Pharmaceutical-related patents are allowed in the FDA's Orange Book only if they're "composition" or "method of use" patents. Such patents may cover the drug compound, specific formulations of the drug, or methods of treating certain diseases by administering the drug. But "process patents," which cover methods for making (chemically synthesizing) the drug compound, are not allowed to be listed in the Orange Book. This inconsistency creates several problems for drug companies.
In ordinary circumstances, a patent owner trying to enforce its patent must first get the competitor's product, look at it and test it, determine that it's covered by the patent, and then file a lawsuit. In most pharmaceutical patent cases, however, the patent owner need not bother with that. Instead, if an innovator drug company lists its patent in the Orange Book, a generic drug company is required by law to notify the patent owner that it is making (and plans to sell) a drug that arguably infringes the patent. Once notified, the patent owner can file a lawsuit for patent infringement. But notice of possible infringement is required only with respect to patents that are listed in the Orange Book. A patent might not be listed for in the Orange Book because either (a) it's a process patent; or (b) the patent owner simply forgot to ask the FDA to include it in the Orange Book.
For generic drug companies, the Orange Book provides notice that there are patents out there covering FDA-approved drugs. This relieves the generic drug company's burden of searching for patents before it invests in research to develop a generic drug product. But patent searching isn't too difficult nowadays, and generic companies have to do it anyway because not all patents of concern are listed in the Orange Book.
For innovator drug companies, the Orange Book provides more valuable benefits. First, the Orange Book relieves the innovator's burden of monitoring the marketplace for new generic drugs that infringe its patents. As long as an innovator drug company gets its patent listed in the Orange Book, a generic drug company that desires to make its own version of the drug must, under law, provide notice of possible infringement to the innovator. Upon receiving notice, the innovator is free to file for patent infringement--without having to see the generic product or conduct expensive chemical testing on it. Second (and probably more importantly to the innovator drug companies), the filing of a lawsuit based on a patent listed in the Orange Book automatically invokes a 30-month stay before the generic drug company can sell its drug.
But why can't any patent relating to an FDA-approved drug be listed in the Orange Book? The answer must be in some sort of bargain struck by lobbyists. After all, the reasons for the Orange Book's existence apply as well or better when it comes to process patents. For example, to enforce its process patents, an innovator drug company has to monitor the marketplace, obtain a sample of the competitor's product, test it, and establish a "good faith basis" for filing a patent infringement lawsuit. In other words, the innovator drug company has to gather some evidence (usually the results of chemical testing) that the generic drug company uses the patented process to make the drug. It is difficult and expensive to gather such evidence. In fact, in most cases it would probably be easier to find chemical evidence that a generic drug company infringes a compound or formulation patent, yet because compound and formulation patents may be listed in the Orange book, such monitoring and evidence isn't required.
Furthermore, owners of process patents must continue to monitor the marketplace even after they win in litigation. Suppose an innovator drug company monitors the market, tests a new generic drug, suspects infringement of its process patent, files a lawsuit, and wins. The generic drug company must then stop selling its drug. However, the generic drug company is free to purchase API made differently, from a different source perhaps, and amend its drug application with the FDA. The innovator drug company that already proved infringement won't be given notice, and therefore must continue to monitor the market and test all new drugs for infringement of its process patents. Such continuous monitoring isn't necessary for owners of composition or method of use patents, because a generic company that loses in the first round of litigation will have to provide notice to the innovator company if it later files another drug application. As long as composition or method of use patents are in the Orange Book, the generic drug company must provide notice.
Maybe the inconsistency that only some, but not all, kinds of pharmaceutical patents may be listed in the Orange Book is a minor issue. Maybe the bigger problem is that the Orange Book exists at all. Every other company has to continuously monitor the marketplace for potentially infringing products. And monitoring and testing is expensive for all sorts of high tech industries. What makes the drug companies special? Moreover, because the FDA includes any composition or method of use patent in the Orange Book that an innovator company asks it to list, and does not question whether such listings are proper, many patents that don't belong in the Orange Book are listed there. This often leads to unnecessary litigation between drug companies. Maybe a way to bring consistency to FDA regulations is to eliminate the Orange Book entirely.
Notes:
- Post author: Aaron Barkoff is a patent litigator at the Chicago office of MBHB. He hold a PhD in Biochemistry from Wisconsin and a JD from the University of Chicago.
- Comments are welcome.
