In a closely watched case, the U.S. Court of Appeals for the Federal Circuit denied Caraco’s petition to rehear en banc its dispute with Novo Nordisk over the statutory construction of the “counterclaim provision” of the Hatch-Waxman Act (HWA). Judge Dyk joined Judge Gajarsa in dissenting from the per curiam decision to deny the en banc rehearing. Novo Nordisk A/S v. Caraco Pharm. Labs., Ltd., Case No. 10-1001 (Fed. Cir., July 29, 2010) (per curiam) (Dyk, J. and Gajarsa, J., dissenting).

In the original majority opinion, Chief Judge Rader reasoned that Congress enacted the counterclaim provision, 21 U.S.C. § 355(j)(5)(C)(ii), in direct response to the Court’s decision in Mylan Pharmaceuticals v. Thompson, which held that generic drug manufacturers did not have a cause of action under the HWA to force the U.S. Food and Drug Administration (FDA) to correct “patent information” listed in the Orange Book. Therefore, the majority construed that provision narrowly to only remedy the defect brought to light in Mylan. Judge Dyk, dissenting, argued for a broader construction that would have provided a remedy for any incorrect information, including “use codes.”

Dissenting in the present denial of en banc review, Judge Gajarsa argued that Congressional intent demanded the broader interpretation as articulated in Judge Dyk’s prior dissent. Although the dispute was over the construction of the counterclaim provision, Judge Gajarsa argued that the original panel opinion actually nullifies the “carve-out provision” of 21 U.S.C. § 355(j)(2)(A)(viii). Thus, Judge Gajarsa argued that the opinion effectively eliminated the careful balance struck by Congress between innovator and generic pharmaceutical companies in the marketplace. Judge Gajarsa further argued that the opinion invalidated the FDA’s effort to define “patent information” to include use codes.

According to Judge Gajarsa, Novo will likely be able to delay competition for Prandin® until 2018 by its submission of an overly broad use code for publication in the Orange Book, despite the drug composition being currently off-patent. Judge Gajarsa argues that this is an extension of Novo’s monopoly beyond the scope of its patented methods of use and beyond clear Congressional intent.

Practice Note: This case leaves in place the “ministerial” function of the FDA in publishing without policing the contents of the Orange Book. Despite the warning in the dissent Caraco’s position was hindered by its stipulation of infringement of U.S. Pat. No. 6,677,358 during the course of the infringement litigation. Generic pharmaceutical manufacturers may now be more hesitant to submit stipulations of infringement for a patented method of use and will now likely seek agreements from innovator drug companies to not amend use codes in a manner that will negatively impact any negotiated dismissals in Paragraph IV litigation.