Skinny Labels and the Future of Induced Infringement: Understanding Why and How it carries particular weight in New York

Intellectual property (IP) is one of the most valuable assets for most companies. Unsurprisingly, companies consider various forms of IP, such as patents, trade marks, copyrights, and trade secrets to safeguard their IP. In life sciences in particular, certain patent portfolio strategies have proved to be “tried and true”. An example of such a strategy follows a typical pattern: a company develops a novel, non-obvious, core product, a drug or a biological. The company then pursues an initial patent filing (which we call a patent family in patent law). This initial patent filing is designed to protect the characteristics of the core product itself – whether a drug, a biological product, or a piece of hardware.

Over time, the company spends millions of dollars further developing and validating the core product. During such further developments and validation, new discoveries are frequently made. A series of improvements are also frequently made to the composition of that core product, such as refinements to its formulation. Clinical validation of the product in most countries also requires compliance with regulatory guidelines, and in most cases, millions of dollars are invested by the company to assess not only the safety of the compound but also its efficacy for the treatment of a first indication. As has been said by others, the difference between the efficacy of a drug and its inefficacy in treating any particular indication can be the proper dosage for the target indication. Validation of such dosages also requires significant investment and risk; after all, in many cases clinical studies can fail to prove efficacy. In the case of pharmaceuticals, the identification of new therapeutic indications is often protected through method-of-use or process patent filings tailored at the new indication. Because these patents have a later filing date, they typically extend the period of exclusivity for the original product well beyond what the initial patent alone would afford.

Such strategies are tried and true, and many have considered policy questions as to whether or not such patents properly reward companies that assume the risk in pursuing validation of products for new indications, or whether they unfairly extend exclusivity to a product. In the United States, Congress has considered this issue and provided a path for “skinny labels”. The future of skinny labels is one of the largest topics of interest in IP law at the moment in the United States and in New York.

What are skinny labels?

A skinny label is a regulatory strategy allowing generic drug manufacturers to market a product by omitting (or “carving out”) specific patented uses from the label, while retaining approved, non-patented indications. It was introduced as part of a 1984 Federal Law, named the Drug Price Competition and Patent Term Restoration Act (Hatch-Waxman Act) which established the modern US generic drug regulatory system, providing laws that apply to each American state, including New York.

A skinny label enables earlier market entry for generics, often before all patents on a brand-name drug expire, fostering competition. All new drugs must be approved by the Food and Drug Administration (FDA) before they can be marketed or sold in the United States. More specifically, in the United States all drugs sold in the State of New York (or in any other state) are generally approved by the FDA through a new drug application (NDA). To obtain FDA approval, NDA sponsors typically conduct the clinical trials to demonstrate a drug’s safety and effectiveness, which is generally a part of a costly and time-consuming process. NDA sponsors must also submit proposed labelling for the drug for the FDA’s approval, including the approved indications for use of the drug (eg, the diseases or conditions that the drug is approved to treat). Although the FDA approves new drugs for specific indications, physicians may still prescribe an approved drug “off label” to treat other indications that the FDA has not reviewed for safety and effectiveness. In New York, New York’s generic substitution laws interact directly with the skinny label framework.

Skinny labels and the future of induced infringement

Hatch-Waxman created a separate pathway for FDA approval through abbreviated new drug applications (ANDAs). ANDA filers need only show that their product is pharmaceutically equivalent and bioequivalent to an FDA-approved drug with the same active ingredient (such that the new drug can be expected to have the same therapeutic effect). As a result, generic drug manufacturers need not conduct their own clinical trials on safety and efficacy, and often sell the drug at lower prices. ANDA filers must also propose labelling for the generic drug, which generally must be the same as the referenced brand-name drug’s labelling. Of note is the fact that an ANDA can be submitted with a Section viii statement, which provides a carve-out for specific patented indications or uses from the product label.

Among the most consequential IP developments in 2026 in the United States is the Supreme Court’s unanimous decision in Hikma Pharmaceuticals USA Inc. v Amarin Pharma, Inc. (No 24-889), which squarely addressed the boundaries of the “skinny label” pathway under the Hatch-Waxman Act. At issue was whether a generic drug manufacturer that files an ANDA with a Section viii carve-out – omitting a patented method-of-use indication from its label – can nonetheless be held liable for induced infringement under 35 U.S.C. § 271(b). The case arose from Amarin’s patented method of using icosapent ethyl (marketed as Vascepa) to reduce cardiovascular risk, and Hikma’s ANDA filing with a skinny label that carved out that patented indication. The Court reversed the Federal Circuit and held that Amarin did not plausibly allege that Hikma’s skinny label and marketing actively induced infringement of Vascepa’s cardiovascular-use patents – a decisive win for the generic industry that affirms skinny labelling as a shield against method-of-use liability. The New York Intellectual Property Law Association (NYIPLA) had filed an amicus brief in support of neither party, reflecting the balanced perspective of a bar association whose members represent both brand-name innovators and generic manufacturers. . The NYIPLA urged the Court to preserve the ordinary, generally applicable standards for both inducement and civil pleading, warning against the adoption of any bespoke, technology-specific rule. As the brief emphasised, the existing inducement standard “derives from the common law of aiding and abetting” and “has the benefit of providing uniformity and predictability across domains, unaffected by the technology at issue, while also being flexible enough to respond to differences across contexts and cases”. The NYIPLA cautioned that swinging too far in either direction (too rigid or too lax) would instead unsettle the “balance” Congress struck in the Hatch-Waxman Act between incentivising research and enabling generic competition.

