[author: Courtenay C. Brinckerhoff]

On April 17, 2012 the Supreme Court issued a unanimous decision in Caraco Pharmaceutical Labs., Ltd. v. Novo Nordisk A/S, reversing the Federal Circuit decision and finding that 21 USC § 355(j)(5)(C)(ii)(I) provides a mechanism for a generic drug manufacturer to challenge the accuracy of a use code associated with an Orange Book listed patent. This decision may permit generic manufacturers to obtain earlier FDA approval for certain generic drugs, but may not solve all of the problems that can arise from an overly broad use code.

The Hatch-Waxman ANDA Framework

The Federal Circuit decision and Supreme Court decision provide good summaries of the Hatch-Waxman ANDA framework, so I will provide only a skeleton outline of the most relevant provisions here.

The Orange Book

When a brand manufacturer obtains FDA approval for a new drug product or method treatment, it submits to the FDA a list of relevant patents and their expiration dates. For method of use patents, the brand manufacturer must provide a description of the methods, which is referred to as the “use code narrative.” The FDA publishes this information in its “Approved Drug Products With Therapeutic Equivalence Evaluations,” a/k/a, the Orange Book.

A generic drug manufacturer may seek FDA approval to market a generic version of an approved drug by filing an Abbreviated New Drug Application (ANDA). An ANDA must include a certification regarding each patent listed in the Orange Book for the product at issue, chosen from the following:

A paragraph I certification states that there is no patent information listed in the Orange Book
A paragraph II certification states that the listed patent has expired
A paragraph III certification seeks approval on date on which the listed patent will expire
A paragraph IV certification states that the listed patent is invalid or will not be infringed by the generic product

Generic Carve-Out Labeling

When a product is covered only by one or more method of use patents (as opposed to product patents), a generic manufacturer can file an Abbreviated New Drug Application (ANDA) that seeks FDA approval for a use that is not covered by the patents. Under these circumstances, the generic manufacturer must make a ”section viii” statement certifying that the method of use patent “does not claim a use for which the [ANDA] applicant is seeking approval,” as reflected in the generic manufacturer’s proposed labeling. When reviewing this type of ANDA, the FDA compares the brand product’s use code narrative with the generic manufacturer’s proposed labeling to confirm that there is no overlap between the uses.

ANDA Litigation

According to the Hatch-Waxman Act, the filing of an ANDA with a paragraph IV certification constitutes an act of patent infringement.  The FDA will approve the generic drug notwithstanding the Orange Book listed patent(s) unless the patent owner brings an infringement action against the ANDA applicant within 45 days of receiving notice of the paragraph IV certification. If the patent owner commences such ANDA litigation, the FDA will not approve the drug for thirty months (this is often referred to as a “thirty month stay”), unless the litigation is resolved earlier.

ANDA Litigation Counterclaim

The Hatch-Waxman Act ANDA litigation provisions include a clause introduced by a 2003 amendment (21 USC § 355(j)(5)(C)(ii)(I)) that permits a generic manufacturer to challenge the Orange Book listing under certain circumstances:

[The ANDA] applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder under subsection (b) or (c) of this section on the ground that the patent does not claim either–
(aa) the drug for which the application was approved; or
(bb) an approved method of using the drug.

The Caraco Question

This issue presented in Caraco is whether this clause permits a counterclaim when the listed patent does claim an approved method of using the drug, but the use code narrative describes the use (allegedly) over-broadly.

The Caraco Dispute

The Original Orange Book Listing

The product at issue is the drug repaglinide, which Novo Nordisk A/S markets under the brand name Prandin®. The FDA has approved the drug for three uses:

1. repaglinide by itself (i.e., monotherapy)
2. repaglinide in combination with metformin
3. repaglinide in combination with thiazolidinediones

The Orange Book listed two patents for Prandin®:

1. U.S. RE 37,035, which includes product claims and expired March 14, 2009
2. U.S. 6,677,358, which includes combination product and method claims using repaglinide and metformin, and which is set to expire June 12, 2018:

A method for treating non-insulin dependent diabetes mellitus (NIDDM) comprising administering to a patient in need of such treatment repaglinide in combination with metformin.

The ’358 patent originally was listed with the following use code:

U-546–Use of repaglinide in combination with metformin to lower blood glucose.

The Caraco Carve-Out

After Novo Nordisk initiated ANDA litigation against Caraco, Caraco submitted an amended ANDA seeking approval with a carve-out of the repaglinide-metformin combination therapy. The FDA indicated that it would approve Caraco’s proposed carve-out label, but then Novo Nordisk submitted an amended form to modify the use code narrative to conform to the indication on its labeling. Pursuant to that filing, the FDA removed the use code U-546 from the Orange Book listing and substituted a new use code:

U-968–A method for improving glycemic control in adults with type 2 diabetes mellitus.

Because Caraco’s proposed carve-out no longer avoided the method encompassed by the new use code narrative, the FDA would not approve Caraco’s proposed carve-out labeling.

