The U.S. Supreme Court ruled on April 17, 2012, in Caraco Pharmaceutical Labs. Ltd. v. Novo Nordisk A/S, slip no.10-844, that a generic pharmaceutical manufacturer can counterclaim to have a "use code" for a method of use patent corrected in the FDA Orange Book. Generic manufacturers now have a mechanism for challenging use codes in the Orange Book (and possibly other patent information submitted to FDA by brand companies) which should facilitate faster approval of generic drugs.
The manufacturer of a brand-name drug is required to submit to the Food and Drug Administration (FDA) information about patents covering the drug and its approved uses. This information, which is published in the FDA's "Orange Book," includes a description of the scope of the patent known as a "use code." Where a brand drug has several approved uses, a generic drug applicant can carve-out the patented uses from the label for its generic drug, submit a statement to FDA stating that the label does not include the patented method (referred to as a "section viii" statement), and quickly receive FDA approval for the non-patented uses. If, however, the FDA determines that the proposed label with the carved-out use still overlaps with the brand manufacturer's use codes, the FDA will not permit the generic manufacturer from employing section viii to bring its generic drug to market. An overly broad use code for a method of use patent may, therefore, substantially delay FDA approval of a generic drug.
Novo markets the drug Prandin (repaglinide) for three approved uses. The Orange Book lists a method of use patent covering one of these uses. The use code provided by Novo for this patent, however, broadly covers all three approved uses. Because the use code covered all approved uses, when Caraco filed a generic drug application for repaglinide, it could not carve-out the patented use from its label and obtain quick approval for its generic drug. Instead, Caraco listed all of the approved uses in its label and advised FDA that the patent was invalid or would not be infringed (commonly referred to as a Paragraph IV certification).
Novo subsequently initiated a patent infringement suit against Caraco. The lawsuit triggered an automatic stay of approval of Caraco's generic drug application for at least 30 months (or the conclusion of the lawsuit). Caraco counterclaimed to have the use code corrected pursuant to 21 U.S.C. §355(j)(5)(C)(ii)(I). The counterclaim provision authorizes a generic applicant sued for patent infringement to
"assert a counterclaim seeking an order requiring the [brand] to correct or delete the patent information submitted by the [brand] under subsection (b) or (c) [of 21 U.S.C. §355] on the ground that the patent does not claim either —
(aa) the drug for which the [brand's new drug application] was approved, or
(bb) an approved method of using the drug."
The U.S. Court of Appeals for the Federal Circuit earlier held that Caraco lacked a statutory basis to assert a counterclaim against Novo. The Federal Circuit read the phrase "the patent does not claim ... an approved method of using the drug" to require Caraco to demonstrate that Novo's patent does not claim any approved method of use. Because the patent-at-issue claims one approved method of use, the counterclaim was unavailable. The Federal Circuit also ruled that the term "patent information" does not include use codes, but only consists of the patent number and its expiration date.
In reversing the Federal Circuit, the Supreme Court held that "a generic [drug] manufacturer may employ [the counterclaim] provision 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." In doing so, the Supreme Court looked at the statutory context of the counterclaim provision. The provision, the Court found, was enacted to provide a mechanism for generics to challenge inaccurate information in the Orange Book. The Court therefore constructed the phrase "the patent does not claim ... an approved method of using the drug" to refer to a patent that does not claim a particular approved method of using the drug, not all approved methods.
[T]he 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.
Moreover, the Court held that the reference to "patent information" in the statute must include use codes.
Justice Sotomayor, in a concurring opinion, argued that the counterclaim provision does not adequately address the problem of overly broad use codes because the counterclaim provision can only be invoked after a generic applicant files a paragraph IV certification for a method of use patent, and a patent infringement lawsuit has been initiated. This is a costly and time consuming procedure. Justice Sotomayor's concurring opinion suggests that a fix is needed from Congress or FDA, and suggests FDA provide greater clarity as to what is required of brand manufacturers in providing use codes to the agency.
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