The US Court of Appeals for the First Circuit held that pharmaceutical companies that wrongly list patents in FDA’s Orange Book must prove they acted in good faith to avoid antitrust liability. In re Lantus Direct Purchaser Antitrust Litigation, Case No. 18-2086 (1st Cir. Feb. 13, 2020) (Kayatta, J).

In applying for FDA approval to market new drugs, drug manufacturers must list all patents that “claim” the drug or the method of using the drug in FDA’s “Orange Book.” Listing a patent in the “Orange Book” allows the drug manufacture to trigger an automatic 30-month stay of FDA approval of any application for a competing drug product.

Sanofi-Aventis first obtained FDA approval to market insulin glargine under the brand name “Lantus” in 2000, and filed a patent for the drug set to expire in 2014. In 2006, Sanofi filed a “supplemental” new drug application to sell insulin glargine in a disposable injector pen device called the “Lantus SoloSTAR,” and in 2013 listed a patent in the Orange Book named “Drive Mechanisms Suitable for Use in Drug Delivery Devices,” which does not expire until 2024. The listed patent does not mention insulin glargine or Lantus SoloSTAR. Sanofi filed infringement suits based on the patent against three competing drug manufacturers, automatically triggering 30-month stays of FDA approval of these competing products.

A direct purchaser of insulin glargine seeking class certification sued Sanofi alleging that Sanofi unlawfully extended its monopoly over insulin glargine products in violation of Section 2 of the Sherman Act. The plaintiff alleged Sanofi improperly listed the patent in the Orange Book, triggering the automatic stay of FDA’s approval of competing insulin glargine products. At issue was whether Sanofi’s listing of the patent was an unlawful means of maintaining its monopoly power for insulin glargine granted by the patent. The district court dismissed the lawsuit determining that the listing was “reasonable.” Plaintiff appealed.

The First Circuit reversed, concluding that Sanofi’s listing was improper because the listed patent does not “claim” insulin glargine or any method of using the insulin glargine. Sanofi argued based on FDA regulations and guidance that a “drug delivery system” such as the Lantus SoloSTAR device qualifies as a “drug” under the relevant statute. The Court explained, however, that even if the Lantus SoloSTAR injector pen qualifies as a “drug,” the patent “does not claim or even mention the Lantus SoloSTAR” and “though it claims a device intended for use in an injector pen, it does not claim any injector pen, nor even a method of using a pen.” The Court analogized Sanofi’s theory to arguing that a “patent claiming a transmission system must be read as also claiming any car in which it is used.”

The Court next addressed whether the fact that Sanofi’s listing was “a reasonable mistake” insulates the company from antitrust liability. In a monopolization case, courts typically look only at the effects of a monopolist’s conduct, rather than subjective intent. The Court held that, in this unique regulatory setting, intent may serve as a defense to liability, because drug manufacturers are required by law to submit drug related patents to the Orange Book. In fact, according to the First Circuit, Sanofi could potentially face antitrust liability from both listing and not listing the patent, because failing to list a necessary patent in the Orange Book may “have an anticompetitive effect by depriving potential competitors of notice and of the other procedural benefits that result from an Orange Book listing.”

The First Circuit looked at antitrust cases from other circuits dealing with heavily regulated industries and held that a reasonable, good-faith attempt to comply with the FDA’s Orange Book requirements constitutes a valid antitrust defense. The Court reversed the district court’s dismissal and remanded the case back to the district court for further proceedings on the question of whether Sanofi acted in good faith in listing its patent.

Practice Note: A patent holder’s intent when listing a patent in the FDA’s Orange Book can subject it to antitrust liability if it acts in bad faith.