The Federal Trade Commission (FTC) has taken the position that certain drug-device patents are not legitimate. Asthma and COPD inhalers, obesity and type-2 diabetes injectables, glucagon nasal spray, epinephrine autoinjectors, and other drug-device combinations have recently been in the crosshairs of the FTC. This has created controversy regarding hundreds of patent listings within the Food and Drug Administration’s “Approved Drug Products with Therapeutic Equivalence Evaluations,” commonly known as the Orange Book.
The FTC has long been dedicated to creating a free and fair marketplace. The commission argues that the “illegitimate” patents block the FDA from approving a generic product for 30 months, due to legitimate patent holders’ ability to block such entry into the market through the FDA. This is accomplished by filing an infringement lawsuit. The regulatory commission has issued two rounds of letters to various manufacturers questioning the accuracy of their patents in an effort to promote fair competition in the marketplace.
In November of 2023, the FTC identified over 100 patents in the Orange Book, which are held by manufacturers of brand-name drug-device products. The commission then sent out warning letters to inform the respective manufacturers that it had submitted patent listing dispute communications to the FDA. The FTC did not provide manufacturers with an extensive list of all patents the commission believed to be inaccurately filed, so it was then up to the manufacturers to verify the accuracy of each of their patents. Some manufacturers complied with the letters and delisted patents. Others chose to proceed with the other options in the FDA’s process, which gives the patent holder 30 days to either amend the patent listing or certify under penalty of perjury that the listing complies will all applicable regulatory and statutory obligations. As of May 2024, the FTC has not taken further action against companies who refused to remove patents after receiving warning letters in November of 2023.
In April of 2024, the FTC again sent out warning letters to drug manufacturers whose patents are listed in the Orange Book. This time, over 300 patents are being targeted by the FTC and are having their accuracy disputed. It appears that the manufacturers who received letters are taking time to review them and determine a course of action. The FTC is challenging the patents through the FDA’s process, despite explicitly stating that it reserves the right to escalate the situation and challenge the patents through Section 5 of the Federal Trade Commission Act.
A challenge through Section 5 of the Federal Trade Commission Act would be difficult for the FTC to execute. First, the commission would have to develop a case to substantiate its claim that “only patents that claim active ingredients should be listed in the Orange Book.” This will prove to be especially arduous, as the FDA has remained silent despite requests from the industry to provide guidance relating to listing drug-device patents. Since the FDA is considered the expert arbiter when it comes to matters of the Orange Book, the FTC’s opinions of which type of patents are permissible in the Orange Book may be irrelevant. Even in the event that drug-device patents are determined not to be listable, the patents still may not violate antitrust laws. Case law in re Lantus Direct Purchaser Antitrust Litigation, Case No. 18-2086, held that pharmaceutical companies that wrongfully list patents in FDA’s Orange Book must prove that they acted in good faith in order to avoid any antitrust liability. This means that any drug-device patents listed in the Orange Book in good faith would not be subject to consequences of violating antitrust regulations.
Despite the uphill battle for the FTC to prove antitrust violations, the commission is determined to continue its fight against patents it views as improperly listed and remains committed to identifying more patents that it believes are inappropriately listed in the Orange Book. The FTC may even review patents that cover manufacturing processes, packaging, and Risk Evaluation and Mitigation Strategies (REMS).
The FTC’s public denunciation of these patents appears to be one of the biggest threats to patent holders. The negative publicity is costing manufacturers valuable goodwill. Even if the FTC escalates to the point of litigation, the outcome of the litigation could be secondary to damage done to the reputation of the manufacturer. For this reason, pharmaceutical companies should be extraordinarily cautious to ensure that they are filing patents in good faith. Filing of infringement action on an existing patent that clearly violates the FDA’s guidelines for filing in the Orange Book will likely be subject to a myriad of legal obstacles from multiple stakeholders including the FTC, generic applicants, and purchasers.
How the FTC will choose to handle patent holders who do not respond to their warnings is yet to be seen. Its efforts have been successful in garnering some voluntary compliance from its subjects. While further escalation appears unlikely, it cannot be ruled out. Patent holders should operate under the assumption that their actions will be viewed under extreme scrutiny by the FTC. PHSL will continue to follow the actions of the FTC. What do you think the FTC will do to patent holders who do not delist their patents? Should drug-device patents be listed in the Orange Book? How could a future ruling against drug-device patents impact the industry?
Posted June 10, 2024
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