SCOTUS verdict shines on Caraco in generic 'Orange Book' battle

Sun Pharmaceutical US unit Caraco Pharmaceutical won a major victory for all generic drug makers on 17 April when the US Supreme Court ruled in a unanimous decision that those firms may employ the so-called counterclaim provision of the Hatch-Waxman Act to force brand-name drug manufacturers to correct inaccurate descriptions of their medication's patent as covering a particular method of using the product.

Innovator drug makers must provide to the US FDA descriptions of their method-of-use patents, known as use codes, which the agency publishes in the Approved Drug Products with Therapeutic Equivalence Evaluations, a large volume commonly called the Orange Book, which also contains patent numbers and expiration dates.

The FDA, however, does not attempt to verify the accuracy of the use codes that brand manufacturers supply.

Generic makers consult the Orange Book when filing abbreviated new drug applications (ANDAs) for their products.

Under the Hatch-Waxman law, initially enacted in 1984, generic makers have two options for filing ANDAs seeking approval for products with unexpired method-of-use patents.

For a patented use of the branded drug, generic makers must submit a so-called Paragraph IV certification, stating the patent is invalid, unenforceable or uninfringed by the proposed product – an action that generally results in the innovator firm bringing patent litigation, which triggers a 30-month stay by the FDA on the generic approval.

But in cases where the patent does not cover all of the approved uses of the brand-name drug, the generic maker may seek immediate approval for the unpatented uses by submitting a statement, known as a section viii, which permits the generic firm to "carve out" the patented uses and include only the unpatented uses in the labelling.

The case involving Caraco was triggered when it sought to gain approval of a generic version of Novo Nordisk's diabetes drug Prandin (repaglinide), which has annual US sales of about $230 million.

Bagsvaerd, Denmark-based Novo originally owned a patent for the compound, known as patent 035, but it expired in 2009.

In 2004, Novo also acquired a method-of-use patent for the drug, called patent 358, for the administration of Prandin with metformin – a patent that expires in 2018.

But the FDA approved three uses for Prandin – administration of the compound alone, with metformin or with thiazolidinediones.

Caraco initially filed a Paragraph IV certification in 2005, and Novo brought an infringement suit. So the Detroit, Michigan-based generic maker submitted a section viii and a proposed labelling carving out Novo's patented use of Prandin with metformin.

But before the FDA could approve Caraco's ANDA, Novo changed its use code to indicate that it held a patent on all three approved methods for using Prandin, so US regulators refused to approve the generic version.

So Caraco employed the counterclaim provision of Hatch-Waxman, which was added to the law in 2003, seeking an order requiring Novo to correct the patent information it had submitted to the FDA, pointing out that the patent did not claim two of the three approved methods of using Prandin.

But in its suit, Novo argued that Congress established the counterclaim only to solve the problem raised by the impossibility of deleting an improperly listed patent from the Orange Book.

While a district court denied Novo's motion to dismiss the counterclaim and granted summary judgment for Caraco – ordering the Danish firm to amend its use code for the 358 patent in the Orange Book – the US Court of Appeals for the Federal Circuit reversed that decision in a 2-1 judgment.

The appeals court determined the law did not permit a counterclaim if the method of use patent covered any approved use of the brand-name drug, even if it failed to cover other approved uses. The Federal Circuit also held that use codes were not patent information submitted by the holder under US law and therefore could not be the subject of an order requiring brand-name companies to correct or delete such information.

But writing for the court, Justice Elena Kagan said the statutory counterclaim "we have considered enables courts to resolve patent disputes so that the FDA can fulfill 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 employ the counterclaim to challenge a brand's overbroad use code," she continued.

Writing separately in a concurring opinion, Justice Sonia Sotomayor called on Congress and the FDA to fix the generic approval process.

"In short, the counterclaim cannot restore the smooth working of a statutory scheme thrown off kilter by an overly broad use code," Justice Sotomayor said. "At best, it permits the generic manufacturer to do what the scheme contemplates it should do – file an ANDA with a section viii statement – but only after expensive and time-consuming litigation. A fix is in order, but it must come from Congress or FDA."

She added that "Precisely because the regulatory scheme depends on the accuracy and precision of use codes, I find FDA’s guidance as to what is required of brand manufacturers in use codes remarkably opaque."

Indeed, Justice Sotomayor declared, "in some respects we are here today because of FDA's opacity in describing what is required of brand manufacturers".

In a statement, Sun Pharma said it was "pleased” about the “landmark decision," which it said would "help all generic companies prevent brand companies from improperly delaying or preventing the marketing of generic drugs against their products by misrepresenting their patents to the US FDA".

James Shehan, vice president and general counsel at Novo's US offices, said that while his company is "disappointed" with the decision, he insisted "it appears the Supreme Court has held only that Caraco may challenge the use code narrative for Novo Nordisk's patented method of treating diabetes with repaglinide in combination with metformin".

"Novo Nordisk's use code narrative is, and has always been, correct, and we are confident that further proceedings will show Caraco's challenge to the use code narrative is meritless," he said.