Last week, Magistrate Judge Jennifer Hall of the U.S. District Court for the District of Delaware recommended denial of two motions to dismiss and denied a motion to sever in a case involving a novel induced infringement claim against a health insurance provider. See Amarin Pharma, Inc. v. Hikma Pharm. USA Inc., No. 20-1630-RGA-JLH, 2021 WL 3396199 (D. Del. Aug. 3, 2021) (“Amarin R. & R.”) (docket version); Amarin Pharma, Inc. v. Hikma Pharm. USA Inc., No. 20-1630-RGA-JLH, 2021 WL 3363496 (D. Del. Aug. 3, 2021) (“Amarin Mem. Order”) (docket version). The dispute relates to Hikma Pharmaceuticals USA Inc. and Hikma Pharmaceuticals PLC’s (collectively, “Hikma”) generic version of the plaintiffs’ VASCEPA® product (icosapent ethyl). Hikma’s generic product has been on the market since November 2020. See Amarin R. & R., 2021 WL 3396199, at *3. The plaintiffs asserted three patents against Hikma and a health insurance company, Health Net, LLC (“Health Net”). Hikma and Health Net both moved to dismiss for failure to state a claim, and Health Net also moved to sever the claims against it from those against Hikma. Magistrate Judge Hall recommended that the motions to dismiss be denied, and she denied the motion to sever. Id. at *1; Amarin Mem. Order, 2021 WL 3363496, at *1.
As to Health Net, the plaintiffs’ claim was based on Health Net’s approval and payment process for the branded and generic products. Amarin R. & R., 2021 WL 3396199, at *8–9. The plaintiffs stated that Health Net’s formulary and authorization process are implemented in a way that encourages physicians to use the generic product for the patented indication. Id. at *8. According to the plaintiffs, Health Net allegedly encourages use of the generic product over the branded product by requiring a higher co-pay for the branded product, having placed it on tier 3 of its formulary, whereas the generic product is on tier 1. Id. And the plaintiffs also alleged that Health Net knows about the intended use because its prior authorization process requires documentation of the use for which the prescription is made. Id. Finally, the plaintiffs maintained that Health Net was aware that certain intended uses constituted infringement because the plaintiffs sent Health Net a pre-suit demand letter. Id.
On the motion to dismiss, Judge Hall concluded that the plaintiffs’ induced infringement theory was not “so implausible” as to require dismissal. Id. However, she stressed she was “not concluding that this novel claim against a health insurer will or is likely to succeed on the merits.” Id. at *9. She also noted that ultimately, (1) Health Net might not have taken affirmative acts with the intent to cause infringement, (2) Health Net’s formulary and pre-authorization actions may not influence providers to prescribe or beneficiaries to use the generic product in an infringing way, or (3) the plaintiffs’ own pricing decisions may encourage use of the generic product over the branded product. Id. Given the allegations to the contrary, however, those were not issues for the dismissal motion. Id. Judge Hall therefore denied Health Net’s motion to dismiss.
As for the motion to sever, Health Net argued there was no overlap between the supposedly infringing acts that it and Hikma perform, making joinder improper under 35 U.S.C. § 299(a). Amarin Mem. Order, 2021 WL 3363496, at *1. Judge Hall disagreed because the statute allows joinder if the patentee asserts a “right to relief . . . arising out of the same transaction, occurrence, or series of transactions or occurrences relating to the . . . using . . . of the same accused . . . process,” and both defendants were alleged to induce the same acts of direct infringement of method claims. Id. at *2 (quoting 35 U.S.C. § 299(a)(1)). Judge Hall also refused to sever to avoid prejudice to Health Net because there are overlapping factual and legal issues that would be addressed more efficiently by coordinating discovery and claim construction for both sets of claims. Id. Judge Hall deferred deciding whether to try the cases together until dispositive motions are due, noting that the court will be in a better position to decide at that time. Id.
Regarding Hikma, the plaintiffs’ claim involved Hikma’s so-called “skinny label.” Although Hikma has only received FDA approval to market its generic product for an unpatented indication, the plaintiffs nevertheless alleged that Hikma’s product label, website, and press releases induce physicians to use the product for a patented indication. Amarin R. & R., 2021 WL 3396199, at *1. At the motion to dismiss stage, Judge Hall found the complaint to plausibly suggest that Hikma’s label and public statements encouraged use of the generic product for the patented indication, and that Hikma knew about and intended to cause the infringing use. Id. at *7. Hikma’s actions during the FDA approval process were key. The plaintiffs received FDA approval for the patented indication while Hikma’s ANDA was pending, and the plaintiffs removed a limitation of use from the branded product label related to that indication. Id. at *2. Hikma then submitted a section viii statement to carve out the patented indication and did not seek to add that new indication to its product label. Id. at *3. But notably, Hikma removed the restriction of use from its label, just as the plaintiffs had. Id. at *3–4. This act, along with Hikma’s later sale of the generic product with the modified label and statements on its website and in press releases were all acts that allegedly encouraged infringement. Id. at *7. If this were an ANDA case based on a proposed label, Judge Hall noted, the inducement theory might lack merit. Id. But this was an action under Section 271(b) directed at past infringement based on more than a product label. Id. Judge Hall thus denied Hikma’s motion to dismiss.