A Delaware federal court will decide whether innovator firms' strategy of making minor changes to a product late in patent life, thereby blocking generic competition, is anticompetitive.

The issue at hand is whether Abbott changed the formulation of its cholesterol therapy Tricor (fenofibrate) from capsules to tablets in order to prevent generic competition rather than to improve the product.

The case will proceed after Judge Kent Jordan denied Abbott's consolidated motion to dismiss the case May 26, writing in his opinion that "inquiry as to product-switching conduct such as alleged in this case is justified because that conduct 'seems clearly to be an effort to game the rather intricate FDA rules to anticompetitive effect.'"

"The decision is a sweeping victory for the plaintiffs and provides a thoughtful roadmap for the adjudication of these product hopping claims in the pharmaceutical industry," Robins Kaplan Miller & Ciresi attorney David Balto said in a memorandum issued May 29.

Judge Dismisses Abbott's Arguments

Plaintiffs in the consolidated case against Abbott, including Teva and Impax, allege that Abbott violated Sections 1 and 2 of the Sherman Act by developing the tablet formulation and removing capsules from the market in advance of generic entry.

"Not surprisingly these claims are frequently unsuccessful: courts are ill equipped to second guess whether a product change is true innovation," Balto said. "But on the other hand, the courts have not declared product changes per se legal."

Abbott maintained that it did not violate the antitrust laws because Teva and Impax had not been excluded from participating in the fenofibrate market.

However, Jordan found that "the per se standard proposed by Defendants presupposes an open market where the merits of any new product can be tested by unfettered consumer choice."

"While Teva and Impax may be able to market their own branded versions of the old Tricor formulations, they cannot provide generic substitutes for the current Tricor formulation, which is alleged to be their cost-efficient means of competing in the pharmaceutical drug market."

"That opportunity has allegedly been prevented entirely by Defendants' allegedly manipulative and unjustifiable formulation changes. Such a restriction on competition, if proven, is sufficient to support an antitrust claim in this case."

Abbott argued that even a monopolist has "no general duty to aid competitors" and therefore the removal of the remaining fenofibrate capsules from the market following approval of the tablets did not violate antitrust laws.

The ruling concluded, however, that Abbott's actions "allegedly suppressed competition by blocking introduction of generic fenofibrate" and, under Berkey Photo, Inc. v. Eastman Kodak Co., "such conduct, which results in consumer coercion, is potentially anticompetitive."

Abbott maintained that the plaintiffs conceded in their complaints that changes in the formulation of Tricor were indeed improvements.

Jordan found otherwise, "they clearly make the opposite contention: that there were no significant medical benefits from the changes."

Furthermore, Jordan found that "contrary to Defendants' assertion, the Plaintiffs are not required to prove that the new formulations were absolutely no better than the prior version....Rather, as in [United States v.] Microsoft, if Plaintiffs show anticompetitive harm from the formulation changes, that harm will be weighed against any benefits presented by Defendants."

Jordan concluded that Abbott's arguments supporting its motion to dismiss the case "both fail to state proper legal standards and mischaracterize Plaintiffs' factual allegations."

The Three Faces Of Tricor

The antitrust suit stems from Abbott's actions following the initial generic challenges to Tricor. Novopharm, since acquired by Teva, filed an ANDA for 67 mg and 200 mg fenofibrate capsules in 1999; Impax filed a similar ANDA in 2000. A three-year patent dispute ensued, leading to summary judgments for Teva and Impax in March 2002 and March 2003.

While the cases were pending, Abbott submitted an NDA for 54 mg and 160 mg fenofibrate tablets, claiming that fenofibrate could also be used to increase levels of high density lipoprotein (HDL).

To support this indication, Abbott submitted data for the capsule formulation of fenofibrate arguing that the tablet formulation was bioequivalent to the capsule formulation.

"According to Plaintiffs, Defendants' submission of the capsule data effectively admitted that the tablet formulation was not an improvement over the previous capsule formulation," Jordan wrote in his opinion.

After FDA approved Abbott's tablet formulation of fenofibrate in September 2001, the company stopped selling Tricor capsules, bought back all remaining supplies of the capsules and changed the code in the National Drug Data File to "obsolete," according to court papers.

Teva's ANDA for 200 mg capsules was approved April 9, 2002 and launched in September of that year. However, generic substitution was "no longer possible" because Abbott had removed Tricor's capsule formulation from the market, the court said. By September 2002, Abbott reported nearly 100% conversion of Tricor prescriptions to tablet form.

Following Abbott's introduction of the tablet form, Teva and Impax both filed ANDAs for the 54 mg and 160 mg fenofibrate tablets in June and September 2002. However, during pending patent litigation, Abbott submitted another NDA for a new formulation of fenofibrate tablets in 145 mg and 48 mg dosage forms instead of the already marketed strengths.

Along with the new dosage, Abbott sought a label change stating that the new tablets no longer needed to be taken with food, according to court documents. As with the prior change from capsules to tablets, Abbott stopped selling the old dosage form and changed the National Drug Data File code.

In addition to the suit by generic firms, Abbott's activities on Tricor have also drawn the scrutiny of the Federal Trade Commission (¹ 'The Pink Sheet' Aug. 8, 2006, In Brief).

Other life-cycle management techniques commonly used by the pharma industry, including development of single-isomer products as a blockbuster's patent life wanes, are also being eyed by FTC for potential antitrust issues.

Life-Cycle Management Heads To Court; Abbott Faces Antitrust Trial On Tricor

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