Background

To promote generic competition, the Hatch-Waxman Act established a pathway through which the U.S. Food and Drug Administration (FDA) may approve an abbreviated new drug application (ANDA) for a reference listed drug (RLD) protected by a listed patent if the ANDA applicant submits a statement certifying that it will omit or “carve out” from its labeling information pertaining to a protected use. To prevent generic drugs from gaining approval for patented uses, the onus is on the RLD sponsor to describe the patented uses (which FDA publishes in the Orange Book).

Labeling carve-outs, sometimes called “skinny labels,” are an exception to the general rule under the Federal Food, Drug, and Cosmetic Act (FDCA) that ANDA products have the same labeling as the RLD.[1] An ANDA applicant seeking to omit an approved indication or condition of use from the generic drug’s labeling can submit a “section viii statement” that acknowledges that patent information has been submitted to FDA for a patent, but that the patent at issue does not claim an indication or use for which the ANDA applicant seeks approval.[2] FDA may approve an ANDA with a carve-out only if the proposed labeling omissions “do not render the proposed drug product less safe or effective than the listed drug for all remaining, non-protected conditions of use.”[3]

A labeling carve-out does not provide a wholesale safe harbor from patent infringement for generics that only nominally carve out protected information, or for those that leverage the “A” therapeutic-equivalence rating to affirmatively suggest that their product is de facto available for all uses for which the RLD is approved, or that otherwise advertise or promote their products for carved-out use. Now that SCOTUS has denied certiorari in the Teva Pharms. USA, Inc. v. GlaxoSmithKline, LLC “skinny labeling” case, it is settled law that generic drug sponsors relying on a labeling carve-out to gain FDA approval may still be at risk of litigation for inducing other actors to infringe the RLD sponsor’s patent.

Teva v. GSK

In the legal battle between Teva and GSK, the patent holder (GSK) sued the generic drug manufacturer (Teva) for induced infringement, arguing that Teva induced physicians to prescribe its generic carvedilol for the carved-out indication of congestive heart failure (CHF), for which GSK’s branded carvedilol product Coreg^® was patented. GSK argued that circumstantial evidence supported a showing of inducement, including Teva’s product labeling, advertisements, and user manuals directed to a class of direct infringers. This evidence included Teva’s product catalogs that referred to Teva’s carvedilol as the “AB rated generic equivalent of GlaxoSmithKline’s Coreg^® tablets.”

The jury ruled in favor of GSK, awarding $235 million in damages. The district court, however, overturned the jury verdict, holding that the skinny label did not instruct doctors to prescribe generic carvedilol off-label for the protected CHF indication. Therefore, no reasonable jury could find that Teva’s marketing of generic carvedilol induced infringement.

A divided panel of the U.S. Court of Appeals for the Federal Circuit revived the jury verdict in October 2020 and August 2021, confirming both times that a reasonable jury could find Teva liable for induced infringement (as we summarized online here and here). In sum, the Federal Circuit indicated that “the content of the product label” itself was “evidence of inducement to infringe.” The court held that there was “substantial evidence” of induced infringement in Teva’s promotional materials, press releases, and product catalogs – including communicating the product’s “A” therapeutic equivalence rating – along with evidence that physicians and providers took these sources as signaling that the generic product could be substituted without regard to the limits of the product’s labeling.

Teva petitioned SCOTUS for a writ of certiorari. In March 2023, the Solicitor General asked the Supreme Court to review the case, arguing:

The section viii pathway cannot function properly if FDA and generic manufacturers cannot rely on an NDA holder’s representations to the agency regarding which portions of the brand-name drug’s labeling teach patented methods of use. Uncertainty about the section viii pathway is likely to deter generic manufacturers from invoking that mechanism, thereby threatening the availability of lower-cost generic drugs, in contravention of the statutory design.

SCOTUS denied Teva’s certiorari petition, with only Supreme Court Associate Justice Brett Kavanaugh voting to hear the case. The Court’s refusal to consider Teva v. GSK carries significant import for the drug industry, and it settles the debate, at least for now, over whether a labeling carve-out is a “blanket” safe harbor. The case confirms innovators’ rights to assert induced infringement claims following FDA approval, in certain circumstances. As a result, generic manufacturers that obtain approval by proposing nominal or incomplete skinny labels will be launching “at risk” with respect to the patents. In addition to labeling language, other activities by a generic sponsor, such as promoting a generic product for the infringing use or leveraging the “A” rating to indicate that the generic can be used for all of the RLD’s approved uses, may be evidence of induced infringement.

One lingering question that will be decided on remand is the issue of equitable estoppel as a defense to GSK’s claim of induced infringement. Teva had argued that it could not be held liable as it relied on GSK’s representations to FDA regarding the scope of the patent and the specific indications in the labeling that were protected. The district court decided that the equitable estoppel issue was reserved to be tried to the Court at a later date, and the Federal Circuit found there were factual disputes regarding the issue that the district court had not yet had an opportunity to decide.

In light of SCOTUS’s refusal to hear the case and the remaining estoppel question on remand, the interaction between carve-outs and patent infringement has become even more complicated, and even more important. Among the issues requiring renewed attention:

• How RLD sponsors craft use codes to describe the patented use, and how they relate the use codes to what’s protected in the labeling;
• The manner in which FDA relies on use codes to inform the scope of the carve-out; and,
• How generic drug sponsors approach not only the labeling carve-out, but also other promotional activities that may induce infringement.

Next steps

For RLD sponsors, the case affirms that generics can and should be held accountable for induced infringement even where the protected use is nominally carved out. Moving forward in the post-Teva v. GSK landscape, RLD sponsors should continue to pay careful attention to how generic promotional materials and other communications might be suggesting or encouraging use of their products for carved-out uses. The case also highlights the complex connection between Orange Book listed use patents, the reference listed drug’s PI, and generic drug promotional labeling and other activities.

Of particular note, the Federal Circuit’s decision leaves the validity of Teva’s estoppel defense in flux. Until this question is affirmatively answered, RLD sponsors’ assertions to FDA when listing patents in the Orange Book must be made carefully to avoid a potential equitable estoppel defense to an induced infringement action. Patents, especially method of use patents, must be carefully described in use codes when listing patents in the Orange Book via FDA Form 3542, and sponsors must claim each section of the labeling that contains protected information. These forms and assertions must also be kept current, particularly following subsequent approvals and labeling revisions.

We will continue to monitor new cases that may arise related to pharmaceutical labeling carve-out regulations, and keep you informed of any legal updates.