What is more dangerous to competition, pharmaceutical "product hopping" or attempts to prevent it? This article will not answer that question because the answer depends on the product involved, the test the court applies to evaluate the defendant's conduct, and other factors. And that uncertainty is precisely the problem.
"Product hopping" is the pejorative term, adopted here for the sake of simplicity, for a pharmaceutical manufacturer's launch of a new version of a product and, in some cases, subsequent discontinuation of the older version. Courts evaluating antitrust challenges to product hopping have faced a variety of facts, but all the courts' decisions share a common thread: they each required the plaintiff to prove customer "coercion" by the defendant—a concept familiar to antitrust practitioners who have been involved with product tying arrangements. But the courts do not appear to have evaluated, in the first instance, whether the competitive effects of tying are sufficiently similar to the effects of product hopping to justify using the same test. And the use of an ambiguous coercion test in the product-hopping context risks creating inconsistent results and uncertainty for drug manufacturers, which is troubling because product-hopping litigation involves not only the launch of new products (an area that antitrust law promotes and the FDA protects) but also health care (an area Congress protects, or at least regulates heavily).
In the discussion below, we attempt to synthesize the case law on antitrust challenges to product hopping, take a closer look at the coercion requirement and whether it makes sense in the context of product hopping, and offer a few proposals to bring greater certainty to courts, clients, and practitioners involved in these cases.
Click here to download a full PDF version of Doryx, Namenda, and Coercion: Understanding and Un-Tying Product-Hopping Litigation.
This article was first published in American Bar Association's Antitrust, Vol. 32, No. 3, Summer 2018.
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