FTC challenges ‘junk’ drug patents. Here’s what they are and why they matter

The US Federal Trade Commission (FTC) announced last week that, for the second time, dispute hundreds of rubbish patents listed in the Food and Drug Administrations (FDA) Orange Book, a list of FDA-approved drugs. The challenges cover 20 different brand medicines, including Novo Nordisks Ozempic, and are part of an effort to promote competition and lower drug prices.

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

By filing false patent listings, drug companies block competition and drive up the cost of prescription drugs, forcing Americans to pay sky-high prices for the drugs they depend on, said FTC Chairwoman Lina M. Khan , in a statement.

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

Why do pharmaceutical companies file junk patents?

In the United States, drug patents last 20 years from the time a patent application is filed. During this period, the pharmaceutical company holding 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 reach the market, drug companies try to extend their exclusivity rights as much as possible. One way to achieve this is to file more patents that prevent cheaper copycats from being launched.

Drug companies say this is necessary to recoup the millions of dollars they spend on drug research and development. Some researchers have disputed this claim. A Study 2022 found that research and development costs did not explain the variation in drug prices.

What are they and how do they work?

Junk patents are not filed 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 it is formulated, manufactured or even administered.

For example, in the FTC letter in Novo Nordisk, the Commission said it disputed the patent listings for the companies’ Ozempic, Saxenda and Victoza brands. The FTC challenges specifically targeted device patent lists like the one covering Ozempics injection device with torsion spring and rotating screen.

Once listed in the Orange Book, patents like this can trigger an automatic 30-month stay that prevents the launch of competing drugs and effectively extends patent owners’ exclusive rights over a drug.

Is the FTC’s challenge enough to address them?

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

However, even if a patent is removed from the Orange Book, the patent owner can still file patent infringement litigation.

Wasserman suggests that one possible solution to the problem is to give patent examiners more time to review applications. According to Wasserman, patent examiners spend an average of 19 hours reviewing a patent application. She says this is not enough time to remove invalid applications.

In his new study, Wasserman is looking at how much money consumers can save on drug prices if patent examiners have more time to review applications. She estimates that 50% more time for patent examiners can save up to $5 billion a year due to lower drug prices.