The US Federal Commerce Fee (FTC) despatched letters on November 7, 2023, accusing 10 firms of improperly itemizing drug supply gadget patents within the US Meals and Drug Administration (FDA) Orange Guide, stating that the FTC has taken steps to “dispute” these listings.
The FTC’s statements recommend the potential for future antitrust enforcement actions in opposition to these firms, in addition to for additional disputes concerning a “big selection of patent listings.”
The FTC’s letters observe the company’s September 2023 policy statement saying that “improper” Orange Guide listings could also be challenged “as unfair strategies of competitors” in violation of Part 5 of the FTC Act, as we described in this October 18 alert.
The letters come because the FTC is more and more taking a place on these points in non-public litigation – together with a November 2023 amicus brief arguing that “improper” Orange Guide listings can “represent unlawful monopolization” and trigger hurt extending past the 30-month keep, as a result of they will “distort the aggressive course of.”
We summarize the FTC’s actions and supply key takeaways for innovator pharmaceutical producers.
FTC’s ‘challenges’ aren’t antitrust enforcement actions
The FTC’s September 2023 coverage assertion outlined an aggressive view of the antitrust implications of Orange Guide listings. The FTC implied that it views “improper” Orange Guide listings as primarily per se illegal below Part 5 of the FTC Act, topic to condemnation whatever the reasonableness of the choice to checklist or the aggressive impact of the precise itemizing.
The specter of antitrust enforcement could deter Orange Guide listings, however it conflicts with present case regulation and antitrust rules, leaving the FTC weak if it had been to deliver antitrust challenges primarily based on the theories articulated within the coverage assertion.
Certainly, whereas the FTC characterizes its latest letters as “difficult” 100+ Orange Guide patent listings, it notably didn’t deliver any Part 5 enforcement actions or different antitrust challenges in opposition to these Orange Guide patent listings, nor did it provoke a course of to compel delisting of any patent.
As a substitute, the FTC despatched letters to the FDA, pursuant to FDA rules that allow anybody to query a patent itemizing. The businesses which have listed the patents within the Orange Guide have 30 days to both take away the listings or recertify that the listings adjust to statutory necessities.
Past initiating the dispute, the FTC will play no formal position within the course of – and presumably neither will the FDA, which traditionally has performed solely a “ministerial” position in managing the Orange Guide. If the businesses focused by the FTC letters recertify the patent listings, the patents will stay listed.
Since 2021, there have been greater than a dozen different listings questioned, as tracked by the FDA. In additional than half of these situations, no adjustments had been made to the Orange Guide.
Uncertainty concerning itemizing gadget patents
The Hatch-Waxman Act and associated FDA rules require new drug utility (NDA) holders to checklist sure patents associated to the corporate’s permitted drug merchandise within the FDA’s Orange Guide, formally the “Accredited Drug Merchandise with Therapeutic Equivalence Evaluations.”
The rules require the itemizing of patents directed to the permitted drug substance, the permitted drug product and method-of-use patents masking the permitted indication(s). For almost twenty years, if not longer, drug firms have sought the FDA’s steering on the itemizing of drug-device patents within the Orange Guide, as these gadgets are regularly integral to the supply of the drug and are permitted as drug-device mixtures.
Over this era, the FDA has continued to checklist drug-device patents however has refused to offer written steering concerning the listability of those patents. The 2021 Orange Guide Transparency Act required the FDA to solicit feedback concerning the itemizing of gadget and different patents within the Orange Guide. In response, the FDA acquired numerous comments from industry and others concerning the itemizing of gadget patents. Within the face of those feedback, the FDA has continued to checklist drug-device patents within the Orange Guide however has but to subject any written steering directed on the listability of those patents.
The patent listings disputed within the latest FTC letters are directed to a majority of these drug-device patents. The FTC’s declare that these patents are clearly unlistable stands in distinction to the FDA’s long-standing observe of itemizing these patents within the Orange Guide, together with the FDA’s refusal to offer any categorical steering concerning the itemizing of drug-device patents, however many years of business requests for readability.
FTC’s view on gadget patents and the Orange Guide
The FTC has made clear that, in its view, “solely patents that declare the energetic ingredient ought to be listed within the Orange Guide,” and that “drug-device patents that don’t declare the energetic ingredient shouldn’t be listed.” In a latest interview, the FTC deputy director who signed the drug supply itemizing letters asserted that this isn’t “notably controversial,” as “the regulation is definitely comparatively clear” with “not loads of ambiguity right here when it comes to what ought to and shouldn’t be listed.”
