Generic Drugs and the Struggle to Compete: The Role of Skinny Labels

Abstract

Purpose:

The generic drug industry currently faces multiple, serious issues that threaten the U.S. drug supply. So-called “skinny labels” are one of the few tools authorized by Congress to expedite entry into the market by generic competitors when the first patent for a brand’s drug compound (only) expires. This paper reviews the law on this expedited marketing pathway for generic competitors, as well as limitations on its use.

Methods:

We examined the literature on patent protection of brand drugs, including the timelines for production of generic competitors. We also examined the law concerning “skinny labels” including a recent decision of the U.S. Federal Circuit Court that clearly articulates the guidelines concerning entry into the generic market, including labeling, marketing and promotion.

Findings:

Skinny labels that follow the regulations set forth in the Hatch-Waxman Act, including the necessary carve-out procedure for “methods of use” still protected by one or more active patents, do not infringe a brand drug’s label. Further, the skinny label does not induce or contribute to infringement merely because its label contains FDA-required safety data – even when the data cross-reference superiority studies on still-patent protected methods of use elsewhere in the label.

Implications:

Generic drugs have become essential to the broad general availability of clinical therapeutic agents. The Hatch-Waxman Act was intended to facilitate entry of generic competitors into the marketplace, and the skinny label is an important tool to accomplishing that end. As long as the generic manufacturer follows the essential skinny-label rules, specifically including marketing the compound without promoting or advertising those “methods of use” still protected by ongoing patents, the law will not find induced or contributory infringement.

Introduction

In an era when generic drugs have been facing challenges from multiple directions, so-called “skinny labels” offer one avenue to increasing access to life-saving drugs. Pursuant to the Hatch-Waxman Act, Congress permits generic drug manufacturers to market a competitor to a brand drug as soon as the patent on the compound expires, even when subsequent “method of use” patents are still in place.¹ Since generally a brand drug manufacturer will patent its new molecule or compound soon after it is discovered, and before its proposed “methods of use” undergo clinical study, the ”compound” patent will expire some years before its “use” patents expire. The ”Skinny label” provision allows a pathway for generic production of the molecule or compound – even while the brand has “methods of use” still protected by patent.

In 2021 the U.S. Supreme Court declined further review in the matter in Teva Pharmaceuticals USA, Inc. v. GlaxoSmithKline LLC et al., (2021)² which had created some uncertainty concerning the rules governing skinny labels. Both the lower and appeals courts in Teva held that its skinny label “induced infringement” of GSK’s brand drug, but their guidance on skinny labels was limited to those circumstances in which the generic drug manufacturer engages in unlawful advertisement or promotional activities. Teva had urged the Supreme Court to grant further review, arguing that the Federal Circuit’s 2021 ruling³ would “cause havoc,” and compromise generic drug manufacture. The Solicitor General of the United States also argued in favor of further review, expressing concern that the Federal Circuit’s opinion would result in “significant uncertainty” for generic drugmakers.

Although the U.S. Supreme Court declined review in Teva, the issue arose again recently in H. Lundbeck A/S et al v. Lupin et al (2023)⁴ and the Federal Circuit Court of Appeals has now issued that further guidance regarding the allowed use of skinny labels. It is undetermined at this time whether or not the U.S. Supreme Court will eventually weigh in on this issue.

The Hatch-Waxman Act

The Hatch-Waxman Act⁵, established in 1984, was intended to facilitate generic drug manufacture by providing incentives to generic manufacturers to prepare their products during the life of the brand manufacturer’s patent protection. The process requires a generic manufacturer to file an “Abbreviated New Drug Application” (“ANDA”) with the FDA specifying one of three permitted pathways: (1) the generic manufacturer can start the FDA approval process during the brand’s patent protection with the promise that it will not market its product until relevant patents expire;⁶ (2) the generic manufacturer can challenge the validity of the brand’s patents, inevitably triggering litigation of the brand’s patent validity;⁷ or (3) the generic manufacturer can apply for FDA approval to market a generic use of the drug limited to its initial compound and indication (emphasis added) – assuming the drug is approved for multiple indications that are protected pursuant to various “method of use” patents. This is the so-called “skinny label.” In doing so, it must strictly avoid infringing ongoing method-of-use patents.

