In Jazz case, FTC urges court to delist patent on blockbuster Xyrem

As Jazz Pharmaceuticals works to hold off forthcoming competition to its top-selling drug, antitrust regulators in the U.S. government are calling out its tactics.

In a court filing (PDF), the U.S. Federal Trade Commission (FTC) took issue with a Jazz patent that covers a system for distributing Jazz's twice-nightly narcolepsy drug Xyrem under an FDA-required program to curb treatment-related risks.

Specifically, the agency says the company's patent doesn't qualify for listing in the FDA's Orange Book. Once a patent is listed in the book, the FDA can't approve potential rivals for 30 months, the FTC notes.

The patent details a Risk Evaluation and Mitigation Strategy program for distributing Jazz's drug, not a "a method of using the drug for treatment," the FTC says. The agency argues the patent should be delisted from the Orange Book, which would allow the FDA to give its final endorsment to a once-nightly rival from Avadel Pharmaceuticals.

Avadel won a tentative FDA approval for its extended-release rival to Jazz's narcolepsy drug Xyrem over the summer. The company is gearing up to launch the product, called Lumryz, by June 2023. But it could launch sooner if it prevails in its legal clash with Jazz.

The FTC filed its brief in the infringement case between Jazz and Avadel. In that case, Avadel has filed a motion asking the court to delist the patent from the Orange Book.

Xyrem generated $1.27 billion in sales for Jazz last year, a decline from $1.74 billion in 2020. But at the same time, the company is marketing a newer, low-sodium version called Xywav, which is gaining share and pulled in more than $530 million last year. The drugs comprise the company's "oxybate" franchise of medicines, which grew sales 3% in 2021 to $1.8 billion.

As for the FTC, the agency has sought to take a broader approach to regulating biopharma competition in the last two years. In March 2021, the agency said it would be taking a closer look at big mergers and acquisitions going forward, specifically flagging the deals between Bristol Myers Squibb and Celgene, AbbVie and Allergan, and Pfizer's Upjohn unit and generics giant Mylan as raising competitive concerns.

For future M&A reviews, the FTC said it would look into how proposed deals could affect innovation and also take into account pharma's well-known anti-competitive tacitcs such as "pay-for-delay sttelements," "sham" patent litigation and more.

The industry hasn't seen any mega deals since the FTC unveiled its effort, but midsize M&A is alive and well. Recent examples include Pfizer's buyouts of Biohaven and Global Blood Therapeutics and Amgen's deal for ChemoCentryx.