By Kevin E. Noonan --
Today, the Supreme Court again disregarded the views of the Federal government regarding whether to grant certiorari, here in Teva Pharmaceuticals USA v. GlaxoSmithKline LLC, and in some ways the only positive outcome is that the Court has shown it is willing to refuse to take action is cases other than subject matter eligibility (although Justice Kavanaugh indicated he would have granted the petition). Perhaps the Justices felt that the Federal Circuit's backtracking in its second panel decision on the breadth of infringement inducement set forth in its first decision, in light of then Chief Judge Prost's strong dissent and the firestorm of protest (public and through amicus briefing regarding Teva's petition for rehearing), was enough to cabin the decision to the somewhat unique facts in this case. Nevertheless, consideration of the Solicitor General's arguments is sufficiently important to review them here despite the Court's decision not to do so.
The Federal Circuit's decisions, rendered separately (see "GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2020)" and "GlaxoSmithKline LLC v. Teva Pharmaceuticals USA (Fed. Cir. 2021)") over strong dissents by former Chief Judge Prost in both instances, regarding whether a generic applicant filing a "skinny label" ANDA could properly be found liable for inducing infringement under 35 U.S.C. § 271(b) led, not surprisingly, to a petition to the Supreme Court for certiorari. The Court issued an Order to the Solicitor General soliciting the government's views and that brief was filed in March, advocating that the Court grant cert.
The matter arose in litigation over GSK's Coreg® product (carvedilol) for treatment of hypertension (the initial approved indication; U.S. Patent No. 4,503,067), congestive heart failure (CHF) (the subject of U.S. Patent No. 5,760,069), and left ventricular dysfunction following myocardial infarction (LVD-MI). The '069 patent recites a method of treating CHF with a combination of carvedilol and "one or more of an angiotensin-converting enzyme ("ACE") inhibitor, a diuretic, and digoxin."
Teva's ANDA was filed with a Paragraph III certification over the '067 patent and a Paragraph IV certification over the '069 patent. The FDA tentatively approved Teva's generic product for "treatment of hypertension and heart failure" which Teva launched on expiration of the '067 patent. Teva's label indicated that the product was approved for treatment of LVD-MI and hypertension and announced that the FDA had given its product an "AB rating" (which the opinion explained "allow[s] users to determine quickly whether the Agency has evaluated a particular approved product as therapeutically equivalent to other pharmaceutically equivalent products"). Thereafter, the FDA required Teva to amend its label to be identical to the GSK label for Coreg®, which introduced treatment of heart failure into the approved treatments recited in Teva's label.
GSK filed for reissue of the '069 patent which was duly granted by the U.S. Patent and Trademark Office as Reissue Patent No. RE40,000; claim 1 is representative of the invention as claimed in the '000 reissue patent:
1. A method of decreasing mortality caused by congestive heart failure in a patient in need thereof which comprises administering a therapeutically acceptable amount of carvedilol in conjunction with one or more other therapeutic agents, said agents being selected from the group consisting of an angiotensin converting enzyme inhibitor (ACE), a diuretic, and digoxin,
wherein the administering comprises administering to said patient daily maintenance dosages for a maintenance period to decrease a risk of mortality caused by congestive heart failure, and said maintenance period is greater than six months.
(where the italicized portion of the claim represents the modifications introduced in prosecution of the reissue application.)
GSK filed suit against Teva for inducement of infringement in light of the Teva label, based on direct infringement by physicians prescribing the drug for the label indications. Teva argued that it had "carved out" the indication for CHF pursuant to 21 U.S.C. § 355(j)(2)(A)(viii), resulting in a "skinny label" with regard to this indication. Thereafter, the FDA compelled Teva to amend its label to include that indication. In addition, Teva argued that it could be liable for inducement only if GSK could show that Teva had "directly communicated with the direct infringers and 'caused' them to directly infringe the method in the '000 patent." In an instruction, the District Court informed the jury that circumstantial evidence could be used to satisfy this burden.