Hatch-Waxman also made provisions for expedited marketing pathways and various “safe harbors”⁸ that protect generic manufacturers during the expedited process and periods of “regulatory exclusivity” that prevent other generic competitors from competing for a period of time. The option at issue in the present case is the Hatch-Waxman “skinny label” provision.⁹ By way of background, in order for the manufacturer of a brand drug to apply for initial patent protection, it must specify all of the compounds and the proposed use of the compounds sought to be protected. The “compound” is generally patented first, whereas “method of use” patents are often filed years later after clinical research on their use of the compound. Thus, the compound is generally discovered (and protected) first, followed by the various methods in which it might be used or delivered. Further clinical experimentation is required and the resulting FDA-approved indications are patented.

GlaxoSmithKline LLC. v. Teva Pharmaceuticals, USA

With respect to the Teva matter, Coreg^® (carvedilol) is a beta blocker which was discovered by GSK and approved by the FDA in 1995 for three identified indications: (1) treatment of mild to severe heart failure of mild or ischemic or cardiomyopathic origin; (2) reduction in cardiovascular mortality in clinically stable patients with history of myocardial infarction; and (3) management of essential hypertension. Teva filed an ANDA for the generic compound, carvedilol, upon expiration of GSK’s compound patent, but prior to the expiration of its various “method of use” patents.

Each patent expired after 20 years, with the carvedilol compound patent expiring first. The “skinny label” would allow Teva to start its generic manufacture while one or more of GSK’s “method of use” patents was still in effect. The law requires that with an ANDA for the drug compound (only), all of the “methods of use” must be explicitly “carved out” of the proposed “skinny label” during the ongoing period of patent protection. Marketing and promotion of the generic product must be limited to the compound and its approved uses indicated on the label. Any references to methods of use covered by unexpired patents violates the spirit (and the law) of the skinny label.

One of the keys to a successful skinny label carve-out is that the generic’s promotional material and advertisements avoid all indication that it is promoting the brand drug’s ongoing patented “methods of use.” If the skinny label “carves out” all patent-protected methods of use but it is nevertheless promoted in a manner that entices those uses, the generic may be liable for so-called “induced [patent] infringement.”¹⁰ The law imposes a high bar to prove induced infringement, as the brand must prove that the infringement was both “knowing” and “intentional.” If demonstrated, however, the result may be very costly.

In GlaxoSmithKline LLC v. Teva Pharmaceuticals USA, Inc., GSK obtained several patents for carvedilol covering the compound and various “methods of use.” As required, when Teva applied for a “skinny label,” it carved out GSK’s “methods of use” and certified that it would only market the compound. At about the same time, GSK also sought to reissue one of its “method of use” patents to cover “a method of decreasing mortality caused by CHF by administering carvedilol with at least one other therapeutic agent” to further extend patent protection. This was one of the case-specific idiosyncrasies that the U.S. Supreme Court may have sought to avoid.

GSK sued Teva claiming “induced infringement” created by its skinny label generic counterpart. GSK alleged that Teva’s marketing campaign (specifically press releases and promotional materials) was intended to induce physicians to prescribe generic carvedilol to “treat congestive heart failure” (among others) during the period of time that the skinny label specifically carved-out “treating congestive heart failure” as a method of use.

