Generic Drugs Head to the Supreme Court

Dan Gorenstein (DG): Generic drugs now fill nine out of every 10 prescriptions in America.

Next month, one of these cheaper, copycat medicines will land before the Supreme Court.

DG: Hikma versus Amarin — it’s a showdown between two pharmaceutical companies over patents, press releases and… fish oil. It’s a quirky fight that could raise drug costs for patients and change the way generic companies do business. 

Today, we break down this case and its possible consequences.

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein. This is Tradeoffs.

*****

DG: As we reported during our series ‘Race to the Bottom,’ we’ve long counted on generic drugs to be this escape hatch for America’s very high drug prices. 

Blockbuster, brand-name medicines — while under patent — make billions. But most drugs eventually go generic and prices plummet by as much as 85%.

Amidst all the recent talk about how unaffordable health care is, this system for fostering generic competition is a rare bright spot that saves us hundreds of billions of dollars every year.

So when the Supreme Court agreed to hear a case involving a key pillar of this system, our senior reporter Leslie Walker sounded the alarm.

Leslie Walker (LW): Wee-oo wee-oo. Dan, it’s Oyez, Oyez time. 

DG: Oh no, oh no, Leslie Walker! I’m glad you’re here to help us unpack all this generic drug drama. Let’s start with the cast of characters. Who, Leslie, is involved?

LW:  Yeah, sure. So, we’ve got Hikma and Hikma is this big generic drug company that’s based out of London, and they are trying to sell a copycat version of a drug made by this other company Amarin. And Amarin is a brand drug company, but they’re pretty unique in that they only sell one drug.

DG:  Is this a drug that we have heard of?

LW:  I’m not sure it. It’s called Vascepa and it’s…

DG: Oh, this is the fish oil.

LW: This is the fancy fish oil. It’s basically like super purified fish oil. It comes in this clear gel capsule. And at the time of this lawsuit, the company off this one drug makes about $1 billion a year.

So it’s a big product — and it’s for people who basically have too much of a certain kind of fat in their blood.  And that kind of fat makes all kinds of heart problems for people. It can cause strokes, heart attacks, and the company found that if you take this fish oil, it can lower your risk for those types of bad outcomes.

DG:  Wait, wait real quick. Can I tell you about the fish oil I used to take as a boy?

LW:  Oh God. Yes?

DG: So my mom who was obsessed with vitamins would give me like eight, nine, 12 vitamins, right? But then also because that wasn’t enough she’s like, you need to have this cod liver fish oil. Then one day she’s like, “Hey Danny, great news!”

LW: Uh-huh…

DG: Here’s a mint-flavored fish oil.

LW: Oh no!

DG: Which was arguably a little bit better, but still revolting. And then she came back and said, great news. I know you don’t like the mint. Here’s some cherry.

LW: Oh God. Truly disgusting. I mean, really that that is the crime that should be before the Supreme Court. Let’s be real.

DG:  That’s right. Totally. Okay. So, back to Amarin. Making a bunch of money, this company does one thing. What’s the crux of the case? What’s the problem? I mean, it seems like business as usual. What’s going on?

LW:  Sure. So, Amarin’s fundamental beef here is basically: Hikma — again, the generic drug maker — you are on our turf. You’re infringing on our patents.

And the thing to know is that Amarin’s drug is patented for uses with two different groups of patients: One with super high levels of that dangerous fat in their blood and the other for patients with a much lower level of that fat, so a more mild case, and therefore it’s a much bigger market. It accounts for something like three-quarters of Amarin’s sales.

DG: Got it. Okay, so two patented uses — one small market, one huge.

LW: Right. Now eventually, the first and much smaller of those two uses went off patent. So around 2020, Hikma got the greenlight to start selling their copycat but only for people with the severe version of this heart issue.

It’s this special kind of generic approval that Hikma got and it’s known as a skinny label.

DG: Skinny because it’s only approved for some but not all uses of the drug, I’m guessing?

LW: That’s right, yeah. So this skinny label option can be very useful for generic companies that want to copy a brand-name drug that has a bunch of patents for different uses.

For example, Amarin has some patents on Vascepa that could last all the way until 2033!

DG: That’s a long time, both for the generic companies but also the patients and insurers paying these brand-name prices.

