Caraco Pharmaceutical Laboratories, Ltd. v. Novo Nordisk A/S: Oral Argument – December 05, 2011

Roberts: We’ll hear argument first this morning in Case 10-844, Caraco Pharmaceutical Laboratories v. Novo Nordisk. Mr. Hurst. Hurst: Mr. Chief Justice, and may it please the Court: Since 1984, whenever an — a drug has multiple FDA-approved uses, there has been a statutory path for generic drugs to reach the market if there are specific uses not covered by a patent. Here, there is no dispute that Novo’s patent does not claim the use of repaglinide when used alone, and that is “an approved method” of using the drug. Even though that matches the statutory language exactly, Novo is arguing that in this case, our counterclaim to correct their blocking use code is thwarted by the fact that their patent does claim a different approved use– Ginsburg: Is it first — is it first approved, the drug itself — they’re not claiming that, because that — that patent has expired, hasn’t it? Hurst: –That patent has long expired, and they also had a patent using — for the use of the drug to treat diabetes through any method, and that patent has long expired. The only patent that’s left that Novo has is specifically limited to the use of repaglinide in combination with metformin to treat diabetes. My client, Caraco, is attempting to get on the market for admittedly non-infringing uses, which occupy about 70 percent of the marketplace out there. Alito: Suppose I said your brief does not cite a Supreme Court decision. Would that be a correct statement? Hurst: I believe that — that — if — it depends on the context of the sentence, but I think that would be a correct statement if I understand the way you are asking the question. You are asking the question in a way that suggests to me by context, you’re asking whether I cite any Supreme Court precedent. But the context here is a little bit different, because the context here in the counterclaim is a situation where drugs routinely have multiple and different distinct uses. And in that context– Alito: Well, we have hundreds and hundreds, probably thousands of opinions, and you didn’t cite — there were many of them that you didn’t cite. You cited quite a few, but you didn’t cite all of them. Hurst: –That’s true, that’s true. But when a judge — when a judge says to me that, you know, you are going to lose this case because you didn’t cite an applicable precedent, I am going to hear that to mean I didn’t cite a specific particular case. There are many ways to use the word “an” after the word “not” where it clearly does not mean “any”. For instance: “The prosecutor failed to get a conviction because she did not prove an element of the offense. ” “I got lost on my way to the party because I failed to make a turn. ” “My cake fell because I did not include an ingredient. ” So the context speaks volumes in terms of whether or not “an” means “any” in any particular context. Scalia: But — but the context here, one would expect it to say, if it meant what you say it meant, a — did not claim a use asserted by the generic. Hurst: Justice Scalia — you’re– Scalia: But not just “did not claim a use” and we have to fill in, that is “the use asserted by the generic. ” That’s a strange thing to fill in. Hurst: –Justice Scalia, I am not quibbling with the fact that this could — the statute could have been written more elegantly. My guess is that almost every statute this Court is asked to construe, there are different ways that it could have been written to resolve the issue in question. Scalia: It’s not a matter of elegance. It’s a matter of how I would have expected it to be — to be framed if it meant what you — what you say it means. It’s — so easy to say that, does not — claim the use asserted by the generic. My goodness, and that’s what you say it means. Hurst: If — and look at the context. The statute does not ask the brand company to identify an approved use that the patent does claim. It puts the burden on the ANDA applicant to come into court, file a counterclaim, and identify an approved use that the patent does not claim. We’ve carried that burden twice over, There are two approved uses that the patent does not claim. Context– Alito: As I understand your argument, you satisfy the — the ground for seeking deletion or correction was satisfied even before Novo wrote the new use code that you claim is overly broad. When the use code said simply the use of repaglinide with metformin, the — the ground for seeking deletion or correction was satisfied, wasn’t it? Hurst: –Well, I mean — the truth is the patent — yes — the answer to that question is yes. But I would have no reason to go into court to fix a use code that is not blocking me. Alito: No, but that’s another — so there are two oddities in the way you read the statute. Now, maybe Congress just did a bad job of drafting. But the first is the one we were discussing before, and that’s the second one, that — your — your beef really is not that the patent does not include every use. Your beef is that the source — the use code is too broad, and yet that is not the ground that the statute sets out for seeking deletion or correction. Hurst: I believe it does, because it the deletion talks about — there’s two remedies: remedy and the correction remedy. As we read the statute, we preserve distinct roles for the correction remedy and the deletion remedy. As Novo reads this statute, they all but acknowledge that they are writing the word “correct” out of the statute, because there is no meaningful role for the correction remedy as Novo is reading this statute. They call the correction remedy a — a relic of a failed bill. And in fact, they haven’t identified any meaningful role for the word “correct” in the statute as they read this statute. Remember, what they say is there is two pieces of information that qualify as patent information: expiration dates and patent numbers. Nothing else. The correction remedy can never reach an expiration date under any circumstances. I haven’t heard Novo to argue otherwise. What they’re saying is if a patent is correctly listed in the Orange Book, this counterclaim is unavailable. So what does that mean? If the brand company incorrectly lists the expiration date for a properly listed patent as 2150, this counterclaim is not available to correct the expiration date. So that leaves only one single piece of information that could possibly be addressed by the correction remedy. And what does Novo say? Patent numbers: They say well, the correction remedy could be available for fixing typos in a patent. Scalia: Well, it’s not much, but it’s something. [Laughter] And — and the way you are talking, you seem to assume that all the problems in the world have to be addressed by this statute. Would you have no remedy by — by suing the FCC for accepting uses that — that it should not have accepted? Hurst: I — whether I do have alternative remedies doesn’t answer the question about whether I have a remedy in — for this particular counterclaim. Scalia: That’s true, but if — but if you have alternative remedies, I am not terribly shocked by the fact that you don’t have a remedy under this statute. Hurst: I don’t have any good remedies under this statute. I could not, Justice Scalia, sue the FDA for accepting the use code, at least based on existing law, because the FDA’s position is that their role with respect to patents is purely ministerial. That has been upheld for about a decade now, including multiple courts of appeals, the Federal Circuit and the D.C. Circuit. So my ability to sue the FDA for accepting Novo’s incorrect use code is not really a