The Roadblock for Generic Drugs: Declaratory Judgment Jurisdiction for Later Generic Challengers

October 31, 2013

The Hatch-Waxman Act allows generic drug manufacturers to market a generic equivalent of a pharmaceutical company’s patented drug prior to the patent’s expiration by bringing Paragraph IV challenges against the patent holder. To encourage generic manufacturers to make these challenges, the Hatch-Waxman Act grants the first generic challenger (“first-filer”) for a particular drug a 180-day period of marketing exclusivity during which the Food and Drug Administration (“FDA”) will not approve applications from later generic challengers (“later-filers”). However, the first-filer almost always enters into reverse-payment settlement agreements with the pharmaceutical patent holder, where the patent holder agrees to pay the generic challenger to postpone entering the market. These settlement agreements act as roadblocks for later-filers.
One of the only ways for a later-filer to overcome such a roadblock is to bring a declaratory judgment action against the pharmaceutical patent holder. Early decisions by the Federal Circuit, however, suggested that later-filers could not bring declaratory judgment actions because they failed to satisfy the Constitution’s Article III “case or controversy” requirement.