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Home Archive Current Volume Volume 66, Issue 1 COMMENT: Big Pharma Monopoly: Why Consumers Keep Landing on “Park Place” and How the Game Is Rigged
COMMENT: Big Pharma Monopoly: Why Consumers Keep Landing on “Park Place” and How the Game Is Rigged

By Mark S. Levy | 66 Am. U. L. Rev. 247 (2016) 

Now, more than ever before, pharmacologists are contributing medical advances to confront ravaging disease.  They are developing drugs to mitigate the effects of Alzheimer’s, HIV, multiple sclerosis, and various forms of cancer.  To capitalize on the opportunity, brand-name pharmaceutical firms are patenting these drugs, consequently guarding formulas and, with it, profits.  Patents grant brand-name firms market exclusivity, which essentially allows them to set their own prices.

Even though brand-name firms are investing some of their capital to cultivate new drugs, they also are enjoying gigantic revenue streams, absurd profit margins, and seemingly unfettered control of their respective markets.  Consequently, sick patients are unable to afford their medication; high prices are bankrupting consumers in the absence of reasonably-priced generic alternatives.  Despite the fact that generic drugs contain identical ingredients, cure the same symptoms, and cost 70% less, brand-name drugs persistently dominate their generic counterparts.

Indeed, brand-name firms are improperly preventing generic market entry.  Without generic competition, no watchdog exists to curb big pharma’s prohibitive prices.  Despite the Supreme Court’s fleeting fix in FTC v. Actavis, which condemned reverse payment settlements that precluded competition, brand-name firms are employing other tactics predatorily to extend their market exclusivity and charge consumers unaffordable prices.

To prevent brand-name abuse and help infirm patients afford their medication, this Comment proposes that courts apply federal antitrust law to brand-name firms that attempt to monopolize a pharmaceutical market through anticompetitive means, particularly by abusing Risk Evaluation & Mitigation Strategies (REMS) and by “product hopping.”  To combat exclusionary conduct, courts should mirror the “rule of reason” framework set forth in Actavis and apply an “enhanced” version specifically tailored to the pharmaceutical industry, giving stronger credence to generic challengers.  In addition to finding brand-name tactics exclusionary, this Comment also proposes that courts adopt a bright-line rule prohibiting brand-name firms from exploiting the “legitimate business” defense to immunize their destructive conduct.

The current framework perpetuates abuse and grants brand-name firms ostensibly indefinite monopolies.  Analyzing brand-name defensive tactics under federal antitrust law would facilitate generic market entry and consequently moderate drug prices.  Even after sacrificing their entire financial portfolios, patients are still unable to afford their medication.  This Comment interprets Actavis as prohibiting the “legitimate business” defense and provides a remedy to deserving consumers by preventing REMS abuse and product hopping, fostering generic competition, and tempering excessive drug prices.

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