Identifying potential prescription drug product hopping

Federal Trade Commission Actions on Prescription Drugs, 2000-2022

Importance

The Federal Trade Commission's (FTC) oversight role in the pharmaceutical market is critical to the health of patients and the health care system. This study characterized the FTC's policy on the pharmaceutical market in recent decades, identifying the types of actions it has favored, barriers it has faced, and authorities that remain untested.

Objective

To review FTC legal actions in the pharmaceutical market from 2000-2022.

Evidence Review

Legal actions were determined through manual review of search results from the FTC's online Legal Library as well as a 2023 FTC report on pharmaceutical actions. The alleged misconduct, type of legal action taken, timing, and outcome were collected from press releases, complaints, orders, and other legal documents.

Findings

From 2000-2022, the FTC challenged 62 mergers, brought 22 enforcement actions against allegedly unlawful business practices, and made 1 rule related to pharmaceuticals. Alleged misconduct in enforcement actions involved anticompetitive settlements in patent litigation (n = 11), unilateral actions by brand manufacturers to delay generic competition (n = 6), noncompete agreements (n = 4), and monopolization (n = 3), with 10 outcomes involving monetary payment, totaling $1.6 billion. Of the 62 mergers the FTC challenged, 61 were allowed to continue, 58 after divesting certain drugs to third-party competitors. The FTC's reliance on drug divestitures decreased from 18 drugs per year from 2000-2017 to 4.3 per year from 2017-2023.

Conclusions and Relevance

The FTC brought about 1 enforcement action and 3 merger actions per year against pharmaceutical manufacturers from 2000-2022, pursuing a small fraction of the estimated misconduct and consolidation in the pharmaceutical marketplace. Although the FTC faces substantial legal and practical limitations, important tools remain untested, including a rule defining "unfair methods of competition," that may allow it to more effectively prevent repetitive patterns of anticompetitive behavior.

Understanding 'Evergreening': Making Minor Modifications Of Existing Medications To Extend Protections

Recent studies have examined strategic behaviors in the pharmaceutical industry that extend patent and regulatory protection, known alternatively as "lifecycle management" or "evergreening." This literature highlights the extent to which the patent system is increasingly focused on granting new protections for minor modifications of existing innovations. The phenomenon raises questions regarding the value of the trend to society and its potential effects on innovation. Specifically, is there value in tinkering with existing medication, and does that value justify the extensive rewards available with a "golden" patent? Could aspects of the current system be distorting how companies choose to spend their precious innovation time and money? As a society, we may decide that certain parts of the system are valuable and that others require reform, but we cannot make any considered evaluation without understanding how the system works on the ground.