FTC gets new power to block drug-switching schemes that block generics
S. 1040 — Drug Competition Enhancement Act · Filed by John Cornyn (R-TX) · 3 cosponsors · Introduced Mar 13, 2025 · Reported out
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What it does
This bill amends the Federal Trade Commission Act to prohibit pharmaceutical manufacturers from engaging in 'product hopping'—a practice where a drug maker withdraws or disadvantages an older drug to force patients and insurers onto a newer, similar version, blocking generic or biosimilar competition. The FTC gains explicit authority to sue manufacturers for this conduct and seek financial penalties (disgorgement and restitution). Manufacturers can defend their actions if they prove they had legitimate safety, supply, or pro-competitive reasons unrelated to blocking generics.
Why we flagged it
The bill's core mechanism is a new FTC enforcement power targeting a specific anticompetitive practice (product hopping) in pharmaceutical markets. It is a targeted antitrust measure, not a broad deregulation or subsidy.
What the text implies
- The 180-day/3-year window creates a narrow enforcement window; conduct outside this period may escape liability even if anticompetitive.
- Manufacturers can defend by claiming 'legitimate pro-competitive reasons' — a standard that may be litigated extensively, creating uncertainty in enforcement.
The full analysis lists 5 implications of this text.
Who stands to gain
generic drug manufacturers; biosimilar manufacturers; health insurers and pharmacy benefit managers