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4 October 20235 minute read

Orange Book alert: Improper patent listings could be investigated as potential violations of the FTC Act

Recently the Federal Trade Commission (FTC), with the support of the Food and Drug Administration (FDA), issued a policy statement advising branded drug manufacturers that “the FTC intends to scrutinize improper Orange Book listings to determine whether these constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act.”

This announcement is the latest indication that the FTC is closely monitoring Orange Book listings as part of its antitrust enforcement mission.

In response, companies that manufacture and sell branded pharmaceuticals should carefully review their existing Orange Book listings to ensure that the listed patents conform to statutory and regulatory requirements and should also factor such requirements into the decision-making process when considering which patents to list in the Orange Book going forward.

Orange Book statutory and regulatory background

The Hatch-Waxman Act requires manufacturers of branded drugs to submit to the FDA certain information concerning patents that claim the drug substance (active pharmaceutical ingredient), drug product (formulation or composition), or method of using such drug described in the branded manufacturer’s New Drug Application (NDA).The FDA publicly maintains this information in the Orange Book, which the FTC Policy Statement describes as “the statutory mechanism for identifying and potentially resolving certain patent disputes” while applications for generic or follow-on versions of branded drugs for which there are listed patents “are still under review by the FDA.”

NDA holders are responsible for ensuring that the Orange Book-listed patent information is complete and complies with all regulatory listing requirements – the FDA performs a “purely ministerial” role in the listing process and does not monitor or confirm regulatory compliance.

A company intending to market a generic version of a listed drug must provide “a certification with respect to each listed patent which claims the listed drug . . . or which claims a use for such listed drug for which the applicant is seeking approval.” If the generic company seeks FDA approval before the relevant Orange Book-listed patent expires, it must file what is known as a “paragraph IV certification” that states that the listed patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the generic application is submitted. This act of filing a paragraph IV certification constitutes a statutory act of infringement against the Orange Book-listed patent or patents and provides a basis for suit by the owner of the listed patent or patents against the generic. If the patent owner files an infringement suit within 45 days of receiving notice of the paragraph IV certification, a 30-month stay of any FDA approval of the generic company’s application automatically goes into effect.

The Orange Book thus plays a central role in providing notice to generics that the products they seek to market are covered by existing patents and that they must file a paragraph IV certification, which in turn allows issues of patent infringement and validity to be litigated before the FDA approves the generic version of the drug at issue.

The FTC policy statement and recent FTC actions

The FTC Policy Statement warns NDA holders, patent owners, and branded pharmaceutical companies that Orange Book listings “that do not meet the statutory listing criteria undermine… the competitive process and may constitute an unfair method of competition in violation of Section 5 of the FTC Act.” In particular, the FTC cautions that the improper listing of a patent in the Orange Book, coupled with the timely filing of an infringement suit triggered by a paragraph IV certification covering that patent, could lead to an unwarranted 30-month stay that would prevent FDA approval of the relevant generic drug.

According to the FTC’s Policy Statement, the FTC intends to “scrutinize whether brand[ed] drug companies and responsible individuals are improperly listing patents in violation of Section 5” as well as to “scrutinize a firm’s history of improperly listing patents during merger review.” The FTC Policy Statement notes that the improper listing of patents in the Orange Book may result in individual civil liability or even a criminal investigation.

The strong stance taken in the FTC Policy Statement represents a continuation of the FTC’s recent public positions in favor of stricter enforcement of Orange Book listing requirements. For example, the FTC filed an amicus brief in Jazz Pharms., Inc. v. Avadel CNS Pharms., LLC, arguing in favor of delisting a listed patent. And the September 14, 2023 statement of FTC Chair Lina M. Khan characterized the issue of improper Orange Book listings as one of “enormous urgency.”

Looking forward

Though the FTC Policy Statement “does not operate to bind the FTC or the public” and “does not preempt federal, state, or local laws,” it serves as an important signal to the pharmaceutical industry that the FTC intends to take a more active role in monitoring Orange Book listings and may act to enforce the proper listing of patents in the Orange Book in the absence of any infringement action. Companies that manufacture and sell branded pharmaceuticals could soon face independent FTC actions for improper Orange Book listings.

Therefore, in the wake of this new FTC guidance, NDA holders and branded pharmaceutical companies should be vigilant in maintaining their existing Orange Book listings correctly and should take steps to ensure that all new Orange Book listings also comply with statutory and regulatory requirements.

Learn more about the implications of this new FTC guidance, and about maintaining your Orange Book listings, by contacting any of the authors.