Poison pills or product hopping prevents the development of new drugs

Kieran, 1-1-2017, “Abuse of the Hatch-Waxman Act: Mylan 's Ability to Monopolize Reflects Weaknesses”, Brooklyn Journal of Corporate , Financial, and Commercial Law, https://brooklynworks.brooklaw.edu/bjcfcl/vol11/iss2/12/#:~:text=Though%20the%20Hatch%2DWaxman%20Act,consumers%20of%20a%20generic%20option.

Another hole in Hatch-Waxman has allowed companies to engage in “forced-switch schemes,” or “product hopping.”121 The forced-switch scheme is a strategy used by pharmaceutical companies in which a brandname company has an NDA drug on the market, but whose patent exclusivity period is almost expired, allowing for a generic version to soon enter and compete.122 Instead of using a reverse-payment strategy or filing citizen petitions against the generic company, brand-name companies have completely withdrawn their own drugs from the market and quickly introduced their own generic versions as a substitute.123 Although another generic may come to the market after the forced-switch scheme, the court in Actavis, for example, found it unlikely that a patient with Alzheimer’s disease would choose to switch to the competitor’s generic after being forced to already switch to the brand-name company’s generic version.124 This pattern of behavior may be mimicked when it concerns a drug that is in high demand, such as the EpiPen. This scheme essentially coerces patients to switch from the company’s brand-name product to the same company’s generic product, all the while maintaining their effective monopoly in the drug market.125 This strategy grew in popularity until the Second Circuit became the first appellate court to finally address “product hopping” in Actavis. 126 The Second Circuit held that a scheme to coerce patients to switch from an old product to a new one, by withdrawing from the market with an intent to affect generic competition, violated antitrust laws.127 The court indicated, though, that efforts to persuade patients to make the switch, while keeping the old product available, would be permissible.128 As a result of public scrutiny of Mylan for the rising price of the EpiPen, the company announced it would release its own generic version of the EpiPen for half the price.129 If Mylan were to do so, the removal of the brandname EpiPen from the market immediately followed by the introduction of the generic version would be prohibited, as per the Second Circuit decision.130 This forced “hard switch” would be the exact mechanism used to maintain the relevant market monopoly that the Actavis court wished to prevent.131 By contrast, the introduction of its own generic while keeping the brand name EpiPen on the market, also known as the “soft switch” is permissible.132 Although the Second Circuit’s reliance on antitrust laws worked to outlaw this strategy, it was a result of gaping holes in the Hatch-Waxman Act that allowed Actavis to create a monopoly of its relevant market in the first place.133 The Act has been ineffective at proactively combating these strategies because the Act does not itself forbid these tactics. Mylan and other companies are not technically violating the Act, but reap the benefitsfor years until the strategies are challenged in court.134 Thus, without strict amendments to the Act that would work to further protect both generic applicants and approved generics, Mylan and other brand-name companies will continue to game the patent system to protect their monopolies. In addition, since these practices are prohibited by judicial precedent135 and not by a legislative enactment, there is no telling if or when a court may decide to overturn such a ruling.