LW: Exactly. So what’s a generic drugmaker to do in this situation?

They could a) Wait for everything to expire or b) Go to court and challenge those patents head on.

DG: Arguing, for example, that the ‘innovation’ that’s been patented is actually obvious and not innovative at all. 

LW: Right but those lawsuits, Dan, can take a long time too and they often cost several million dollars.

So, enter c) the skinny label option.

Here, Dan, the generic company gets to skip that long wait and that expensive litigation.

Instead, as soon as they see one use of a brand drug go off patent, they head to the FDA and say hey, approve our drug for just that unpatented use. 

Set the other still patented uses aside. We won’t mention them in our marketing. We’ll basically pretend they don’t exist.

DG: Just let us on the market for this one unpatented use, as you were saying. We won’t touch the other stuff.

LW: Yes. That’s what Hikma did and the FDA granted them their skinny label.

But then Amarin then turned around and sued Hikma saying, hey, you are not following the rules of the road here. You are doing what is called, sorry, Dan, technical term here, but it’s called induced infringement.

DG: Induced infringement, which means…

LW:  Which means something you’re doing, the words you’re using, the way you’re describing this in your marketing materials, in your press releases, in the label on the drug, you are using words that Amarin is saying is causing doctors to prescribe this drug for the still patented use.

So basically, Hikma is kind of stealing sales away from Amarin for the still patented stuff that they’re supposed to really not be touching. Does that make sense?

DG:  Yes, that makes sense. But this just sounds like Amarin is trying to protect market share.

LW: They absolutely are. I mean, here’s how University of Alabama law professor Sean Tu put it for me.

Sean Tu (ST): This is Amarin’s only product so they’re going to fight tooth and nail for this thing. 

DG: That’s their golden goose.

LW:  It is. The question is, is Hikma inducing doctors in some way to prescribe the drug and so that we won’t get into the super weeds of the case, but that there’s a couple big things that that Amarin points to.

One is they say, well, on your label you describe this drug as a generic equivalent of Vascepa but they don’t specify only for use with people with severe blood fat or whatever.

DG: So they’re being sort of intentionally vague — that’s Amarin’s claim here at least.

LW: Right, and then the second thing they point to is Hikma put out this press release saying we’re super excited to come to market with the generic version of Vascepa — sales for Vascepa are $1 billion dollars. Well, that stat used in the press release is the entire market share of Vascepa, not just the market share for this small unpatented use. 

DG: Is that it? A kind of vague label and a dollar figure in a press release?

I mean, I’m no lawyer, but this doesn’t really sound like Hikma is twisting doctors’ arms here.

LW: A lot of legal experts agree with you. Something like 75 legal scholars – and the Trump administration’s solicitor general – have all filed briefs siding with Hikma, the generic company. 

Here’s how patent attorney Dennies Varughese put it. 

Dennies Varughese (DV): Inducement requires more than that. It would be like this, right? Like, imagine I’m a Hikma representative. And I go to doctors and I’m like, “Hee, hee, hee. Hey, I carved out this use, but use my drug for this use, use it. Use it.” They’re not doing that.

DG: No hee-hee to see here.

And so by being vague here, Hikma is, at least according to Amarin, sort of winking and nodding to the fact that this drug can be used in other ways that are still patented. 

LW: Right, and that’s important because even if that other, larger use of this drug is still technically under patent, once a generic hits the market, by law, in most states doctors and pharmacists can start filling all kinds of prescriptions with it — not just that unpatented use.

DG: So the flood gates on sales of the generic kind of fling open and Amarin with this lawsuit is, in a way, trying to find a way to shove those gates back closed as best they can, I guess.

LW: Yeah. And you know, that strategy seemed promising. 

A federal circuit court ruled in Amarin’s favor — said their claims seemed serious enough that this case could at least move forward, play out in front of a jury.

But Hikma appealed that all the way up to the Supreme Court and now here we are. 

DG: So the justices are basically weighing whether these couple of vague things Hikma did and said are serious enough to send this case forward or whether Amarin is just basically crying wolf and this case should be tossed.

LW: Yeah, and you know, that might sound kind of just like a procedural, technical question the Court is deciding.

