Key Takeaways:
- Supreme Court set to consider cert. petition on generic drug use of “skinny labels” to avoid infringing method of use patents.
- Court expected to consider cert. petition during court conference on May 11, 2023.
- Whatever decision the Supreme Court makes regarding Teva’s petition against GSK may send ripples throughout the drug industry. If the petition is denied, that may signal to many the end of the skinny label safe harbor. If it is granted, it could lead to greater clarity.
The Supreme Court is expected to consider Teva’s pending petition for certiorari in the highly anticipated GlaxoSmithKline LLC v. Teva Pharms. USA, Inc. on May 11, 2023, a case that could carry enormous implications for the pharmaceutical industry and patent litigation. It concerns the practice known as “skinny labeling,” a practice authorized by the Hatch-Waxman Act and used by generic drug makers to avoid infringing patents that cover methods of use.
The case centers on GSK’s branded drug product, Coreg®, which uses carvedilol (a type of beta blocker) to treat high blood pressure and heart failure, and Teva’s generic version of that product. Despite Teva’s use of a skinny label, a jury found that Teva had induced infringement of GSK’s method of use patent. The trial judge then set that verdict aside, a split Federal Circuit panel reversed siding with the jury, and the full circuit court denied en banc review over vigorous dissents. Teva’s certiorari petition argues that the Federal Circuit’s decision could sow “competition-killing uncertainty,” contrary to the Hatch-Waxman Act, which the U.S. healthcare system “cannot sustain.” While we await the Supreme Court’s decision on certiorari, this client alert provides an overview of the case, the legal issues at stake, and the potential impact of the Supreme Court’s ruling on the industry.
Why Monitor Teva’s Cert Petition?
Teva’s petition raises important questions concerning how the Hatch-Waxman Act will be interpreted for both branded and generic manufacturers and may affect the scope of generic liability for years to come. The actual facts of the case, as we discuss below, are convoluted and case-specific—and perhaps a reason to deny certiorari—but Teva and amici have brought larger issues to the Court’s attention.
The Hatch-Waxman Act provides three options for an abbreviated new drug application (ANDA) applicant to address unexpired patents listed in the FDA’s Orange Book (officially called the Approved Drug Products with Therapeutic Equivalence Evaluations). Two of these options address a listed patent directly: an applicant may certify that it will market its generic drug only after the relevant patents expire (a “paragraph III certification”) or submit a so-called “paragraph IV” certification certifying its belief that the relevant patents are invalid or would not be infringed by the manufacture or sale of its generic product. 21 U.S.C. § 355(j)(2)(A)(vii)(III)-(IV). Submission of a paragraph IV certification is an act of infringement (35 U.S.C. § 271(e)(2)) that might trigger litigation. The third option allows the ANDA applicant to apply for FDA approval to market the generic drug for less than all of the approved indications of the branded, provided the branded product is approved for multiple indications, thereby avoiding any relevant method-of-use patent listed in the Orange Book. 21 U.S.C. § 355(j)(2)(A)(viii). Mechanically, the FDA assigns “use codes” for approved indications that correspond to Orange Book-listed patents methods of use, and those use codes also appear in the Orange Book; skinny labels remove that indication and therefore that use code for the generic.
Typically, the ANDA applicant must propose a label that is identical to the brand’s except that the skinny label provisions allow a generic applicant to “carve out” indications that correspond to still-patented methods of use. See Caraco Pharm. Labs., Ltd. v. Novo Nordisk, A/S, 566 U.S. 399, 406 (2012); see also 21 C.F.R. 314.94(a)(8)(iv) and (12)(iii)(A). The FDA has the authority to approve a generic using a skinny label if the proposed omissions “do not render the proposed drug product less safe or effective than the listed drug for all remaining, non-protected conditions of use.” 21 C.F.R. 314.127(a)(7).
The Long and Fraught History Behind this Case
In 1995, the FDA approved GSK’s Coreg® for three separate indications: (1) “treatment of mild to severe heart failure of ischemic or cardiomyopathic origin, usually in addition to diuretics, ACE inhibitor, and digitalis, to increase survival”; (2) “reduc[ing] cardiovascular mortality in clinically stable patients who have survived the acute phase of a myocardial infarction and have a left ventricular ejection fraction of ≤40% (with or without symptomatic heart failure)”; and (3) “management of essential hypertension.”
