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As patents expire on blockbuster biologic drugs, manufacturers are increasingly employing a controversial tactic known as “product hopping” to maintain market dominance and stave off cheaper biosimilar versions.
Product hopping involves making minor modifications to existing drugs—such as changing the dosing or delivery method—and then aggressively marketing the “new” version to switch patients before biosimilar competitors can enter the market. This strategy extends a pharmaceutical manufacturer’s monopoly and its ability to charge high prices, often at the expense of consumer welfare.
“It’s a strategy to extend monopoly pricing by circumventing the competitive process,” said Michael Carrier, a professor at Rutgers Law School who studies pharmaceutical antitrust issues. “The concern is that some of these switches can significantly decrease consumer welfare” [1].
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Examples of Product Hopping
Recent examples in the biologics space illustrate how this practice is applied:
- AbbVie: Transitioned patients from its top-selling Humira to a higher concentration formulation ahead of biosimilar launches in 2023.
- Amgen: Introduced Neulasta Onpro, an on-body injector version of its white blood cell booster, as biosimilars to the original Neulasta neared approval.
- Roche: Reformulated its cancer drug Herceptin into a subcutaneous version called Herceptin Hylecta as multiple Herceptin biosimilars hit the market.
While companies argue the modifications provide patient benefits, critics say many changes offer minimal clinical advantages and serve primarily to impede competition.
Legislative and Legal Landscape
To combat these practices, lawmakers have proposed legislation to crack down on product hopping. For instance, the Affordable Prescriptions for Patients Through Promoting Competition Act seeks to strengthen the Federal Trade Commission’s ability to bring cases against drug manufacturers engaging in product hopping. This bill defines product hopping as an anticompetitive practice and empowers the FTC to litigate against it [1][2].
The complexity of product hopping cases is evident in recent court decisions:
- New York ex rel. Schneiderman v. Actavis PLC: Forest Laboratories removed Alzheimer’s drug Namenda IR from the market and replaced it with Namenda XR, extending patent protection. The Second Circuit upheld an injunction preventing Forest from removing Namenda IR [1][2].
- Mylan Pharma v. Warner Chilcott: Warner Chilcott ceased sales of its acne drug Doryx in favor of a reformulated version. The Third Circuit acknowledged the intent to delay generic market entry but upheld Warner’s conduct [1].
- FTC v. Reckitt Benckiser: The FTC’s first product hopping lawsuit resulted in a $50 million settlement with Reckitt Benckiser for switching patients to a film version of the opioid treatment drug Suboxone [1].
Impact on Biosimilars
Product hopping in biologics could have an even greater anticompetitive effect than with small molecule drugs. The barriers to entry are higher for biosimilars, making these tactics more effective at delaying competition. “The regulatory landscape around these products is still evolving,” said Lakesha Farmer, Senior Director at ION Oncology Practice Network at Cencora. “Tactics like this can stall the ability to introduce new biosimilars to the market” [3].
Future Outlook
As the biosimilars market continues to evolve, scrutiny of product hopping strategies is likely to intensify. Some experts believe that more robust legislative support is needed to curb these practices and promote fair competition. “Although we are still making strides from a legislative standpoint, I believe that those strides are moving in the right direction,” Farmer added [3].
The ongoing debate over product hopping underscores the tension between innovation and competition in the pharmaceutical industry. While manufacturers argue that new formulations benefit patients, critics contend that these changes often serve to protect profits at the expense of consumer access to affordable medications.
“Product hopping in biologics could have an even greater anticompetitive effect than with small molecule drugs,” said Robin Feldman, a professor at UC Hastings Law. “The barriers to entry are higher for biosimilars, so these tactics can be more effective at delaying competition.”
As the legal and regulatory frameworks continue to develop, the pharmaceutical industry will need to navigate these challenges to balance innovation with fair market practices.
Sources:
- [Stopping the Pharmaceutical “Product Hop” – Bill of Health]
- [How Drug Companies Stifle Competition With ‘Product Hopping’ – Forbes]
- [Expert: Biosimilar Legislation Making Moves in the Right Direction – Drug Topics]
