DOSE OF REALITY: FORBES: HOW BIG PHARMA STIFLES COMPETITION WITH PRODUCT SHOPPING

Research Column Explores Case Study in Common Patent Abuse Tactic That Negatively Impacts Consumers, Extends Monopolies and Keeps Drug Prices High

A new research column in Forbes this week explores case studies in one of Big Pharma’s most commonly used patent abuse tactics: product hopping. The column, authored by Forbes columnist and President of The Foundation for Research on Equal Opportunity (FREOPP) Avik Roy, details how this type of patent abuse has little to do with actual innovation, and is instead entirely designed to extend monopolies, block competition and keep drug prices high.

A Case Study in Product Hopping: Namenda IR

The column starts with the example of Namenda IR, an Alzheimer’s treatment manufactured by drug maker Forest Laboratories and its parent company, Actavis. According to the article, the original patents for Namenda IR were set to expire in July 2015. However, in order to prevent competition from generics, Forest and Actavis concocted a scheme to introduce a once-daily injection of the drug to replace the twice-daily formulation that was currently on the market. If the companies were successful in switching patients over to the new formulation, they would have been able to block competition through 2029.

However, the strategy was less successful than hoped for, and only around 30 percent of patients switched to the once-daily injection. So, instead, Forest and Actavis pulled the twice-daily formulation from the market, forcing patients to switch to the new formula or risk not taking their medication.

This decision resulted in the companies being sued by New York’s attorney general at the time for “violations of the Sherman Antitrust Act.”

The Soft Switch & The Hard Switch

Roy uses the Namenda IR example to highlight that there are two common types of product-hopping: the soft switch and the hard switch. The soft switch is when “manufacturers use tactics like temporary discounts and sales pitches to persuade doctors to switch their patients to the new drug.” While the hard switch is when drug makers force “patients over to the new drug by pulling the old one from the market, or by formally declaring the old drug ‘obsolete’ in order to make it legally difficult to prescribe.”

A Bipartisan Solution: The Affordable Prescriptions for Patients Act

Egregious examples of product-hopping, like the case of Namenda IR, have led lawmakers to put forward bipartisan, market-based solutions to address this, and additional types, of anti-competitive behavior from Big Pharma. One proposed solution, first introduced in 2019, called the Affordable Prescriptions for Patients Act, or Cornyn-Blumenthal, would address Big Pharma’s abuse of the patent system through product-hopping and patent thicketing. The bill has advanced out of the U.S. Senate Committee on the Judiciary with strong support from both sides of the aisle in multiple Congresses, including most recently in February 2023.

According to Roy, the bill defines “product hopping as anticompetitive,” and establishes regulatory safeguards, “to block it.”

Don’t Buy Big Pharma’s Bogus Innovation Arguments

Roy preempts Big Pharma’s argument against these solutions, by debunking false arguments on innovation. As he explains in the article:

“The weakest and most clichéd argument one hears from the drug industry is that extending drug monopolies leads to more ‘innovation.’ The opposite is true. As research by my colleague Gregg Girvan at the Foundation for Research on Equal Opportunity shows, price increases on older drugs don’t lead to more innovation, because legacy companies usually squander the extra cash. Indeed, it’s the expiry of patents on older drugs that drives big companies to develop new ones. If they don’t, they’ll go out of business.”

The column provides just a few examples of egregious abuse of the patent system that is commonplace for Big Pharma, and that extends monopolies and keeps prescription drug prices high for patients. At a U.S. Senate Committee on the Judiciary hearing earlier this week, lawmakers emphasized the importance of advancing solutions to crack down on these anti-competitive practices.

Congress should act on this strong bipartisan support for action and hold Big Pharma accountable.

Read the full column from Forbes HERE.

Read more on what members of the U.S. Senate Committee on the Judiciary had to say on Big Pharma’s patent abuse in the recent hearing HERE.

Read more on how Big Pharma’s patent abuse tactics drive increased costs for consumers and the U.S. health care system HERE.

Learn more about market-based solutions to hold Big Pharma accountable and lower drug prices HERE.