Pharmaceutical Product Hopping: Is There a Role for Antitrust Scrutiny? - Bret Dickey Kun Huang Daniel L. Rubinfeld
A branded manufacturer engages in product hopping when it introduces a minor change to an existing prescription drug product and shifts substantial sales to the reformulated product, with the effect of inhibiting emerging competition from a generic version of the original brand. Product hopping presents a difficult policy challenge. While even incremental innovation by pharmaceutical manufacturers can generate substantial consumer benefits, it is possible for trivial reformulations of branded products to inhibit generic competition substantially and reduce consumer welfare. This paper offers an overview of the relevant economic issues surrounding product hopping, and in the process asks why existing market participants, such as PBMs, have not been able to adequately address it. Although not without its difficulties, careful antitrust intervention by the courts offers a potentially viable approach to the evaluation of product hopping, one that is more promising than a regulatory intervention. When a full-blown rule of reason analysis is not feasible, we favor some form of a no-economic-sense test to evaluate product hopping.