UPDATE 1-Jazz Pharma ruling clears U.S. roadblock for rival narcolepsy drug

(Adds comment from Jazz Pharmaceuticals) By Blake Brittain Feb 24 (Reuters) - A U.S. appeals court ordered Jazz Pharmaceuticals Inc on Friday to de-list a patent related to its blockbuster narcolepsy drug Xyrem from the U.S. Food and Drug Administration's register of approved medications, in a win for rival drugmaker Avadel CNS Pharmaceuticals Inc. The decision by the U.S. Court of Appeals for the Federal Circuit removes an obstacle for Avadel to sell its own narcolepsy drug Lumryz. Avadel stock was up 4.2% Friday afternoon following the ruling, and Jazz stock was down 1.4%. The U.S. Federal Trade Commission had backed Avadel in the case, telling the Federal Circuit that allowing the listing in the FDA's so-called Orange Book would harm customers and stifle competition.

The Orange Book lists all patents that cover an approved drug and methods for using it. Avadel argued successfully that Jazz's patent should be de-listed because it relates to distributing Xyrem, not the drug itself or how it is used.

The Federal Circuit said the inclusion of the patent was preventing the FDA from approving Lumryz until June 2023.

Jazz said in a statement Friday that it still believes the patent was properly listed in the Orange Book but intends to "fully comply" with the order.

The FTC declined to comment on the decision. Representatives for Avadel did not immediately respond to a request for comment. Avadel said in a U.S. Securities and Exchange Commission filing on Friday that it intends to seek final FDA approval for Lumryz after Jazz complies with the order. Jazz sold over $1.8 billion of Xyrem in 2021, according to a company report. Both Lumryz and Xyrem use the same active ingredient, though Lumryz is meant to be taken once per night, and Xyrem is taken twice nightly. The patent at the center of the case covers aspects of Jazz's distribution system, which controls access to narcolepsy drugs with a central pharmacy and computer database. It relates to a risk-mitigation strategy that the FDA required before approving Xyrem, whose active ingredient GHB can be misused as a date-rape drug. Jazz sued Avadel for infringing the patent and others in Delaware federal court in 2021, in a lawsuit that is still ongoing. The case is Jazz Pharmaceuticals Inc v. Avadel CNS Pharmaceuticals LLC, U.S. Court of Appeals for the Federal Circuit, No. 23-1186. (Reporting by Blake Brittain in Washington)