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Glaxo/Teva Ruling Could Spell Trouble for Generic Drugmakers

Oct. 5, 2020, 5:58 PM

A Federal Circuit decision reinstating a $235 million verdict against Teva Pharmaceutical Industries Ltd. for infringing GlaxoSmithKline Plc‘s heart drug patent could lead to changes for the generic drug industry.

A trial court had thrown out the jury’s verdict that Teva’s sale of a generic version of Glaxo’s heart drug Coreg infringed. The U.S. Court of Appeals for the Federal Circuit, in a 2–1 ruling, reinstated both the infringement finding and the damages award based on Glaxo’s lost profits.

The $235 million penalty is three times the $74.5 million Teva made in sales of the generic drug. Such outcomes could put pressure on generic makers.

“This decision will make it harder for patients to access more affordable generic medicines in a timely way,” said Jeff Francer, senior vice president and general counsel of the Association for Accessible Medicines, a lobbying group for the generic drug industry.

But those supporting the branded drugmakers say that reaction is overblown.

“The court’s decision maintains the status quo and confirms that long-standing principles of infringement law apply to small molecule patent litigation,” said Melissa Brand, associate counsel and director of intellectual property policy at the Biotechnology Innovation Organization, a trade association representing biotechnology companies.

Teva’s position “would have resulted in a major change to patent law,” she said.

‘Skinny Label’ Dispute

Glaxo sued Teva for infringing its patent on using compound carvedilol to lessen the chance of death from congestive heart failure, even when Teva was only selling the generic version of Coreg for hypertension.

Teva said it used a “skinny label” that excluded hypertension as an indication for the generic drug. It began selling its copycat version of Coreg in 2007, when the main patent on the drug expired.

Even after a drug is approved by regulators, brand companies sometimes discover their medicine can be used for new indications, and will obtain a patent on the drug for that use. Skinny labels are used when a generic drugmaker gets Food and Drug Administration approval to sell a medicine, but only for uses that aren’t covered by active patents.

The majority agreed with Glaxo that Teva marketed the drug as the same as Coreg regardless of the skinny label. Judge Pauline Newman, joined by Judge Kimberly A. Moore, said that circumstantial evidence like press releases and marketing materials show that Teva induced doctors to infringe Glaxo’s patent.

Chief Judge Sharon Prost, in a dissent longer than the majority opinion, said the majority “nullifies Congress’s statutory provision for skinny labels,” which were meant to shield generics from liability for inducing others to infringe.

“The majority and Judge Prost clearly are at opposite ends of the spectrum on the issue of ‘skinny labels,’” patent litigator Christopher Loh of Venable LLP in New York said. This division explains why it took the court over a year to issue an opinion after oral argument, he said in an email.

Generics Will Take Care

Francer called the decision “antithetical to the Hatch-Waxman statute and FDA’s regulations that allow generic drug manufacturers to carve out patented uses of approved drugs.”

Brand disagreed, saying, “The law is very clear that generics should be able to sell their drugs for unpatented uses but not for patented ones. Teva’s new legal theory in this case would have wiped out this distinction.”

But the truth may lie somewhere in the middle, Dmitry Karshtedt, patent professor at the George Washington University School of Law, said.

“Generic drug companies will be careful not to put out press releases and other promotional materials that might drive up demand for the infringing use of the off-patent chemical, but simply focus on manufacturing the chemical and introducing it into the stream of commerce,” he said.

He finds the dissent’s concerns about nullifying the skinny label provision “misplaced” because “support for a jury verdict of inducement was based on the cumulation of the evidence.”

Teva’s press release announced FDA approval for the company to market its generic “cardiovascular agent.” That phrase is “ambiguous—it doesn’t unequivocally refer to the patented use—but here we have expert testimony that a physician would have understood it to refer to the congestive heart failure indication and the jury believed him,” Karshtedt said.

Fish & Richardson PC represented GSK. Goodwin Procter LLP represented Teva.

The case is GlaxoSmithKline LLC v. Teva Pharm. USA, Inc., Fed. Cir., No. 18-1976, 10/2/20.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bloomberglaw.com

To contact the editors responsible for this story: Keith Perine at kperine@bloomberglaw.com; Renee Schoof at rschoof@bloombergindustry.com

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