Case Name: Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, Civ. No. 10-844, 2012 U.S. LEXIS 3106 (April 17, 2012) (Kagan, J. delivered unanimous opinion of the Court, Sotomayor, J. delivered concurring opinion), on cert. from Novo Nordisk A/S v. Caraco Pharm. Labs., Ltd., 601 F.3d 1359 (Fed. Cir. 2010)
Drug Product and Patent(s)-in-Suit: PrandinTM (repaglinide); U.S. Pat. Nos. RE37,035 ("the '035 patent") and 6,677,358 ("the ‘'358 patent")
Nature of the Case and Issue(s) Presented: The issue here is whether Congress authorized a generic drug manufacturer to challenge a use code's accuracy through the assertion of a counterclaim against a brand manufacturer in a patent infringement suit. Specifically, is it permissible for a brand manufacturer to submit a use code that encompasses a series of uses if a valid patent covers at least one of those uses? Last, do use codes even constitute "patent information" as that term is understood under 21 U.S.C. § 355(j)(5)(C)(ii)(I)?
In 2005, Caraco Pharmaceutical Laboratories, Limited ("Caraco") filed an ANDA seeking to market a generic version of Novo Nordisk A/S's ("Novo") branded PrandinTM diabetes drug. Novo owned the '035 patent, which covered repaglinide and expired in 2009. In 2004, Novo acquired the '358 patent, which claimed a method of using repaglinide in combination with metformin to lower blood glucose. The '358 patent does not expire until 2018. At the time Caraco filed its ANDA, the FDA had approved three uses for repaglinide, but Novo owned only one patent that covered a single approved use (repaglinide in combination with metformin). Novo did not own patents covering the remaining two FDA-approved uses of the drug. In its ANDA submission, Caraco confirmed that it would not market its generic drug until the '035 patent expired, and filed a Paragraph IV certification with respect to the '358 patent, claiming that the patent was invalid or would not be infringed. Because Novo's use code for the '358 patent represented that the patent only covered repaglinide in combination with metformin, the FDA advised Caraco that it could submit a Section viii statement, carving out the repaglinide/metformin use, but leaving the two other approved uses. Caraco took FDA's advice and filed the Section viii statement. Before the FDA took further action, however, Novo submitted a new use code indicating that the '358 patent covered all three FDA-approved uses, rendering Caraco's proposed section viii carve-out a nullity.
Caraco responded to Novo's use-code change by asserting a counterclaim seeking to compel Novo to correct its use code. On September 24, 2009, the district court determined that Novo had improperly submitted an inaccurate use code and instructed it to correct the code. Novo appealed the decision to the Federal Circuit. On April 14, 2012, the Federal Circuit reversed the district court, finding that Novo's amended use code was proper because the use of repaglinide with metformin constituted "an approved method of using the drug" under 21 U.S.C. § 355(j)(5)(C)(ii)(I). The Federal Circuit also held that the counterclaim provision could not be used to correct use codes, because "patent information" only consisted of patent numbers and expiration dates. Caraco filed a petition for a writ of certiorari to the United Supreme Court, which was granted.
Why Caraco Prevailed: The Supreme Court found that Novo's interpretation of the 21 U.S.C. § 355(j)(5)(C)(ii) counterclaim provision was incorrect. First, the Court focused on Novo's interpretation of the phrase, "the patent does not claim . . . an approved method of using the drug." Novo interpreted this phrase to mean that the counterclaim provision was unavailable so long as the brand manufacturer's patent claimed at least one approved method of using a drug. Specifically, Novo interpreted the word "an" to mean "any." This interpretation was essential to Novo's position, because the disputed use code described the two approved uses that were not covered by Novo's '358 patent, in addition to the covered use. Conversely, Caraco argued that the statutory language allowed a counterclaim when a brand manufacturer's use code identified even a single approved method that was not covered by a claim of a patent. The Court determined that the word "an" in isolation was certainly ambiguous and subject to competing interpretations. But the Court determined that the phrase needed to be considered in light of the objectives of the Hatch-Waxman legislation. Namely, the statutory scheme contemplates that one patented use of a drug should not foreclose marketing a generic version for other unpatented uses. A company may bring a counterclaim to show that a method of use is unpatented because establishing that fact allows the FDA to authorize a generic drug under section viii. The Court also alluded to the fact that if Congress had wanted to use the word "any" as Novo argued, it would have, as it did in nearby § 355(j)(5)(C)(ii)(II). Thus, Caraco's interpretation of the statutory language was correct, and fit within the statutory scheme.
On alternative grounds, Novo also argued that use codes could not be corrected through the counterclaim provision because use codes are not "patent information submitted . . . under subsection (b) or (c)." Novo claimed that the counterclaim provision could only be used to correct patent numbers and expiration dates, not use codes. But the Court again disagreed with Novo's position, finding that use codes are pivotal to the FDA's implementation of the Hatch-Waxman Amendments. The FDA is directed to approve an ANDA filed with a section viii statement when it proposes to market a drug only for an unpatented method of use. In order to carry out this directive, the FDA must be able to determine whether a patent covers a particular method of use (the FDA does not conduct an independent inquiry and simply relies upon brand manufacturer-submitted use codes). The Court noted that a brand manufacturer's submission of over broad use codes tends to defeat the stated legislative objective of approving the use of generic drugs for unpatented methods. The Court also noted that it would not have been necessary for the statutory text to include "correction" in addition to "deletion" of the patent information as a remedy under Novo's interpretation of the statute. Novo argued that the "correction" remedy would apply if a generic manufacturer sought to correct a patent number or expiration date, but the Court dismissed this argument as nonsensical, finding that a defendant would have little incentive to assert such a counterclaim.
Last, the Court rejected Novo's legislative history argument. Novo pointed to a bill that Congress failed to pass that would have allowed a generic company to bring a civil action, as opposed to a counterclaim, to delete or correct patent information. The legislation specifically described "patent information" as including a description of the "approved use covered by the [patent] claim." Novo argued that if Congress had previously defined "patent information" to mean approved uses, its failure to do so clearly in the current Hatch-Waxman legislation was evidence that Congress sought to limit "patent information" to patent numbers and expiration dates. The Court disagreed, noting that the legislation failed to pass for many reasons, and it did not make sense to assume that the proposed legislation failed solely because it defined "patent information" in such a specific manner. The Court noted that the proposed legislation had also contained a provision addressing the importation of prescription drugs, a controversial provision which just as plausibly could have led to the demise of the bill.
