the enactment of section 505(q), does not fall into this category and is therefore not subject to the 180-day deadline of section 505(q).” This statement could suggest that since Endo’s citizen’s petition is not covered under 505(q), Watson cannot receive the benefit of the related exemption from forfeiture.

The agency has considered the FDAAA exemption in the context of other ANDAs, but there does not appear to be a case where the agency has decided that a citizen’s petition submitted prior to the enactment of FDAAA saved an ANDA first-filer from forfeiture. Rather, the agency’s decisions to date appear limited to citizen’s petitions filed after FDAAA’s September 2007 enactment.

For example, in March 2012 FDA determined that Dr. Reddy's Laboratories Ltd. forfeited 180-day exclusivity for Antara (fenofibrate) capsules for failure to obtain tentative ANDA approval within 30 months. The agency concluded that two citizen’s petitions involving Antara generics filed in 2010 did not pertain to Dr. Reddy’s ANDA and did not delay approval of the company’s generic.

In December 2010, FDA approved Impax Laboratories Inc.’s ANDA for Doryx (doxycycline hyclate delayed-release) tablets with 180-day exclusivity, even though the application did not receive tentative approval within the 30-month time period. FDA determined that a 2008 citizen’s petition that required the agency to review the standards for approval of doxycycline products, coupled with a change in the requirements for approval, protected Impax from forfeiture.

Watson may, however, find some relief from a provision in the FDA Safety and Innovation Act. Enacted on July 9, the law extended the period in which ANDAs filed on or after Jan. 9, 2010 had to obtain approval, or face the loss of exclusivity, from 30 months to 40 months. If Watson’s ANDA was deemed to have been filed on or after Jan. 9, 2010, it may be protected.

Other Causes For Delay?

It is also unclear what, if any, delaying effect the controversy involving Cetero Research had on Watson’s approval.

In July 2011, FDA sent letters to pharmaceutical sponsors informing them that Cetero, a contract research organization, falsified bioanalytical and bioequivalence study data, and that tests supporting NDAs and ANDAs may need to be redone Also see "Cetero Fallout: Five Years Of Potentially False Data Creates Three Tough Options For Sponsors" - Pink Sheet, 27 July, 2011..

Watson has acknowledged that testing supporting the Lidoderm ANDA was conducted by Cetero but asserts the matter was resolved.

In a Feb. 3 press release, the company said it believed questions “related to the site where a biostudy supporting the ANDA was conducted have been addressed to FDA’s satisfaction.” During an earnings call less than two weeks later, Bisaro sought to quash any speculation that the Cetero matter was a delaying factor for the company’s lidocaine application. “There is no issue regarding the biostudy that was performed at Cetero,” Bisaro said, according to a call transcript. He called the matter a “red herring.”

Ultimately, FDA will not need to render a decision on 180-day exclusivity and the impact of the FDAAA forfeiture exemption if another ANDA is not eligible for approval before Watson’s September 2013 launch or within 180 days thereafter. Nevertheless, the uncertainties surrounding Mylan’s ANDA and its litigation with Endo suggest that, at this point in time, FDA’s ability to maintain its no-decision stance is not a sure thing.

Watson’s Generic Lidoderm Approval Leaves Questions About Exclusivity

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