Teva Drug-Label Case Spurs Fresh Litigation as Judges Weigh Redo

March 8, 2021, 10:31 AM

Generic drugmakers trying to market copycat medicines with limited-use labels are seeing lawsuits begin to mount after a ruling against Teva Pharmaceutical Industries Ltd. cast the routine practice into doubt.

At least five lawsuits filed since last October challenge the use of “skinny labels,” which allow generic producers to evade patent infringement by selling their own versions of branded drugs for limited purposes. Attorneys say more are on the way unless the Federal Circuit reverses or limits the scope a decision critics argue could hinder access to low-cost drugs.

These lawsuits are emblematic of “the biggest danger” imposed on the generic market from the Federal Circuit’s ruling, threatening to “cut off a lot of sources of competition,” Matthew Lane, executive director of the Coalition Against Patent Abuse, said.

A divided U.S. Court of Appeals for the Federal Circuit panel held Teva infringed GlaxoSmithKline LLC’s intellectual property by inducing doctors to prescribe its generic heart drug for patented uses, despite excluding those uses from its label. The court, in an unusual move, agreed to reconsider its decision after outcry from industry players.

The new lawsuits “show us this could be a very important decision,” Michael Carrier, a Rutgers law professor specializing in IP law, said. “If the decision is not significantly changed on a second look, then these sorts of lawsuits will continue.”

‘Piggybacking’ on Teva

In a 2-1 split, the Federal Circuit said Teva should pay $235 million for selling a generic version of GSK’s heart drug Coreg—more than three times what Teva made in generic sales. The court revived a jury’s findings that even though Teva’s label excluded GSK’s patented treatment for congestive heart failure, Teva’s marketing induced doctors to prescribe the drug for that purpose.

Dissenting Judge Sharon Prost said it was “more costly for Teva to sell an unpatented drug for unpatented uses than it would have been to stay out of the market altogether.” She said the majority decision would slow down the introduction of low-cost generic drugs.

The panel reheard the case Feb. 23, and a new decision is expected in the coming weeks.

But fallout from the initial decision has already begun, attorneys say, emboldening companies like Amarin Pharma Inc. and Endo’s Par Pharmaceutical Inc. to challenge labeling practices that generic drugmakers have relied on for quick market entry.

Amarin sued in November 2020 to get Hikma Pharmaceuticals Inc.’s generic version of its Vascepa heart medication off the shelves. Amarin alleges Hikma’s skinny label induced doctors to prescribe a generic for an indication recently approved by the Food and Drug Administration. The case is ongoing.

And Par in December sued drugmakers Amneal, Dr. Reddy’s, Eagle, and Aurobindo, arguing that proposed generic versions of its injectable low blood pressure treatment infringe its patent. The cases against Amneal and Eagle are ongoing. The parties in the other two cases agreed to drop the claims.

Attorneys say the Par lawsuits, filed in the U.S. District Court for the District of New Jersey, lean on the Teva decision in an attempt to prevent generics from entering the market. Par argues that even if the FDA were to green-light generic drugs with labels carving out its patented uses, the companies could still induce infringement by marketing their copycats for those uses.

That argument in Par’s complaints “suggests piggybacking on the GSK case,” Scott Lassman, an FDA law and policy attorney with Lassman Law + Policy, said.

‘Wave of Lawsuits’

Under the current Federal Circuit ruling, “just putting out a generic drug and marketing it as therapeutically equivalent to the brand would open up the brand to patent infringement liability,” Lassman said.

“If the Federal Circuit dials back the prior decision, it’s going to cut the legs out from some of these lawsuits,” Lassman said. “Generic companies could carve out indications, and if they didn’t specifically market those carved out indications, they’re protected from patent infringement liability.”

But a decision similar to the original would spur “a wave of lawsuits against generics, because it seems like using a skinny label is not enough to prevent a claim of induced infringement,” Carrier said.

The Federal Circuit seemed split when it reheard arguments over whether to leave Teva on the hook for $235 million.

However, the judges signaled they want to ensure generic providers can keep selling low-cost alternatives with limited-use labels. The questioning indicated that the panel would make it more clear that Teva’s case was fact-specific, and that it wouldn’t restrict the use of skinny labels in other cases.

Juanita Brooks, GSK’s lawyer and a principal at Fish & Richardson, said during arguments that generics seemed concerned “the sky is going to fall,” but that Teva’s label is “not a true skinny label.”

Carrier said the panel might decide that Teva’s label wasn’t a true skinny label because a jury had previously concluded the company didn’t carve out GSK’s patented use appropriately. That could put the case in line with the Federal Circuit’s 2010 ruling in AstraZeneca LP v. Apotex Inc., which found that a partial label didn’t carve out a protected use and therefore would lead doctors to infringe.

“If the panel is more precise about exactly what Teva did here that led it to conclude it induced infringement and that conduct doesn’t involve a skinny label, then maybe we’ll see fewer of the cases in the future,” Carrier said.

In the meantime, the new batch of lawsuits showcases the potential ramifications of the Federal Circuit decision on competition and access to low-cost medications, attorneys say.

“Is the court paying attention to these cases? Are they going to find a way to narrow their decision?” Lane asked. If they don’t, “the door is going to be open to this strategy for keeping competition out of the market.”

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

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Alexis Kramer at akramer@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com

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