Welcome

Teva ‘Skinny Label’ Ruling Comes Amid Lawmaker Drug Cost Fight

Aug. 6, 2021, 7:24 PM

Republican and Democratic lawmakers trying to push down prescription drug prices may have just had a wrench thrown into their efforts thanks to a federal appellate court, following a decision legal experts say will make it more complicated for generics to enter the marketplace.

Brand-name drug manufacturers often take out patents on new uses for old medications. Generic drugmakers trying to enter the marketplace often slap “skinny labels” on their copycat versions of the drugs that carve out the name brand’s new, patented uses to prevent courts from holding them liable for infringement.

But on Thursday, the U.S. Court of Appeals for the Federal Circuit may have made it harder for generic companies to rely on this practice to evade legal action. In reinstating a $235 million patent infringement verdict against Teva Pharmaceutical Industries Ltd. after finding the company encouraged doctors to prescribe its generic version of GlaxoSmithKline Plc‘s heart drug Coreg for unapproved use, legal experts say the court may have added complications for generic providers trying to get their own products into the market.

“It’s going to force them to be much more careful,” Dmitry Kashtedt, a George Washington University law professor, said. “This opinion makes clear that a label, if it’s not particularly carefully written, even if it tries to avoid infringing, it can still be read as a user manual, which is a classic way to induce infringement.”

The Teva decision comes as government support for curbing the costs of prescription drugs reaches bipartisan heights. Lawmakers from both sides of the aisle and the Biden administration are leaning on legislation and government agencies to rein in drug company practices that many consider anticompetitive.

“It’s unfortunate that this decision is coming out now, when there’s so much emphasis on drug pricing” on Capitol Hill and with the administration, Scott Lassman, an FDA law and policy attorney at Lassman Law + Policy, said. “This is the type of thing that will be detrimental to that.”

The decision “undermines the whole effort to address the drug pricing issue,” Lassman said.

‘In The Dark’

A divided Federal Circuit panel rendered GlaxoSmithKline v. Teva‘s outcome. The majority dubbed the decision a “narrow, case specific review” that won’t impact other skinny label cases. The dissent claimed it leaves generics “in the dark about what might expose them to liability.”

GSK’s Coreg drug was initially approved for hypertension treatment, but the company later got approval, and a patent, for promoting the drug as a means to prevent congestive heart failure. After GSK’s patent on Coreg’s active ingredient expired, Teva started selling a generic with a skinny label only mentioning hypertension.

GSK nonetheless sued, alleging that press releases on the Teva website encouraged doctors to prescribe its generic for heart failure. Thursday’s decision marks the second time the Federal Circuit took up the case, with the majority writing “substantial evidence supports the finding that Teva’s partial label was evidence Teva instructed physicians to use its carvedilol in an infringing way.”

Some legal experts say the ruling places greater emphasis on the use of a skinny label when determining whether a generic infringes a name brand drug.

“The opinion makes clear that evidence of inducement can come from anywhere, including paradoxically the skinny label itself,” Karshtedt said. And given the current congressional climate around lowering drug prices, the decision “could spur further congressional action” for skinny labeling to be conclusively found as noninfringing.

‘More Bite’

In late July, a suite of bipartisan-backed bills aimed at lowering drug prices by curtailing allegedly anticompetitive conduct sailed through the Senate Judiciary Committee.

Among them are bills for limiting arrangements where brand drugmakers compensate generics for waiting to enter the market and prohibiting companies from changing drug formulation or delivery to transfer a patent to a new version of a product, or “product hopping.”

“Congress is interested in medical innovation,” John Thomas, a Georgetown Law professor, said. The Teva decision “would complicate” those efforts, as now, “secondary” drug patents “might have more bite.”

Thomas said for a long time, generics have “engaged in a wink-wink, nudge-nudge situation,” where they’re selling products primarily used for the carved out indication, given that from the patient and physician perspectives, “a repurposed old drug is the same as a new drug.”

Now, “repurposed drugs may be subject to meaningful intellectual property rights, and that would delay competition for repurposed drugs,” Thomas said.

Aziz Burgy, an Axinn, Veltrop & Harkrider LLP attorney who represents both generic and name brand drug companies, said the Teva decision’s impact on current legislation would be indirect, but it nevertheless leaves a murky future for drugmakers across the board.

“From the generic perspective, a lot of people are saying that the sky is falling under skinny labeling. The other side, the brand side, they’re arguing that this case in an anomaly, and that skinny labeling is not going to be adversely affected,” Burgy said.

“It’s going to create a lot of ambiguity going forward, and it’s going to create complexity over time,” he added.

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; Karl Hardy at khardy@bloomberglaw.com

To read more articles log in.

Learn more about a Bloomberg Law subscription.