One for Generics

Jan Wolfe

Corporate Counsel

06-01-2012

A U.S. Supreme Court ruling in April makes it easier for the makers of generic drugs to bring successful counterclaims against brand-name drug companies that try to thwart them from bringing products to market. In a 9-to-0 decision, the court reversed a ruling by the U.S. Court of Appeals for the Federal Circuit, finding that a district court judge was right to conclude in 2009 that Danish pharma giant Novo Nordisk A/S must correct information it provided to the Food and Drug Administration about its diabetes drug Prandin. The decision should allow Caraco Pharmaceutical Laboratories Ltd., a subsidiary of Sun Pharmaceutical Industries Limited, to market a generic version.

More significantly, the ruling expands the scope of the so-called counterclaim provision of the Hatch-Waxman Act, which lets generic companies challenge the accuracy of patent information that branded drug companies supply to the FDA. In doing so, the ruling sheds light on a murky provision of Hatch-Waxman. Under the law, the FDA won't approve generic drugs for uses covered by patents owned by branded drug makers.

With that in mind, pharma companies have long had an incentive to overstate the patented uses of their drugs. The FDA has made that incentive even stronger by adopting a policy of never second-guessing the patent information that drugmakers supply.

To clamp down on the trend, Congress amended Hatch-Waxman in 2002 to allow generics to counterclaim that brand-name drug companies filed inaccurate patent information with the FDA. Jurists have been parsing the statute ever since, and coming to very different conclusions about when the counterclaim can be brought.

Some of that ambiguity has now been resolved. Relying on legislative intent and policy considerations, the court took a broad view of when generic drug companies can assert the counterclaim provision. The Federal Circuit had taken a much narrower view in its 2-to-1 decision siding with Novo Nordisk. That decision "looked at the counterclaim provision very literally and in isolation," says Aaron Barkoff of McAndrews Held & Malloy, who wasn't involved in the case.

The high court ruling caps a roller coaster of litigation over Prandin. While the FDA had approved three methods of prescribing the drug, Novo Nordisk's patent covers only one method. Caraco sought FDA approval to market its generic version for the two other approved uses. Novo Nordisk tried to block the generic by amending its regulatory filings to claim that the patent actually covers all three approved uses.

After a 2009 trial, Caraco won an injunction forcing Novo to scale back its claims. Caraco moved forward with plans to market its generic, but then Novo convinced the Federal Circuit to set aside the injunction. The Supreme Court granted cert last summer, setting the stage for a December showdown between Winston & Strawn's James Hurst, representing Caraco, and Novo's counsel, Gibson, Dunn & Crutcher's Mark Perry.

Patent experts are abuzz over the ruling. According to Barkoff, this is the first time the Supreme Court has weighed in on a Hatch-Waxman challenge to a brand-name drug.

"This decision is certainly beneficial to generic drug companies because it opens up a new avenue of litigation," says Gerald Flattmann Jr. of Paul Hastings, who represents brand-name drug companies. "This will really motivate generic drug companies to consider potential new strategies."

Andrew Bos, Caraco's top in-house lawyer, adds: "It feels great to be vindicated in our opinion of how to read the act after a long struggle."