Antitrust Law Daily Wrap Up, ANTITRUST NEWS: FTC’s amicus brief challenges ruling in pharmaceutical “product hopping” case, (Oct 1, 2015)

By Michael Menzhuber, J.D., LL.M.

The FTC has filed an amicus brief today before the Third Circuit Court of Appeals, explaining that the district court made significant analytical errors in ruling for defendants in a dispute involving allegations of pharmaceutical “product hopping.”

“Product hopping” is a tactic whereby brand-name pharmaceutical companies can avoid generic competition and preserve monopoly profits by combining minor product reformulations with efforts to damage or destroy the market for the original formulation.

While the FTC took no position on the merits of the case—a private antitrust case between Mylan Phamraceuticals Inc. and Warner Chilcott PLC/Mayne Pharm Group—the brief explained that the district court’s broad ruling effectively embraced a rule of nearly per se legality for “product-hopping” conduct. That outcome, the brief stated, conflicts with the law of the Third Circuit, as well as other circuits.

The FTC’s brief also explained 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. A brand-name manufacturer, that tweaks its brand-name product shortly before anticipated generic entry and begins eliminating the market for the original formulation, 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. This conduct can deprive generic companies of their most-efficient means of distribution, which is automatic substitution at the pharmacy, and result in maintaining the brand’s monopoly through illegal means, the brief stated.

News: Antitrust FederalTradeCommissionNews