(Bloomberg) — Pharmaceutical companies that make minor tweaks to brand-name drugs in order to blunt competition from cheaper generic treatments may be violating antitrust laws, the U.S. Federal Trade Commission (FTC) said.
The practice, known as “product-hopping,” harms consumers who save billions of dollars each year through generic competition and undermines laws that allow pharmacists to automatically substitute brand-name drugs with low-cost copycats, the commission said.
“Such conduct could deprive generic companies of their most efficient means of distribution — automatic substitution at the pharmacy — and, as a result, maintain the brand’s monopoly through illegal means,” the FTC said in a statement Thursday.
The FTC is asking the 3rd U.S. Circuit Court of Appeals to reinstate a lawsuit in which Mylan NV claims that the makers of an antibiotic called Doryx changed the formula to thwart competition. Allergan PLC had the rights for Doryx in the United States until earlier this year when it sold them to Mayne Pharmaceuticals.
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Brand-name drugmakers sometimes make insignificant formulation changes to their products just before patents are about to run out and as generics are about to come to the market. Those formulation tweaks let the drugmaker switch patients to the new brand-name drug, or to make improved product claims, blunting use of the less-expensive generics.
Mark Marmur, a spokesman for Allergan, didn’t immediately respond to requests for comment. Nina Devlin, a Mylan spokeswoman, declined to comment.