Caraco’s Counterclaim

After the FDA adopted the new use code, Caraco asserted a counterclaim in the ANDA litigation, “requesting an order requiring Novo to change the use code for the ’358 patent” and alleging that the new use code “was overbroad because it incorrectly suggested that the ’358 patent covered all three approved methods of using repaglinide even though it claimed only one approved method.”

The district court granted Caraco’s request, and issued the following order:

Novo Nordisk is hereby directed by mandatory injunction under 21 U.S.C. § 355(j)(5)(C)(ii)(1)(bb) to correct within twenty (20) days from the date of this Order and Injunction its inaccurate description of the ’358 patent by submitting to FDA an amended Form FDA 3542 that reinstates its former U-546 listing for Prandin and describes claim 4 of the ’358 patent in section 4.2b as covering the “use of repaglinide in combination with metformin to lower blood glucose.”

The Federal Circuit Decision

On appeal, the Federal Circuit construed the counterclaim provision narrowly, and reversed the district court. The Federal Circuit read the plain language of clause (bb) as ”authoriz[ing] a counterclaim only if the listed patent does not claim any approved methods of using the listed drug.” Because the patent at issue claimed one of the three approved uses for Prandin®, the counterclaim provision did not apply. Moreover, the court read the main clause as “only authoriz[ing] suits to correct or delete an erroneous patent number or expiration date,” not to correct any alleged errors in the use code narrative.

The Supreme Court Decision

 In a unanimous decision, the Supreme Court reversed the Federal Circuit decision and held that a generic manufacturer can use the counterclaim provision of 21 U. S. C. §355(j)(5)(C)(ii)(I) to “force correction of a use code that inaccurately describes the brand’s patent as covering a particular method of using the drug in question.”

The Supreme Court arrived at its interpretation of the statute after considering together both its “statutory text and context.” The Supreme Court noted that the FDA itself does not review the accuracy of the use code information provided by the innovator patent holder, but “takes that code as a given.” The Supreme Court recalled the context of the counterclaim provision, noting that it was enacted after the 2002 FTC report that highlighted the problem of  “brands’ submission of inaccurate patent information” and the 2002 Federal Circuit decision in Mylan Pharmaceuticals, Inc. v. Thompson, where the court held that there was no private right of action to delist an allegedly improperly listed patent.

The Supreme Court explained:

The statutory scheme, in other words, contemplates that one patented use will not foreclose marketing a generic drug for other unpatented ones. Within that framework, the counterclaim naturally functions to challenge the brand’s assertion of rights over whichever discrete use (or uses) the generic company wishes to pursue. That assertion, after all, is the thing blocking the generic drug’s entry on the market. The availability of the counterclaim thus matches the availability of FDA approval under the statute: A company may bring a counterclaim to show that a method of use is unpatented because establishing that fact allows the FDA to authorize a generic drug via section viii.

The Supreme Court noted that its construction “fit within the statutory scheme” and promoted the Congressional purpose of “facilitating the approval of non-infringing generic drugs.”

Not A Cure-All?

Justice Sotomayor wrote a concurring opinion to discuss problems that still might arise from an overly broad use code. In particular, she notes that correction of an overly broad use code via 21 U. S. C. §355(j)(5)(C)(ii)(I) requires the generic manufacturer to do the following:

submit an ANDA with a paragraph IV certification (which requires a proposed label materially identical to the brand manufacturer’s label)
wait for the brand manufacturer to institute suit
file a counterclaim
litigate the counterclaim
file an ANDA with a section viii statement and a carve-out label

Justice Sotomayor correctly points out that this is a lengthy and expensive process and—perhaps even more significantly—depends on the brand manufacturer bringing an ANDA litigation. The counterclaim provision is just that—available only as a counterclaim in an ANDA suit. By its express terms, it is not available in any other civil action or proceeding.

If the brand manufacturer does not bring an ANDA litigation, the generic manufacturer’s ANDA would be approved, but its labeling would be the same as that of the brand manufacturer, and so might support a finding of liability for inducing infringement. (See my article on AstraZeneca LP v. Apotex, Inc for a discussion of this issue.) Thus, the generic manufacturer may be left with an unsatisfactory choice between staying off the market until the patent at issue expires, or entering the market and risking liability for inducing infringement.

Justice Sotomayor concludes that further action by the FDA or Congress is required to provide a mechanism to “restore the smooth working of a statutory scheme thrown off kilter by an overly broad use code,” and takes the FDA to task for providing “remarkably opaque” guidance “as to what is required . . . in use codes.” Indeed, she does not fault Novo Nordisk for its actions in this case, blaming instead the FDA’s use code instructions.

**Foley & Lardner LLP Involvement In This Case**

One of my colleagues at Foley & Lardner LLP served as an expert witness in this case. I personally had no confidential knowledge or involvement in the proceedings, and based this article entirely on public records.