On August 5, 2021, a Federal Circuit panel upheld a $235 million verdict against Teva Pharmaceuticals over induced infringement of GlaxoSmithKline's Coreg (carvedilol).
The precedent setting decision has generic applicants questioning what exactly constitutes induced infringement regarding labeling carve-outs, or “skinny labels.” Should ANDA applicants still pursue Section VIII Statements over Paragraph IV Certifications?
GSK Wins $235M Coreg Patent Infringement Appeal
In 2002, Teva submitted an ANDA with a Paragraph IV certification for a carvedilol patent. Teva later submitted a Section VIII statement to change its initial Paragraph IV certification to a carved-out skinny label, removing indications and methods of use for the treatment of congestive heart failure (CHF).
Teva received tentative approval in June 2003 and final approval with an AB rating in fall 2007. The label carve-out period lasted from 2007-2011. In May 2011, Teva began selling generic carvedilol without a carve-out, using a full label that added the indication for treatment of CHF.
In 2014, GlaxoSmithKline (GSK) sued Teva Pharmaceuticals for induced infringement involving GSK’s Coreg (carvedilol) tablets. The jury ruled in favor of GSK, finding that Teva persuaded doctors to prescribe its carved-out generic carvedilol for CHF treatment and therefore knowingly induced patent infringement - to the tune of $235 million.
Teva followed up with a motion for Judgment as a Matter of Law. A District of Delaware Judge reversed the decision, holding that Teva did not induce infringement. But GlaxoSmithKline appealed, and on October 2, 2020, a Federal Circuit panel reversed the judgement in a 2-1 decision. The majority found that substantial evidence supported the original jury decision, restored the $235 million award for damages, and remanded the case back to the District Court.
On August 5, the Federal Circuit panel revived the $235 million verdict, leaving generic drug sponsors wondering whether Section VIII statements and labeling carve-outs are worth it. Teva sold under $75 million of its generic carvedilol and now owes $235 million.
What Constitutes Induced Infringement of Drug Patents?
Generic drug sponsors are able to sell drugs similar to patented Reference Listed Drugs (RLDs) using a Section VIII statement. By agreeing to remove certain indications or other conditions of use language from the product label so that it differs from the RLD label language, the Section VIII statement acknowledges that a patent exists, but that the ANDA applicant’s proposed product does not involve the same conditions of use as the patented product.
However, RLD owners may still have concerns, especially when the carved-out drug is marketed for protected indications or conditions of use. To prove induced patent infringement, RLD owners must supply evidence showing that (1) direct patent infringement resulted from an act that the accused party performed (or caused to happen) to encourage infringement and (2) that the accused party knew that the act constituted patent infringement.
Teva Carved Out CHF Indication and Method of Use
GSK’s Coreg method-of-use patent was approved under the use code “decreasing mortality caused by congestive heart failure” when administered in daily doses for more than six months in concert with an ACE inhibitor, digoxin, and/or a diuretic. In that regard, Teva’s effort to carve-out the indication for CHF treatment from the carvedilol label was intended to avoid GSK’s protected indication. In addition, Teva left out GSK’s specific use instructions.
Historically, courts have held that a plaintiff must show that the alleged party performed or induced another party to perform each step outlined in the method of use to prove induced infringement.
Teva argued that its Section VIII statement had carved-out CHF treatment as an indication and the use instructions for daily administration over six months. As it did not knowingly act to promote CHF treatment by daily administration for over six months, there could be no infringement. Courts have traditionally held that a skinny label by itself cannot serve as evidence of induced infringement.
Promotional Materials Support Induced Infringement Claim
Despite Teva’s efforts, the Federal Circuit found that Teva’s labeling practices served as evidence of inducement.
GSK’s medical expert testified that he was led to believe the generic carvedilol was to be used to treat CHF after reading a 2004 press release stating that Teva had tentative approval and expected final approval for generic carvedilol by 2007.
Later, during the label carve-out period from 2007-2011, Teva’s promotional materials referred to its carvedilol tablets as “AB-rated equivalents” of Coreg tablets. Here, GSK’s expert testified that that doctors rely heavily on promotional materials and that the term “AB-rated” leads doctors to believe the drug is interchangeable.
GSK’s medical expert also testified that a 2007 press release reading “Teva Announces Approval and Shipment of Generic Coreg® Tablets” led him to believe that doctors “should be able to prescribe generic carvedilol for heart failure."
Teva argued that it never officially marketed the generic as approved for or intended to treat CHF. Dissenting Chief Judge Sharon Prost opined that the two press releases were published before GSK’s patent was issued (2008) and that doctors don’t typically rely on an announcement of “tentative approval.” According to the dissent, an AB rating indicates “that the product is therapeutically equivalent when used as labeled,” and does not apply to off-label use.
Regardless, the jury could have found that the general statements without these limitations could have induced infringement of the carved-out indications or conditions of use. Congress did not intend Section VIII Statements and labeling carve-outs to permit generic applicants to avoid patents and exclusivity for a protection condition of use and yet market the generic drug in a way that takes advantage of being generic and AB-rated for all purposes.
The Federal Circuit held that the “criteria of induced infringement are met” due to the “ample record evidence of promotional materials, press releases, product catalogs, the FDA labels, and testimony of witnesses from both sides.”
Thursday, majority Judges Pauline Newman and Kimberly A. Moore backed the original opinion, finding that significant evidence existed to prove Teva “failed to carve out all patented indications” and was marketing its carvedilol for patent-protected uses.
Judge Prost again dissented, stating that the majority “strains to prop up a jury verdict that is unsupportable."
While the majority opinion emphasizes, "This narrow, case-specific review of substantial evidence does not upset the careful balance struck by the Hatch-Waxman Act regarding section viii carve-outs," dissenting Judge Prost warns that the majority “creates confusion for generics, leaving them in the dark about what might expose them to liability."
Teva Petition of Certiorari Denied
In July 2022, Teva submitted a petition for a writ of certiorari to determine whether induced infringement exists when a label carves out a protected method of use. In March 2023, the government submitted a brief urging the Supreme Court to accept Teva’s petition, stating, “The decision below is incorrect. No reasonable jury could have concluded that the carved-out labeling for petitioner’s generic carvedilol from 2007-2011 was itself evidence of intent to induce infringement.”
The amicus brief agreed with Judge Prost’s stance, arguing that generic labels should not qualify as evidence of intent to induce infringement when the generic adheres to section VIII pathway requirements and carves-out the specific indication listed as covered by a method of use patent. Instead, the government argues that labeling carve-outs suggest the intent is to dissuade infringement.
The brief states that 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.” The government reasoned that, “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.” Both FDA and the United Stated Patent and Trademark Office signed the brief.
On May 15, the Supreme Court denied Teva’s petition to review the decision, noting however that Justice Brett Kavanaugh would have granted the petition.
What does the Federal Circuit opinion mean for generic applicants? An important takeaway is that skinny labels alone do not safeguard generic applicants from liability for patent infringement.
Carved-out labels must be precise in stating that the product is generic for the innovator for the indications or conditions of use noted on the generic label, and/or indicate that the generic is AB-rated for the indications or conditions of use described on the label. In this way, the carve-out operates in the limited way intended by Congress.