Orange Book Blog

    by Alex Menchaca

"Product hopping" is the practice of changing the
formulation of an approved Reference Listed Drug to stay one step ahead of the
generics seeking to compete with the RLD.

In July, Mylan Pharmaceuticals filed an antitrust complaint accusing Warner Chilcott of engaging in product hopping in connection with its Doryx product, which is prescribed for the
treatment of severe acne and other bacterial infections.  Other plaintiffs include Meijer and Rochester
Drug Co-Operative.  The case is Mylan Pharms. et al. v. Waner Chilcott Co. et al., No. 12-cv-3824-PD (E.D. Pa.).

The complaint alleges an interesting tale of how Warner
Chilcott made a number of changes to its Doryx product in order to
"manipulate the FDA regulatory processes to delay and/or prevent generic
competition to Doryx, thereby foreclosing Mylan from the Relevant
Markets."

Warner Chilcott, the complaint alleges, first obtained
FDA approval for a Doryx capsule.  When
generic competitors were on the verge of attaining FDA approval for the capsule
product, Warner Chilcott converted the marketplace from capsules to tablets.  This move, Mylan alleges, rendered its
proposed generic version of the capsules obsolete as a capsule cannot serve as
a substitute for a tablet RLD.  The
complaint continues its tale reciting two more examples where Warner Chilcott
"pulled the rug out from under the generics by switching the market" to new
formulations.  As the generics neared FDA
approval for a formulation, that imminent approval would be rendered
obsolete.  This conduct, Mylan asserts,
constitutes anti-competitive behavior in violation of the Sherman Act, 15
U.S.C. §§ 1 and 2.

Applesauce Study.  The complaint also explains how applesauce
can be used as part of a greater plan to violate the Antitrust Laws:

In
2006, Defendants released a study for the administration of Doryx with
applesauce and sought a corresponding labeling change that required generic
manufacturers to develop tablets that could be administered by breaking the
tablets into pieces and sprinkling the pieces over applesauce.  This scheme delayed Mylan's development of
its generic Doryx tablets anywhere from 6 to 12 months.

Motion to
Dismiss.  Warner Chilcott filed a motion to dismiss commenting, in part, that the changes to its product were "nothing more
than innovation [] and the marketing of those innovations once government
approvals were obtained."  For example,
Warner Chilcott reports that "dissolution storage stability" provided the
motivation for one of the formulation changes.

In its brief, Warner Chilcott argues that "[a]ntitrust law
does not impose a duty on anyone to slow down innovation, roll out new products
at a certain pace, keep older versions on the market, or do anything else to
help competitors compete."  Warner
Chilcott cites to two cases for the proposition that "competitive loss from
alleged 'product switching' is not antitrust injury."

Enter the FTC.  On November 21, 2012, the FTC filed a
motion for leave to file an amicus brief.  In its amicus brief, the FTC
asserts that "pharmaceutical product redesigns can constitute exclusionary
conduct."  The FTC explains product
hopping as follows:

Product
hopping can work in the following way:  first, the brand manufacturer makes
minor non-therapeutic changes to the brand product, such as a dosage or form
change.  Next, prior to generic entry, it
removes the original product from the marketplace, or accomplishes this
indirectly, such as by recalling supply of the original product or raising the
price of the original product by a meaningful amount above the reformulated
one.  Such conduct can push patients and
physicians to abandon the original product. 
In this way, a brand manufacturer can convert existing market demand for
the original product to its reformulated product – not because physicians and
patients prefer it, but simply because the original product is no longer as
available or is more costly.  Once the
original version of the brand product is less available or more expensive,
physicians will stop writing prescriptions for it.  Because the prescription must contain, among
other things, the same dosage and form as the generic for a pharmacist to
substitute it for the brand, a product switch will effectively eliminate
substitution at the pharmacy counter and thus meaningful generic
competition.  As the author of the
leading antitrust treatise put it:  "Product-hopping seems clearly to be an
effort to game the rather intricate FDA rules . . . .  The patentee is making a product change with
no technological benefit solely in order to delay competition."

This past Monday, December 3rd, the court granted the FTC's motion and
accepted its brief.

Warner Chilcott reports that "[t]hree courts have considered claims that new
pharmaceutical products constituted illegal 'product switching' in violation of
the antitrust laws."  Two courts have
dismissed the complaint and one permitted the case to proceed (this latter case
reportedly settled for $250 million after one day of trial).

We
will keep our eyes on this case to see which way the court goes.