Ivette Rodriguez Nieves, Contributing Member 2024-2025
Intellectual Property and Computer Law Journal
I. Introduction
Pharmaceutical companies drive their revenue from patented products, such as drugs, therapeutics and medical devices. [1] These companies spend a large amount of their funds in research and development trying to come up with novel discoveries.[2] The research and innovation of pharmaceutical products takes time to develop the best methods possible.[3] Before pharmaceutical companies can sell products to the public, they must ensure the products are safe and effective.[4] This is when the Food and Drug Administration (FDA) comes into play.[5] The FDA is the federal agency that determines whether drug products meet the baseline standards of safety and effectiveness.[6] These products are listed in the Orange Book, an official publicized list of all FDA-approved drug patents hat provides information on the patent(s) awarded to each product for companies and individuals that wish to enter the market.[7] However, pharmaceutical companies have started to abuse this tool and have filed numerous “junk” patent listings.[8] Junk patents are filings made with the purpose to extend the time protection on the patent and ensuring competitors are deterred from entering the market.[9]
In response, the Federal Trade Commission (FTC) has started to question these listings.[10] Improper listing of patents has the potential to harm competition in the pharmaceutical industry and prevent further innovation necessary for new patent filings.[11] Currently the FTC is scrutinizing the listings on the Orange Book.[12] The FTC is looking to ensure the listings are correct and not deterring any competition entry.[13] But is this sufficient to address the improper patent listings in the Orange Book?
This article will discuss why pharmaceutical companies are improperly listing patents in the Orange Book and why the FTC is addressing the issue. Part II will provide an introduction of the FDA, the Orange Book and the FTC. Part III will discuss why pharmaceutical companies are making improper listings and the FTC’s reason and process to resolve the issue. Lastly, Part IV will conclude by identifying possible solutions and insight on the issue.
II. Background
FDA
The FDA is a federal agency and a division of the Department of Health and Human Services.[14] The FDA’s mission is to protect public health by ensuring the safety, efficacy, and security of human and veterinary drugs, biological products, and medical devices.[15] It is also responsible for advancing public health by helping to speed innovations that make medical products safer, more effective, and more affordable by helping the public get accurate, science-based information they need to use medical products to maintain and improve their health.[16] It oversees any product considered food (except meat and poultry which are overseen by the United States Department of Agriculture), drugs, devices, cosmetics, and health supplements.[17] Within its jurisdiction of drug regulation, its primary goal is to ensure the safety and effectiveness of pharmaceutical products.[18]
The Orange Book
The Orange Book is not actually a book, but an FDA publication titled “Approved Drug Products with Therapeutic Equivalence Evaluations”.[19] The publication itself identifies drug products approved on the basis of safe and effectiveness by the FDA under the Federal Food, Drug, and Cosmetic Act and related patent information such as the patent number of the product.[20] It also includes the patent information for the listed product and notifies generic companies in the types of patents that the branded product has claimed.[21] The book is updated daily to provide the information for new generic drug approvals.[22]
FTC
The Federal Trade Commission is a federal agency whose purpose is to protect the public from deceptive or unfair business practices and unfair methods of competition through legal enforcement, advocacy, research, and education.[23] Particular to this issue, the FTC is concerned with how “Big Pharma” companies are preventing generic product entry into the market by creating a monopoly and deterring timely access to the public.[24]
For example, Company A manufactures and sells Drug X, which has a market exclusivity protection for 15 years. Drug X has been on the market for 10 years and has 5 years of protection left. However, Company A had filed additional patents to Drug X, affording it numerous approved patents with market exclusivity protection for another 5 years. Thus, Drug X has a 10-year protection from which Company A can charge high prices because of lack of competition, since generic drugs cannot enter the market for another 10 years.
III. Discussion
The Orange Book is a public tool accessible to everyone.[25] It operates on a “good faith” basis, where companies are responsible for ensuring the correct listings of their own products on the book.[26] Therefore, ensuring the listings are properly done is somewhat ensured by other companies and individuals who wish to patent or bring into market a new or generic product.[27] These individuals or companies consult the Orange Book to identify what FDA approved drugs have been granted patents by the USPTO, which is the agency responsible for issuing patent protection.[28]This is helpful for potential competitors because they can estimate how much market exclusivity the product has and whether they would be infringing a company’s patent.[29] Market exclusivity is the protection a company has of being the only product with certain specifications on the market for a set period of time.[30] This further allows potential generic drug competitors to determine a timeline for their generic product to enter the market.