The FTC additional prompt that itemizing a majority of these patents violates antitrust regulation, and that the FTC “retains the correct to take additional motion,” together with by investigating and bringing instances. If any of the focused firms recertify their listings, the FTC could effectively try to make use of that as proof the itemizing was maintained understanding the FTC believes it’s improper.
Any future antitrust enforcement actions in opposition to these or different disputed patents, nonetheless, would require the FTC to develop considerably extra proof.
As an preliminary matter, whereas the FTC has now expressed the view that a majority of these drug-device patents shouldn’t be listed, the actual fact is that the FDA has remained silent concerning repeated requests from business to offer clear steering concerning the listability of drug-device patents and has continued to checklist these patents within the Orange Guide. Furthermore, the FTC is just not an professional arbiter in figuring out statutory patent itemizing standards for a fellow federal company.
Even when sure drug-device patents are finally decided to not be listable, that may not essentially imply the itemizing violates antitrust regulation, because the FTC suggests, for numerous causes:
- The case regulation – particularly, the US Court docket of Appeals for the First Circuit’s 2020 choice in Lantus – supplies that there ought to be no antitrust legal responsibility if a list was made “moderately” and in “good religion.” This precedent is predicated on the popularity that the requirement to checklist patents is just not voluntary, however is statutorily mandated, and within the absence of clear steering, firms shouldn’t be held chargeable for religion try to adjust to a statutory scheme.
- Antitrust regulation is worried with conduct that causes or threatens probably hurt to competitors. The FTC has expressed concern that improper Orange Guide listings could delay or deter generic entry, however that’s not believable for at the very least a number of the disputed patents. For instance, the place a disputed patent has not been used as the premise for acquiring a 30-month keep, or if there are further patents listed within the Orange Guide that aren’t disputed by the FTC, the itemizing of the disputed patent could not have any impact on competitors in any respect. That is particularly the case contemplating {that a} patent holder can allege infringement no matter whether or not a patent is Orange Guide-listed.
The FTC usually investigates and marshals supporting proof of an antitrust violation earlier than going public with options of wrongdoing. Right here, the FTC has gone public whereas stating it “retains the correct to take … additional motion [including] investigating the producer’s conduct.”
Key issues going ahead
The FTC has lengthy prioritized enforcement in opposition to conduct that delays or deters generic entry, and it’s now clearly centered on Orange Guide listings as a technique to take action, arguing it’s defending “People from unlawful enterprise ways which are climbing the prices of medicine and drug merchandise.”
In an interview following the FTC’s announcement, the FTC deputy director stated that the FTC “proceed[s] to evaluation different patent listings” and that this motion is just not “exhaustive.” It thus seems probably that the FTC will proceed to determine patents it views as improperly listed, similar to patents masking manufacturing processes, packaging, REMS (Threat Analysis and Mitigation Methods) and different drug distribution techniques, in addition to gadget patents, and can publicize its efforts to focus on these listings.
Pharmaceutical firms ought to, due to this fact, be further cautious to make sure they’ve religion foundation for considering their Orange Guide listings fulfill the itemizing standards.
As our October alert detailed, vital antitrust publicity would come from deliberately itemizing a patent that doesn’t meet the statutory standards and submitting an infringement motion on such patent to delay or deter generic entry. Such motion is prone to entice antitrust counterclaims from the generic applicant – along with potential FTC scrutiny and sophistication actions on behalf of purchasers – that could be troublesome to defend.
FTC enforcement is way much less probably to achieve the absence of proof {that a} specific itemizing was made in unhealthy religion, and that the itemizing precipitated or is prone to trigger generics to delay or forego entry. Below these circumstances, non-public claims are also a lot much less probably, since conduct that doesn’t really impression generic entry wouldn’t end in antitrust harm and damages.
Within the present atmosphere, nonetheless, that doesn’t imply the FTC won’t act. The place there may be ambiguity about an Orange Guide itemizing, firms might want to steadiness the advantages of itemizing in opposition to the downsides. Issues on this evaluation embrace the energy of the authorized foundation for itemizing and related documentary file, the potential for a protracted FTC investigation, together with litigation and hostile publicity, even when the corporate could finally prevail, and the truth that firms can, after all, nonetheless assert infringement – even when a patent is just not listed.
Cooley’s antitrust, patent and Hatch-Waxman groups can be found to advise on these and different points on the intersection of antitrust and pharmaceutical patent enforcement.
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