A Delaware federal judge went too far when enjoining Avadel CNS Pharmaceuticals from seeking regulatory approval of its sleep disorder drug Lumryz for the treatment of idiopathic hypersomnia, the US Court of Appeals for the Federal Circuit ruled. The precedential ruling paves the way for Avadel clinical trials to continue but leaves unanswered the question of whether a common clinical trial practice falls within the Hatch-Waxman Act’s safe harbor.
An effort by Jazz Pharmaceuticals and Jazz Pharmaceuticals Ireland to thwart Avadel CNS Pharmaceuticals from encroaching on their market exclusivity for the treatment of a rare sleep disorder has hit a major snag.The US Court of Appeals for the Federal Circuit (see here) yesterday said Judge Gregory Brian Williams of the District of Delaware abused his discretion when barring Avadel CNS Pharmaceuticals from seeking a new indication — for the treatment of idiopathic hypersomnia, or IH — for its excessive daytime sleepiness, or EDS, and cataplexy drug “Lumryz.”
Vacating and remanding, the panel said Williams must revisit and answer the question of whether pursuit of US Food and Drug Administration approval, alone, can rise to the level of infringement under Section 271(e)(2) of the Hatch-Waxman Act before the practice can be enjoined. Yet other aspects of the relief ordered by the district judge, including limits he placed on Avadel’s Lumryz-related clinical trials, were reversed outright, with the panel deeming those actions protected by Section 271(e)(1) safe harbor.
At issue in the dispute is Jazz’s US Patent No. 11,147,782, covering sodium oxybate and methods of its manufacture.
Although the patent owner makes two oxybate-containing products — twice-nightly “Xyrem,” for the treatment of EDS and cataplexy in narcolepsy patients, and twice-nightly “Xywav,” for the same conditions in addition to IH — it opted not to list the ‘782 patent in the US Food and Drug Administration’s Orange Book of Approved Drugs.
Thus, the parties’ legal wrangling began as a cause of action for artificial infringement under Section 271(e)(2) but later transformed into a case of actual infringement once Avadel’s paper new drug application, or NDA, for once-nightly Lumryz received FDA approval in 2023, two years into the litigation.
Within weeks, Avadel began commercially marketing Lumryz — which shares the same active ingredient as Xyrem and Xywav.
Before Williams, Avadel conceded infringement but took the question of validity of claim 24 of the ‘782 patent to trial.
There, jurors sided with Jazz, upholding the claim as patentable and awarding the patent owner $233,562.83 as a reasonable royalty. The matter of injunctive relief then fell to the Delaware federal judge but before he could rule Avadel started a new clinical trial on the efficacy and safety of Lumryz in IH-diagnosed patients.
Ultimately, Williams would go on to order Avadel to refrain from any new Lumryz-related clinical trials and from offering existing trial participants open-label extensions, or OLEs, which allows for continued access to an investigational drug after a trial has concluded. Additionally, he barred Avadel from applying for FDA approval for the IH indication.
No aspect of that relief survived the Federal Circuit’s scrutiny yesterday, however.
Writing for the panel, Judge Alan Lourie first found that under the “plain language and purposes” of the Hatch-Waxman Act, Williams abused his discretion in forbidding new clinical trials on Lumryz for IH.
That is so because use of a patent is exempt from infringement liability so long as it is “reasonably related to the development and submission of any information” to the FDA under the federal Food Drug and Cosmetic Act. Per binding US Supreme Court precedent in Merck v. Integra, Lourie explained, clinical studies “of patented compounds that are appropriate for submission to the FDA” fit within that exemption.
Jazz argued Avadel must show entitlement to safe harbor for each future clinical trial, a showing it failed to make below, but the Federal Circuit disagreed.
While “in some circumstances, reliance on the safe harbor requires factual development,” Lourie deemed the instant dispute “factually and procedurally unique in our safe-harbor jurisprudence” because Avadel — with its pre-trial stipulation — was under no burden to demonstrate noninfringement.
Jazz, Lourie noted, can still seek injunctive relief if it has reason to believe Avadel’s Lumryz-related activities stray beyond the safe harbor but, he continued, “to enjoin Avadel outright from those activities at this juncture, before they have been adjudicated to infringe, exceeds the bounds of the law.”
His panel similarly reversed Williams’ bar on OLEs but stopped short of deciding whether those same offers relate to the “development and submission of information” to the FDA.
Although the question of OLE safe harbor was “extensively” debated by the parties on appeal, Lourie said because it was raised only belatedly at the district court, after Williams’ injunction was entered, his court would not supply the answer one way or the other.
The court went on to vacate and remand Williams’ restriction on Avadel’s pursuit of FDA approval of Lumryz for the treatment of IH, however.
There, Lourie said his panel uncovered “a critical, unresolved, and unbriefed issue” on appeal — whether Avadel’s submission of a paper NDA for an additional indication is an act of infringement under Section 271(e)(2), when it contains no certification of noninfringement of invalidity of an Orange Book-listed patent.
Ironically, it could be in Avadel’s best interest that Williams answer “yes”’ because the application might yet fall under the safe harbor. But if the answer is “no,” the Federal Circuit said the district judge must consider the eBay v. MercExchange injunction factors anew, “in accordance with this opinion before again enjoining that activity.”
“Here, the only findings to support enjoining Avadel from seeking FDA approval relate to the harm Jazz would suffer if Avadel were to enter the market for the IH indication — not if Avadel were merely to apply for FDA approval of that indication. Although Avadel’s ability to enter the market is, in part, dependent on Avadel seeking FDA approval, it does not follow that enjoining Avadel’s application would be necessary to prevent infringement,” they ruled.
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