Inducement Suit Proceeds Against Insurance Company for Encouraging Use of Generic Drug

Jones Day

In Short

The Situation: Generic drug makers often use "skinny labels" to carve out approved indications that are covered by an innovator's patents, and thus to avoid liability for inducing infringement. After launch, however, the generic's market conduct may support an inducement claim if it actively encourages use for the patented indication. In Amarin v. Hikma, the patent holder brought such a claim against Hikma related to a generic version of Amarin's Vascepa® product and, in a novel twist, also brought inducement claims against an insurance carrier for covering use of Hikma's product even for the patented indication.

The Result: On January 4, 2022, the United States District Court for the District of Delaware ruled on both defendants' motions to dismiss. The court granted Hikma's motion, concluding that it did not actively induce infringement of Amarin's patents. The claim against Health Net was allowed to proceed, however, as the court found that actions such as placing Hikma's generic on a more favorable formulary tier, coupled with Health Net's prior authorization process, were sufficient to state a colorable claim of inducement.

Looking Ahead: Amarin's decision to bring inducement claims against an insurance provider is novel, and represents the latest application of the Federal Circuit's decision in GSK v. Teva. Innovator companies would be wise to continue monitoring the law in this area as it may provide additional avenues for relief, at least in the post-marketing context.

Background

The case relates to so-called "skinny labels," in which the filer of an Abbreviated New Drug Application ("ANDA") seeks FDA approval to market a generic version of a branded drug, but "carves out" from its label certain approved indications that are covered by the innovator's patents.

At issue in this case is Amarin's Vascepa®, a prescription drug currently approved for: (i) treatment of severe hypertriglyceridemia ("SH indication"), and (ii) cardiovascular risk reduction ("CV indication"). In 2016, Hikma filed an ANDA seeking approval to market a generic version of Vascepa® for the SH indication only; the CV indication—which was covered by separate Amarin patents—was carved out of Hikma's label. The FDA approved Hikma's ANDA in May 2020, and Hikma launched shortly thereafter.

Amarin then brought this action against Hikma, asserting its patents covering the CV indication and alleging that, notwithstanding the "skinny label," Hikma was actively inducing infringement of the patents by encouraging use of its drug for CV therapy. In a novel twist, Amarin also added inducement claims against Health Net, an insurance carrier, alleging that Health Net also induced infringement of the patents by covering insurance claims where Hikma's generic product was used for CV therapy, placing Hikma's generic on a more favorable formulary tier to encourage its use, and other actions. Both defendants moved to dismiss.

The Decision

On January 4, 2022, the court made its ruling, dismissing the claims against Hikma, but allowing the claims against Health Net to proceed.

The court concluded that Hikma did not induce infringement because "there [had] been no instruction as to CV risk reduction." For one, it found Hikma's inclusion in its label of a warning regarding possible side effects for patients with CV disease was "hardly instruction or encouragement." Further, the court reiterated that generics are not required to include on their labels statements affirmatively discouraging use of a drug for patented indications that have otherwise been carved out of the generic's label.

As evidence of inducement, Amarin pointed to Hikma's press release stating that its product was a "generic equivalent to Vascepa®," and referencing Vascepa®'s sales for both the SH and CV indications. The court said that, while the press release could be evidence of intent to induce, it was not itself an inducing act. Hikma also broadcast on its website that its generic was "‘AB rated' in the therapeutic category: Hypertriglyceridemia," which Amarin contended was broad enough to encompass both patented and unpatented indications. Distinguishing the Federal Circuit's decision in GSK v. Teva, 7 F.4th 1320 (2021), the district court held that "without a label or other public statements instructing as to infringing use," the statement that a generic is "AB-rated" did not "rise to the level of encouraging, recommending, or promoting taking Hikma's generic for [the CV indication]."

Conversely, the court concluded Amarin's complaint was sufficient to state a colorable cause of action for inducement against insurance carrier Health Net. The court focused on several factors. First, Health Net had knowledge of the patents in suit by virtue of a letter Amarin sent to Health Net explaining that it had patent protection for the CV indication. Second, Health Net offered coverage of Hikma's generic drug, regardless of whether it was used for the SH indication or the CV indication. Third, Health Net affirmatively placed Hikma's generic on a more favorable formulary tier than Vascepa®, knowing that this would make the generic more financially attractive to the end user and would thus encourage greater utilization of the generic over the brand, again regardless of the therapeutic use. Finally, Health Net imposed a prior authorization process which required a pharmacist to select on a form the indication for which the patient was receiving the generic, and which included the patented CV indication. Taken together, the court found that these allegations of affirmative acts by Health Net to encourage use of Hikma's generic for the patented CV indication were sufficient to survive dismissal.

Recap

This post-marketing case illustrates a novel application of induced infringement claims in the wake of the Federal Circuit's decision in GSK v. Teva. While the district court distinguished the GSK decision and refused to allow inducement claims against ANDA applicant Hikma, it did allow similar claims to proceed against an insurer that covers use of Hikma's product.

Three Key Takeaways

  1. Inducement claims involving generic drugs arise most often in the pre-marketing context, but infringement claims focused on actual sales and marketing efforts may also be brought after the generic has launched.
  2. This case recognizes that, even where a "skinny label" insulates the generic from liability for inducement, patent holders may assert inducement claims against third-party payers who encourage use of the generic for carved-out indications.
  3. Innovators should consider carefully whether they can enforce patent rights after a generic is launched, even if a "skinny label" is used by the generic, and should monitor whether the actions of market actors other than the generic company constitute inducement.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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