Appellate Court Opinion Cites Professor Stacey Dogan’s Antitrust Article in Big Pharma Alzheimer’s Drug Case
“Antitrust Law and Regulatory Gaming ” informs ruling against global pharmaceutical giant Actavis for “product hopping.”
An article coauthored by Professor Stacey Dogan was recently cited in a United States Court of Appeals for the Second Circuit opinion in the case of State of New York v. Actavis.
The case concerns an antitrust action brought by the State of New York against Actavis, a top-ten global pharmaceutical manufacturer whose portfolio includes brands from Botox to Loestrin, as well as neurosciences/Central Nervous System products.
When Actavis’ twice-daily drug designed to treat Alzheimer’s disease neared the end of its patent exclusivity period, the company introduced a new once-daily version of the drug, with exclusivity ensured until 2029. Faced with the prospect of competition from a generic version of the twice-daily drug, Actavis removed virtually all of it from the market, forcing Alzheimer’s patients to switch to the once-daily, freshly patented version of the drug.
New York argued that the defendants’ forced-switch scheme would impede generic competition for the drug, because patients who had been forced to switch to the new version would stick with their new prescription, which had no generic substitute. As a result, Actavis would maintain its effective monopoly in the relevant drug market, in violation of antitrust laws.
The court’s decision, handed down on May 22, ruled in favor of New York. According to statements made by New York State Attorney General Eric T. Schneiderman, “the decision prevents Actavis from pursuing its scheme to block competition and maintain high drug prices. Our lawsuit sends a clear message: drug companies cannot illegally prioritize profits over patients.”
Dogan worked with Professor Mark A. Lemley of Stanford Law School to author “Antitrust Law and Regulatory Gaming,” published in the Texas Law Review. The article argues that “whether or not particular acts of regulatory gaming harm competition is and should be an antitrust question, not merely one that involves interpreting statutes or agency regulations. Some level of antitrust enforcement—with appropriate deference to firm decisions about product design and affirmative regulatory decisions that affect market conditions—provides a necessary check on behavior, such as product hopping, that has no purpose but to exclude competition.” The Second Circuit cited the article three times in Actavis in support of the notion that “product hopping”—switching patients to new products in order to evade generic competition—can violate the antitrust laws.
Dogan focuses her scholarship in intellectual property and competition law, and is a leading authority in the field. “I’m happy that our work played a role in this important outcome,” says Dogan. “There’s sometimes a fine line between product innovation and anticompetitive behavior, but Actavis clearly crossed the line in this case.”
Reported by Sara Womble (CFA’14)