Tuesday, July 25, 2017
Michael A. Carrier, Rutgers Law School and Carl J. Minniti III, Rutgers University, identify Biologics: The New Antitrust Frontier.
ABSTRACT: The pharmaceutical industry lies at the intersection of patent law, antitrust law, federal and state regulations, and complex markets. For the past several decades, courts and commentators have analyzed issues presented by brand-name and generic drug companies in the “small molecule” setting. But just as they have begun to comprehend the multiple moving parts, a new frontier has arisen involving large molecules known as “biologics.”
Biologics differ from small-molecule drugs along multiple axes. They are more expensive, costing hundreds of millions of dollars to develop. They cannot be precisely replicated, followed by “biosimilars” rather than generics. They are governed not by the Hatch-Waxman Act but by the Biologics Price Competition and Innovation Act. And they present a blank slate on which issues of innovation and competition will be hammered out in the decades to come. Given that biologics promise revolutionary advances like treatments for previously incurable diseases and cancer regimens offering substantial benefits over chemotherapy, the stakes could not be higher.
The small-molecule setting has been replete with collusive behavior such as “reverse payment” agreements by which brands and generics settle patent litigation and unilateral conduct by which brands modify their drugs to block generics, file frivolous government petitions, manipulate the regulatory regime, and deny materials generics need to enter the market. How likely are these (or other) forms of conduct to appear in the biologics industry? And if these behaviors occur, how should antitrust law respond? This Article addresses these questions, offering an antitrust framework for the conduct most likely to arise. In particular, it concludes that in the biologics setting, “citizen petitions,” the disparagement of biosimilars, and collusion between biologics and biosimilars will be more frequent and that “product hopping” and reverse-payment settlements will be less typical. The Article also recommends antitrust analysis similar to what courts have applied in the small-molecule setting and modestly more deferential for citizen petitions.
Antitrust finds itself at a unique and crucial moment: poised at the precipice of a new industry but able to draw on decades of case law in an analogous setting that has addressed issues of competition and innovation. It is far from obvious how much courts can—or should—take from that setting. This Article assists in this task by determining which antitrust principles and doctrines should be exported to the biologics setting while appreciating the differences that counsel against such extrapolation. Given the importance of life-saving cancer treatments and an impending $400 billion market, there is no time to waste.