Can Amarin benefit from the GSK v. Teva decision regarding induced infringement for off-label sales?
Zachary Silbersher
Just when you think the Amarin saga to keep out generic competition is over, something else happens. In the latest development, the Federal Circuit issued a precedential decision in an unrelated case (GlaxoSmithKline v. Teva) that suggests that a generic could potentially be liable for inducing infringement of a patented indication, even though that indication has been carved out of the generic’s label. Will this decision benefit Amarin?
How could GlaxoSmithKline v. Teva provide a benefit for Amarin?
In the GSK v. Teva case, Teva sold a generic version of GSK’s pharmaceutical drug, Coreg®. The active ingredient in Coreg® is carvedilol. GSK’s drug was approved for three indications: hypertension, congestive heart failure (CHF) and post-MI LVD. In 2007, Teva’s generic was initially approved for only two of these indications, and it expressly carved out the CHF indication. Thus, Teva’s label was initially a skinny label. Later on, in 2011, the FDA directed Teva to amend its label to include all three indications, after which its generic was sold with a full label.
The case itself turned upon GSK’s assertion of a patent that covered the CHF indication. This was the indication that Teva initially carved out of its generic label before, years later, being instructed by the FDA to add it back in. Despite this, the Federal Circuit reversed the lower court’s ruling, and held that substantial evidence existed for finding that both Teva’s skinny label, at first, and its full label, later on, induced infringement of GSK’s patent covering its CHF indication.
Taking the reasoning of this case, it is easy to see a clear pathway for how this might benefit Amarin. Indeed, it is hard to believe that either Hikma or Dr. Reddy’s has read the GSK opinion and not asked their attorneys to advise on how this decision could impact their potential liability from launching generic Vascepa. Both Hikma’s and Dr. Reddy’s generic drugs for Vascepa have been approved only for the severe hypertriglyceridemia indication, but not for the cardiovascular indication. That means, when they launch, they will do so with skinny labels that do not include the cardiovascular indication. Yet, if Amarin could sue, or threaten to sue, either generic for infringement of its cardiovascular patents, that could either stop the generics from launching altogether, or it could potentially lead to the coveted settlement between Amarin and the generics that so deftly eluded the parties during the Nevada litigation.
Any potential suit by Amarin against a generic would have to wait until after that generic launches. Unlike the earlier Nevada suit, this potential lawsuit would not be under the Hatch-Waxman Act because it would not be triggered by the filing of an ANDA by either generic. Rather, the theory of liability would be that Hikma’s or Dr. Reddy’s sales under its skinny label, which is limited only to the severe hypertriglyceridemia indication and which carves out the cardiovascular indication, nevertheless induces infringement of Amarin’s patents covering its cardiovascular indication. Amarin could theoretically seek an injunction against the generics’ continued sales, i.e., the same relief it sought in its unsuccessful lawsuit in Nevada. Alternatively, Amarin could also seek monetary damages in the form of lost profits or a reasonable royalty. (Amarin could not request monetary damages in the Nevada lawsuit because that suit occurred under the Hatch-Waxman Act, i.e., before either of the generics launched.)
If Amarin’s suit for infringement of the cardiovascular patents has any teeth, then that alone could potentially bring the parties back to the table to negotiate a settlement. Because the generics’ exposure would include compensating for Amarin’s lost profits, that could theoretically change the calculus for the generics about whether a settlement is warranted. This factor did not exist during settlement discussions occurring within the Nevada lawsuit (to the extent that Amarin and the generics ever engaged in any settlement discussions.)
Lost profits damages could be large enough to have a material impact on the business viability of either Hikma or Dr. Reddy’s. Obviously, the scope of those damages will depend upon Amarin’s success penetrating the market with its new cardiovascular indication. Exposure to lost profits damages is typically one of the reasons that hold back generics from launching at risk. This is because, in light of the steep price decreases occurring after generic entry, a generic’s potential profits are typically eclipsed by the brand’s lost profits. That means that companies such as Hikma and Dr. Reddy’s would have to seriously consider their exposure from entry to the extent that Amarin’s resulting lost profits could have a material negative impact on the bottom line of either generic company.