The jury found that Teva induced infringement of the '000 reissue patent both before and after the label amendment (albeit infringing several claims after but not before that change). The District Court granted Teva's motion for judgment as a matter of law (JMOL) on the basis that GSK had not "caused" physicians to prescribe their product for the infringing uses. Because proof of such causation was required, according to the District Court, its absence precluded the jury from having substantial evidence in support of its decision. The Court relied on the "many sources of information available to prescribing physicians" other than Teva's label (including paradoxically GSK's label and promotion of its Coreg® product) in finding this evidentiary deficiency. Also, the Court based its decision on physician testimony that their prescribing behavior relied on "guidelines and research, as well as their own experience" and not Teva's label. "In sum," the Court said, "substantial evidence [did] not support the jury's finding on causation, and therefore [did] not support its verdict that Teva is liable for induced infringement, during both the skinny and full label periods."
In a first appeal, the Federal Circuit reversed, in an opinion by Judge Newman joined by Judge Moore; Chief Judge Prost provided a lengthy, comprehensive dissent. The panel majority relied on the Supreme Court's decision in Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754 (2011), that copying is evidence of inducement, and also found compelling evidence from Teva's website regarding its product's AB rating with GSK's Coreg® product and other promotional content, as well as testimony from GSK's witnesses regarding physician reliance on information from generic drug makers.
The panel majority opined that the District Court erred in applying the incorrect legal standard, stating that "precedent makes clear that when the provider of an identical product knows of and markets the same product for intended direct infringing activity, the criteria of induced infringement are met." Considering this precedent, the majority held that "[t]here was 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."
Then-Chief Judge Prost dissented based on her objections to the quanta of evidence adduced and policy consequences should the majority's position be sustained. In the then-Chief's view, the majority's decision undermined the policy goals, embodied in the provisions of the law regarding skinny labels, for balance between the incentives patents provide for pharmaceutical innovation and the public's need for access to that innovation once the patent term has expired. In her view, the majority's decision undermined these policy goals by finding Teva induced infringement by marketing its generic drug produce for unpatented uses (emphasis in dissent) using its skinny label. The dissent not only disagreed with the majority's decision, but apprehended it to "nullify[y] Congress's statutory provision for skinny labels—creating liability for inducement where there should be none," contrary to Congressional intent and "slowing, rather than speeding, the introduction of low-cost generics."
The original majority opinion occasioned an outpouring of outrage from industry groups (particularly generic ones) who latched onto the then-Chief Judge's rhetoric in her dissent to the effect that the opinion eviscerated the congressional sanctioning of skinny labels. The Court granted panel rehearing that resulted in the second opinion (that was later the subject of the Court's denial of en banc review).
The outcome did not change in the second opinion, which recited with approval behavioral distinctions underpinning the majority's decision based on the law with regard to skinny labels:
Generics could be held liable for actively inducing infringement if they marketed a drug with a label describing a patented therapeutic use or if they took active steps to encourage doctors or patients to use the drug in an infringing manner. But generics could not be held liable for merely marketing and selling under a 'skinny' label omitting all patented indications, or for merely noting (without mentioning any infringing uses) that FDA had rated a product as therapeutically equivalent to a brand-name drug [emphasis in original].
Stating that the panel (or at least the majority) agreed to rehear arguments "to make clear how the facts of this case place it clearly outside the boundaries of the concerns expressed by amici," the opinion stated that the basis for their decision that the jury correctly found Teva liable for inducing infringement was "by marketing a drug with a label encouraging a patented therapeutic use" (emphasis in opinion). The opinion also stated more precisely the procedural basis for their opinion: "[t]his is a case in which substantial evidence supports a jury finding that the patented use was on the generic label at all relevant times and that, therefore, Teva failed to carve out all patented indications." The majority also emphasized that their decision was a "narrow, case-specific review of substantial evidence [that] does not upset the careful balance struck by the Hatch-Waxman Act regarding section viii carve-outs." The remainder of the majority opinion set forth (extensively) the evidentiary basis for their opinion that there was sufficient evidence (including expert testimony and marketing efforts occurring both before and after FDA-mandated changes to Teva's label) to satisfy the substantiality standard, and that the District Court erred in granting Teva JMOL to the contrary (inter alia including specific errors in treating factual questions as legal ones that the majority state were "not this court or the district court, to resolve").
