When you think about patents on prescription drugs, you probably think about exclusive rights to a chemical compound—a drug product protected until its patent expires, after which generic versions can enter the market. In a new New England Journal of Medicine article, Texas Law Professor Paul Gugliuzza and his coauthor Jacob Sherkow, of the University of Illinois College of Law, show how patents on specific uses of a drug—not on the drug itself—are quietly reshaping pharmaceutical litigation, with significant impacts for drug prices and access to medicine.
Their article, “Drug Labels as Evidence of Patent Infringement,” examines a growing line of court decisions treating language in Food and Drug Administration-approved generic drug labels as evidence that those generic manufacturers are inducing doctors to infringe patented uses. According to Gugliuzza and Sherkow, this legal theory, which they call “infringement by label,” misunderstands how medicine is practiced and how patent law traditionally works.
“Drug labels are regulatory documents that doctors rarely read,” says Gugliuzza. “Yet courts are acting as if doctors rely on labels to make prescribing decisions.”
The courts’ mistake has real consequences for consumers: an expanded threat of patent infringement liability means that generic manufacturers will delay or forgo market entry, leaving drug prices higher for longer.
Two Types of Patents
To understand the problem, one must understand the different kinds of patents that exist for drugs.
The patents most people are familiar with cover the drug itself, as a chemical compound. But brand-name manufacturers also obtain patents on specific methods of use—for instance, using a drug to treat a particular medical condition or patient population.
Under a federal statute called the Drug Price Competition and Patent Term Restoration Act (commonly known as the Hatch-Waxman Act), once the patent on a drug’s chemical compound expires, generic manufacturers can sell that compound using what is known as a “skinny label”—one that omits FDA-approved uses of the drug that are covered by a patent. Congress authorized generics to use skinny labels to ensure that patents on specific uses of a drug won’t entirely block a generic from entering the market.
For decades, courts respected Congress’ choice, holding generic manufacturers liable for inducing infringement of a patented method only when someone following the language in a generic’s label would “inevitably” perform the patented method.
Label-based Infringement
But the approach has shifted in recent years, largely due to decisions from the Court of Appeals for the Federal Circuit, which hears all patent appeals in the United States. In two decisions, GlaxoSmithKline v. Teva (2021) and Amarin Pharma v. Hikma Pharmaceuticals (2024), the Federal Circuit court allowed patent owners to establish inducement from language that remained in a generic’s skinny label, such as warnings and descriptions of clinical trials that referenced a patented use, as well as the generic’s marketing statements that its product was “equivalent” to its brand-name counterpart.
The result, Gugliuzza and Sherkow argue, is a dilemma for generic manufacturers. Even if they comply with FDA guidance, remove patented uses from their labels, and avoid describing their product as equivalent to a brand-name drug, they could still face infringement liability.
“This isn’t about bad actors gaming the system,” Gugliuzza says. “It’s turning regulatory compliance into legal risk.”
This isn’t about bad actors gaming the system. It’s turning regulatory compliance into legal risk.
The stakes are enormous. In GlaxoSmithKline, the generic’s total sales were only $75 million, but it was held liable for $236 million in damages—equivalent to the profits the brand would have made on its higher-priced product. In Hikma, the trial court had granted an early-stage motion to dismiss the case, but the court of appeals sent the case back to begin the costly discovery process, with a trial to follow.
Those damage awards and litigation costs, Gugliuzza and Sherkow explain, inevitably get passed on to consumers in the form of higher drug prices.
A Better Way Forward
Gugliuzza and Sherkow have been studying this issue for a while, including in an article published in the Stanford Law Review earlier this year, “Infringement by Drug Label.” What troubles them most is that court decisions like GlaxoSmithKline and Hikma ignore clinical reality.
Empirical evidence indicates that doctors rarely look to drug labels when making prescribing decisions, instead relying on clinical guidelines, peer-reviewed studies, and professional judgment.
Fortunately, Gugliuzza and Sherkow explain, the U.S. Supreme Court has an opportunity to fix the problem. The court added the Hikma case to its docket in January.
A label is a medical regulatory document, not a roadmap for patent infringement.
Gugliuzza and Sherkow plan to write a brief in the case, urging the court to make clear that FDA-required labeling and routine equivalence statements shouldn’t prove patent infringement. Instead, courts should demand proof that a generic manufacturer encouraged a use that infringes a patent—which is what federal patent law typically requires to support a finding of inducement.
“A label is a medical regulatory document, not a roadmap for patent infringement,” Gugliuzza says.