true alternative remedy. The remedy that Congress gave me, that I — that we think Congress gave us, is an enormously efficient remedy. We filed our counterclaim and within 3-1/2 months we got an injunction asking Novo to correct its use code. Alito: Suppose you didn’t file the — suppose the counterclaim provision wasn’t available, and Novo — you filed a paragraph IV certification and Novo sues you for infringement. Could you not defend the infringement action on the ground that your use of the — of the drug was not in — did not infringe their patent? Hurst: I could not. Alito: Why — why is that? Hurst: Because there’s two paths that are available under the FDA to get — for a generic to get approval. One is section (viii), and if I proceed under section (viii) I can carve out the patented use from my label. If — and Your Honor’s question assumed I am I went through the other route, paragraph IV. I am not — FDA does not allow you to carve out any portion of your label if you are proceeding under paragraph IV. So in the circumstance that you just described, I would — I would be infringing under paragraph IV and the only way for me to get on the market is to invalidate the patent. Now, think about what that means. Novo is forcing us, essentially, to infringe. We don’t want to infringe. We are trying to carve out our label so that we can proceed under section (viii). They have blocked our ability to use section (viii), so they’ve forced us into paragraph IV, forced us to infringe. And what happens if we fail to invalidate the patent? We are kept off the market until 2018 for admittedly noninfringing uses of the drug. There are two admittedly noninfringing uses of the drug. That’s where we want — that’s what we want to use to get to the market. Kagan: Mr. Hurst, would — would you agree that Congress did not contemplate this situation? As I understand it, it wasn’t until 2003 that the FDA allowed companies to write their own use codes, and that’s what creates this problem. So would you agree that the Congress that passed this act really couldn’t have had this situation in mind? Hurst: I wouldn’t agree, because look at the timing. The FDA issued the regulation entitled 2003. Congress enacted this counterclaim using the same language in December of 2003. The submission of patent information regulation by the FDA with respect to method-of-use patents, and that’s what we are talking about here, is all about ensuring that the use code itself is accurate and correct and matches up with the patent. So I think this is something that Congress clearly had in mind, because you have to assume that they knew about the regulation enacted by the agency that was administering this statute, issued just months before they enacted the counterclaim using the same — the same– Ginsburg: But what about the fact that the FDA and not the patent holders were drafting the use code at the time this legislation passed? Hurst: –Justice Ginsburg, that is incorrect; your timing is incorrect. Prior to June of 2003 the FDA was authoring the use codes based on information from the brand companies, but after June 2003 the brand companies were authoring the use codes and the statute was enacted after June of 2003. Kagan: So you are suggesting that– Kennedy: When the FDA was writing the codes, was it writing about the scope of the patent? Or was it writing about labeling? Hurst: It was writing about the scope of the patent. The use codes have always been about the scope of the method-of-use patent; it has never been about anything other than the scope of the method-of-use patents. The only– Kennedy: We can ask the government, but why did it think that it lacked the expertise, because it didn’t want to opine under the patent laws? Hurst: –I think the short answer is yes; the FDA has always done their very best to not get anywhere near the patents. They don’t do patents, essentially, and so they decided — and there was a — there was a notice and rule — I’m sorry, notice and comment rulemaking about this, and eventually they decided to make — to have the brands submit the use code. Kennedy: Would it suffice in the description just to give a cross-reference to the patent, to say the use of this drug as described in patent claim number 43? Hurst: It — it would not be sufficient, because the way — the whole purpose of the use code is to administer section (viii). So what the FDA does is they take the use code, and they match it up with the label, and then the generic gets to carve out whatever the brand company says is patented via the use code. Sotomayor: Counsel– Hurst: But if I could get back to a question, Justice Scalia, that you asked about the — whether correcting typos in patent numbers is a real role for the correction remedy. I would submit it is not. And for all practical purposes, Novo is asking you to eliminate the correction remedy from this statute, and here’s why. Think about what they are saying. Novo is saying that the brand company decides to put the patent in the Orange Book, but somebody transposes two numbers. There is a — there is a mistake that’s made. What does that mean in concrete terms? Well, if you transpose the two numbers, the odds are astronomically high that the brand company is citing a patent that they don’t own and that certainly doesn’t relate to the drug in question. It might relate to tire treads; who knows? But you do not — Congress did not enact a Federal cause of action to address typos in patents. The brand company has every incentive in the world — and the generic company has no incentive to file a lawsuit to fix that. But the brand company has every incentive in the world to ensure that they don’t make such mistakes, because there is a statutory benefit to properly listing patents. Sotomayor: –Counsel– Scalia: So it — it’s — it’s — the issue is not whether Congress enacted it only for that. The issue is whether Congress enacted it for that in addition to a lot of other stuff. Hurst: But– Scalia: I mean, it’s a very small detail, you know — “correct”. You are saying this one word, “correct”, in this immense bill with all sorts of cause of actions and other provisions here and there; that one word has this, this minimal meaning. Hurst: –You have– Scalia: It’s conceivable. Hurst: –You have to give it some meaning. You have to give it some practical meaning. And right now — and it’s only — the counterclaim has only two remedies, so Novo is arguing that the first of the two remedies is practically nonexistent. Sotomayor: –Counsel– Hurst: There is no role — I’m sorry. Sotomayor: –I’m sorry. Finish answering. Hurst: There is no role whatsoever. It is surplusage by any definition to — to say that — “correct” is surplusage by any meaningful definition. If you even put a dose of realism to this, “correct” has no role under Novo’s reading, while we preserve a distinct role for both the correction and the deletion remedy. Sotomayor: I will wait for your rebuttal. Hurst: Thank you. I’m sorry, Justice. Sotomayor. Roberts: Thank you, counsel. Mr. Horwich. Horwich: Mr. Chief Justice, and may it please the Court: I would like to pick up with Justice Kennedy’s question about FDA and writing use codes. The first thing I’d point out is that before 2003, although FDA wrote the actual text that went in the Orange Book, it was relying on information submitted on a sort of free-form declaration by the — by the brand. So the brand was still kind of — excuse me — calling the shots in that — in that respect. But the — but the more important point is that the FDA doesn’t have the resources or expertise or — to engage in the substantive patent evaluations