GSK also presented evidence that in many cases patients who been prescribed Coreg by their physicians were automatically transitioned to generic carvedilol by their medical insurance carriers based upon the skinny label, in keeping with mandatory generic substitution laws enacted in 19 states.¹² While generic manufacturers do not initiate this substitution, GSK pointed out that they certainly are aware of it. To this point, the court held that “[t]he accused infringer must have ‘knowingly aided and abetted’ direct infringement” and taken steps to encourage, recommend, or promote infringement.”¹¹

Indeed, Teva defended largely on the basis that the legal standard for “induced infringement” requires “knowing” and “intentional” misconduct. Teva denied that it provided either the instruction or the encouragement necessary to prove that it intentionally induced infringement of GSK’s “method of use” patent. With respect to the alleged mandated switch to a generic drug, Teva denied that it had any knowledge or participation, thus negating both “knowledge” and “intent.”

The jury found that Teva had willfully “induced infringement” of GSK’s “method of use” patents, based largely on the press releases and advertising that implied bioequivalence to Coreg^®. It awarded damages in the amount of $235 million. ¹² Further legal action ensued, and eventually 2 judges of a 3-member panel of the Federal Circuit Court of Appeals stated that if “a provider of an identical product knows of and markets the same product for intended direct infringing activity, the criteria of induced infringement are met.”¹³ The dissenting member of the panel countered that such a standard would essentially eliminate the use of the skinny label, despite Congressional approval of it. The U.S. Supreme Court denied further review.

H. Lundbeck A/S et al v. Lupin et al

H. Lundbeck A/S et al v. Lupin et al followed with a decision in December, 2023. In Lundbeck, Takeda Pharmaceutical Company, et al, as licensee, held the patent on Trintellix^®, (vortioxetine) an antidepressant labelled to treat major depressive disorder (MDD). That original patent on the compound was set to expire, but Takeda also held subsequent “method of use” patents with later expiration dates.¹⁴ Specifically, the subsequent patents protected “methods of use” of Trintellix for patients who suffered (1) Treatment Emergent Sexual Dysfunction (TESD) and (2) cognitive impairment with other anti-depressant medications. In this case, the generic manufacturer, Lupin, et al, was careful to carve out from its label and promotion those indications as set forth in the “method of use” patents, focusing only on the compound and its recommended doses. It did cross-reference the Clinical Studies for Trintellix^®, which Takeda presented as evidence of infringement.

Takeda sued to enjoin Lupin from marketing generic vortioxetine, alleging “induced” and “contributory” infringement. Since there was no evidence of advertising or promotion, Takeda pointed to Lupin’s label containing recommendations on prescribed dosages and cross-referencing Takeda’s “Clinical Studies” which “contained information on its superiority studies conducted for the still-protected methods of use.”¹⁵ A 3-member panel of the Federal Circuit in Lundbeck affirmed the district court, finding that Lupin’s skinny label did not encourage or induce infringement of Takeda’s patent. Distinguishing Teva, both the District and Federal Circuit Court of Appeals found that the Section viii carve-out statement was honored by Lupin and no advertising or promotional materials encouraged infringing uses.

On the issue of “induced” or “contributory infringement,” Lupin alleged that the “Clinical Studies” contained within the generic’s label reference Since Takeda’s patent-protected “method of use” concerning use of vortioxetine in patients who suffer from TESD, plaintiffs argued that defendants “induced” or “contributed to” infringement of plaintiff’s later patent by virtue of this reference. However, as explained by the U. S. Supreme Court in Bartlett v. Mutual Pharm Co. “generic drug manufacturers have an ongoing federal duty of ‘sameness.’”¹⁶ This means that pursuant to the Federal Food, Drug and Cosmetic Act,¹⁷ a generic manufacturer must carry the same safety issues on the label and can only alter it when ordered to do so by the FDA.¹⁸

