The Federal Trade Commission has challenged more than 100 medical patents the agency believes are improperly listed in the FDA Orange Book, a compendium of drug products the FDA has deemed safe and effective. The FTC will challenge these listings through an FDA regulatory dispute resolution process, which may lead to loss of market exclusivity for these products, but which would also encourage development of generic alternatives.
The Government Accountability Office stated in a March 15, 2023, report that pharmaceutical patent practices can delay access to generic drugs. This includes pharmaceutical products that require a device for delivery, such as inhalers for treatment of respiratory disorders. According to GAO, holders of these patents may attempt to extend patent protections by making minor changes to the drug, or to the device used to deliver the drug, which could impede generic competition.
The FTC released a September 2023 policy statement stating that patents that are improperly listed in the Orange Book may be subject to enforcement under Section 5 of the Federal Trade Commission Act. The FTC policy statement was supported by FDA Commissioner Robert Califf, who stated that the FDA is prepared to assist the FTC in this endeavor. Califf said the two agencies have “a long history of collaboration to protect American consumers,” which includes activities undertaken per the White House executive order on competition in the U.S. economy.
A listing in the FDA Orange book provides manufacturers of brand name drugs with a 30-month stay of FDA approval of competing generic drug applications under the FDA’s abbreviated new drug application program. The FTC states that the Supreme Court has recognized the potential for Orange Book listings to prevent or delay generic drug entries since the 1990s, but the FTC’s authority to intervene in these practices has not been applied consistently in recent years.
The FTC has stated that the scope of its authorities authorizes the agency to conduct oversight of activity that constitutes an impending violation of antitrust law, including conduct by manufacturers that have not yet established a monopoly. This may include conduct that has the potential to ripen into a violation of antitrust law. A manufacturer that enjoys a high concentration of activity for a particular market may not be subject to enforcement action by the FTC merely by virtue of that concentration, which may be the consequence of nothing more than a historical accident. FTC enforcement action may require that the manufacturer engage in activities that the agency determines are deliberately anticompetitive.
The FTC would have to determine that the method of competition in question is unfair, which is any method of competition that goes beyond the merits of the product, such as the superiority of the product over a competitor’s products. Any conduct that is coercive, abusive, or deceptive would fulfill the description of unfair methods of competition. The conduct would have to negatively affect competitive conditions in the market, but the policy statement indicates that this may be determined prospectively rather than only after the alleged anticompetitive effect is visible.
One important takeaway from the FTC policy statement is that the agency may refer any false certifications in the Orange Book to the U.S. Department of Justice. These actions may be prosecuted as criminal matters rather than as civil matters, which would expose the manufacturer to substantially greater legal risk than is the case in civil matters.