Drug Competition Enhancement Act
The Drug Competition Enhancement Act would amend the Federal Trade Commission Act to prohibit a practice called "product hopping"—where a brand-name drug maker allegedly shifts to a new formulation, brand, or related product to impede competition from generic drugs or biosimilar versions. The bill creates a detailed framework to identify and challenge such conduct. It defines key terms (like abbreviated new drug applications, biosimilars, listed drugs, reference products, and follow-on products) and establishes two forms of prohibited behavior: hard switches (pulling or discontinuing the original product and pushing a follow-on, or taking actions that impede competition while marketing the follow-on) and soft switches (actions that disadvantage the original product relative to a follow-on, while marketing the follow-on). The action is treated as an unfair method of competition for a specified window after a generic or biosimilar application is filed, unless the manufacturer can justify the conduct for safety, supply, or pro-competitive reasons. The FTC would have broad enforcement tools, including injunctions, disgorgement, and restitution, with a defined process for appeals and a rulemaking authority to clarify terms. The bill does not remove the applicability of existing antitrust laws but adds an additional basis for liability under the FTC Act. It applies to conduct occurring after enactment and to actions commenced after enactment.
Key Points
- 1Definitions and scope: Establishes precise terms for what counts as a follow-on product, a listed drug, an abstracted new drug application (ANDA), and a biosimilar license application, along with who qualifies as a “manufacturer” and what constitutes a reference product.
- 2Prohibition on product hopping: Creates a prima facie case of unfair competition if, within a defined period after an ANDA or biosimilar filing, a brand/reference drug maker engages in either:
- 3- Hard switch: withdrawing or discontinuing the original product (or pressuring that withdrawal) and marketing a follow-on product; or destroying inventory or other actions that impede competition, plus marketing a follow-on product.
- 4- Soft switch: taking other actions that disadvantage the original product relative to the follow-on and marketing the follow-on product.
- 5Time window: The relevant period starts when the original drug maker first receives notice of an FDA filing referencing the product and ends at the earlier of (a) 180 days after the generic/biosimilar first markets, or (b) 3 years after the follow-on product first markets.
- 6Exclusions and justifications: Excludes truthful promotional activity or ceasing promotional marketing. Allows a manufacturer to justify conduct if it would have occurred regardless of generic entry and for safety risks, supply disruptions, or legitimate pro-competitive reasons; the FTC can rebut or weigh benefits versus anticompetitive effects.
- 7Enforcement and remedies: FTC can initiate actions under the FTC Act, seek temporary or permanent injunctions, and pursue equitable remedies such as disgorgement (unjust enrichment) and restitution, with specific time limits on seeking such remedies. Final orders can be reviewed by targeted federal courts of appeal.
- 8Rulemaking and interaction with other law: FTC may issue rules to define terms used in the new section and, aside from the new liability basis, nothing in the act changes the applicability of existing antitrust laws.
- 9Applicability: Applies to conduct and actions occurring after enactment and those commenced after enactment.