that, that would be required under a theory where you would go sue the FDA if you had a problem with this. But more to the point– Ginsburg: Mr. Horwich, do we — do we know what FDA’s position is in this case? Is the position you are presenting the position of the FDA? Horwich: –We — yes. We represent the United States here, and so we — we speak — we speak for FDA and the other agencies of the government who are very concerned here about the competition law effects of this. I mean, that’s — that’s in some ways the bigger story here. Kagan: Well, Mr. Horwich, what does that mean exactly, that you represent? I mean, this might be a case where we would give the agency deference, except the agency’s name doesn’t appear on the brief. So should we give you any deference? Horwich: Well, the names on the brief I think should not be a guide to the deference question. But we are not really claiming deference in the sense — because what we are construing here, what the Court is construing here, is the counterclaim provision, which is a Federal cause of action. So the Adams Fruit decision of this Court would say that agencies don’t get deference in defining the terms of a Federal cause of action. We do think that — we do think that it’s important to recognize that Congress and the agency were engaged in a dialogue in 2003. And although I wouldn’t label that deference, I would — I would probably characterize it more accurately as Congress building upon what FDA had done in constructing its patent information regulation and Congress saying, we need a means to — to protect the integrity of the system FDA has set up. Kennedy: Just one more question on how this works. Why does the FDA rely on use codes in the Orange Book to make the carve-outs if it doesn’t do anything to ensure the accuracy of the code? Horwich: Well, the statute — well, let me start with the basic that the statute envisions that there will be carve-outs. That’s the whole principle behind section 8. And so FDA says, well, we need to know when a generic has made a valid carve-out. And FDA says, and FDA goes through this in the 2003 rulemaking — if you read through the preamble there is more detail. But the short of it is FDA has three choices. It could rely on the generics to say that they’ve carved out, but that doesn’t really work because the generics could say something and then get on the market when they hadn’t proper carved out and that kind of defeats the whole point of Hatch-Waxman’s principle of getting patent issues resolved before regulatory approval. FDA could, as a second alternative, try to evaluate patents itself. But nowhere else in the statute is FDA given any role in the substantive evaluation of patents, and with good reasons. This Court has said in its Markman decision that claim construction of patents is a question of law. The actors in our system that decide what patents mean are courts and ultimately this Court; it’s not FDA. So the third choice– Alito: If the patent holder — if the patent holder writes a use code that is ridiculously, totally, unreasonably broad, is there anything that FDA can do about that? Horwich: –Well, I think the problem, Justice Alito, is that from FDA’s point of view it’s a very slippery slope, because as soon as FDA starts undertaking criticism of a use code its effective — the only basis for criticizing it is looking at the patent. Now, this may be a very easy case, but the Court shouldn’t be fooled that all cases are going to be easy. And if FDA here were to go in and said, well, this doesn’t look like it’s the same as the claim of the patents, in the next case, where it’s a more difficult question, where there may be some very good faith dispute between the parties about the very meaning of the patent, FDA is going to have to make a decision one way or the other, and it’s going to get sued. Alito: Well, what about after — what about after there has been litigation and a court has decided that a use code that was written in a particular case was totally unreasonable? Does that mean that the writing of that was in violation of some provision of the Food and Drug Act or FDA regulations and that there would be some sanction against the company that did that? Horwich: Well, I think the — I think the only posture in which a court would actually look at a use code and evaluate it is under the counterclaim. The court would not be looking at a use code under traditional paragraph IV litigation, and so the author of the majority opinion below was kind of mistaken in that regard. Roberts: What about an APA action against the FDA for relying on the use code? Couldn’t that be challenged as arbitrary and capricious? Horwich: Well, it seems to me that that challenge would fail because [= FDA] has made a reasonable construction of the statute, that its role its role is ministerial, it does not engage in substantive evaluation of patents because the statute doesn’t envision that. So FDA would win that suit. On the other hand, if — going back to my answer to Justice Kennedy, if we are talking about kind of a second scenario where FDA does engage in substantive patent review, yes, FDA could get sued. But the problem with that is that FDA is going to get sued in an APA suit, the real parties in interest are going to be the generic and the brand, FDA is not going to be owed any deference because it’s going to turn on a matter of claim construction, which is a question of law. Kennedy: So how do you describe what the FDA does? What’s your third? Horwich: So what FDA does do is it accepts the submission from the brand describing its — describing its use code. And FDA says in its 2003 rulemaking: We are trying to do the best we can through the administrative process to get good information in the first instance. Kagan: And it’s your understanding that you require companies to state the scope of the patent in the use code, or might you think it’s perfectly permissible for a company to write its use code in terms of indications? Horwich: It’s certainly possible in a particular case that the indications would be appropriate. This is — what we are asking for in the use code is something that’s good enough to do the job that the use code is intended for, which is to inform FDA– Sotomayor: But you said that– Horwich: –what needs to be carved out. Sotomayor: –Except, counsel– Kagan: So that — I’m sorry, go ahead. Roberts: Justice Sotomayor. Sotomayor: –Except the FDA tells parties not to rely on the orange code. Horwich: It– Sotomayor: It tells them what controls is the patent. Horwich: –Well, that is true that FDA said that the parties should look at the patent. But what FDA said in its 2003 rulemaking is that it would rely on the use code. Let me also point– Sotomayor: Could I ask you– Horwich: –I’m sorry. Sotomayor: –just on a practical basis. I understand that the Petitioner has filed an amended label in 2010. I presume that that amended label copies the current label with the exception of substituting the manufacturer. Horwich: The label — I can’t speak to what the labeling in the application is right now, because it’s confidential. Sotomayor: But let’s assume that’s– Horwich: But if we assume for the sake of argument that it’s the same, yes. Sotomayor: –Now, it claims that when the paragraph IV — the paragraph IV action is started and it’s sued for infringement, that it’s automatically going to lose– Horwich: Well, that’s right, and in fact– Sotomayor: –because– Horwich: –In fact, Caraco has stipulated to that. That’s at joint appendix 177, because it includes the– Sotomayor: –Could you explain to me — could you explain to me why? Is merely