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U.S. Supreme Court Upholds Competition in Prescription Drug Market

The U.S. Supreme Court held a generic drug manufacturer may force correction of an inaccurate patent description that blocked the introduction of a generic drug.


Manufacturers who obtain patents for new pharmaceuticals enjoy a period of exclusivity, enabling them to develop a market and recoup their costs. After that period of exclusivity, generic manufacturers can apply to the federal Food and Drug Administration (FDA) to produce versions of the drug. Congress enacted the Hatch-Waxman Act to spur competition, including an expedited approval process for generic competitors (Abbreviated New Drug Application process, or ANDA), that seeks to balance the need for public safety with the ability to bring new less-expensive medicines to market quickly.

ANDA allows generic manufacturers to bypass submissions of independent clinical testing if they can show that the generic drug contains the same active ingredients and is bioequivalent to a brand pharmaceutical already on the market. However, a loophole in that law allows brand name pharmaceutical companies to erode ANDA by tinkering with the description of how the drug is used.

Congress sought to close this loophole in 2003 by providing a process in which a generic ANDA applicant can ask a brand name manufacturer to “correct or delete the patent information” at issue. In the current case, Novo, the brand manufacturer of the diabetes drug repaglinide, had a patent for one method-of-use for the drug even though the FDA approved three uses. Generic makers of the drug applied to the FDA to market the generic version for the two other approved methods of use that the brand was not using. Novo sued the generics for patent infringement and changed its use code to indicate that it used all three approved methods of use. The generic maker then filed a counterclaim challenging the brand’s use code.

AARP’s brief, filed by attorneys with AARP Foundation Litigation, parsed the language of the law, reviewed the debates leading up to its enactment, detailed the skyrocketing escalation of pharmaceutical drug costs and the devastating effect these costs have on public health, and reviewed the “gamesmanship” brand name manufacturers use to protect their exclusivity.

The Supreme Court  unanimously agreed. “Whether a brand lists a patent that covers no use or describes a patent on one use as extending to others, the brand submits misleading patent information to the FDA … The text and context of the [statutory] provision demonstrate that a generic company can employ the counterclaim to challenge a brand’s overbroad use code.”

What’s at Stake

Generic drugs provide an opportunity for consumers to receive the health care they need at a more affordable price. Study after study shows that when generics are precluded from avenues for market entry, prices remain high and the effects of that are felt by purchasing consumers as well by federal, state and local governments in the form of the costs of their public health programs.

Case Status

Caraco Pharmaceutical Laboratories v. Novo Nordisk was decided by the U.S. Supreme Court and is remanded to the U.S. District Court for the Federal Circuit for further proceedings.