‘Product-Hopping’ Can Be Snagged Under The Antitrust Laws

The Drug Price Competition and Patent Term Restoration Act, more commonly known as the Hatch-Waxman Act, together with the patent laws, attempt to advance the competing goals of preserving pharmaceutical companies' incentives to make the staggering investments necessary to bring new, improved drugs to market, as well as fostering lower prices through competition from generic versions of branded drugs. Developing and bringing to market new, better drugs requires enormous investments in research and development. To protect the branded-drug manufacturers' incentives to make those investments, the Hatch-Waxman Act established an extension of the term for patents relating to drugs that were subject to lengthy regulatory delays and could not be marketed prior to regulatory approval, even though the term of the patent covering the drugs was running. Pharmaceutical companies depend on the higher prices they can often charge while their drugs are under the exclusivity protection of a patent—or other statutorily granted exclusivity, such as for orphan drugs—to recoup their investments in bringing the branded drug to market.

On the other hand, the Hatch-Waxman Act promotes price competition by allowing generic drug manufacturers to obtain expedited approval of the generic counterparts to previously approved branded drugs. The generic drug companies may enter the market using a streamlined application process—an Abbreviated New Drug Application (ANDA)—under which the generic drug manufacturer may rely on data from clinical trials and other costly procedures already done by the branded drug companies, in order to make the showing necessary for ANDA approval—that the proposed generic drug is, in fact, the bioequivalent of the branded drug.

'Product-hopping'

Branded drug companies naturally want the exclusivity period to last as long as possible. Extending a period of market dominance without patent or regulatory protection, however, raises antitrust concerns. One recent practice of the branded drug companies, called "product-hopping" or "product-switching," has started to generate private antitrust claims from generic drug companies and end users. Product-hopping refers to changing the form of a druge.g., from a tablet to a capsule or liquidor the dosage amount, rather than its underlying composition. Changing the form of the drug prevents a generic company from relying on the streamlined ANDA that had been issued based on the branded manufacturer's...