FTC Charges Warner Chilcott With Product Hopping

FTC Charges Warner Chilcott With Product Hopping

November 28th, 2012 // 5:08 pm @ jmpickett

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In its latest bid to level the playing field for generic drugs, the US Federal Trade Commission has filed a supportive brief in a lawsuit charging Warner Chilcott with concocting various schemes to thwart generic competition for its Doyrx acne pill. The lawsuit was filed last July by Mylan Laboratories, which claims the tactics were anticompetitive and cost consumers and taxpayers hundreds of millions of dollars.

At issue is a concept called product switching or product hopping in which a brand-name drugmaker makes modest reformulations that purportedly offer little or no therapeutic advantages, but cause generic drugmakers to reformulate their own aspiring copycat versions. Such tactics can delay generic entries into the marketplace and, as a result, forestall competition that, presumably, would offer lower prices to consumers and government programs.

And this is what Mylan accuses Warner Chilcott of doing several times over the past few years. To keep generic competition at bay, Warner Chilcott (WCRX) allegedly converted the market from Doryx capsules to tablets; released a study for administering Doryx with applesauce and sought a labeling change to require generic rivals to develop tablets that could be sprinkled over applesauce; and added scores, or lines, on Doryx tablets so patients would presumably find it easier to divide a tablet into thirds, court documents state (here is the lawsuit).

With each move, Warner Chilcott succeeded in delaying competition and Mylan (MYL) cites internal documents that describe at least one of these moves as part of an “anti-generic strategy.” And in doing so, Mylan charges that Warner Chilcott successfully maintained a monopoly, an argument with which the FTC agreed in its amicus, or friend-of-the-court brief filed in federal court yesterday.

“Product-switching, or product-hopping, can be an effective way to game the regulatory structure that governs the approval and sale of generic drugs, thereby frustrating the efforts of federal and state policymakers to facilitate price competition in pharmaceutical markets,” the FTC writes in its brief. “A brand company can interfere with the mechanism by which generic drugs compete by making modest non-therapeutic changes to its product, and effectively prevent generic competition, not because the reformulated product is preferred by consumers, but simply because it is different” (here is the brief).

This is not the first time that a federal agency has looked askance at Warner Chilcott and its tactics. Last year, the drugmaker filed a citizen petition with the FDA in hopes the agency would force generic rivals to rework their own forthcoming versions of copycat Doryx pills with additional scores, which would delay approval of the rival products. The FDA, however, denied the gambit (back story).

Warner Chilcott had argued unsuccessfully to the FDA that doctors might write a prescription for Doryx and instruct patients to divide its 150mg tablet into thirds, but patients would find it difficult to obtain the correct dose from a tablet with one score. In short, this was a matter of potential patient error. But the FDA disagreed and also noted that the drugmaker planned to simultaneously sell both versions of its own Doryx tablet – single and dual-scored. This also held the potential for causing consumer confusion.

Although reformulating a brand-name product is not a new idea, as the FTC notes in its brief, the use of additional scoring drew attention, because the effort was considered somewhat novel (back story). Warner Chilcott allegedly displayed a similar level of chutzpah when during the episode involving the applesauce study, according to court documents.

In 2002, Warner Chilcott completed studies in which Doryx 75mg and 100mg capsules were broken into pieces and sprinkled over applesauce, and then sought a labeling change the following year. However, Warner Chilcott did not release the studies until 2006, by which time a switch had been made to 75mg and 100mg tablets. Another labeling change was sought and approved, forcing Mylan to again go back to the proverbial drawing board.

“Every day consumers pay millions out of their pocket books because of the schemes by branded firms to delay generic entry,” says David Balto, a former policy director in the Bureau of Competition at the FTC, who has written about product switching (read here). “Product hopping keeps low cost geneerics off the market and the FTC’s actions sends a signal that these practices will get tough scrutiny by the cops and the antitrust courts”

We asked Warner Chilcott for comment and will update you accordingly. Meanwhile, we should note that a federal judge last spring upheld the validity of the patent for the 150mg dose, but also ruled that versions by Mylan and Impax Pharmaceuticals did not infringe on the patent (see this).