Amid the Federal Trade Commission's (FTC's) campaign to bolster scrutiny around large biopharma M&A deals, the agency is now taking a closer look at patent gamesmanship.
Thursday, the agency issued a policy statement warning pharmaceutical companies that they could face legal action by making “improper” listings in the FDA’s Orange Book, a registry of patents for approved drugs.
“Improperly listing patents in the Orange Book may harm competition from less expensive generic alternatives and keep prices artificially high,” the commission wrote in the policy statement.
During an open meeting Thursday—which included public comment—commission members voted 3-0 to issue the statement.
“A brand pharmaceutical company can obtain a presumptive 30-month stay of the FDA approving generic competitors merely by listing a patent in the Orange Book and filing a lawsuit against the generic manufacturer, regardless of whether the patent listed is actually valid or infringed by the competing generic product,” FTC Chair Lina M. Khan said prior to the vote.
FDA Commissioner Robert Califf, M.D., said he supports the efforts of the FTC. The FDA will assist “to protect American consumers," Califf added.
In the public comment period, Tahir Amin, the founder and CEO of the nonprofit Initiative for Medicines, Access & Knowledge, or I-MAK—which works to solve inequities in drug development and access—said that patent scrutiny shouldn’t fall entirely on the FTC. He urged the FDA and the U.S. Patent Office to collaborate in their examination of patents.
“Pharmaceutical companies regularly exploit the FDA’s lack of oversight and lack of clear rules and guidelines," Amin said.
Amin cited moves by companies that have gone beyond protecting active ingredients of drugs. Sanofi, for example, patented a device for its insulin product Lantus, he said.
Additionally, Jazz Pharmaceuticals patented its Risk Evaluation and Mitigation Strategies (REMS)—a drug safety program—to protect its narcolepsy drug Xyrem from a competitor, Avadel Pharmaceuticals, that had developed a rival treatment.
The patent was delisted, but the strategy gained Jazz an extra 10 months of market exclusivity, according to Khan.
The FTC move comes after calls from Congress last month to crack down on “sham patents.” On Thursday morning, Rep. Pramila Jayapal, D-Washington, and Sen. Elizabeth Warren, D-Massachusetts, reiterated their concerns to the FTC.
“Brand-name pharmaceutical companies have routinely abused the U.S. patent system, violated antitrust law, and hiked the prices of prescription drugs to widen their own profit margins,” the lawmakers wrote.
Industry association PhRMA points out that of the thousands of patents that have been listed in the Orange Book since 2017, only 21 disputes resulted in an updates. PhRMA says that more direction from the FDA is needed.
“The FTC appears to be criticizing biopharmaceutical companies for attempting to comply with the statute which requires listing in the Orange Book of all patents in certain categories," a PhRMA spokesperson said. "The industry has asked FDA repeatedly for years to clarify whether certain patents should be listed, to no avail. In addition, the FDA already has a process for challenging the listing of any Orange Book patent. We hope the FTC will recognize this uncertainty and FDA will provide the industry with clarity.”
Before the vote, Khan said drugs are more costly in the U.S. than in any other country. She also said that a “striking number of people now report having to ration their medicines or skip them altogether because they are just too expensive.”
“We at the FTC are fully committed to using all of our tools to combat misconduct that is unlawfully inflating drug prices,” Khan said.
Aside from the patent issue, the FTC is also ratcheting up its M&A scrutiny in the biopharma industry. In 2021, the agency said it would conduct more comprehensive antitrust reviews of proposed deals rather than rely on product-by-product breakdowns.