A pharmaceutical company took advantage of a security requirement to make money Story-level

The pharmaceutical industry is littered with stories of companies imagining ways to extend their monopolies on lucrative drugs. They play with chemicals they adjust dosage. Are exchanged capsules for tablets.

By hoarding patents, drug companies delay the day when competitors can introduce similar, cheaper products.

Jazz Pharmaceuticals has figured out a way to push the limits even further, a feat that demonstrates the lengths drugmakers go to for extra profit and one that two federal courts have now ruled was inappropriate.

Jazz’s flagship product is a drug for the sleep disorder narcolepsy. The company patented the drug formulation. But Jazz also went further, arming himself with a new weapon to block the competition.

Due to the serious side effects of the drug and her history of date rape abuse, federal regulators required Jazz to devise a plan to ensure the drug was safely distributed to patients without falling into the wrong hands. Jazz’s program included having a single pharmacy in the entire country that would ship the drug directly to patients.

Jazz took the unusual step of patenting that security program, and then listed those patents in a federal register known as the Orange Book. low dark federal ruleif a rival challenged one of the patents under certain circumstances, federal regulators would not be able to approve that competitor’s product for more than two years.

That was precisely the strategy that Jazz deployed when a rival was about to introduce an improved version of the drug.

Jazz’s narcolepsy drug, used by thousands of patients, is hugely lucrative, generating more than $13 billion in revenue since Jazz acquired it in 2005. Medicare now spends hundreds of millions of dollars a year on it. The drug accounted for 58 percent of Jazz’s revenue in 2021.

In other words, for every month that Jazz could delay the arrival of the competition, the company and its shareholders would benefit financially.

But the tactics deprived narcolepsy patients of access to a new drug that was much easier to take.

Patent law experts say Jazz’s strategy of enforcing the patent on how the drug is distributed has strayed from the ostensible purpose of the US intellectual property regime, which seeks to reward drugmakers for taking risks to develop and improve innovative products. The case, they say, is an egregious example of how pharmaceutical companies exploit the patent system to protect their products from competition for as long as possible.

“It has very little to do with all the reasons we allow drug patents,” said Michael Carrier, an expert on drug patents at Rutgers Law School in Camden, New Jersey. “A lot of this stuff is just a computer program.”

Jazz’s strategy has been criticized by the Federal Trade Commission and struck down in court. A federal court in Delaware ruled in November that the company had inappropriately used the Orange Book to block the drug from rival Avadel Pharmaceuticals. Jazz appealed and a federal circuit court on Friday confirmed the judgment of the lower court.

The ruling will not have a major impact on the availability of Avadel’s product, which was due to hit the market in the coming months regardless of the court decision. But it’s important because it shows that there may be limits to how far the pharmaceutical industry can go to exploit the patent system to lock out rivals.

Aimee Christian, a spokeswoman for Jazz, defended the company’s patent strategy, but said Jazz would comply with the court’s order to seek removal of its patent from the Orange Book, which is named after its bright colors. front page.

“We remain confident in the strength of our patent portfolio and will continue to adequately defend our intellectual property as we continue to focus on ensuring the safety of patients receiving oxybate therapy,” he said, referring to the company’s narcolepsy drug.

Since 2005, Jazz has enjoyed a near monopoly on treating the major symptoms of narcolepsy, which include excessive daytime sleepiness, loss of muscle control, and interrupted sleep. Jazz sells two versions of his drug, called Xyrem and Xywav.

The list price for the highest dose of each version is now more than $200,000 annually, according to SSR Health, a data company. Xyrem is now 19 times more expensive than it was in 2007, when SSR started tracking it.

Jazz’s drug is a pharmaceutical-grade derivative of gamma-hydroxybutyric acid, or GHB, which is tightly regulated due to its history of abuse as a date-rape drug after being sold by health food stores. As a dietary supplement in the late 1980s.

GHB was first synthesized and tested in the 1960s. Jazz, which is legally based in Ireland but has many top executives in California, did not do the original development work on the prescription version of the drug; the company acquired it almost three years after its first approval.

