Another Brand Name vs. Generic Drug Maker Fight Plays Out in Supreme Court Arguments

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By Tony Dutra

The U.S. Supreme Court engaged in a typical debate of statutory intent versus textual specificity Dec. 5, this time in the context of a patent case challenging the Hatch-Waxman Act's 2003 amendment to address abuses by brand name drug makers (Caraco Pharmaceutical Laboratories Ltd. v. Novo Nordisk A/S, U.S., No. 10-844, argued 12/5/11).

The arguments centered on the act's counterclaim provision, which allows a generic drug manufacturer to challenge the way the brand's underlying drug method-of-use patents are listed.

The generic companies, via appellant Caraco Pharmaceutical Laboratories Ltd., want the Food and Drug Administration to narrow patent use code narratives so that the companies can introduce generic versions with labels that disclaim patented uses. The brand makers, through Novo Nordisk A/S, know that doctors can still infringe by prescribing the patented use despite the label carve out. Novo consequently sought and received FDA support for a broader patent use narrative.

Representing the textualist approach, Justice Antonin Scalia clearly supported Novo's viewpoint despite acknowledging that the counterclaim provision would have limited application. And as usual, on the other side, Justice Stephen G. Breyer clearly could find no other meaningful rationale for Congress's intent in including that provision the 2003 amendment than to allow noninfringing uses.

The attitudes of the remaining justices, however, were not so clearly discernible.

Caraco Fights Orange Book Use Description

Novo owns patents (RE 37,035 and 6,677,358) underlying the drug repaglinide, which the company markets under the brand name Prandin. The ‘035 patent covers the drug itself, but it expired in 2009. The ‘358 patent is on uses of the drug and does not expire until 2018.

The FDA approved three uses of Prandin—by itself, in combination with metformin, and in combination with thiazolidinediones.

Only Claim 4 of the ‘358 patent is at issue in the case. It claims a method for using repaglinide in combination with metformin to treat type 2 diabetes. The FDA, in fact, initially limited the Orange Book use code solely to “Use of repaglinide in combination with metformin to lower blood glucose.”

Caraco sought to offer generic repaglinide and filed an abbreviated new drug application (ANDA), accordingly, with a Paragraph IV certification—21 U.S.C. §355(j)(2)(A)(vii)(IV)—as to the ‘358 patent.

Subsequently, Caraco filed a Section viii statement declaring that it was not seeking approval for the combination with metformin. Soon thereafter, though, Novo requested and the FDA agreed to a change broadening the use code description: “A method for improving glycemic control in adults with type 2 diabetes mellitus.”

In addition, the FDA required Caraco to label its product without disclaiming use with metformin, leaving it in the position of infringing the patent given that label. Responding to Novo's patent infringement lawsuit, the generic drug maker counterclaimed under Section 355(j)(5)(C)(ii)(I), requesting that the use code and description be changed back to the original.

Federal Circuit Reverses Lower Court

The U.S. District Court for the Eastern District of Michigan granted Caraco's motion for summary judgment on the counterclaim, which would have forced the use code revision, but the Federal Circuit reversed. Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories Ltd., 601 F.3d 1359, 95 USPQ2d 1031 (Fed. Cir. 2010) (73 PTD, 4/19/10).

In a 2-1 decision, the court determined that the counterclaim provision is available only when the branded drug maker lists patents that are not related at all to the listed drug. Two terms in the counterclaim provision were key to the majority's view:

• The challenger may invoke the provision “on the ground that the patent does not claim … an approved method of using the drug.” The majority held, “When an indefinite article is preceded and qualified by a negative, standard grammar generally provides that ‘a' means ‘any,' ” and it was thus sufficient that the ‘358 patent claims any one of the three methods of use.

• Second, the remedy sought by asserting the provision would be “to correct or delete the patent information submitted by the holder.” But, the majority said, “patent information” means only “the patent number and the expiration date of any patent,” and does not include the use code.

A subsequent petition for en banc rehearing failed 7-2 . The Supreme Court granted Caraco's petition for a writ of certiorari June 27.

