The Pharmaceutical Corner

The year 2020 marks the 40th anniversary of the publication of the Orange Book – a publication central to Hatch-Waxman litigation that identifies all drug products approved by the FDA and lists all patents and exclusivities covering drug products as well as all approved indications and uses of drug products.  But the Federal Circuit’s decision in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc. is likely to be a more memorable 2020 event for Hatch-Waxman litigators. 976 F.3d 1347 (Fed. Cir. 2020) (GSK).

In a split decision, the Federal Circuit held that a generic pharmaceutical company could be liable for inducing infringement based on a “skinny label,” which lists only non-patented indications for the generic drug.  The court determined that since generic drugs may predictably be prescribed for off-label (and patented) uses, even a “skinny label” can give rise to induced infringement if the generic company takes steps to equate the generic drug with its branded equivalent.

Although Teva may seek either rehearing or Supreme Court review, this precedential decision has potentially far-reaching impacts that both branded and generic drug manufacturers should consider in preparing for future Hatch-Waxman litigation and generic-product launches.

Skinny labels and induced infringement

In the ordinary course, a generic drug must be labeled for the same indications approved for its corresponding brand name drug, or “reference listed drug” (RLD).  However, the Hatch-Waxman Act allows a generic drug manufacturer to omit from its label any RLD-approved use that is protected by exclusivity or patents that are listed in the Orange Book, provided that the generic drug is no less safe or effective than the RLD for all remaining non-protected uses. Generic labels that omit (or “carve out”) patented or exclusive uses are known as “skinny labels.”  If a generic company carves out a patented use, it must then file a “section viii” statement indicating that the remaining uses listed on the skinny label are not claimed by an Orange Book patent.

Significantly, if a generic company files a section viii statement for a patent, it cannot be sued for infringement of that patent under 35 U.S.C. § 271(e). Section 271(e) provides that the filing of the generic company’s drug application with the FDA is an artificial act of infringement.  This allows the brand and generic companies to address patent issues while the generic drug company’s application is being evaluated by the FDA, prior to launch.  This scheme benefits both generic and brand-name companies, since it allows the generic company to gain certainty that it will not be selling an infringing product once it is approved for marketing, and it protects the brand-name company from generic competition until it is determined that the generic product does not infringe an Orange Book patent.  But where a generic company will only be selling a product for non-patented uses (assuming there are no other Orange Book patents covering the drug product itself), a generic company can then skip patent infringement litigation and launch immediately, since selling a product for a non-patented use would not be infringing.

The FDA allows a generic drug to be marketed only for its approved uses, and thus generic drugs cannot be marketed for uses that were carved out in the approval process. Nevertheless, generic drugs are placed on the market by generic manufacturers with a known possibility that physicians or consumers will use it for the off-label, patent-protected indications, setting the stage for potential induced infringement. Induced infringement requires that a generic manufacturer have sufficient intent to cause another’s infringement, which 35 U.S.C. § 271(b) defines broadly: “whoever actively induces infringement of a patent shall be liable as an infringer.”

Historically, skinny-labeled generics have been shielded from induced infringement claims if their generic drugs are labeled only for non-patented uses.  In view of GSK, however, a skinny label alone is likely insufficient to foreclose induced infringement allegations.

GSK v. Teva: Jury awards $235 million in damages despite Teva’s skinny label

GSK had several Orange Book-listed patents, including US Patent No. 5,760,069 (the ’069 Patent), for its drug Coreg® (carvedilol). The ’069 Patent’s accompanying use code – the required description of the use that is claimed in the patent – was “decreasing mortality caused by congestive heart failure.”  But Coreg® was also approved for non-patented uses, including treatment of hypertension and left ventricular dysfunction after a heart attack.  The ’069 Patent was later reissued to GSK with narrower claims as Reissue Patent 40,000 (the ’000 Patent).

Teva applied for FDA approval to market generic carvedilol and carved out GSK’s patented indication for treatment of congestive heart failure.  By this time, other than its patent covering treatment of congestive heart failure, GSK had no other patents listed in the Orange Book since its other Coreg® patents had expired.  Accordingly, Teva launched its generic product with a skinny label in 2007 with accompanying press releases and marketing materials which stated that its carvedilol was an AB Rated (“bioequivalent”) generic of GSK’s Coreg® Tablets.  Teva was later required by the FDA to amend its label in 2011 to add the patented congestive-heart-failure indication, but the opinion GSK v. Teva concerns damages for the period between 2007 and 2011 (the skinny-label period).

In 2014, GSK filed suit and accused Teva of inducing infringement of the ’000 Patent, including during the skinny-label period.  Teva contended that since it had carved out congestive heart failure from its label, it could not induce infringement of GSK’s patents covering that specific use.  GSK countered that Teva’s marketing and other public statements touting its generic drug as an AB Rated version of Coreg® proved induced infringement, even if its label was limited to non-infringing uses.  The jury agreed with GSK, found that Teva’s marketing materials caused physicians to prescribe generic carvedilol for congestive heart failure, and awarded $235 million in damages.  The district court granted Teva’s motion for JMOL and overturned the jury verdict, and GSK appealed.

The Federal Circuit reinstates the $235 million award and makes new law

In a split decision, the Federal Circuit sided with GSK and reinstated the jury verdict and $235 million damage award.  The Federal Circuit found sufficient evidence to sustain the jury’s verdict based on “ample record evidence of promotional materials, press releases, product catalogs, the FDA labels, and testimony of witnesses from both sides.”  In these materials, Teva advertised that its product was a “generic of Coreg®” and “AB rated,” without any statement restricting the generic version to the non-patented uses listed on its skinny label.

Chief Judge Sharon Prost dissented, opining that “Congress … specifically designed [skinny labelling] such that one patented use would not foreclose a generic from marketing a drug for other unpatented uses.”  In her view, the majority’s approach to induced infringement “undermines Congress’s design for efficient generic drug approval,” thus slowing generic entry into the market.

Following the decision, Teva filed a motion for extension of time in which it expressed its intent to file a combined petition for panel rehearing and rehearing en banc.

Practice pointers for brand-name and generic manufacturers

For brand-name manufacturers, GSK may provide new leverage in approaching litigation and negotiating settlements with generic challengers.  Brand manufacturers now have a roadmap from the GSK decision to assert induced infringement of method-of-use patents, even when the generic manufacturer has limited its drug to a skinny label that carves out all infringing uses.

Prudent generic manufacturers are planning to scrutinize their promotional materials, press releases, public market predictions, and other external communications to ensure they are not triggering liability under GSK by suggesting that their generic drug can be used for all uses of the brand-name drug.

Will GSK kill the use of skinny labels?  Likely not.  But if the decision stands, it may affect the cost-benefit analysis for generic companies in structuring their advertising materials and selecting which products to pursue.

Learn more about this decision and its implications for your business by contacting any of the authors.