“Skinny Labels” for Generic Drugs Under Hatch-Waxman

https://crsreports.congress.gov

Updated December 27, 2024

“"Skinny Labels”" for Generic Drugs Under Hatch-Waxman

New “brand-name”-Waxman

New "brand-name" drugs are often protected from generic competition by patentspatents. In general, a drug manufacturer intending to market a generic version of a brand-name drug must eithereither wait for those patents to expire or challenge the validity or applicability of the patents in court.

While some drug patents cover the active ingredient itself, other patents cover different things related to the drug, such as a method of using the drug. When some methods of using a drug are still patented but other uses are not, the Hatch-Waxman Act of 1984 (P.L. 98-417) provides a special process to allow limited generic entry before patent expiration. This process—sometimes called Hatch- Waxman’s “skinny-label”Waxman's "skinny-label" provisions—allows a generic manufacturer to seek approval from the U.S. Food &and Drug Administration (FDA) onlyonly for approved uses of the drug no longer protected by patents. This In Focus provides background on the skinny-label provisions.

and issues for Congress relating to skinny labels.

New and Generic Drug Approval

All new drugs must be approvedapproved by FDA before they can be marketed or sold in the United States. New drugs are generally approved by FDA through a new drug application (NDA). To obtain FDA approval, NDA sponsors typically conduct clinical trials to demonstrate a drug’'s safety and effectiveness—a costly and time-consuming process. NDA sponsors must also submit proposed labelinglabeling for the drug for FDA’'s approval, includingincluding the approved indications for use of the drug (e.g., the diseases or conditions that the drug is approved to treat). Although FDA approves new drugs for specific indications, physicians may still prescribe an approved drug “"off label”" to treat other indications that FDA has not reviewed for safety and effectiveness.

To encourage generic drug entrymarket entry of generic drugs, Hatch-Waxman created a separate pathway for FDA approval through abbreviated new drug applications (ANDAs). ANDA filers need only showshow that their product is pharmaceutically equivalent and bioequivalent to an FDA-approved drug with the same active ingredient (such that the new drug can be expected to have the same therapeutic effect). As a result, generic drug manufacturers need not conduct their own clinical trials on safety and efficacy, and often sell the drug at lower prices. ANDA filers must also propose labelinglabeling for the generic drug, which generally must be identical togenerally must be the same as the referenced brand-name drug’'s labeling.

Pharmaceutical Patents

Patents, which Patents are granted by the U.S. Patent and Trademark Office, protect new to protect new and useful inventions. Patent rights last for aboutabout 20 years. If the patent is valid, no oneno one else may make, use, sell, or import the patented invention in the United States during that period without permission from the patent holder. Pharmaceutical

Drug manufacturers may patent a drug’'s active ingredient, drug formulations, methods of using a drug,use (indications), and devices to administer a drug, and methods of making a drug (among other things). A single brand-name drug may be protected by multiple patents that expire at different times.

Orange Book Patents and “Use Codes”

"Use Codes" An NDA sponsor must submitsubmit to FDA information on any patent that either (1) claims the drug (i.e., an active ingredient, formulation, or composition patent) or (2) claims a method of using the drug for which FDA approval is sought.

For method-of-use patents, FDA regulations require the NDA sponsor to includeinclude a description of the patent and information on whether the patent claims one or more FDA-approved methods of using the drug. This description must be adequate to assist future ANDA filers in determining whether the patent covers a given approved use (i.e., a drug’'s indication). The description provided by the NDA sponsor on method-of-use patents is knownknown as a use code. The NDA sponsor must also identifyidentify the sections of the proposed drug label that describe the method(s) of use claimed by the patent. If the drug is approved, FDA publishespublishes the patent information and use codes (along with any updates) in a resource known as the “"Orange Book.”." The Orange Book listslists all FDA-approved nonbiologic drugs, along with therapeutic equivalence evaluations and information on drug patents and other exclusivities. (For more information, see CRS In Focus IF12644, Patent Listing in FDA’'s Orange Book.