Waxman, U.S. Support Caraco

Caraco's Sept. 6 brief set up the public policy argument by accusing Novo of “gamesmanship” in its FDA actions (188 PTD, 9/28/11). “Using a patent to block the marketing of concededly unpatented uses would be extraordinary under any statute, but especially one designed to expedite generic competition.”

Caraco received the support of one of Hatch-Waxman's original sponsor, Rep. Henry A. Waxman (D-Calif.) and the Office of the U.S. Solicitor General, on behalf of the U.S. government (188 PTD, 9/28/11).

In its brief, Novo argued that Caraco's proper complaint was against the FDA under the Administrative Procedures Act, and the current challenge is really a collateral attack to broaden generic drug makers' options under the counterclaim provision in lieu of a Paragraph IV challenge to the underlying patent (208 PTD, 10/27/11).

Novo's use code description is, in fact, correct, according to the brief. “FDA's requirement of a use code narrative is simply ‘intended to alert ANDA … applicants to the existence of a patent that claims an approved use,' ” Novo said, quoting from the agency's final rulemaking in 2003. 68 Fed. Reg. 36,676 (June 18, 2003).

Oral Arguments on Meaning of ‘Correct.'

James F. Hurst of Winston & Strawn, Washington, D.C., arguing for Caraco, faced questioning from the outset by Scalia and Justice Samuel A. Alito on the meaning of the counterclaim provision text.

Scalia contended that it would have been easy for Congress to write the statute exactly the way Hurst interpreted it—that the generic maker may invoke the provision “on the ground that the patent does not claim … a use asserted by the generic.”

Hurst acknowledged that Congress could have written the provision “more elegantly,” but insisted that the context of the 2003 amendment made that intent clear. He further noted that the generic maker's request of the FDA is to “correct or delete” the patent information, and the ability to “correct” anything meaningful is essentially written out of the text if it applies only to the patent number and the expiration date.

When Hurst acknowledged that such corrections could be reduced to fixing typos, Scalia said, “That's not much, but it's something.”

Scalia faulted Caraco for relying so much on “one word in an immense bill.”

But Hurst insisted that the court give the word practical meaning and concluded by saying, “‘Correct' is surplusage by any meaningful definition.”

Mark A. Perry of Gibson Dunn & Crutcher, Washington, D.C., arguing on behalf of Novo, contended that the use of the word “correct” was for a different reason—that the brand name manufacturer owning a portfolio of patents may have simply listed the wrong patent as covering the use code.

Further, Perry built off Scalia's comment on the scope of the 2003 amendment. He said that document was 415 pages long, and so it is dangerous to hone in on “two clauses in one sentence of a statute” of that length. “This case is not what Congress intended” to address in that amendment, he contended.

Government Supports Caraco, But Did FDA?

The government was granted motions of the solicitor general for leave to participate in oral argument as amicus curiae and for divided argument Nov. 7 (216 PTD, 11/8/11). Benjamin J. Horwich, assistant to the solicitor general, argued in court.

He was questioned immediately about an odd factor that has permeated the litigation of this case—the lack of participation by the FDA.

“Is the position you are presenting the position of the FDA?,” Justice Ruth Bader Ginsburg asked pointedly. Horwich at first indicated that the FDA supported the government's brief, but then clarified his position: “We represent the United States here, and so we speak for FDA and the other agencies of the government who are very concerned here about the competition law effects of this.”

Justice Elena Kagan noted that no one from the FDA was listed on the brief, and Horwich replied, “The names on the brief I think should not be a guide.”

The underlying issue was that brought up by the concurrence in the Federal Circuit's opinion—how much more could the FDA do to resolve this issue at the administrative level.

Horwich said the FDA has only three options in creating the use code narratives: rely on the generic makers to say they have properly carved out noninfringing uses, evaluate the patents themselves, or accept the submissions from the brand name manufacturers.

Horwich discounted the first option because “defeats the whole point of Hatch-Waxman's principle of getting patent issues resolved before regulatory approval.”

