S. 1040 — Drug Competition Enhancement Act

This section amends the Federal Trade Commission Act (15 U.S.C. 41 et seq.) by adding a new section 27 that deems product hopping by drug manufacturers a prima facie unfair method of competition in violation of section 5(a). (Product hopping occurs when a manufacturer of a reference product or listed drug introduces a follow-on product—defined as a reformulation or modification with a similar indication—and takes actions to withdraw or disadvantage the original product to impede generic or biosimilar competition.) The prohibition applies during the period beginning when the manufacturer receives notice of an abbreviated new drug application (ANDA) or biosimilar biological product license application referencing its product and ending on the earlier of (1) 180 days after a generic drug or biosimilar referencing the product is first marketed or (2) three years after the follow-on product is first marketed. A prima facie violation is established by demonstrating either (1) a hard switch, where the manufacturer (a) requests FDA to withdraw approval of or list the original product as discontinued and markets a follow-on product or (b) withdraws, discontinues manufacture of, or destroys inventory of the original product in a manner impeding competition (absent an FDA request) and markets a follow-on product; or (2) a soft switch, where the manufacturer takes actions unfairly disadvantaging the original product relative to the follow-on product. (Thus, the provision enables the FTC to initiate enforcement actions against such practices, which delay lower-cost generic and biosimilar entry into the market.)