Normally, the staid details of antitrust regulation do not get much airtime on late-night television.
But in early April, US Federal Trade Commission chair Lina Khan had an opportunity to discuss her agency’s handling of several high-profile cases with Jon Stewart, who hosts The Daily Show, one of America’s most popular talk shows. And one case she pointed to involves FTC efforts to crack down on pharmaceutical companies that improperly list patents.
“There can be all sorts of tricks and monopolistic behavior that can be leading” to high prices for drugs, she explained, and cited asthma inhalers, in particular. “They’ve been around for decades, but they still cost hundreds of dollars. So, our staff took a close look and we realized that some of the patents listed for these inhalers were… bogus. And in the last few weeks, we’ve seen companies delist these patents.”
Indeed, the FTC has succeeded in persuading three pharmaceutical companies to remove patents listed in the Orange Book, a registry that is maintained by the Food and Drug Administration and plays a crucial role in shaping competition. These listings are used to put generic companies on notice about certain types of patents that are claimed by a brand-name company for a medicine.
Califf Suggests Congress ‘Tighten Up Laws’ To Address Orange Book Abuses
The stipulation is mandated in the Hatch-Waxman Act, a law used to sort out patent infringement and, ultimately, make it possible for generic companies to market their versions of brand-name medicines in the US. But the FTC found that some brand-name drug companies listed patents in the Orange Book without properly claiming certain key information, such as a drug substance or method for using a drug.
These omissions matter because the FDA is automatically barred from approving a generic drug for 30 months if a brand-name company sues a generic rival for infringing on a patent listed in the Orange Book. Last November, the FTC warned 10 brand-name drug companies that they had failed to follow requirements for listing patents for asthma inhalers as well as epinephrine auto-injectors. Among the companies that received notices were AbbVie Inc., AstraZeneca PLC, Mylan Specialty, Boehringer Ingelheim GmbH, and subsidiaries of GSK plc and Teva Pharmaceutical Industries Ltd.
The move came against a backdrop of intensifying anxiety over the cost of prescription drugs, an issue that has raised questions about access and affordability across the globe. And despite its wealth, the US has not been an exception as poll after poll has found a growing number of Americans complain they have trouble paying for a prescription.
This explains why the media savvy Khan was on such a widely watched late-night TV talk show. In an election year, the Biden administration is trying to convince voters that its policies toward health care are working, especially when it comes to the cost of medicines. A key effort, of course, is the Inflation Reduction Act that allows Medicare to negotiate prices for some drugs.
Action In A Politically Charged Year
But the White House has been pursuing various tactics to address this issue. One approach has been to focus on pharmaceutical patents, since industry critics maintain drug companies too often manipulate and abuse the patenting system in a variety of ways that unfairly preserve high prices for extended periods of time at the expense of consumers.
One widely criticized maneuver is the use of so-called patent thickets. This refers to dozens and dozens of patents filed in connection with a medicine, but some of these amount to little more than tweaks. Yet they can be so numerous that would-be generic rivals find it too daunting to engage in patent litigation and, instead, reach settlements that extend the monopolies held by brand-name companies.
This is one reason the Biden administration issued an executive order for the FDA and the US Patent & Trademark to work more closely together to find ways to blunt the pharmaceutical industry from filing essentially frivolous patents. But the FTC has also been instructed to dig into monopolistic practices and sees improperly filed patents as an area ripe for greater enforcement.
“In Washington, there seems to be a general sense that the topic to tackle after pharmacy benefit managers is patent abuse, and the FTC has begun dipping its toes into the water,” said Robin Feldman, who heads the Center for Innovation at University of California Hastings and studies pharmaceutical pricing and patents.
She noted several lawmakers, including US Sen. Elizabeth Warren (D-Mass.), joined the fray by pressing companies to delist their patents. And Bernie Sanders, who chairs the US Senate Committee on Health, Education, Labor and Pensions and an industry critic, launched an investigation into inhaler pricing. He noted prices in the US are much higher than elsewhere and cited patents as an issue.
“In my view, improperly listed drug-and-device patents, such as those for asthma inhalers, are the first step,” Feldman continued. “But I think the FTC is actually hinting more broadly, even in its initial statements about this topic, that they could move more expansively. How far they move may depend on how successful they are at each step and who heads the FTC after the (upcoming presidential) election.”
Spotlight On Diabetes Next?
Although the FTC has not shown its hand, another type of product that may warrant similar scrutiny is the injector pen for diabetes. A recent analysis in JAMA found that more than half of the injector-pen patents for several widely used diabetes treatments – including Ozempic and Mounjaro – do not mention several important characteristics that should otherwise prevent them from being listed in the Orange Book.
A total of 188 patents were examined for 10 injector pens that include a delivery device and a GLP-1 medicine. Of those, 57% included claims on the devices and some were listed on multiple products. But only 43% made other types of claims for active ingredients, chemical structures or therapeutic classes. And only one injector-pen patent on three different products mentioned diabetes as a specific use.
Notably, all of the patents were listed in the Orange Book even though it is only supposed to list patents with claims covering active ingredients, formulation and composition, or an approved use.
