FTC takes aim at pharma patent tactics used to block generics

2023-09-15

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Dive Brief:

The Federal Trade Commission will “use its full legal authority” against drugmakers that impede competition by improperly listing patents in a government database that controls how generic manufacturers can enter the market, under a policy statement the commission approved Thursday.

According to FTC Chair Lina Khan, pharma companies can “weaponize” the database, called the Food and Drug Administration Orange Book, because any generic maker that applies for approval of a drug with a listed Orange Book patent can be sued by the branded manufacturer and blocked from entry for 30 months.

The policy statement highlights the antitrust regulator’s tightening scrutiny of drugmakers’ marketing, patent and acquisition practices. The FTC recently slowed Amgen’s $27.8 billion acquisition of Horizon Therapeutics until Amgen agreed to safeguards against the “bundling” of drugs in the combined company. The agency is also carefully reviewing Pfizer’s planned $43 billion takeout of Seagen.

Dive Insight:

The federal law known as the Hatch-Waxman Act set out specific legal steps for the orderly entry of generic drugs once patents and other forms of legal exclusivity expire. Among the requirements is that branded manufacturers must submit to the FDA all patents covering an approved product, including those issued after approval, for publication in the Orange Book.

Any manufacturer that applies for approval of a generic version of a marketed drug must certify that they won’t violate a listed Orange Book patent, or that a listed Orange Book patent is invalid or won’t be infringed. In the latter instance, the branded manufacturer can sue and win a 30-month stay on approval of the generic company’s application.

The FTC is arguing that many listed patents don’t fit the legal guidelines under Hatch-Waxman and subsequent refinements. Khan cited a court case decided earlier this year in which Jazz Pharmaceuticals lost a bid to block Avadel CNS Pharmaceuticals from launching a competitor to the narcolepsy drug Xyrem by using Orange Book-listed patents on its risk evaluation and mitigation strategies program.

“Abuse of patent rights can really deprive Americans have access to more affordable drugs and medical products, and the FTC has a long history of challenging these practices when they violate the antitrust laws,” Khan said at an open FTC meeting in which the policy statement was endorsed in a 3-0 vote.

“The policy statement we’re considering today builds on that important work and explains that patents that are improperly listed in the Orange Book can maybe an unfair methods of competition and violate the FTC act,” she said.

FDA Commissioner Robert Califf expressed support for the policy statement, saying his agency “stands ready to assist the FTC” in identifying and addressing the practices cited by the commission.

Industry groups Pharmaceutical Research and Manufacturers of America and Biotechnology Innovation Organization did not respond to requests for comment on the policy statement.

In a note to clients, TD Cowen analyst Rick Weissenstein wrote he is skeptical the FTC’s actions will result in much action. “It is not clear there is a real problem with the Orange Book, but this fulfills the White House pledge to implement patent reforms,” he wrote.

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