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USF Symposium Explores Antitrust Enforcement in Pharmaceutical Industry

October 05, 2009

On Sept. 25, the USF School of Law hosted Lawyers, Drugs, and Money, a symposium exploring antitrust enforcement in the pharmaceutical industry.

UC Hastings Professor Robin Feldman (left), B.D. Daniel of Beck Redden & Secrest, LLP, and Deputy Attorney General Cheryl Johnson participated in a panel on burdens of proof.

Several leaders in the field served as panelists and moderators, including Columbia Law School Professor C. Scott Hemphill, who delivered the keynote address, UC Hastings College of the Law Professor Robin Feldman, Rutgers School of Law Professor Michael Carrier, and Meredyth Andrus of the Federal Trade Commission.

Sponsored by USF's Center for Law and Ethics, the symposium brought together leading scholars and practitioners to examine the industry's most pressing issues. "A crucial concern today is the high cost of medication. This symposium brings together scholars, government attorneys, and private practitioners to examine the conduct and legal rules that contribute to that high cost," said Professor Joshua Davis, director of the Center for Law and Ethics. Davis organized the event and presented papers on two of the panels.

In the keynote address, Hemphill discussed the Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, which changed patent laws as they apply to pharmaceutical products in an effort to balance consumers' needs for new and innovative pharmaceuticals and less costly generic drugs. Since the passage of the act 25 years ago, legislation has been introduced with hopes of closing loopholes that have been exploited by brand companies to decrease competition by generics.

Hemphill examined intended reforms and considered future directions for legislative reform.

"Rulemaking actually gives us a vehicle for saying something potentially authoritative that spans more than one case. I think that's the final ground for optimism for our 26th anniversary update (on the Hatch-Waxman Act) next year," Hemphill said.

But Hemphill tempered his optimism with concerns about making the act more complex and suggested that solutions should be simple. "One of the things I'm really worried about is making the Hatch-Waxman Act more complicated. Because it's more or less at the edge of what I feel I can manage. It is beyond the edge of what the legislative process currently tolerates," Hemphill said.

The day-long symposium included five panels addressing emerging industry issues such as the legality of reverse payments in settling drug patent disputes, the burden of proof for claims based on allegations of sham patent litigation, the effect of current case law on class certification in antitrust actions, and the legality of product hopping.

In his presentation on product hopping, Steve Shadowen, a shareholder at Hangley Aronchick Segal & Pudlin, said that in ordinary markets innovation will almost always lead to increased consumer welfare because consumers make the choice between price and quality. In the case of pharmaceuticals, the doctor decides upon the product for the consumer, which creates a price disconnect.

"The purpose of those generic substitution state laws is to reconnect the price and quality decision in the hands of consumers," Shadowen said. "Unfortunately, because of the medical issues that are involved the state substitution laws and the federal laws require that to be substitutable the generic drug must be the same form, same strength, same bio-equivalency as the brand drug."

Shadowen explained that this requirement opens a way for brand manufacturers to play a game to defeat generic substitutability by making changes to the brand product that the generic will have to copy. Often these changes are designed only to forestall generic competition, not because they have a beneficial effect—for example, withdrawing a tablet from the market and introducing a capsule instead, or vice-versa. Because of regulatory barriers to entry in the generic market, these changes can give brand companies an extra 18 months to two years of exclusivity while the generic companies return to the Food and Drug Administration for approval, he said.

Columbia Law School Professor C. Scott Hemphill delivered the symposium's keynote address.

"The regulatory structure and…(the) price disconnect in these markets creates an incentive and an opportunity for brand manufacturers to make changes to products for some reason other than consumer welfare," Shadowen said. "In this circumstance, because of the regulatory game that can be played and because of the price disconnect, the brand manufacturer has a different motive."