The petition for panel rehearing and for rehearing en banc was denied.

As part of the NDA process, the manufacturer must also identify all patents that claim the drug or a method of use. If the patent claims one or more methods of using the NDA drug, FDA forms require a description of each of those processes. This description is commonly known as the “use code narrative.” The FDA assigns a unique number, known as a “use code,” to each description. The FDA publishes a list of drugs, along with the applicable patents and their associated use codes, in the Orange Book.

A manufacturer that seeks to market a generic copy of these listed drugs may submit an abbreviated new drug application (ANDA) in which a generic manufacturer must make a certification that it would not infringe any patent identified in the Orange Book pertaining to its drug. Specifically, the generic manufacturer must select one of four alternatives permitting use of the patented product or process:  (I) no such patent information has been submitted to the FDA; (II) the patent has expired; (III) the patent is set to expire on a certain date; or (IV) the patent is invalid or will not be infringed by the manufacture, use, or sale of the generic drug. 21 U.S.C. § 355(j)(2)(A)(vii).

Often pharmaceutical formulations have multiple uses and applications. After expiration of the patent on the composition itself, only some of those uses may get continued protection as patented methods. If a generic manufacturer wants FDA approval for a use not covered by a method-of-use patent for a listed drug, the generic manufacturer must submit a proposed label to the FDA that does not contain the patented method of using the listed drug. When considering approval of these requests for a use not covered by a patent, the FDA relies on the applicable patent’s use code narrative to determine the scope of the patented method. The FDA approves the statement only where there is no overlap between the proposed carve-out label submitted by the generic manufacturer and the use code narrative submitted by the pioneering manufacturer.

The Hatch-Waxman Act enables a generic manufacturer in a Paragraph IV suit to assert a counterclaim challenging the accuracy of the “patent information” submitted to the FDA:

[The ANDA] applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder under subsection (b) or (c) of this section on the ground that the patent does not claim either– (aa) the drug for which the application was approved; or (bb) an approved method of using the drug. 21 U.S.C. § 355(j)(5)(C)(ii

Congress enacted the counterclaim provision in order to prevent patent holders from making unwarranted or inaccurate claims of patent coverage in the Orange Book. Patent holders previously made such claims in order to delay the onset of competition from generic drug manufacturers, by preventing or delaying FDA approval of a generic manufacturer’s Abbreviated New Drug Application (ANDA).

Novo sells repaglinide under the brand name Prandin, approved for three uses: (1) repaglinide by itself (i.e., monotherapy); (2) repaglinide in combination with metformin; and (3) repaglinide in combination with thiazolidinediones (TZDs).

The Orange Book lists two patents for Prandin: U.S. Patent No. RE 37,035 (the “’035 patent”) for the chemical composition of repaglinide, which expired on March 14, 2009, and U.S. Patent No. 6,677,358 for repaglinide in combination with metformin, which expires on June 12, 2018.

The FDA initially assigned the ’358 patent the use code “U-546–Use of repaglinide in combination with metformin to lower blood glucose.”

Caraco filed an ANDA for the drug repaglinide with a Paragraph III certification for the ’035 patent and a Paragraph IV certification for the ’358 patent. Caraco stipulated that its ANDA would infringe the ’358 patent if it included a label that discussed the combination of repaglinide and metformin. Caraco submitted an amended ANDA declaring that Caraco was not seeking approval for the repaglinide-metformin combination therapy (a carve-out label). Novo got mad and said that the carve-out would render the drug less safe and effective.

Novo then updated its use code narrative for the ’358 patent where the FDA removed the use code U-546 from the Orange Book for Prandin and substituted the new use code “U-968–A method for improving glycemic control in adults with type 2 diabetes mellitus.” The FDA then disallowed Caraco’s section viii statement, because its proposed carve-out label overlapped with the use code U-968 for the ’358 patent. As a result, Caraco’s current label now includes the repaglinide-metformin combination therapy, which is stipulated to infringe claim 4 of the ’358 patent.

