Does an AB Rating Fill Out a Skinny Label?
October 2, 2020
The Federal Circuit today issued a remarkable opinion finding inducement of infringement in a Hatch-Waxman drug patent case. The Judge Newman majority opinion focuses on written materials apart from the generic company’s “skinny label,” the statutory creature that carves out infringing uses to avoid inducing infringement. The opinion indicates that the issue of causation may be dispositive for inducement if the generic company receives the standard AB rating: therapeutically interchangeable with the brand drug.
GSK, the brand, had three patents directed to the drug carvedilol, branded Coreg®. The carvedilol product patent (’067; exp. 3/5/07); method of decreasing mortality using carvedilol and other drugs (’069) and a reissue of the ’069 (’000; granted 1/8/08), including treatment of congestive heart failure. Coreg® was approved for treatment of hypertension, congestive heart failure and left ventricular dysfunction following a myocardial infarction.
In 2004 Teva was given tentative FDA approval for its ANDA for “treatment of heart failure and hypertension,” effective after expiry of the ’067 patent. On June 4, 2004 Teva issued a press release announcing this approval, noting that Teva’s generic product was the “AB-rated generic equivalent of GlaxoSmithKline’s Coreg® tablets.”
Once the ’067 patent expired, Teva launched its generic product, with label indications “1.1 Left Ventricular Dysfunction following Myocardial Infarction . . . 1.2 Hypertension . . .” Teva’s label did not include the treatment of congestive heart failure, to which the ’069 patent was directed. Teva issued press releases and marketing materials that stated that its carvedilol is “an AB Rated generic of Coreg® Tablets. One press release stated, ”Teva Announces Approval and Shipment of Generic Coreg® Tablets.” Evidence indicated that this announcement, and the 2004 announcement―including the “heart failure” indication― remained on Teva’s website into the patent terms of the ’000 patent.
Then, in 2011 the FDA ordered Teva to amend its skinny label to be “identical in content to the approved [GSK Coreg®] labeling (including the package insert and any patient package insert and/or Medication Guide that may be required.” This “full” label included treatment of congestive heart failure. GSK sued Teva in 2014 for inducement of infringement of the ’000 reissue patent, alleging damages of almost $750m.
The Delaware District Court jury found in favor of GSK. Chief Judge Stark, however, overturned the jury verdict. The Court issued a Judgment as a Matter of Law, finding that the jury verdict of inducement did not meet the “substantial evidence” test for infringement. The District Court’s analysis itself set the stage for the appellate decision, by focusing on materials apart from the generic labeling, and resting its determination on causation. The District Court found that prescribing physicians already knew well before Teva’s generic sales of all the approved uses of carvedilol ―whether hypertension and congestive heart failure. Coreg® literature and related promotions efforts fully apprised the medical profession of all carvedilol uses. Thus Teva’s label made no difference to―did not induce―physician’s prescribing behavior.
Judge Newman took her lead from Chief Judge Stark’s analysis. After noting strict standards for (1) JMOL (granted “only if ‘the record is critically deficient of the minimum quantum of evidence’ to sustain the verdict”), and (2) the “intent” prong for inducement, (“[E]vidence that the product labeling that Defendants seek would inevitably lead some physicians to infringe establishes the requisite intent for inducement.”), the Federal Circuit Court found ample proof of causation in Teva’s extra-labeling activities and materials. Teva’s press announcements stated that its generic carvedilol was AB rated, as did its product catalogues and product guides, all of which―according to testimony―were received by and relied upon by prescribing physicians. One GSK testifying physician stated that the “AB rating” shown in Teva’s materials meant “therapeutically interchangeable. The same witness put it, “we’re completely reliant on what [the generics] provide to us.” The Federal Circuit Court discounted testimony by Teva’s witnesses that indicated doctors already had the requisite prescribing information from Coreg® materials, and didn’t look to Teva’s materials for that purpose. The Court took especial notice of Teva witnesses who admitted that “AB” would be expected to snare for Teva congestive-heart-failure uses for its generic drug.
Judge Newman’s opinion concluded:
The district court applied an incorrect legal standard, for precedent makes clear 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.
The Federal Circuit accordingly found Teva liable for damages during the term of the asserted ’000 patent, granted January 8, 2008, despite the fact that until May 1, 2011 Teva had a carved-out―skinny―label, excluding the infringing use.
Chief Judge Prost penned a substantive and lengthy dissent rooted in policy. She wrote that the majority opinion undermines the “critical balance” found in ANDA litigation “by allowing a drug marketed for unpatented uses to give rise to liability for inducement and by permitting an award of patent damages where causation has not been shown.” Teva’s “skinny label” approach, according to the dissenting opinion, was enacted by Congress for exactly the circumstances that existed in this case, namely, that the “lone method covered in the ’000 patent would not foreclose access to more affordable carvedilol.” Teva waited until the carvedilol compound expired before launching its ANDA product. By that time, GSK could not rely on Teva’s ANDA as an artificial act of infringement and had to prove induced infringement by showing “that Teva actually caused doctors to directly infringe the ’000 patent.” According to Chief Judge Prost, no communication from Teva encouraged doctors to use generic carvedilol to practice the patented method, and no evidence showed that doctors relied on Teva’s label. “This holding is no small matter: it nullifies Congress’s statutory provision for skinny labels—creating liability for inducement where there should be none. Contrary to Congress’s intent, the Majority thereby allows one patented method to discourage generics from marketing skinny labels—thus, slowing, rather than speeding, the introduction of low-cost generics.”
The opinion seems far-reaching indeed. Its broadest read is to destroy the carve-out provisions of 21 U.S.C. § 355(j)(2)(A)(viii) for AB-rated―all―505(j) generics. A narrower read suggests carving out the phrase “AB rated” to avoid inducement, and remove old press announcements claiming an infringing use from the company website. But couldn’t a fact witness be found to say that prescribing physicians already know that generic drugs are bioequivalent―AB rated? A rose by any other name would then give the same outcome. In the end, barring a rehearing or Supreme Court ruling on the inducement analysis, perhaps a constitutional challenge on the basis that the Congressional intent is thwarted provides a possible option. In the meantime, best practice would be not to promote interchangeability, and carve out from generic materials―not just the patented use―but “AB rated” language.
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