Teva Urges Fed. Circuit to Rehear Carve-Out Patent Case

Before the Federal Circuit on Wednesday, Teva Pharmaceuticals USA Inc. filed a petition for rehearing en banc in regards to an Oct. 2 decision, seeking to reverse a noninfringement judgment as a matter of law that found Teva had willfully infringed a valid patent belonging to plaintiff GlaxoSmithKline (GSK).

The petition began by explaining a “carve-out,” a statutory mechanism allowing the sale of a lower-cost generic drug product through taking out “any reference to a patented indication from its product’s labeling” through submission of a statement indicating such to the Food and Drug Administration along with the abbreviated new drug application. The petition cited case law from 2012 finding that such a procedure prevents brands from “maintain(ing) de facto indefinite exclusivity over a pharmaceutical compound by obtaining serial patents for approved methods of using the compound.”

Teva maintained in the petition that it followed the carve-out procedure with its drug carvedilol, a generic version of GSK’s Coreg, which is used to manage hypertension, congestive heart failure (CHF), and post-heart attack complications. The patent on the carvedilol compound expired in 2007, and eight companies started launching generic carvedilol with carved-out labels omitting CHF, the patented indication, in September 2007.

In 2008, GSK reissued its patent, which claimed fewer uses of carvedilol to treat CHF. By 2011, the method-of-use patents that GSK no longer claimed were delisted, so Teva added the previously omitted information to its carvedilol label as directed by the FDA. GSK sued Teva for inducing infringement in 2014, and GSK won $235 million in damages.

The petition argued that this decision “contradicts multiple lines of settled precedent, eviscerates the Section viii carve-out, and throws inducement doctrine into disarray.” It noted “market realities,” which means that “even if (the) generic drug is formally approved only for unpatented uses, pharmacists and doctors will nonetheless substitute the generic for all indications,” in arguing that Teva did not induce physicians to prescribe its generic product but rather that it is a convention for physicians to do so. The majority’s conclusion that Teva’s expectation of making sales from its generic product was equivalent to inducing infringement was a conflation, the petition asserted.

The further argument the panel used “relied on Teva’s skinny label, without disputing that the CHF indication was fully carved-out,” and the fact of Teva’s generic product being touted as an AB-rated equivalent to Coreg to claim that Teva infringed; Teva maintained that “these facts will exist in literally any carve-out case.” The petition maintained that simply planning to distribute and expecting to make sales does not mean encouragement of infringement nor infringement itself, and that if reflecting the FDA’s judgment that the product is an AB-equivalent to Coreg means Teva was inducing infringement, “the carve-out stature truly has been ‘nullifie(d).’ ”

The petition emphasized the “grave harm to competition mak(ing) this decision exceptionally important.” Because the court’s decision effectually expanded liability for infringement inducement by generic manufacturers, the petition proffered, generics wanting to enter the market may be “discourage(d).”

Teva is represented by Goodwin Proctor LLP. GSK is represented by Fish & Richardson.