)

FDA views its authority over patent information in the Orange Book as “ministerial.”"ministerial." That is, FDA does not independently verify the accuracy of use codes and other patent information; FDA merely publishes it in the Orange Book. NDA sponsors must declaredeclare that the patent information they submit is accurate and complete.

ANDAs and Patent Certification

Paragraph I-IV Certifications Under Hatch-Waxman, ANDA filers mustmust usually make a certification for each patent listed in the Orange Book for the drug at issue. For example, ANDA filers may certifycertify that there are no patents listed for the drug or that all the listed patents are expired. In that case, FDA may approveapprove the ANDA whenever its review is complete.

ANDA filers may also may make what is called a paragraph IV certification: a claimclaim that the listed patent is either invalid, or would not be infringed (i.e., violated) by the ANDA filer making and selling the generic drug. Paragraph IV certifications often leadlead to patent litigation in federal

“Skinny Labels” for Generic Drugs Under Hatch-Waxman

https://crsreports.congress.gov

court. If the NDA sponsor timely files suit following a paragraph IV certification, FDA generally cannot approve the ANDA for 30 months while the litigation proceeds (known as the “"30-month stay”).

").

Section viii Statements and “Skinny Labels” "Skinny Labels" Hatch-Waxman provides an additional patent certification option for method-of-use patents. With a section viii statement, an ANDA filer certifies that the patent does not cover the uses of the drug for which the ANDA filer seeks approval. Section viii statements are typically used when only someused when some (but not all) approved methods of using the drug are still patented. Through a section viii statement, an ANDA filer may seek FDA approval onlyonly for the approved uses of the drug that are not patented. Unlike a paragraph IV certification, a section viii statement does not delay FDA’'s ability to approve the ANDA (i.e., the 30-month stay does not apply). Along with a section viii statement, the ANDA filer must submit proposed labeling that omitsomits the parts of the brand-name drug’'s labeling that correspond to still- patented uses identified by the NDA sponsor. For this reason, generics relying on section viii statements are said to “"carve out”" the patented uses. The result is a skinny label for the generic version.

Challenges to Orange Book Patent Information

Use Codes The use codes and label portions identified by the NDA sponsor definedefine what the ANDA filer must carve out when using a section viii statement. If the use codes are overly broad (i.e., they extend beyond what a patent actually claims) then an ANDA filer may be unable to use a section viii statement as a practical matter, and may choose to file a paragraph IV certification or wait to file the ANDA..

ANDA filers’' ability to challenge the use codes and other patent information provided by NDA holders is limited. While FDA provides a regulatory processprocess to dispute Orange Book patent information, FDA regulations provide that FDA will not change the informationwill not change Orange Book patents or use codes unless the NDA holder agrees to update or correct itthem. In the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MPDIMA) (P.L. 108-173), Congress created a counterclaimcounterclaim allowing ANDA filers to seekseek a court order correcting or deleting Orange Book patent information. Because the counterclaim is notnot an independent cause of action, an ANDA filer cannot assert it unless they are sued first (e.g., after a paragraph IV certification).

In Caraco Pharmaceutical Labs. vPharmaceutical Labs. v. Novo Nordisk (U.S. 2021), the Supreme Court construed the scope of this counterclaim that MPDIMA created. The Court unanimously heldheld that the counterclaim could be used by generics to correct inaccurate use codes (e.g., use codes that purport to cover methods not actually protected by patent).

Justice Sonia Sotomayor wrote separately in Caraco to note her view that the ruling did not fully “fix” the problem of overly broad use codes. As the MPDIMA counterclaim is not an independent cause of action, an ANDA filer cannot proactively challenge an inaccurate use code in court. Rather, they must first make a paragraph IV certification, potentially be sued, trigger the 30-month stay, and only then seek to correct use codes via the counterclaim. In

Justice Sotomayor’s view, the result is “delay and expense the statutory scheme does not envision.”

express her view that action from FDA or Congress is needed to fully "fix" the problem of overly broad use codes.

