Recent Suit Includes 'Product Hopping' Theory In Pay For Delay Claim

The Pennsylvania Employees Benefit Trust Fund ("PEBTF") recently filed a purported class-action antitrust complaint relating to the brand name drug Opana ER, an extended-release formulation of a medication used to treat pain and other conditions. The core of PEBTF's allegations are that the brand manufacturer paid more than $100 million to prevent the launch of a generic version for approximately two and a half years. But PEBTF also alleges that the manufacturer reduced generic competition even further by introducing a crush-resistant version of the drug (which helps prevent abuse) called Opana ER CRF. According to the plaintiff, the manufacturer introduced Opana CRF to induce physicians to stop prescribing the prior product, preventing automatic generic substitution. Plaintiffs and commentators have labeled that type of conduct "product hopping."

District courts have previously addressed "product hopping" allegations in the pharmaceutical context. In Abbott Laboratories v. Teva Pharmaceuticals USA Inc., 432 F. Supp. 2d 408 (D. Del. 2006), plaintiffs alleged that on two separate occasions Abbott had reformulated its cholesterol drug TriCor in order to impede generic substitution. Among other things, the plaintiffs alleged that the new formulations provided no benefits over the prior formulations and that after each new formulation was approved, the defendant ceased selling the prior branded version. On a motion to dismiss, the court concluded that a rule of reason analysis should apply to a market where branded products have market power due to patent protection, that removal of the prior formulations from the market impeded consumer choice, and that a factual analysis of the benefits of the new formulations was required in order to determine whether those benefits outweighed anticompetitive concerns. In denying the motion to dismiss, the court ruled that plaintiffs would therefore not be "required to prove that the new formulations were absolutely no better than the prior version or that the only purpose of the innovation was to eliminate the complementary product of a rival." Similarly, in Mylan Pharmaceuticals Inc. v. Warner Chilcott Public Limited Co., 2013 U.S. Dist. LEXIS 152467 (E.D. Pa. June 12, 2013), the plaintiffs alleged that defendants had reformulated the brand drug Doryx from tablets to capsules in order to impede generic competition and that the new formulation provided little to no benefit to patients. Although the Warner...