The End of the Road for the Skinny Label?

Well, it’s official: The Federal Circuit decision in GSK v. Teva stands, as the Supreme Court has decided not to hear the case on appeal.  While the statistics were against the Supreme Court taking up the case given the limited number of cases heard per year, it’s definitely disappointing for those of us who have been watching the case for the last 7 years.  And, for generics, the Federal Circuit decision will be looming large behind any carve-out proposals, keeping open the possibility of liability for induced infringement even if compliant with the statutory scheme permitting such carve-outs.

We previously noted that “the skinny label may be dead” and, while we still can’t be sure if it’s truly gone (but not forgotten), we now know that the Supreme Court won’t hear this case at this time.  As a result, the case goes back to the Delaware District Court where additional issues not decided in the original 2017 trial will be presented to the court.  Among the issues to be presented in a bench trial is whether GSK should be prevented from asserting its patent on the use of carvedilol to treat congestive heart failure because of representations it made to the FDA as to which uses of the drug that patent covers.  So GSK may not see any money yet, but the Federal Circuit’s position on induced infringement—that a carve-out, even if legally permissible under the FDCA, can still be the basis of an induced infringement claim— stands firm.  In the Federal Circuit rehearing decision, the Court did state that “[w]e do not hold that an AB rating in a true section viii carve-out (one in which a label was produced that had no infringing indications) would be evidence of inducement,” but whether a carve-out is a “true carve-out” may be unclear and may only be clear once a carve-out is challenged in patent litigation.  Each patent carve-out, therefore, will be subject to a fact-specific inquiry as to infringement.

Due to the subjectivity of a fact-specific inquiry, whether in the hands of a jury or a District Court judge, the carve-out is now, from a practical perspective, fraught with peril.  If the sufficiency of a carve-out can be assessed only by a court, there is a risk that any carve-out could be the subject of litigation.  Indeed, we’ve already seen some of these cases being brought.  The subjectivity of that assessment makes all carve-outs liable for litigation, which significantly increases the risk of a tool that’s supposed to be used precisely to avoid litigation.  This leaves generic manufacturers with a real concern that any carve-out will be brought to court, which may significantly reduce the number of carve-outs by risk-averse generic companies.

Further, FDA, in its ministerial role, only looks at the use code and approves a carve-out based on the use code.  But the decision here suggests that the use code really doesn’t do enough.  Generic manufacturers, as they always have before, must review the patents and carve-out information in accordance with that patent.  But generic manufacturers are hamstrung because FDA will only permit them to carve-out the use code.  Consequently, RLD sponsors now have an incentive to include a narrower use code, walking a potential carve-out into an induced infringement claim.  In other words, where before there was incentive to have use codes that were too broad to prevent carve-outs in the first place, now there are incentives to have use codes that are too narrow to permit an induced infringement claim.  And the only practical way to address an overly broad or overly narrow use code is in the throes of patent litigation!

So, while the skinny label may not actually be dead, there will certainly be a reluctance to use it.  Perhaps Congress will weigh in, but until then, we’ll say that the skinny label is on life-support.