In September 2023, the FTC issued a policy statement warning branded drug manufacturers that it would scrutinize improper Orange Book patent listings as potential unfair method of competition in violation of Section 5 of the FTC Act. The Hatch-Waxman Act and FDA regulations set forth the criteria for listing patents in the Orange Book. As part of the Hatch-Waxman framework, brand drug manufacturers are required to submit information to the FDA about certain types of patents covering the products described in their new drug application. Patents listed in the Orange Book must claim the reference listed drug or a method of using it. The purpose of listing a patent in the Orange Book is to put potential generic manufacturers on notice that the brand considers the patent to cover its drug. By listing patents, brand drug manufacturers may benefit from a 30-month stay of FDA approval of generic drug applications, regardless of whether a court ultimately finds the patent at issue is valid or infringed by the competing product. According to the FTC’s policy statement, “certain manufacturers have submitted patents for listing in the Orange Book that claim neither the reference listed drug nor a method of using it. When brand drug manufacturers abuse the regulatory processes set up by Congress to promote generic drug competition, the result may be to increase the cost of and reduce access to prescription drugs.”

Making good on its promise, on November 7, 2023 the FTC sent letters to 10 brand-name drug companies accusing them of improperly listing more than 100 patents in the Orange Book. The FTC stated it would take steps to dispute the Orange Book listings, though it has not initiated any Section 5 enforcement actions or other antitrust challenges against these Orange Book patent listings to date. Instead, the FTC wrote that “we have opted to use the FDA’s regulatory dispute process to address the improper listings, but we retain the right to take any further action the public interest may require.”

Under the FDA’s Orange Book dispute resolution process, the companies have 30 days to respond by recertifying the patents, otherwise they can allow them to be stripped from the Orange Book. If the FTC’s letters successfully deter the companies from recertifying the patents in the Orange Book, many products currently protected by those patents could be subject to swift generic competition. If the branded drug manufacturers re-certify the patents, they run the risk of being sued by the FTC under the FTC Act as an unfair method of competition, or being referred to the Department of Justice for criminal prosecution for submission of false statements.

Key Takeaway: The FTC aims to promote generic competition for brand-name drugs to provide “lower prices, increased access, and significant cost savings for consumers and the healthcare system.” This recent action under the FDA’s Orange Book dispute process is yet another example of the FTC utilizing all tools available in furtherance of its heightened antitrust enforcement mandate. The FTC Deputy Director has said that the FTC will continue to review other patent listings and that this action is not exhaustive. Pharmaceutical companies would be well-advised to take extra caution to ensure that they have a good faith basis for concluding their Orange Book listings satisfy the listing criteria.