New York Intellectual Property Law Association (NYIPLA) suggests that a properly carved skinny label, standing alone, should not constitute evidence of intent to use

Critically, the NYIPLA rejected both parties’ characterisations of the standard. Hikma argued that a plaintiff must plead that the defendant specifically instructed the patented use in its label, while Amarin contended that Hikma sought a heightened pleading standard. The NYIPLA’s position was that neither extreme is warranted: a properly carved skinny label, standing alone, should not constitute evidence of intent to induce, but conduct outside the label – including marketing statements, digital outreach, and promotional strategies directed at the patented indication – may support an inducement claim under the totality of the circumstances. The Federal Circuit, in the NYIPLA’s view, correctly applied this flexible, fact-intensive approach.

This decision carries significant implications for patent portfolio prosecution strategy. For innovators holding method-of-use patents, the Court’s ruling that a properly carved skinny label does not give rise to inducement liability means that such claims now provide materially less protection against generic competition than they did before. The value of method-of-use claims has diminished relative to composition-of-matter claims, which are not subject to the Section viii carve-out and provide more robust protection against generic entry regardless of labelling. In light of this ruling, it will become more important than ever for brand-name companies to expand their method-of-use patent portfolios in conjunction with approved uses to create new moats to protect their intellectual property. For patent prosecutors, this dynamic underscores the importance of building layered portfolios that include both composition-of-matter claims and method-of-use claims, rather than relying on any single claim type. Companies should also consider prosecuting claims directed to specific dosing regimens, formulations with particular dosage forms, and combination therapies, which may offer additional avenues of protection that are more difficult for generic manufacturers to carve around. Brand-name innovators must now think creatively about how to construct patent portfolios that cannot be neutralised by a simple label carve-out – whether through narrower formulation claims, device-drug combination patents, or claims tied to biomarker-guided treatment protocols that are difficult to separate from the product itself.

The Hikma v Amarin decision will serve as a defining precedent for how pharmaceutical IP portfolios are constructed and enforced in the years ahead, and brand-name companies that fail to adapt their prosecution strategies risk losing meaningful exclusivity to generic entrants armed with the skinny label shield.

How federal changes affect New York

Patent prosecution does not exist in a vacuum. Although the patents themselves are prosecuted at a federal level, drug reimbursement and regulation of exclusivity are managed at both federal and state levels. New York’s regulatory and reimbursement landscape makes it particularly sensitive to federal policy shifts in drug approval and pricing. If the FDA accelerates drug approvals through expedited pathways, the downstream effects on New York’s healthcare system and its IP-related regulatory framework will be significant.

First, New York’s Medicaid programme – one of the largest in the nation – directly incorporates federal drug approval decisions into its formulary and coverage determinations. Under New York Social Services Law, the state’s Medicaid Drug Utilization Review Board and Pharmacy and Therapeutics Committee evaluate new drugs for inclusion on the state’s preferred drug list. Accelerated federal approvals will compress the timeline for these state-level reviews, potentially forcing New York to make coverage and reimbursement decisions on an unexpectedly compressed timeline. For patent holders, the speed of state formulary inclusion can either extend or shorten the practical window of market exclusivity.

Second, New York’s generic substitution laws will interact directly with the skinny label framework. Under New York Education Law § 6816-a, pharmacists may – and in many cases must – substitute a less expensive generic equivalent when dispensing prescriptions, provided the prescriber has not indicated otherwise. If a generic manufacturer enters the market with a skinny label under an accelerated approval framework, New York pharmacists could substitute that generic for the branded product even though the generic’s label omits the patented indication for which the drug was prescribed. This creates practical enforcement challenges for brand-name patent holders and underscores why the outcome of Hikma carries particular weight in New York. It also underscores the importance of understanding how the mechanisms for procuring and enforcing patents occur at the federal level.

Potential for accelerated drug approval, directly impacting New York

In 2025, major shifts in leadership at the FDA, the Advisory Committee on Immunization Practices (ACIP), and the Centers for Disease Control and Prevention (CDC) drove considerable uncertainty. For the first time in decades, changes in public health leadership may lead to earlier-than-expected approvals at the federal level, with significant implications for reimbursement practice at the state level. Notable developments include the increased use of artificial intelligence in regulatory review processes and the launch of the Commissioner’s National Priority Voucher Program, both of which could enable faster drug and device approvals.

From a patent prosecution standpoint, companies should ensure their prosecution strategies are tightly aligned with the accelerated timelines these programmes may offer, so that market exclusivity is maximised when products receive approval. As a result, they may be better positioned to take advantage of expedited regulatory pathways. In the wake of the Supreme Court’s decision in Hikma, the value of standalone method-of-use patents has diminished as a defensive tool, since generics can now at least partially rely on skinny labels as a shield against inducement liability. This makes it all the more critical for brand-name companies to pursue sequential method patents for distinct indications as part of broader, layered portfolios – combining method-of-use claims with composition, formulation, and dosing claims – to create durable moats that cannot be easily carved around. For New York pharmacists operating under the state’s generic substitution laws, the practical effect is clear: generic substitution will become easier, and innovators must build patent portfolios robust enough to maintain exclusivity even in a post-Hikma landscape.