In a remarkable decision by a three judge panel of the Federal Circuit Court of Appeals, the Federal Circuit has upended decades of legal precedent and generic marketing practices, finding patent infringement against Teva Pharmaceuticals USA, Inc. (“Teva”) simply because Teva marketed its generic carvedilol tablets as “AB” rated to GlaxoSmithKline LLC’s (“GSK’s”) Coreg®. GlaxoSmithKline LLC v. Teva Pharm. USA, Inc., Nos. 2018-1976, 2018-2023, 2020 U.S. App. LEXIS 31651 (Fed. Cir. Oct. 2, 2020).
The decision promises to upend marketing practices used by generics since Hatch Waxman was enacted in 1986 if not overturned. Generics readily displace branded pharmaceuticals by comparing their drugs to their branded counterparts. Their success depends on pharmacists quickly understanding that FDA has determined the generic drug to be therapeutically equivalent, or “AB rated,” to a branded counterpart, state laws that require substitution of AB rated generic drugs, and pharmaceutical databases that link generic drugs to their branded counterparts on the basis of FDA’s AB rating.
FDA’s approval of Teva’s generic carvedilol was no different than hundreds of other generic approvals that FDA has granted under the Hatch Waxman Act. When Teva received approval for its generic version of Coreg® in 2007, Coreg® was approved for three different indications:
- hypertension;
- mild-to-severe congestive heart failure (“CHF”); and
- left ventricular dysfunction ("LVD") following myocardial infarction (heart attack) in clinically stable patients
However, only the CHF indication was protected by patent (U.S. Patent No. RE 40,000). To avoid this patent, Teva carved out the CHF indication from labeling it proposed to FDA, and secured FDA’s approval only for Coreg’s hypertension and LVD indications, in a practice commonly referred to as "skinny labeling." There was no dispute that Teva’s label did not mention CHF or encourage doctors to use Teva’s product for the treatment of CHF.
Despite this, a jury returned a verdict for $236 million dollars against Teva for inducing infringement of RE 40,000, GSK's patent for CHF. GSK’s evidence essentially took two forms:
- Teva marketed its drug as AB rated to Coreg®, in product leaflets, generic catalogs, and press releases; and
- Teva knew this AB rating would lead to its drug being used for CHF, due to generic substitution at the pharmacy.
After receiving the verdict, The District Court issued a Judgement as a Matter of Law (“JMOL”) that Teva could not be liable for patent infringement, because GSK had not proven that any doctors had even reviewed Teva’s marketing or product label. In a 2-1 split decision, the Federal Circuit vacated the JMOL and reinstated the verdict. According to the majority,
“there was substantial evidence to support the jury's findings of induced infringement, throughout the term of the '000 patent, on the entirety of the documentary and testimonial record concerning liability”
If Teva and the generic drug industry wake to the potential ramifications of the decision, a likely event given the attention this decision is garnering, we predict that this decision will be reversed or significantly modified, through an en banc reconsideration at the Federal Circuit or the United States Supreme Court. As the dissenting judge in this 2-1 decision correctly stated, based on decades of Supreme Court and Federal Circuit precedent,
“Congress … specifically designed the statutory scheme governing drug approval such that one patented use would not foreclose a generic from marketing a drug for other unpatented uses. … By finding inducement based on Teva's skinny label, which was not indicated for and did not otherwise describe the patented method, the Majority invites a claim of inducement for almost any generic that legally enters the market with a skinny label.”
We will keep you tuned to the progress of this interesting decision.
