Federal Trade Commission Takes Aim at Pharmaceutical Industry “Product Hopping”

Declaring that “The potential for anticompetitive product design is particularly acute in the pharmaceutical industry,” on November 21 the FTC filed an amicus brief in Mylan Pharmaceuticals v. Warner Chilcott Public Limited Company (E.D. Pa.), urging the court not to accept the view that “product-hopping” (the practice of repeatedly reformulating a patented drug, allegedly to impede generic competition) is per se lawful. 
Noting that generic alternatives to branded drugs typically save consumers billions of dollars each year, the FTC maintained that the court should consider whether a drug company’s decision to reformulate a patented drug creates some new therapeutic benefit for consumers rather than simply declaring such conduct lawful in all cases.  Where no material therapeutic benefit results from the reformulation – as in the case with some minor dosage or form changes, for example – the FTC urged the court to permit an antitrust action to be maintained if the plaintiff generic manufacturer can show that the changes were, in fact, instituted to impede the ability of a pharmacist to substitute the less expensive generic drug for the patented drug (which can typically only be done where the two drugs are identical in all respects).  To find otherwise, the FTC stated, would “entitle brand pharmaceutical companies, as a matter of law, to manipulate the FDA regulatory process and undermine state and federal laws that encourage generic competition.”
The FTC’s amicus brief demonstrates its continued interest in addressing potentially anticompetitive practices in the pharmaceutical industry, and follows closely on the heels of its filing of a petition to have the Supreme Court hear the more highly publicized “pay for delay” pharmaceutical antitrust issue that the FTC has pursued for many years.  The Supreme Court is expected to decide whether to hear that issue (either in the K-Dur or Androgel case) in early December.