The next chapter in an unusual saga involving a high-priced, rare disease drug will play out in a federal court, where Catalyst Pharmaceuticals (CPRX) has accused the Food and Drug Administration of violating the law when it recently approved a similar medicine made by a small, family-run company. And the battle is being closely watched for clues that incentives for developing such drugs may be jeopardized.

In its lawsuit, Catalyst alleges the FDA “arbitrarily and capriciously” approved the other medicine, which is made by Jacobus Pharmaceutical, by applying different standards. Moreover, the agency unfairly trampled on Catalyst’s right to seven years of exclusive marketing, a designation for so-called orphan drugs that treat small numbers of patients, according to the lawsuit.

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