The Supreme Court case Caraco Pharmaceutical Laboratories, Ltd. et al. v. Novo Nordisk A/S et al. addresses the regulatory framework governing the approval of generic drugs under the FDA, specifically focusing on patent information submitted by brand-name manufacturers. When a brand manufacturer seeks FDA approval, it files a new drug application (NDA) that includes the drug's components and proposed labeling. Following this, a generic manufacturer may file an abbreviated new drug application (ANDA) but cannot market a generic drug that infringes on the brand's patent.
To expedite generic drug approval post-patent expiration, the Hatch-Waxman Amendments require brand manufacturers to disclose their patent numbers and expiration dates. The FDA publishes this information in the Orange Book without verifying its accuracy. Generic applicants must provide certifications to assure the FDA that their products do not infringe on existing patents. They can either submit a section viii statement, which carves out patented methods of use, or a paragraph IV certification, which claims the patent is invalid or non-infringing. The latter triggers an infringement lawsuit from the brand manufacturer, delaying generic approval.
In this case, Caraco, the petitioner, seeks to market a generic version of the diabetes drug repaglinide for two FDA-approved uses not covered by Novo's patent, which only claims one use. Caraco initially filed a paragraph IV certification, prompting Novo to sue for infringement. The case centers on the statutory counterclaim provision enabling generic manufacturers to challenge brand manufacturers' patent information submissions deemed inaccurate, particularly regarding claims that do not cover approved methods of using the drug.
Caraco submitted a section viii statement and a proposed label excluding Novo’s patented therapy, but Novo subsequently modified its use code to claim a patent on all three approved methods of using repaglinide. This modification prevented the FDA from allowing Caraco's drug to go to market under section viii due to overlap with Novo's use code. In response, Caraco filed a counterclaim in the ongoing infringement suit, requesting Novo to correct its use code, arguing that the patent did not cover two of the three approved methods. The District Court initially ruled in favor of Caraco, granting summary judgment. However, the Federal Circuit reversed, interpreting the counterclaim's language to require Caraco to prove that Novo's patent did not claim any approved method, which it did not succeed in doing since the patent covered one method. The court also determined that the counterclaim provision did not apply to use codes, as these do not constitute “patent information submitted” under the relevant statutory subsections, which only require the patent number and expiration date.
The ruling established that a generic manufacturer can invoke the counterclaim provision to correct inaccurate use codes that misrepresent the scope of a brand's patent concerning a drug's method of use. The interpretation of "not an" in the phrase “the patent does not claim an approved method” was crucial, with Caraco's reading favorably considered because it aligns with the legislative intent that a drug could have multiple uses, not all covered by a patent. Additionally, the court recognized that use codes qualify as “patent information submitted” under the relevant subsections, as they are integral to the FDA's regulatory process and the implementation of the Hatch-Waxman Amendments.
The counterclaim provision effectively undermines Novo's arguments by clarifying the remedies available. The Court interprets the provision to allow for both "deleting" a patent listing from the Orange Book when no relevant patent exists and "correcting" the listing when a patent's scope is misdescribed. Novo’s interpretation would eliminate the "correct" remedy, limiting actions solely to deletion, which would leave few inaccuracies to correct.
Novo argues based on the drafting history of the counterclaim, highlighting Congress's failure to pass an earlier bill that would have mandated brands to file descriptions of method-of-use patents and allowed generics to challenge those descriptions. However, the Court asserts that the earlier bill's failure resulted from various factors, including its more complex mechanism for challenging patent descriptions. Additionally, a subsequent FDA rule requiring brands to supply use codes diminished the need for the proposed changes in the earlier bill.
Novo also claims that the counterclaim was intended only to address the inability to delete improperly listed patents, referencing the Mylan Pharmaceuticals decision, which indicated generics lacked a cause of action to delist patents. The Court counters that Mylan revealed a broader issue: generics lacked a means to challenge inaccurate patent listings, which could impede the approval of generic drugs. The statutory text supports that the counterclaim is applicable not only to baseless patent listings but also to overbroad ones, as misleading patent information can delay the market entry of generics for drugs that do not infringe any patent.
