Generic-Drug Makers Win at High Court on Brand-Name Patents

The U.S. Supreme Court boosted generic-drug makers in seeking federal approval for treatments, saying they can argue in court that their brand-name rivals overstated the reach of their patents in regulatory filings.

The justices today unanimously sided with Caraco Pharmaceutical Laboratories Inc., a generic-drug company trying to sell a lower-cost version of Novo Nordisk AS (NOV)’s Prandin diabetes drug.

The decision gives generic companies what they say is an important tool to prevent brand-name drugmakers from abusing the Food and Drug Administration approval process to thwart competition. It overturns a lower-court ruling that a 2010 Morgan Stanley research report said would have let brand-name companies delay generic versions of select drugs.

Detroit-based Caraco and its Mumbai-based parent company, Sun Pharmaceutical Industries Ltd. (SUNP), contend that Novo improperly extended its monopoly over Prandin until 2018 by misrepresenting to the FDA the reach of one of its patents. Novo is based in Bagsvaerd, Denmark.

Caraco says the patent covers only the use of Prandin with another diabetes drug, metformin. The so-called use code Novo provided for the FDA’s Orange Book, which lists the patents for branded drugs, suggests the company can preclude any use of Prandin until 2018.

Generic Prandin

The FDA pointed to that Orange Book listing when it rejected Caraco’s application to sell a generic version of Prandin, also known as repaglinide.

The Supreme Court today said Caraco could challenge the listing by filing a counterclaim in Novo’s patent-infringement suit against the generic-drug maker. Writing for the court, Justice Elena Kagan said Caraco could invoke a provision in the so-called Hatch-Waxman Amendments letting generic-drug companies challenge information submitted to the FDA in some circumstances.

That provision “enables courts to resolve patent disputes so that the FDA can fulfill its statutory duty to approve generic drugs that do not infringe patent rights,” Kagan wrote.

Novo argued unsuccessfully that the counterclaim provision applies only if a patent doesn’t cover any approved methods of using a drug.

FDA ‘Opacity’

In a concurring opinion, Justice Sonia Sotomayor called on Congress or the FDA to fix a system that forces generic-drug makers to engage in “expensive and time-consuming litigation” to challenge an overly broad use code.

Sotomayor faulted the FDA for its “opacity in describing what is required of brand manufacturers” and suggested the agency should evaluate the accuracy of use codes on its own.

The Supreme Court decision reversed a federal appeals court ruling. The appeals court decision, the first to address the issue, might have helped AstraZeneca Plc, Sanofi and Novartis AG, according to the Morgan Stanley report.

The case is Caraco v. Novo Nordisk, 10-844.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net.

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