the use of a label that’s identical infringement or is it an infringement of the underlying patent? Horwich: –It would be inducement of infringement to sell a product with labeling that suggests that the product be used for a patented method of use. Sotomayor: Okay. So tell us how a court gets out of the quandary of there being a claim that is stipulated to — I’ve infringed — and then how does it deal with the counterclaim? Now, the district court just ignored the act of infringement below and went straight to the counterclaim. But I’m not quite sure how you get out of the quandary that this creates for the courts and the parties. Horwich: The counterclaim is designed precisely to get out of the quandary, because what it says is the paragraph IV litigation here, the choice between infringement and noninfringement, is a false choice, because if the counterclaim prevails and the use code changes the paragraph IV litigation is going to go away because Caraco is going to want to go proceed through section (viii). It’s going to be able to carve out and get approval that way without a judgment in the paragraph IV litigation. Sotomayor: Let’s assume that Caraco puts in a label like the one it wants to use under claim 4. Will the FDA just kick it out? Horwich: Yes. It’s not — it’s not permissible. Sotomayor: It will not even ask for a response from Novo? Horwich: FDA will not permit — does not permit — will not approve the application where theirs is carve-out combined with section — with paragraph IV. Sotomayor: But is that before — without an infringement action by Novo? Horwich: I’m not sure of the timing. Of course, it’s possible. The paragraph IV litigation is somewhat in the control of the parties, so it’s not as if FDA sends out the notices that could trigger the litigation. But there might not be — there might not be– Sotomayor: If you tell me the FDA doesn’t want to get involved in construing the patent, why is it kicking out the claim for, claim for, claim until Novo does a suit on whether or not the generic is infringing or not– Horwich: –I– Sotomayor: –and let that issue be decided below? Horwich: –From FDA’s point of view, it’s not a sufficient application if there’s carveout labeling presented with a paragraph IV certification. And I’d also say this. To take a step back, the fact that there might be conceivably alternative remedies under some other construction of the operation of the statute shouldn’t make you think the counterclaim isn’t available here. After all, the situation that Novo agrees– Roberts: Finish your statement. Horwich: –Thank you. –the situation Novo agrees is covered by the counterclaim, where the patent doesn’t belong in the Orange Book at all, is one that can be remedied at some expense and delay through paragraph IV litigation by proving noninfringement if the patent’s irrelevant. Roberts: Thank you, counsel. Mr. Perry. Perry: Mr. Chief Justice and may it please the Court: I think the last half-hour has made clear that what really is at issue here is a challenge to FDA’s administration of the Orange Book. That is an APA challenge, not this counterclaim. Justice Kennedy, you asked if when FDA was writing the use codes did it describe the scope of the patent, and Mr. Hurst said yes. That’s false. The answer is no. For example, if I could point to the joint appendix at page 522, these are some FDA-authored use codes. Everything before U530 is an FDA-authored use code. U275. Roberts: I’m sorry. What page have you got? Perry: Page 522, Your Honor. Roberts: Thanks. Perry: U275, “Method of use of the drug substance. ” U278, “Method of use of the indication of the drug product. ” U279, “Method of use of the approved product. ” These were the ones that the FDA wrote when it was responsible for writing use codes to put the world on notice. So U-278, method of use of the indication of the product, the patent relates to secondary hyperparathyroidism, but you will never know that from the use codes, and that’s when the FDA was writing it. In 2003, FDA decided to turn it over to the industry. And it said in this rule making, and you’ve heard about the rule making but not what FDA actually said. It said to this: 19 A of the reply brief. This is 68 Federal register page 36,682. “We believe an approach that requires the NDA applicant or holder or patent owner to identify the approved methods of use protected by the patent is most consistent with the general balance adopted in the Hatch-Waxman Act. ” “And then the generic industry during this very rule making made all of the arguments that Mr. Hurst has made today, said we should have more of a challenge, we should have litigation and so forth, and the FDA said no, that’s not right, because that would let the generics pick it. ” And we said — they said, we shouldn’t do that. And this is important. This is on page 24(a) of the reply brief. The FDA said very clearly, “There would be repeated litigation over individual patent lifting decisions. ” That’s a bad idea, the FDA said, because there is no assurance that NDAs would be approved sooner or generic drugs would enter the market any more rapidly. Roberts: But the alternative is that the FDA is going to have to hire an awful lot of patent lawyers to review the use codes and their correspondence to the actual patents. Perry: There are several alternatives, Your Honor. First, the FDA could de-link the indications from use codes. Right now the regulations say that you can base your use code on the indication or use code as identical or indication applies with every regulation. You didn’t hear Mr. Horwich say that FDA thinks our use code is wrong. FDA has accepted our use code. Caraco filed an administrative challenge to the use code arguing that it was arbitrary and capricious under the APA. And that’s the way agency actually gets challenged in the ordinary course as this Court has seen it many times. Not here. Roberts: Well, that’s the way agency action gets challenged when it’s substantive action. The FDA’s position, the United States position is that this is purely ministerial act. Perry: Your Honor, they have chosen to make it a ministerial act, which is not a negative, by the way. It is the Federal Drug — Federal Food and Drug Administration. What they do is administer this program. And they have in other areas, such a patent term extensions, entered into memorandums of understanding with PTO where there are patent issues so that there is interagency cooperation to deal with patent issues. They could do that here but they have chosen not to, and in the exercise of their enforcement discretion said: We are going to accept the ANDA applicant’s submission. And, more importantly, FDA has made the policy decision to tie the section viii determination to the use code. They don’t have to do that. That’s not in the statute. They could change that by rule making. And third, on the indication, for example, Novo’s use code always follows the indication. The change in this case is because FDA changed the indication. Sotomayor: What odds would you put– Perry: I’m sorry? Sotomayor: –What odds would you put as a betting lawyer on them winning a challenge to the FDA policy decisions of what its capable of doing and not doing? Perry: Your Honor, there have been about a dozen APA challenges to various aspects of this administration in the DC Circuit over the past ten years. The generics have won several of them including most importantly the Purepac case that we cite in our brief which is direct challenge to FDA’s refusal of a section viii carveout because of the use code, and the generic won that argument. It said it was