Another significant consideration from the GSK v. Teva decision is that the Court found Teva liable for all of GSK’s lost profits, even though Teva was only one of at least eight generic drugs for Coreg® that had entered the market. Yet, Teva was the only generic that was sued by GSK. What that means is, Amarin can threaten to sue either Hikma or Dr. Reddy’s alone for all of its lost profits, even if there are other generics on the market, which might also include Teva or Apotex. Indeed, to the extent Teva has the opportunity to enter the market any time soon, then coincidentally, Amarin could choose to sue Teva alone.
This is potentially a big threat than any individual generic must consider before entering the market. In other words, any potential generic for Vascepa could theoretically enter the market, sell alongside three other generics, capture less than 25% of the generic market, but still be liable for all of Amarin’s lost profits. That potential level of exposure did not exist during the prior lawsuit in Nevada, and it is a safe assumption any potential generic for Vascepa is currently reconsidering the landscape of its possible exposure in light of the GSK v. Teva decision.
What are the obstacles?
While the GSK v. Teva decision has, unexpectedly, handed back leverage to Amarin that appeared all but lost, the upside for Amarin is not yet guaranteed. There are a number of caveats and qualifications that must be borne in mind before either Amarin or the generics seriously consider taking action based upon the GSK decision.
First, the GSK v. Teva case may not stand up. Before the GSK v. Teva case, there was pretty clear caselaw that held that a generic cannot induce infringement for off-label sales. The GSK case is thus potentially an outlier. There are a few telltale signs within the opinion to suggest this. For one thing, Judge Prost issued a very strong and lengthy dissent. Lengthy, detailed dissents are typically a mechanism that Judges use to telegraph to the rest of the Court that the panel has gone astray and that en banc review may be warranted.
Another telltale sign may be that the majority opinion strangely fails to address the precedent that previously held that even when generics have knowledge of off-label sales, that is not enough to amount to induced infringement. While the majority cited numerous cases addressing induced infringement outside the of the pharmaceutical context, it failed to cite to and distinguish two of the leading cases on this issue within the pharmaceutical context. These cases include Takeda Pharmaceuticals U.S.A. v. West-Ward Pharmceutical Corp., 785 F.3d 625 (Fed. Cir. 2015) and Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348 (Fed. Cir. 2003). As expected, these opinions were discussed at length within Judge Prost’s dissent.
Given all of this, Teva is likely to petition for rehearing and en banc review. It is questionable whether Hikma or Dr. Reddy’s will cut any deals, enter any settlements or even come to the table until the full Court weighs in one way or another on whether the GSK v. Teva decision will be allowed to stand. That said, this decision alone may be enough to delay either Hikma’s or Dr. Reddy’s launch for a few more months (although that will be a business decision by either generic.)
The GSK v. Teva decision also represents a fairly monumental change in the law of induced infringement for off-label sales. Given that, it is likely to attract considerable amicus attention from brands, generics and trade organizations across the pharma industry. This decision has effectively upset the expected scope of liability for most generic launches with skinny labels. By doing so, it could potentially drastically increase a generic’s potential liability for launching with a skinny label. Indeed, this is one of the main thrusts of Judge Prost’s dissent. Namely, the GSK decision essentially undermines Congress’ directive that generics are permitted to carve-out indications from their generic labels without facing liability. All of this increases the odds of the full Federal Circuit considering a rehearing.
A second important reason why the GSK opinion may not yield any benefit for Amarin relates to the concrete reasons for why Teva was found liable. The court relied extensively upon Teva’s promotional activities outside of its drug label. Unlike the Nevada suit, which assessed inducement before any generic launch, this suit will happen after a generic launch. That means the question will turn on whether the generic has affirmatively encouraged and induced doctors to prescribe generic Vascepa for cardiovascular reasons. It will therefore not focus exclusively on the wording of the generic’s label, but will sweep in each generic’s actual marketing conduct.
The point here is that that Hikma and Dr. Reddy’s are also studying and scouring the GSK opinion. The decision is essentially a roadmap of what not to do. The generics will likely design any promotional materials, activities or references to their generic drug in a manner to avoid the pitfalls made by Teva.
For example, the Court in the GSK case relied specifically upon Teva’s press releases and Teva’s product catalogues in the course of finding Teva liable for induced infringement. Those materials stated that Teva’s carvedilol tablets were AB rated equivalents of the Coreg® tablets. The Court also relied upon other press releases announcing FDA approval of Teva’s generic version of GSK’s Coreg® drug. Importantly, the Court found that these promotional materials induced infringement of the GSK patent covering its CHF indication not because they actively and affirmatively encouraged doctors to prescribe Teva’s generic for the CHF indication (the indication that had been carved out of Teva’s label). Instead, the Court found that inducement existed simply because the promotional materials failed to expressly specify that Teva’s generic drug was not indicated for the CHF indication.
