"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.