Caraco made a counterclaim requesting to change the use code for the ’358 patent in reference to Prandin from U-968 to U-546. Caraco claimed that the use code U-968 was overbroad because it incorrectly suggested that the ’358 patent covered all three approved methods of using repaglinide even though it claimed only one approved method. Caraco also added a patent misuse defense, asserting that Novo misrepresented the scope of the ’358 patent in its use code narrative.

The district court found that Novo had improperly filed an overbroad use code narrative for the ’358 patent and directed Novo Nordisk to correct the description of the ’358 patent by reinstating its former U-546 listing for Prandin and describes claim 4 of the ’358 patent in section 4.2b as covering the “use of repaglinide in combination with metformin to lower blood glucose.”

The ’358 patent claims only one of the three approved methods of using PRANDIN (i.e., repaglinide in combination with metformin). Novo argued that the counterclaim is available only if the ’358 patent does not claim any approved methods. Caraco countered that it is entitled to the counterclaim because the ’358 patent does not claim two of the approved methods of PRANDIN use. In other words, Novo reads “an approved method” in the counterclaim statute as “any approved method” while Caraco reads it as “all approved methods.”

The Federal Circuit shot down Caraco’s chances for a rehearing by extending the rights of the original patent holder:

This court detects no ambiguity in the statutory language. When an indefinite article is preceded and qualified by a negative, standard grammar generally provides that “a” means “any.”

The rest of the counterclaim provision also does not support Caraco’s interpretation. In the context of this case, the statutory language “an approved method of using the drug” refers to the approved methods of using the listed drug, PRANDIN. This language cannot refer to the methods of using Caraco’s generic drug, because the FDA has not yet approved Caraco’s ANDA. Therefore, the Hatch-Waxman Act authorizes a counterclaim only if the listed patent does not claim any approved methods of using the listed drug.

[Legislative] language selected for this Amendment supports this court’s interpretation that “an approved method” means “any approved method.” A patent listing that covers one amongst several approved methods of using a formulation protects that patented method and thus bears a direct relation to the purpose of Orange Book listings. This court does not detect a situation such as the one occurred in Mylan.

As Judge Clevenger points out, Caraco’s real complaint should lie with the FDA, not with Novo. Had it not been for the FDA’s regulatory action, Caraco could have asserted in a Paragraph IV lawsuit that its proposed labeling did not infringe the ’358 patent. It was the FDA, not Novo, that tipped the careful balance in the favor of pioneering manufacturers.

Denied.

Circuit Judges Gajarsa and Dyk dissented:

As the dissent explains, the majority’s opinion adopts an overly narrow construction of “patent information” and an overly broad construction of “an approved method of using the drug.” See id. at 1370-72, 1376-78. Both constructions are irreconcilable with pre-existing FDA regulations, the text of the HWA, and Congressional intent. See id. at 1370-78. I believe rehearing the case en banc is necessary to rectify these improper constructions.

Not only is the majority’s construction of the counterclaim provision erroneous, it also eliminates the careful balance Congress has struck between encouraging pharmaceutical discoveries and ensuring that the American people have access to low cost generic drugs. Specifically, the majority’s opinion seriously undermines Section viii, a critical provision of the HWA that facilitates the approval and marketing of lower-cost generic drugs for uses no longer protected by a patent.

To defeat this Section viii carve-out statement, Novo changed the Orange Book use code associated with the ’358 patent from “use of repaglinide in combination with metformin to lower blood glucose” to “a method for improving glycemic control in adults with type 2 diabetes mellitus.” See id. at 1362-63. The latter use code unmistakably covering both patented and unpatented uses. … This effectively allows a patent holder to extend its monopoly to unpatented uses.

