The Federal Circuit decision in GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc., is getting attention for potentially “endangering” the practice of skinny labelling. Indeed, the Federal Circuit held that Teva’s skinny label did not shield it from liability for inducing infringement of an Orange Book-listed method of use patent. Chief Judge Prost’s dissenting opinion argues the majority decision upsets the “critical balance” between promoting innovation in the pharmaceutical space and permitting low-cost generic drugs to enter the market, but the realities of prescription drug practices make it hard to pick a side when an innovator develops and patents a new use for a known drug.

The Coreg® Patents And Approved Uses

The underlying litigation related to an Orange Book-listed method of use patent for GSK’s Coreg® (carvedilol) product. The FDA originally approved Coreg® for treatment of hypertension. The first Orange Book listed patent was U.S. Patent 4,503,067, which claimed carvedilol and methods using it to treat “hypertension and/or angina pectoris.” In 1997, GSK obtained approval of Coreg® for treatment of congestive heart failure. In 1998, GSK obtained U.S. Patent No 5,760,069, which claimed a “method of decreasing mortality caused by congestive heart failure,” by administering “carvedilol in conjunction with one or more other [specified] therapeutic agents.” GSK listed the ’069 patent in the Orange Book with a use code for “decreasing mortality caused by congestive heart failure.” According to the Federal Circuit majority opinion, in 2003 the FDA approved the “Coreg® combination” for “use by patients suffering from left ventricular dysfunction following a myocardial infarction.”

In 2002, Teva filed an Abbreviated New Drug Application (ANDA) seeking approval of its generic carvedilol product, making a Paragraph III certification for the ’067 patent (which was set to expire in 2007) and a Paragraph IV certification for the ’069 patent. Teva’s proposed labeling did not include the indication and prescribing information for treatment of congestive heart failure, but in 2011 FDA required Teva to amend its label to be identical to GSK’s Coreg® label.

In 2003, GSK sought reissue of the ’067 patent, and eventually obtained Reissue Patent No. RE40,000 in 2008. Like the ’069 patent, the ’000 patent claimed a “method of decreasing mortality caused by congestive heart failure, by administering “carvedilol in conjunction with one or more other [specified] therapeutic agents,” but the reissued claims recited additional protocol details. It is the ’000 patent that was asserted against Teva in the underlying litigation.

The Trial And Jury Verdict

In 2014, GSK sued Teva for inducing infringement of the ’000 patent. In its defense, Teva argued that it could not be liable for inducing infringement of that patent because its original product had a “skinny label” that did not refer to congestive heart failure and by the time it was required to amend its label to include that indication, prescribing physicians already knew from GSK and elsewhere that carvedilol was useful for treating congestive heart failure. Thus, according to Teva, it could not have “caused” them to infringe the ’000 patent.

The jury disagreed, applying a jury instruction that provided in part:

GSK must prove that Teva’s actions led physicians to directly infringe a claim of the ’000 patent, but GSK may do so with circumstantial—as opposed to direct—evidence.

As summarized in the Federal Circuit majority opinion:

The jury found that Teva induced infringement of claims 1-3 during the period starting January 8, 2008 (the date of the ’000 patent’s issuance) to April 30, 2011 (the last day before Teva amended its label); and that Teva induced infringement of claims 1–3 and 6–9 during the amended label period starting May 1, 2011 and ending June 7, 2015 (the date of expiration of the ’000 patent). The jury assessed damages based on a combination of lost profits and royalty, and found that the infringement was willful.

The District Court’s Grant of JMOL

The district court granted Teva’s motion for judgement as a matter of law, on the basis that GSK had failed to prove that “Teva’s alleged inducement, as opposed to other factors, actually caused the physicians” to prescribe generic carvedilol to treat congestive heart failure. For example, the district court noted “many sources of information available to prescribing physicians,” including “GSK’s Coreg® label and promotion of carvedilol,” that “had already informed physicians about the uses of Coreg®.” The district court concluded:

A reasonable factfinder could only have found that these alternative, non-Teva factors were what caused the doctors to prescribe generic carvedilol for an infringing use.

The Federal Circuit Decision

The Federal Circuit decision was authored by Judge Newman and joined by Judge Moore. Chief Judge Prost filed a 33 page dissenting opinion.

The majority opinion notes the high bar for granting JMOL after a jury verdict, and finds substantial evidence to support the jury’s finding of induced infringement. While the majority opinion reviews a number of pieces of supporting evidence, it notes in particular evidence that Teva promoted its products “as AB rated equivalents” of GSK’s Coreg® tablets and as “Generic Coreg® Tablets” and testimony that physicians would have understood this to mean that the Teva product was “therapeutically interchangeable” with Coreg®. The majority opinion also quotes testimony from a Teva employee acknowledging that Teva knew it would get sales from prescriptions written to treat congestive heart failure:

Question: And so to make it specific to the issues here, if Teva has carved out congestive heart failure, but not hypertension and not post MILVD, Teva still expects to get sales where the doctor prescribed carvedilol for congestive heart failure, correct?

Answer: Yes, unless the doctor feels strongly.

Question: Writes brand only?

Answer: Yes.

All in all, the majority found “ample record evidence of promotional materials, press releases, product catalogs, the FDA labels, and testimony of witnesses from both sides, to support the jury verdict of inducement to infringe the designated claims for the period of the ’000 reissue patent.”

Chief Judge Prost’s Dissent

Chief Judge Prost strongly disagreed with the majority decision, which she characterizes as “allowing a drug marketed for unpatented uses to give rise to liability for inducement.” Judge Prost criticizes the majority for “nullifying” 21 U.S.C. § 355(j)(2)(A)(viii), which permits generic companies to obtain approval notwithstanding the existence of a method of use patent if they “carve-out” that indication from their label. According to Judge Prost, that provision was intended to make it “such that the lone method covered in the ’000 patent would not foreclose access to more affordable carvedilol.” Judge Prost also disagrees with the majority’s finding that substantial evidence supported the jury verdict:

The district court got it right: no evidence established that Teva actually caused the doctors’ infringement for either label. 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. Indeed, GSK’s own expert admitted that he had not read Teva’s label before prescribing generic carvedilol.

Chief Judge Prost also finds the damages award to be unfair, noting that “Teva only sold $74 million worth of carvedilol during the allegedly infringing period (mostly for unpatented uses) but now owes $234 million in damages for sales made for a single indication.” Judge Prost comments that “[t]his irony reflects the fact that Teva’s product was dramatically less expensive—costing less than 4 cents per pill as compared with Coreg®’s price of at least $1.50 per pill.” According to Judge Prost, “Teva did everything right—using a skinny label, taking care not to encourage infringing uses—and yet, given today’s result, it was ultimately more costly for Teva to sell an unpatented drug for unpatented uses than it would have been to stay out of the market altogether.”

Patenting New Uses Of Approved Drugs

Chief Judge Prost’s opinion indicates that 21 U.S.C. § 355(j)(2)(A)(viii) embodies a Congressional policy determination on how to balance competing interests in promoting innovation versus permitting generic drugs when patents are granted on new uses of previously approved products, but did Congress really decide that innovators should have no recourse against generic products prescribed for new infringing uses? Focusing on the “skinny label” ignores that physicians are free to prescribe approved drugs for any purpose. Indeed, both the majority and dissent cited testimony that physicians did not read Teva’s label before writing prescriptions. While a skinny label may circumscribe the activities for which a generic company can be found liable for infringement under 35 U.S.C. § 271(e)(2)(A), I’m not bothered by the majority’s decision that it does not necessarily shield a generic company from liability for inducing actual infringement under 35 U.S.C. § 271(b).