Life Sciences’ September Surprises

The October surprise may be the stuff of electoral legerdemain, but drug and device makers are seeing a few interesting legal twists inside and outside the courtroom in the month of September. In one instance, PMA preemption is back in the news, while another story involves what seems a very generous sale of intellectual property assets forced by multiple patent challenges.

Lassoed Again by the Riata

Despite best intentions, sometimes an old drug or device comes back to haunt its maker. This would appear to be the case with the Riata and Riata ST series of electrophysiology leads made by St. Jude Medical, now a subsidiary of Abbott. While this seems a fairly typical preemption case, Connelly v. St. Jude Medical seems to revive the issue of a litigant’s access to confidential commercial information.

According to documents from the U.S. District Court for the Northern District of California, Richard Connelly received a total of three Riata leads between 2003 and 2015. Connelly’s attorneys argued liability on the basis of manufacturing defects, failure to warn, negligence and negligence per se, and Abbott responded that the first three claims are explicitly preempted while the last is truncated by implied preemption.

Judge Edward Davila rejected the failure to warn claim, albeit with a possible amendment of the claim, the same determination he came to regarding the negligence per se claim. Avila gave the plaintiff until Sept. 8 to amend those claims, which apparently his counsel has done.

However, Avila affirmed the manufacturing defect claim partly because the plaintiff’s attorneys had no access to the entirety of the documentation for the regulatory filing. The basis of the manufacturing defect argument commenced with three pieces of evidence; an FDA inspectional form, the recalls of the Riata series of devices, and an internal root cause analysis undertaken to examine the lead insulation problems.

Avila wrote that California state law does indeed run parallel to federal law on the manufacturing defect issue because the plaintiff had demonstrated “a plausible connection between the alleged manufacturing defect and his injuries.” He based this conclusion in part on a 2014 case in the U.S. District Court for the Northern District of New York, Rosen v. St. Jude, but not much else.

Avila conceded that the Court of Appeals for the Ninth Circuit “has not directly addressed this issue,” but states that a plaintiff’s inability to access confidential commercial information at the time complaint was filed – coupled with factual evidence presumed to be sufficient to demonstrate a causal connection – are all that is needed to sidestep federal preemption and satisfy the requirements of Twombly.

The negligence claim survived on essentially the same set of facts, and the court determined that Abbott is not liable in this instance because its acquisition of St. Jude was not completed until after Connelly was injured. Avila indicated that the plaintiff can amend the complaint on this point as well, however. It seems fairly plausible that this case will end up in Ninth Appeals, regardless of the outcome in this venue.

Allergan’s IP End Run

Most methods for dealing with patent challenges run to the tried and true, but Allergan’s move to insulate its patents for Restasis may have left some members of the patent bar a bit dewy-eyed for not having thought of it themselves.

Allergan has declared it will transfer all patent rights for the treatment for dry eye to the St. Regis Mohawk Tribe, which will confer sovereign immunity on the related patents. This would seem to fend off ongoing challenges via the inter partes review process at the Patent and Trademark Office, but there are suggestions that Allergan has progressively less to lose. While sales of the product exceeded $350 million in the third quarter of 2016, the FDA has yet to decide whether generic versions will have to go through clinical trials in a debate between the agency and the manufacturer that is now in its fourth year.

The company is also fending off a patent challenge in the patent rocket docket in Marshall, Texas, over the production of generics, which some believe will hit the market as early as 2019. The problem for Allergan in this lawsuit, at least in terms of optics, is that the company has already settled with Famy Care Ltd., which will be able to market its generic version no later than 2024 (when the patent expires), and possibly substantially earlier.

Under the terms of the licensing agreement, the St. Regis Mohawk Tribe seems to be doing quite well, indeed, explaining in a Sept. 8 statement that it will receive more than $13 million from Allergan to take ownership of the patents in addition to an expected annual sum of $15 million in royalties.

Cardiaq Sustains Narrow Win Over Neovasc

The patent scrum between Cardiaq Valve Technologies and Neovasc Inc., made it all the way to the Court of Appeals for the Federal Circuit, which has affirmed a district court decision awarding the plaintiff more than $110 million. In Cardiaq Valve Technologies v. Neovasc, Inc., the plaintiff alleged that Neovasc had breached a contract the two companies had signed as part of a development program by Cardiaq toward a transcatheter mitral valve technology, which Neovasc purportedly violated by using some of the intellectual property in an effort to develop its own mitral valve device.

