Generic Drugs, Used Textbooks, and the Limits of Liability for Product Improvements
Timothy J. Muris & Jonathan E. Nuechterlein
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A key issue in “product-hopping” cases is how to reconcile society’s interest in increased price competition with the need for continued pharmaceutical innovation, particularly where a new product formulation presents genuine therapeutic benefits. Some courts have proposed to weigh the acknowledged therapeutic value of a new pharmaceutical product against the monetary effects of suppressed generic competition. But the task of “weighing” such radically incommensurable social values lies well beyond the competence of generalist tribunals. Michael Carrier and Steve Shadowen have proposed to side-step this problem through what they call a “no business sense” test. Although this approach would avoid a direct comparison of therapeutic benefits and monetary harms, it would present intractable implementation problems of its own, and it asks the wrong conceptual question in any event. In the final analysis, developing and marketing a new formulation should not subject a manufacturer to antitrust liability if the formulation presents genuine therapeutic benefits for patients.
We underscore these points by comparing the pharmaceutical marketplace to the economically similar marketplace for college textbooks. That marketplace, too, features a “price disconnect,” where the professors who assign textbooks do not pay for them, and the students who pay for textbooks do not choose them. Yet no one seriously proposes to subject publishers and authors to antitrust liability for conduct strikingly similar to pharmaceutical product-hopping: introducing new editions more often than they otherwise would allegedly in order to suppress competition from used booksellers. There is no principled reason for applying different rules to successful reformulations of existing pharmaceutical products.
Cite as
Timothy J. Muris & Jonathan E. Nuechterlein, Generic Drugs, Used Textbooks, and the Limits of Liability for Product Improvements, 4 Criterion J. on Innovation 207 (2019).
Tim Muris is a senior counsel at Sidley Austin, focusing on antitrust matters, including mergers, civil investigations, and strategic counseling, as well as on consumer protection issues, including advertising and privacy regulation. He represents clients before the Federal Trade Commission (FTC), the Department of Justice, the European Commission, and other domestic and international agencies. From 2001 to 2004, Mr. Muris served as Chairman of the FTC, where he oversaw the creation of the National Do Not Call Registry, increased antitrust scrutiny of intellectual property issues, and challenged fraudulent and deceptive advertising and health claims to protect U.S. consumers. Previously, he served as Director of the Bureau of Consumer Protection and Director of the Bureau of Competition at the FTC—the only person ever to lead both of the agency’s enforcement bureaus. Mr. Muris has authored more than 100 scholarly articles and books. He graduated from UCLA Law School in 1974 and from San Diego State University in 1971.
Jon Nuechterlein is a partner at Sidley Austin and co-leader of its Telecom and Internet Competition practice, focusing on telecommunications law, antitrust, and appellate litigation. From 2013 to 2016, he served as General Counsel of the Federal Trade Commission. As the FTC’s chief legal officer, Mr. Nuechterlein oversaw the Commission’s appellate litigation activities and provided legal counsel on a range of antitrust and consumer protection issues. In addition to his responsibilities as General Counsel, he also served as Acting Director of the FTC’s Bureau of Competition in several antitrust investigations. His extensive government experience also includes positions as Deputy General Counsel of the Federal Communications Commission, Assistant to the Solicitor General, and law clerk to Circuit Judge Stephen Williams of the U.S. Court of Appeals for the D.C. Circuit and to Justice David Souter of the Supreme Court of the United States. Mr. Nuechterlein has authored numerous scholarly articles and the book, Digital Crossroads: Telecommunications Law and Policy in the Internet Age, with Philip J. Weiser. He graduated from Yale Law School in 1990 and from Yale College, summa cum laude, in 1986.
