It’s happened in most generic product development programs: A likely looking drug product candidate is selected and the due diligence begins. A review of the Orange Book shows one or more “use code” patents listed for the RLD. A review of the actual patent reveals that the use code description (supplied by the RLD holder and not reviewed by FDA prior to publication in the Orange Book) are MUCH broader than what is actually described in the patent. A mistake? Not according to the Federal Trade Commission, which in 2002 issued a study presenting evidence that (shocker) the NDA holders were submitting inaccurate patent information to FDA to prevent/delay the entry of generic versions of the product.

Subsequently, Congress amended the FD&C Act to include a provision allowing generic firms sued for patent infringement in connection with Paragraph IV certifications in ANDA applications to assert a counterclaim requiring the NDA holder to delete or correct any overbroad use codes listed in the Orange Book. In other words, the counterclaim provision allowed the generic company to essentially assert, “Not only am I not infringing, but you’ve got to remove or amend your inaccurate patent information in the Orange Book.” If the generic company was successful at trial, the court would so order.

The crucial language in the amendment to the FD&C Act allows the counterclaim in situations where the (use) patent does not claim “…an approved method of using the drug.” Like anything else in the United States these days, the scope of this language had to be litigated. Thus, Caraco Pharmaceutical Laboratories, et al. v. Novo Nordisk A/S et al began its trek through the federal court system.

To compress and (likely over) simplify, Caraco filed an ANDA for repaglinide and filed Paragraph IV certification for the use patent listed in the Orange Book. Novo sued. However, there were three indications listed in the repaglinide insert, and the use patent covered only one. Caraco then submitted an amendment to the ANDA employing what’s referred to as a “Section viii carve-out” 355(j)(2)(A)(viii). This is a process through which an ANDA applicant can get approval for the non-patent covered indications by “carving out” all references to the patented indications in the labeling submitted for review in the ANDA. This allows FDA to approve the ANDA for the indications remaining in the labeling. Novo responded by revising the description of the use patent to cover all the indications. Result: FDA could not go forward with Caraco’s ANDA because the “carve out” has been nullified by Novo’s rather transparent obstructive revision to the patent code description. Remember, FDA regards it’s role here as strictly administrative, they don’t do any review of what is provided for entry into the Orange Book. So Caraco files a counterclaim as part of the ongoing infringement action and wins in a summary judgment in Federal District Court. In the Federal Circuit Appeals court, the decision is reversed. At the center of the decision is the language where the offending patent must not cover “…an approved method of using the drug”, and, what constitutes the “patent information” the RLD holder must submit to FDA for publication in the Orange book. Novo argues that since the revised description it provided does cover approved uses (all three), no counterclaim is available. Alternatively, they argued that the counterclaim provision cannot “reach” the patent code descriptions since the law requiring submission of patent information specifies submission of only the patent number and expiration date. The Appellate court agreed. The Supreme Court of the United States (SCOTUS) did not.

The Supreme Court’s analysis in reversing the Federal Circuit focused mainly on what Congress’ intent was in passing the amendment, and how, while the language at the center of the controversy could be read either (Novo’s or Caraco’s) way, the statutory construction of the amendment proposed by Novo would substantially eliminate Congress’ intent, i.e., via Novo’s reading, the correction component of the counterclaim would be nullified.

For the argument regarding whether or not the counterclaim provision “reached” patent code descriptions, the Court concluded that the statute’s language and the “broader statutory context” were sufficient to include the patent code descriptions, especially since they are “pivotal” to FDA’s implementation of the Hatch-Waxman amendments.

Notably, the decision was 9-0, most definitely not your typical SCOTUS vote these days.

In a concurrence, Justice Sotomayor posed an interesting hypothetical question. What if Novo hadn’t sued for infringement, but had revised the patent code description as they did after Caraco had submitted the “carve-out”? The counterclaim provision is only available where there is an action for infringement. Judge Sotomayor suggested that Congress and FDA look very carefully at that.

And for all those with an interest in 505(b)(2) applications, the answer is yes, there is also a component in the statute for counterclaims in connection with 505(b)(2) patent infringement actions.