Minor, non-therapeutic changes to a branded drug product that can harm generic competition can constitute a violation of US antitrust laws, the Federal Trade Commission (FTC) has advised.
Such actions can constitute exclusionary conduct, says the FTC, in an amicus (friend of the court) brief which the agency has filed before the US District Court for the Eastern District of Pennsylvania, in conjunction with a private antitrust action brought against Ireland-headquartered drugmaker Warner Chilcott.
US courts are “”properly reluctant” to question the innovative value of a new product in most industry, says the FTC in its brief. However, it adds that “the potential for anticompetitive product redesign is particularly acute in the pharmaceutical industry.”
The tactic known as “product hopping” or “product switching” can be used by brand-name pharmaceutical manufacturers to try to obstruct generic competitors and preserve monopoly profits on a patented drug by making modest reformulations that offer little or no therapeutic advantages, says the FTC brief. For example, prior to facing generic competition, a branded drug company can simply withdraw its original product, forcing consumers to switch to the reformulated branded product and enabling the branded drugmaker to keep its market exclusivity, thus preventing consumers from obtaining the benefits of generic competition.
This “product hop” may succeed, despite the fact that consumers would not be likely to choose the new product, according to the amicus brief.
“In the pharmaceutical industry…the success of a product-switching scheme does not depend on whether consumers prefer the reformulated version of the product over the original, or whether the reformulated version provides any medical benefit,” it points out. Instead of making a choice, consumers are denied a real choice, says the FTC.
The plaintiffs bringing the private antitrust action against Warner Chilcott claim that the firm maintained a monopoly in the market for its tetracycline antibiotic Doryx (doxycycline hyclate) by suppressing generic competition through three successive “insignificant” reformulations of the product.
Warner Chilcott has filed a motion to dismiss the case, essentially arguing that product reformulations are legal per se, but the FTC amicus brief asserts that “applying a per se legal standard, as Warner Chilcott effectively advances here, 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.”
– Earlier this month, Warner Chilcott reported that sales of Doryx had slumped 31% to $20 million in the third quarter of 2012, as a result of generic competition in the US. For 2011, the drug’s revenues had reached $264.1 million.
