Argument preview: Federal Circuit faces uphill battle in latest generics case
on Nov 30, 2011 at 11:26 am
The Supreme Court hears arguments next week in its first patent case of the year, Caraco Pharmaceutical Labs v. Novo Nordisk. Like last Term’s Pliva, Inc. v. Mensing, this case presents the Court with one of the many places in which generic and branded pharmaceuticals face off at the FDA. The question here involves efforts of a generic manufacturer to sell a drug for a particular use that is approved by the FDA but not covered by the branded manufacturer’s patent. The Federal Circuit ruled for the branded manufacturer; despite the absence of a conflict (the issue as a practical matter can come up only in the Federal Circuit), the Court called for the view of the Acting Solicitor General and granted review in accordance with his recommendation.
The specific problem involves the interface between the FDA and the Patent and Trademark Office (PTO). Despite the importance of patents to the pharmaceutical industry, the FDA traditionally has taken a hands-off approach to matters involving the interpretation or assessment of patents. Thus, generally speaking, the role of patents in the FDA process for approving generics is that the branded manufacturer files a list of its patents and a summary of their scope with the FDA. If the branded manufacturer has filed patents claimed to cover the drug, a generic manufacturer that nevertheless wants to sell the drug must certify either that the patent does not extend to the drug or that the patent does not extend to “an approved method of using the drug.”
This case involves a drug (repaglinide) approved by the FDA for three separate uses related to diabetes. Novo Nordisk has a patent that covers one of the three uses but not the other two uses. Still, the summary of patent scope that Novo submitted to the FDA covers all three uses. Because the FDA abjures any power to revise the description, however patently erroneous it might be, no generics can be sold for the non-infringing uses. Accordingly, Caraco seeks an order under 21 U.S.C. § 355 “correct[ing]” Novo’s description of its patent.
All the parties and the court below acknowledge that Novo’s description is overbroad; Novo’s patent does not extend to the uses for which Caraco proposes to sell repaglinide. The sole question in the litigation is whether federal courts have the power to order correction of the description (to permit generics to sell their products for non-infringing uses). The Federal Circuit ruled that this power is not available, which means that Novo’s overbroad description allows it to unilaterally extend the scope of its patents, with no possibility of administrative or judicial correction.
From that big-picture perspective, the case seems easy. Because the result seems so obtuse, it would seem that only the clearest statutory language could justify the Federal Circuit’s decision. And unfortunately for the Federal Circuit, the statutory basis for its decision simply won’t withstand that kind of scrutiny. Like a number of cases this Term, the central textual question is surprisingly simple. For a drug that has three approved uses, does the generic manufacturer allege that the patent “does not claim . . . an approved method of using the drug” if the generic can show that the patent extends to only one of those uses (that it does not claim two of the three approved methods)? In a context in which “approved method” has a specific and verifiable meaning, and is frequently likely to be plural, it is self-evident that the language will bear the meaning Caraco ascribes to it. To be sure, the language could have been written more clearly. And it would not be unreasonable, in the abstract, to take the alternate reading: to say that the generic cannot prevail unless it can show that the patent claims none of the approved methods (it does, after all, “claim . . . an approved method”).
But given the consequences – unilateral extension of the brand manufacturer’s patent because of a statutory glitch – the Federal Circuit’s reading seems wooden at best. To make matters worse for the Federal Circuit, the FDA has weighed in urging the Court to reverse, emphasizing both the adverse systemic consequences of the decision below and the ease of reading the statute to avoid them. Essentially, it leaves the decision below looking like the worst of the Federal Circuit’s pro-patent excesses – centralizing all authority to assess patents in the PTO and litigation challenging it, with no path for substantive action left to the FDA even in the most dire of circumstances.
Novo’s brief tacitly acknowledges the difficult position in which it has found itself. It opens with a jurisdictional argument, apparently raised at this late stage for the first time. Novo more or less concedes that its reading of the phrase “an approved method” makes another section of the statute – permitting the trial court to order the FDA to “correct” the relevant information – largely superfluous. And it offers nothing to suggest that the system the Federal Circuit has created is sensible. The most it can say is that the Hatch-Waxman Act reflects a series of difficult compromises and that it is up to Congress to recast the scheme if the results lean too unfairly in any one direction. Conspicuous by its absence is any explanation of why anybody in Congress might have wanted to permit patent-holders to use the FDA process to unilaterally, and unreviewably, extend the scope of their patents.
In sum, if the materials in this case offer any guidance, despite a strong performance in the Court last year, the Federal Circuit is not off to a good start this year.