Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S: Generics May Seek Correction Of Overly Broad Use Codes

May 01, 2012

In a unanimous decision, the U.S. Supreme Court recently held that a generic drug company may use a counterclaim provision of the Hatch-Waxman Act to seek correction of an overly broad use code submitted in connection with a patent listed in the FDA Orange Book.

Under Hatch-Waxman, New Drug Application (NDA) holders (e.g., brand drug companies) are required to provide patent information to the FDA for all of their patents that cover the FDA-approved product and use. For method-of-use patents, the information must include a proposed “use code” that describes the indication or method of use identified in the approved labeling. There is very little guidance as to what constitutes an appropriate use code, and the FDA will automatically accept one without substantive review.

When a generic drug manufacturer later seeks approval to market the drug, it must file an Abbreviated New Drug Application (ANDA) including certification(s) as to how its generic version will avoid infringing each Orange Book-listed patent. A Paragraph IV Certification (certifying that the patent is invalid, would not be infringed, or is unenforceable) constitutes a statutory act of infringement; and if the brand then files a patent infringement suit within 45 days, the FDA will stay the ANDA approval for 30 months or until a court rules in favor of the generic, whichever occurs first. The generic must also match its label to the brand label, particularly with respect to the approved indications and usage.

Alternatively, if the branded drug is approved for use(s) not covered by the Orange Book-listed patent(s), the ANDA applicant may instead submit a “section viii statement” asserting that it only seeks approval to market the drug for unpatented approved use(s). The generic label must also “carve out” information related to the patented indication(s). If there is any overlap between the carve-out label and the brand’s use code, the FDA will not approve the generic drug.

In Caraco, the FDA had approved three uses of Novo’s repaglinide (Prandin®) for treating diabetes: repaglinide alone, repaglinide in combination with metformin, and repaglinide in combination with thiazolinediones. But only the repaglinide-metformin combination therapy was claimed in Novo’s Orange Book-listed method-of-use patent. Since there were unpatented approved uses of repaglinide, the door should have been open for a generic section viii statement, and initially it was because Novo’s original use code narrowly specified the use of the repaglinide-metformin combination to lower blood glucose.

Nevertheless, Caraco’s original ANDA included a Paragraph IV Certification, after which Novo sued Caraco for patent infringement, triggering the 30-month stay. The FDA, noting that repaglinide had been approved for uses beyond what was specified in the original use code, advised Caraco that a section viii statement could lead to earlier market approval. Thus, Caraco submitted a section viii carve-out label. Before the FDA could take further action, however, Novo changed its use code to more broadly recite a method for improving glycemic control in adults with diabetes, without identifying any specifically approved therapy. Consequently, Novo’s new use code overlapped with Caraco’s carve-out label, effectively blocking FDA approval under section viii.

Caraco then filed a counterclaim in the ongoing Paragraph IV suit under 21 U.S.C. §355(j) (5)(C)(ii)(I), which authorizes an ANDA applicant sued for patent infringement to seek “an order requiring the [NDA holder] to correct or delete the patent information submitted by the [NDA holder] under subsection (b) or (c) [of §355] on the ground that the patent does not claim … an approved method of using the drug.” According to Caraco, Novo’s new use code should be corrected because the patent did not cover two approved methods of use.

The District Court granted summary judgment to Caraco and ordered reinstatement of Novo’s original use code. The Court of Appeals for the Federal Circuit, however, reversed that decision, holding that the counterclaim was unavailable because: (i) Novo’s patent covers an approved method of use (the repaglinide-metformin combination); and (ii) use codes are not “patent information” subject to correction. The Supreme Court disagreed on both points.

In reaching its decision as to whether a “patent does not claim … an approved method,” the Court recognized that the meaning of “an” depends heavily on context and that the statutory context and legislative history of the counterclaim provision indicate that “an” means “a particular one.” According to the Court, the purpose of section viii is to provide a mechanism for generics to quickly market drugs that have been approved for unpatented uses. Thus, to fit within this statutory scheme, the counterclaim should be available when the patent does not claim a particular approved use. Regarding the question of whether use codes qualify as “patent information,” the court again looked to statutory context and congressional intent and concluded that this language includes everything the FDA requires NDA holders to disclose about their Orange Book patents.

The Court also found support for its conclusions in the two available remedies of the counterclaim – i.e., correction or deletion of patent information. Under the Court’s reading, the counterclaim provision requires correction of an Orange Book listing when it inaccurately describes the scope of the patent in relation to the approved product or use, or deletion of the listing when the patent does not cover any approved product or use. Also, Novo’s unsuccessful arguments based on the counterclaim’s drafting history only strengthened the Court’s view that the counterclaim is intended to prevent unfair delays to FDA approval of non-infringing generic drugs by offsetting “perceived abuse” of FDA patent listing practices. Such abuse was exemplified in Mylan Pharms,. Inc. v. Thompson, 268 F. 3d 1323 (Fed. Cir. 2001) where an Orange Book-listed patent covered neither the approved drug nor any method of using it, and the generic had no way to challenge the accuracy of the listing. According to the Court, Congress’ later decision to let generics challenge improper listings was an attempt to halt this abuse.

Justice Sotomayor added a lone concurrence emphasizing that Hatch-Waxman is intended to expedite generic drug approval. In particular, she noted that even when the counterclaim provision is available to force correction of overly broad use codes, the steps that must be taken to obtain ANDA approval cost the generic extra time and money and are not even sure to succeed. For instance, if the door is open for a section viii statement but a patent is listed with an overly broad use code, she suggests that the ANDA applicant could file a Paragraph IV Certification, wait to be sued, counterclaim to force correction of the use code and then, if successful, submit a section viii carve-out label. Her concern, however, is that a brand may not wish to commence litigation, in which case this path to approval would be foreclosed.

This may be a reasonable concern because while filing suit will trigger a 30-month stay that would delay ANDA approval and generic market entry, a suit filed under the Caraco  circumstances might conclude in less than 30 months because the generic could win summary judgment on its counterclaim (possibly even before discovery is complete) since it would only have to show that the patent does not claim the use for which generic approval is sought. If the generic’s counterclaim is successful, it could then seek FDA approval through section viii which could be promptly granted because ANDA review would have been ongoing since the date the ANDA was filed. Thus, the brand may not achieve any additional delay by initiating litigation. In reality, however, brands are very likely to file suit because even a short delay to generic market entry could be worth millions of dollars.

Justice Sotomayor also points out that excess litigation might be avoided if the FDA clarifies its “remarkably opaque” use code requirements so generics would not have to resort to the counterclaim provision to clear a path to market entry for non-infringing drugs. Until that happens or until Congress amends Hatch-Waxman, perhaps by creating a sanction for intentionally listing an overly broad use code, a cumbersome path to section viii approval is likely to continue. Even so, section viii has other unique pros and cons to consider. For instance, 180-day market exclusivity can be obtained by the first generic to file an ANDA with a Paragraph IV Certification, but no such exclusivity is available to section viii filers. On the other hand, the 180-day exclusivity only blocks other Paragraph IV-ANDA Applicants from entering the market, not section viii filers. Other issues and litigation strategies will likely arise in the wake of Caraco and other cases involving differences between the scope of listed patents and the scope of FDA approval as well.1



1See, e.g., Bayer Schering Pharma v. Lupin, No. 2011-1143 (Fed. Cir. Apr. 16, 2012).