Both asthma inhalers and injector pens are big markets, which suggests that combination products are going to face greater hurdles as the FDA works with the Patent & Trademark Office to more carefully review patents. That effort is taking time, however, as both agencies develop procedures for working together more closely to identify insufficient patent applications.
Meanwhile, the FTC has been busy asserting its concerns in different court cases. Last November, the agency filed a so-called friend-of-the-court brief in a case in which Mylan, a generic maker now part of Viatris Inc., filed a lawsuit accusing Sanofi of improperly listing patents for its Lantus injectable insulin. Mylan argued Sanofi abused the patent system to thwart generics and create a monopoly.
The argument has played out before in the court system. In a closely watched decision four years earlier, a US appeals court ruled that device component patents that do not explicitly claim the drug product cannot be listed in the Orange Book. The decision came in a case brought against Sanofi over the same insulin product.
The FTC did not take a position on the facts of the most recent case over the Lantus product, but the agency did use its court filing to explain its position toward improperly listed patents and the effect these can have on competition and consumers. And this point was emphasized in yet another such filing in March involving another legal battle over improperly filed patents.
FTC Sides With Amneal Over Inhaler Patent Dispute With Teva
In this instance, the clash centered on asthma inhalers. A generic manufacturer, Amneal Pharmaceuticals, Inc., alleged that Teva Pharmaceutical improperly listed patents in order to crowd out competition. This time around, though, the FTC filed a lengthy friend-of-the-court brief that spelled out – in great detail – why the agency thought Teva patents should be delisted from the Orange Book.
This was only the second time, in fact, that the FTC filed such a brief and explicitly discussed patents that should not have been filed in the Orange Book. The first time occurred in November 2022 in response to a lawsuit brought by Avadel Pharmaceuticals plc, which argued that Jazz Pharmaceuticals plc patented a risk-mitigation strategy, or REMS, in a bid to prevent generic competition.
Where Does The FDA Come In?
The latest filing prompted Sara Koblitz, an attorney at the Hyman Phelps & McNamara law firm that runs the FDA Law blog, to write that “it doesn’t look like FTC is planning to stop policing the Orange Book any time soon. It would not be surprising if we see more [such] briefs from the FTC in Hatch-Waxman patent suits or if FTC starts to take its own enforcement action beyond the request to delist.”
This sequence of events, though, begs a question – where is the FDA in all this? The FDA is responsible for administering the Orange Book, but so far, has not taken an active role in policing patents that may belong there, even though the pharmaceutical industry has long sought more definitive guidance for listing patents in the registry.
In a blog post last December, David Korn, who handles intellectual property issues at the Pharmaceutical Research & Manufacturers of America, an industry trade group, lamented that drug companies have for 15 years asked the FDA to provide guidance on whether certain drug delivery device patents should be listed. He noted the agency committed in 2022 to form a working group to examine the issue.
In that same report, though, the FDA maintained it has only a “ministerial role” when it comes to listing patent information in the Orange Book. A guidance issued in 2022 about the Orange Book failed to specifically address the question, although the agency did include plans to issue guidance submitting patents to the Orange Book in its line-up of guidance documents to be released this year.
For the moment, the FTC is providing cover for the FDA.
In its brief in the case between Teva and Amneal, the FTC noted the FDA’s mission is to “protect the public by ensuring that drugs are safe and effective,” not to “resolve economic disputes about the coverage of patent claims.”
The overriding problem is that the FDA should be clearer about which patents can be listed in the Orange Book, said Michael Carrier, a law professor at Rutgers University who specializes in antitrust issues and the pharmaceutical industry. “The FTC probably feels the need to weigh in because FDA hasn’t been clear enough,” he said.
Meanwhile, the FTC has threatened action against the inhaler makers that have not de-listed patents. At the same time, the agency has taken some of the credit for the recent moves by three inhaler makers to cap monthly out-of-pocket costs to $35 for people covered by commercial health insurance. However, the drop may have more to do with avoiding Medicaid rebates for years of steep price hikes.
In any event, the FTC’s actions are starting to have a different kind of effect.
In March, the first antitrust lawsuit was filed stemming from the letters the agency sent to the makers of asthma inhalers. The Massachusetts Laborers’ Health and Welfare Fund filed a lawsuit against Boehringer Ingelheim, which has so far not delisted any of the patents cited by the FTC on two of its inhalers. Significantly, the fund cited the FTC scrutiny extensively.
“As a result of Boehringer’s wrongful Orange-Book-listing scheme, there is, to this day, no affordable generic versions of either” inhaler, the lawsuit stated. Experts are expecting more lawsuits of this sort.
“This is a larger systemic problem, but I think it stops with the FDA,” said Tahir Amin, who heads the Initiative for Medicines, Access & Knowledge, a nonprofit that researches pharmaceutical patent issues in different countries. “The FDA needs to show some leadership and say which things shouldn’t go in the Orange Book.”
“The agency doesn’t know how to deal with patents but runs a regulatory system that is dependent on patents inserted into the approval system. So, we have a sort of kangaroo system. They have to know what’s going on because right now, it’s ripe for gamesmanship.”