On May 13, 2014, the Competition Bureau
("Bureau") announced that it was discontinuing its
investigation of Alcon Canada Inc. ("Alcon"). The Bureau
was investigating whether Alcon's product life-cycle management
strategy for its drug, Patanol, was intended to hinder competition
from generic drug companies contrary to the abuse of dominance
provisions of theCompetition
Alleged Violations of the Competition Act
"Product hopping" or "product switching" is
a strategy designed to switch prescriptions from one product to a
second generation formula of the same drug. Alcon's patent in
the medicinal ingredient in Patanol was expiring in November 2012.
In January 2011, Alcon received its notice of Compliance (NOC) from
Health Canada for Pataday, a new once-a-day dosing with the same
medicinal ingredient as Patanol.
In July 2012, just four months before Patanol's patent
expiry, Alcon stopped supplying Patanol, allegedly designed to
force consumers to alternative treatments such as Pataday,
Alcon's reformulation of Patanol, which is patent protected
The Bureau was concerned that Alcon's product switching
would delay or prevent the availability of generic
alternatives,1 forcing patients to purchase Pataday at a
higher price. The Bureau investigated whether product switching had
any anti-competitive effects, such as precluding/delaying the entry
of generic medicines. After the inquiry began, Alcon resumed its
sales of Patanol in January 2013 and by May 2013 sales were where
they had been before the supply disruption. Subsequently, generic
versions have captured significant market share from Alcon
prompting the Bureau to discontinue the investigation.
Practical Business Implications
Despite ending its investigation, the Bureau made clear that it
does not consider product life-cycle management strategies in the
pharmaceutical sector to be inherently anti-competitive. However,
life-cycle management strategies that are designed to impede
competition from generic drug companies "may cause significant
harm to competition".2 For example, disrupting
market supply for the purpose of switching demand, including by
termination, repurchase or recall of supply or similar action to
frustrate supply raises potential concerns under the Act.
The Bureau did not make a statement about the circumstances in
which replacing a product with a new version will be
anti-competitive or an abuse of dominance. It is not clear whether
simply replacing one product with a newer one will in and of itself
raise flags, nor is it clear when a limitation of supply will
amount to an anti-competitive market disruption.
In order to reduce or eliminate risk under the Act,
pharmaceutical companies should carefully consider the implications
of this investigation and seek legal counsel before making
strategic decisions about product life-cycle management.
1. Apotex was challenging Patanol's patents pursuant
to the Patented Medicines (Notice of Compliance)
Regulations from 2010 to April 2013 when Alcon discontinued
the litigation. On November 22, 2012, Health Canada issued Apotex
an NOC for the generic verson of Patanol.
2. Competition Bureau Statement Regarding the Inquiry
into Alleged Anti-Competitive Conduct by Alcon Canada Inc., May 13,
Originally published June 2014
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