May 30, 2024

The U.S. Federal Trade Commission (FTC) announced last week that it is, for the second time, disputing hundreds of “junk” patents listed in the Food and Drug Administration’s (FDA) Orange Book, a list of FDA-approved drugs. The challenges span 20 different brand name drugs — including Novo Nordisk’s Ozempic — and is part of an effort to promote competition and lower drug prices.

The FTC argues that improper or inaccurate listings delay more affordable generic and biosimilar alternatives from entering the market, resulting in artificially high drug prices.

“By filing bogus patent listings, pharma companies block competition and inflate the cost of prescription drugs, forcing Americans to pay sky-high prices for medicines they rely on,” said FTC Chair Lina M. Khan in a statement.

Here is everything you need to know about junk patents and their impact on the pharmaceutical industry.

Why do drug companies file “junk” patents?

In the United States, drug patents last 20 years from when a patent application is filed. During this period, the pharmaceutical company that owns the patent can set the price of a drug without competition.

Because drugs are patented years before they complete clinical trials, secure regulatory approval, and hit the market, pharma companies try to extend their exclusivity rights as much as possible. One way of achieving this is to file more patents that fend off cheaper copy cats from launching.

Pharma companies say this is necessary to recover the millions of dollars they spend in researching and developing drugs. Some researchers have disputed this claim. A 2022 study found that research and development costs “did not explain the variation” for drug prices.

What are are they and how do they work?

Junk patents are filed not to protect a genuine innovation, but to delay competitors from entering the market.

They often look like additional or secondary patents on an existing drug that protect slight modifications in the way a drug is formulated, manufactured, or even administered.

For example, in the FTC’s letter to Novo Nordisk, the Commission said it was disputing patent listings in regards to the company’s Ozempic, Saxenda, and Victoza brands. The FTC’s challenges specifically targeted device patent listings like the one covering Ozempic’s “injection device with torsion spring and rotatable display.”

Once listed in the Orange Book, patents like this one can trigger an automatic 30-month stay that prevents competing drugs from launching and effectively extends a patent owner’s exclusive rights to a drug.

Is the FTC challenge enough to address them?

Melissa Wasserman, a professor at the University of Texas, Austin who researches drug patent law, said this is positive development. “Those patents that are listed in the Orange Book can have a blocking effect,” Wasserman said. “You, as a generic, can’t come on until you basically deal with every patent that’s listed in the Orange Book for that drug.”

Still, even if a patent is removed from the Orange Book, a patent owner can still file litigation for patent violations.

Wasserman proposes that one possible solution to the problem is to give patent examiners more time to review applications. Patent examiners spend an average of 19 hours to review a patent application, according to Wasserman. She says this is not enough time to weed out invalid applications.

In her new study, Wasserman is looking at how much money consumers can save from drug prices if patent examiners are given more time to review applications. She estimates that 50% more time for patent examiners can result in up to $5 billion in saving a year from lower drug prices.

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