In its ongoing effort to closely examine substantial mergers and acquisitions (M&A) in the biopharmaceutical sector, the Federal Trade Commission (FTC) has shifted its focus toward patent practices within the pharmaceutical industry. Recently, the FTC issued a policy statement cautioning pharmaceutical companies regarding the potential legal repercussions associated with the act of “improperly” listing patents in the FDA’s Orange Book, which serves as a registry of patents for approved drugs.
FTC Policy Statement on Patent Inclusion in the Orange Book
- FTC policy addresses the negative outcomes associated with patents included in the Orange Book.
- Emphasizes the potential hindrance to competition, especially from cost-effective generic alternatives.
- Highlights the risk of artificially inflated medication prices due to this practice.
- The FTC’s policy statement is a proactive step to counter mounting concerns.
It aims to address situations where pharmaceutical companies may exploit the system to delay generic drug market entry.One crucial concern addressed by the FTC is the capacity of brand-name pharmaceutical companies to secure a 30-month delay in FDA approval for generic competitors by simply listing a patent in the Orange Book and instigating legal proceedings against the generic manufacturer. This practice, irrespective of whether the listed patent is legitimately enforceable or violated by the competing generic product, has elicited apprehensions about the potential for anti-competitive conduct.
FTC Chair Lina M. Khan has emphasized the significance of addressing this issue, as it has a direct impact on the affordability and accessibility of medications. In a show of solidarity, FDA Commissioner Robert Califf has expressed his support for the FTC’s endeavors, emphasizing their shared commitment to safeguarding American consumers’ interests.
During the public comment phase, Tahir Amin, the CEO of the nonprofit Initiative for Medicines, Access & Knowledge (I-MAK), advocated for a cooperative approach between the FDA and the U.S. Patent Office in scrutinizing patents. Amin pointed out that pharmaceutical companies frequently exploit the absence of stringent oversight and the ambiguity surrounding regulations governing patents by these organizations.
Amin cited instances where companies extended their patent protection beyond active drug ingredients. For example, Sanofi patented a device associated with its insulin product Lantus, and Jazz Pharmaceuticals patented its Risk Evaluation and Mitigation Strategies (REMS) program to safeguard its narcolepsy drug Xyrem from a competitor. Although the latter patent was eventually removed, Jazz gained an additional 10 months of market exclusivity through this strategy, as noted by Chair Khan.
The FTC’s decision to confront patent manipulation follows recent calls from members of Congress to crack down on “sham patents.” Representatives Pramila Jayapal and Elizabeth Warren have voiced their concerns about brand-name pharmaceutical companies exploiting the U.S. patent system, contravening antitrust laws, and inflating prescription drug prices to bolster their profits.
Chair Khan underscored the staggering disparity in drug costs between the United States and other nations, as well as the growing number of individuals who report rationing or forgoing their medications due to financial constraints. Khan reaffirmed the unwavering commitment of the FTC to deploy all available tools to combat any misconduct that artificially inflates drug prices.
Furthermore, in addition to addressing patent-related issues, the FTC has heightened its scrutiny of M&A activities within the biopharmaceutical sector. In 2021, the agency announced its intention to conduct more comprehensive antitrust evaluations of proposed deals, moving away from the previous practice of assessing them on a product-by-product basis. This heightened scrutiny resulted in a legal challenge against Amgen’s proposed acquisition of Horizon. However, following a recent settlement, the two companies have received the green light from the FTC to proceed with their merger.
