Federal Circuit Denies Rehearing Petition in PRANDIN Patent Use Code Case; Dissents Argue that “Section viii” Carve-Outs Eviscerated

By Kurt R. Karst – 

Earlier today, the U.S. Court of Appeals for the Federal Circuit denied Caraco Pharmaceutical Laboratories, Ltd.’s (“Caraco”) and Sun Pharmaceutical Laboratories, Ltd.’s (“Sun”) Petition for Panel Rehearing and Rehearing en banc of an April 14, 2010 Federal Circuit decision in Novo Nordisk A/S v. Caraco Pharmaceutical Laboratories, Ltd. addressing whether the patent delisting counterclaim provisions at FDC Act §505(j)(5)(C)(ii)(I), as added by the Medicare Modernization Act, may be used to correct or delete an Orange Book-listed Patent Use Code (“PUC”).  Interest in the case has been high, as evidenced by the amicus briefs submitted by GPhA, Mylan, Teva, Apotex, Impax, and the Consumers Federation of America.

FDC Act §505(j)(5)(C)(ii)(I) states that:

If an owner of the patent or the holder of the approved application under [FDC Act § 505(b)] for the drug that is claimed by the patent or a use of which is claimed by the patent brings a patent infringement action against the applicant, the applicant may assert a counterclaim seeking an order requiring the holder to correct or delete the patent information submitted by the holder under [FDC Act § 505(b)] or (c) on the ground that the patent does not claim either – (aa) the drug for which the application was approved; or (bb) an approved method of using the drug.

As we previously reported (here and here), last year the U.S. District Court for the Eastern District of Michigan (Southern Division) ruled and issued an Order and Injunction requiring Novo Nordisk, Inc. (“Novo”) to change an Orange Book-listed PUC  for a patent (U.S. Patent No. 6,677,358 (“the ’358 patent”)) on its drug product, PRANDIN (repaglinide) Tablets, as a result of Caraco’s FDC Act §505(j)(5)(C)(ii)(I) counterclaim.  Novo appealed and the Federal Circuit reversed and vacated the district court’s judgment in a 2-1 decision.

The Federal Circuit, in its April 2010 majority opinion, ruled that Caraco “does not have a statutory basis to assert a counterclaim requesting” a court to enter an order to replace Novo’s new PUC with the former PUC.  First, “the Hatch-Waxman Act authorizes a counterclaim only if the listed patent does not claim any approved methods of using the listed drug.”  Second, “the terms of the counterclaim provision do not authorize an order compelling the patent holder to change its use code narrative,” just the patent number and expiration date of an Orange Book-listed patent.  Judge Dyk lodged a 28-page dissent arguing that “the majority’s crabbed view of the statute sanctions an unjustified manipulation of the Orange Book,” and that FDC Act §505(j)(5)(C)(ii)(I) should be available with respect to challenging PUCs, because “all Orange Book information is ‘patent information.’”

The Federal Circuit’s July 29th Order denying Caraco’s/Sun’s rehearing petition is brief, stating, in part, that “[t]he petition for rehearing was considered by the panel that heard the appeal, and thereafter the petition for rehearing en banc, the response to the petition, and briefs amici curiae were referred to the circuit judges who are authorized to request a poll on whether to rehear the appeal en banc.  A poll was requested, taken, and failed.” 

Judges Gajarsa and Dyk, however, took the opportunity to rail against the majority’s decision, stating that:

• The majority’s opinion construes the counterclaim provision contrary to its manifest Congressional purpose.  That construction renders 21 U.S.C. § 355(j)(2)(A)(viii) (“Section viii”) carve-out statements a virtual nullity and leaves generic drug manufacturers without a remedy to challenge inaccurate Orange Book listings with respect to method of use patents.

• With the majority’s blessing, pioneering drug manufacturers now have every incentive to follow Novo’s lead and draft exceedingly broad use codes thereby insulating them-selves from generic competition and rendering Section viii a dead letter.

• Finally, the majority opinion effectively invalidates the FDA’s effort to define “patent information” for the purposes of the counterclaim provision.  This invalidation is especially troubling given Congress’s explicit approval of those regulations.  Without even requesting the views of the FDA, the majority opinion refuses to give effect to the FDA’s interpretation of an important statutory term.

As we previously noted, the number of PUCs have doubled since FDA permitted firms to design their own descriptors in 2003.  Whether the Federal Circuit’s decision will make “section viii” statements a nullity remains to be seen.  In the meantime, we would not be surprised if there is a push to get Congress to amend the FDC Act.