Generic vs. Brand Drug Tussle Continues In Comments on High Court's Caraco Ruling

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Opposing sides' comments were predictable in the wake of the U.S. Supreme Court's April 17 ruling in favor of generic drug manufacturers as to Food and Drug Administration labeling procedures under the Hatch-Waxman Act.

However, Robert Goldman of Ropes & Gray, East Palo Alto, Calif., had a more measured review of the result. “In the long run, everyone is better off if we know what the rules of the road are,” he told Bloomberg BNA.

The high court held unanimously that the counterclaim provision of the act allows a generic drug maker to force the FDA to change the use code and description of the brand name manufacturer's drug. Caraco Pharmaceutical Laboratories Ltd. v. Novo Nordisk A/S, No. 10-844 (U.S. April 17, 2012) (74 PTD, 4/18/12).

The ruling overturned the U.S. Court of Appeals for the Federal Circuit's conclusion that use of the counterclaim provision was limited to correcting patent numbers and expiration dates, and even at that, only when the patent does not cover any use identified by the use code.

In an April 17 statement to the press, the Generic Pharmaceutical Association applauded the decision, saying that upholding the Federal Circuit's opinion “threatened to eliminate a critical check on brand-name drug manufacturers' ability to block generic competition by providing FDA with misleading and overbroad descriptions of their patents.”

The Pharmaceutical Research and Manufacturers of America has not returned Bloomberg BNA's request for comment and has yet to post a statement on its website.

Other defenders of patent owners--the brand name firms in this case--responded, however. “There is a serious danger that by undermining the value of pharmaceutical patents, we are discouraging research and development, and thereby decreasingly the development of new, lifesaving medications,” according to Richard A. Samp of the Washington, D.C.-based Washington Legal Foundation.

Battle Over Use Codes in Drug Labels.

The situation at issue in the case occurs when the patent related to a brand name drug covers some but not all of the FDA-approved uses.

In the instant case, Novo Nordisk A/S 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 has approved use of the drug for unpatented uses as well, though.

The FDA allowed Novo to create a use description that covers all uses, including the unpatented ones. It further denied generic maker Caraco Pharmaceutical Laboratories Ltd.'s demand to fix the description so as to be aligned with the patented uses only.

In infringement litigation initiated by Novo, Caraco counterclaimed under 21 U.S.C. §355(j)(5)(C)(ii)(I), requesting that the FDA narrow the use code and description.

A 2-1 Federal Circuit panel disagreed on how to interpret the provision, with the majority favoring Novo's view. Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories Ltd., 601 F.3d 1359, 95 USPQ2d 1031 (Fed. Cir. 2010).

The Supreme Court reversed. “We cannot say that the counterclaim clause is altogether free of ambiguity,” the court admitted, in an opinion written by Justice Elena Kagan. “But when we consider statutory text and context together, we conclude that a generic manufacturer in Caraco's position can use the counterclaim.”

Hatch-Waxman “contemplates that one patented use will not foreclose marketing a generic drug for other unpatented ones,” the court said. “Within that framework, the counterclaim naturally functions to challenge the brand's assertion of rights over whichever discrete use (or uses) the generic company wishes to pursue.”

Justice Sonia M. Sotomayor filed a concurring opinion criticizing the FDA's “opaque” regulations on use codes and descriptions, and identifying the difficulty for a generic drug maker following the Hatch-Waxman process even under the court's interpretation.

GPhA, Waxman Applaud Decision.

“This ruling is a win for generic competition and, more importantly, a win for consumers,” said Ralph G. Neas, president and CEO of GPhA in the organization's statement to the press. “We commend the Supreme Court for preventing Novo Nordisk's actions from becoming a playbook for all brands and costing consumers millions of dollars by delaying the introduction of affordable, lifesaving generic drugs.”

He added, “The Supreme Court's unanimous ruling … provides generic manufacturers with a clear judicial remedy for addressing the problem.”

Hatch-Waxman's original sponsor, Rep. Henry A. Waxman (D-Calif.), had filed an amicus brief supporting Caraco's arguments in the case.

In a statement after the opinion was published, Waxman wrote that he was pleased with the decision. “While the issues in the case may seem arcane, the fact of the matter is that allowing brand companies to exaggerate the breadth of their patent protections in their listings with FDA served as a real block to generics,” he said. “This decision is in the interest of American consumers who should have the benefit of competition and lower prices.”

WLF Disagrees With Court's View.

Samp and colleague Daniel J. Popeo had submitted the Washington Legal Foundation's brief in support of the Federal Circuit's approach.

“We are obviously disappointed by the court's decision,” Samp told BNA April 17. He faulted the court for “reasoning backward” from one intent of Hatch-Waxman, to assist generic companies in gaining FDA approval. However, he said, “Another important purpose [of the act] was to minimize the amount of litigation that patent holders would face while defending their patents.”

The court would have come to a different conclusion had it approached statutory construction by its “usual method,” Samp argued. “Normally, it construes a statute based on its most natural reading,” he said, “and by far the most natural reading here is that Congress did not intend to permit generics to sue if the Orange Book listing includes any patented use for the product.”

Samp suggested that the court's decision could have negative implications for patent holders and for investment in drug research and development. “The Supreme Court's expansive interpretation of the right of action at issue here will no doubt lead to increased numbers of patent challenges being asserted,” he said. “That may be a good thing from the standpoint of those who seek earlier generic entry as a means of bringing about short-term price decreases, but there is a serious danger [of] undermining the value of pharmaceutical patents.”

Measured Review of Opinion.

Goldman, in an April 17 interview with Bloomberg BNA, first applauded Kagan for being “exceptionally frank about the fact that there's an ambiguity in the statute.” Having found that ambiguity, he said, the court was then “driven by what it has consistently thought Hatch-Waxman stood for,” a balancing between brand name and drug manufacturers' interests. “The court resolved the ambiguity in the statute,” he asserted firmly.

“Faced with the effect of Novo's contention--that the FDA won't review [a use code] and a court can't review it--the court said that it didn't seem right that nothing would happen,” Goldman reasoned. “That's certainly a plausible reading of the statute and of Congress's intent.”

Bloomberg BNA asked Goldman to address Sotomayor's concern, expressed in her concurrence, that brand name companies will defer decisions on filing an infringement lawsuit until after the generic makers file abbreviated new drug applications. She argued that such a strategy will put a new burden on generic companies: introducing a new product with a label likely to be infringing and thus invoking litigation from the patent holder after expending time and money in product launch.

Goldman did not see that as a likely scenario, however. “The 30-month stay is such a valuable procedural part of the Hatch-Waxman structure,” he said, referring to the delay in ANDA approval by the FDA if an infringement lawsuit is filed, that “you're almost certainly going to take it.”

However, he was more intrigued by Sotomayor's call on the FDA to clear up the “opacity” of its current guidelines, which in the instant case appeared to confuse both Novo and Caraco.

“Someone has to deal with this, either the courts or Congress,” he said, though he noted that the court “passed it back to FDA and private parties to bring the issue to Congress.”

Nevertheless, he said, “The Supreme Court obviously took the first step today, to refocus the debate.”

By Tony Dutra  

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