A Reminder For Drug Cos. To Confirm Orange Book Listings
In this Law360 article, partners Tasha Francis Gerasimow, Devora Allon and Jeanna Wacker discuss the FTC’s policy statement warning pharmaceutical companies that make and sell brand-name drugs that they could face legal action if they improperly list patents in the FDA’s “Orange Book.”
On Sept. 14, the Federal Trade Commission released a policy statement, supported by the U.S. Food and Drug Administration, warning pharmaceutical companies that make and sell brand-name drugs that they could face legal action if they improperly list patents in the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations, more commonly known as the Orange Book.
The FTC's stated goal "is to put market participants on notice that the FTC intends to scrutinize improper Orange Book listings to determine whether these constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act."
As part of the Hatch-Waxman framework, brand drug manufacturers are required to submit information to the FDA identifying certain patents covering the products described in their new drug application.
The purpose of listing a patent in the Orange Book is to put potential generic manufacturers on notice that the company considers the patent covers its drug, and that potential generic manufacturers may infringe the patent if they proceed to market a product relying on or referencing the product described in the new drug application.
Specifically, for a patent to be listed, under Title 21 of the U.S. Code, Section 355, as amended by the Orange Book Transparency Act of 2020, it must be one that:
1. Claims the drug for which the applicant submitted the application and is a drug substance (active ingredient) patent or a drug product (formulation or composition) patent; or
2. Claims a method of using such drug for which approval is sought or has been granted in the application.
By contrast, patents that have claims directed to the process or manufacture of the drug substance, to the packaging of the drug product, or to metabolites or intermediates of the drug substance are not supposed to be listed in the Orange Book.
Notably, the FDA does not generally police, examine or otherwise review the listings in the Orange Book. In other words, the FDA will list the patents identified by a brand drug manufacturer even if the patent does not claim the drug or method of using same, potentially creating a situation where a patent is listed in the Orange Book even though it does not satisfy the requirements of Section 355.
The FTC policy statement contends that "Improper Orange Book listings may have played a role in distorting pharmaceutical markets for decades."
The statement cites one example where the FTC charged a company "for, among other things, wrongfully listing a patent in the Orange Book to block generic competition in violation of the FTC Act."
The statement also references amicus briefs the FTC filed in private litigations relating to alleged anti-competitive effects of improper Orange Book patent listings.
The FTC states that it will now dispute Orange Book patent listings through the FDA process previously set out in Title 21 of the Code of Federal Regulations, Section 314.53(f)(1), which allows any interested person to request correction of patent information published in the Orange Book.
This process includes a 30-day period in which the brand drug manufacturer must "confirm [in 250 words] the correctness of the patent information" and include a signed verification or, alternatively, withdraw or amend the patent information within 30 days from when the FDA sends the request.
Results of this process are listed on the FDA's website.[1] As such, such responses become publicly available.
The FTC statement also indicates that false certifications filed under Title 21 of the Code of Federal Regulations, Section 314.53(c)(2)(ii)(R), may constitute a potential criminal violation for the submission of false statements, and individuals who submit or cause the submission of improper Orange Book patent listings, including those who certify compliance under Section 314.53(c)(2)(ii)(R), may be held individually liable.
The statement concludes the commission may refer such cases to the U.S. Department of Justice for further investigation.
This FTC policy statement comes on the heels of increased litigation involving the alleged misuse of Orange Book listings.
For example, in May, Teva Pharmaceutical Industries Ltd. was sued in the U.S. District Court for the District of Massachusetts for alleged antitrust violations involving its asthma inhalers including allegedly "wrongfully causing ineligible patents to be listed in the Orange Book."
Comparable claims of alleged improper Orange Book listings have been raised by Mylan Pharmaceuticals Inc. in a litigation against Sanofi-Aventis U.S. in the U.S. District Court for the Western District of Pennsylvania, in which Mylan alleges Sanofi monopolized the market for injectable insulin glargine and in the In Re: Actos Antitrust Litigation, in the U.S. District Court for the Southern District of New York, involving Takeda Pharmaceutical Co. Ltd.'s diabetes product, Actos.
Allegations of Orange Book mislistings have also arisen in the context of Hatch-Waxman litigation.
These cases highlight the scrutiny patent owners already face regarding decisions related to Orange Book listings.
On one front, patent owners can be attacked for failing to list patents in the Orange Book that they later assert in litigation, essentially circumventing the process laid out by the Hatch-Waxman regime designed to facilitate resolution of patent disputes in a timely manner.
On the other hand, they have also faced exposure to antitrust liability over a listing decision that a court or jury might later determine, potentially with the benefit of hindsight, was improper. And now patent owners should expect increased attention from the FTC, along with the potential for additional liability.
Moreover, brand pharmaceutical companies contemplating or currently involved in mergers and acquisitions should be mindful of the FTC's focus on this issue and affirm proper listing of their patents in the Orange Book as the FTC may use the premerger review process to scrutinize a company's Orange Book listings consistent with its recent guidance.
In light of these developments, now is an opportune time for patent owners to review their Orange Book listings for key product portfolios, and as necessary, confirm the appropriateness of the listings.
Such preparation will be particularly advantageous to the extent the company receives notification pursuant to Title 21 of the Code of Federal Regulations, Section 314.53(f)(1), from the FTC or other interested third parties.
Given the quick 30-day turnaround time required by this process, the limited scope of the response allowed, and the fact that the analysis may be complex and affect multiple patents and product portfolios, advance review is advisable, if not a necessity.
Moreover, such statements may resurface in subsequent litigation as evidence of intent or good faith belief of the patent owner in listing their patents in the Orange Book, for example in the context of allegations of so-called sham patent litigation. Thus, to the extent these statements will become future evidence in antitrust litigation, considerate review of the submission is justified.
