FEATURES
`
`Competition, Market Power and Pricing
`in Brand Name Pharmaceutical Markets
`
`vor's mind in chow siteations iseninga low delas
`beyui: Dus A miler than DrugB. They wil
`choose die drug ther choy peewnliy helnewe x chee
`
`fog chair pasate, “This is eqpactally moe whens, os
`>>> Joel Wi Ay, PADENNNE:
`Seeeene
`Branded pharmaceutical innovation has been declining substantially for
`tecmqardupakindeftrenenwhaiies
`over 60 years. Drug innovation is dependent on cufficientiy high prices andprof-
`its fo reward risky and costly RED.
`in assessing competition in pharmaceutical
`whore ig constmen te dhe dicted Eeeruuer cho
`markets government agencies evaluating potentially anti-competitive behavior
`whith drug i wwonlly bower Even fthere were
`can misapply pricing tools developed elsewhere.
`in other industries measures
`cheer clined evelner dew Dwg A ie supetios no
`price decnems wereld be mifliclest to ges docinesto
`of cross-price elasticity of demand are crucial for assessing relevant economic
`canoes Drug 8. Conversely, Pheciimicd evidence
`markets, but since brandedpharmaceuticais often don't compete on price, these
`fevers Dinwe B, chen no doctoreelidchooseTrg
`measures lose relevance. Rather than focusing on drug priting behavior, assess-
`Ay rogendion of te peice Ametins deciers apr
`ments of anti-competitive conduct in branded pharmaceutical markets should
`reflect the distinet institutional characteristics ofthese marnets.
`compass,andheNationaleee
`wade vonaprcnd RADY lie, ‘they devon
`subsaniial efion to che marketing and promotion
`ofthetbeans since eycayfaveaLanaeeldeme
`ann enter the muse andwipeext their profice,
`Prices ar: chien only a minor diraensica ofbrand-
`ed drugcomperdion.
`
`rooms Law: Brand Name Drug Lnacva-
`Gon and Pricing
`Pharmaccuical innawmon is highly rhby.
`dow and cons ‘the average oats of bringing a
`new drug e marke emeeds 3 bilion dollar. and
`ihe avenge development tine emecds a denuke
`Grer dhe past sis dacedss diets hs bees a alae
`ing end mlentkes decline in phunnacouticel me
`
`1 as is offen che cam, dors ame oo dolinkve
`sodas dioming superiocicy for Dime A os Drug
`B, clinkisns wid band bes chomae memment
`corteps. Abarat clear favlines thom 2 head-to-head
`companiine cllechemes tisl afA wera: Bd
`niciens aang wesimemts with potendislly Gest or
`serious heaaonsumacnces ay not going eo aler
`choiroreectibing in eugene in dragpricechanges,
`Constlend Bow a cogeidee disenames pemper-
`tee,”isperlocdy naturalwest 2 dacterwho me
`Sindy mies Kioaning dochises will hme rong
`Rieenowic ceoment pedemnon pexiedr in
`thee desions whues de dided evidence & ome
`brdent Eb would be hed for decren: em lee wih
`decom thinking tha: di the pede thoyd
`weaed wih Dwg A Gockading ame who hae
`died? wold hove aqunliy done bewer wich Dang
`B. bb inwmenabls deo weer doczess
`
`dee drag peices. whether the dimial evliemce &
`arnbkaaoaoc nem.
`Monaeen in moar cues drog enmpanies oll
`ang FDA-approved mendicesinessarr enldloelyto rick
`dheis eximing marian dhs by eoodnoting head.
