“If policymakers genuinely want lower drug prices, the better starting point is stronger (i.e., more certain, reliable and enforceable) patent rights that encourage the development of innovative medicines—the very medicines that will one day be generics.” – Jeffrey Depp
Thursday’s Supreme Court ruling in Wisdom v. Amir has been discussed as a definitive win for the generics industry and may have implications beyond pharmaceutical and Hatch-Waxman cases. The Court criticized the U.S. Court of Appeals for the Federal Circuit (CAFC) for its trend of what the Court called focusing on “whether the relevant statements could be read by medical providers as instructions to infringe” when judging induced infringement in Hatch-Waxman cases. Below, stakeholders weigh in on the upshot of the ruling and what it means for pharmaceutical innovation going forward.
“The Supreme Court decision in Wisdom v. Amir will likely be celebrated as a win for generic drug manufacturers as it will be viewed by some as providing greater certainty to the law regarding skinny drug labels. However, I think the decision may cast greater uncertainty over what constitutes a proper skinny label. In particular, I think we are likely to see lower courts grappling with more questions regarding whether FDA-mandated statements on a drug label are actively inducing infringement.”
Jeffrey Depp
, Center for Innovation, Competition & Entrepreneurship Policy (Center ICE Policy)
“The Supreme Court’s unanimous decision in Wisdom v. Amir is disappointing, though not surprising. The Court has once again prioritized the perceived benefits of accelerated generic entry over the long-term incentives that drive pharmaceutical innovation. By effectively elevating the Hatch-Waxman Act’s “skinny label” framework above the realities of how medicines are actually prescribed and used, the Court reinforces a regulatory construct that has become increasingly detached from market behavior.
What struck me throughout this litigation—and particularly during the oral argument—is how clearly it illustrates the failure of the central premise underlying Hatch-Waxman. At argument, counsel repeatedly returned to the fact that Hikma’s product and Vascepa were, for practical purposes, “the same stuff.” Anyone familiar with pharmaceutical markets knows that doctors and patients generally care far more about therapeutic equivalence and price than about the intricacies of a label carve-out. Physicians are free to prescribe drugs off-label, and patients certainly do not make treatment decisions based on the legal boundaries of a skinny label. In other words, the label is largely for regulators and lawyers. Yet Hatch-Waxman assumes policymakers can engineer market outcomes through distinctions that matter greatly in Washington but rarely matter to the doctors and patients making real-world treatment decisions.
Forty years later, we are still debating high drug prices, while innovation incentives have steadily weakened. If policymakers genuinely want lower drug prices, the better starting point is stronger (i.e., more certain, reliable and enforceable) patent rights that encourage the development of innovative medicines—the very medicines that will one day be generics.”
“The availability of the skinny label pathway has clearly been important to the generic drug industry and today’s decision reflects a reaffirmation of the pathway. At the same time, FDA and Congress have acknowledged the need to provide and maintain incentives to support the development of new uses of existing products to maximize the utility of existing drug products – sometimes even years after their approval, like in FDA’s recently announced initiatives around repurposing drugs. As with everything in the Hatch-Waxman space, a careful balance between innovation and competition needs to be maintained for the system to work properly. After every significant Hatch-Waxman milestone, FDA needs to consider whether its everlasting balancing act needs any adjustment to ensure that both innovation and competition both remain robust.”
“The decision is pretty much a complete victory for Hikma and the generic drug industry. It certainly affirms the practice of skinny labeling and will generally shield generic companies who have appropriately carved out the patented indication from their label from being held liable for induced infringement even if there are general statements made about the generic product being AB-rated and the like.
The 9-0 decision and the fact that it came out so quickly after oral argument is also noteworthy in that it signals that the entire Court was in agreement with the position taken by Hikma and the generic drug industry in this case.
The Court’s decision appears to be grounded in its conclusion that inducement of infringement requires affirmative steps to encourage infringement, and the court concluded that general statements about AB-rating or safety information in the label were passive steps.
Although direct infringement does not depend on the mental state of the infringer (i.e., it is a strict liability standard), for inducement, the Court emphasizes that there must be active steps taken by the accused infringer to state a case (i.e., the accused infringer’s actions demonstrates a desire for someone to infringe the patent).
Interestingly, in a footnote, the Court rejects what it describes as the trend by the Federal Circuit as set forth in the GSK/Teva case to focus on how medical providers will read statements instead of on whether the defendants actively encouraged infringement through their statements.
