Delaware Magistrate Judge: Novel Induced-Infringement Claim Against Health Insurance Provider Survives Dismissal – Intellectual Property

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.

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