In a significant escalation of regulatory oversight, the Federal Trade Commission (FTC) has expanded its campaign against what it considers improper patent listings in the FDA's "Approved Drug Products with Therapeutic Equivalence Evaluations," commonly known as the Orange Book.
On April 30, 2024, the FTC sent its second round of warning letters to 10 pharmaceutical companies, challenging more than 300 patents listed in the Orange Book. This action follows an initial November 2023 effort that disputed over 100 patents from 10 drug and medical device manufacturers. The patents in question span 20 different brand-name products, including injectable drugs for weight loss and diabetes, asthma and COPD inhalers, and diabetes treatment nasal sprays.
FTC's Legal Basis for Challenging Orange Book Listings
The Federal Food, Drug, and Cosmetic Act requires companies seeking FDA approval to include in their new drug applications any patent that either claims the drug substance (active ingredient) or product (formulation or composition), or claims a method of using the drug for which approval is sought. These patents are subsequently listed in the Orange Book upon drug approval.
FTC Chair Lina Khan has taken a strong public stance on the issue, stating: "By challenging junk patent filings, the FTC is fighting these illegal tactics and making sure that Americans can get timely access to innovative and affordable versions of the medicines they need."
The FTC's position centers on the argument that certain drug-device patents should not be included in the Orange Book. According to the agency, patents claiming devices or device components that are "untethered" from any drug or formulation are not eligible for listing.
Regulatory Process and Manufacturer Responses
Under the FDA's regulatory dispute process, manufacturers receiving FTC warning letters have 30 days to either withdraw/amend the identified listings or certify under penalty of perjury that the listings comply with statutory and regulatory requirements.
In response to the initial round of letters, several manufacturers withdrew their patents, which the FTC characterized as a "victory lap" in subsequent media appearances. Chair Khan has highlighted these results in multiple public forums, including:
- An interview with The Daily Show on April 1, 2024
- A White House event on lowering healthcare costs on April 3, 2024
- A livestream hosted by Senator Bernie Sanders on April 15, 2024
Some manufacturers have also announced they would cap patient out-of-pocket costs on asthma inhalers to $35 per month following the FTC's actions.
FTC's Legal Actions Beyond Warning Letters
The FTC has demonstrated its willingness to pursue additional legal avenues beyond warning letters. On March 22, 2024, the agency filed an amicus brief supporting a motion for judgment on the pleadings in a patent dispute between two drug manufacturers. The brief argues that certain patents were improperly listed device patents that did not mention any drug in their claims.
The agency's brief cites the First Circuit's 2020 decision in In re Lantus Direct Purchaser Antitrust Litigation, which held that plaintiffs adequately alleged that a patent should not have been submitted for Orange Book listing because it was a device patent that did not claim the drug at issue.
Competitive Impact and Antitrust Concerns
The FTC has emphasized that improperly listed Orange Book patents can harm competition by deterring and delaying entry of lower-cost generics. When patents are listed in the Orange Book, a brand drug company may benefit from an automatic 30-month stay of FDA approval for competing generic drug applications.
In its legal filings, the FTC has argued that improper listings may constitute illegal monopolization under Section 2 of the Sherman Act, as they represent an "improper means" of acquiring or maintaining monopoly power.
FDA's Role and Future Outlook
The FDA's role in this regulatory dispute has been notably passive. As the FTC explains in its amicus brief, the FDA "does not directly police the Orange Book" and considers its role "purely ministerial," with drug manufacturers bearing the burden of ensuring their Orange Book listings meet statutory requirements.
However, FDA Commissioner Robert M. Califf's recent statement suggests potential for increased collaboration: "The FDA will continue to engage with the FTC to identify and address potential efforts to impede competition so that consumers can get access to the medicines they need."
The FTC's aggressive stance on Orange Book listings represents a significant shift in regulatory approach and signals continued scrutiny of pharmaceutical patent practices that may impede generic competition. For pharmaceutical manufacturers, this evolving landscape presents new compliance challenges and potential antitrust risks that will require careful navigation.
