In 2022, retail purchases of prescription drugs in the United States exceeded $400 billion for the first time ever, an 8.4% increase from the year prior—the largest percentage increase since 2014. Of that, health insurers paid $343.5 billion (roughly 85%, or $1,030 per person), with private health insurance covering nearly half of that figure and individuals covering the remaining $56.7 billion. A Department of Health Services report found that, when including over-the-counter medications, the total purchases of branded drugs account for ninety percent of sales (in USD) of all medication in the United States but less than ten percent of the total volume (in dosages) sold. In other words, the vast majority of money goes to the significant minority of sales—the branded drugs.
The FDA estimates that when a single generic brand alternative enters the market and breaks up a branded drug’s dominance, the average retail price of the drug (sale of branded and generic versions aggregated) declines by 30%. When five generic drug manufacturers are available, the average retail price of the drug typically goes down by 80-85%. Indeed, generic drugs accounted for more than $2.2 trillion in savings from branded-drug pricing from 2009 to 2019. It is little wonder that branded drug manufacturers are incentivized to do anything they can to protect their fiefdom over specific drugs by keeping generics off the market.
One tactic currently under scrutiny that a branded drug’s manufacturer may use to protect its position is the listing of newer and often ineligible patents for much older drugs in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations registry, more commonly called the “Orange Book.” In September 2023, the FTC published a statement cautioning the pharmaceutical industry that improperly listing patents in the Orange Book, which “may harm competitive conditions in pharmaceutical markets,” could lead to liability under the federal antitrust and unfair competition laws. Since November 2023, the FTC has sent twenty companies warning letters challenging the listing of more than four hundred patents listed in the Orange Book.
The Orange Book is a Database of Current Patents Claiming a Brand Name Drug.
In 1984, Congress passed the Drug Price Competition and Patent Term Restoration Act, more commonly known as the Hatch-Waxman Act. The law promoted an increase in the availability of generic drugs by providing generic drug manufacturers with a speedier FDA approval process, known as an Abbreviated New Drug Application or “ANDA”. The Hatch-Waxman Act also requires that branded drug manufacturers submit to the FDA and that the FDA publish a list of all drug patents, i.e., the Orange Book. Patents listed under a branded drug in the Orange Book are submitted by the branded drug’s manufacturer under sworn certification; the FDA does not review or scrutinize any Orange Book listings.
FDA regulations require that a patent submitted for inclusion in the Orange Book must claim a “drug substance” (active ingredients), “drug product” (a finished dosage form, such as a pill or serum), or “methods-of-use patent.” Patents for drug devices—such as syringes, inhalers, droppers—or their component parts are not eligible. Typically, the improperly listed patents are for newly developed devices or parts submitted with a much older branded drug, which creates the illusion that the branded drug’s patent protection will expire much later that it actually should (if it has not expired already).
Improperly Listing Patents in the Orange Book Delays Generic Competition and Harms Consumers
If a generic drug manufacturer is the first to file an ANDA and claims one or more patents in the Orange Book are invalid or improper, the FDA grants that first-filer generic drug manufacturer an exclusive approval for 180-days. However, if the branded drug’s manufacturer sues the first filer for patent infringement within 45-days of the ANDA (where the filing of the ANDA is the act of infringement), the Court will automatically issue a 30-month stay on the approval of all generic alternatives. Such a suit can only be filed if the patent at issue is listed in the Orange Book. So, if a branded drug’s manufacturer lists scores of ineligible patents in the Orange Book for a single device, when a generic drug manufacturer files an ANDA to come to market with a cheaper version, the branded drug’s maker can automatically keep any generic off the market for at least two-and-a-half years by suing on a patent that should not be in the Orange Book in the first place.
As a result of improperly-filed legal actions, consumers and health insurers are forced to pay exorbitant prices for branded drugs that much earlier should have had competition from generic alternatives. These costs materially affect vulnerable people across all spectrums of life, including those undergoing physician care for needs as varied as allergies; auto-immune conditions; asthma; chronic obstructive pulmonary disease and other respiratory conditions; diabetes; infections in the ears, eyes or sinuses; gender-affirmation; hormone therapy; mesothelioma; multiple sclerosis; and more.
Berman-Tabacco is currently litigating two cases against branded drug manufacturers in the District Court of Massachusetts for antitrust violations stemming from the improper listing of inhaler patents in the Orange Book.