In addition to the initial jury damages of $70 million, Neovasc will have to pay roughly $20 million each for interest and enhanced damages, although neither the district court nor the Federal Circuit agreed to enjoin Neovasc’s development program. While Cardiaq won’t enjoy the kind of exclusivity typically afforded by a patent, it was acquired by Edwards Lifesciences, which has a degree of credibility with cardiologists that Neovasc cannot possibly match in the near term. Thus, while the patent fight seems uncomfortably close to a draw for plaintiff, the physician adoption curve is nearly certain to favor Cardiaq by a wide margin.

NJ Supreme Court Hears Significant Preemption Case

Beth S. Rose, Esq. | Sills Cummis & Gross P.C.

On April 11, 2016, the New Jersey Supreme Court heard oral argument on an issue of importance to manufacturers of generic drugs. The issue concerns whether failure to warn claims are preempted when there is a gap between the time the brand manufacturer changes its label and the time the generic manufacturer updates its label to match that of the brand.  Plaintiffs argued  that where there is a delay in the  generic manufacturers’ label update,  warnings claims are not preempted by the U.S. Supreme Court’s decision in Pliva v. Mensing. They maintained that in such a situation, it is not “impossible” for the generic manufacturers to update their labels to match those of the brand.  Defendants, on the other hand, argued that such claims are impliedly preempted by the U.S. Supreme Court’s decision in Buckman, the FDA’s exclusive enforcement authority, and other New Jersey case law, because the claims are based on an alleged violation of a federal requirement, namely the duty of sameness.

Although defendants’ reasoning  correctly flows from the FDCA and preemption jurisprudence, the Justices seemed extremely skeptical of the generics’ position. From the outset, the Court seemed concerned that if it ruled for the generics, then consumers would be left without a cause of action. Chief Justice Rabner’s first question presented a scenario where the brand manufacturer changed its label, and the generic waited two years to update its label to match the brand.  The Chief Justice asked whether a consumer who took a generic drug prior to the update and was injured had a remedy other than “calling the FDA.” The questions posed by other Justices suggested that they believed that plaintiffs could prove their warnings claims without referencing federal law, and that Buckman was distinguishable. They seemed predisposed to the approach of the 6th Circuit, which has accepted plaintiffs’ argument. The Justices also seemed interested in whether the FDCA or its regulations identified a specific time frame for generics to update their labels, and why FDA had not taken any enforcement action against generics that had not promptly updated them. They did not seem to fully appreciate that the label goes to the doctor (the learned intermediary) as opposed to the consumer. Also,  it seems highly unlikely that plaintiffs could prove such a claim without reference to federal law. Similarly, plaintiff’s so-called failure to warn claims do not fit within the New Jersey Product Liability Act and the corresponding jury charges. If the Court agrees with plaintiffs’ position, trials in such cases are likely to be complicated, unwieldy and contort New Jersey law.

What Scalia’s Passing Means to Life Sciences Companies

Courtney A. Stevens | Senior Attorney, Loss Control | Medmarc Insurance Group

The recent passing of Justice Antonin Scalia, the Court’s longest-serving justice, means more than just political scuttlebutt over who will get to appoint his replacement. For life sciences companies, it means the loss of a real ally in matters of tort liability and a powerful force in intellectual property.

Preemption

Scalia authored the 8-1 majority opinion in Riegel v. Medtronic, 552 U.S. 312 (2008), a pivotal decision in preemption jurisprudence that held that the Medical Device Amendments to the Food, Drug and Cosmetic Act (FDCA) preempted state-law claims relating to the safety and effectiveness of pre-market approval (PMA) devices. This effectively shields makers of PMA devices from products liability claims.

In Wyeth v. Levine, 555 U.S. 555 (2009), which undermined preemption in holding that FDA approval of a medication does not preempt state law failure-to-warn claims, Scalia joined the dissent (authored by Justice Samuel Alito). The dissent argued that this holding was inconsistent with their previously-adopted “conflict preemption” analysis.

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