Mylan v. Warner Chilcott: A Study in Pharmaceutical Product Hopping

INTRODUCTION I. THE HATCH-WAXMAN REGULATORY FRAMEWORK AND PRODUCT HOPPING A. The Hatch-Waxman Act 1. Abbreviated New Drug Application Procedure 2. Patent Suits and ANDA Stays B. State Drug Substitution Laws C. Pharmaceutical Product Hopping II. WARNER CHILCOTT'S MOTION TO DISMISS A. Mylan's Complaint B. Defendant's Motion to Dismiss C. The Court's Order III. LEGAL BACKGROUND FOR REGULATORY GAMING IN PHARMACEUTICALS A. Patent Settlements B. Product Hopping Caselaw IV. MANIPULATION OF THE HATCH-WAXMAN REGULATORY FRAMEWORK A. Was Mylan's Generic Entry Free-Riding? B. The Effect of Product Hopping on the Hatch-Waxman Compromise C. Withdrawal of Older Branded Versions in Mylan CONCLUSION INTRODUCTION On June 11, 2013, a district court in the Eastern District of Pennsylvania denied Defendant Warner Chilcott's motion to dismiss in the ongoing pharmaceutical litigation suit, Mylan Pharmaceuticals, Inc. v. Warner Chilcott Public Limited Co. (1) The Plaintiff in the suit, Mylan Pharmaceuticals, alleged that when Warner Chilcott "switched the market" for their acne drug, Doryx, from tablets to capsules, solely to avoid generic competition, it engaged in "product hopping" and broke the antitrust laws. (2) In its order, denying Warner Chilcott's motion-to-dismiss, the court stated that because the defendant's antitrust defense required it to consider facts that were well outside the complaint, it could not address the defendant's arguments "without going beyond the pleadings." (3) However, although the court denied Warner Chilcott's motion to dismiss, its characterization of Mylan's product hopping theory as "'novel' at best" and failing to state "an antitrust injury" (4) is troubling in light of the precedent. While the "court's dismissal decision" sends a "promising sign to those who oppose antitrust scrutiny" of regulatory gaming in general and product hopping in particular, it "does little to clarify the law." (5) Moreover, the court's stance on product hopping can have grave consequences for consumers, health care plans, and the government if the court ultimately refuses to submit Warner Chilcott's conduct to antitrust scrutiny. In this Note, I explain how product hopping--making non-substantial changes to branded drugs to delay the entry of generic alternatives to the market--is a form of regulatory gaming. Product hopping defeats the intended purpose of the Hatch-Waxman Act, which was intended to expedite competition and the entry of generics. (6) Although in Mylan, no branded-drug patent is implicated, product hopping can occur even when a patent is in force and a generic competitor challenges it as invalid. (7) In such a case, a brand firm can manipulate Hatch-Waxman's regulatory framework to increase the amount of litigation and Food & Drug Administration (FDA) delay in approving the generic alternative to the detriment of consumers. Therefore, the consequences of the court's final decision in Mylan has implications reaching far beyond the facts of the suit to cases where invalid patents in combination with product hopping could hold up generic entry. This Note is organized as follows. In Part I, I begin by describing the Hatch-Waxman regulatory framework, state drug substitution laws, and pharmaceutical product hopping. In Part II, I state the relevant facts and procedural history of the Mylan case, and describe the district court's decision and reasoning. In Part III, I present the legal background in this area before Mylan. In Part IV, I analyze whether Mylan's sought generic entry to the market was indeed free-riding as Warner Chilcott characterizes it, and whether Warner Chilcott's conduct sought to manipulate the Hatch-Waxman regulatory framework and frustrate Congress's stated intent. I. THE HATCH-WAXMAN REGULATORY FRAMEWORK AND PRODUCT HOPPING In this Part, I describe the regulatory framework established by Hatch-Waxman and state drug substitution laws. …