On April 17, 2012, the U.S. Supreme Court held that the
Hatch-Waxman Act provides a generic drug manufacturer (generic)
with a counterclaim to force the branded drug manufacturer (brand)
to correct a use code that inaccurately describes the brand's
patent as covering a particular use for the drug. Caraco Pharm.
Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. ___ (2011).
The Food and Drug Administration (FDA) had approved three uses of
Novo's brand-name drug to treat diabetes. Novo owns a patent
covering only one of the three FDA-approved uses, and Novo had
listed that use in the FDA's Orange Book. In 2005, Caraco filed
an abbreviated new drug application (ANDA) seeking to market its
generic drug under paragraph IV. See 21 U.S.C.
§355(j)(2)(A)(vii)(IV). This prompted a patent infringement
suit by Novo in the Eastern District of Michigan. While the suit
was pending, the FDA advised Caraco that it could seek approval
using the quicker approach to enter the market, section viii, as
long as it did not seek to market its drug for the one use covered
by Novo's patent. See §355(j)(2)(A)(viii). This
would allow Caraco to market its generic for the other two approved
uses, carving out the one patented use. Before the FDA took further
action, Novo amended its use code in the Orange Book to cover all
three FDA-approved uses. As such, Caraco's proposed uses now
overlapped with Novo's use codes. Accordingly, Caraco was no
longer able to seek the shorter route to market under section viii
and instead needed to resort to the lengthier paragraph IV
process.
Caraco responded by filing a counterclaim to "correct"
Novo's use code on the grounds that the patent covers only one
of the three uses. Under an amendment to the Hatch Waxman Act, a
successful counterclaim achieves "an order requiring the
[brand] to correct or delete the patent information submitted by
the [brand in the Orange Book] on the ground that the patent does
not claim . . . an approved method of using the drug." 21
U.S.C. §355(j)(5)(C)(ii)(I). The District Court granted
summary judgment in favor of Caraco, issuing an injunction ordering
Novo to correct its use listing. 656 F.Supp.2d 729, 730 (E.D. Mich.
2009).
The Federal Circuit reversed on two grounds. 601 F.3d 1359 (2010).
First, it read the statute's language of "the patent does
not claim . . . an approved method of using the drug" as
requiring Caraco to prove that Novo's patent does not claim
any approved method of use. Because Novo's patent
covers one approved method (even though it does not cover the other
two listed uses), the counterclaim provision was unavailable to
Caraco. Second, the Federal Circuit read the statute's
"patent information" as referring to the ability to
correct or delete the "patent number and the expiration
date." Thus, the Federal Circuit held that the counterclaim
provision does not grant a remedy to correct use information, which
is submitted pursuant to FDA regulations.
In a unanimous opinion authored by Justice Kagan, the Supreme Court
reversed the Federal Circuit. The Court held that a generic may
employ the counterclaim provision to force correction of a use code
that inaccurately describes the uses of a brand's patent.
Regarding the statutory construction of "not an," the
Court reasoned that a section viii statement allows the FDA to
quickly approve a generic drug for an unpatented use. Thus, the
statute contemplates that a patented use will not preclude market
entry for unpatented uses. Therefore, even though Novo's patent
covered one of the uses, Caraco could use the counterclaim to force
correction of the two unclaimed uses. In addition, the Court held
that a use code qualifies as "patent information" because
it is a description of the patent. Use codes are necessary for the
FDA to implement the Hatch-Waxman Act, so the counterclaim
provision should be read broadly to encompass them.
What This Means for You
The Supreme Court has made it clear that the counterclaim provision of the Hatch-Waxman Act is available to challenge use codes not covered by the brand's patent, even if the brand correctly lists other uses. The Supreme Court's opinion should facilitate scrutiny and correction of use codes by generics. It remains to be seen whether the Court's ruling will constrain brands' submission of uses to the FDA in the first instance, or whether the ruling will act as a springboard to buttress any antitrust claims arising out of erroneous listings in the Orange Book.
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