The Evolution of Pharmaceutical Regulatory Gaming Practices
THE EVOLUTION OF PHARMACEUTICAL REGULATORY GAMING PRACTICES
Chelsea E. Ott 1
0 Mylan Pharms., Inc. v. Warner Chilcott Pub. Ltd. , No. 12-3824, 2015 U.S. Dist. LEXIS 50026, at
1 36 (E.D. Pa. Apr. 16, 2015), internal citations omitted
Brand name drug manufacturers invest approximately $2.6 billion and a decade's worth of time bringing a drug to market.1 Generic drug manufacturers are able to enter the market quickly after a brand name drug's patent expires without costly clinical research trials. After generic competitors enter the market, brand name drugs usually lose upwards of ninety percent of their market share.2 Brand name companies are upset with generic manufacturers' ability to “freeride” on their investment in research and development (R&D) and marketing. Generics claim that they are primarily able to offer lower priced products because they do not have to market their drugs or details to physicians in order to get their product into the hands of patients.3 Both brand and generic drug manufacturers serve important roles in treating and curing diseases. They are also extremely profitable. Nonetheless, in an effort to continue profiting from their initial investment, brand name manufacturers have engaged in questionable practices, such as pay-for-delay settlements and product hopping. Federal courts have reviewed such practices using nuanced antitrust frameworks and arrived at differing conclusions. Generics, meanwhile, have traditionally been protected by the federal and state government because they help to limit health care costs, but in recent
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years it is unclear if all generics are as well-intentioned as they have
been portrayed. It is unclear what steps government agencies can take
at this time without being given additional powers from Congress.
Part II provides a primer of the drug approval processes of both
brand name and generic drugs. It examines the unique quality of the
pharmaceutical market, explains the current patent system, and lays
the foundation for understanding relevant antitrust law. Part III delves
into how federal agencies are involved in regulating anticompetitive
practices that have the potential to harm patients, specifically
pay-fordelay settlements and product hopping. Part IV explores three recent
product hopping cases and explains how they reached differing
results. Lastly, Part V concludes.
II. A PRIMER ON THE LEGAL LANDSCAPE REGARDING DRUG APPROVAL
A. The Drug Approval Process, Patents, and the Hatch-Waxman Act
Drug patents, while similar to U.S. Food and Drug Administration
(FDA) market exclusivity rights, are distinct.4 Drug patents are
property rights approved by the United States Patent and Trademark
Office (USPTO).5 Patents allow their holders “to exclude others from
making, using, offering for sale, or selling the invention throughout
the United States or importing the invention into the United States”
for twenty years in exchange for public disclosure when the patent is
granted.6 Patents may be granted at any point in the course of drug
development and drugs are eligible to receive more than one patent if
they meet appropriate criteria.7 Patents expire twenty years from the
date of filing.8 Patents and exclusivity may run concurrently, but it is
not a requirement that they do so.9
Brand name drugs are those that initially seek approval from the
FDA using a New Drug Application (NDA). FDA approval is required
before a drug may be introduced into interstate commerce.10 A
company that has submitted a NDA will “undergo a long,
comprehensive, and costly testing process, after which, if successful,
4 Frequently Asked Questions on Patents and Exclusivity, U.S. FDA (July 18, 2014),
http://www.fda.gov/Drugs/DevelopmentApprovalProcess/ucm079031.htm#Whatist
hedifferencebetweenpatentsandexclusivity?.
5 How Can I Better Understand Patents and Exclusivity?, U.S. FDA (Jan. 16, 2015),
http://www.fda.gov/ForIndustry/FDABasicsforIndustry/ucm238582.htm.
6 35 U.S.C. § 154(a) (2006).
7 U.S. FDA, supra note 5.
8 U.S. FDA, supra note 4.
9 Id.
10 21 U.S.C. § 355(a) (2006).
COMMENT
the manufacturer will receive marketing approval.”11 In addition to
marketing approval, the FDA will confer market exclusivity upon a
drug that receives NDA approval.12 This protection can prevent the
approval or market entrance of certain 505(b)(2) applications,13 as well
as abbreviated new drug applications (ANDAs) for prescribed periods
of time.14 The duration of the exclusivity varies by type of drug.15
The Drug Price Competition and Patent Term Restoration Act of
1984, more commonly known as the Hatch-Waxman Act, has had two
important effects on the pharmaceutical industry. First, generic drug
manufacturers are permitted to use the streamlined ANDA process.16
Second, the first generic ANDA paragraph IV certification filer is
eligible for 180 days of marketing exclusivity.17
“A generic drug product is one that is comparable to an innovator
drug product in dosage form, strength (...truncated)