As to the second option, Roberts provided his own answer, noting that “the FDA is going to have to hire an awful lot of patent lawyers to review the use codes and their correspondence to the actual patents.”

However, Alito still questioned the third option—the current approach. He asked, “If the patent holder writes a use code that is ridiculously, totally, unreasonably broad, is there anything that FDA can do about that?”

Horwich did not answer the question directly, but claimed it was a “very slippery slope” for the FDA to be doing more.

Caraco's Alternative Remedies Limited

Throughout the oral arguments, Justice Sonia M. Sotomayor asked questions on the practical effect of reading the statute one way or another.

In a colloquy with Horwich, she first noted that Caraco had no way to file for an amended label with a carve out, and Horwich acknowledged that Caraco would be charged with inducement of infringement should the company proceed with the FDA-required label.

When Sotomayor then asked how a court can “get out of the quandary” of providing no remedy, Horwich said that the counterclaim provision “is designed precisely to get out of that quandary.”

However, Sotomayor pressed him, and asked why the FDA does not simply let Caraco proceed with a disclaimer on the label, let the infringement occur, and then wait until that plays out before deciding to reject Caraco's preferred label. Horwich had no response to the general situation posed by Sotomayor's query, saying only that the option was not available to Caraco here.

Sotomayor did not spare Perry, either, though. Novo's counsel repeated the arguments from its brief that Caraco had alternative paths to a remedy via challenges to the FDA, but Sotomayor asked him to assess the odds that Caraco would win such a challenge when deference is due to the agency.

Perry contended that generic drug companies have won challenges under the Administrative Procedure Act in the U.S. District Court for the District of Columbia. He pointed to Purepac Pharmaceutical Co. v. Thompson, 354 F.3d 877 (D.C. Cir. 2004), as one example of a generic winning a case on a request for a carve out despite the high standard of finding that the FDA's action was arbitrary and capricious.

Ginsburg asked why that was not the same fact pattern as this case, and that the arbitrary and capricious action was the FDA's decision “to just accept the brand's use code.”

Perry distinguished the case, though, saying that the brand name maker in Purepac changed its position but the FDA did not change its position accordingly. In the instant case, he said, the FDA went along with change. “Novo has done nothing wrong,” he said.

In a slightly different context, Chief Justice John G. Roberts elicited a comment from Horwich that challenging the FDA under the APA would probably fail.

However, Horwich added, the alternative is to require that the FDA make patent scope decisions. He suggested that the resulting litigation would present a problem in that the agency would be sued repeatedly even if the real parties in interest were the brand name and generic drug companies.

Breyer, Kagan Joined by Usual Textualists?

Breyer joined the discussion in earnest after Perry claimed Novo had done nothing wrong. He quoted the statutory text and, agreeing with the dissent in the Federal Circuit's decision, argued that the statute on its face explicitly covered the facts of this case, requiring a change of the use code narrative.

Kagan and Roberts joined the attack against Novo's position, both returning to the argument that Novo would reduce the use of the counterclaim provision to very limited and not substantive circumstances.

For his part, Perry repeatedly turned to the content of FDA Form 3542 implementing the “patent information” aspects of Hatch-Waxman, as well as to comments made by the FDA in the Federal Register supporting the limited view the agency itself had of the use code narrative.

Breyer disagreed on that interpretation as well, saying that the rules promulgated by the agency require an accurate “description of the patented method or use,” something that clearly could fall under the requirement that the FDA “correct” information. “We have the government here,” he said. “They're telling us that ‘patent information' does cover” the use code narratives.

Even Alito at this point questioned Perry on whether Novo's position means a generic maker cannot contest the situation where its proposed noninfringing use is blocked by the FDA's use code and labeling requirements.

Once again, Perry referred to Caraco's administrative appeal options. But he ultimately argued that his client would win those appeals as well.

“We have complied at every point with the FDA's requirements,” he said. “This case is about a properly working administrative process.”


Federal Circuit decision at http://pub.bna.com/ptcj/101001Apr14.pdf  

Transcript of oral arguments at http://pub.bna.com/ptcj/100844transcriptDec5.pdf