Is It Time for FDA to Revise Its Orange Book Rules to Deal with Skinny Labeled Generic Drugs?

FDLI’s Food and Drug Policy Forum, Volume 1, Issue 19

Late last term in Pliva v. Mensing, the Supreme Court reviewed the Food and Drug Administration’s (FDA’s) generic drug labeling rules and concluded, in a 5-to-4 vote, that in terms of protecting the public health, those rules “make little sense.” This term, in Caraco v. Novo Nordisk, the Court will review FDA’s Orange Book rules governing generic drug substitutions and will likely conclude that these rules “make even less sense.”

The common thread in these cases is the Drug Price Competition and Patent Term Restoration Act of 1984 (the Hatch- Waxman Act), a complex and schizophrenic piece of legislation designed to deliver low-cost generic medicines to the public quickly without undermining the enormous investments required for new drug discoveries. Officially, Caraco is about the authority of courts to review the accuracy of patent information filed in the Orange Book by brand name (or “pioneer”) manufacturers that are intent on slowing the pace of generic entry. Unofficially, the case is about the Orange Book itself how it can inadvertently distort the scope of patent protection and potentially facilitate the unsafe use of generic drugs, the same issue that split the Court so deeply in Pliva. By granting certiorari in generic drug cases in back-to back terms, the Supreme Court may be signaling that after 27 years, the Hatch-Waxman “balance” is in need of re-calibration.

According to recent studies, generic drugs account for nearly 75 percent of all prescriptions written and 25 percent of all drug revenues. Moreover, these percentages are certain to increase as an estimated $100 billion in pioneer drug revenues come off patent between now and 2015. The problem for both pioneer manufacturers and consumers is that new drug pipelines are not easy to fill. Various studies estimate the cost of researching, developing and obtaining approval for a new drug to be well over $1 billion. Even new uses for existing drugs can cost tens of millions of dollars to develop. What keeps these staggering investments coming in from pioneer manufacturers is the promise of new patent protection. As long as manufacturers can protect new discoveries long enough to recover their investment and return a reasonable profit, they will continue to feed the voracious drug development cycle. But if drug discoveries “go generic” too quickly the process breaks down, new drug investments dry up and, ultimately, the public health is made to suffer.

In a nutshell, this is what Caraco is about—the battle between a pioneer manufacturer trying to protect a large investment in a lucrative drug for as long as possible and a generic manufacturer trying to enter the market with a copy of that drug as quickly as possible. What is unique about this particular dispute is that it will focus Supreme Court attention, for the first time, on the Orange Book and the role it plays in the cost and delivery of national healthcare. What the Court will discover in Caraco is how FDA, in an effort to promote generic drug substitution on a national scale, has turned the Orange Book into a vehicle that can distort pioneer patent rights and put patient safety needlessly at risk. While Caraco, in theory, is a narrow statutory dispute over the type of patent information that can be listed in the Orange Book, in reality it is over federally driven drug substitution policies that are long overdue for reform.

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