The recent (August 5, 2021) Federal Circuit decision of GSK v Teva, finding Teva induced infringement of a GSK patent, has created a conundrum in the drug patent world. The facts are a little bit complicated. However it is interesting to see the Government trip over itself through contradictory regulations. The following is useful background:
- Methods of use or applications of FDA approved drugs can be patent protected (in addition to separate patent protection for the drug as a composition of matter, i.e., a patent on the chemical composition of the drug).
- Congress has also authorized the FDA to approve generic versions of the drug for Non-Patented methods of use or applications. This requires the approved generic to exclude from its label all reference to the patent protected methods of use. This results in issuance of “skinny labels” (as termed in the drug industry).
- FDA issues identical “AB” rating numbers for drugs of different manufacturers (generic versus brand named) when the drugs have therapeutic equivalence. Drugs having the same AB rating can be substituted for each other by a pharmacist without seeking the prescribing physician’s approval.
- A manufacturer of a generic drug can be sued by the brand manufacturer for inducing infringement by others by substituted use of the generic drug for patent protected methods of use or application reserved for the brand name drug.
GSK manufactures the drug carvedilol under the brand name Coreg®. Use of carvedilol to “decrease a risk of mortality caused by congestive heart failure” is protected by patent. (An earlier patent covering the chemical composition of carvedilol expired in approximately 2007.) The FDA approved manufacture of carvedilol by Teva provided the Teva drug label excluded use for congestive heart failure. This was the Teva “skinny label”. The Teva label indicated only that it could be used for hypertension and left ventricular dysfunction following a heart attack.
Carvedilol manufactured by Teva has the identical FDA issued AB rating as that manufactured by GSK. However, the “per pill” price of the Teva drug is 4 cents versus the GSK price of $1.50.
Apparently GSK concluded that the Teva carvedilol drug was being substituted for GSK’s Coreg® drug in treatment of increased risk of mortality caused by congestive heart failure. GSK sued Teva for inducing infringement of GSK’s method of treatment patent.
Note that the case law on inducing patent infringement requires the patent owner (GSK) to show the alleged infringer (Teva) took active and intentional steps to encourage others to use the Teva’s drug to infringe use of the GSK method of use patent, i.e., treatment for congestive heart failure. Evidence of Teva’s intent and action to induce others to infringe is required. Existence of knowledge that infringement is possible is not sufficient. In other words, it is not sufficient to show Teva knew its carvedilol drug could be used for treatment of congestive heart failure.
As stated, GSK sued Teva for inducing infringement of the GSK patent. The case was heard by a jury. The jury awarded GSK $234 million in damages for infringement. However the judge, upon motion brought by Teva, determined that there was no evidence to support the jury award. The judge found that there was no evidence that any doctor was ever induced by the Teva drug label to prescribe the Teva drug for treatment of congestive heart failure. In other words, the judge did not find evidence that Teva caused the switch from Coreg® to the Teva manufactured carvedilol. The judge also found evidence that the prescriptions for GSK Coreg® were automatically switched by pharmacists without the prescribing doctors’ knowledge.
Deprived of its $234 million jury award for lost profits, GSK appealed the federal trial judge’s decision to the Federal Circuit. The Federal Circuit ruled on August 5, 2021 that the trial judge was in error. The Federal Circuit was swayed by evidence that Teva advertised that its drug was equivalent to GSK’s Coreg® and possessed the same AB rating. However this was all true. The FDA issued the identical AB rating, indicating to the medical industry that the Teva carvedilol was the therapeutic equivalent.
Interesting is the fact that due to the substantial price difference between the Teva drug and GSK drug, Teva lost money on the sale of its carvedilol drug.
More important, Chief Judge Prost dissented from the other Federal Circuit judges and wrote a lengthy dissent, essentially arguing that Teva’s conduct did NOT create any inducement but rather had conducted itself correctly in complying with all government regulations.
Chief Judge Prost’s dissent succinctly states:
- GSK’s patent for carvedilol expired in 2007 but GSK still had a patent on one of the drug’s three FDA approved uses.
- Absent statutory permission, the FDA could not approve a less expensive generic coming to the market even though the drug itself and the other two uses were unpatented.
- The Hatch-Waxman Act enacted the “skinny-label” provisions to provide this permission and allow approval of less expensive generics to enter the market for non-patented uses.
- GSK defined the text (describing the patent protected use of the drug) to be excluded from Teva’s label (thereby creating the skinny label).
- To achieve FDA approval of Teva’s carvedilol, Teva’s drug had to be the equivalent to the GSK Coreg®. The FDA determines the drug equivalency.
- The decision of the majority of the Federal Circuit judges (finding induced patent infringement) “throws a wrench into Congress’s design for enabling quick public access to generic versions of unpatented drugs with unpatented uses.”
This is an example of how compliance with government (FDA) regulations does not protect against very significant liability for perceived violations of other government (patent) law. There is no dispute that Teva complied with FDA regulations. Indeed, it appears the FDA’s assignment of identical AB ratings empowered pharmacists (or pharmacists directed by insurance companies) to substitute the drastically less expensive Teva carvedilol for the brand name GSK Coreg® regardless of the prescribing doctor’s intent.
Teva has promised to appeal the Federal Circuit decision. In the meantime, the decision throws a damper on the intended goal of the law, i.e., encouragement of lower cost generic drugs to enter the market at an early opportunity.
© David McEwing 2021