In 1984, the US Congress introduced a law called the Drug Price Competition and Patent Term Restoration Act, or the Hatch-Waxman Act after the two sponsors of the bill: Representative Henry Waxman and Senator Orrin Hatch. This legislation has been attributed with launching the generic industry in the US, as it established a regulatory system for these cheaper products to operate under.
To speed up market entry of generics of drugs for multiple indications, the Act allows generic drug companies to seek US Food and Drug Administration (FDA) approval for a generic product before patents for the relevant brand-name drug have expired, explains Holland & Hart partner Lee Gray.
Generic companies do this by removing, or carving out, from their labelling any 鈥渟pecific uses that are covered by a brand company鈥檚 patents or regulatory exclusivity,鈥� adds Chad Landmon, chair of Axinn鈥檚 intellectual property and FDA practice groups. The generic is then approved by the FDA for other non-patented indications; this mechanism is known as skinning labelling and has become commonplace in the decades since the Act was introduced.
However, in October a decision by a federal circuit court regarding a case between GlaxoSmithKline (GSK) and Teva 色界吧s (GSK v Teva Nos 2018-1976, 2018-2023), which centres around GSK鈥檚 beta-blocker Coreg (carvedilol), concluded that Teva鈥檚 marketing of its version induced infringement of GSK鈥檚 patent. This is despite Teva using a skinny label, which was FDA-approved and did not mention the indication covered by GSK鈥檚 patent for Coreg.
Has this decision thrown a spanner in the works and challenged the validity of skinny labelling by the generics industry?
Pros and cons of skinny labelling
A major benefit of 鈥榮kinny labelling鈥� is that it significantly 鈥渙pens the market for these generics drugs years before it would otherwise be available鈥�, according to Gray. In turn, this means that patients have access to lower-cost versions of drugs, as University of California Hastings College of Law Arthur J Goldberg distinguished professor Robin Feldman notes.
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By GlobalDataLandmon claims that earlier access to generic products has saved patients and payors millions, if not billions in drug costs, which was why Congress put this mechanism in place in the Hatch-Waxman Act.
Carving out indications from their labels, he continues, allows generic companies to combat attempts by brand companies to both strengthen and extend their market exclusivity for their pharma products through mechanisms like and thicketing. Feldman agrees, stating in her book, Drug Wars: How Big Pharma Raises Prices and Keeps Generics of the Market, this is common as drug nears the end of its patent.
Unsurprisingly, big name pharmaceutical companies are less keen on skinny labelling. Gray explains they argue that this technique 鈥渆ffectively ends their lucrative monopoly on the drug鈥� necessary for them to 鈥渞ecoup the exorbitant cost of new drug development, clinical trials and the approval process鈥�.
He explains that generic companies argue that by using carve-outs they are only marketing the generic drugs for non-patented uses, and as such they are 鈥渘ot affecting the brand manufacturers鈥� exclusivity鈥� or patents.
Despite this, brand manufacturers argue that these generics are prescribed off-label to patented indications even if those are not listed on the skinny label, explains Feldman.
It is common for doctors to view them as equal and therefore prescribe the generic for patented uses in order to save their patient鈥檚 money, however, Feldman notes in Drug Wars that the FDA has refused to accept this rationale to refuse a skinny label.
Exploring the detail of the GSK v Teva case
In 1997, the FDA approved GSK鈥檚 branded drug Coreg for three indications: hypertension, mild-to-severe congestive heart failure (CHF) and left ventricular dysfunction (LVD) following a heart attack. However, GSK only patented Coreg for CHF. In 2007, after the expiration of GSK鈥檚 compound patent for Coreg, but before its patent in CHF expired, Teva received FDA approval to market a generic version of carvedilol for only the non-patented indications: LVD and hypertension. Teva鈥檚 approved skinny label did not list CHF.
However, in 2011, the FDA required Teva to amend its label to include CHF, meaning its generic carvedilol had an identical label to GSK鈥檚 branded Coreg. This was because GSK鈥檚 CHF patent for Coreg had expired and 鈥渟kinny labels are only available when there is a brand product on the market to use as a reference鈥� drug,鈥� explains Feldman.
