Orange Book Patent Listing: The Rationale and Economic Impact of the New Rule

Abstract

Listing a patent in the US Food and Drug Administration's (FDA) ‘Orange Book’ of approved pharmaceuticals brings some significant advantages to the patent owner. The FDA has recently changed its requirements for listing patents in the Orange Book. The rule's significant economic impact creates a unique opportunity to build valuable new pharmaceutical product lines. In this paper, the rationale for the new rule will be reviewed and its significant economic impact — expected, over the next decade, to add $19bn in revenues to generic drug manufacturers and to take away $52bn in innovator manufacturer revenues — measured. Moreover, the legal advantages of listing patents in the Orange Book, potential obstacles to listing a patent and the way in which the rule applies to patents on polymorphic forms of approved therapeutic products will be examined.

Keywords

Orange Book ANDA pharmaceutical patent drug patent pharmaceutical economics polymorph patent

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References

The orange colour was selected because the list was apparently first published just before the American holiday of Halloween; one of the traditional theme colours for Halloween is orange.

In the USA, a new drug may legally be sold only after the FDA concludes that the drug is safe and effective. A new drug's manufacturer presents clinical data regarding safety and effectiveness to the FDA in an NDA. When a generics company wants to make and market the same drug, this company need not repeat the expensive clinical testing required for an NDA; rather it need only show that its own product is biologically equivalent to the original manufacturer's product. The generics company presents such bioequivalence data to the FDA in an ANDA. If a generics company wants to make and market a drug that is functionally equivalent, yet somewhat different chemically, it then needs only to show that its product is functionally equivalent to the original manufacturer's product pursuant to a §505 (b)(2) application.

More precisely, the 30-month period may be shortened or lengthened by court order or a court decision regarding the listed patent(s).

See 67 Fed. Reg. 65460.

21 CFR 314.53(b).

The financial model is described in 67 Fed. Reg. 65448.

Congressional Budget Office (1998) ‘How increased competition from generic drugs has affected prices and returns in the pharmaceutical industry’, at p. 30, Box 4.

Caves

Whinston

M. D.

Hurwitz

M A.

(1991) ‘Patent expiration, entry and competition in the U.S. pharmaceutical industry’, Brookings Papers in Economic Activity: Microeconomics, p. 36, Table 9.

67 Fed. Reg. 65460–65461.

10.

Gains and losses include impacts of an economic transfer in addition to changes in resource costs.

11.

These estimates are derived using methods and data similar to those described in 68 Fed. Reg. 65448.

12.

68 Fed. Reg. 36676.

13.

Specific examples of polymorphic drug substances are discussed in detail in Hutchins

(2003) ‘Extending the monopoly — How 'secondary patents’ can be used to delay or prevent generic competition upon expiry of the basic product patent’ Journal of Generic Medicines Vol. 1, No.1, pp. 57–71, especially pp. 62–64.

14.

Eastern Research Group (1998) ‘Pharmaceutical industry cost savings through use of the scale-up and post-approval change guidance for immediate release solid oral dosage forms (SUPAC-IR)’.