Concerning Trintellix, Lundbeck specifically held that “at plaintiffs’ request … FDA approved additions to the Trintellix^® label in a section entitled “Clinical Studies” to present data from the two superiority studies …[and] a new sentence at the beginning of the section describing the adverse reactions of sexual dysfunction that cross-references the superiority studies presented elsewhere in the new label.”¹⁹ So while those references may “induce” or “contribute” to prescribing vortioxetine off-label, the law supports use of “skinny labels” and also requires that the label carry over the safety data contained in the superiority studies. The Federal Circuit specifically commented that “plaintiffs’ infringement theory depends entirely on the “Adverse Reactions” section of the defendants’ ANDA labels. However, this was essential to FDA approval to market the drug for treatment of MDD and has been present in the Trintellix label since FDA first approved the drug for the treatment of MDD.”²⁰

Finally, the mere fact that Takeda had obtained additional, subsequent, unexpired “method of use” patents, and that knowledgeable physicians could prescribe off-label for those uses, did not defeat the “skinny label” generic scheme set forth by Congress. Indeed, the Federal Circuit Court of Appeals specifically held that where there is the opportunity for substantial, non-infringing uses with narrowly crafted methods of treatment, a finding of contributory infringement is unlikely.²¹

Congressional Intent and the Skinny Label

Approximately 90% of drug prescriptions written today are filled with generic drugs and the U.S. healthcare system is greatly reliant on their availability.²² Congress created the “skinny label” avenue of early generic approval as a means of expediting generic availability. As argued by Lupin, if simply marketing a generic version of the compound is itself enough to satisfy the criteria of induced infringement, there would be no place for the skinny label. The Federal Circuit concluded that “it cannot be, as plaintiffs suggest, that a patentee can bar the sale of a drug for a use covered only by patents that will have expired simply by securing a new patent for an additional, narrower use.”²³ Thus the Lundbeck decision clarified that, consistent with 21 USC S 355(j)(2)(A)(viii) (Section viii), a skinny label lawfully carving out infringing uses will not be vulnerable to a claim of induced infringement.

In 2021, researchers from Brigham and Women’s Hospital and Harvard Medical School, with support from the Commonwealth Fund, conducted a study looking at 56 brand drugs appropriate for skinny labeling.²⁴ Twenty-four (43%) resulted in approval of a skinny label due to multiple approved indications. The study concluded that the resulting generics were able to trim off an average of 3.2 years of exclusivity for patent protection, resulting in billions of dollars of savings to consumers. This includes the blockbuster drugs, aripiprazole (Abilify) and imatinib (Gleevac). In the absence of the “skinny label” pathway, timely competition by generics would be thwarted despite Congressional intent to ensure that patent thickets do not prevent timely entry of generic competitors.

The generic drug industry currently faces multiple, serious issues that threaten the U.S. drug supply. Supply chain complications have long impaired seamless availability, which have been exacerbated by the Covid-19 pandemic. Even more critical has been the market share competition and the tightening range of price points of popular generic products. As many as 10–15 generic manufacturers can line up to produce a generic version of a successful brand product.²⁵ One line of popular thinking suggests that the skinny label is a viable solution, effectively reducing the patent life of brand drugs. ²⁶ Another line of thinking suggests that the concept of a skinny label is fraught with contradiction – reducing patent life by allowing automatic substitution of the generic product based solely upon the identification of the compound – while pretending that the fig leaf of the Section viii technical carve-out is a viable, even robust, check on the reduced patent life. The cross-reference to the Clinical Studies also suggests contradiction, although FDA can argue that such cross-referencing facilitates identification of the most currently available safety profile. The court in Lundbeck nevertheless appears to have clarified the court’s interpretation of Congress’s intent. While “skinny labels” are not the solution to the current challenges created by generic drug shortages, every obstacle to a company’s ability to market a lower-cost product contributes to the problem.²⁷ At least with the rules clarified, the risk/reward of generic manufacture – a small fraction of the 20 years of patent exclusivity reward for brand manufacture – is not further burdened with the risk that physicians, or even algorithms designed to identify generic alternatives, perhaps unbeknownst to prescribers, will be held to have induced infringement. Similarly, the FDA-required cross-referencing of clinical superiority studies in the generic skinny label also will not vitiate the validity of the label.