In light of this, there is potentially a clear pathway for the generics to place themselves outside of the net cast by the GSK opinion. Hikma and Dr. Reddy’s will likely modify any promotional materials, either press releases or product catalogues or communications to the doctors, to specify that any mention of their generic formulation for Vascepa is not indicated for, and not encouraged for treatment of, the cardiovascular indication. That type of simple modification within any promotional materials may be enough to avoid infringement of any of Amarin’s REDUCE-IT patents. And unfortunately for Amarin, it might also have a negligible impact on whether doctors actually prescribe generic Vascepa for cardiovascular reasons.
If so, then this might all be much ado about nothing. This should demonstrate that while the GSK case is a rather fortuitous bend in the law that could serendipitously benefit Amarin’s predicament, it is not a straight shot, and the decision itself may simultaneously provide a roadmap for how the generics can avoid it. Indeed, another major distinction is that Teva was selling with a full label for at least a portion of the damages period, and there is not currently any reason we are aware of to presume that Hikma or Dr. Reddy’s will be required to do that.
The next stages of this process will be to watch whether Teva files for en banc review, and if so, whether the Court requests any reply from GSK.
What about Amarin’s en banc petition?
What about Amarin’s en banc petition? Amarin filed its petition for rehearing and en banc review of the Federal Circuit’s affirmance of the lower court’s judgment invalidating the Marine patents. We previously provided our thoughts on the likelihood of the Court taking up Amarin’s case en banc within the comments section of an earlier blog post. Amarin’s petition, as anticipated, focused upon the Cyclobenzaprine issue. More specifically, the petition argued that the lower court improperly considered the prima facie case of obviousness before turning to the secondary considerations, and by virtue of doing so, unfairly prejudged the obviousness determination against Amarin.
The petition hit the right notes that would be expected from an en banc petition within this case. We received some questions regarding why Amarin would return in its en banc petition to the same arguments that it lost on in the underlying appeal. Similarly, questions arose why Amarin would once again refrain from raising Dr. Bhatt’s argument and how his article purportedly shows that a reworking of the statistical data from Mori reveals the lack of the differential comparison between the EPA and DHA groups.
En banc petitions are not the opportunity for aggrieved litigants to take one more crack at convincing the Federal Circuit that the lower court got it wrong in their particular case. Rather, the Federal Circuit will not typically take up petitions en banc unless they demonstrate that a legal issue at stake that requires review by the full Federal Circuit. The Federal Circuit Rules specifically require the petitioning attorney to certify that the appeal requires an “answer to one or more precedent-setting questions of exceptional importance.” (Fed. Cir. Rule 35(b)(2)). This typically requires showing an existing split among the Judges at the Court over a particular legal doctrine or that a particular legal issue has spawned inconsistent precedential decisions. Raising new technical arguments that speak only to the facts of a particular case, as Dr. Bhatt’s article would, is an easy way guarantee your an en banc petition will be rejected.
Yet, at the same time, this also underscores why Amarin’s en banc petition is likely to be rejected. Given that it was a Rule 36 judgment, there is no opinion, and therefore, it is very difficult to demonstrate that this case is a good candidate for the full Federal Circuit to clarify an area of law over which the Court is clearly split. Indeed, the Federal Circuit Rules state as much. A Rule 36 judgment is necessarily a non-precedential decision, and the Rules state, “[a] petition for rehearing en banc is rarely appropriate if the appeal was the subject of a non-precedential opinion by the panel of judges that heard it.” (Practice Notes to Rule 35).
Finally, one of the most troubling obstacles to Amarin’s en banc petition is Judge Reyna. Judge Reyna was on the merits panel, and Judge Reyna has been one of the more vocal advocates for the Cyclobenzaprine framework. And yet, Judge Reyna joined the Rule 36 judgment affirming the invalidation of the Marine patents. For the Court to grant en banc review would most likely require Judge Reyna to purportedly change his view of this case. While that is not impossible, since at the end of the day nothing is really ever impossible, it remains nevertheless highly unlikely.