Tough road ahead for some generics after USA's Federal Circuit Patent Use Code decisions

A recent report issued by Morgan Stanley, titled Pharmaceuticals - Potential Selective Upside for Industry post Prandin Ruling, predicts 'increasing probability for the innovative pharmaceutical industry to successfully delay US generic approval of select innovative drugs' following a pair of rulings in Novo Nordisk A/S (NVO.N) versus Caraco Pharmaceutical Laboratories, handed down earlier this year by the US Court of Appeals for the Federal Circuit concerning Patent Use Codes (PUCs; The Pharma Letter July 12) and the Danish drugmaker's product Prandin (repaglinide) tablets.

Commenting on the report, Kurt Karst of US law firm Hyman, Phelps & McNamara, notes that, in those decisions the Federal Circuit ruled that a generic applicant 'does not have a statutory basis to assert a counterclaim requesting' a court to enter an order to change an Orange Book-listed PUC because a PUC, among other things, is not 'patent information.' PUCs, as the Morgan Stanley report shows (using the table HPM put together for a previous post on its FDA Law Blog), have doubled in recent years, while at the same time 'the number of approved patents has remained largely unchanged.'

Mr Karst anticipates that several companies will extract significant [earnings per share] and [net present value] upside from utilization of PUC (Patent Use Code) narrative strategies. In the absence of listed Food and Drug Administration Orange Book patents, it is challenging to identify discrete opportunities. However, he believes those companies facing near term generic competition have the strongest motivation to consider this strategy in order to capture residual intellectual property value.