George Mason University Antonin Scalia Law School

CPIP Scholars Join Comments to FTC on How Antitrust Overreach is Threatening Healthcare Innovation

dictionary entry for the word "innovate"On December 21, 2018, CPIP Senior Scholars Adam Mossoff and Kristen Osenga joined former Federal Circuit Chief Judge Randall Rader and SIU Law’s Mark Schultz in comments submitted to the FTC as part of its ongoing Competition and Consumer Protection in the 21st Century Hearings. Through the hearings, the FTC is examining whether recent economic or technological changes warrant adjustments to competition or consumer protection laws. The comments submitted to the FTC explain how the FTC itself is harming innovation in the health sciences by meddling in patent disputes between branded and generic drug companies.

The introduction is copied below, and the comments can be downloaded here.


How Antitrust Overreach is Threatening Healthcare Innovation

Imagine passing a rigorous test with flying colors, only to be told that you need to start over because you weren’t wearing the right clothing or you wrote your answers in the wrong color. Does that sound silly? Unfair? That scenario is happening to the American pharmaceutical industry thanks to regulators at the Federal Trade Commission who aren’t content to let the Food & Drug Administration (the experts in pharmaceutical safety and regulation) and federal courts (which referee disputes between branded and generic drug companies) decide when new drugs are ready to come to market. The consequences of these regulatory actions impact people’s lives.

The development and widespread availability of safe and effective pharmaceutical products has helped people live longer and better lives. The pharmaceutical industry invests billions each year in research and infrastructure and employs millions of Americans. The industry is closely regulated by many agencies, most notably the FDA, which requires extensive testing for safety and effectiveness before new drugs enter the market. Many thoughtful proposals have been advanced to improve and modernize the FDA’s review and approval of new drugs, but there is broad agreement that the FDA’s basic role in drug approval serves valid ends.

In recent years, however, other government agencies have played an increasingly intrusive role in deciding whether and when new drugs can enter the market. One such agency is the Federal Trade Commission, which has recently taken steps to block branded drug companies from settling patent litigation with generic drug makers. The FTC substitutes its own judgment for the business judgment of sophisticated parties, simultaneously weakening the patent rights of branded drug companies that spend billions in drug discovery and development and delaying generic drug companies from bringing consumers low cost alternatives to branded drugs. This example of government agencies picking winners and losers—indeed, deciding there should be no winners and losers—harms consumers in the short run by slowing access to drugs and in the long run by weakening innovation.

This paper describes the role of patents in protecting drugs and the special patent litigation regime Congress enacted in the 1980s to carefully balance the needs of branded drug companies, generic competitors, and consumers. Although these systems are not perfect, the FTC’s overreach in its regulatory powers in this area of the innovation economy results in a net loss for American consumers, as described below.

To read the comments, please click here.