Both versions of the Jazz medication come in bottled liquid form. Patients mix it with water and drink it. Patients should take two daily doses: the first at bedtime and the second up to four hours later.

Brian Mahn, a 53-year-old consultant in Cypress, Texas, said he had to stop taking Xyrem several years ago because the dosing schedule was too difficult. He would sleep through the multiple alarms he would set between 2:30 and 3 am, which would disrupt his family. Mr. Mahn often took his second dose too late, leaving him with such severe brain fog in the morning that he couldn’t drive to work.

Avadel’s product, Lumryz, shares the same drug substance as Xyrem, but it comes in powder form and, most importantly, has an easier dosing schedule. Avadel powder is taken just once a day at bedtime, so patients do not have to wake up in the middle of the night.

Because of that advantage, many patients are expected to switch to the drug Avadel once it becomes available.

Jazz decided to take action to defend his goose that laid the golden eggs. His strategy hinged on the federally mandated security program known as Risk Assessment and Mitigation Strategies, or REMS, which he had patented and listed in the Orange Book.

Jazz’s REMS program consisted of a computerized system to track which doctors can prescribe a drug and have a single pharmacy ship the drug to patients across the country.

About a decade ago, Jazz was awarded seven patents related to its REMS program and listed them in the Food and Drug Administration’s Orange Book, according to a analysis by Mr. Carrier.

One of those patentsGranted and listed in 2014, it is at the center of Jazz’s dispute with Avadel.

Including a patent in the Orange Book had important implications. Under a 1984 federal law, if a drug company accuses a rival of infringing an Orange Book patent under certain circumstances, the FDA cannot approve the competitor’s drug for at least 30 months.

The problem is that only certain types of drug patents, such as those that protect a drug itself or a method of using it, can be included in the Orange Book. It is unclear how a REMS program, which is a system for getting medication from a pharmacy to patients, fits either definition.

Due to these limitations, it is unusual but not unprecedented for a pharmaceutical company to patent a REMS program and list it in the Orange Book.

Jazz has taken this strategy to a new level, with its CEO even bragging to investors about how his REMS patents would make it difficult for a generic drug maker to establish its own REMS program.

Prior to the Avadel case, Jazz had nine companies seeking authorization for a generic version of Xyrem, accusing them of infringing on Jazz’s REMS patents. The strategy worked: Those manufacturers reached agreements with Jazz agreeing to delay the introduction of their products.

Drug patent experts called such tactics an abuse of the patent system.

REMS programs “are supposed to promote drug safety,” said Dr. Aaron Kesselheim, a professor of medicine at Brigham and Women’s Hospital and Harvard Medical School. “That’s not supposed to be a mechanism to expand revenue streams.”

In 2020, Avadel applied to the FDA to approve its powdered narcolepsy drug. Over the next two years, Jazz filed a barrage of lawsuits alleging that Avadel was infringing on various patents. Included in them was a lawsuit last summer that Avadel accused of violating the 2014 REMS patent in the Orange Book.

Due to 1984 federal law, the lawsuit automatically meant that for 30 months the FDA could not approve Avadel’s drug, although, days after the lawsuit was filed, the agency certain that the product was safe and effective.

In this case, the automatic delay was to last only about 12 months, not 30, because Jazz’s REMS patent was scheduled to expire on June 17.

Jazz’s attorneys, at the firms of Sidley Austin and Quinn Emanuel Urquhart & Sullivan, argument that Jazz’s REMS program represented “a method of use” of the drug for the purpose of listing it in the Orange Book.

But both federal courts rejected that argument, ruling that Jazz’s patent was improperly included in the Orange Book because the REMS program was unrelated to the drug itself or a method of using it. As a result, Jazz should not have been able to delay FDA approval of the rival drug.

“We have considered Jazz’s remaining arguments and find them unconvincing,” the judges of the US Court of Appeals for the Federal Circuit wrote in their ruling on Friday.