Antitrust -- key to innovation

In response to these arguments, opponents assert that antitrust enforcement impedes innovation in the pharmaceutical industry.147 The idea of chilling innovation and deterring the development of new, potentially life-saving drugs is certainly concerning. However, this argument is less concerning than it sounds. When submitting its Amicus Brief in support of Plaintiff-Appellee State of New York in the Second Circuit Actavis case, the AAI addressed this argument. First, the AAI asserted that no empirical evidence existed showing that antitrust scrutiny of product hopping deters innovation.148 Moreover, the AAI further asserted that antitrust scrutiny of product hopping actually increases innovation.149 Without antitrust scrutiny of product hopping, brand- name companies will invest in making minor alterations to products to extend the patent, rather than investing in research for new, innovative drugs.150 Indeed, one study found that “[b]rand-name firms have sought increasing recourse to ancillary patents on chemical variants, alternative formulations, methods of use, and relatively minor aspects of the drug.”151 Essentially, immunizing brand-name pharmaceutical companies from antitrust liability encourages them to spend time and resources in order to find ways to make insignificant changes to current drugs in order to preserve the patent, instead of using time and resources to develop the next innovative drug. In its Brief as Amicus Curiae filed with the district court in Mylan, the FTC bolstered this argument by asserting: “The threat posed to existing brand drugs by generic competition can incentivize the brand company facing dramatic loss of sales to develop new and innovative drugs that benefit consumers.”152 Notably, the FTC recently filed a Brief for Amicus Curiae in support of Mylan in its appeal to the Third Circuit.153 In sum, there is no evidence that antitrust regulation of product hopping slows down innovation by brand-name pharmaceutical companies. Rather, regulation actually encourages innovation, as the competition from generics causes brand-name manufactures to innovate new products and prevents them from spending resources on insignificant changes to extend patents.