`wehead dinicd wick w tex whaler de doz
`ate scully superior wo derongethom. This hes
`bee tin! 2couple ofumes with highprofil nag
`adhe comuaquences etthe
`HEREC
`om mach as when Erizol-Meyers Siquubls ram 2 tril
`eftheir drag, Premchol. apsion the endingoctin,
`Lapuorandleet in the PREFVE-IT eral? Simddaris
`Moki ENHANCE mil ieund Gheedoug Vine
`rin to be ne bewer dum genome sierventatin” An
`
`esccudive & eo conduct 3 dinical wal aglaw der
`
`Research fnainas (POCLo) wes oxedighed
`
`EtheSENEP Dont FitYou MustAcquit
`Goverment apmeier weninely aciees in-
`
`Food and Drug Adminiaration (FDAbepproved
`drugs per inflsioadjuned bilicn dollam of
`R&D
`mere:
`inys
`i: hallshoureverynine
`eeetee induery problem so
`
`serious that it hes been charscterbed ay Moores
`Law in rivers, or “Emons Lave” While thee
`cnues of this decline a complex and nee fully
`understood, it is dear dha: lower branded rhur-
`rrustcanied prices and profirs will ondycompound
`the
`:
`Bead name drug munulactusers are typically
`grimed parent prowrtion or other formu ofmaz
`het anchuwityspecificallyto cncasumgead meant
`them for
`bri
`innoverve troatanents te mu
`hoc? This metans that meamalarusess can act prices
`
`sell 2 madeet prices che am ofen many dems
`higher than che mangnad cost ofpeodaction. ‘This
`is not, by ited) evidence thet che monudacerer
`poses maker of miesopoly power itv dhe scrue
`that gavernmens
`bike che LLS. Depart
`ment oflamice (OO or the Federal Tree Com-
`tiaion (FC) ue thos concep to pee fegl
`anthcompetiiveot
`iaie markerbehuvton
`muaderevclustviryrevaed forinaovation.
`Bred none drug munulscuen competc
`fiseelyin rescscls anddevelopmen ofnewomer
`imuntal pipeline products, and in dee accpdzicion:
`ofnew
`fromotherorganizwionsGnchul-
`ing
`inaindions,otherbiopharmeceulical
`
`Branded Dregs Typically Dest Compete on
`Proc
`in various legal cares qarermmen! agencies
`and speie etonoenias hove premand a deory of
`drug price competion that may well appleps
`odhor makes, bur is coully zion to how branded
`pharmaceuticalscompe, Under dis theorycome
`* pesiegs branded dees could enhoner dein murder
`shareswith aepresive peite diacoumties, Asa malt
`the prices foc bode’ drags chould dmp aub-
`santady a: cach company auepes anuy mes
`profiss ts gain wiles, Conary evidence of iclge
`drwp prices or peice ides in che foo ofcomped-
`ve dullenges would be primes facie evileeux of
`arsLoompethive moriet conducr under chis view,
`iiowerer, branded dongs copete primarily on
`decir
`end semclieind aurtboies not
`their prions" The is pertiwlatle che esr when
`theedings ane used in Motheringchmstions, ar
`when dmg choice con lerd so Ged or permunene
`heakh oomsguenccs,
`ifs decor mules che wrong choice ona dmg
`to meat minor horthern, che patient may exper
`cnet same shorterdismomlor: best eypiealiy che
`wort commune wall be a mmavier tothe decor
`io seth w an aiemuae mediwcion Por Be
`threwening conditions sich as HIV/AIDS. mee
`
`COPD the wrong madimtion choiceonuli! Lend to
`progmasve daewe, imeartiide nations heabh dere
`Miomeion, or even death “The bux dhaiew:on: the doc-
`
`6
`
`Harvard}Health: Policy FReview
`
`
`
`
`
`:é:
`
`(CR-298-0/¥0R
`DEPOSITION
`EXHIBIT
`
`Biogen Exhibit 2217
`Mylanv. Biogen
`_22-|f-
`IPR 2018-01403
`
`Page 1 of 4
`
`Page 1 of 4
`
`Biogen Exhibit 2217
`Mylan v. Biogen
`IPR 2018-01403
`
`

`

`FEATURES
`
`dimey conduc: and enfome anui-competition
`been. Tp geen wheiber a omtemy he muadket
`power acbject us potenti shes: ane flew hes to
`
`ecier in det eelevure magiet. As deamibal in dhe
`DOJ asd PPC Merger Guidelines, elvan: e-
`nomic mazhess are
`ideniified acing the
`“SSNTT" deena best dendicent endmonaemanory
`incur in price) toot” This cams that fa anal
`poco increas Gg. 5-100) for Prodact A cannen
`
`ompome conduc would dif under shematne
`fepotbeticd drug dhenture scenuion “The ben
`evden on this wil peneraly not be baad on
`eoonwemeric demand estimates. ta will inckedeevi-
`donee fpom clisied ranrchers, physicies, phar
`muacies thind panypayers, drugcompanyofficials
`and othe to deine mlevers markets and ames
`peoduc aibaltembdlayalongwich real-world and
`bypoducticd “hus ios” marker behavior.
