Key Takeaways
- The FTC is intensifying scrutiny of practices that delay generic and biosimilar entry.
- Strategies that extend exclusivity without sound therapeutic basis face elevated risk.
- Risk extends beyond agency action to private litigation and reputational exposure.
- Companies should consider proactively assessing, documenting, and being prepared to defend lifecycle management strategies.
Last week, the Federal Trade Commission reiterated the agency’s “laser focus” on potential anticompetitive and exclusionary practices in the pharmaceutical industry. Speaking at the Reuters Events' Pharma USA conference, the Director of the FTC’s Bureau of Competition said the agency’s heightened focus comes at a pivotal time for the industry, as a wave of high revenue products will lose patent protection in the coming years, ushering in a “patent cliff.” Many pharma companies are responding to the upcoming loss of exclusivity through pipeline investments, lifecycle management, and strategic M&A. But the FTC has made clear that certain approaches to extending exclusivity may trigger scrutiny when they appear designed to delay generic or biosimilar competition rather than reflect genuine innovation.
Anticompetitive Theories: Product Hopping and Patent Thickets
One area the FTC is likely to focus on is “product hopping,” where a company transitions patients from an existing drug to a reformulated version shortly before loss of exclusivity and generic or biosimilar entry. Often reformulations can deliver real clinical benefits and be legitimate. However, the FTC is likely to examine whether the timing and substance of the change reflect meaningful innovation or instead merely function to preserve exclusivity. Risk potentially arises especially where the original product is withdrawn or restricted (a “hard switch”), or where the new product offers limited incremental value relative to its competitive impact. Public scrutiny—from patient groups, providers, or policymakers—can further elevate enforcement risk in this area.
The FTC is also likely to target so-called “patent thickets,” where companies accumulate numerous (sometimes hundreds of) follow-on patents covering variations of a branded drug. The aim is that, once the original patent expires, it makes it difficult for competitors to enter without potentially infringing one or more of the follow-on patents. This strategy can effectively extend exclusivity beyond the life of the core patent. While patent portfolio development is a standard and often legitimate practice, the FTC is expected to focus on whether these patents reflect real innovation. Factors likely to draw scrutiny include the volume and timing of filings, their connection to bona fide R&D milestones, and whether the claimed innovations provide meaningful clinical benefit. Patents perceived as weak, peripheral, or strategically timed may be characterized as exclusionary and anticompetitive.
Trump Administration’s Priority to Reduce Drug Prices
The FTC’s recent announcement aligns with the Trump Administration’s stated federal policy priority of increasing pharmaceutical competition and lowering drug prices for patients in the United States. The Trump Administration’s has directed federal agencies—including through the April 2025 Executive Order Lowering Drug Prices by Once Again Putting Americans First—to promote generic and biosimilar entry. Likewise, last summer, the FTC and DOJ conducted a series of listening sessions on lowering drug prices, including a session titled “Anticompetitive Conduct by Pharmaceutical Companies Impeding Generic or Biosimilar Competition” focused on “strategies employed by incumbent manufacturers to preserve their market share even after generic or biosimilar entry.” Panelists highlighted product hopping and the accumulation of excessive patents as ongoing challenges that warrant continued FTC investigation and potential enforcement action. This is in addition to FTC actions related to improper Orange Book listings and pharmacy benefit managers’ practices that potentially exclude lower cost generics or biosimilars.
Risks Beyond FTC Investigation
The risk environment is not limited to regulatory enforcement. Private litigation now accounts for a significant share of disputes in this space, and the FTC has shown a willingness to participate in such cases through amicus filings. Recent decisions suggest that courts may be increasingly receptive to claims involving product hopping and related conduct, particularly where plaintiffs allege exclusionary effects tied to formulary positioning or market access. Agency investigations and private litigation can also create reputational harm to a company.
Practical Implications for Pharmaceutical Companies
Companies facing loss of exclusivity on popular therapeutics should expect heightened antitrust scrutiny of how they manage product lifecycles. We anticipate the FTC will keep its focus on these practices in the coming years, so it is critical to evaluate the antitrust risks. The key question—across both enforcement and litigation—will be whether those strategies are grounded in legitimate innovation or instead are intended to delay competition. Companies that align lifecycle decisions with clear clinical and scientific justifications, and that document those justifications contemporaneously, will be better positioned to withstand that scrutiny.