The Court's opinion, delivered by Justice Kagan, concludes with a unanimous agreement, reversing and remanding the prior decision.
The FDA mandates that brand manufacturers submit use codes, which describe the scope of their patents, when seeking approval for a new drug application (NDA). The FDA accepts these descriptions at face value without verifying their accuracy, impacting the approval process for generic drugs. A critical issue is whether Congress permits generic companies to challenge the accuracy of these use codes through a counterclaim in a patent infringement lawsuit. The relevant statute allows generic companies to seek an order requiring brand manufacturers to correct or delete patent information if it inaccurately claims patent protection for an approved method of using the drug. The ruling affirms that generic manufacturers can utilize this provision to contest misleading use codes.
The FDA oversees the approval process for prescription drugs, requiring brand manufacturers to submit comprehensive data, including safety, efficacy, and proposed labeling. Once a brand drug is approved, other companies can file abbreviated new drug applications (ANDAs) to market generic versions, demonstrating that their drugs are biologically equivalent to the brand-name drug without duplicating safety and efficacy evidence. The approval of an ANDA hinges on the scope and duration of the brand's patents, which can include patents on the drug compound and specific methods of use. The Hatch-Waxman Amendments facilitate this process by directing brand manufacturers to provide relevant patent information, including use codes, which the FDA does not verify for accuracy.
The Orange Book, officially titled Approved Drug Products with Therapeutic Equivalence Evaluations, publishes codes with associated patent numbers and expiration dates for drug products. When a company files an Abbreviated New Drug Application (ANDA), it must confirm to the FDA that its generic drug does not infringe on existing patents. If no patents are listed or all have expired, the generic manufacturer certifies this fact. If patents are still in effect, the applicant has two paths:
1. **Section VIII Statement**: This option allows the generic manufacturer to market the drug for specific methods of use not covered by the brand’s patents. It is typically used when the brand’s patent on the compound has expired, but it retains patents on certain uses. The generic’s labeling must exclude those patented methods, which the FDA may approve, allowing market entry for unpatented uses. However, the FDA will reject the ANDA if the carve-out label overlaps with the brand’s use code, as it does not assess patent scope but relies on the brand’s description.
2. **Paragraph IV Certification**: This approach involves declaring that a listed patent is either invalid or not infringed by the generic drug. This is pursued when the generic seeks to market the drug for all uses or cannot avoid overlap with the brand’s use code. Filing this certification triggers litigation, as it constitutes an act of infringement, granting the brand the right to sue. Consequently, the FDA may delay ANDA approval for 30 months or until a court ruling on the patent's validity or infringement is made.
The potential for lengthy litigation through the Paragraph IV process may ultimately allow the generic to market its drug for all approved uses. Concerns arose in the late 1990s regarding brands exploiting this statutory framework to hinder the entry of generics, leading the Federal Trade Commission (FTC) to investigate and report on these anticompetitive practices.
The FTC Study highlights concerns regarding brand-name pharmaceutical companies submitting incorrect patent information to the FDA, which can impede the approval of generic drugs. A notable case, Mylan Pharmaceuticals, Inc. v. Thompson, illustrated this issue, where a brand listed a new patent that did not actually cover any drug or method, leading to the FDA rejecting a generic application. The Federal Circuit ruled that generic manufacturers had no right to compel the removal of such listings, forcing them to pursue lengthy infringement litigation instead. In response, Congress established a mechanism allowing generic manufacturers to file counterclaims against misleading patent listings under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. This provision enables generic applicants to contest and seek corrections of patent information that improperly blocks FDA approval.
In the current case, the parties involved, Novo and Caraco, are contesting the diabetes drug repaglinide. Novo manufactures the brand Prandin and holds a method-of-use patent for repaglinide in combination with metformin (the ’358 patent), expiring in 2018, while its compound patent (the ’035 patent) expired in 2009. Caraco seeks to market a generic version for two FDA-approved uses of repaglinide, excluding the use with metformin, for which Novo holds a patent. Caraco filed an ANDA and indicated it would not market the generic until the ’035 patent expired. After filing a paragraph IV certification claiming the ’358 patent was invalid or not infringed, Novo initiated an infringement lawsuit. The FDA informed Caraco that it could submit a section viii statement to market its generic for the other two uses of repaglinide, provided its ANDA was otherwise compliant.
