Antitrust

Shearman & Sterling Antitrust Annual Report 2019

Shearman & Sterling LLP

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S H E A R M A N & S T E R L I N G L L P | 8 9 More recently, courts have continued to allow plaintiffs' claims that a brand engaged in anti-competitive lifecycle management strategies to survive motions to dismiss and proceed to discovery. In both Asacol and Suboxone, Warner Chilcott withdrew the original product from the market as it launched new reformulations and transitioned the market to the patent-protected version ahead of generic competition. 7 And, based on the 'hard switch,' both cases survived motions to dismiss. TAKEAWAYS & NEXT STEPS Enforcement efforts and court interpretations are evolving on lifecycle management strategies, particularly on so-called product hopping allegations. The remaining (somewhat) bright line rule to reduce the risk of liability (but not necessarily scrutiny or a complaint from an enterprising plaintiff) is to avoid the 'hard switch' by keeping the original product on the market, and instead focus on building the 'soft switch' strategy that relies on the marketing efforts and strength of the new product innovation. But Namenda does not clearly draw the distinction between the 'hard switch' and 'soft switch' strategies as a bright line rule, instead focusing on the provider and patient coercion aspect of the switch, arguably leaving the door open to future cases premised on a 'soft switch' that fall somewhere beyond AstraZeneca, though short of Abbott and Namenda. This theory remains untested, but is premised on showings of coercion absent a 'hard switch.' Importantly, the decision in Mylan squares with this untested, expansive view of the provider and patient coercion analysis in Namenda because a broader market with the existence of competing generics in Mylan removed concerns about coercion. Interestingly, the FTC and Department of Justice have largely been quiet on product hopping and lifecycle management strategies, instead, leaving enforcement to state attorneys general and private litigants. Although the FTC was active in support of enforcement as an amicus in the Mylan case at the district court and the Third Circuit, it has yet to file a complaint in federal district court on a product hopping theory, although it has expressed an interest in doing so. T H E F T C A N D D E PA R T M E N T O F J U S T I C E H A V E L A R G E LY B E E N Q U I E T O N P R O D U C T H O P P I N G A N D L I F E C Y C L E M A N A G E M E N T S T R A T E G I E S 5. Mylan Pharms. Inc. v. Warner Chilcott Pub. Ltd. Co., 838 F.3d 421 (3rd Cir. 2016). 6. The Mylan court was also wary of the court's possible role as arbiter of the strength of innovation. Id. at 440 ("At the same time, courts should also be wary both of second-guessing Congress's legislative judgment and of turning courts into tribunals over innovation sufficiency."). 7. In re Asacol Antitrust Litig., No. 18-1065, 2018 WL 4958856 (1st Cir. Oct. 15, 2018) (denying class certification in a product hopping case); In re Suboxone Antitrust Litig., No. 13-2445, 2017 WL 3967911 (E.D. Pa. Sept. 8, 2017). 

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