Skinny Labels and Induced Patent Infringement Liability

Because the brand-name drug is still protected by one or more patents, patients and doctors may use a skinny-label generic in an infringing manner (i.e., for still-patented uses) despite a skinny label. And if. If a generic manufacturer takes active steps to encourage the "carved out" patented uses, they may be held liable for inducing patent infringement.

inducing patent infringement. Recent judicial decisions on patent infringement liability for skinny-label drugmakers have increased concerns by some stakeholders about whether the skinny-label provisions remain effective in facilitating partial generic competition.

In GlaxoSmithKline LLC v. Teva Pharmaceuticals USA (Fed. Cir. 2021), the U.S. Court of Appeals for the Federal Circuit addressed whether generic manufacturers may be liable even if they carve out the indications identified in the Orange Book’s use codes and do(Federal Circuit) affirmed a jury verdict finding a generic manufacturer liable for inducement even though the manufacturer carved out the label portions identified by the brand's use codes and did not specifically tell doctors to use the generic for carved-out uses. In GSK v. Teva, the Federal Circuit affirmed a jury verdict finding the generic manufacturer liable, holdingThe majority in GSK v. Teva held that a jury could reasonably find that Teva actively induced patent infringement based on generic’s labelthe generic's label (which included an infringing indication not identified by the use code), advertising, and press releases. The Supreme Court declined to hear Teva's appeal in 2023.

In Amarin Pharma, Inc. v. Hikma Pharmaceuticals USA (Fed. Cir. 2024), the Federal Circuit reversed a lower court decision that dismissed a complaint alleging induced infringement by a generic manufacturer using a skinny label. The allegations of inducement in that case focused on the skinny label itself and press releases that promoted the skinny-label drug as a "generic equivalent" of the brand-name drug. Following a brief from the U.S. Solicitor General arguing that skinny labels themselves should not "be treated as evidence of culpable encouragement to infringe," the Supreme Court agreed to hear argument in Hikma v. Amarin during its October 2025 term.

Considerations for Congress

Should Congress seek to clarify Hatch-Waxman'. Judge Prost dissented, arguing that allowing liability in the case “throw[s] a wrench into Congress’s design” for the skinny-label provisions. Although the U.S. Solicitor General urged the U.S. Supreme Court to take the case, the Court declined to hear Teva’s appeal in 2023.

Considerations for Congress

Following Caraco and GSK v. Teva, some stakeholders question whether Hatch-Waxman’s skinny-label provisions remain effective in facilitating partial generic competition when only some uses of a drug are patented. Should Congress seek to clarify the Hatch-Waxman’s skinny-label provisions, there are several possible issues it may consider.

One issue concerns responsibility for monitoring and correcting Orange Book use codes and other patent information. The FDA does not independently verify listed patents or use codes, and generic manufacturers have limited means to challenge this information before filing an ANDA. Becausethem, yet inaccurate use codes may interfere with an ANDA filer’sgeneric drugmakers' ability to effectively use section viii statements, generic manufacturers may decline to file an ANDA or use paragraph IV certifications instead. This may lead to unneeded . This may lead to litigation and delay in generic approval in some cases. Congress may consider whether to impose more responsibilities on FDA to monitor Orange Book patent information, or to expand current procedures for challenging that information. For example, Congress could consider creating an independent cause of action to correct Orange Book patent information (such as that proposed by S. 1128 in the 118^th118th Congress).

GSK v. Teva makes clear that a generic Cases like Hikma v. Amarin and GSK v. Teva make clear that under current law a drug manufacturer may sometimes be liable for inducing patent infringement when marketing skinny label generics. The case hasThese cases have arguably increased risk and uncertaintyuncertainty for generic manufacturers when using the section viii pathway. Congress may thus consider whether to clarify when generic manufacturers using a skinny label should be liable for indirect patent infringement through a statutory safe harbor (such as that proposed by S. 43 and H.R. 6485 in the 119th Congress). S. 5573 in the 118^th Congress).

“Skinny Labels” for Generic Drugs Under Hatch-Waxman

https://crsreports.congress.gov | IF12700 · VERSION 2 · UPDATED

Kevin J. Hickey, Legislative Attorney

IF12700

Disclaimer

This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you wish to copy or otherwise use copyrighted material.