In 2008, Caraco submitted a section viii statement to the FDA proposing a labeling carve-out for Novo's patented metformin therapy. However, Novo subsequently changed its use code for the ’358 patent to encompass all three approved methods of using repaglinide for diabetes treatment. This change rendered Caraco’s carve-out insufficient, as it overlapped with Novo’s use code, leaving Caraco with no viable marketing option since the FDA had approved repaglinide for only those three uses. The FDA informed Caraco that it could not utilize section viii to market its drug under these circumstances. In response, Caraco filed a statutory counterclaim in an ongoing infringement suit, seeking an order for Novo to correct its use code, arguing that the ’358 patent does not claim two specific approved methods of repaglinide use. The District Court initially ruled in favor of Caraco, mandating Novo to amend its use code. However, the Court of Appeals reversed this decision, concluding that Caraco had no statutory basis for the counterclaim because the phrase “the patent does not claim an approved method” required proof that the patent claimed no approved methods at all, which was not the case here. Additionally, the court determined that use codes did not qualify as “patent information” under relevant statutory subsections. A dissenting opinion argued that the phrase should include cases where a use code inaccurately reflects the patent's coverage. The Supreme Court granted certiorari and aimed to clarify the statutory language regarding what constitutes a “patent [that] does not claim an approved method” and the definition of “patent information submitted” under specific statute subsections.
Statutory interpretation emphasizes the language of the statute, its specific context, and the broader statutory framework. The counterclaim clause in question is deemed ambiguous; however, it allows a generic manufacturer, like Caraco, to file a counterclaim if a patent does not claim an approved method of using the drug. The interpretation of “not an” becomes pivotal in the debate between Caraco and Novo. Novo interprets it to mean “not any,” suggesting Caraco cannot counterclaim because Novo’s patent includes claims for the drug's use with metformin. Conversely, Caraco argues that “not an” means “not a particular one,” allowing for a counterclaim since the patent does not cover methods involving TZDs or the drug alone. The meaning of “not an” is context-dependent, illustrated through various examples that show how context can alter interpretations. This context undermines Novo’s reliance on dictionary definitions, as the statutory context supports Caraco's view, highlighting that a single drug may have multiple methods of use, only some of which may be patented. The statutory scheme allows for the marketing of generic drugs for unpatented uses even if other uses are patented, as established by the Hatch-Waxman Amendments.
The counterclaim serves as a mechanism for the generic company to contest the brand's claim of patent rights over specific uses of a drug, which is pivotal for the generic's market entry. The statute allows a counterclaim to demonstrate that certain uses are unpatented, enabling FDA approval for a generic drug under section viii. In this case, Caraco aims to market a generic version of repaglinide for two specific uses, which can be approved by the FDA if no patent exists for those uses, even if another use is patented. Novo acknowledges that Caraco could counterclaim if it lacked a valid patent; however, Novo argues that Caraco's counterclaim is invalid due to its existing patent on a different use, despite Caraco's lack of interest in that patented use. Novo contends that the counterclaim becomes irrelevant because of its patent, requiring strong evidence to challenge this interpretation.
Novo further argues that the statute could have included clearer language to impose additional qualifications on the term "an approved method of use." However, the court finds that the natural reading of the statute suffices, and the absence of the phrase "not any" in the counterclaim provision suggests that Congress did not intend for it to apply only to uses without any patent protection. The court notes that if Congress intended a more restrictive interpretation, it could have easily clarified its intent. Additionally, Novo claims that Caraco's counterclaim fails because it does not address "patent information" as defined under the relevant statutes. The court disagrees, asserting that a use code must still qualify as patent information.