The problem was that GSK had reissued its patent for Coreg in 2008 with a slight modification of the CHF indication. Gray notes that it is unclear why the FDA made this request of Teva given the newly issued 2008 CHF patent for GSK鈥檚 Coreg.
In 2014, GSK took Teva to district court in Delaware for patent infringement of Coreg. According to Gray, 鈥淕SK alleged that Teva had induced infringement during the period when Teva鈥檚 label included the CHF indication (full label period) [2011-2014], as well as the period when Teva鈥檚 label did not include the CHF indication (skinny label period) [2007-2011]鈥�.
A jury for the Delaware district court found that Teva had wilfully induced infringement during both the skinny and full label periods. This was on the basis that Teva鈥檚 marketing materials led doctors to prescribe carvedilol for CHF even between 2007 and 2011 when it was not on the product鈥檚 label.
Teva filed a motion for Judgement as a Matter of Law (JMOL) as a result of this decision. The JMOL centred on whether Teva actually induced the doctors to prescribe carvedilol over Coreg for CHF, or whether other factors were at play. The court subsequently overturned the jury鈥檚 verdict because it concluded that GSK did not prove that Teva鈥檚 actions during the skinny label period directly caused doctors to infringe the CHF patent.
GSK then appealed the JMOL in a Federal Circuit court. In a 2-1 decision, the court reversed the district court鈥檚 JMOL and restored the jury鈥檚 findings of infringement and awarded GSK $235m in damages from Teva.
The majority judgement determined that Teva could be liable for induced infringement even though CHF indication was carved out from its label. This was because of press releases and marketing materials that implied Teva鈥檚 carvedilol鈥檚 equivalence with GSK鈥檚 Coreg and, therefore, encouraged off-label use for CHF, infringing GSK鈥檚 patent.
Implications of the GSK vs Teva case for skinny labelling
However, the federal circuit鈥檚 decision was not universal. In the words of Hyman, Phelps & McNamara counsel Sara W Koblitz in an FDA law , one of the judges, chief US circuit judge Sharon Prost 鈥渧ehemently鈥� dissented from the federal circuit鈥檚 majority judgement. Judge Prost argued that the judgement nullified the practice of skinny label launches, a practice that has Congressional approval. She added that Teva was being punished for following the regulatory pathway set out in the Hatch-Waxman Act.
Teva has already indicated it will be appealing the case. The company has now successfully won its appeal, so a new hearing with the same three judge panel has been set for the .
However, the federal circuit鈥檚 decision could create considerable risks for generics companies using skinny labels. The heightened risks include 鈥渆xpensive litigation that would include extensive discovery of internal documents鈥�, including marketing materials, and 鈥渢he potential for large damage awards鈥�, according to Feldman.
The industry is now faced with a 鈥減recedent finding鈥� that even a full carve out of the patented use can lead to induced infringement, argue Hogan Lovells attorneys in . In addition, this case gives brand manufacturers a 鈥渞oadmap鈥� to challenge generic drugs relying on skinny labelling, notes Gray.
Another concern is that, as Chief Judge Prost noted in her , 鈥渃ontrary to Congress’s intent, the majority 鈥� allows one patented method to discourage generics from marketing skinny labels鈥攖hus, slowing, rather than speeding, the introduction of low-cost generics.” Landmon agreed that the decision could have 鈥渁 significant impact on delaying generic drug products coming to market鈥�.
This is particularly concerning as Gray notes that skinny labelling is the only way to market a generic drug within a branded drug鈥檚 exclusivity period without challenging the patent itself. Compared to skinny labelling, litigation is a costly and time-consuming exercise not at all in the spirit of the Hatch-Waxman Act and its aim to increase competition and lower drug prices.
鈥淲ithout skinny labelling, brand drug companies can continue to extend their monopolies by seeking new indications covered by new patents鈥�, concludes Landmon.
