The Federal Trade Commission today issued a policy statement, supported by the U.S. Food and Drug Administration (FDA), 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 catalog of “Approved Drug Products with Therapeutic Equivalence Evaluations,” commonly known as the “Orange Book.”
Improperly listing patents in the Orange Book may harm competition from less expensive generic alternatives and keep prices artificially high, according to the policy statement. The FTC will scrutinize improper Orange Book patent listings as potential unfair methods of competition in violation of Section 5 of the FTC Act.
“Improper patent listings in the Orange Book illegitimately delay or lock out generic manufacturers from entering the market, depriving Americans of access to lower-cost medicines and drug products,” said FTC Chair Lina M. Khan. “The FTC is making clear that improper Orange Book listings may be an unfair method of competition in violation of the FTC Act. We won’t hesitate to use all our tools to combat illegal practices that are inflating the price of health care, including medicines.”
“The FDA appreciates and supports the FTC’s efforts to examine whether brand drug companies are impeding generic drug competition by improperly listing patents in the Orange Book,” said FDA Commissioner Robert M. Califf, M.D. “The FDA stands ready to assist the FTC as part of our long history of collaboration to protect American consumers, including our continued engagement under the Executive Order on Competition in the American Economy to help identify and address efforts to block or delay generic drug and biosimilar competition.”
The FDA’s Orange Book is a list of drug products approved by the agency as safe and effective. When a brand pharmaceutical company lists a patent in the Orange Book it may lead to a statutory stay that blocks the introduction of competing drug products for up to 30 months, including lower-cost generic alternatives. Listing patents in the Orange Book can, however, tend to negatively affect competitive conditions if listings are improper, as defined by law.
As described in the policy statement, listing certain types of brand drug patents in the Orange Book is a statutory requirement. If a brand company timely files a patent infringement action based on a listed patent, the brand company may be entitled to an automatic 30-month stay of approval of the marketing application for the generic’s drug product while the companies litigate potential patent infringement, regardless of whether the patent is invalid or not infringed.
As the policy statement describes, improper patent listings may unlawfully delay generic competition for years and disincentivize generic manufacturers from trying to come to market with lower cost alternatives at all. Such improper patent listings have likely been distorting pharmaceutical markets for decades. A 2002 FTC study, for example, identified numerous instances in which the automatic 30-month stay was used to block competition. Since then, the Commission has filed several lawsuits and amicus briefs in court alleging the anticompetitive impacts of improper Orange Book patent listings.
The policy statement emphasizes that “[p]atents improperly listed in the Orange Book can significantly undermine competition and harm the American public. The FTC will continue to use all its tools to halt unlawful business practices that contribute to high drug prices.” These tools include using FDA’s regulatory process for disputing a brand company’s patent listing and potentially pursuing relief under the antitrust laws including Section 5 of the FTC Act.
The Commission vote approving issuance of the policy statement was 3-0. FTC Chair Khan issued a separate statement.