FTC: Generic-fighting product tweaks violate antitrust laws

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The Federal Trade Commission's campaign for generic drugs has taken a new twist. The agency, long an opponent of "pay for delay" patent settlements, is now taking up the banner against product tweaks that can keep brands protected for years after initial patents expire.

The FTC filed an amicus brief in a patent fight that exemplifies this conflict. In fact, it's something of an extreme example. The case pits generics makers Mylan ($MYL) and Impax ($IPXL) against Warner Chilcott ($WCRX), which had successfully extended its monopoly on Doryx, an antibiotic used to treat acne. After a series of reformulations, the company made headlines by putting two score lines on the Doryx tablet. Warner then petitioned the FDA, claiming that generic versions must replicate the two-score design, rather than the previous single score.

Meanwhile, Mylan and Impax were locked in patent fights with Warner over the drug. In April, a judge ruled that Mylan and Impax's generic versions didn't tread on the Doryx patent. Warner appealed--and that's where FTC's brief comes in.

"[M]inor, non-therapeutic changes to a branded pharmaceutical products that harm generic competition can constitute exclusionary conduct that violates U.S. antitrust laws," the agency said in announcing the filing. FTC says Warner extended its monopoly by "suppressing generic competition through three successive insignificant reformulations of the drug."

Doryx isn't the only example of a product that kept its exclusivity via small tweaks. Abbott Laboratories ($ABT) repeatedly reformulated its TriCor cholesterol fighter in ways that thwarted automatic generic substitution, such as converting the drug to a tablet from a capsule. Perfectly legally, we might add. Thus, the drug remained a big seller even after cheap copies hit the market.

- get the FTC statement

Special Report: Abbott Laboratories - 10 Largest U.S. Patent Losses

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