FTC Warns ‘Junk Patents’ May Inflate Drug Costs like Ozempic

The Federal Trade Commission (FTC) has raised concerns over the potential inflation of drug prices, specifically highlighting the impact on medications like Novo Nordisk’s diabetes drug, Ozempic. This follows the FTC’s challenge to numerous patent listings from several pharmaceutical companies, which the FTC argues could lead to higher prices for medications by making it harder to produce generic drugs.

The FTC’s scrutiny has resulted in warning letters being sent to 10 pharmaceutical companies, including major players like Novo Nordisk, AstraZeneca, GlaxoSmithKline, and Teva. These letters dispute over 300 “junk” patent listings across 20 different brand-name products. The FTC alleges that some of the patents filed by these companies are “bogus” because they are not directly related to the drugs they sell. For example, the injection “button” for Novo Nordisk’s diabetes drug Victoza or the “injection device with torsion spring and rotatable display” for Ozempic are cited as examples of patents that may not be legitimately related to the drugs themselves.

The core concern is that these “improper or inaccurate” patents, if listed in the FDA’s Orange Book (which catalogues patents for brand-name drugs), could delay the entry of cheaper generic alternatives into the market. This delay would effectively maintain higher prices for brand-name drugs, as generic competition would be hindered. Under the Hatch-Waxman Act, generic drugmakers have the opportunity to challenge Orange Book patent listings. If successful, they can gain a brief period of exclusivity, allowing their generic product to enter the market ahead of other generics. However, if the brand-name manufacturer successfully defends its patent listing, regulatory approval for the generic drug could be delayed for up to 30 months.

In response to the FTC’s warnings, pharmaceutical companies have been given 30 days to remove or amend their patent listings. Alternatively, they can certify, under penalty of perjury, that the listings meet regulatory requirements. This development is part of a broader initiative by the FTC to scrutinize “bogus” patent listings from pharmaceutical companies, with the aim of promoting competition and ensuring that generic drug alternatives are not unduly delayed.

Despite the FTC’s efforts, some companies have pushed back against the notion that these patents stifle competition or prevent generic drug alternatives. AstraZeneca, for instance, has argued that some of the patents challenged by the FTC actually help generic drugmakers understand the intellectual property landscape better, facilitating the creation of alternative medications. Teva has similarly defended its use of patent listings, stating that they are “inherently pro-competitive” and play a crucial role in the legal and regulatory framework.

The impact of these patent disputes extends beyond the immediate pricing concerns. Ozempic, for example, belongs to a category of drugs called GLP-1 agonists, which have seen increased demand for weight loss purposes, despite Ozempic being authorized only for diabetes treatment. The limited supplies of GLP-1 drugs like Wegovy, a weight loss medication also by Novo Nordisk, highlight the broader implications of these patent challenges on drug availability and access.

In conclusion, while the FTC’s actions aim to address potential issues in the pharmaceutical industry related to patent listings, the broader implications on drug pricing, competition, and access to medication remain significant considerations.