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FTC says suppressing generics by ‘product hopping’ is illegal

28-Nov-2012

FTC says minor reformulations to keep market share are illegal
FTC says minor reformulations to keep market share are illegal

The US Federal Trade Commission (FTC) says making insignificant reformulations to drugs to block generic competition violates antitrust laws.

The FTC made the comments in an amicus brief issued in connection with a case in which pharmaceutical firm Warner Chilcott has been accused of blocking generic completion for its oral antibiotic Doryx - used to treat acne - through successive insignificant reformulations of the drug.

The Commission said that – if successful - Warner Chilcott’s counter argument that such reformulations are legal would set a precedent that drug firms could use to unfairly maintain market advantage.

 “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.”

Product hopping

The practice of ‘product hopping’ – making minor changes to drug products that offer no therapeutic advantages – is a recognised tactic that some manufacturers try use to prevent generic competition eating into market share.

There are various forms of product hopping or product switching, including – as the FTC pointed out – the practice of withdrawing a drug from the market before it faces non-branded competition, which forces patients to switch to a reformulated version of the drug that has a longer patent life.

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,” the commission said adding that “instead of making a choice, consumers are denied a real choice.

Warner vs Mylan

The Doryx battle began in April when generic drugmakers Mylan and Impax won patent suits against Warner Chilcott and began selling its own version of the product.

Warner Chilcott cited the ruling in its fincnail results for the quarter ended September 30 when it said that the drop in Doryx sales – down 31 per cent to $20m - was due primarily to the introduction of generic competition.

Mylan is also currently seeking unspecified damages, accusing Warner Chilcott of illegally trying to restrict completion through product hopping in a trust lawsuit filed in the U.S. District Court for the Eastern District of Pennsylvania.

The case is ongoing and the FTC has asked the court to consider its comments in the final ruling.

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