But the thing is here, Dan, what Hikma did, like we said, it’s pretty minor, innocuous stuff.

And so if that’s enough to trigger litigation then companies who used to rely on this skinny pathway to avoid long, expensive lawsuits could suddenly find themselves stuck in … a bunch of long, expensive lawsuits anyway.

Again, here’s Alabama professor Sean Tu.

ST: If I thought that the skinny label pathway helps me avoid litigation and allows me to go onto the market early, I’m doing that. But this is all about risk right? If I’m a generic company, I want to minimize my risk.

So the result is we’re just not gonna see people enter the market using this pathway, which means that brand firms get longer monopolies, which means higher prices for patients, which means less access to these medications, which ultimately means that patients suffer at the end of the day with poorer health outcomes.

DG: Leslie, how much of a hit for patients are we talking about here? I gotta think even a one or two year delay on some of these branded drugs going generic could be huge money.

LW: Absolutely. Take one example that the generic trade group the Association for Accessible Medicines highlighted in their brief to the Supreme Court.

Crestor — this super popular cholesterol medicine — had several patents that could have kept that brand name drug’s monopoly going until 2022.

But thanks to the skinny label pathway, generic competition launched six years earlier, in 2016.

And in just one year, that copycat saved patients and insurers more than $8 billion — on just one drug.

DG: When we come back, legal scholars gaze into their crystal balls and debate how likely the sky is to fall. 

BREAK

DG: Welcome back. We’re talking with Tradeoffs senior producer Leslie Walker about a case that the Supreme Court will hear next month that could shake up the generic drug industry.

Leslie, just to refresh folks, this is a legal fight between two pharmaceutical companies: Amarin, the brand-drug maker, and Hikma, the generic copycat, over this common patenting practice known as skinny labeling. 

LW: Right, or as I like to call this case, Dan, the Skinny Love lawsuit.

LW: Ya know, after that early 2000s song “Skinny Love” by the brooding indie band Bon Iver.

[MUSIC: “Skinny Love” by Bon Iver]

LW: Still a banger, 20 years later.

DG:  Oh my, oh my. All the Bon Iver fans are gonna flock to this one. I can tell.

LW: Absolutely.

DG: Alright, so Leslie, look. Before the break, law professor Sean Tu sounded this pretty dire alarm that if this case goes in favor of Amarin, the brand company, this could kill skinny labeling as we know it. And that would leave all of us waiting longer for cheaper generics to come to market.

I’m curious, how widely held is Tu’s view? I mean, how big of a blow could this really be?

LW: There’s a wide range of opinions here, Dan.

On one end of the spectrum you’ve got the Sean Tu’s — this is a five-alarm fire for generic companies like Hikma — and on the other you’ve got folks like Hans Sauer.

He used to head up intellectual property for the biotech trade group known as BIO.

His point: This skinny label pathway has always carried some risk. You could always get sued.

Hans Sauer (HS): Nobody ever said that if you have a skinny label you’re free and clear from patent infringement.

LW: In Hans’s view, even if this case ends up making the skinny labeling a bit more risky, Hans still thinks that pathway is lucrative enough that generic companies will find a way to deal with it, like, let’s say, by being more careful with their marketing.

HS:  Is the sky going to fall as a result of this case? No, I doubt it. I think this case, whichever way it goes, will have little consequence for the way generic drugs are being approved and marketed and dispensed to patients. 

DG: I mean, Leslie, is there any data here? Any evidence to give us a sense of who’s right here about just how big of a deal this case could be?

LW: So the clearest precedent here is a similar case that came up a few years ago and it went in favor of the brand company GlaxoSmithKline. 

There was a lot of handwringing that this was the death knell of skinny labeling. 

Since then, one study has shown fewer generics using skinny labels but the sample size is super small — given how recent the case was — so I would take that with a grain of salt.

I also called up this patent litigator who works for a major generic drug company and he told me it’s true, that case did make the risks of this skinny label pathway a bigger point of conversation when his company makes decisions, but it hasn’t actually swayed them against using it — at least so far.

DG:  It hasn’t it actually hasn’t changed behavior.