`Branded daass inevitably wid be pexeived to
`have some bed ofmarket power pmeielybecuase
`drag pareras ore grantedta cneoutage and sewand
`drug product insovation byallowing price: w cx
`ceed marginal coat. Sockery mecdds co balance peels
`af cfickere compeive marke agsina pools of
`ensuring het pharmaccaical manufacturers arc
`mruundod to herp
`innowading. Ht is cerainly
`hy
`
`audy poate br s beedol plamacecd
`commany to achieve dangeross monopoly power
`and engage in lurid anti-competitive behavior,
`Bae pricing puusemis clone ane ineudliviont in ames
`
`Pricing conduc is often 2 ed herring in ae
`
`ies it can make the modia headline: and Sonne
`Boor qeeches En stumytees drug thanelacteres
`ame so sendieive we che polaicd blowback the they
`set branded dows prines well below levels hax con
`be jumlfied on the beds ofscons] drue value. This
`muy be one of the masons why drup inagestion
`hes been declining for decades In any cu, das
`
`persion in dhe Unied Sonex drug indusery” The
`dourmal ef Indunvial Esonemiss 26, a0. 3 (1978):
`235-257.
`7. Festinges, Leon. A sheory ofrogeities dinenaney,
`Vel 2 Suanford Univerdry Prom, 162.
`8. Connon, Cheisepher 2, Eugene Braunwald,
`Carolyn HL MeCsbe, Danizl J. Rader, bean 1. Ree
`leau, Rene Eelder, Seewen V. Joysl, Karen A. HH
`Mare AL Pieler, and Alan M, Skene. “Intensive
`vermus suederme Upld lowering with matins after
`acute coremary nyadretnes,” New Enyplomd Jexrnst
`efMedicine 350, no. 19 GOD 1495-1904.
`9. See Hughe: “ENHANCE resales yield ditgp-
`pelinamucna for execientise.”
`Hesrwire, January 14, 2005, Feeapellfeweithebeart,
`orglanicis(837243.do faeerued Apel 7, 2S).
`1 Michsd EL Caapon, A Beer Way to Gener-
`wz and Us Compermive-Effenivence: Reseatch,
`Poligy Analysis, Na, 652 February G, 2009, hupsll
`whew,casd.orpelpubslicaionsdpolicy-analysisibetticc-
`way-gencraic-use-compatativerlectiveness-te-
`seatch facermed April 7, 2413).
`,
`1), UA. Depanmen of Janie and the Federal
`Trade Commision. Merizental Menger Guidelines,
`2015,
`herpalfwenwfustiongovisaripwbticlguide-
`Hneafieemg-2010pdf (accessed March 30, 2043).
`12, Regan. Tracy L. “Generic entry, price comperi-
`tien, and masket segmcniatien ia the preasription
`drag markes.” International Journal af Industrial
`Oreenination 26, nat (G08BAB,
`13. Appleby, Indie. “Spectaliy drug: offes hope, ben
`can carry big price rage
`isa Today August. DL. 2011. hupofusueday3Q.
`usaadsyonm/moncy/indasricdheal:hidrugdsa-
`eat
`theehopetan-can-canyth
`SUPOEEN Cacreed March0.2813.
`Mi HjLve ngRameea Bar
`peicebeymace hen $8 ardyou keene Fercerecu
`analcompetitive mumket conduct spaccus-
`tangs
`tae, Rather dium Bosing aulubely on pricing
`behavior we should look for gach conduct in all
`19, BreesbislsPetcesforConcerDrugs”NawbielJie, Nor
`bend defectors?
