By Kevin E. Noonan —

On April 14th, the Federal Circuit
rendered a decision construing statutory language in a rather straightforward
and unremarkable (albeit not unanimous) opinion.  But the statutory language at issue involved the 2003
Medicare Prescription Drug Improvement and Modernization Act, which amended the
1984 Drug Price Competition and Patent Term Restoration Act (colloquially known
as the Hatch-Waxman Act), thus raising the opinion's significance.

The statutory provisions at issue involve the
requirements for listing patents claiming drug products or their uses in the
Orange Book.  The statute requires
an innovator and approved New Drug Application (NDA) holder to identify these
patents by patent number and expiration date.  For patents claiming uses (more properly, methods of use) of
a regulated drug, the FDA proscribes "use codes" which are published
in the Orange Book as well.

For a use not covered by an Orange Book listed
patent, a generic drug manufacturer who files an Abbreviated New Drug
Application (ANDA) must submit a proposed label for the unpatented use as well
as a statement under 21 U.S.C. § 355(j)(2)(A)(viii) (a "Section viii"
statement) that the use does not infringe any listed patent.  Approval of the ANDA requires that the
proposed label does not overlap with any patented method (a "carve-out").

As part of the litigation provisions of the
Hatch-Waxman Act, an ANDA filer can file a counterclaim in ANDA litigation that
challenges the accuracy of the patent information submitted by the innovator,
on two grounds — either that the patent doesn't claim the approved drug or an approved
method for using the drug (which is defined by the use codes and the innovator
drug label).  This part of the law
was enacted as part of the MMA amendments, in response to a Federal Circuit decision as
discussed in the opinion and below, and is codified as 21 U.S.C.
§ 355(j)(5)(c)(ii)(I):

[The ANDA]
applicant may assert a counterclaim seeking an order requiring the holder to
correct or delete the patent information submitted by the holder under
subsection (b) or (c) of this section 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.

The case involves Novo Nordisk's repaglinide drug
product marketed as PRANDIN®.  Novo
listed two patents in the Orange Book associated with this drug:  Reissue Patent
No. RE37,035, which claims repaglinide drug product itself; this patent
expired March 14, 2009.  The other
patent, U.S. Patent No. 6,677,358, claims the method of using repaglinide in
combination with metformin; this patent expires June 12, 2018.  There are two other approved uses for
PRANDIN®:  as monotherapy and in
combination with thiazolidinediones (TZD's); neither of these indications is
claimed in any Orange Book listed patent.  All indications are for treating Type 2 (adult-onset) diabetes.

Caraco filed an ANDA for generic repaglinide having
a Paragraph III certification regarding the '035 patent and a Paragraph IV certification
for the '358 patent, the latter leading to ANDA litigation pursuant to 35
U.S.C. § 271(e)(2).  During the
litigation, Caraco stipulated in that action that its ANDA would infringe the '358
patent if it included a label describing the combination of repaglinide and
metformin, and at the same time submitting an amended ANDA with a Paragraph IV
certification and a Section viii statement that its ANDA would not seek
approval for the repaglinide + metformin combination.  The "carve-out" label was acceptable to FDA.

However, at that time the FDA changed the use code
associated with Novo's PRANDIN® product.  The original use code, U-546, specified the combination of repaglinide +
metformin to lower blood glucose.  The FDA changed this use code to U-968, for a method for improving glycemic
control in adults with Type 2 diabetes."  This use code was not limited to the specific repaglinide +
metformin combination, and indeed was not expressly limited to Novo's drug
(i.e., it could encompass metformin monotherapy).  (There was some dispute between the majority and the
concurring opinion, the concurrence asserting that the FDA changed the use code
sua sponte which was not asserted in
the majority opinion.)

This change in the use code caused the FDA to reject
Caraco's Section viii certification and "carve-out" label, requiring
Caraco to include the rapaglinide + metformin combination on its label.  Since Caraco stipulated that this
combination was an infringement, the FDA's decision essentially mandated
judgment for Novo absent a finding at trial of invalidity or unenforceability.

In response to the FDA's determination, Caraco
counterclaimed for an injunction to return the use code to U-546.  The District Court granted summary
judgment on this issue, granting Caraco the requested injunction.  Specifically, the Court's injunction
ordered Novo to request the FDA to change the use code in the Orange Book for
Prandin® from U-968 to its former U-546 listing.

The Federal Circuit granted Novo an expedited
appeal and briefing schedule, and stayed the injunction pending the
appeal.  In its opinion, by Judge
Rader joined by Judge Clevenger (with concurring opinions by Judge Clevenger
and a dissenting opinion by Judge Dyk), the CAFC held that the statute
contained no provisions permitting an ANDA defendant to request or a district
court to grant such an injunction, reversing the decision and vacating the
injunction.