The excerpt outlines the legal interpretation of use codes in relation to patent claims, specifically regarding the requirements set forth by the FDA under 21 CFR §314.53. Novo argues that use codes may not be directly tied to patents and can broadly encompass approved indications for drug use, such as treating diabetes. However, the text asserts that Novo's interpretation is flawed, as regulations explicitly require NDA applicants to provide a description of patented methods of use, thereby linking use codes to patent claims. The FDA's authority to enforce these requirements is grounded in sections 505 and 355 of the Federal Food, Drug, and Cosmetic Act. The discussion also clarifies that the term “submitted under” encompasses not only the statutory provisions but also the related regulations, suggesting that all patent-related information, including use codes, falls within the scope of counterclaims. The excerpt references legal precedents that support a broad interpretation of submissions made under federal law, reinforcing the necessity of aligning use codes with patent descriptions.
The term "under" in subsections (b) and (c) refers broadly to patent information required by the FDA as part of its regulatory framework, as established in case law (Eli Lilly, 496 U.S. at 667). This encompasses all patent-related materials the FDA mandates, not just minimal details like patent numbers and expiration dates found in similar statutory phrases. The context highlights the significance of use codes in the FDA's application of the Hatch-Waxman Amendments, which facilitate the approval of Abbreviated New Drug Applications (ANDAs) for unpatented methods of use. Misleading or overly broad use codes can hinder the FDA's approval process for generic drugs.
The counterclaim provision in the statute allows for remedies that mandate a brand to "correct or delete" its patent information. This interpretation maintains the meaning of both remedies: deleting a patent listing when no relevant patent exists and correcting a listing when a patent's scope is misrepresented. Novo's argument that a counterclaim only allows for deletion disregards the statutory inclusion of "correct." Novo's interpretation would limit remedies to situations where a patent does not claim the drug or any approved method, effectively sidelining the correction aspect of the statute. Novo posits that correction could only address clerical errors, but this interpretation is seen as insufficient, as it fails to account for the broader implications of the "correct" remedy as intended by Congress.
Brands have a strong incentive to accurately provide patent numbers and promptly correct any errors to inform generic companies and the FDA, thereby preventing patent infringement. In contrast, generic companies have minimal motivation to file counterclaims that only correct minor errors in the Orange Book. The document argues against the notion that Congress intended to create a legal action merely for correcting typographical errors, referencing TRW Inc. v. Andrews to support the idea that Congress would not render parts of a statute insignificant or superfluous.
Further, it critiques Novo’s interpretation of "patent information," suggesting it undermines the statutory term "correct." The excerpt illustrates scenarios where a generic manufacturer’s counterclaim to correct an expiration date would be ineffective if the patent still claims the drug. It highlights that if a patent is incorrectly listed as still valid when it has lapsed, the remedy should involve deletion of the listing rather than correction.
Novo's historical arguments regarding the drafting of the statute are also dismissed. The company contends that the current interpretation revives a previously rejected scheme from a failed 2002 bill which would have allowed greater powers for generic companies to challenge patent descriptions. However, the document argues that there is no basis to conclude that Congress intended to limit the interpretation of the enacted statute based on the failure of that bill.
Novo’s reliance on the history of previous bills to interpret current legislation is misguided, as the reasons for a bill's proposal or rejection can vary widely. The failure of S. 812, which included provisions related to importing prescription drugs, was influenced by multiple factors, including criticisms of its mechanism for challenging patent claims, which focused more on creating an independent cause of action rather than the specific "patent information" it addressed. Additionally, the FDA's issuance of a rule requiring brands to provide method-of-use patent information likely prompted revisions in the counterclaim provisions, indicating Congress’s intention to align the new counterclaim with existing FDA regulations.
Novo also argues the counterclaim was created solely to address issues raised in the Federal Circuit’s Mylan decision regarding the delisting of improperly listed patents from the Orange Book. However, while Mylan may have highlighted perceived abuses in patent listings, it did not singularly drive the enactment of the counterclaim. Congress considered broader concerns, as evidenced by an FTC study criticizing patent listings and the FDA's rule addressing these issues. Therefore, the legislative evolution signifies that Congress aimed to provide generic companies with a means to challenge the accuracy of brand patent listings, rather than solely responding to the Mylan case.
