Two months after rolling out a policy statement targeting sham pharmaceutical patents in the Food and Drug Administration’s so-called “Orange Book,” the Federal Trade Commission has taken its first steps in cracking down on some of the culprits.
This week, the FTC announced it is challenging more than 100 patents of drug products that were improperly listed in the FDA’s patent registry.
The commission sent letters to 10 major pharma companies, including AbbVie, AstraZeneca, Boehringer Ingelheim, GSK and Teva, who allegedly listed sham patents for their products — spanning inhaler devices for asthma to EpiPens. A good chunk of the patents in the Orange Book — around 35 — belonged to Teva for its inhalers.
In its statement, the FTC argued that wrongfully listed pharma patents can significantly drive up the prices people pay for medicines and drug products while undermining fair and honest competition in the marketplace.
“The FTC’s action today identifies over 100 that we believe are improperly listed, affecting products ranging from inhalers to EpiPens,” said FTC Chair Lina Khan in a statement. “We will continue to use all our tools to protect Americans from illegal business tactics that are hiking the cost of drugs and drug products.”
The Orange Book’s value
Some may be wondering what makes a patent appearance in the Orange Book so valuable.
Simply put, a patent in the Orange Book can prevent generic drugs from entering the market for up to 30 months.
Thus, the FTC argued in its original policy statement back in September that pharma companies listing sham patents are doing so to stifle competition, lock out generic manufacturers and keep drug prices high.
Expanding on that point this week in an interview with NPR, Khan said the drugmakers are now officially on notice that the FTC will be contesting their patents. She added that the companies are legally required to attempt to justify the patents.
“[I]f they cannot show why these patents are legitimately listed, then they’ll have to remove them,” Khan said. “They’ll be delisted, which will open up the market for competition and make sure that people who rely on inhalers or EpiPens or a whole set of other drug products, that those people are able to access more affordable generics.”
Khan expects pushback from the industry, and arguments that the FTC’s challenges would stifle innovation. However, Khan has countered that suggestion, arguing that the FTC’s move would open up the market in the long run, spur innovation and more generics into the market.
“Look, we’re talking here about inhalers, where… the core parts of these products have been around forever – for decades and decades,” she said. “And yet the prices are still fairly high. We haven’t seen a lot of generics enter the market, we believe, because of improper patent listings. And that’s a problem.”
Longstanding feud renewed
Despite the recent moves by federal authorities, this issue with drugmakers goes back years.
The FTC has been eyeing such improper patents for more than two decades now, ever since it released its first complaint against Biovail Corporation in 2002 for wrongfully acquiring a patent license for blood pressure drug Tiazac.
What has given the regulatory agency added support for the move was an ongoing call to action from lawmakers like Sen. Elizabeth Warren, (D-Mass.), who has called on the federal government to tighten guidelines on drug patents.
The move also reflects a larger FTC crackdown on the pharma and healthcare industry as a whole, as the national scrutiny on high drug prices remains top of mind. The agency has recently put major healthcare mergers and acquisitions in the spotlight, as well as launched inquiries into pharmacy benefit managers.
Industry observers would also note that while the agency has been more active than in recent years, it hasn’t entirely been successful. The FTC ultimately greenlit Amgen’s nearly $28 billion acquisition of rare-disease biotech Horizon Therapeutics after challenging it earlier this year and saw its efforts to block Microsoft’s $69 billion acquisition of Blizzard fizzle in the courts.
Like she has done on the consolidation front, Khan promised this won’t be the end of the patent challenges from the FTC.
“We won’t hesitate to use all our tools to combat illegal practices that are inflating the price of healthcare, including medicines,” she emphasized.
