FTC’s Challenge of Improperly Listed Patents

On November 7, 2023, the Federal Trade Commission (FTC) officially challenged more than 100 patents that brand name drug manufacturers have listed in the Food and Drug Administration’s (FDA) “Approved Drug Products with Therapeutic Equivalence Evaluations," colloquially referred to as the “Orange Book.”

“Wrongfully listed patents can significantly drive up the prices Americans must pay for medicines and drug products while undermining fair and honest competition,” said FTC Chair Lina M. Khan.

The FTC sent notice letters to 10 New Drug Application (NDA) holders identifying numerous patents as improperly listed in the Orange Book. The FTC also took action under 21 C.F.R. § 314.53(f)(1)^[1] and “notified FDA that it disputes the accuracy or relevance of the listed information for these patents, which may require that the manufacturers remove the listing or certify under penalty of perjury that the listings comply with applicable statutory and regulatory requirements.” Pursuant to the FDA’s regulatory dispute process, 21 C.F.R. § 314.53(f)(1), FDA will notify the NDA holders of FTC’s challenge, giving them 30 days to withdraw the patents, amend their listing, or certify that the patents are properly listed.

In its letters to NDA holders, FTC also noted that “we retain the right to take any further action the public interest may require, which may include investigating this conduct as an unfair method of competition under Section 5 of the FTC Act, 15 U.S.C. § 45.”

FTC’s Policy Statement

FTC’s November 7, 2023 notice letters follow on the heels of the FTC’s September 14, 2023 policy statement^[2] which was a wake-up call to brand name drug manufacturers to ensure that they are properly listing patents in the Orange Book. The policy statement also served as a reminder to generic drug manufacturers that they can and should request that the FDA delist improperly listed patents from the Orange Book, and that there are counterclaims that can be brought in a Hatch-Waxman infringement suit for the delisting of patents, as well as antitrust claims that can be brought against NDA holders for improperly listing patents.

In its September 14, 2023 policy statement, the FTC stated that it “intends to use its full legal authority to protect patients and payors . . . from business practices that tend to negatively affect competitive conditions. This includes taking action against companies and individuals that improperly list patents in the Orange Book that do not meet the statutory listing criteria.” The policy statement makes it clear that there are several legal actions that the FTC can take as improper listing can constitute: (1) an unfair method of competition in violation of Section 5 of the FTC act; (2) illegal monopolization; and (3) a potential criminal violation for the submission of false statements filed under 21 C.F.R. § 314.53(c)(2)(ii)(R)^[3], which the FTC states it may refer to the U.S. Department of Justice for investigation. The FTC may also invoke the FDA process set out in 21 C.F.R. § 314.53(f)(1), as seen with the FDA’s November 7, 2023 action.

Patents Required in Listing

Pursuant to 21 C.F.R. § 314.53(b), NDA applicants and holders must submit to FDA for listing in the Orange Book “each patent that claims the drug or a method using the drug that is the subject of the NDA or amendment or supplement to it and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner of the patent engaged in the manufacture, use, or sale of the drug product.”^[4] Such patents consist of:

• drug substance (active ingredient) patents - the drug substance claimed must be the subject of the pending or approved NDA or must be the same as the active ingredient that is the subject of the approved or pending NDA;
• drug product (formulation and composition) patents - the drug product claimed must be described in the pending or approved NDA; and
• method-of-use patents - the patent must claim indications or other conditions of use for which FDA approval is sought or has been granted in the NDA and the “applicant must separately identify each pending or approved method of use and related patent claim(s).”

Patents Excluded in Listing

Pursuant to 21 C.F.R. § 314.53(b), the following patents are prohibited from being submitted to FDA for listing in the Orange Book:

• patents for which there has been a judicial finding of invalidity, from which no appeal has been or can be taken^[5];
• process patents;
• patents claiming packaging;
• patents claiming metabolites;
• patents claiming intermediates;
• patents claiming unapproved uses or for which approval is not being sought; and
• polymorph patents (unless the patents claim a “polymorph that is the same as the active ingredient described in the approved or pending NDA,” and the applicant has certified that it has test data “demonstrating that a drug product containing the polymorph will perform the same as the drug product described in the NDA”).

Misinterpretations and Abuses

Which patents should and should not be listed in the Orange Book is not always easy to determine. This is evident from the FDA’s Report to Congress on January 5, 2022 in which it summarizes public comments received concerning whether additional clarity is needed regarding the types of patent information that should be included or removed from the Orange Book.

Issues related to improper patent listings may ultimately stem from the fact that NDA applicants and holders self-certify as to which patents should be listed in the Orange Book. The FDA’s role of listing the patents is described, including by the FDA itself, as purely ministerial. The FDA does not independently verify the accuracy of the NDA holder’s patent certifications, nor does it independently remove improperly listed patents from the Orange Book. Therefore, abuses can and do occur. One undisputed benefit to NDA holders of listing patents in the Orange Book is that they obtain an automatic 30-month stay in which the FDA cannot approve a 505(b)(2) application or an ANDA if the NDA holder files an infringement lawsuit within 45 days after receiving notice of a Paragraph IV certification. In its September 14, 2023 policy statement, the FTC states that it has “identified numerous instances in which the 30-month stay was used to block competition.”

What Can Companies Do?

The FDA has procedures for both NDA holders and any third party to request correction of patent information in the Orange Book.^[6] Third parties may also file certain antitrust claims against the NDA holders, such as attempted monopolization and monopolization. Further, if sued for infringement of an alleged improperly listed Orange Book patent, a 505(b)(2) or ANDA applicant can file antitrust counterclaims or counterclaims seeking a declaratory judgment requiring the brand name drug maker to delist the improperly listed patents. In a recent case, the Federal Circuit affirmed a Delaware District Court decision granting judgment on the pleadings on a delisting counterclaim, directing the drug maker to request that the FDA delist its REMS patent from the Orange Book.

We recommend that NDA holders consult their legal advisors to determine whether currently listed or to-be-listed patents comply with the listing requirements to avoid legal liability or FTC action. We also recommend that generic drug manufacturers consult their legal advisors to ensure there are no improperly listed patents that could lead to any unnecessary expense or litigation blocking their approval pathways. Locke Lord is available to assist your company in determining what should and should not be listed in the Orange Book as well as navigating the delisting procedures.

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^{[1] 21 C.F.R. § 314.53(f)(1) allows any third party to “dispute[] the accuracy or relevance of patent information submitted to the Agency . . . and published by FDA” in the Orange Book.}

^{[2] Federal Trade Commission Statement Concerning Brand Drug Manufacturers’ Improper Listing of Patents in the Orange Book. See also Statement of Chair Lina M. Khan at the September Open Commission Meeting on Brand Drug Manufacturers’ Improper Listing of Patents in the Orange Book Commission File No. P233900.}

^{[3] 21 C.F.R. § 314.53 sets forth the requirements for submission of patent information for NDAs.}

^{[4] See also 21 U.S.C. §§ 355(b)(1)(A)(viii), 355(c)(2).}

^{[5] 21 C.F.R. § 314.53(f)(2).}

^{[6] See 21 C.F.R. § 314.53(f).}