The U.S. Court of Appeals for the Federal Circuit on April 16, 2012, in Bayer Schering Pharma AG v. Sandoz, Inc., Nos. 2011-1143, -1228 (YASMIN®), affirmed a district court's holding that as a matter of law, generic drug makers could not infringe patent claims reciting a method of use of an FDA-approved drug where the U.S. Food and Drug Administration had not approved the drug for the claimed uses, and where the FDA-approved labeling did not indicate instructions or intent to encourage the claimed use.

YASMIN® is a drug Bayer produces and markets under FDA approval as an oral contraceptive. The asserted patent did not claim the drug YASMIN® itself or the use of YASMIN® solely as an oral contraceptive. Rather, the patent was directed to a method of use narrowly focused on simultaneously achieving three effects in patients: an anti-androgenic effect (anti-acne), an anti-aldosterone effect (diuretic) and a contraceptive effect.

The FDA-approved label for YASMIN® undisputedly indicated the drug was approved as an oral contraceptive. However, the parties disputed whether the label could also be interpreted to indicate that YASMIN® should be used as claimed, i.e., as an anti-acne and diuretic drug as well as a contraceptive. Watson Pharmaceuticals and Sandoz argued that YASMIN® was approved only for contraceptive use, that their abbreviated new drug applications (ANDAs) necessarily included an "Indications and Usage" section which provided information related only to contraceptive use and that such contraceptive-only indications were not covered by Bayer's patent.

The majority opinion identified the critical question in this case to be whether FDA affirmatively found YASMIN® to be safe and effective for the additional purposes of inducing anti-acne and diuretic effects in a patient with a specific need for all three of those effects. It was not enough that FDA was aware that YASMIN® could cause the patented effects, or even that FDA approved marketing materials promoting the use of YASMIN® to achieve those effects.

The majority identified the Federal Circuit's previous decisions in Warner-Lambert Co. v. Apotex Corp., 316 F.3d 1348 (Fed. Cir. 2003), and Allergan, Inc. v. Alcon Labs., Inc., 324 F.3d 1322 (Fed. Cir. 2003), as informing the current opinion. In both cases, the generic drug manufacturer sought FDA approval to market either an unpatented or expired patented drug for an unpatented FDA-approved use. The court ruled in both instances in favor of the generic drug maker on the grounds that it is not infringement to market a drug for a specific use when neither the drug nor its approved use is covered by an unexpired patent.

In deciding the critical question here, the majority looked only at the drug label for the use listed in the Orange Book. More specifically, the majority looked to the Indications and Usage portion of the label. The majority observed that this portion of the label details the specific conditions that FDA approved the drug to treat. Although other potential effects of the drug may be described in other portions of the label, the information in those sections failed to establish that FDA approved the drug for producing those effects in a patient who needs them.

Specifically, the "Clinical Pharmacology" portion of the YASMIN® label mentioned that one of the two active compounds in YASMIN® had anti-aldosterone effects and that preclinical studies in animals had shown it to also have anti-androgenic effects. The majority noted that these statements did not indicate that FDA has actually approved YASMIN® for producing these effects in human patients needing them, and the label did not provide any safety or efficacy information for prescribing YASMIN® for such uses. The majority also noted that under FDA labeling regulation, only the Indications and Usage portion of the label reflects FDA's approval.

According to the majority, because FDA had not formally approved YASMIN® for all three purposes claimed in the patent, as a matter of law, Bayer could not state a claim for patent infringement. The majority affirmed that the suit against Watson Pharmaceuticals and Sandoz was properly dismissed on the pleadings, before even beginning pre-trial discovery.

Circuit Judge Newman dissented from the majority opinion, ascribing error to the majority's conclusion that listing some of YASMIN®'s properties in the Clinical Pharmacology section of the label, instead of the Indications and Usage section, removed the generic counterpart from the scope of the patent's claims. Judge Newman also disagreed that the label, taken in its entirety, failed to recommend or suggest to a physician that YASMIN® was safe and effective for inducing the claimed combination of effects in patients in need thereof. In the dissent's view, the portion of the FDA label in which a product's properties are described is irrelevant to whether the patent is infringed by sale or use of the product. Furthermore, the dissent contended that, as a matter of pleading its case in its complaint, Bayer had sufficiently alleged that an "intended use" for YASMIN®—as approved by FDA—was the simultaneous treatment of all three effects. Accordingly, the dissent believed that Bayer was entitled to an opportunity to further litigate its case.

Bottom line: The Federal Circuit's decision that the generic drug makers could not infringe the asserted patent was based on the single approved indication for the drug. FDA's approval of the single indication, to the exclusion of other uses claimed in the asserted patent, was established by the FDA-approved label taken as a whole—with particular emphasis on the Indications and Usage section of the label and notwithstanding statements found in other sections of the label that failed to show that FDA approved the drug for those claimed uses.