Pharmaceutical companies, like Novo Nordisk Inc., develop groundbreaking drugs to treat health conditions and diseases.[31] Due to high investments in research and development, companies recoup these costs from the sale of their products.[32] Companies with patent protection have flexibility in establishing their desired price point.[33] With no competitors, they can charge higher amounts for their products, which is attractive for their accounting records.[34]
In fact, “Big Pharma” companies tend to obtain an average of 74 secondary patents per product from the USPTO.[35] Most of these patents are obtained after FDA approval for strategic reasons.[36] One reason is that the product has been approved by the FDA, therefore the company acquires confidence that their product is worth the cost of patenting and can regain those costs from their sales.[37] In addition, they are able to take advantage of a longer market exclusivity period that allows them to charge a higher price for the product.[38] However, patents do not last forever–at most they last up to 20 years–and generic versions of the drugs are eventually developed and sold in the market.[39]
Generic versions of drugs are developed based on the bioequivalence of the approved FDA branded drug.[40] Bioequivalence is when two products are equal in the rate and extent the active pharmaceutical ingredient is administered or received.[41] The purpose is to make the drug economically accessible to communities by creating market competition.[42]
However, with concern of potential revenue decline due to competing with generic drug manufacturers, pharmaceutical companies with brand name drugs take advantage of the Orange Book.[43] They frequently start adding new drug patent listings to the Orange Book with the intention to delay entry of generic drugs and maintain market dominance.[44] Some of these are improper patent listing because they do not meet statutory requirements like claiming the drug itself or the method of use of the drug .[45]
Recently, the FTC targeted more than 300 of these pharmaceutical drugs in the Orange Book listings.[46] Among the companies engaging in this practice were Teva Pharmaceuticals, Novo Nordisk Inc., and Novartis.[47]
Novo Nordisk Inc. received a letter on April 30, 2024 from the FTC indicating improper Orange Book patent listing for their blockbuster type 2 diabetes drug, Ozempic, as well as for their weight loss injectable drug, Saxenda.[48] The letter indicated that Ozempic had an additional 16 patent listings on the book.[49] These patents were deemed as bogus, improper or junk patents because they lacked an essential element to be granted protection.[50] Novo Nordisk had 30 days to withdraw or amend the challenged listings.[51] However, there is no information at the time of writing this blog that indicates whether the company has removed the listing or has amended any of them.
The FTC emphasized the negative impact these listings would have, indicating that delaying others from developing generic innovations is the first of a myriad of problems.[52] They are more concerned with the public refraining from engaging in research, providing these companies with extensive market dominance, and preventing patients from having access to affordable medication and treatments.[53] Since November 2023, the FTC has paid close attention to the patent listings and have not held back in sending warning letters.[54]
IV. Conclusion
In light of these events, these listings raise two concerns. One concern is the lack of good faith practices from the companies listing the information on the Orange Book. The second concern is the consistent review issues from the book’s readers. Right now, companies with branded products are under vigilance by the FTC.[55] The FTC is more concerned with the deterrence of competitors and preventing companies from converting market exclusivity into a monopoly. This is good news for those who wish to enter the market with generic products, but it is also burdensome.[56] Since the FDA and FTC are not regulators of the Orange Book and there is no official designated regulator, the job gets done slowly.[57]
This issue clearly conveys the need for more regulation and scrutiny. One option is implementing a special counsel to review the listings.[58] However, the deciding factor will be to determine if this counsel should be an independent counsel apart from the FDA and FTC, or if one of the agencies should develop one. From one point it needs to be considered that the Orange Book is part of the FDA, but on the other hand it is within the mission of the FTC to ensure fair competition. The best option would be to enact a separate counsel comprising of members within those organizations to specifically target this issue. With a designated group of people who already possess the expertise in their respective fields in the agencies it would be easier to address this issue. There is also the possibility of creating an AI tool that processes the information to better capture any discrepancies that might reflect improper patent listing.
However, FTC’s mission is to continue to use tools to protect American citizens from illicit commercial practices that would economically harm consumers.[59] It can be inferred that for now, the FTC will continue with its efforts to thwart junk listings from the Orange Book.
[1] New Research: Big Pharma Companies Earn Big Revenues Through Patent Gaming, America’s Health Insurance Plans (Dec. 13, 2021), https://www.ahip.org/news/press-releases/new-research-big-pharma-companies-earn-big-revenues-through-patent-gaming [https://perma.cc/3LNV-XCQW].
[2] Dee Gill, $52.6 Billion: Extra Cost to Consumers of Add-On Drug Patents, UCLA Anderson Rev. (Apr. 24, 2024), https://anderson-review.ucla.edu/52-6-billion-extra-cost-to-consumers-of-add-on-drug-patents/ [https://perma.cc/H6B3-NA5V].
[3] Id.
[4] Development & Approval Process | Drugs, U.S. Food & Drug Admin., https://www.fda.gov/drugs/development-approval-process-drugs [https://perma.cc/2A5D-MQUH].
[5] Id.
[6] FTC Challenges More Than 100 Patents as Improperly Listed in the FDA’s Orange Book, Fed. Trade Comm’n., (Nov 7, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/11/ftc-challenges-more-100-patents-improperly-listed-fdas-orange-book [https://perma.cc/ZS65-RXXS].
[7] Id.
[8] Id.
[9] The FTC Is Challenging “Junk” Drug Patents. Here’s What They Are and Why They Matter, Quartz, (May 8, 2024) https://qz.com/what-are-junk-drug-patents-explainer-ftc-1851464935 [https://perma.cc/PS2N-SSQL].
