Pharma Product Hopping and Product Evergreening in the Limelight Again 
[Posted on: Thursday, October 8, 2015]

The “war” against high drug prices heats up even more this week when in a court filing Federal Trade Commission (FTC) strongly criticized practices used by the pharma companies to keep the drug prices high using questionable business and regulatory practices against generics. Pharma companies use two processes to increase the competitive advantage of their products over generics; filing new patents for seemingly minor updates to a given product, called Product Evergreening, and creating new products similar to the original product and then practically forcing patients to switch to the new version, called Product Hopping. Both practices are perfectly legal and both are criticized as evidence of unfair competition by FTC. Point to note, FDA has not chimed into this discussion, and for good reasons. Many countries actively discourage Product Evergreening by not allowing patents for minor improvement such as a new formulation. However, Product Hopping is more wide-spread in the US due its dual support from the 505(b)(2) pathway. A new formulation for a previously approved product is approved under the 505(b)(2) pathway which gives an automatic 3 years of market exclusivity to the applicant. Once the new formulation is approved, the manufacture can discontinue the original product and shift all its marketing muscle to the new formulation. Since the new formulation targets the same population as the original product, patients have no option but to use the new formulation. Product Hopping is typically timed to start a few months prior to the expiration of the patents or market exclusivity of the original product so that by the time the generic versions of the original product are available, patients and doctors have already switched to the new formulation which is protected from generic competition either because of new patents under Evergreening practice or market exclusivity under 505(b)(2). Although legally, doctors can still prescribe the generic versions of the old formulation, in practice, the new formulation is preferred by both doctors and patients for practical reasons of keeping the prescription, effectively severely curtailing the generic competition. To a large extent the criticism of these practices is justified, however it may not be fair to generalize the issue for all companies. Product improvements are necessary even if they are as simple as creating new formulations. Hence, under US law, an improvement to an existing product is considered patentable. Also, most of these changes may require additional clinical trials for FDA approval, hence the market exclusivity. Both of these incentives are critical for developers to keep improving their products. Patents can be challenged and market exclusivity is only available if the applicant had to conduct additional clinical trials. Under the law, a company cannot be forced to manufacture a product it deems unprofitable. So, while FTC may fume over it, there is little support for this under the law. I am not lawyer but it seems FTC is trying to overextend by claiming antitrust violations. FTC filed a similar amicus brief in 2012. We will keep you posted if this time it is able to convince the judges.

Expert Opinion: Mukesh Kumar
VP, RA, Amarex Clinical Research