Federal Trade Commission Warns Against Improper Orange Book Listings

18 September 2023 PharmaPatents Blog
Author(s): Kate E. Gehl Courtenay C. Brinckerhoff

As announced in a September 14, 2023, press release, the FTC has issued a policy statement “warning pharmaceutical companies that make and sell brand-name drugs that they could face legal action if they improperly list patents in the FDA’s [Orange Book].” The policy statement builds on the premise that “[b]rand drug manufacturers may be harming generic competition through the improper listing of patents” in the Orange Book, and warns that the “FTC intends to use its full legal authority to protect patients and payors … from business practices that tend to negatively affect competitive conditions,” including “taking actions against companies and individuals that improperly list patents in the Orange Book that do not meet the statutory listing criteria.”


FTC Promises More Scrutiny of Orange Book Listings

The stated goal of the policy statement is “to put market participants on notice that the FTC intends to scrutinize improper Orange Book listings to determine whether these constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act.” As a result, the policy statement appears to be yet another example of the FTC flexing its Section 5 muscles in the wake of its November 2022 policy statement announcing its commitment to enforcing the prohibition against unfair methods of competition under Section 5 on a standalone basis, even if the conduct does not otherwise violate the antitrust laws. 

The policy statement summarizes the statutory requirement to list patents in the Orange Book and the types of patents that can be listed, and emphasizes that new drug application holders “are responsible for ensuring that Orange Book patent information is consistent” with the implementing regulations.

The policy statement states that “[i]mproper Orange Book listings may have played a role in distorting pharmaceutical markets for decades,” citing one example where FTC charged a company with “among other things, wrongfully listing a patent in the Orange Book” and citing a few examples where it filed amicus briefs “in private litigations relating to the anticompetitive effects of [allegedly] improper Orange Book patent listings.”

The policy statement outlines a theory as to how an improper Orange Book listing could constitute “an unfair method of competition in violation of Section 5 of the FTC Act,” with reference to the framework outlined in the November 2022 policy statement for how it would analyze unfair methods of competition going forward. The current policy statement also warns that improper Orange Book listings could constitute “illegal monopolization.” The policy statement raises the spectre of individual liability for submission of improper Orange Book patent listings, and the potential criminality of making a false Orange Book certification that FTC could refer to the Department of Justice “for further investigation.” Also of note, the FTC warns it may examine a company’s history of improperly listing patents during merger review.

Avoiding FTC Scrutiny of Your Orange Book Listings

As noted above, the policy statement cites only a few instances where the FTC has actually been involved with a case alleging improper Orange Book listing. That said, the policy statement is a strong signal of the FTC’s enforcement priorities in the pharmaceutical space, and pharmaceutical companies should be prepared for more aggressive enforcement. To that end, pharmaceutical companies may want to exercise more caution when making Orange Book listing decisions and consider reviewing current listings to assess any potential FTC enforcement risks. While many Orange Book listing decisions are clear-cut, new drug application holders may want to consider engaging outside counsel or obtaining second opinions when the listability of a given patent might be questioned. Moreover, brand pharmaceutical companies contemplating any M&A transactions should be mindful that the FTC may use the premerger review process to scrutinize a company’s Orange Book listing practices. 

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