By Kevin E. Noonan –
Over several years and two administrations (see “FTC Announces Efforts to Police Pharmaceutical Companies’ Patent Behavior“; “FTC Warns Pharma Companies It Means Business with Its Orange Book Listing Policy“; “Federal Trade Commission Continues Efforts to Delist Drug Device Administration Patents in Orange Book“), the Federal Trade Commission has maintained a campaign against listing in the FDA Orange Book of patents claiming devices for administering approved drugs (and frequently not reciting any particular drug in the patent claims therein). On Wednesday, the Commission announced that one of its targets, Teva Pharmaceuticals, had agreed to remove over 200 such “improper patent listings” from the Orange Book, in response to these FTC efforts.
Teva was only one such FTC target, there having been ten pharmaceutical companies and 100 patents identified by FTC under former Chairwoman Lina Khan, which number expanded to 300 so-called “junk patents” by the end of her tenure. This campaign against Teva was aided by a decision in the New Jersey District Court (Teva Pharms. Inc. v. Amneal Pharms. LLC (D.N.J. 2024)), affirmed by the Federal Circuit (Teva Branded Pharmaceutical Products R&D, Inc. v. Amneal Pharmaceuticals of New York, LLC (Fed. Cir. 2024)) holding that five device patents owned by Teva and asserted against Amneal Pharmaceuticals were improperly listed in the Orange Book (the FTC having filed an amicus brief relied upon by the District Court in coming to its decision).
The press release ascribed the current administration’s asserted policies to be part of its efforts to reduce drug prices, referencing an Executive Order on Lowering Drug Prices. FTC Chairman Andrew N. Ferguson was quoted as saying that “[t]he Trump-Vance FTC is working hard to ensure that Americans have access to the affordable prescription drugs they need” (pursuing a policy started by the Biden Administration). Further, the press release (also echoing the sentiments of the Biden administration) the FTC stated that:
Improper patent listings can limit competition by preventing generic alternatives from entering the market. This can keep drug prices artificially high and prevent patients from accessing lower-cost alternatives. The removals of more than 200 improper listings will pave the way for greater competition for generic alternatives for more than 30 asthma, diabetes, and COPD drugs and epinephrine autoinjectors.
While reducing drug prices is a goal shared by policymakers on both sides of the aisle, it is difficult not to respond to assertions such as those in the FTC’s press release with “Not so fast, FTC.” Because as appealing as declaring victory may be, it ignores the realities of the structure provided by the Hatch-Waxman Act that has greatly increased the availability of generic drugs since it was enacted in 1984. Some of the reasons for these successes is that the Orange Book contained the patents a branded drug maker could assert in obtaining a thirty-month stay in FDA approval for a generic drug who had filed an ANDA (abbreviated new drug application). In addition, because of that stay of infringement (by filing the ANDA) was constructive under the statute (35 U.S.C. § 271(e)(2)) so that money damages were not available for the branded drug maker (unless at the expiration of the 30 months the generic company launched “at risk,” which also provided the branded drugmaker with the possibility of obtaining treble damages for willful infringement under 35 U.S.C. § 284)).
Having delisted any patents now determined by the FTC to be improperly listed, none of these protections (for either party) exist regarding those patents. After all, they have not evaporated or been deemed unenforceable, and the capacity for branded drugmakers to assert them still exists under 35 U.S.C. § 271(a) should the generic drugmaker enter the market after its ANDA was approved. It remains an open question, but despite FTC’s triumphant rhetoric that delisting has improved the likelihood of generic entry it may on the contrary inhibit it; although having no Orange Book listed-patents precludes a branded drug maker from asserting infringement under § 271(e)(2), it is unlikely that they would not bring suit under §271(a). With the attendant risks of enhanced liability under § 284, it seems equally likely that potential generic drugmakers, even having obtained FDA approval for their generic version of the “more than 30 asthma, diabetes, and COPD drugs and epinephrine autoinjectors” cited in the FTC press release, would prudently pause to consider their best strategic path to bringing their product to market. And the possibility of reaching a licensing agreement with the branded drugmaker might be less appealing in view of the protracted (and ultimately somewhat successful; see FTC v. Actavis) efforts by the FTC over a decade ago to thwart certain of these types of licenses (see “The FTC’s Thinking Does Not Make It So Regarding Reverse Payment Agreements“; “Federal Trade Commission Issues Report on Reverse Settlement Agreements in FY2010“; “FTC Releases Another Report on Reverse Payment Settlement Agreements in ANDA Litigation“; “The FTC Is at It Again“) (albeit those that delayed rather than facilitated generic market entry).
But the possibility of FTC scrutiny even of efforts to bring generic drugs to market being an uncertain eventuality, it is at least possible that the unadorned benefit of the FTC’s success in getting some (but by no means all, at least not yet) of the threatened listed patents and companies having listed them may not be quite the policy coup that is being touted by the administration this week. Time will tell.
