FTC’s Crackdown on Sham Patents in the Orange Book: What You Need To Know

A “sham patent” is a term often used in the context of antitrust law and patent litigation to describe a patent that is obtained and enforced by a company primarily for anti-competitive purposes, rather than for the legitimate protection of intellectual property rights. Sham patents are considered to be invalid and unenforceable because they are not genuinely innovative or deserving of patent protection.

On September 20, 2023, the Federal Trade Commission (FTC) issued a policy statement warning brand pharmaceutical manufacturers that they could face legal action if they improperly list patents in the FDA’s Orange Book. The Orange Book is a public catalog of all approved drug products and their patents, and it plays an important role in ensuring generic drug competition. The lawsuit that triggered the FTC to go after brand companies engaged in improperly listing patents in the FDA’s Orange Book is Jazz Pharmaceuticals Inc. v. Avadel CNS Pharmaceuticals, LLC.

In its amicus brief in the case of Jazz Pharmaceuticals v. Avadel CNS Pharmaceuticals, the Federal Trade Commission (FTC) argued that Jazz’s Orange Book listing of a patent on a distribution system for its drug Xyrem was improper and that the 30-month stay on approval of Avadel’s generic version of Xyrem was anti-competitive.

The FTC made the following arguments in its brief:

  • Distribution patents are not properly listed in the Orange Book because they do not cover the drug product itself or its method of use.
  • The Orange Book listing process was not designed to allow brand pharmaceutical manufacturers to delay generic competition by listing patents that are not relevant to generic drug development.
  • Jazz’s Orange Book listing of its distribution patent was intended to delay generic competition and to harm consumers.

The FTC’s policy statement is new because it explicitly states that improper Orange Book patent listings may constitute an unfair method of competition in violation of Section 5 of the FTC Act. This means that the FTC has the authority to take action against brand pharmaceutical manufacturers that engage in such practices.

The FTC’s policy statement also comes at a time when there is growing concern about the rising cost of prescription drugs. Generic drugs are typically much less expensive than brand-name drugs, and they play an important role in making prescription drugs more affordable for consumers. By cracking down on improper Orange Book patent listings, the FTC hopes to promote generic drug competition and lower prescription drug prices for consumers.

Here are some specific examples of improper Orange Book patent listings:

  • Listing patents that do not cover the drug product or its method of use
  • Listing patents that have expired or are invalid
  • Listing patents that are not relevant to generic drug competition.

The FTC’s policy statement is a significant development in the fight against high prescription drug prices. It is a clear signal to brand pharmaceutical manufacturers that they cannot engage in anti-competitive practices to delay or prevent generic drug competition.

In this case, Jazz Pharmaceuticals listed a patent on a distribution system for its drug Xyrem in the Orange Book. Xyrem is used to treat narcolepsy and cataplexy. Avadel CNS Pharmaceuticals was developing a generic version of Xyrem, and Jazz’s Orange Book listing blocked approval of Avadel’s drug for 30 months.

The FTC also argued that the 30-month stay on approval of Avadel’s generic version of Xyrem was anti-competitive because it prevented consumers from having access to a more affordable alternative.

Senator Elizabeth Warren (D-MA) has raised concerns about “sham patents” issued to biopharma companies that are used to “hold off generic competition.” In a 2023 letter to the FDA Commissioner, Warren and Representative Pramila Jayapal (D-WA) wrote that “about 25 percent of active patents in the Orange Book have been invalidated in court.” They also noted that “Big Pharma companies routinely add improper patents to the Orange Book to block the introduction of lower-cost generics.”

Senator Warren has been a vocal critic of the pharmaceutical industry, and she has called for reforms to the patent system to make it more difficult for companies to use patents to delay generic competition. She has also proposed legislation to create a new agency to oversee the pharmaceutical industry and to protect consumers from high drug prices.



In addition to Senator Warren, other senators who have raised concerns about sham patents include:

  • Senator Bernie Sanders (I-VT)
  • Senator Amy Klobuchar (D-MN)
  • Senator Richard Blumenthal (D-CT)

These senators have called for the FDA to take action to crack down on sham patents and to make it easier for generic drugs to come to market.


Here are a few examples of sham patent lawsuits:

  • Amgen Inc. v. Apotex Inc.: In this case, Amgen listed a patent on its drug Neulasta in the Orange Book. Apotex was developing a generic version of Neulasta, and Amgen sued Apotex, alleging that the generic would infringe on its patent. However, Amgen later admitted that the patent was invalid. Amgen agreed to pay Apotex and other generic companies $280 million to settle the lawsuit.
  • AstraZeneca LP v. Teva: Pharmaceuticals USA, Inc.: In this case, AstraZeneca listed a patent on its drug Nexium in the Orange Book. Teva was developing a generic version of Nexium, and AstraZeneca sued Teva, alleging that the generic would infringe on its patent. However, the court ruled that the patent was invalid. AstraZeneca agreed to pay Teva and other generic companies $145 million to settle the lawsuit.


These are just a few examples of biopharmaceutical sham patent lawsuits. There have been many other cases in recent years, and the number of cases is increasing. This is due to the fact that biopharmaceutical companies are increasingly relying on patents to protect their products and to delay generic competition.

Sham patent lawsuits can be very costly for both biopharmaceutical companies and generic companies. However, these lawsuits are important because they can help to ensure that generic drugs are available to consumers in a timely manner.

The FTC’s crackdown on sham patents within the FDA’s Orange Book marks a pivotal moment in the battle for fair pharmaceutical competition and affordable drug prices. The term “sham patent” now stands as a symbol of patents obtained for anti-competitive purposes rather than genuine innovation, rendering them invalid and unenforceable. The FTC’s recent policy statement, triggered by the Jazz Pharmaceuticals v. Avadel CNS Pharmaceuticals case, signifies a commitment to protect consumers from soaring prescription drug costs. 

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