[Ip-health] FTC Files Amicus Brief Explaining that Pharmaceutical "Product Hopping" Can Violate the Antitrust Laws
tahir at i-mak.org
Fri Oct 2 13:08:02 PDT 2015
*FTC Files Amicus Brief Explaining that Pharmaceutical "Product Hopping"
Can Violate the Antitrust Laws*
October 1, 2015
The Federal Trade Commission filed an amicus brief before the U.S. Court of
Appeals for the Third Circuit explaining that the district court made
significant analytical errors in ruling for defendants in a dispute
involving allegations of pharmaceutical "product hopping." The brief
explains that, in examining whether such conduct is unlawful, courts should
account for the unique aspects of the pharmaceutical marketplace, including
the nature of competition between branded pharmaceutical products and their
Generic competition through state automatic substitution laws saves
American consumers billions of dollars each year. Brand-name pharmaceutical
companies can avoid this competition and preserve monopoly profits by
combining minor product reformulations with efforts to damage or destroy
the market for the original formulation. This tactic, commonly called
product hopping, can harm consumers.
As the brief explains, "If a brand-name manufacturer tweaks its brand-name
product shortly before anticipated generic entry and begins eliminating the
market for the original formulation, it can impede competition from
would-be generic entrants, which have sought FDA approval to sell a generic
version only of the original formulation but not the replacement." Such
conduct could deprive generic companies of their most-efficient means of
distribution – automatic substitution at the pharmacy – and, as a result,
maintain the brand's monopoly through illegal means.
The FTC filed its amicus brief in a private antitrust action in which Mylan
Phamraceuticals Inc. alleges that Warner Chilcott PLC/Mayne Pharm Group
maintained a monopoly in the market for its antibiotic Doryx by suppressing
generic competition through three successive insignificant reformulations
of the drug, combined with various efforts to curtail the availability of
the original formulations. The district court granted the defendants'
motion for summary judgment, and the plaintiffs appealed that ruling to the
U.S. Court of Appeals for the Third Circuit.
The FTC takes no position on the ultimate merits of this case. The brief
explains, however, that the district court's broad ruling effectively
embraces a rule of nearly per se legality for product-hopping conduct: "The
district court held that a brand company may with impunity destroy what is
often the only means of generic distribution -- automatic substitution --
so long as generics remain hypothetically free to pursue new and more
costly distribution alternatives, such as direct advertising to
physicians." That outcome, the brief states, conflicts with the law of the
Third Circuit, as well as other circuits.
The FTC's brief also explains that the district court's analysis of the
monopoly-power question failed to account for the special characteristics
of the pharmaceutical marketplace, including that generics are unique
sources of competition for brand-name prescription drugs.
The FTC vote approving the amicus brief filing was 3-1, with Commissioner
Maureen Ohlhausen voting no. It was filed on September 30, 2015.
The FTC's Bureau of Competition works with the Bureau of Economics to
investigate alleged anticompetitive business practices and, when
appropriate, recommends that the Commission take law enforcement action. To
inform the Bureau about particular business practices, call 202-326-3300,
send an e-mail to antitrust at ftc.gov (link sends e-mail), or write to the
Office of Policy and Coordination, Bureau of Competition, Federal Trade
Commission, 600 Pennsylvania Ave., NW, Room CC-5422, Washington, DC 20580.
To learn more about the Bureau of Competition, read Competition Counts.
Like the FTC on Facebook (link is external), follow us on Twitter (link is
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Office of Public Affairs
Brief available here:
Co-Founder and Director of Intellectual Property
Initiative for Medicines, Access & Knowledge (I-MAK)
*Email:* tahir at i-mak.org
*Tel:* +1 917 455 6601/+44 771 853 9472
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