Teva submitted its ANDA for generic carvedilol in 2002. At the time the Orange Book listed two relevant GSK patents - one claiming the carvedilol compound and one, the ’069 patent, claiming a method of using carvedilol to treat congestive heart failure. Teva certified it would not market its generic until 2007 when the carvedilol compound patent expired, a paragraph III certification, and provided a paragraph IV certification as to the ‘069 patent (GSK did not sue at the time). The FDA tentatively approved Teva’s ANDA as of 2007, when the compound patent expired. As that date approached, Teva amended its label to carve out treating congestive heart failure—the ’069 patented method of use—and launched its generic version with this “skinny label.”
Meanwhile, GSK obtained reissue of the ’069 patent, called the ’000 patent, in January 2008. The ’000 patent covered “a method of decreasing mortality caused by [congestive heart failure] by administering carvedilol with at least one other therapeutic agent” and was set to expire in 2015. GSK timely notified the FDA of its new ’000 patent and the FDA added the ’000 patent with the same use code as for the ’069 patent to Coreg’s Orange Book listing. Teva took the position that it need not certify as to the ’000 patent because its ANDA had already been approved and so it did not need to seek approval for maintaining any labeling carve outs. However, in 2011 the FDA required that Teva amend its label to add the previously carved out congestive heart failure indication, and Teva began using the revised label which included the same three indications as the Coreg label including the ’000 patent’s congestive heart failure indication.
In 2014, GSK sued Teva for inducing infringement of the ’000 patent. At trial, the district court instructed the jury to consider liability during two distinct periods: the skinny label period after launch, i.e. from 2008 to 2011, and the full label period thereafter. The jury found infringement for both periods, but the district court granted Teva’s motion for judgment as a matter of law (“JMOL”) holding that no reasonable jury could find that Teva’s marketing of generic carvedilol had caused doctors to prescribe the generic drug to treat congestive heart failure during the skinny label period.
A divided Federal Circuit panel issued an opinion that it then vacated on rehearing in favor of a second decision. The second opinion, also for a divided 2-1 panel, agreed with GSK that the district court failed to properly consider Teva’s press releases and promotional materials during the skinny label period, and so it reversed the JMOL. This second panel decision stated that “when the provider of an identical product knows of and markets the same product for intended direct infringing activity, the criteria of induced infringement are met.” In dissent, Chief Judge Prost warned that this holding “slow[s], rather than speed[s], the introduction of low-cost generics” because it essentially wipes out the practice of skinny label launches despite congressional approval. Teva’s petitioned for review en banc, which was denied with 4 dissents.
In its petition for certiorari, Teva asks ”can the generic manufacturer be held liable on a theory that its label still intentionally encourages infringement of those carved-out uses?” Teva asserts that the Federal Circuit’s decision “eviscerates the key element of inducement liability: the requirement that a plaintiff prove active steps to encourage direct infringement”, arguing that the decision “effectively nullifies a Congressional enactment created specifically to encourage precisely what Teva did here: bring a low-cost generic drug to market labeled for unpatented uses.” In opposition, GSK’s question presented was slightly different: “When a generic drug is doubly indicated for a patented use, and there is strong record evidence of intent and inducing conduct, can the generic manufacturer evade liability for induced patent infringement merely because it did not include on its label (i.e. ‘carved out’) one of the two indications corresponding to the patented use?”
In late March 2023 the Solicitor General urged the Court to grant certiorari, warning that the Federal Circuit’s decision deterred use of the skinny label pathway. The Solicitor General cautioned that “[t]he decision below subverts the balance struck by Congress, creates significant uncertainty for [the] FDA and generic manufacturers, and invites gamesmanship by brand-name manufacturers.”
What Comes Next?
The Supreme Court is expected to consider Teva’s petition during a conference on May 11, 2023, and so the Court will likely announce its decision on the petition shortly. Whatever decision the Supreme Court makes regarding Teva’s petition will send ripples throughout the drug industry. If the petition is denied, that may signal to many the end of the skinny label safe harbor. If the Supreme Court grants the petition, it will have an opportunity to provide much needed clarity. We will continue to closely watch the case and report on the Court’s certiorari determination.
