“Product-hopping” refers to a practice employed by some brand-name pharmaceutical companies in which the company attempts to shift users from an older prescription drug that is going off-patent and will soon face generic competition to a newly introduced similar product from that company. Often, the new product will have a significant term of patent protection or other exclusivity remaining.
“Product-hopping” can be used to fend off generic competition, in part, because it prevents or delays “automatic substitution” by pharmacies. Under automatic substitution, a pharmacy filling a prescription can dispense a generic version of the prescribed drug—if one is available—absent a specific “dispense as written” instruction. Importantly, however, substitution is only allowed if the generic is an “AB-rated” equivalent to the branded drug, meaning that it has the same active ingredient, dosage, and form, and a similar absorption profile in the body. Therefore, by moving the market for an older drug facing imminent generic competition to a newer alternative for which no AB-rated equivalent exists, brand-name companies can potentially mitigate the severe drop in sales and profits that follows from automatic substitution by pharmacies.
Eastern District Rejects Product-Hopping Theory
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