`wonbar 12. BHD hugeweweraiemconeDUE EY
`poadill:dimension:ofdruecampanybehavior in-
`Wha
`in shusions for Weaning
`EeNe
`oemmanid
`dre ie. for cmeen HIVIATDS, congenhe
`dading engapemen: ia clinical meard:, produc
`beer ibihee. ovmic Gbvoss, ec} in that the do
`pemotion and maracing, produc quality and
`snowation, caromer siiiacion andbarriers 10
`mand cures am so inelastic chat small pormanent
`
`eos and net mevenat eo Producr 8. thes: Product A
`and Produc B ae in dhe aene mlevan: coomondc
`market. Ver ofien, as with che femews give in dee
`OS
`wal. applying che “npusre og’ deory
`ofSNIP tan peicing condact so che ‘roand hale’
`ofphemmaetice products to euzes elvant o-
`mectic tule dunply dew Ge When lemd
`une nharmacatios! peolaces desiz compete on
`peice, demand eladchyeniewees and SSNTD eas
`ypaceverymelinaigmain cone
`OFted drugs meulindy aussin their sles
`volumes deplte denificant pie Incecacs, Neher
`application ofde SSNEP tex ow plnrenacmcticals
`cool inply nomenadcal conchuions suck as every
`bred meme dmes is alan in tsown relevant mez-
`bet withou: comperkom. Rorsompds, application
`of che SSNIP ten could kad eo che conchsien
`that generic bleemdvaiendy kiesicel venions of
`a branded drop ar now its the seme selevert coo
`
`rll taxed Mach 51,
`
`ave nat conerined by ecomonsic makes Forces,
`‘the m
`ofiaindraga fen
`incrosas meena by charming
`r
`s
`
`than theywnasllydo aad get awaywith binGe
`mkt, bet powtldlyrot tn the podicieu! ar pablie
`cele: aretan fb ip pomlble char a: aueme seach
`hitherpei thn dyacuulychargetieSNP
`Hide in ibe, oncology wi die gone dn
`we would chow some cos-price demand
`mamufacunrs now mutindy chame S10008 to
`5250000 per pations fornow drags tha add only
`alee mombsolbi” Onlya dese area
`ig specialty drup prices ase ver earting two ser seme
`iahitett poring serudeivinat Be
`“Peau and-compattine comdnca in branded
`placental markets rather than SSNIP teat,
`the PYC and adhergeeemiment mths eos
`sreuid be wing nontraditions! mols thanileeller
`the Eutinwlonsl maliies of de
`mugkeplece ‘They dtodd exelidlle considerhow
`Senng 2013 Vol. 14, Nob|7
`
`References
`i. DiMed, beeoh A. and Henry G. Geebowskl.
`
`difercad.” Managerial end Deruden Hroneesies 18,
`no. 4-9 CAA: 429-473,
`2. Scammell, Jack Wi. Alex Blanckiey, Helen Beld-
`oo, are] Erlan Warrington. “Diagnosing the decline
`in phanesceusion! RED ePicieney” Naser Renders
`Drug Dueovery 11, no, 3 QOL Zh 101-265,
`& Bay, Joel WE. “Applicsian af Coa Efectivencis
`and Cae Bowel: Analysis eo Pharreaccuticals.” Tx
`Fie Goad Borers Edge and she Pigrmanmtical
`iadiaory bu the Dies Centary, od. Samara Mi. Ger
`vie, 225 «BE, (New Yorks: Cambrides University
`Prem, 2005),
`4, Le, 7, den. and Wiltam §. Cemanes. “Sare-
`ingit peeking of new pharmaccuticd” Armia off
`ExaaneicsdeadStertetier GO, ne. 1 (1S1OG-918.
`3. Bermk, Ernest R.. Linds Bai, Dovid 2. Bellew
`asd Glen 1 Urkes, “lefarmation. markerine.and
`pride in the US amthdoer drag merken.” Fie
`dimeritan Evomomie erie $9, pa. 2 (1895: 100-
`14,
`& Esch, Wo Dhncan. “Price and aualiy com-
`
`Page 2 of 4
`
`peel Hay pevvived £8 ELA soma com laud’from
`Jmbers College andPRD. is economicsfron Yale
`Ukdversieg [ir & afounding Peeniee Bosrdmem-
`
`{AGlicen) aod ale afoandox Eacoutter Boand
`
`. teed Ioenends and Quiemmes Research GSPORL
`fieisaprofemorat obe USCSebaelofPharenaryand
`aan becontactedathapigeec.edu.
`
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