arbitrary and capricious for the agency to do what it did. So — look, every APA battle is an uphill battle. They’re the plaintiff. They burden — the burden of proof. It is an available remedy. You couple that, Your Honors, with the– Ginsburg: What you described sounded very much like this case. So if the — what was the D.C. Circuit case? If — if the DC Circuit said its arbitrary and capricious not to — to just accept the brand’s use code– Perry: –In Purepac, Your Honor, the brand changed its position but the FDA did not change its position accordingly. And that was the arbitrariness there. Here of the brand changed its position and the FDA went along. So I don’t think they would win that case, to be clear, in our particular facts. That’s because Novo has done nothing wrong. I mean, you’ve heard about, a lot about over breadth, misleading, blah, blah, blah. There is nothing wrong with Novo’s use code if the agency agrees with that. Breyer: Can I bring you back for a minute, please, to the statute, and if you — it’s in page 3 of the blue brief. And in just reading it, I might be missing something which you will point out to me, I’m sure. But if you get the statute at the bottom of the page, it says, as I — if you’ve got it there, right? Perry: Yes, Your Honor. Breyer: It says, ANDA Holder> [“], now that’s — that’s Novo, “holder of the approval — the approval Holder for the drug, a. ” –I’m skipping words — “a use of which is claimed by the patent. ” and that’s what you are doing — what’s that use was, and I look at page 12 and the use is “a method for improving glycemic in adults with type 2 diabetes mellites. ” So that’s the use that you’re — that’s the use that’s claimed by the patent. “If you bring a patent infringement action against the ANDA applicant. ” that’s them, “the ANDA applicant may assert a counterclaim, which they want to do, seeking an order requiring the holder to correct the patent information on the ground that the patent does not claim an approved method of using the drug. ” So I look at that with those words — I’ve skipped words. I look at those words and I say that’s what they are saying. They are saying the use that — that it — that your patent does not cover a portion of the set of things described by your use. And therefore they would like to correct the description so that the description no longer covers something that you do not have — a use that you do not have a patent on. Now that would seem to me to fit within those literal words. And of course the purpose is what we have been arguing about. But just looking at the literal words, why doesn’t it fit? Perry: Justice Breyer, your question conflated as Caraco often does, the use and the indication. You quoted the indication, that is, a method of improving hypoglycemic control. The use is repaglinide combined with metformin. They are disclosed in different parts of the label. The indication is under indications, and the use is under dosage and administration. That is the way FDA has always administered this, and that’s the distinction between indication and method of use, which why the regulations and the form are written in the alternative. Breyer: In other words, you are saying that the — this — a method for improving glycemic control in adults with type II diabetes mellites is not the patent information. Perry: Your Honor, that is the indication that– Breyer: I know, but are saying it is patent information? Perry: –It is not patent information submitted under (b) or (c) of section 505 which is the statutory language. It is information submitted under 314.53(p) and (e) of the regulation, which is a different question. Kagan: Was not the regulation issued under this statutory section? Perry: No, Your Honor. The regulation was issued under section 701, the general rulemaking authority. They cite section 505, but there was a subsequent rulemaking when Pharma, the trade association for the branded industry, challenged FDA’s authority to require all this information. And then in 2007 rulemaking that my friends on this side never cite, FDA came back and explained that our — that the patent submission reg is based on section 701 to facilitate the section viii and ANDA process, not an interpretation of section 505. And there are lots and lots of interpretations of the statute. Drug– Scalia: Can you give us of a cite of that, please? Perry: –I’m sorry, the 2007 rulemaking is– Scalia: You don’t have to do it now. Just file it with the Court. I don’t want to eat your time up. Perry: –You Honor, it is cited in our brief and my colleague will hand up to you momentarily. Scalia: Oh, it’s cited in principal brief? Perry: In the red brief, Your Honor. Scalia: Yeah. Don’t waste your time. Go ahead. Perry: Justice Breyer– Scalia: I don’t really care. Perry: –To further answer your question– Breyer: I do. Maybe your colleague can find it for you. Perry: –Justice Breyer, there is another point on the structure of the statute. If you look at the chart in the back of our red brief where we tried to lay out the various provisions of the actual statute, the counterclaim that the Court read and that we are focused on talks about “a” use. And in the preamble it says, “If the patentholder claims a use– ” Breyer: You know, I know that argument, right? Perry: –So– Breyer: You don’t need that argument. If you’re right that the patent information in this particular provision does not have anything to do with or at least does not cover the words about diabetes I just read, well, then I guess this section would have nothing to do with it because those are the words they want corrected, aren’t they? Perry: –That’s correct, Your Honor. There’s a section– Kagan: Mr. Perry, in your view, patent information is just the patent number and the expiration date, and that’s all? Perry: –The patent information submitted under (b) and (c) of section 505, correct, Your Honor. Kagan: Is that just the patent number and the expiration date? Perry: That’s right. And we know that because the Congress at the same time debated it, an alternative bill that was sponsored by the Democrats that had lots and lots of additional patent information. Kagan: Well, why would anybody have created this counterclaim to fix the patent number and the expiration date when that can be done by way of the defense to a patent claim? Perry: Your Honor, it’s important to remember the counterclaim is only a delisting provision. It is a very narrow provision. The FTC report that’s cited in the briefs identified eight cases in the first 18 years of Hatch-Waxman that raised this problem of improper listing, mostly due to successive 30-month stays. That was fixed in the counterclaim, and the 30-month stays were fixed and there has never been a case since — since 2003 there has never been– Ginsburg: –What was fixed? I missed what you said. What was fixed in the counterclaim? Perry: –The counterclaim addressed the problem of improper listing that was addressed in the FTC report. The purpose of the counterclaim, according to its sponsors, and according to the conference report, the listing of improper patents, that problem has gone away. There is no such problem any more. It has never come up again. The counterclaim was entirely successful in solving the problem that Congress set out to address. It had nothing to do with use codes. Scalia: What do you mean by the problem of improper listing? Perry: Your Honor, what the FTC report explained was that certain branded companies near the expiration of the listed patent would come in and file a second patent in the Orange Book, even though it was not properly listed, it didn’t fit