In a decision that could ripple through the pharmaceutical industry, the Federal Circuit recently ruled on Jazz Pharmaceuticals, Inc. v. Avadel CNS Pharmaceuticals, LLC, clarifying the limits of injunctive relief and patent listings under the Hatch-Waxman Act. The May 6, 2025 ruling emphasized a key point: even when a company is found to infringe a valid pharmaceutical patent, courts can’t stop it from engaging in clinical trials or offering open-label drug extensions—so long as those activities fall under the Act’s “safe harbor” provision.
A Closer Look at the Case
The controversy centered around Jazz’s blockbuster narcolepsy drug, Xyrem, which contains GHB, a powerful sedative also known for its abuse potential. Jazz had patented a single-pharmacy distribution system for tracking and dispensing the drug. This system was at the heart of their patent dispute with Avadel, who sought approval for a competing GHB-based drug, FT218—but with a once-nightly dose and a different distribution method.
When Avadel submitted its New Drug Application (NDA), the FDA still required them to certify against Jazz’s listed patent. Jazz then sued for infringement. Avadel fired back, challenging the patent’s inclusion in the FDA’s Orange Book (a listing of patents related to approved drugs), arguing that Jazz’s patent didn’t actually claim a drug or a method of using one—which are the only categories eligible for listing.
The District Court Sides with Avadel
The district court agreed with Avadel, finding that Jazz’s patent claims were for a “system,” not a method of use or a drug itself. That distinction matters: only drug compositions and methods of use are valid for listing in the Orange Book. The court ordered Jazz to delist its patent, and Jazz appealed.
The Federal Circuit Weighs In
On appeal, Jazz argued two main points:
- That its patent did in fact claim a method of using the drug.
- That even if it didn’t, the FDA’s broader regulatory language should apply, allowing system claims to count as method claims.
The Federal Circuit wasn’t persuaded. It upheld the lower court’s reasoning, explaining that:
- Patent law requires method claims to involve specific steps. Simply describing a system—even one that enables a method—is not the same.
- The FDA regulation does not override that fundamental distinction in patent law.
- Jazz’s system patent couldn’t be reclassified as a method-of-use patent simply because it was related to conditions for prescribing the drug.
What About Clinical Trials?
An additional issue was whether Jazz could stop Avadel from continuing clinical research activities related to FT218. The appellate court clearly stated: No. Even when infringement is found, a district court cannot block clinical trials or open-label extensions if they’re protected by the Hatch-Waxman Act’s safe harbor—a provision designed to encourage innovation and expedite FDA approvals.
Why This Matters
This ruling reinforces a critical boundary between commercial infringement and regulatory research activities. It also tightens the standards for what can be listed in the Orange Book—potentially preventing brand-name drugmakers from using system patents to block competition unfairly.
For biotech and pharma companies, this is a strong reminder: if your patent doesn’t claim a drug or a method of using it, it doesn’t belong in the Orange Book. And for generics and 505(b)(2) applicants, it’s a win that helps preserve the streamlined pathway to market entry—even when innovative system-based solutions are at play.