The Third Circuit recently ruled that certain changes to a drug made by a pharmaceutical company did not constitute “product hopping” and therefore did not violate federal antitrust laws. Product hopping occurs when a pharmaceutical company makes insignificant and non-substantive changes to a drug with the intent to thwart other companies from creating generics of the drugs. This creates a type of monopoly in the market that the federal antitrust law, the Sherman Act, is designed to prevent.
A previous case in New York’s Second Circuit courts was decided in opposition to this case, wherein the court determined on summary judgment that antitrust laws were violated. The Third Circuit said that the previous case in New York was different since discovery was conducted and it could look more closely at whether the thresholds under the Sherman Act were in fact met.
The Third Circuit case, Mylan v. Warner Chilcott, analyzes whether Warner Chilcott violated the Sherman act by possessing monopoly power in the market and whether it acquired this monopoly power “by means other than superior product, business acumen, or historic accident” which is commonly known as “anticompetitive conduct.”
Determining if a Drug is Generic
It is important to note that in order for a drug to be considered by the FDA as a generic, it must be bioequivalent to the brand name drug and it must match the dosage, strength, and form. In this case, Mylan alleged that Warner Chilcott changed the form from capsule to tablet and also the dosage of the drug on a frequent basis in order to avoid other companies from developing generics.
Here, the Third Circuit found it important that Warner Chilcott’s changes to the drug did not bar or restrict Mylan from occupying a place in the market. Additionally, the court broadened the definition of the marketplace from Mylan’s arguments and found that Warner Chilcott’s share of the market never exceeded 18 percent and therefore did not constitute a monopoly. Mylan defined the market in this instance to include only the drug Doryx, which is a tetracycline drug, and more specifically a delayed release doxycycline hyclate used to treat acne. The Court determined that the market encompassed all tetraclycline drugs used to treat acne, and not just Doryx. Additionally, the Court pointed out that Mylan earned sizeable profits from a generic Doryx drug in tablet form when Doryx was sold as a tablet.
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