FTC Warns Pharma Companies That It May Go After Them For Sham Patent Listings Designed To Delay Generic Competitors
from the abusing-the-orange-book,-green-with-greed dept
For many, many years we’ve detailed how big pharma companies, who only care about the monopoly rents they can receive on medicine while under patent, have concocted all sorts of scams and schemes to avoid having to compete with generic versions, even after their patents have expired (or been invalidated). But one of their older tricks is apparently popular yet again, though the FTC is now warning pharma that it might finally start cracking down.
If it does, it will just be reinforcing the kinds of actions the FTC used to bring. Twenty years ago, the FTC went after Bristol Meyer Squibb for false listings in the Orange Book. The Orange Book, managed by the FDA, is where pharma companies list the FDA-approved drugs they have under patent, which alerts generic drug companies basically not to make generic versions of those drugs.
But, of course, this creates a very tempting scenario: if pharma can get drugs not actually under patent into the Orange Book, they effectively save themselves from generic competition, and they get to profit massively (at the expense of the public and their need for affordable medicine).
However, despite enforcement against such abuse years ago, it seems that the FTC and the FDA have kinda let these things slip over the past few years. And Big Pharma has really taken advantage of that. Thankfully, it looks like the FTC is finally interested in cracking down on this practice again. In a new policy statement, it warns pharma companies that it’s looking into the abuse of the Orange Book and sham patent inclusions.
Brand drug manufacturers are responsible for ensuring their patents are properly listed. Yet 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.
The goal of this 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.
Of course, this raises some questions, including why do we make the pharma companies themselves the party responsible for making sure their patents are “properly” listed. Why don’t we have at least some process in place for these listings to be reviewed, whether when they’re submitted to the Orange Book or even if another party (such as the generic drug manufacturers) contest an Orange Book listing.
It seems the dumbest possible system is to assume that the Big Pharma companies will be honest in their Orange Book listings.
And, even though the FTC is now putting these companies “on notice,” the fact that the FTC has brought these cases in the past seems like it should be “notice” enough. Instead, it sounds like the FTC let enough pharma companies get away with this for long enough that the big pharma firms felt cleared to abuse the system this way and to delay competition in the marketplace.
The one thing I find interesting in this statement, is that they note that improperly listing things in the Orange Book may “constitute illegal monopolization.”
The improper listing of patents in the Orange Book may also constitute illegal monopolization. Monopolization requires proof of “the willful acquisition or maintenance of [monopoly] power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” This requires proof that “the defendant has engaged in improper conduct that has or is likely to have the effect of controlling prices or excluding competition,” and courts have recognized that improperly listing patents in the Orange Book may constitute an “improper means” of competition. Accordingly, improperly listing patents in the Orange Book may also be worthy of enforcement scrutiny from government and private enforcers under a monopolization theory. Additionally, the FTC may also scrutinize a firm’s history of improperly listing patents during merger review
This seems exactly correct, but notable in that very few people seem to recognize that (1) patents are government granted monopolies, and thus (2) an abuse of the patent system to get a patent or patent-like protections you don’t deserve are therefore an illegal monopoly seems like an important point. I would hope that this could get expanded to other abuses of patent and copyright law as well.
Still, given that we’ve been facing this and multiple other schemes from Big Pharma to delay generics for decades, I’m not sure anything is really going to change just yet, but at least the FTC is waking up (again?) to this issue. Now let’s see if it actually starts bringing cases…
Filed Under: competition, drug prices, ftc, generics, monopoly, orange book, patents, pharma
Comments on “FTC Warns Pharma Companies That It May Go After Them For Sham Patent Listings Designed To Delay Generic Competitors”
'How dare you, that was .000001% of our profit during that time!'
Pharma companies aren’t trying to stymie and keep generics off the market because they’re bored and looking for something to do they’re doing it because it’s hugely profitable to do so so unless the FTC is willing to hand out some massive financial penalties in amounts that are at a minimum equal to how much the companies have been getting from squashing generics all they’re really going to do here is turn ‘getting caught keeping generics off the market for a few more years’ into just another business expense.
It’s a good idea but only if they’re willing to fully commit to it as far from a warning or penalty any token effort is likely to be treated as encouragement and confirmation that the behavior they are trying to stop is hugely profitable even when you get caught.
It really doesn't look like that
No, it doesn’t look like they’re interested in cracking down on anything. It looks like they’ve chosen a performative warning over taking action. You could argue that this is a good first step, but I’d argue that it’s a joke.
It will look like they’re interested in cracking down when they start, you know, cracking down on someone for something.
Until then, nothing at all has changed.
Re:
I wonder whether the FTC actually have the authority for this. With regard to broadband internet, they claim only the FCC has authority to deal with false advertising claims. So, in this case, how do the FDA’s and FTC’s authority interact?
… because a half million a year (5 highly trained positions, or 2 highly trained and 6 google-monkeys) looks like a lot on a budget, and the pharma lobby knows how to press “skimp on budget” buttons.
Until it is executive recompense, and then it looks insufficient.
Now think of the generics as IP going into the public domain…
You can just rererelease an album, call it remastered and hey you have a brand new copyright on music recorded by someone over 100 yrs ago.
While they are feeling like they should do their job perhaps they should address the massive price gouging happening when some douche acquires a needed medicine thats cheap to make but then raise the price by 3000% to screw the few who have no other option but die/suffer without it.
DONT MAKE ME LAUGH THIS HARD
The department dont have the money to sustain Any court.
Each department has been Cut back sooo much they cant do anything, and havent in the last 30 years.
They are responsible for the money spent, TO LAWYERS.
My Question is WHY? The departments Should be able to send in lawyers and STAND there and say “FIX IT”. and it gets done.
NOPE. the Corps have more lawyers and more money, and if they NEED more, they raise the price of the products, so the customer PAYS.
Lock the corps funds up, until its decided.