Teva’s Orange Book Defeat Sparks Pharma-Patent Strategy Overhaul

Patent lawyers are racing to adapt how they draft and defend drug-device patents after a court ruling reshaped the FDA’s registry that brand-name companies use to fend off generic competition.

The decision has upended a system that lets drugmakers delay cheaper copies for 30 months when they sue over patents they’ve listed in the US Food and Drug Administration’s registry of approved drugs, the Orange Book. Under the tighter standards adopted by an appeals court, companies risk losing the exclusive market protections tied to the listings.

The US Court of Appeals for the Federal Circuit in December upheld a New Jersey judge’s finding that five patents covering components of Teva Pharmaceutical Industries Ltd.'s asthma inhaler were improperly listed in the Orange Book because they don’t claim the active ingredient, albuterol sulfate. To be listed, the court said a patent must explicitly name the drug—not just describe the device that delivers it. Teva plans to challenge the decision at the US Supreme Court.

Teva’s loss in its clash with generic-drug maker Amneal Pharmaceuticals Inc. already looms over other fights: challengers invoked it during a failed bid to delist a patent for Novartis AG’s heart drug Entresto. Regulators are eyeing Orange Book listings, too: The US Federal Trade Commission last month cited the ruling in letters to Teva and six other companies, warning that dozens of inhaler- and device-related patents were improperly listed.

Branded-drug makers worry the logic behind the Federal Circuit’s ruling could extend further, jeopardizing a broader swath of patents, said Kevin Noonan, a partner at McDonnell Boehnen Hulbert & Berghoff LLP.

“That reasoning—was it claimed or not?—is what the branded companies are afraid of,” he said. Broader genus claims, which cover families of compounds rather than a single drug, could face fresh vulnerability if courts demand more precise language.

The practical effect, Noonan said, is that companies will have to craft patents with surgical precision—or risk losing not only patent listings, but the competitive moat they provide.

The 1984 Hatch-Waxman Act created the system that governs how brand-name drugs and their generic competitors are approved and litigated in the US. The Federal Circuit’s ruling and FTC crackdown threaten to undermine that regulatory framework, which helped turn the US generics market into a pharmaceuticals powerhouse, said Adam Mossoff, an IP law professor at George Mason University.

“An entire multi-billion-dollar industry was created entirely on the basis of the Orange Book,” Mossoff said. In the four decades since the law’s passage, he said, the sector has grown to “hundreds of billions in market capital” from “a mere couple hundred million.”

Teva has until July 31 to petition the Supreme Court to take up the case.

Shifting Strategies

Patent prosecutors and litigators are already navigating the fallout.

David B. Gornish, a former Hatch-Waxman litigator who now focuses on prosecuting drug-delivery and device patents at Eckert Seamans, said many patents covering delivery devices were drafted without the Orange Book in mind.

Mechanical-patent drafters, he said, tend to “stay in their own lane” and haven’t historically considered Hatch-Waxman or Orange Book eligibility when crafting claims. Now they must adjust to a landscape where “the actual drug” must be recited alongside the device to secure Orange Book eligibility.

That’s created a divide, Gornish said, between patent prosecutors, who focus on broad, defensible claims, and litigators, who need claims that clearly list active ingredients to lock in the FDA’s 30-month stay on approving competitors. He expects more collaboration between the two groups as companies adjust to the ruling.

But practitioners shouldn’t view the shift as a burden—it’s a strategic opportunity, Gornish said. He encourages patent drafters to work more closely with research and commercial teams to ensure their devices don’t target just a single drug.

Lawyers should tell their lay colleagues “to actually make a laundry list of the drugs that potentially could be used in this platform,” he said. “Don’t just limit it to one.”

By doing so, Gornish said, companies can secure patents that not only protect their own drugs but also can serve as licensing assets.

“By virtue of just listing the drug, they give them the ability to have an Orange Book-listable patent in an exclusive field-of-use license for that particular drug to someone else, and then they can get a royalty stream from that,” Gornish said. “That can be pretty valuable, because, as you know, Orange Book patents are very valuable.”

Leverage

Many pharmaceutical-patent prosecutors haven’t had to prioritize crafting claims that explicitly list a drug or class of drugs intended for use with a delivery device, as they’ll now have to do.

For brand-name companies, the changes could mean losing a critical litigation advantage. Without the Orange Book’s automatic stay on FDA approval, brand-drug makers would instead have to wait until after a generic launches to sue—exposing them to riskier, more expensive infringement battles, along with the new competition.

For now, he said, patent attorneys are bracing to tighten their patent claims, anticipate new delisting litigation, and enhance collaboration between patent drafters and litigators.

Device-patent prosecutors, Gornish said, should “think more broadly” and include more drugs in their specifications—"a literal laundry list.” Ideally, he said, they’d add a dependent claim: “‘The device of Claim 1, wherein the medication is selected from the group consisting of'—and it’s just, boom, have a list.” That, he said, could be the difference between a patent being Orange Book-listable or not.

Teva could’ve written a narrower patent claim that explicitly tied its inhaler to a specific drug, but it opted for broader protections.

“I know why they did it,” Noonan said. “But this is where, sometimes, when you want too much, it can come back and cause trouble for you.”