On April 17, 2012, the Supreme Court issued a unanimous decision favorable to generic pharmaceutical companies in Caraco Pharmaceuticals, Ltd. v. Novo Nordisk, No. 10-844 [enhanced version available to lexis.com subscribers]. The Court held that a generic pharmaceutical company may pursue a counterclaim against a brand pharmaceutical company to force a correction of use codes listed with the FDA regarding method-of-use patents. This decision is significant because it allows generic pharmaceutical companies to challenge overly broad use codes, as highlighted below, which could potentially lead to approval, or quicker approval, of more generic drugs.
Background Regarding Use Codes
As part of an application to obtain FDA approval of a drug, brand pharmaceutical companies are required to identify certain method-of-use patents that claim one or more approved uses of the drug. In addition, the brands are required to provide the FDA with a "use code" identifying the use claimed in the patent by specifically referencing the approved labeling for the drug. The FDA does not determine the scope of the patent claims or the use codes, and simply publishes the use codes and identified patents in the FDA "Orange Book" publication.
Generic pharmaceutical companies, in turn, need to address each of the patents listed in the Orange Book before the FDA will approve an application to market a generic version of the same drug. One option available to address method-of use patents is a so-called Section viii statement. Here, the generics certify that they are not seeking approval for any use covered by the method-of-use patents and, instead, they are seeking approval only for other, non-patented, approved uses. In this regard, the patented methods-of-use are "carved out" of the generics' proposed drug labels (also referred to as "skinny labels").
The FDA, however, does not compare the skinny labels with the method-of-use patents to confirm that the patented methods of use were fully "carved out" of the label. Rather, the FDA only considers the use codes provided by the brands, and the FDA will not approve a generic's application if its proposed drug label overlaps with the brand's use code.
Supreme Court Decision
In theory, the brand's use codes should be consistent in scope with the associated method-of-use patents. If the use codes are broader, they could preclude the FDA from approving generic drugs for uses that are not covered by the brand's patents.
The Caraco case involves this tension. The brand's drug is approved for three methods of use, but the brand's patent allegedly only covers one of these methods. Accordingly, the generic submitted a Section viii statement and attempted to carve the patented method-of-use out of its label while seeking approval for the other, non-patented uses. The use code provided by the brand, however, allegedly covered all three uses - the patented use and the two non-patented uses. Accordingly, the FDA would not approve the generic's drug application.
The generic sought to remedy this alleged error by filing a counterclaim in federal court to force the brand to correct the use code (to limit it to the patented method-of-use). The Court of Appeals for the Federal Circuit held that, under the Hatch-Waxman Act, the generic was not entitled to pursue a counterclaim to correct use codes. The Supreme Court reversed, however, and held that the generic rightfully could pursue such a counterclaim. The Court remanded the case for an assessment of the merits of the counterclaim.
Impact of the Decision
In view of the Caraco decision, use codes supplied by the brands may more closely conform to the scope of the method-of-use patents listed in the Orange Book, since brands and generics alike may more critically scrutinize the use codes. And, to the extent the codes are overly broad, we will likely see an increase in counterclaims attempting to correct, thus narrow, the codes. With narrower use codes, it will be easier for the generics to carve the patented methods-of-use out of their proposed drug labels. As a result, it is possible that we could see an increase in the number of, and quicker approval of, applications seeking approval of generic drugs.
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