within section 505(b) in the listing requirements, solely for the purpose of getting a second 30-month stay, essentially to box out the generic companies; And that that was an anticompetitive action. They recommended the counterclaim to fix that, and at the same time the FTC said if Congress were to enact such a counterclaim it is unclear how frequently it ever would be used. So this was always intended to be a very narrow — it’s not a fix-all remedy. Kagan: So your argument, Mr. Perry, is not just that the word “correct” does no work. Your argument is that the entire provision no long does any work? Perry: No, Your Honor. My argument is very simple. A delisting question, it’s an on/off switch. Either the patent is properly listed in the Orange Book or it’s not. The counterclaim gives the generic a one-shot knock-out remedy. If it’s not properly delisted it goes away, and a bunch of things follow from that. There is no 30-month stay, there is no paragraph IV litigation, there is no impediment to FDA approving the ANDA, because if the patent isn’t listed in the Orange Book then a whole separate set of ANDA approval requirements kick in. A use code is nothing like that. Roberts: I’m still not following it. It’s not listed simply because the number is wrong? Perry: Your Honor, the usual case is it’s not listed because it doesn’t fit. The most famous example, the Buspar case that claimed a metabolite rather than the drug substance and that wasn’t the proper listing for that reason. The correction language which does come out of the other bill, the alternative bill, and we do think is an artifact as the language is used, is there to give flexibility to courts. If you have a situation of an improperly listed patent, then the court has more flexibility than simply delisting. Roberts: The brand manufacturer has an overwhelming incentive to list the correct patent, doesn’t it? Perry: Yes, Your Honor. Roberts: So why would we give a procedure to an adversary to fix the number when the brand manufacturer is going to fix it as soon as its alerted to the problem? Perry: Because, Your Honor, if the generic raises a counterclaim and if it’s delisted, the generic gets no more 180-day marketing exclusivity stay at the end of the ANDA process. If it’s corrected through a different patent number, the generic would still have its 180-day exclusivity. So there is every incentive for the generic to bring a counterclaim for a correction if that’s the appropriate remedy. And again, it just gives more flexibility to the courts. That is something that very much would benefit the generic and it would be available use of the word “correct”. It may be an unusual one, but it’s certainly available. Ginsburg: I can’t imagine that that would really come to — I mean, if it’s a transposition of numbers, that there would have to be a proceeding to get it changed. I mean, the minute that was noticed, I assume that the brand manufacturer would change it. Perry: Your Honor, the transposition is not the problem. The more frequent — the way we think it would come up is these branded companies have large portfolios of patents, they list many patents in the Orange Book. You know, Novo has five or six right now. Other companies have many more, dozens and dozens. They write these use codes and they associate them with the patents. And in the Orange Book — by the way, it is called “the Orange Book” because it’s orange. And it’s thick. It’s got a lot of information in it. It has to list every single approved drug with the use code. I mean, it’s just pages and pages of numbers is what’s in here. It’s not a transposition of numbers, but rather the listing of one patent and improperly associating it with a drug. That could be corrected through this counterclaim. But again, that’s worlds away from this use code challenge, which is really what Caraco wants to bring, something that wasn’t on Congress’s radar screen because FDA wrote the use codes at that point. Sotomayor: Counsel, let’s assume, because I now take from your earlier conversation with Justice Breyer that you’re saying the use code here is absolutely right, because the only use that we claimed was the combination use of the drug, your drug with the metformin. But the only thing that is wrong here is the indication that the FDA has required. So that’s not even wrong because you have no choice about that; is that correct. Perry: That — the indication is correct. Sotomayor: What this means practically I believe is that when your patent expires no generic can come in with a use that’s different than yours because they’re going to be boxed out by this indication, this overbroad indication. Do you actually I thought think that that’s what Congress intended? I thought with claim 4 and section viii that what Congress intended was to ensure that drugs got onto the market as quickly as possible. Perry: Your Honor, that argument was made to the FDA by the generic industry in the 1994 rulemaking, the first time this issue came up, and they said: You should not allow use codes to be based on indications; you should instead require a description of the patented method-of-use. You heard Mr. Hurst say that again this morning. Here’s what FDA said in response. quote: It’s page 59, Federal Register page 50,346, “For a use patent, FDA includes in the Orange Book a code identifying the indication covered by the patent. ” “We decline to expand the Orange Book to include patent descriptions. ” Then it went on to explain that persons interested in patent descriptions should consult the official gazette– Breyer: Yeah, but what it also says is this, and that’s what I want to go back to this literal statutory argument. We took the words, because this is what you can correct. What you can correct, the statute says, is you can correct “patent information submitted by the Holder under subsection (B) or (C). ” So we look at (B), and what (B) says is (B) tells us that you are supposed to submit in respect to where you claim the use of a drug the patent number and the expiration date. So, so far that seems to support you. But then we look at the regulations which the FDA promulgated, I take it promulgated in respect to (B) and (C), particularly the sentence I read, or maybe some similar sentence, and it tells you that you have to provide the description of the patented method of use as required for publication. So now I go back and look at what you did provide. And what you did provide was you provided — you said that what we do, we have a method for improving glycemic control in adults with type II diabetes mellitus. That seems to fit directly under (iii) of the FDA’s requirement and that FDA requirement was an expansion of (B) and therefore it sounds to me as if when they say “correct”, “correct the patent information”, it includes the sentence that you put there that they would like to see corrected. Now, what’s wrong with that? Perry: –First, the regulation is not an interpretation of 505(b). It’s an implementation of 701. Second and more substantively, however, the form — you quoted accurately from Box 4.2(b) of the form. There is also Box 4.2(a) of the form, which includes the description of the method of use tied to the label, which is required by subsection (P) of the regulation that you were just quoting to me. In that part of the form, Novo very carefully describes claim 4 of the patent and ties it to the dosage and administration and clinical pharmacology sections of the patent and calls out by reference combination trials. The only combination trial in the label is the metforminrepaglinide combination. And in FDA — that that is a