Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S
566 U.S. ___ (2012)

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Justia Opinion Summary
Once the FDA has approved a brand manufacturer's drug, another company could seek permission to market a generic version pursuant to legislation known as the Hatch-Waxman Amendments. See Drug Price Competition and Patent Term Restoration Act of 1984, 98 Stat. 1585. The relevant statute at issue in this case provided that a generic company "may assert a counterclaim seeking an order requiring the [brand manufacturer] to correct or delete the patent information [it] submitted... under [two statutory subsections] on the ground that the patent does not claim... an approved method of using the drug." 117 Stat. 2452, 21 U.S.C. 355(j)(5)(C)(ii)(I). At issue in this case was whether Congress had authorized a generic company to challenge a use code's accuracy by bringing a counterclaim against the brand manufacturer in a patent infringement suit. The Court held that a generic manufacturer could employ this provision to force correction of a use code that inaccurately described the brand's patent as covering a particular method of using the drug in question. Therefore, the Court reversed the judgment of the Federal Circuit.

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .

SUPREME COURT OF THE UNITED STATES

Syllabus

CARACO PHARMACEUTICAL LABORATORIES, LTD., et al. v. NOVO NORDISK A/S et al.

certiorari to the united states court of appeals for the federal circuit

No. 10–844. Argued December 5, 2011—Decided April 17, 2012

The Food and Drug Administration (FDA) regulates the manufacture, sale, and labeling of prescription drugs. A brand-name drug manufacturer seeking FDA approval for a drug submits a new drug application (NDA) containing, among other things, a statement of the drug’s components and proposed labeling describing the uses for which the drug may be marketed. See 21 U. S. C. §§355(b)(1), (d). Once the FDA has approved a brand manufacturer’s drug, another company may seek permission to market a generic version by filing an abbreviated new drug application (ANDA). See §§355(j)(2)(A)(ii), (iv). But the FDA cannot authorize a generic drug that would infringe a brand manufacturer’s patent. To facilitate the approval of generic drugs as soon as patents allow, the Hatch-Waxman Amendments require a brand manufacturer to submit its patent numbers and expiration dates, §355(b)(1); and FDA regulations require a description of any method-of-use patent, known as a use code, see 21 CFR §§314.53(c)(2)(ii)(P)(3), (e). The FDA does not attempt to verify the accuracy of the use codes that brand manufacturers supply. Instead, it simply publishes the codes, patent numbers, and expiration dates in a large volume known as the Orange Book.

          After consulting the Orange Book, an ANDA applicant enters one of several certifications to assure the FDA that its generic drug will not infringe the brand’s patent. If the patent has not expired, an applicant may fulfill this requirement in one of two ways. First, it may submit a so-called section viii statement asserting that it will market the drug for only those methods of use not covered by the brand’s patent, see 21 U. S. C. §355(j)(2)(A)(viii), and proposing a label that “carves out” the still-patented method(s) of use, see 21 CFR §314.94(a)(8)(iv). The FDA will not approve an ANDA with a section viii statement if the proposed label overlaps at all with the brand’s use code. Second, the ANDA applicant may file a so-called paragraph IV certification stating that the brand’s patent “is invalid or will not be infringed by the [generic drug’s] manufacture, use, or sale.” 21 U. S. C. §355(j)(2)(A)(vii)(IV). Such filing is treated as an act of infringement, giving the brand an immediate right to sue and resulting in a delay in the generic drug’s approval.

          In 2002, the Federal Trade Commission (FTC) issued a study detailing evidence that brands were submitting inaccurate patent information to the FDA in order to prevent or delay the marketing of generic drugs. In response, Congress created a statutory counterclaim available to generic manufacturers sued for patent infringement. The provision allows a generic manufacturer to “assert a counterclaim seeking an order requiring the [brand] to correct or delete the patent information submitted by the [brand] under subsection (b) or (c) [of 21 U. S. C. §355] 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). This case concerns the scope of the counterclaim provision.

          Respondents (collectively Novo) manufacture the brand-name version of the diabetes drug repaglinide. The FDA has approved three uses of the drug, but Novo’s method-of-use patent claims only one. Petitioners (collectively Caraco) wish to market a generic version of the drug for the other two approved methods of use. Caraco initially filed a paragraph IV certification and, considering this an act of infringement, Novo brought suit. Caraco then submitted a section viii statement and a proposed label carving out Novo’s patented therapy. But before the FDA could approve Caraco’s ANDA, Novo changed its use code to indicate that it held a patent on all three approved methods of using repaglinide. Because Caraco’s proposed label now overlapped with Novo’s use code, the FDA would not permit Caraco to employ section viii to bring its drug to market.

          Caraco filed a statutory counterclaim in the ongoing infringement action, seeking an order requiring Novo to “correct” its use code because the patent did not claim two of the three approved methods of using repaglinide. The District Court granted Caraco summary judgment, but the Federal Circuit reversed. It read the counterclaim’s phrase “the patent does not claim . . . an approved method of using the drug” as requiring Caraco to demonstrate that Novo’s patent does not claim any approved method of use; because the patent covers one approved method, the counterclaim was unavailable. The court also ruled that the counterclaim provision does not reach use codes because they are not “patent information submitted by the [brand] under subsection (b) or (c)” of §355. That information, the court concluded, consists only of the patent number and expiration date expressly required by the statutory provisions.