The Court opines that the FDA cannot approve applications for generic drugs if the brand's patent listings are misleading or overly broad. The statute permits a counterclaim not only when a patent listing is baseless but also when it is overbroad. The Court highlights that Congress's allowance for a counterclaim to correct patent information undermines the brand's arguments, as the appropriate remedy for an improper patent listing is complete delisting. This situation mirrors prior cases, such as Mylan, where misleading patent information could delay or block generic drug approvals.
In the present case, Novo's attempt to prevent Caraco from selling repaglinide for unpatented uses until 2018 exemplifies the risk generic manufacturers face. Unlike a situation where a patent covers no use, a generic company cannot effectively challenge an overbroad use code through paragraph IV certifications, which require identical labeling to the brand's and thus inevitably infringe on valid patents. Therefore, the counterclaim is essential for generic manufacturers to achieve market entry for non-infringing uses.
The Court concludes that the statutory counterclaim allows courts to resolve patent disputes, enabling the FDA to fulfill its duty to approve non-infringing generic drugs. Caraco is permitted to file a counterclaim to correct Novo's use code, as the relevant patent does not claim approved methods for the drug. The Court reverses the judgment of the Court of Appeals and remands the case for further proceedings in line with this opinion.
The Supreme Court's ruling interprets the counterclaim in 21 U.S.C. § 355(j)(5)(C)(ii)(I) to allow generic manufacturers to compel brand manufacturers to amend inaccurate use codes. Justice Sotomayor concurs but emphasizes that while this counterclaim helps address issues with overly broad use codes, it cannot fully resolve them. The statute aims to expedite the market entry of low-cost generics, permitting rapid approval if the generic submits an abbreviated new drug application (ANDA) with a section viii statement that excludes patented methods of use. However, broad use codes hinder this process since the FDA relies on these codes for ANDA approval without assessing their accuracy.
Post-opinion, a generic manufacturer facing a problematic use code must go through a lengthy process involving filing an ANDA with a paragraph IV certification, waiting for the brand to initiate litigation, and potentially correcting the use code via a counterclaim. This method introduces delays and costs not intended by the statute and may not incentivize brand manufacturers to litigate. Furthermore, if the brand does not sue, it remains unclear how the FDA will proceed with approving the generic application while preserving the patent owner's infringement claims.
Generic manufacturers who proceed with a paragraph IV certification may face challenges due to the requirement to market a drug with labeling that is materially identical to the brand manufacturer’s. This situation raises concerns of inducing infringement, as selling a product with such labeling could suggest use of a patented method. If a generic manufacturer files a new drug application (NDA) while a patent covers an approved method of use, the proposed labeling could infringe the patent. The existing statutory framework is disrupted by overly broad use codes, and while the counterclaim allows for filing an Abbreviated New Drug Application (ANDA) with a section viii statement, it does so only after lengthy litigation.
The regulatory system relies on precise use codes, yet FDA guidance for brand manufacturers is unclear. Regulations require brand manufacturers to describe patented methods of use, but the character limit for these descriptions (240 characters) can be inadequate, leading to ambiguity. In a specific case involving Novo, the company initially submitted a narrow use code, which was later amended to comply with FDA requirements. Novo believed its amended use code met regulatory standards, suggesting that descriptions of either the patented method of use or the drug's indications could be submitted. However, the court clarified that this interpretation was incorrect, reflecting the complications that arise from the FDA's opaque regulations.
Brand manufacturers are required to provide information regarding the indication or method of use for the Orange Book 'Use Code' description. This includes a clear description of the approved indication or method of use that they intend for the FDA to include as the 'Use Code.' It has been suggested that a method of use is distinct from an indication, and either can be sufficient as a use code. Prior to the introduction of the counterclaim provision, Congress considered legislation mandating that brand manufacturers submit a description of the approved use related to patent claims, which would allow generic manufacturers to initiate civil actions to correct inaccuracies. However, this proposal was rejected due to concerns about promoting excessive litigation. Without clearer guidance from the FDA on what is required from brand manufacturers concerning use codes, there is a risk that the concerns of Congress regarding unnecessary litigation may materialize.
