Supreme Court Sides With Generic Drug Manufacturers, Closes Loophole In Hatch-Waxman Act

In Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S, the Supreme Court has unanimously held that generic drug manufacturers may invoke the counterclaim provision of the Hatch-Waxman Act, 21 U.S.C. § 355(j)(5)(C)(ii)(I), to force branded drug manufacturers to correct overbroad descriptions of their method-of-use patents in the Food and Drug Administration's "Orange Book." The Court's decision closes a loophole whereby uncorrected, overbroad "use codes" could effectively prevent generic drug manufacturers from "carving out" patented uses from their applications to sell generic drugs.

Statutory and Regulatory Background

Generic drug manufacturers often submit Abbreviated New Drug Applications ("ANDAs") to the Food and Drug Administration ("FDA") seeking authorization to sell a drug for certain uses. FDA, however, cannot grant that authorization if the sale would infringe a branded drug manufacturer's patent. The Hatch-Waxman Act requires branded manufacturers to submit to FDA information about their patents, including patent numbers, expiration dates, and "use codes" describing particular methods of use covered by their patents. FDA publishes this information in its "Orange Book" but does not try to verify its accuracy.

In many cases, the branded drug manufacturer's patent on the drug itself has expired, but the branded manufacturer still holds a patent on certain methods of using the drug. In that case, generic manufacturers can avoid infringement by "carving out" the patented use through a so-called "section viii" filing under 21 U.S.C. § 355(j)(2)(A)(viii) certifying that they will market the drug only for unpatented uses. But that approach will not work if the use code in the Orange Book overstates the breadth of the method patent and covers both patented and unpatented uses: FDA assumes the patent information is accurate and will not approve an ANDA if the generic's proposed label overlaps at all with the use code in the Orange Book.

In 2003, Congress adopted amendments to the Hatch-Waxman Act authorizing generic manufacturers to counterclaim to "correct or delete" erroneous Orange Book information if a branded drug manufacturer sues for patent infringement based on submission of an ANDA. In particular, ANDA applicants may counterclaim to "correct or delete the patent information submitted by the holder ... on the ground that the patent does not claim ... an approved method of using the drug." 21 U.S.C. § 355(j)(5)(C)(ii)(I). In this case, the Federal Circuit held that the counterclaim provision is limited to cases where the generic seeks complete delisting of a patent from the Orange Book and is not available in cases where the Orange Book listing covers both patented and unpatented FDA-approved uses. The Federal Circuit also held that the "patent information" that may be corrected by counterclaim is limited to patent numbers and expiration dates and does not include use codes. As a practical matter, the Federal Circuit's decision greatly reduced the usefulness of section viii carve-out filings because a brand manufacturer could submit overly broad use codes, yet FDA would not review them substantively and the...