In an important pharma decision, the Federal Circuit has doubled-down on its prior ruling that Teva’s sales of the drug carvedilol induced infringement of a GSK method-of-treatment patent, even though Teva’s product is approved and labeled only for non-infringing uses (as required by statute). In the new decision, however, the court makes clear that the inducement liability is due to Teva’s additional marketing activity that encouraged others to infringe.
GlaxoSmithKline v. Teva Pharm (Fed. Cir. 2021) (GSK v. Teva 2021)
The GSK Patent covers the use of carvedilol to “decrease a risk of mortality caused by congestive heart failure.” RE40,000 (original US Pat 5,760,069). The FDA approved Teva’s sales of the same drug, but only under a “skinny label” that carves-out the patented use. Teva only labeled its version for treatment of hypertension and left ventricular dysfunction following a heart attack (“post-MI LVD”). Despite the label differences, the drugs are otherwise therapeutic equivalents indicated by the FDA’s “AB rating.” Thus, many people (insurance companies, pharmacies, doctors, patients, etc) began using the cheaper generic for the patented purposes and Teva profited.
GSK sued for inducing infringement and the jury sided with GSK and awarded $200 million in damages. The district court rejected the jury verdict and instead found insufficient evidence to show causation — that insufficient evidence Teva’s actions caused the underlying infringement. Then on appeal the Federal Circuit flipped again and reinstated the jury verdict in its October 2020 decision.
The problem with the Oct 2020 decision is that it included an indication that a Generic could be held liable for inducement by simply selling a generic version of a drug and noting the therapeutic equivalence with the branded drug — without ever mentioning the patented use. The Federal Circuit has now released a new decision clarifying that such a straight use of the Skinny-Label could not justify inducement liability. In this case, however, the court found sufficient evidence that Teva went further — labelling its drug in a way that encouraged the patented use.
An important element of this decision: the FDA’s Skinny-Label Carveout approval process does not create a genuine safe-harbor for the generic launch.
The new opinion is listed as per curiam, signed by Chief Judge Moore and Judge Newman. Judge Prost wrote in dissent.
If a brand drug company (here, GSK) has a patent on one of a drug’s uses, it tells the FDA which use is patented. In fact, it tells the FDA exactly what language from its label is covered by its patents. The FDA will then permit a generic version of that drug to come to market if the manufacturer “carves out” such use from its drug label by omitting the language that the brand drug company identified. That’s what happened here. GSK’s sworn FDA filings identified just one use as patented. So Teva carved out that use and came to market with its “skinny” label. It played by the rules, exactly as Congress intended. It sold its generic for years without controversy.
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The opinion raises the doctrine of equitable estoppel. The argument is premised on the idea that GSK’s statements to the FDA led Teva to believe that its skinny-label would not induce infringement. Since Teva relied upon those statements to its detriment, GSK should now be estopped from suing Teva for inducement. This issue was not yet decided by the district court and so will be raised on remand.
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Note on the damages: $200 million was GSK’s lost profits; Teva only profited $13 million from the infringement because of its generic pricing.
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I expect that we’ll see a congressional fix following this decision.