sufficiently — because these forms, by the way, you have got them in here, are these little tiny boxes, you can’t put very much information in there. That is described in there. It is not that every piece of information required by the regulation — the regulation has 19 lettered questions, of which several have subparts, so it’s 26 separate pieces of information. They’re not provided in one box, Box 4.2(b). There is actually a whole form. It’s four pages long. We filled it all out. And there is an important point, Justice Breyer. This is a summary judgment case. We put in a declaration from an FDA expert — it’s in the record before the Court — explaining how every single box ties to every single thing in the regulation. That’s absolutely undisputed on this record. There is no contrary evidence as to Novo doing anything wrong. So whether Congress — to go back to this counterclaim, we know Congress didn’t intend it to reach this form, because this form didn’t exist when Congress was debating the counterclaim. Breyer: Now, the government — now, the government, which is representing all the government agencies, whether the FDA signs it or not, tells us that that language, that (b) and (c) language about patent information as interpreted by the regs does cover this stuff. This is about the most technical statute I ever read– Perry: Your Honor– Breyer: –and — when I’m talking about patent information among (b) and (c), we have the government telling us that that covers this, and why don’t I just stop right there and say thank goodness I am out of this case — and I’m not out of it– Perry: –I think — I think I can do no better than refer the Court again to the 2007 rulemaking — Justice Scalia, 72 Federal Register page 21268 — which the United States does not address and which Caraco does not address, in which FDA addressed your point, Justice Breyer, and explained that this information — while useful, and we have never challenged FDA’s authority to require the information, but it is not an interpretation of that language patent information — this quote (c) is– Scalia: And even if it were, as I believe the government acknowledged, this is not a situation in which we owe deference to the FDA. The issue is whether a lawsuit can be brought or not. Perry: –Correct. Scalia: And we — we don’t decide whether we have authority to decide cases on the basis of what the agency thinks. Perry: It is certainly– Sotomayor: What is the parade of horribles that you imagine if we were to read the counterclaim provision in the way your adversary is promoting and the government is promoting? What — what, presumably in the normal case and the one that the regulations appear to expect is that the use code, the indication code, everything is going to match the patent. So in that situation, the counterclaim would have no work to do. So what is the parade of horribles? Perry: –Your Honor, first, the counterclaim has no work to do for use codes. There is a complete disconnect there, so– Sotomayor: I — I’m asking you to accept that we are to — as an assumption only, don’t — it’s not intended to be a — a ruling — to assume that we read the counterclaim in the way your adversaries want us to. What’s the parade of horribles? Perry: –Your Honor, it is going to add complexity, expense and so forth. The reason — the problems with all civil litigation, all new causes of action — and this was raised during the congressional debates, when they proposed a freestanding cause of action for generics to sue over a whole bunch of things, Congress was up in arms, and said no, we are not going to do that because we don’t want to let private parties into the FDA process. This Court is familiar with that and the parade of horribles from the Buckman case. Kagan: But, Mr. Perry, there are also horribles on the other side, of course. I mean, here’s — there’s — there’s the statute, and it has three provisions, and two of them are vague and one of them works against you. One is an approved method. I think, you know, you both go back and forth about it; it depends on context. One is patent information, which, you know, maybe you are right, and maybe Mr. Hurst is right. It’s not really quite clear what it means to be under subsection (b) or (c). The third is correct. You basically read “correct” out of the statute. So at best, this is an unclear statute from your point of view. And then there is the question of what it allows you to do. The statute read your way essentially allows you to unilaterally expand your patent in areas in which it’s quite clear that your patent ought not to go — does not go — but allows you to do that. So why should we read the statute so that it effects a purpose that is entirely antagonistic to the purpose that Congress had in passing this statute, given that the statute is at best from your perspective ambiguous? Perry: Justice Kagan, this statute was a political compromise. There is no debate on the historical record about that. And the compromise that Mr. Hurst indicated earlier was that the statute would deal with some things — the counterclaim would deal with some things, delisting — and almost everything else would be turned over to the FDA. And FDA had this extensive rulemaking, that as [= Mr.] Hurst said, Congress was aware of. And during that rulemaking, Congress did several things. First, it confirmed that the industry would write use the use code. Second, that use codes could be based on indication. So there is no extension of the patent monopoly. It is simply following FDA’s instructions as to indication of use code– Ginsburg: Mr. Perry, can I ask you, on that core question: we have a patent on a drug alone. It expires, and then the patent holder gets a label patent that’s on a method of use, and we have a generic that wants to sell the drug alone which is no longer patented. Doesn’t want to sell it in combination with anything else, wants to sell the drug alone. Can it do so without infringing the method of use patent? Perry: –No. Your Honor, we will — they will be sued for infringement if they ever go to market, because the generic substitution laws present in 49 state require or allow pharmacists to substitute the products whether or not the combination is on the label. So there will always be an infringement suit, which gets back to Justice Kagan’s question: why would Congress have contemplated? They didn’t contemplate this. They contemplated delisting, where you take it out of the infringement suit altogether. This issue, indications use code, section viii, that is all within the agency, but there is a litigation problem with it or challenge to it, that is what the APA is for. And again, there have been dozens of APA cases where the generics largely have challenged FDA’s determinations in that respect. It is not what the counterclaim is for. This is a very narrow provision. What we’re — we’re parsing, by the way, two clauses in one sentence of a statute — the 2003 amendments were 415 pages long. The Hatch-Waxman Act is thousands of provisions long. Very delicate balance between lots of competing interests, billions of dollars at stake. And we have to be careful. When Congress creates a new course of action, the law of unintended consequences kicks in here. We know this is not — this case is not what Congress intended. The counterclaim we don’t believe can be read it all to it. Even if it’s ambiguous. Putting it in context and looking at what FDA has actually said about these matters in its rulemaking, when it’s faced with the same challenges that a generic industry that Mr. Hurst presented here — it has rejected them over and over