Although a generic drug product is generally required to have the same labeling as the reference listed drug (RLD), there is an exception for indications and other conditions of use that are protected by a patent or regulatory exclusivity. The statute (21 U.S.C. § 355(j)(2)(A)(viii)) allows the generic sponsor to remove or “carve out” the protected indication or other condition of use from the product labeling, and submit a “section viii” statement explaining that the applicant does not seek approval for the protected use. The agency’s regulations (21 CFR 314.94(a)(8)(iv)) similarly authorize omission of both patented and exclusivity-protected uses. Because there is a similar statutory provision for 505(b)(2) applications (21 U.S.C. § 355(b)(2)(B)) allowing labeling carve-outs, the court’s decision could affect 505(b)(2) products as well.
In this case, Teva launched a generic version of GSK’s Coreg® (carvedilol) with two of that product’s three indications (hypertension and ventricular dysfunction after heart attack), while omitting the patented indication for congestive heart failure (CHF). Despite the “carve out,” GSK sued Teva for “induced infringement,” arguing that Teva induced physicians to prescribe the generic for the patented CHF indication.
GSK argued that circumstantial evidence supported a finding of inducement, based on Teva’s product labeling, advertisements, and user manuals directed to a class of direct infringers. The court noted evidence that included Teva product catalogs that referred to the generic as the “AB rated generic equivalent of GlaxoSmithKline’s Coreg® tablets.” Interestingly, this suit involved not only the product’s labeling (which is often the basis for infringement or induced infringement claims), but also allegations related to post-approval product launch activities
At trial, the jury sided with GSK, awarding $235 million in damages, but the district court overturned the jury verdict, finding insufficient evidence that physicians relied on Teva’s labeling in making their prescribing decisions. GSK appealed to the Federal Circuit, which decided in October 2020 (as we summarized online here) that there was “substantial evidence” of induced infringement in Teva’s promotional materials, press releases, and product catalogs – including communicating the product’s “A” TE rating – along with evidence that physicians and providers took these sources as signaling that the generic could be substituted without regard to the limits of the product’s labeling.
After the October 2020 ruling, eight generic manufacturers joined Teva in urging the court for en banc rehearing, which the court construed as also requesting panel rehearing. The amici expressed concerns that the Federal Circuit’s decision could be read to upset the “careful balance struck with section viii carve-outs,” and that the ruling could be construed to mean generics may be held liable for merely marketing and selling under a labeling carve-out omitting all patented indications. On February 9, 2021, the CAFC granted Teva’s petition for panel rehearing, which took place before the same judges who had written the 2020 opinion.
Misleading TE rating promotion may be evidence of patent infringement
In the Orange Book, the U.S. Food and Drug Administration (FDA) applies TE evaluation codes to indicate whether generic drugs may be considered substitutable for the RLD. An “A” rating (including an “AB” rating, as is at issue in this case) generally indicates FDA’s determination that products are therapeutically equivalent, which is the basis in most states to allow (or require) substitution of one product for the other.
A key issue in the GSK case was whether promotion by the generic drug sponsor of an A rating can be used as evidence that the company induced physicians to prescribe the generic for the all of the RLD’s indications, including any that are carved out from the generic’s labeling. FDA assigns TE ratings to generic products without regard to whether the generic is approved for fewer than all of the indications or conditions of use as the brand name reference product. This creates an obvious tension between FDA’s TE rating, which suggests the generic may be fully substitutable for the branded product, and the actual generic product, which may have labeling that is nominally designed to suggest that the product should be used only for certain, more limited uses.
This case highlights the consequences of this tension: although a generic may omit patent- or exclusivity-protected uses from its labeling, FDA’s manner of assigning TE codes in the Orange Book applies broadly to a product, making no distinction as to indications and arguably negating the practical effect of the carve out in actual use.
Upon rehearing, the CAFC responded to concerns that the 2020 decision could be construed to mean a generic could be held liable for induced infringement merely by noting (without mentioning any infringing uses) that FDA had rated the product as therapeutically equivalent to a brand name drug.
Walking back its 2020 statements on the subject, the CAFC clarified that generics may be held liable for induced infringement if they market a drug product with labeling that describes a patented use, or if they take active steps to encourage doctors or patients to use the drug in an infringing manner. However, the court clarified that generics generally will not be held liable for merely marketing and selling under labeling that carves out patented indications or conditions of use, or for simply noting (without mentioning any infringing uses) that FDA had rated a product as therapeutically equivalent to a brand name drug.
The court found that, in this instance, Teva induced infringement by marketing a drug product with labeling that actively encouraged an infringing use, as well as using marketing materials that encouraged the purportedly carved-out indication. The court stated: “This 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 court also noted that “Teva’s AB rated representations under these limited circumstances, when substantial evidence supports the jury’s presumed determination regarding the label’s contents, are further affirmative evidence supporting the jury’s inducement finding.” (emphasis added). The majority added a caveat in a footnote, however: “We do not hold that an AB rating in a true section viii carve-out (one in which a label was produced that had no infringing indications) would be evidence of inducement.” (emphasis added).
Further, the 2021 majority opinion speculates that this ruling will not have a broader impact on generic drugs with labeling carve-outs, stating: “This narrow, case-specific review of substantial evidence does not upset the careful balance struck by the Hatch-Waxman Act regarding section viii carve-outs.”
Case remanded on equitable estoppel issue
One new element in the 2021 opinion is consideration of Teva’s argument that GSK’s Orange Book patent listing submission to FDA was at odds with GSK’s infringement allegations in the pleadings, and that GSK should be equitably estopped from now saying the patent covers a different indication. In general, Teva’s allegation is that the description of the patented method of use provided by GSK and presented in the Orange Book, as well as the labeling content GSK identified as covered by the patent (and therefore needing to be carved out) were limited to the CHF indication, while GSK’s argument to the court was that the use code that was listed in the Orange Book — “decreasing mortality caused by congestive heart failure” — covers all heart failure patients, including those with hypertension or ventricular dysfunction after heart attack (the two permitted indications for the generic).
The CAFC decided there are factual disputes regarding this estoppel issue that the district court has not yet had an opportunity to decide. Therefore, the court remanded the case to the district court to make determinations on these facts.
Innovators must carefully draft FDA submissions to preserve patent rights
After the release of the 2020 CAFC opinion, a number of induced infringement suits were initiated…