LW: Yeah, exactly. The one point he raised I thought was interesting is he explained that often a generic firm has  a set litigation budget for the year. So they might have $30 million to deal with lawsuits over patents, which is their whole business, right, is to take on patents and try to get them thrown out so that they can go to market. 

And so he said this can be a big deal where if, you start to get more cases stuck in litigation, that can just like suck up your whole budget and then there’s less money left to then take other patents to court over the course of the year.

So there’s this kind of ripple effect where you might actually see a generic company fewer products to market in a year because they basically just, like, run out of legal resources.

DG: So we’ve talked a lot about what might happen if Amarin gets their way here. What about if Hikma notches the win?

LW: So that would, kind of return us to a status quo from before cases like this one — and a couple others — started shaking generic companies’ confidence in this skinny label pathway. 

Now, if the ruling is really broad, it could potentially empower generic companies to be even more vague in their marketing — to do more of what Hans Sauer called ‘nudging and winking.’

DG: To effectively try to kind of snatch more of those patented sales away from the brand.

LW: Exactly. Now that all said, even Hans Sauer, who spent two decades advocating for brand companies’ interests, told me he didn’t think a win for Hikma would damage brands a ton here.

But that’s because he feels like the damage has already been done.

DG: What does he mean? What’s Hans’s point here?

LW: Well, he believes that there’s this myth out there that skinny labeling preserves this perfect balance where generic companies get to jump in the game, start competing for part of the market, while brand companies get to keep their other patents — reap the rewards of the time and money they put in to find these other newer uses of a drug, new people to help.

The reality, Hans says, is that once a generic hits the market — even for that one, tiny unpatented use — that flings the flood gates open on all kinds of sales.

HS:  You can split the baby, right? In reality today, there’s no baby to be split

LW: Pharmacists and doctors can, by law, start prescribing the generic for any use under the sun. And that does start to really undermine the sales for the brand company for these other still patented uses that they feel like, wait a minute, we put in the time and money to find out that this drug works in these other ways and now we’re not reaping the rewards for that.

DG: And so Hans is raising this classic tension between innovation and access, yeah? 

We all want lower prices. And as soon as a generic hits the market, whether it’s still patented for Disease A but not Disease B or C — or whatever — we just want that lower price. 

And, by and large, our current system gives us that.

At the same time, though, it sounds like Hans believes that our system basically undermines the incentive for brand companies to keep finding new uses for their drugs.

LW: I think that’s right. If you want those extra innovations, someone’s got to reward companies for developing them. That is a tension here.

Now to be clear, Dan, the Supreme Court is not weighing in on that existential question kind of like what is the right balance, you know, of brand versus generic here. They’re really being asked whether this Hikma case can move forward. Does Amarin have a legitimate argument here that inducement is taking place? That is the question or should this whole case be thrown out and basically Amarin’s argument is B.S. That’s the question they’re really gonna weigh in on.

DG: Leslie, I know you’re loath to speculate. You always talk about that in the office. You’re kind of like “Not Crystal Ball” Walker, but I’m guessing you asked your sources to at least guess what might be coming around the bend. Where do folks expect the court to land here?

LW:  Yeah, I think, I mean people who are in favor of the generic viewpoint, they’re, I think, quite excited about this case, and there’s a couple reasons why they’re feeling pretty good.

One is the court asked the Trump administration’s solicitor general to weigh in, which is a pretty rare thing. And they did – strongly in favor of Hikma, the generic company. 

Their other good omen: over the past couple decades, when the Supreme Court has reviewed a lower court’s decision, they’ve overturned it about 70% of the time. 

DG: And, as a reminder, the circuit court had originally ruled in favor of Amarin here.

LW: Correct. That all said, experts told me that a lot of the implications here will come down to the exact words that the justices use.

For example, there’s a world where they rule very broadly in favor of Hikma and generic companies really get empowered here to be more aggressive in marketing their drugs.

Or a world where the ruling is very narrow and basically nothing changes. The same is true if the ruling goes the other way in Amarin’s favor.

So overall, I’d say people are really kind of just waiting to hang on every word coming out of the Court here.

DG:  As they always do.

LW: Yes, indeed.

DG: Leslie Walker, thanks so much for your reporting on this story.

LW: Thanks, Dan. 

DG: I’m Dan Gorenstein. This is Tradeoffs.