again– Alito: Come back to Justice Kagan’s question. Your position is really nothing can be done by a generic that is blocked from marketing a drug for a nonpatented use by a use code that — that is — that seems to cover that use– Perry: –In this case, Justice Alito, there were two points: first, FDA rejected Caraco’s administrative challenge to the use code. They could have taken that to the D.C. Circuit under the APA. Second, they have indicated a rejection of their section viii carve-out because of the use code. They could take that to the D.C. Circuit under the [= APA]. That is the usual course for challenging agency action. If there are any problems here — our position is, we have complied in every respect at every moment with every bit of FDA’s regulations. And again, that — that’s what the evidence in this record shows. So again, I need to push back a little on extensions and monopolies and so forth, because that’s not what this case is about. This case is about a properly working administrative process, and should in private litigation between two parties in which the FDA will not be a party, should that regulatory regime be dismantled. You know — and we actually asked to bring the FDA in, in this case. Novo did. And Caraco resisted that. You know, we think that if you’re going to debate the administration of the Orange Book, it should be under the APA– Kagan: But — but here’s what we know about Congress’s intent. And it goes back to the Mylan suit. What we know about Congress’s intent is that Congress wanted to give a generic manufacturer in this situation a remedy when there was a completely irrelevant patent. And the question is why we should consider this to be any different. In some respects, this makes — this is worse from the generic manufacturer’s point of view because the generic manufacturer doesn’t even have a defense in an infringement suit– Perry: –Your Honor– Kagan: –so why should we think that the Congress that really cared about the result in Mylan does not care about this? Perry: –Mylan, in the response gives the generic a one-shot remedy, and you are out of it altogether. And it’s a black-and-white decision. It’s an on-off switch. Either the patent is properly listed or not. In a use code of the Orange Book, there are over 1000 of them. They are shades of gray. There are — there are very specific ones, very general ones. I read to the Court some of the ones that the FDA itself wrote. You would get into these long involved questions about compliance and so forth — to the effect, Congress wanted to make generic approvals quicker in the Mylan situation. FDA itself, and I started out my argument reading from that page, page 24A of the reply brief, where the FDA said increased litigation over use codes — patent listings — would not assure faster generic entry because you would spend years and years, as we all have, litigating these very issues. So the Congress had it focused on this, which it never did. There is not one word in the thousands and thousands of legislation — pages of legislative history about use codes. Had it focused on this, it would never have gone this way because it didn’t need to. And when it did have the broader bill, SA12, it failed. Roberts: Thank you, counsel. Mr. Hurst, you have four minutes. Hurst: Thank you. I would like to start by — by asking the Court if I can to turn to the Joint Appendix, second volume, 484. And I want to address two issues: the argument that the use code is disconnected from the patent itself, and it — it may relate to the indication regardless of what the patent says; and whether or not the information is being submitted under subsection (b) and (c). If you are at 484, this form went through notice and comment rulemaking before the enactment of the counterclaim. The title, 314.53, entitled “submission of patent information”. Now look at right below those two boxes. What does it say — how does it say the information is being submitted? This is a form Novo signed. “The following is provided in accordance with section 505(b). ” “That’s 355(b) and (c) of the Federal Food and Drug and Cosmetic Act. ” Moreover, when the FDA issued this patent submission regulation in its final rule, it cited 505 as its legal authority. That’s at 28J of the Blue Book. It cited — and it specifically called out subsections (b) and (c). So this is a regulation that was enacted prior to the enactment of the counterclaim. And now– Scalia: And what do you say about the — the section cited by — by your colleague? Hurst: –We address — he’s citing something the FDA said in 2007. And if you actually read it, we cited it — we addressed this in our brief. It actually says our — our legal authority for doing this was explained fully in 2003. And in 2003, the FDA cites 505. Can I turn you quickly to 487 now. This addresses quite specifically this notion that the indication can be used even if it’s disconnected from the patent. 4.2(b). Remember what the regulation says, and Justice Breyer read this before. It’s at 127A of the appendix. But the regulation says that the brand is required to “the description of the patented method of use as required for publication. ” They are supposed to provide that information. And look what the actual instruction says. It could not be more clear 4.2(b), bottom right side. “The answer to this question” — this is where the brand supplies the use code — “the answer to this question will be what FDA uses to create a use code for Orange Book publication. ” “The use code designates a method of use patent that claims the approved indication for use. ” It depends on what the patent claims “of a drug product”. Then it goes on to explain why you need to do that. Each approved use claimed by the patent should be separately identified in this section and contain “adequate information” — this refers to section viii — “adequate information to assist 505(b)(2) and ANDA applicants. ” –that’s us — “in determining whether a listed method of use patent claims a use for which the ANDA applicant is not seeking. ” –that is precisely the situation we were facing. We have offered a construction of this statute that is fully consistent with its text, its structure and its purpose. And it really is the only reading of the statute that carries out congressional intent in terms of trying to prevent situations where incorrect patent information is unfairly delaying generic competition. Up to this point right now, Novo has still failed to identify any reason why anybody in Congress would want the system to work as Novo posits, where the brand company gets to supply an overbroad use code? Without judicial review, without agency review? That blocks admittedly noninfringing products from the marketplace. And I — and I submit that given the addition of the correction remedy that would not be in there if this was not designed to address use codes, because that’s the only thing that can be corrected without remedy. Sotomayor: Going back to the question that I had. And a more practical question– Hurst: Sure. Sotomayor: –As I read the record, in April of ’08, the [= FDA] rejected your section viii application. Hurst: Yes. Sotomayor: All right? And it asked you to submit an amended code. Your brief says we did it in September, Is it anywhere in the record? Hurst: The question is did we– Sotomayor: Did you — you submitted what the FDA requested for your claim 4, the amended label? Hurst: –Yes, we did. And it’s in JA777, paragraph 20. It’s a stipulated– Roberts: Thank you, counsel. Hurst: –Thank you, Your Honor. Roberts: The case is submitted.

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