Caraco Pharmaceutical Labs and Sun Pharmaceutical Ind. tried to get a rehearing en banc regarding the counterclaim provision of the Hatch-Waxman Act (HWA).  Novo Nordisk A/S v. Caraco Pharmaceutical Labs and Sun Pharmaceutical Ind., US Court of Appeals for the Federal Circuit (2010-1001).

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.


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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