Late last month, the US Supreme Court asked the Obama administration for its views on a complicated and controversial spat that has the potential to alter the way brand-name drugmakers use patent law to delay generic competition (look here). Whether the Supremes choose to review the case is unclear, but by asking the US Solicitor General to comment, the court has signaled a hearing is, indeed, a possibility.

The case, meanwhile, is being closely watched, as one might imagine. A growing number of generic drugmakers have begun filing briefs with the Supreme Court, explaining why a review is warranted. And Wall Street has signaled that, if the status quo continues, brand-name drugmakers will have hit on a new means of fending off unwanted generic rivals.

Here is the background: In 2005, Novo Nordisk sued Caraco Pharmaceutical Laboratories for patent infringement over its Prandin med for type 2 diabetes. Nearly four years later, as the litigation played out, Caraco went to the FDA to seek approval under a provision of the Hatch-Waxman Act that allows generic drugmakers to market a drug for uses not covered by patents held by brand-name drugmakers.

In this particular situation, there were three uses approved by the FDA for Prandin - monotherapy; in combination with metformin and in combination with thiazolidinediones. But the only patent listed for Prandin in the Orange Book, which contains patent info for FDA-approved drugs, referred to usage in combination with metformin (here is the patent).

And so Caraco informed the FDA that approval for its generic would be sought for the other uses, which the agency could authorize under section viii of the Hatch-Waxman Act. In such circumstances, a generic drugmaker is granted what is known as a carve-out label for its med. However, Novo Nordisk then submitted a new description of its patents, which Caraco argued was overly broad and, therefore, amounted to patent misuse.

In September 2009, a federal court in Michigan sided with Caraco (read the ruling) and granted an injunction. But a year ago, a divided federal appeals court reversed the decision in a 2-to-1 ruling and vacated the injunction (read here), prompting Caraco to ask the Supreme Court to review the case (read the brief).

The ruling prompted Wall Street speculation that generic drugmakers would, subsequently, find it difficult to secure carve-out labels from the FDA. The appeals court “set a precedent that may make it materially more challenging for generic companies to obtain ANDA approvals for ‘carve-out’ indications, where the originator drug has one or more method of use patents listed in the FDA Orange Book,” wrote Morgan Stanley analyst Andrew Baum in an investor note last fall (look here).

Not surprisingly, Novo argues, among many other things, that a Supreme Court review is inappropriate and unnecessary (see this). But in urging the Supreme Court to review the affair, Caraco argues the appeals court ruling “threatens not only settled intellectual property rights in a $300 billion industry, but the interests of consumers and the FDA’s ability to administer Hatch-Waxman” (see this). And the Generic Pharmaceutical Association trade group this week wrote a letter urging FDA commish Margaret Hamburg to join the fray by filing its own brief to ask the Supreme Court to review the case.

“This decisions affects all of us, and more with each passing day,” GPHA executive director Bob Billings writes. Many blockbuster brand patents developed in the 1980s and early 1990s are now expiring, and brands are seeking to evergreen those patents by patenting methods of using the drug compound. When that happens, the section viii carve-out is a generic’s sole means of avoiding a lawsuit for patent infringement when there is no dispute that the generic’s use does not infringe the method patent. Yet the Federal Circuit’s split decision in the case guts that provision.”