Former Chief Judge Prost remained unconvinced, in large part because this outcome (in her view) undermined the congressionally sanctioned skinny label regime (if only by rendering it much more case- and fact-specific than she perceived Congress intended). The skinny label regime was Congress's solution to a "problem" it "saw coming" in Judge Prost's view, specifically that "[b]ecause the FDA cannot authorize a generic version of a drug that would infringe a patent, this one remaining patented use could have prevented a less-expensive, generic carvedilol from coming to market altogether—even though the drug itself and other uses of it were unpatented." The majority's decision thwarted this intent, according to Judge Prost, based on evidence of inducement that was "thin to nonexistent." The District Court had properly exercised its supervisory role in remedying a situation where a jury came to the wrong conclusion, Judge Prost concluded, based on her evaluation of the evidence before it. The Judge set forth her motivation for writing (once again) in dissent (and that the majority's attempt to provide a comforting standard falls short in her opinion):
I write in this case because far from being a disagreement among reasonable minds about the individual facts, this case signals that our law on this issue has gone awry. I am particularly concerned with three aspects of the majority's analysis. First, even setting aside the majority's willingness to glean intentional encouragement from a label specifically designed to avoid encouragement, the majority further weakens the intentional-encouragement prong of inducement by effectively eliminating the demarcation between describing an infringing use and encouraging that use in a label. Second, the majority defies basic tort law by eviscerating the causation prong of inducement. The upshot of these two moves is that a plaintiff now has to show very little for a jury to speculate as to the rest. Third, the majority creates confusion for generics, leaving them in the dark about what might expose them to liability. These missteps throw a wrench into Congress's design for enabling quick public access to generic versions of unpatented drugs with unpatented uses.
The decision by the full Court not to rehear the case en banc was announced in a simple Order to that effect, and was accompanied by three written dissents: one by Judge Prost, joined by Judges Dyk and Reyna; another by Judge Dyk writing alone, and the third by Judge Reyna.
The Solicitor General's brief recites most of this history as an introduction to the government's views on whether the Court should grant cert on this Question Presented:
Whether the court of appeals erred in holding that the FDA-approved labeling for petitioner's generic drug could provide evidence of intent to induce infringement of respondents' method-of-use patent, where that labeling carved out the portions of the brand-name reference drug's labeling that the brand-name manufacturer and FDA had identified as corresponding to the patented method.
The Solicitor General recognizes and extends the concerns and arguments raised by former Chief Judge Prost in her dissents below. According to the brief,
[A] jury may conclude that a generic manufacturer's engagement in the precise conduct that the Hatch-Waxman Amendments contemplate—namely, marketing an FDA-approved generic version of a brand-name drug with labeling that carves out those indications that the brand-name manufacturer has identified to FDA as claimed by a method-of-use patent—is itself evidence of intent to induce infringement of the patented method.
Under these circumstances, the government argues that uncertainty produced by the majority's decision below is "likely to deter generic manufacturers from invoking that mechanism, thereby threatening the availability of lower-cost generic drugs, in contravention of the statutory design." The brief frankly asserts that the decision below is "incorrect" because "[n]o reasonable jury could have concluded that the carved-out labeling for petitioner's generic carvedilol from 2007-2011 was itself evidence of intent to induce infringement." Reciting the requirement of intent embedded in assessment of inducement under § 271(b), the Solicitor General contends that submission of a skinny label carveout as here cannot satisfy this intent requirement in the face of Congress's intent that "one patented use will not foreclose marketing a generic drug for other unpatented ones." Any other interpretation of the statute will "substantially deter[]" use of Section viii of the statute, the brief asserts. The Solicitor General reserves from this avoidance of inducement liability situations where a generic manufacturer "actively promotes direct infringement of a brand-name manufacturer's method-of-use patent through communications other than the carved-out labeling" or when a brand name manufacturer "timely objects to the generic drug's labeling as failing to carve out a still patented method of use and puts the generic manufacturer on notice that the labeling teaches the method." In the Solicitor General's view, a generic manufacturer submitting a Section viii carveout is better understood to be evidence of an intent "not to encourage infringement" (emphasis in brief).
The brief argues that the inference of an intent to induce infringement by the Federal Circuit was erroneous inter alia because the carveout "was driven by FDA regulatory requirements and GSK's own identification of the indication that should be excised." While the brief hypothesizes that there could be circumstances where a generic manufacturer could take advantage of a branded drugmaker's failure to "identify all the language in its labeling that corresponds to a patented method of use," that was not the case here.
