By Dennis Crouch
Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S, (Supreme Court 2012)
This decision only slightly shifts balance of power in the pharmaceutical industry away from patentees toward generic manufacturers. The case may serve as a good example a complex issue that the Supreme Court appears to understand and deal with in a nuanced fashion.
The FDA maintains a listing of approved drug treatments and any patents that cover the treatment. The listing – known as the Orange Book – is essentially managed by the individual patentee-manufacturers who regularly provide the FDA with updated information of new listings and de-listings. Patentees receive a number of benefits from listing patents in the Orange Book, including constructive standing to sue based upon a generic company's filing of an abbreviated new drug agreement (ANDA) as well as an up-to-30-month stay of FDA approval of any generic versions.
Although the diabetes drug repaglinide has three FDA approved uses, Novo's listed patent covers only one of those methods of use. Relying upon that limitation of coverage, Caraco filed an ANDA application requesting permission to sell the drug for the other two uses but carving out the patented use from its application. Novo then changed its Orange Book listing to indicate that its patent actually covered all three approved uses.
In the ensuing litigation, Caraco filed a counterclaim seeking an order to force Novo to amend its use-code listings. The Federal Circuit, however refused to allow the counterclaim.
In a unanimous decision penned by Justice Kagen, the Supreme Court has reversed, holding that a generic drug manufacturer may employ the counterclaim provision of the Hatch-Waxman Act to force correction of a use code that inaccurately describes the brand's patent as covering a particular method of using a drug.
The Federal Circuit had given the statute a highly technical reading – noting that such a counterclaim for correction was only available if "the patent does not claim … an approved method of using the drug." 21 U. S. C. §355(j)(5)(C)(ii)(I). Since the patent did cover one approved method, the appellate panel majority reasoned that there was no standing to correct the two incorrect listings.
The Supreme Court rejected that analysis as counter to the context surrounding the provision in the law.
The statutory counterclaim we have considered enables courts to resolve patent disputes so that the FDA canfulfill its statutory duty to approve generic drugs that do not infringe patent rights. The text and context of the provision demonstrate that a generic company can employthe counterclaim to challenge a brand's overbroad use code. We accordingly hold that Caraco may bring a counterclaim seeking to "correct" Novo's use code "on the ground that" the '358 patent "does not claim . . . an approved method of using the drug"—indeed, does not claim two.
Justice Sotomayor penned a short concurring opinion calling for further reform to the statute and within the FDA to better ensure that generic drugs can become quickly available for uses that are not covered by any valid patent. The concurring opinion calls the agency to task for failing to exercise its authority in regulating listings in the Orange Book.