The Federal Circuit characterizes the question as whether the
statutory language of "an approved method" means "any approved
method" (Novo) or "all approved methods" (Caraco).  Novo contended that reciting one of the
patented uses was sufficient to preclude the statutory counterclaim, while
Caraco contended that reciting any unpatented use permits an ANDA defendant to
assert the counterclaim.

In finding for Novo, the Court found "no ambiguity" in the language of
the statute:

When an indefinite article is preceded
and qualified by a negative, standard grammar generally provides that "a"
means "any."  See, e.g., American Heritage Dictionary of the English
Language 1 (4th Ed. 2006).

The Court also says Caraco improperly focuses on
its proposed uses:

[T]he statutory language "an
approved method of using the drug" refers to the approved methods of using
the listed drug, PRANDIN.  This language cannot refer to the methods of using Caraco's
generic drug, because the FDA has not yet approved Caraco's ANDA.

Thus, the Court concluded that Caraco can assert
its counterclaim only if no patent listed in the Orange Book claims "any
approved methods of using the listed drug."  That was not the case here.

The opinion also references the legislative history
"to make sure that it does not contain any clear intent to the contrary."  It did not:  the Court says that the counterclaim provisions of the
statute addressed the Court's own interpretation of the Hatch-Waxman Act to be
devoid of a "private cause of action to delist an allegedly irrelevant
patent from the Orange Book."  See Mylan Pharms. Inc.
v. Thompson, 268 F.3d 1323 (Fed. Cir. 2001).  This intent was ascertained by the panel due to the use in
the statute of "exact language" from the Mylan decision, the Court concluding that "[t]his choice of legislative language
suggests that the 2003 Amendment sought to correct the specific issue raised in
Mylan, i.e., to deter pioneering manufacturers from listing patents that were
not related at all to the patented product or method."  Accordingly, the opinion found this
legislative history to be consistent with its interpretation that "an
approved method" means "any approved method," because this
interpretation "bears a direct relation to the purpose of Orange Book
listings."

The opinion
also asserts that, under its interpretation, the combination of a Section viii
certification and ANDA litigation will "ensure that a generic drug
[approved] for non-patented purposes will not be used for patented purposes via
a simple section viii certification."   This is consistent , the court contends, with the
Hatch-Waxman Act's purpose of striking "a balance [between] the pioneering
and generic manufacturers' interests."

Finally, the Court held that the statute has no provisions permitting a generic drug maker
to obtain an order from a court, like the injunction here, to compel a patent
holder to change or modify its use code.  The plain language of the statute authorizes the generic drug maker to "request
an order compelling the 'holder to correct or delete the patent information
submitted by the holder'."  (The Court notes that "the patent
information" under the statute is "the patent number and the
expiration date.") (emphases in original).  Put simply, "the patent
information" does not include the use code narrative according to the
plain language of the statute, and thus does not grant an ANDA challenger to
obtain the injunction granted by the district court below.

This
analysis is complicated by an FDA requirement, promulgated before passage of
the amendments in 2003, that "a pioneering manufacturer . . . submit not
only the patent number and the expiration date, but also the use code
narratives and other patent-related information" on specific FDA
forms.  The panel refused to
conclude that the regulation "change[d] the ordinary meaning of the
statutory use of the term 'patent information,'" citing the Court's
opinion in Wyeth v. Kappos that clear
statutory meaning trumps any agency regulatory interpretation.  And the Court reminds us all that
"no deference is due to agency interpretations at
odds with the plain language of the statute itself," citing Pub. Employees Ret. Sys. v. Betts, 492
U.S. 158, 171 (1989).  Here, the
legislative intent sheds no light on any relevance of the agency provisions to
the plain meaning discerned by the panel.

Judge Clevenger
concurred with the Court's judgment, but in his view Novo merely reacted to a
request by the FDA, and changed its use code narrative to match the new FDA use
code.  "FDA, acting
independently, gummed up the works," according to the judge.

Judge Dyk
(at left) dissented, believing that the construction is contrary to the "manifest
purpose" of the statute, allowing "the same manipulative practices"
the statute was passed to prevent, i.e., "delay[ing] the onset of
competition from generic drug manufacturers."  The dissent has a thorough explication of the Hatch-Waxman
act and the 2003 Amendments, particularly with regard to what Judge Dyk
characterizes as efforts by NDA filers to "block generic competition by
making unwarranted claims to patent coverage, for example, by listing in the
Orange Book a patent for a drug or method of use when in fact the patent was
clearly inapplicable."

Since the
FDA "repeatedly declined to police Orange Book listings," and the
Federal Circuit refused to let ANDA filers use declaratory judgment
jurisdiction to do so (Mylan Pharms Inc.
v. Thompson), Congress intervened by passing the 2003 amendments, including
the Section viii certification provisions thereof.

