Federal Circuit Erred in Caraco v. Novo

JURIST Guest Columnist Carlos Angulo, Partner at Zuckerman Spaeder LLP, says that the Federal Circuit ruled incorrectly in a pharmaceutical patent case recently argued before the Supreme Court...
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On December 5, 2011, the US Supreme Court heard oral arguments in Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S. At stake is whether brand name drug companies will be able to thwart generic competition by closing off access to a key drug approval pathway, the "Section VIII" process. The US Court of Appeals for the Federal Circuit ruled that brand companies could close off this pathway. If the Supreme Court affirms the Federal Circuit, it will significantly undermine Congress's goal in the so-called Hatch-Waxman Amendments — ensuring patients' access to affordable generic drugs.

The specific issue in the case concerns the scope of provisions added to Hatch-Waxman in 2003, allowing a company producing a generic drug to file certain counterclaims against the company producing the brand name in patent litigation brought by the brand against the generic. Under these provisions, the generic can obtain a court order requiring the brand to "correct or delete" certain patent information provided by the brand to the Food and Drug Administration (FDA). The question is whether the statute can be used to require the brand to change "use code" information that overstated the brand product's patent coverage.

"Use codes" are descriptions of a product's patented uses that brand companies are required to submit to the FDA for approved products. Accurate use codes are critical to the Hatch-Waxman generic approval framework because the FDA depends on them to determine whether, under the Section VIII process, a generic version of a particular brand product can be approved without the need for costly patent litigation. The Section VIII process allows the FDA to immediately approve a generic product for non-patented uses (even if other uses of the brand product are covered by patents) and to allow the generic to "carve out" of its labeling information regarding patented uses.

In this case, the brand company product — the diabetes drug Prandin (a branded version of the drug repaglinide) — was indicated for three uses, only one of which was patented. However, the brand product maker, Novo Nordisk, submitted use code information to the FDA that was broad enough to encompass both patented and unpatented uses. This approach prevented Caraco, which sought approval of a generic repaglinide product, from obtaining a Section VIII approval for its product because the FDA was unable to determine from the use code which uses of Prandin were patented and which were not. The generic, being required to follow the brand's description of its product, could not carve out any information from the brand label.

The Federal Circuit held that Caraco could not counterclaim against Novo to require the correction of Novo's use code to cover only the single patented use of Prandin. Its decision was based on unduly narrow interpretations of two passages in the counterclaim provisions. First, the Federal Circuit held that the statute's language allowing counterclaims "on the ground that the patent does not claim ... an approved method of using the drug" meant that a counterclaim is only permitted if the brand company patent claimed no approved use of the brand drug — not if the use code covered both patented and unpatented uses. Second, the Federal Circuit held that the "patent information" that could be changed through a counterclaim included only the patent number and expiration date. Both of these narrow interpretations are inconsistent with the plain meaning and structure of the statute.

The Federal Circuit's narrow construction also cannot be squared with Congress's intent. In 2003, the FDA promulgated regulations that included the use code requirements, in an effort to prevent brands from claiming overbroad coverage for their patents. Six months later, Congress enacted the counterclaim provisions to afford generics a means of correcting misleading brand company patent submissions in the courts — the forum the FDA and Congress agreed should address these types of issues. Congress was not simply trying to reach patent submissions where the product claimed no approved use. It had a broader intent in mind, consistent with, and in an effort to reflect, the then-recent FDA regulations.

Under the Federal Circuit's reading of the counterclaim provisions, however, a brand company, through an overbroad use code, can block its generic competitors' access to the Section VIII approval pathway, leaving generics with the sole recourse of costly, prolonged patent litigation, even when the use for which the generic seeks FDA approval is not covered by a patent at all — the precise situation for which Section VIII is intended. In these circumstances, moreover, the generic would have to concede infringement of the brand patent (because it would be unable to remove the patented information from its labeling) and in most circumstances would be forced to delay marketing until expiration of a patent which under the section viii process should be completely irrelevant. Thus, the Federal Circuit's reading of the counterclaim provisions, far from strengthening the Section VIII process, effectively guts it. The Supreme Court should agree this is not the result that Congress intended.

Carlos Angulo is a Partner at Zuckerman Spaeder LLP, and represented Representative Henry Waxman (D-CA) in the Caraco case, filing an amicus curiae brief on his behalf at the merits stage of the Supreme Court proceedings urging reversal of the Federal Circuit decision. Angulo's practice focuses on food and drug law, including litigation, administrative practice before the FDA and legislative policy matters, representing generic drug manufacturers, anti-smoking groups and other clients in the food and drug field.

Suggested citation: Carlos Angulo, Federal Circuit Erred in Caraco v. Novo, JURIST - Sidebar, Jan. 4, 2012, http://jurist.org/sidebar/2012/01/carlos-angulo-drug-patents.php.



This article was prepared for publication by Sean Gallagher, an assistant editor for JURIST's professional commentary service. Please direct any questions or comments to him at professionalcommentary@jurist.org

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