The majority opinion thus eviscerates Section viii. A generic, like Caraco, cannot use Section viii if the pioneering manufacturer’s use code is erroneously broad. With the majority’s blessing, pioneering drug manufacturers now have every incentive to follow Novo’s lead and draft exceedingly broad use codes thereby insulating themselves from generic competition and rendering Section viii a dead letter.

See the original decision here: Novo Nordisk A/S v. Caraco Pharm. Labs., Ltd., 601 F.3d 1359, 1370-78 (Fed. Cir. 2010) (Dyk, J., dissenting).

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The Court of Appeals for the Federal Circuit said that because of the misconduct of Mylan and Alphapharm this was indeed an exceptional case.  Therefore, the district court did not abuse its discretion in awarding the attorney fees, expenses, and expert fees to Takeda amounting to $11,400,000 from Mylan and $5,400,000 from Alphapharm, with interest.

The ’777 patent covers the anti-diabetic drug pioglitazone, for which Takeda has enjoyed commercial success under the name ACTOS®.  Alphapharm and Mylan tried to get approval to produce generic versions of pioglitazone under the Hatch-Waxman Act.  Takeda then sued Alphapharm and Mylan for infringement.

Regarding Alphapharm, the trial court held that the Paragraph IV certification letter was “so devoid of merit and so completely fail[ed] to establish a prima facie case of invalidity that it must be described as ‘baseless.’”  Ouch!

The court also analyzed what it saw as Alphapharm’s litigation misconduct and found that this was “the exceptional case where an examination of the totality of the circumstances amply justifies, indeed compels, the award of attorneys’ fees.”

Then, the court hammered Mylan’s certification letter saying it was filed in bad faith and with no reasonable basis to claim the ’777 patent invalid.  The court discussed how Mylan argued in its Paragraph IV letter that the invention of pioglitazone was obvious based on Takeda’s disclosure of a compound in the ’200 patent and Sohda II (referred to as compound 16 and compound 14, respectively) only to abandon this theory entirely during the litigation.  In addition, the court discussed Takeda’s numerous allegations of litigation misconduct committed by Mylan in its pursuit of an inequitable conduct claim.

Alphapharm argued that its Paragraph IV letter was not baseless under structural obviousness law.  Alphapharm said that its certification letter made out a prima facie case of obviousness and that, contrary to what the district court held, Alphapharm was not required to explain why a skilled artisan would have identified compound b as the lead compound in its certification letter.

The court did not think much of this argument, stating:

… the court methodically examined a number of shortcomings in Alphapharm’s Paragraph IV letter, which were made obvious by Alphapharm’s “constantly shifting set of arguments,” that supported the finding that the certification was baseless. …  The court also catalogued scientific errors in Alphapharm’s certification letter that the court saw as “insidious” and as underscoring that Alphapharm “did not act with due care or in good faith” in filing its certification.  Id. at 237.  The court found that other assertions in Alphapharm’s Paragraph IV letter were baseless because of undisputed evidence of pioglitazone’s superiority and that Alphapharm abandoned these arguments at trial because “they were unsupportable, not because Alphapharm made a tactical decision regarding which argument should be emphasized at trial.”

Mylan argued that the district court based its finding of an exceptional case against Mylan on conjecture rather than requiring Takeda to show clear and convincing evidence.  Mylan also argued that the fact that it ultimately did not win on its claims does not render this case exceptional and that the district court’s decision to allow Mylan to assert its inequitable conduct claim demonstrates that it was not frivolous.

What did the court think of Mylan’s position?

We conclude that the court did not commit clear error in finding that Mylan’s misconduct contributed to this being an exceptional case.  In fact, Mylan’s invalidity argument in its certification letter appears even more baseless than Alphapharm’s.  …  We find it unsurprising, therefore, that the district court characterized Mylan’s defense of the merits of its Paragraph IV letter as “utterly frivolous.”  In light of the scientific errors present in Mylan’s certification letter, the fact that the court was unmoved by Mylan’s decision not to pursue this obviousness claim at trial can hardly be deemed clear error.

Ouch!

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