Judge Dyk
disagrees with majority on construing the term "patent information"
to be limited to patent number and expiration date.  According to Judge Dyk, this information is not required "in
the abstract"; "the statute on its face contemplates that the scope
of the patent must be accurately described and that the patent must be related
to the drug or method of use for which the NDA application is submitted."

In context,
the statute "contemplates the description of the scope of the patent and
of the relationship between the patent and the drug or the method of use; the
description of that scope and relationship is itself 'patent information.'"

At least one
source of the majority's error, in Judge Dyk's view, is their erroneous
understanding of the Orange Book:

[T]he majority's description of the
Orange Book likely bears no relationship to the actual document.  The Orange
Book is not a list of patents from which a particular patent could be excised.  The Orange Book is a list of NDAs that associates particular patents with
approved drugs or methods of use.  Correction of an Orange Book listing does not
strike a patent from a list, it strikes (or corrects) the listing that
associates the patent with a particular NDA, approved drug, or method of use.

Judge Dyk
also disagreed with the majority's treatment of the FDA's regulations promulgated
six months before enactment of the 2003 Amendments, stating that "Congress
was well aware of this regulatory interpretation of 'patent information'
when it enacted the counterclaim provision," and citing portions of the
legislative history illustrating this awareness (e.g., Senator Schumer's
statement that "[t]he bill provides a critical complement to the work the
FDA has done in clarifying its regulations on patent listing, but it goes much
further."  Legislative and Regulatory Responses to the FTC Study on
Barriers to Entry in the Pharmaceutical Marketplace: Hearing Before the S.
Comm. on the Judiciary, 108th Cong. 19 (2003)).  Judge Dyk believes that under circumstances
where "Congress was specifically aware of the agency's interpretation of a
statutory term at the time the statute was enacted, this is compelling evidence
of legislative adoption of the agency's interpretation," citing Supreme
Court precedent to this effect (including United
States v. Bd. of Comm'rs of Sheffield, Ala., 435 U.S. 110, 131-35 (1978);
Cammarano v. United States, 358 U.S. 498, 510 (1959); and Hartley v. Comm'r,
295 U.S. 216, 220 (1935)).

Judge Dyk
also rejected the majority's interpretation of the term "any" in the
statute, citing (ironically in view of his Merck
v. Integra decision) Justice Scalia's admonition that, in construing a
statute, '[u]ltimately context determines meaning,'" citing Johnson v. United States, No. 08-6925, slip
op. at 5 (U.S. Mar. 2, 2010).  He
illustrates this objection with the following hypothetical:

Under the majority's view, no
correction of erroneous Orange Book information is permitted so long as the
patent covered any approved method of use covered by the NDA.  The patent can be
listed in the Orange Book as erroneously covering approved use A, despite the
fact that the patent actually covers approved use B, and the counterclaim
provision provides no mechanism for correction.  This cannot be what Congress
intended.

Judge Dyk's
dissent adds more confusion to the history of the change in use code for
PRANDIN®; consistent with his view that NDA holders attempt to manipulate FDA
rules to maximize the time generic drug manufacturers are kept off the market, in
his description of the underlying facts Novo asked the FDA for the change in
use codes, and Caraco submitted its "carve-out" labeling proposal at
FDA's behest.  According to Judge
Dyk:

Here, the patentee did exactly what was
expressly forbidden.  For the proposed use code description submitted on the FDA
Form 3542, Novo submitted the following:  "A method for improving glycemic
control in adults with type 2 diabetes mellitus."  J.A. 673.  It thus
utilized that portion of PRANDIN's label that refers to the use of repaglinide
standing alone to treat diabetes (an unpatented use), not to the use of
repaglinide together with metformin (a patented use).  There is no justification for using a
portion of the label referring to an unpatented use to describe a patented use.

The manipulative nature of Novo's
actions is confirmed not only by the lack of justification for the change, but
also by the timing of the change (two years after the labeling change was
initiated by the FDA and immediately after the FDA approved Caraco's section
viii carve-out), and by its own admission that preventing approval of Caraco's
ANDA was part of the motivation for changing the use code.  At oral argument,
Novo conceded that the decision to change the use code was in part "a
response to the section viii ruling . . . in December '08 from FDA."  Oral
Arg. at 3:43-4:03.

"In summary, the majority's crabbed view of the statute
sanctions an unjustified manipulation
of the Orange Book," according to Judge Dyk.  Perhaps hoping to provoke Supreme Court review, in the final
portion of the dissent, Judge Dyk characterizes as "notably inconsistent"
the majority's view and the views of the D.C. Circuit court regarding what
constituted whether the counterclaim is available under these circumstances.

Novo Nordisk
A/S v. Caraco Pharmaceutical Laboratories, Ltd. (Fed. Cir. 2010)
Panel:  Circuit Judges Rader, Clevenger, and
Dyk
Opinion for
the court by Circuit Judge Rader; concurring opinion by Circuit Judge Clevenger;
dissenting opinion by Circuit Judge Dyk