On October 6, 2016, the FDA issued a final rule implementing certain provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) governing the approval of generic drugs, including abbreviated new drug applications (ANDAs) and 505(b)(2) applications. That’s right – the MMA was passed in 2003, and the FDA issued these implementing regulations 13 years later. Are they game-changing? In at least one respect, yes. While many of the provisions reflect FDA policies that have already been in effect but were never formalized, in one crucial area the FDA changed the game of how the NDA holder (that is, the brand) must identify and defend the method patents that cover the indications approved for its prescription drugs.
Our goal here is not to summarize every aspect of the 80 Federal Register pages of rules and commentary, but instead to highlight one change to a highly litigated area involving method patents and their related FDA “use codes.” The new regulations become effective on December 5, 2016.
Here is what you need to know:
We discuss each of these items in more detail below.
1. What Are “Use Codes” and How Are They Used?
Use codes provide the mechanism that NDA holders use to tell the FDA (and the world) how their Orange Book-listed method patents relate to their approved drug indications. Method patents (issued by the Patent & Trademark Office) claim how to use a drug substance or product; drug labels (approved by the Food & Drug Administration) describe the uses of the drug substance or product that the FDA has approved. Generics are permitted to try to “carve out” approved uses from their labels (for example, to seek approval for an unpatented indication instead of the indication covered by the method patent). Whether or not the FDA will approve the carve out depends not on the patent itself (which the FDA will not review), but on the NDA holder’s 240-character description of that patent – the “use code,” which is given a number and identified on the FDA’s website.
Seems simple, right? But the NDA holder’s patent claims do not always match the approved indication word for word, and they have some leeway in how they describe their patent claims in the use code. And out of leeway comes litigation. Several court cases have come out of the FDA’s administrative “carve out” decisions.
2. How Has the FDA Changed The Use of Use Codes?
The FDA’s new rule forces significant changes to the use code regime, ostensibly “to address overbroad or ambiguous use codes that may delay approval of generic drugs.” Specifically, the FDA now expressly requires that “the NDA holder’s description of the patented method of use . . . must describe only the approved method(s) of use claimed by the patent for which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner of the patent engaged in the manufacture, use, or sale of the drug product.” In addition, the FDA requires that “[i]f the method(s) of use claimed by the patent does not cover an indication or other approved condition of use in its entirety, the applicant must describe only the specific approved method of use claimed by the patent for which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner of the patent engaged in the manufacture, use, or sale of the drug product.” And, the NDA holder must “identify with specificity the section(s) and subsection(s) of the approved labeling that describes the method(s) of use claimed by the patent submitted.”
The regulations seem to leave to the courts to decide what claims “could reasonably be asserted.” Furthermore, the FDA adopted what it calls an “incremental” solution for how it will proceed if a use code description is challenged.
3. How Can an Interested Third Party Challenge a Use Code Description?
Previously, if a listing was challenged by a third party, FDA would merely request that the NDA holder confirm the correctness of the listing – without any substantive review by the FDA. Now, the FDA rules require an information exchange when a generic applicant (or other third party) disputes an Orange Book patent listing. The challenger “must first notify the Agency” of the dispute, including “a statement of dispute that describes the specific grounds for disagreement regarding the accuracy or relevance” of the patent listing. The FDA will provide this notice to the NDA holder, who then has 30 days to confirm the correctness of the patent information and provide a signed verification or withdraw or amend the listing.
Where the use code is challenged, additional procedures apply. In that case, the challenger’s “statement of dispute must be only a narrative description (no more than 250 words) of the person’s interpretation of the scope of the patent.” Within 30 days, the NDA holder must then:
All of this information will go back to the challenger, and it will be posted on the FDA’s website. But the FDA will only amend or change the use code or Orange Book listing if it is amended or withdrawn by the NDA holder; it will not independently review or evaluate the submissions.
4. What Happens Then?
Good question. While the patent listing dispute procedure places more burden on the NDA holder, it ultimately may do little to reduce litigation over listing disputes, particularly for use code descriptions. The process might lead an NDA holder to amend or withdraw its use code. But if the NDA holder maintains its position, its use code stands – with the addition of the 250-word defensive statement. The FDA provides little guidance as to how it will use these statements to address carve outs. Indeed, the FDA offered but then withdrew a proposed rule that would defer to the ANDA or 505(b)(2) applicant’s interpretation of the use code if the NDA holder did not respond to the notice or if the NDA holder confirmed its original description without modification.
In short, the FDA is taking a “stepwise” approach. It notes that “[i]f these revisions to our regulations do not adequately address the problem, we will further consider whether to finalize the proposal to review a proposed labeling carve-out for a 505(b)(2) application or ANDA with deference to the 505(b)(2) and/or ANDA applicant(s)’ interpretation of the scope of the patent.”
Right now, it is hard to see how this rule will reduce litigation, but we’ll be watching closely how the FDA, NDA holders, and use code challengers proceed once these rules are in effect.
 Among other things, the new rules cover a range of topics ranging from restrictions on ANDA amendments and supplements to how and when generics can mail their paragraph IV notice letters.
 If pharmaceutical patents are not up your alley, we’ll forgive you if you stop reading!
 Check them out at http://www.accessdata.fda.gov/scripts/cder/ob/results_patent.cfm.
 See, e.g., Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670, 182 L. Ed. 2d 678 (2012); Hospira, Inc. v. Burwell, No. GJH-14-02662, 2014 WL 4406901 (D. Md. Sept. 5, 2014).
 81 Fed. Reg. 69580.
 21 C.F.R. § 314.53(b)(1).
 Id. But in a small (really small) concession to NDA holders, the FDA allowed 10 more characters to describe the use code. 81 Fed. Reg. 69598 (noting increase of use code character limit from 240 characters to 250 characters). (Just to illustrate how small a change this is, we note that it takes 10 characters to write the word “characters”. . . .)
 21 C.F.R. § 314.53(b)(1).
 81 Fed. Reg. 69581.
 21 C.F.R. § 314.53(f)(1).
 21 C.F.R. § 314.53(f)(1)(i)(A).
 21 C.F.R. § 314.53(f)(1).
 21 C.F.R. 314.53(f)(1)(i)(B).
 21 C.F.R. § 314.53(f)(1)(iii).
 21 C.F.R. § 314.53(f)(1)(i)(B)(1).
 81 Fed. Reg. 69581, 69604
 81 Fed. Reg. 69604.