On November 1, 2010, a divided 2-1 panel of the Federal Circuit issued a decision in AstraZeneca LP v. Apotex, Inc. that addresses inducement of infringement in the context of a Section viii "carve out" under 21 U.S.C. § 355(j)(2)(A)(viii) and 21 C.F.R. § 314.92(a)(1). The decision upheld a preliminary injunction that prohibited Apotex from launching a generic version of AstraZeneca's ("AZ") PULMICORT RESPULES® (budesonide).

The primary issue of interest in this alert deals with the preliminary finding of inducement of infringement of a claim in one of AZ's Orange Book-listed patents. This claim taught a new method of using budesonide through treatment "not more than once per day." In contrast to the narrow claim language, AZ's NDA label indicated that the composition could be administered either once or twice daily.

Apotex attempted to avoid inducing infringement of the method claim by removing any explicit reference to once-daily administration in its proposed label. Thus, the proposed label specified only twice-daily usage. Apotex, however, retained a reference to downward-titration of the dosage over time in the proposed label.

A previous related ANDA filed by Ivax had made similar changes in its proposed labeling. AZ filed a citizen petition regarding Ivax's ANDA asking the FDA to require that the label include the once-daily dosing language and questioning the downward-titration language. The FDA denied the petition to require the once-daily dosing language and indicated that, in its view, the downward-titration language did not "teach" once-daily dosing but could include once-daily dosing. Apotex attempted to use the FDA's response to argue that its own label's downward-titration language would not induce infringement of AZ's "not more than once per day" method claim.

Despite the absence of explicit reference to the once-daily administration in Apotex's proposed label, the District Court determined that AZ was likely to prevail on inducement based on the downward-titration language. The District Court reasoned that, given the single-use dosing of a respule, the only way to titrate down from taking two doses per day of the smallest dosage was to decrease the frequency of dosing, i.e., take one dose a day. The Federal Circuit affirmed and determined that the downward-titration language would inevitably lead some consumers to practice AZ's claimed method. Furthermore, the Federal Circuit stated that, rather than supporting Apotex's non-inducement theory, the FDA's response to the earlier citizen petition put Apotex on notice that there were infringement issues. Thus, based on the language of the proposed label and the FDA's response, the Federal Circuit affirmed the finding that AZ would likely prove inducement at trial.

The Federal Circuit was unconvinced that the fact that the language in Apotex's proposed label was required by the FDA demonstrated an absence of intent. Rather, the Federal Circuit noted that Apotex could have submitted Paragraph III or IV certifications, attempted to appeal the language of the proposed label, etc., instead of pursuing a Section viii "carve out."

In affirming the injunction, the Federal Circuit also dismissed an invalidity challenge based on a prior art advertisement that was similar in many regards to the dosing language in Apotex's proposed label. While the majority characterized the question as close, it determined that the "most natural reading" of the advertisement instructs twice-daily administration. Thus, the majority was "not left with a definite and firm conviction that the district court clearly erred by concluding that at trial Apotex will likely not be able to demonstrate by clear and convincing evidence that the advertisement anticipates the asserted method claims." Notably, the majority decision does not use the "substantial question of validity" standard for reviewing the propriety of a preliminary injunction in rendering its conclusion.