A recent ruling in the U.S. District Court for the District of New Jersey could have far reaching implications on the development and sale of generic drug products.

While the judge’s decision is currently on appeal, it is clear pharmaceutical companies that innovate new drugs should expect more challenges to U.S. Food and Drug Administration’s Orange Book patent listings. They also should expect the U.S. Federal Trade Commission (FTC) to insert itself early into more Orange Book listing challenges in support of generic drug companies.

Background

The decision, issued June 10, 2024, came in a patent infringement lawsuit filed under the Hatch-Waxman Act. U.S. District Judge Stanley Chesler found five patents asserted by the plaintiff were improperly listed in the Orange Book.

The lawsuit was filed by Teva Pharmaceuticals USA, which markets an FDA-approved asthma inhaler containing albuterol sulfate for which the five litigated patents were listed in the Orange Book as covering the approved product.

Teva sued Amneal Pharmaceuticals after Amneal filed an Abbreviated New Drug Application (ANDA) seeking approval for a generic version of Teva’s inhaler. In response, Amneal filed a counterclaim seeking declarations ordering Teva to delist the asserted patents from the Orange Book. Amneal later filed a pretrial motion seeking such relief and the FTC filed an amicus brief, which Chesler allowed.

Chesler ultimately sided with Amneal, but stayed his ruling pending an interlocutory appeal.

In his ruling, Chesler determined that under the relevant Hatch-Waxman statutes the five patents did not qualify for Orange Book listing because the patent claims did not cover the active ingredient the inhalers were approved to deliver.

The Hatch-Waxman Act

The Hatch-Waxman Act streamlines the generic drug approval process, which has resulted in hundreds of billions of dollars in savings for the federal government and the private consumer. For approval of a generic drug product, generic companies need only establish bioequivalence. They do not need to perform costly testing or submit evidence of the safety and efficacy previously established by the innovator company that received the original FDA approval for their product.

However, this “abbreviated” New Drug Application is not without risk, since the filing of an ANDA with the FDA can act as a form of patent infringement. Under the Hatch-Waxman Act, innovators are supposed to list patents covering their drug product in something called the Orange Book. When filing an ANDA, a generic company must certify either that no patents are listed (paragraph 1 certification), the patents are expired (paragraph 2 certification), their product will not be marketed until the patents are expired (paragraph 3 certification), or that the patents are invalid, not infringed and/or not enforceable as written (paragraph 4 certification). If the generic company certifies under paragraph 4, then it is required under the statute to provide a notice letter to the innovator detailing the bases for non-infringement, invalidity and/or unenforceability. If the innovator sues the generic company for patent infringement based on the filing of the ANDA within 45 days of receiving this “paragraph 4 notice letter,” then the statute provides that the ANDA cannot be approved by the FDA for at least 30 months, which effectively grants the innovator an automatic injunction against product launch. In the case at hand, Amneal certified under paragraph 4 and Teva sued for patent infringement, resulting in a 30-month stay of Amneal’s ANDA approval.

A valuable 180-day market exclusivity is available for applicants that are the first to file an ANDA that certifies that an Orange Book listed patent is not infringed, invalid or unenforceable. That provides an incentive for applicants to pursue this route and void invalid or unenforceable patents.

The Orange Book

The Hatch-Waxman Act requires the FDA to publish the Orange Book, which is also known as “Approved Drug Products with Therapeutic Equivalence Evaluations” and takes its nickname from the color of its cover. The Orange Book identifies drug products approved based on safety and effectiveness by the FDA under the Food, Drug and Cosmetics Act and lists patents purported to cover each drug.

Patent listings included in the Orange Book are provided by the drug application owner. While the FDA is obliged to list the submitted patents, the Act does not authorize the FDA to examine them. Therefore, there is no guarantee the submitted patents actually cover the purported product.

As stated above, a lawsuit that results from a paragraph 4 certification of Orange Book listed patents ensures a 30-month delay of generic drug approval. This incentivizes innovator companies to list patents covering their approved drug products in the Orange Book. Multiple patent listings also complicate ANDA litigation and increases the likelihood that at least one infringed patent claim will survive.

The Federal Trade Commission

The advantage of listing patents in the Orange Book, and the lack of FDA oversight authority, make the system ripe for abuse. Companies often list dubious patents as a generic drug approval delay tactic.

The FTC stepped into the breach last September, looking at improper Orange Book patent listings as potential unfair trade practices. The agency issued a policy statement warning of abuse of the Orange Book by companies unlawfully listing questionable patents to force generic companies to litigate their validity and delay generic drug approval for 30 months. The FTC subsequently put 10 pharmaceutical companies on notice for over 100 suspect patent listings covering asthma inhalers. Of those patents, 42 are held by Teva—including the five asserted against Amneal.

Impact

Should Amneal prevail on appeal and the patents be delisted, there will be no 30-month stay as the patent validity or infringement need no longer be litigated as a condition of the ANDA approval. Amneal will only need to certify that no patents covering their product are listed in the Orange Book.

It is not clear from the decision whether Amneal was the first filer of an ANDA with a paragraph 4 certification. If it was, then the FDA could refuse to grant Amneal the 180-day market exclusivity because the approval was no longer pursuant to a certification that the patents were invalid, not infringed or unenforceable.

If the five inhaler patents don’t qualify for Orange Book listings, that doesn’t mean there are no patent claims that dominate Amneal’s inhaler device. This was likely the rationale for listing the patents. However, without an Orange Book listing, Teva lacks standing to sue before the effective date of the ANDA approval when the inhalers can be sold or offered for sale.

Practical Considerations

Innovator companies should expect Orange Book patent listing challenges to emerge as an additional and simpler tool for overcoming ANDA litigation. The challenges could become a routine part of pre-trial motion practice. Innovators should expect ANDA filers to assert claim interpretations that fall short of qualifying a patent for Orange Book listing.

Innovator companies also should consider the FTC’s decision to file amicus briefs as the agency’s determination that the patents in question are vulnerable.

When prosecuting U.S. patent applications, innovator companies should ensure claims are included that unequivocally qualify the patent for Orange Book listing.

Generic companies should monitor legal developments in this and similar cases to see how the FDA handles the 180-day market exclusivity when a patent is delisted from the Orange Book. If the FDA doesn’t grant that exclusivity, generic companies will need to decide whether such a loss is worth the upside of knocking a patent out of the Orange Book.

Regardless what happens in this and similar cases, generic companies should still obtain a thorough freedom to operate analysis of the listed patents in the case of device, dosage form or delivery patents. A patent claiming such product types that does not qualify for an Orange Book listing may still cover their ANDA candidate product.