In the ever-evolving landscape of intellectual property and antitrust regulations, the Federal Trade Commission (FTC) issued a new Policy Statement on Patent Listing on September 14, 2023. This statement carries far-reaching implications for patent holders, competitors, and consumers alike. In this blog post, we will delve into the key aspects of the FTC’s Patent Listing Policy, exploring its significance and potential impact on the industry.
Background: The Orange Book
Currently, the federal law known as the Hatch-Waxman Act requires pharmaceutical patent holders to list their branded drugs and the associated patents in the “Orange Book,” formally known as the FDA’s publication of “Approved Drug Products with Therapeutic Equivalence Evaluations.”
When a generic drug company seeks FDA approval for a generic drug by challenging the relevant branded drug’s patents listed in the Orange Book (on grounds such as patent invalidity, unenforceability, or non-infringement), the branded drug company can generally rely on a presumptive 30-month stay of FDA approval for the new generic drug per 21 U.S.C. § 355(j)(5)(B)(iii). That stay would prevent the generic drug company from introducing the generic drug for two and a half years.
Understanding the FTC’s Patent Listing Policy
The FTC’s new Policy Statement on Patent Listing expresses concern regarding this process. Specifically, on the FTC conducted its own studies and reviewed dicta from the recent Supreme Court case Caraco Pharm. Labs., Ltd. v. Novo Nordisk A/S. The Policy Statement asserts that, under the current policy, pharmaceutical companies can list numerous patents with their branded drugs in the Orange Book, regardless of relevance or enforceability, in an effort to ensure at least one patent will trigger the 30-month presumptive stay against the generic drug’s FDA approval application.
As a result, the FTC’s Policy Statement contends
a generic company with a competing product facing an infringement suit based on a patent that was improperly listed in the Orange Book cannot launch its product because the automatic stay would prevent the FDA from granting approval to market the product. Patients suffer because they are deprived of the ability to choose between competing products and may be forced to pay inflated prices.
The FTC further notes that such practices may amount to a monopolistic effort resulting in unfair competition. Consequently, the FTC’s Policy Statement asserts that it will utilize its full authority to prevent such efforts. This Policy Statement comes months after the FTC made clear in November 2022 its commitment to combatting unfair competition through its powers under Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45 .
The FTC’s press release states that the FDA supports the FTC’s position.
FTC Challenges and Concerns
Although the FTC’s Patent Listing Policy is a positive step toward promoting fair competition, it also raises some challenges and concerns within the industry. First, the policy’s effectiveness depends on robust enforcement by the FTC. Enforcement efforts typically require a substantial effort, which may prove taxing on FTC resources. Nevertheless, ensuring that patent holders comply with the policy’s provisions and addressing violations promptly is crucial to its success. Second, determining whether the inclusion of a patent in the Orange Book is misleading or inaccurate can be subjective, given the governing criteria set forth in the Hatch-Waxman Act. Striking the right balance between branded drug patent rights and generic companies’ free-market rights will be a further challenge for the FTC. These are just two of the many enforcement concerns that the FTC will need to address in its efforts to protect competition.
Conclusion
By requiring clarity and accuracy in patent listings, the FTC’s policy aims to prevent deceptive practices that can harm competition and consumers.
Companies, especially those holding essential patents, should carefully examine their practices to ensure compliance with the FTC’s Patent Listing Policy.
** This article was co-authored by Mark Buck, a Law Clerk in NRF’s Houston office. Mark is supervised by attorneys who are licensed in the State of Texas.