Although the Court found that active encouragement can be both explicit and implicit, the Court stated that the encouragement must be “clear” and “affirmative.”
Relying on its Twombly decision on pleading standards, the Court found that the statements by Hikma had an “obvious alternative explanation,” including that the clinical study was required by FDA and that calling a product a “generic version” was standard industry practice, not active inducement.
At bottom, the Court found that all of the statements that Amarin pointed to did not plausibly establish that Hikma was encouraging infringement by medical providers.
Although this decision may still allow for inducement claims to be brought when active steps are taken by a generic company to encourage infringement, it will certainly be a sigh of relief for the generic drug industry and will support the continued use of skinny labeling to avoid infringement of method of use patents.
“Basically, this unanimous opinion by the Supreme Court implements a significant clarification in how ‘induced infringement’ is applied under U.S. patent law and may now be harder to prove across all cases.
This decision by the Supreme Court significantly redefines and tightens the requirements for induced infringement, providing a far more bright-line test and, from a practical standpoint, has made it significantly harder to prove in future cases.
Because the Court articulated a general rule, the impact will extend well beyond pharmaceuticals and skinny labeling contexts.
Several high?stakes ongoing litigation cases should be impacted by this ruling immediately, including medical?device cases involving dual?use surgical systems, software and SaaS cases where user manuals or UI flows allegedly encourage infringing configurations, and consumer?electronics cases involving configurable wireless or health?tracking features.
In each of these areas, the plaintiffs have generally relied on infringement theories involving capabilities, implied operability, general training materials, knowledge by the defendants of how the consumers will likely use the products, and so on. These are the very types of arguments for inducement that the Court has now rejected.
The decision also highlights an important distinction between method and apparatus claims in a patent. A method claim covers steps that are performed; an apparatus claim covers what the system is from a structural or configuration standpoint. Since inducement is inherently tied to use, method claims remain the more natural vehicle for inducement theories.
Under the new standard, induced infringement of an apparatus claim now requires encouragement of configuration, not just knowledge of capability. Knowing that the customer may likely use the product in an infringing way is insufficient under the new standard.”
“Hikma has implications outside the world of Hatch-Waxman litigation. The Court rejected both Amarin’s argument that pleading the sheer possibility of induced infringement was sufficient at the motion to dismiss stage, as well as Hikma’s contention that active inducement had to be ‘express.’ Rather, the Court focused on the absence of ‘affirmative’ statements or actions by the alleged infringer, not ‘mere omissions, inactions, or non-feasance.’ Hikma does not fully close the door to induced infringement, including in the context of skinny labels, but it narrows the pathway for patentees to meet the pleading standards.”
“The Court’s decision is not surprising. It was clear during oral argument that the justices were going to reverse the Federal Circuit. Although skinny labeling was always going to survive this decision, the Court’s analysis of what is required for “active inducement” will now permit generic companies marketing products under a skinny label a bit more freedom in their marketing efforts. The most interesting aspect of the decision to me is how the Court addresses the labeling instructions. Those instructions are required by statute to be copied from the FDA-approved brand’s label (except that the non-patented use must be carved out). Because Hikma was merely complying with its legal obligations, the Court holds that the labeling instructions cannot provide a basis for active inducement conduct. This will be a big benefit to those seeking approval of drugs using skinny labels and likely will impact a brand’s ability to rely on a generic company’s proposed labeling instructions as a basis for infringement outside the context of a case involving a Paragraph IV certification.”
“The Supreme Court decision affirms the longstanding statutory provision that generic drug companies are able to carve out areas that are protected by patents or periods of market exclusivity from their labeling and not have to file a paragraph IV patent challenge. Generic companies will still have to be aware of statements and how they advertise and promote their generic products to avoid claims of inducement of patent infringement. The public will benefit from the earlier availability of high quality, therapeutically equivalent and lower cost generic drugs.”
“Today’s ruling could put the Hatch-Waxman Act’s careful balance at risk. That law built the world’s best generic drug market by pairing a robust generic pathway with real protections for innovation. This has resulted in nearly 90% of today’s prescriptions in the U.S. being filled with generics with an average copay of under $7.
Skinny labeling under Hatch-Waxman was designed to let generics enter the market for non-patented uses, not as a free pass to promote patented ones. It is important to be able to protect patented uses of a medicine to provide the incentives needed to invest in researching new uses for existing medicines.
Congress should reject any legislation that erodes patent protections — patients waiting on the next breakthrough can’t wait.”