Held: A generic manufacturer may employ the counterclaim provision to force correction of a use code that inaccurately describes the brand’s patent as covering a particular method of using a drug. Pp. 10–24.

     (a) The parties first dispute the meaning of “not an” in the phrase “the patent does not claim . . . an approved method of using the drug.” Novo contends that the counterclaim is available only if the patent claims no approved method of use, but Caraco reads this language to permit a counterclaim whenever a patent does not claim the particular method that the ANDA applicant seeks to market. In isolation, either of these readings is plausible, so the meaning of the phrase “not an” turns on statutory context, see Johnson v. United States, 559 U. S. ___, ___. This context favors Caraco: Congress understood that a drug may have multiple methods of use, not all of which a patent covers; and a section viii statement allows the FDA to approve a generic drug for unpatented uses so that it can quickly come to market. The statute thus contemplates that one patented use will not foreclose marketing a generic drug for other unpatented ones. Within this scheme, the counterclaim naturally functions to challenge the brand’s assertion of rights over whichever discrete uses the generic company wishes to pursue; the counterclaim’s availability matches the availability of FDA approval under the statute. Pp. 11–15.

     (b) The parties further dispute whether use codes qualify as “patent information submitted by the [brand] under subsection (b) or (c)” of §355. A use code, which is a description of the patent, surely qualifies as “patent information.” Novo nonetheless contends that use codes are not “submitted under” subsections (b) and (c) because those provisions expressly require an NDA applicant to provide only “the patent number and the expiration date of any patent” claiming the drug or a method of its use. But §§355(b) and (c) also govern the regulatory process by which brands provide additional patent information to the FDA. The term “under” is broad enough to include patent information, like use codes, that brands submit as required by this scheme. This reading draws support from the Court’s prior decisions in e.g., Eli Lilly & Co. v. Medtronic, Inc., 496 U. S. 661 –668, and Ardestani v. INS, 502 U. S. 129 ; and it is bolstered by Congress’s use of the narrower phrases “described in” and “prescribed by” in neighboring provisions. See §§355(c)(2), (d)(6). Again, the conclusion that use codes are “submitted under” §§355(b) and (c) fits the broader statutory context. Use codes are pivotal to the FDA’s implementation of the Hatch-Waxman Amendments, and so it is unsurprising that the counterclaim provision’s language sweeps widely enough to embrace them. Pp. 15–18.

     (c) The counterclaim provision’s description of available remedies dispatches whatever remains of Novo’s arguments. The Court’s reading gives content to both remedies: It “delete[s]” a listing from the Orange Book when the brand holds no relevant patent and “correct[s]” the listing when the brand has misdescribed the patent’s scope. By contrast, Novo’s interpretation would all but read “correct” out of the statute. If, as Novo contends, the counterclaim is available only where the patent claims no approved method of use, the remedy will always be to delete the patent information. And if the counterclaim reaches only patent numbers and expiration dates, the Orange Book will include few if any mistakes in need of correction. Pp. 18–20.

     (d) Novo advances two arguments relating to the counterclaim’s drafting history, but neither overcomes the statutory text and context. The company first points out that Congress failed to pass an earlier bill that would have required brands to file descriptions of method-of-use patents and would have allowed generic companies to bring civil actions to “delete” or “correct” the information filed. Because that bill would have allowed a generic applicant to challenge overbroad descriptions of a patent, Novo contends that this Court cannot read the statute that was eventually enacted as doing the same. But the earlier bill contained numerous items that may have caused its failure. And the limited criticism of its mechanism for challenging brands’ descriptions of their patents focused on the creation of an independent cause of action—stronger medicine than the counterclaim at issue here. Finally, between that bill’s demise and the counterclaim’s enactment, the FDA issued a rule requiring brands to supply use codes. The counterclaim provision’s drafters thus had no need to require this information.

     Novo next contends that Congress established the counterclaim only to address the impossibility of deleting an improperly listed patent from the Orange Book—a problem that had come to light when the Federal Circuit held in Mylan Pharmaceuticals, Inc. v. Thompson, 268 F. 3d 1323, that generics had no cause of action to delist a patent. Novo thus contends that the counterclaim is a mere delisting provision. But this Court thinks Mylan alerted Congress to a broader problem: that generic companies generally had no avenue to challenge the accuracy of brands’ patent listings, and that the FDA therefore could not approve proper applications to bring inexpensive drugs to market. Again, the proof of that lies in the statute itself—its text and context demonstrate that the counterclaim is available not only (as in Mylan) when the patent listing is baseless, but also (as here) when it is overbroad. Moreover, Congress’s equation of the two situations makes perfect sense. In either case, the brand submits misleading patent information to the FDA, delaying or blocking approval of a generic drug that infringes no patent and thus, under the statute, should go to market. Pp. 20–24.

601 F. 3d 1359, reversed and remanded.

     Kagan, J., delivered the opinion for a unanimous Court. Sotomayor, J., filed a concurring opinion.

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