Like former Chief Judge Prost, the Solicitor General appreciates that the Federal Circuit's decisions below "subverts the balance struck by Congress, creates significant uncertainty for FDA and generic manufacturers, and invites gamesmanship by brand-name manufacturers" (and the FDA does not have the expertise or responsibility for reviewing patent claims to address these concerns). The structure of how the FDA has implemented this Congressional intent (by producing use codes obtained from the branded drugmakers) is ministerial, providing the needed information regarding use codes entered in the Orange Book and not independently vetting them. But in this role it is the brand-name drug manufacturers that submit the use codes, and the Solicitor General exhorts the Court that "[t]he section viii pathway cannot function as designed unless FDA and generic manufacturers can rely on brand-name manufacturers' representations to the agency" regarding, inter alia, what parts of the brand-name indications are omitted in the carveout. The continuing responsibility resides in the brand-name drugmaker to ensure that the indications in its label accurately reflect those protected by Orange Book-listed patents and any inaccuracies found in the label can be corrected by the NDA holder (none of which GSK did in this case, the Solicitor General reminds the Court).
The Solicitor General's brief also sets forth its apprehension of the harm to "competition and consumers" that could be occasioned by deigning not to grant certiorari. These include that the Section viii carveout procedural pathway is "an integral component of a complex statutory scheme designed to encourage market entry by generic-drug manufacturers 'as soon as patents allow,'" citing Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S, 566 U.S. 399, 405 (2012). The brief also cites economic statistics, including savings of more than $50 million during the first 12 months of generic sales (at over 75% price reductions) and that "first generic" approvals "often" have carved-out labels. Another aspect is time -- the brief notes that Section viii carve-outs have "permitted generic drugs to be approved for sale an average of three years before the relevant method-of-use patents expired." The Federal Circuit's decisions below threaten to reduce such benefits, the Solicitor General argues in this brief.
Finally, the government asserts that this case is a "suitable vehicle" for the Court to consider the proper relationship between the skinny label pathway, generic drug maker behavior, and inducement of infringement liability. The Solicitor General contends that the "interlocutory" nature of the decision below, being on remand to consider whether equitable estoppel provides a defense, will not diminish the broader harm to competition posed by the Federal Circuit's decisions. And the government disagrees with Respondent GlaxoSmithKline that changes to the statute have made the Court's review unwarranted because those "clarifying revisions" did not "fundamentally alter the regulatory scheme, which has always placed the onus on the brand-name manufacturer—not FDA or generic competitors—to identify accurately any methods of use claimed by a patent." Finally, the relatively specific factual bases for the Federal Circuit's decisions below should not alter the fundamental issue, the government asserts, that "the potential for inducement liability in these circumstances may significantly deter use of the section viii pathway, even if such liability is rarely imposed" (emphasis in brief). Agreeing again with former Chief Judge Prost, in future "[i]f petitioner's carved-out labeling supports a finding of intent to induce infringement [in this case], the section viii pathway will be seriously jeopardized."
Thank you for this post. I confused about this case though and would like to understand the regulatory issues better because it seems like the problem for Teva was really caused by the FDA requiring Teva to change the generic label to recite the infringing use. Once a label recites an infringing use, a finding of infringement seems inevitable. Could Teva have done anything to prevent that change to the label? If not, wasn't going ahead with sales anyway just a business decision by Teva to market the generic and hope that damages are limited to infringing uses, and not enhanced by any finding of willful infringement? Or at least that damages would just be a cost of doing business and they would still come out ahead in sales for non-infringing uses?
Posted by: Connor | May 17, 2023 at 09:27 AM
I think the hope is that the Federal Circuit's decision will be cabined by exactly these facts. The majority seems to have identified the possibility for shenanigans and ruled accordingly.
There was a case where the drug had an indication for 98% of the patients and another one for the remaining 2%. The first filer decided they would file a section viii carve-out for the 2% indication and the judge went ballistic, agreeing to keep the case on her docket so plaintiffs could return if there was any evidence of off-label use (and encouragement of such use by any of the defendants).
Not always the case but frequently enough to generate the issue.
Thanks for the comment
Posted by: Kevin E Noonan | May 17, 2023 at 02:56 PM