Throwing the (Orange) Book at Pharmaceutical Manufacturers: FTC Challenges Over 100 Drug Product Patents Listed in FDA Publication

On November 7, 2023, the Federal Trade Commission (“FTC”) announced it is challenging over 100 patents as improperly listed in the Food and Drug Administration’s (“FDA”) publication titled “Approved Drug Products with Therapeutic Equivalence Evaluations,” which is commonly known as the Orange Book. The FTC sent warning letters to ten drug and medical device manufacturers identifying patents for inhalers, autoinjectors and anti-inflammatory multi-dose bottles that the FTC believes are improperly listed. In the letters, the FTC indicated it is using the FDA’s regulatory dispute process to challenge the listing of these patents in the Orange Book because improperly listing patents may violate antitrust laws and impede competition. The FTC’s actions appear to be consistent with its recent and increased scrutiny of the healthcare and pharmaceutical industries.

To support its position, the FTC cites heavily in the warning letters to a September 14, 2023 FTC Policy Statement Concerning Brand Drug Manufacturers’ Improper Listing of Patents in Orange Book. As explained in the Policy Statement, the purpose of listing a patent in the Orange Book is to “put potential generic manufacturers on notice that the brand [manufacturer] considers the patent to cover its drug.” A brand manufacturer who submits patent information to be listed in the Orange Book is attesting under penalty of perjury that the submission complies with the FDA’s statutory listing requirements.

The Orange Book is used to identify potential patent disputes when a generic manufacturer files an application for approval of generic equivalent drugs. A generic manufacturer may file a “Paragraph IV” certification stating that a brand company’s unexpired Orange Book-listed patents are either invalid or will not be infringed by the generic equivalent drug listed in the application. A “Paragraph IV” certification typically gives a brand manufacturer the right to immediately sue an applicant for patent infringement, which in turn triggers an automatic 30-month stay of the FDA’s approval of the application. Orange Book listings therefore play a large role in patent infringement litigation between brand and generic manufacturers and can influence how quickly a generic medication comes to market.

The FTC asserts in its Policy Statement that improper Orange Book listings “may constitute an unfair method of competition in violation of Section 5 of the FTC Act” and that a 2002 study showed “numerous instances” of a brand manufacturer using the 30-month stay provision to block generic competition. In addition to potentially being an unfair method of competition, the FTC argues that the improper listing of patents “may also constitute illegal monopolization.” The FTC adds that even small delays in generic competition can generate significant profits for brand companies while increasing costs for patients and the healthcare system.

The regulatory dispute process used by the FTC is known as a 314.53(f) Patent Listing Dispute. As part of this process, the FTC sent communications to the FDA that described the specific grounds for the dispute regarding the accuracy or relevance of the listed patents. The FDA will then send the statement of dispute to the applicable New Drug Application (“NDA”) holder. Within 30 days of the date on which the FDA sends the statement of dispute, the NDA holder must either: confirm the correctness of the listed patents via a signed verification; or amend the listed patents. Unless the NDA holder amends its listed patents, the FDA will not change the listed patents in the Orange Book.

The FTC’s position on improperly listed patents in the Orange Book is not new, but its approach here is somewhat novel. In 2002, the FTC charged a corporation for wrongfully listing a patent in the Orange Book on similar grounds to those alleged in the current warning letters, but it has not instituted a comparable action in the past two decades. The FTC has also submitted several amicus briefs maintaining that improper patent listings in the Orange Book can have anticompetitive effects. But this appears to be the first time that the FTC has used the FDA’s procedures to dispute the accuracy or relevance of patent information submitted for publication in the Orange Book. The FTC’s use of warning letters to advise drug manufacturers that they may have improperly listed patents in the Orange Book is also a new strategy. The FTC is closely watching the healthcare and pharmaceutical industries, as demonstrated last year by the two-day joint panel with the Department of Justice on “The Future of Pharmaceuticals: Examining the Analysis of Pharmaceutical Mergers.” We expect this industry focus to continue, particularly in light of FTC Chair Lina Khan’s recent remarks in relation to these Orange Book challenges that the FTC “will continue to use all our tools to protect Americans from illegal business tactics that are hiking the cost of drugs and drug products.”