[10] FTC Issues Policy Statement on Brand Pharmaceutical Manufacturers’ Improper Listing of Patents in the Food and Drug Administration’s ‘Orange Book’, Fed. Trade Comm’n., (Sep 14, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-issues-policy-statement-brand-pharmaceutical-manufacturers-improper-listing-patents-food-drug [https://perma.cc/QK6S-GTHZ].
[11] Id.
[12] George O’Brien, U.S. FTC Continues Aggressive Scrutiny of Pharmaceutical Patents Listed in the Orange Book, Mayer Brown, (May 8, 2024), https://www.mayerbrown.com/en/insights/publications/2024/05/us-ftc-continues-aggressive-scrutiny-of-pharmaceutical-patents-listed-in-the-orange-book [https://perma.cc/T7H8-NT54].
[13] Id.
[14] About FDA, U.S. Food & Drug Admin., https://www.fda.gov/about-fda [https://perma.cc/34DS-HKQF].
[15] What We Do, U.S. Food & Drug Admin., https://www.fda.gov/about-fda/what-we-do#mission [https://perma.cc/MB6T-Y8GD].
[16] Id.
[17] Id.
[18] Id.
[19] FTC Challenges More Than 100 Patents as Improperly Listed in the FDA’s Orange Book, supra note 6.
[20] Id
[21] Id
[22] Frequently Asked Questions on The Orange Book, Fedeeral Drug Administration, https://www.fda.gov/drugs/drug-approvals-and-databases/frequently-asked-questions-orange-book [https://perma.cc/26HC-RSDD].
[23] About the FTC, Fed. Trade Comm’n, https://www.ftc.gov/about-ftc [https://perma.cc/CD8V-BX76].
[24] U.S. FTC Continues Aggressive Scrutiny of Pharmaceutical Patents Listed in the Orange Book, supra note 12.
[25] About the FTC, supra note 23.
[26] Federal Trade Commission Statement Concerning Brand Drug Manufacturers’ Improper Listing of Patents in the Orange Book, Fed. Trade Comm’n., https://www.ftc.gov/system/files/ftc_gov/pdf/p239900orangebookpolicystatement092023.pdf [https:/perma.cc/E28D-8R3Q].
[27] Id.
[28] Id.
[29] Id.
[30] U.S. Const. art I, § 8, cl. 8.
[31] FTC Expands Patent Listing Challenges, Targeting More Than 300 Junk Listings for Diabetes, Weight Loss, Asthma and COPD Drug, Fed. Trade Comm’n, (Apr. 30, 2024), https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-expands-patent-listing-challenges-targeting-more-300-junk-listings-diabetes-weight-loss-asthma [https://perma.cc/EK9Z-QWAW].
[32] Id.
[33] Ryan Cooper, How Big Pharma Rigged the Patent System, Prospect, (June 6, 2023) https://prospect.org/health/2023-06-06-how-big-pharma-rigged-patent-system/ [https://perma.cc/57S9-CJW4].
[34] Id.
[35] Id.
[36] Id.
[37] Id.
[38] Id.
[39] Frequently Asked Questions on The Orange Book, supra note 22.
[40] Bioequivalence, U.S. Food & Drug Admin., https://www.fda.gov/animal-veterinary/abbreviated-new-animal-drug-applications/bioequivalence [https://perma.cc/8HSX-EKUN].
[41] Id.
[42] Generic Drugs, U.S. Food & Drug Admin., https://www.fda.gov/drugs/buying-using-medicine-safely/generic-drugs [https://perma.cc/WK57-7W6B].
[43] FTC Expands Patent Listing Challenges, Targeting More Than 300 Junk Listings for Diabetes, Weight Loss, Asthma and COPD Drug, supra note 31.
[44] Id.
[45] Cong. Rsch. Serv., Types of Pharmaceutical Exclusivity, IF12644, at 1 (2023), https://crsreports.congress.gov/product/pdf/IF/IF12644#:~:text=Only%20certain%20types%20of%20pharmaceutical,Orange%20Book%20with%20the%20drug [https://perma.cc/S5ZA-ZZED].
[46] The FTC Is Challenging “Junk” Drug Patents. Here’s What They Are and Why They Matter, supra note 9
[47] Id.
[48] Id.
[49] Novo Nordisk Inc., Fed. Trade Comm’n, (Apr. 30, 2024), https://www.ftc.gov/legal-library/browse/warning-letters/novo-nordisk-inc [https://perma.cc/6256-9MWG].
[50] The FTC Is Challenging “Junk” Drug Patents. Here’s What They Are and Why They Matter, supra note 9.
[51] Christopher Yasiejko, Novo’s Blockbuster Ozempic Among FTC’s Latest Patent Targets, Bloomberg Law, (Apr. 30, 2024), https://news.bloomberglaw.com/ip-law/novos-blockbuster-ozempic-among-ftcs-latest-patent-targets%20%5b [https:/perma.cc/5WHL-GAFP].
[52] FTC Challenges More Than 100 Patents as Improperly Listed in the FDA’s Orange Book, supra note 6.
[53] Id.
[54] Id.
[55] O’Brien, supra note 12.
[56] Id.
[57] Id.
[58] Id.
[59] About the FTC, supra note 23.
The University of Cincinnati Intellectual Property and Computer Law Journal 
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