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Teva Gets Generic Drugmakers’ Backing in Bid to Redo Label Case

Dec. 9, 2021, 10:35 AM

Generic drugmakers are lining up behind Teva Pharmaceuticals to tear down a product label ruling they claim jeopardizes their ability to get low-cost drugs to market as the Federal Circuit weighs whether to rehear the case for the third time.

A divided U.S. Court of Appeals for the Federal Circuit panel has twice ruled that Teva’s label on a copycat version of GlaxoSmithKline Plc’s Coreg heart drug led doctors to prescribe the generic for an infringing use. The outcome saddles Teva with a $235 million penalty, and case watchers say the latest ruling discourages generic producers from using routine labeling strategies to bring drugs to consumers for fear of massive financial hits—even more so than the first decision.

“The panel sought to correct its decision,” the Association for Accessible Medicines said. “The sequel, however, is worse than the original.”

The practice at issue, called skinny labeling, involves leaving a name-brand drug’s patented uses off of a generic label to avoid being held liable for infringement. The generic industry group said in an amicus brief that instead of “correcting the original decision’s harms to the ‘skinny label’ regime, the new decision ‘exacerbates’ them.”

Teva in October requested that the full Federal Circuit reconsider the case. Mylan Pharmaceuticals Inc., the author of modern generic drug law, and others are also urging the court for another redo.

“The ramifications for the generic drug industry and consumers are enormous,” said Canadian drug company Apotex Inc. in an amicus brief. A full court rehearing is “critical” as the opinion “has provided brands with a blueprint for securing crippling damages awards against generics,” for using skinny labeling, the company said.

“Brands can simply lie in wait to sue on their method patents, as GSK did,” Apotex said.

GSK said in a Dec. 6 response brief that there’s no need for the court to take up the dispute again, saying that Teva’s arguments are misplaced.

“Teva’s refrain that the panel’s rehearing decision is the Armageddon for skinny label generics is belied by the dearth of cases mirroring this one that have been filed in its wake,” GSK said. “History shows that generic manufacturers by-and-large know how to execute proper skinny labels. That Teva is on the wrong side of history is no reason to rewrite it now.”

Exacerbated Harm

Last year, the Federal Circuit dealt what many consider a blow to the generic drug industry in reinstating a jury’s verdict that Teva’s sale of a generic version of GSK’s Coreg amounted to patent infringement.

That finding came despite Teva’s use of a “skinny label” that didn’t list—or “carved out"—GSK’s patented use of its name-brand drug for congestive heart failure. That’s because Teva induced doctors to use the drug for heart failure via marketing materials and press releases, the majority ruled.

The FDA had approved Teva’s label to indicate use for hypertension.

In an unusual move, the Federal Circuit agreed to Teva’s request to reconsider its ruling. In a news 2-1 decision issued in August, the three-judge panel placed greater emphasis on the Teva generic’s label rather than the press releases for inducing doctors to infringe.

Critics of that decision warn that it encourages name brand drugmakers to engage in gamesmanship, laying out a template to use the patent system to fend off generic drug competition.

“The new decision converts acts intended to avoid infringement into acts intended to induce infringement,” Mylan said in an amicus brief, noting the outcome is already spurring “copycat” lawsuits.

“The decision incentivizes brands to make their labels as interwoven as possible, so generics acting in good faith will be compelled to mention each step of the patented method,” the company added.

‘Flatly Inconsistent’

Some groups are asking the Federal Circuit to tap the Biden administration—which has voiced its commitment to protecting such practices—to wade into the case. The Department of Health and Human Services had said in a September drug price report that litigation “has raised some questions” over the future of the skinny labeling strategy,

“At a minimum, given the decision’s catastrophic impact on FDA’s generic drug program, the Court should not deny rehearing without first inviting the federal government’s views,” AAM said.

Some commenters emphasized the threat it allegedly poses to the patent law framework for getting generic drugs to market, known as the Hatch Waxman Act. Among those is Henry Waxman, a former Democratic congressman from California and lawmaker behind that law.

Waxman dubbed the majority decision “flatly inconsistent” with the law and Congress’ intent, and that if not overturned, it “will devastate the Hatch-Waxman Act’s generic drug program.”

“Congress was aware that the approval of a generic drug as therapeutically equivalent to the brand drug means that it may be safely substituted for all uses, including those that are carved out of the labeling,” Waxman said in a brief. “Congress thus intended that, without more, a generic would not be liable for infringement if a physician prescribes generic drugs for patented off-label uses.”

‘Product Equivalence’

Some warn that the effects of the decision could permeate beyond the drug industry.

In deciding Teva induced infringement of GSK’s patent, the panel majority relied on government submissions and product advertisements to determine one product is equivalent to another, a group of fourteen law professors noted in a brief.

But if product advertisements and other information that consumers—or in Teva’s case, doctors—use to make decisions are held up as evidence of patent infringement, that could have repercussions in other industries, the professors said.

“It denies basic comparative product information to consumers,” the professors said. “Statements of product equivalence are found in a range of industries beyond generic drugs, such as biosimilars, mechanical repair parts, and information and communication technology.”

Yet whether the court hears the concerns remains to be seen.

The Federal Circuit has already denied a full court rehearing once. If Teva’s second bid doesn’t succeed, the drugmaker’s next avenue would be the U.S. Supreme Court.

Otherwise, generic drugmakers say they will be left feeling its repercussions.

“From here on out, every inducement claim in the Hatch-Waxman context will need to go to trial, because virtually every generic carve out label will contain language relevant to unpatented indications that could be combined to supposedly meet the elements of a brand’s method patent claims,” Apotex said.

The case is GlaxoSmithKline LLC v. Teva Pharms. USA, Inc., Fed. Cir., No. 18-01976, GSK Response 12/6/21.

To contact the reporter on this story: Ian Lopez in Washington at ilopez@bloomberglaw.com

To contact the editor responsible for this story: Alexis Kramer at akramer@bloomberglaw.com

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