What We Learned from the DOJ and FTC's Recent Panels on Generic and Biosimilar Competition Issues
In two recent public panels, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) hosted the first of three joint listening sessions mandated by Executive Order No. 14273, Lowering Drug Prices by Once Again Putting Americans First. The panels focused on "improving the affordability of prescription drugs by increasing market access to generics and biosimilars through promoting competition." The insights gathered will inform a joint DOJ/FTC report due by October 12, 2025, which will recommend strategies to address anticompetitive behavior in pharmaceutical markets.
Panelists included a former regulator, academics, and industry group representatives. However, the panels lacked input from major industry players — pharmaceutical manufacturers, health insurance companies, pharmacies, and pharmacy benefit managers. As a result, the panels did not include industry responses or delve into the practical realities and challenges of implementing some of the sweeping (and potentially disruptive) proposed reforms. We remain interested to see whether the listening sessions scheduled for July 24 and August 4 will include broader industry perspectives.
Here are our key takeaways:
1. Enforcers Believe "Pay-for-Delay" Isn't Over — It's Just More Complicated
According to Markus Meier, former assistant director in charge of the FTC's Health Care Division, "reverse payment" or "pay-for-delay" settlements have not disappeared. Instead, he believes they have become more complex. Meier explained his view that early "reverse payment" scenarios were straightforward: a brand-name drug manufacturer pays a generic manufacturer cash to delay entry. In Meier's perspective, today the flow of payment from brand to generic is more opaque: "They got more sophisticated. In addition to doing a patent license, [manufacturers] started doing a lot of side business deals. In these side business deals the cash flow or the money flow always went from the brand to the generic," Meier said. He cited a January 2025 FTC blog post, Reverse Payments: From Cash to Quantity Restrictions and Other Possibilities, which identified settlement provisions such as restrictive supply arrangements that the FTC believes "have the potential to alter the competitive dynamics of the market, maintain supracompetitive prices, and allow for the sharing of monopoly profits between the patentee and patent challengers." Meier noted that the Biden administration did not prioritize investigating these newer settlement types and recommended renewed enforcement efforts.
At the same time, Meier acknowledged that there is a very innovative pharmaceutical industry in the US, which benefits consumers. He therefore called for antitrust enforcement in the pharmaceutical space to be "surgical" to avoid "disrupt[ing] the whole system."
It is worth noting that Meier did not address private antitrust litigation targeting alleged reverse payment settlements, which remains active. Since the Supreme Court's Actavis decision in 2013, private plaintiffs have filed dozens of reverse payment antitrust lawsuits and class actions against pharmaceutical manufacturers. Notably, every private reverse payment antitrust case that has reached a verdict at trial has resulted in a complete defense victory. This trend has not deterred private plaintiffs from continuing to pursue novel theories of reverse payment antitrust claims, including involving alleged side deals and supply constraints. Regardless of the pace of government enforcement and investigation activity into patent litigation settlements, private antitrust litigation in this space has remained aggressive.
2. Renewed Calls for Federal Legislation Targeting "Patent Thickets" and "Product Hopping"
Panelists advocated for legislation targeting "patent thickets" (i.e., large numbers of purported overlapping patents alleged to delay generic competition) and "product hopping" (i.e., product development alleged to unfairly extend exclusivity periods). With respect to patent thickets, panelists warned that the ever-growing number of patents on a single drug — particularly small-molecule drugs — may serve less to protect innovation and more to delay competition. In support of this argument, one panelist cited a statistic claiming to show that about 33% to 40% of generics launch with "skinny labels," meaning they avoid infringing certain patents altogether and still reach patients. According to the panelist, this statistic suggests that patents may serve more as deterrents than actual legal barriers.
This is not the first time such legislation has been proposed. Past legislative efforts to address patent thickets and product hopping include the Affordable Prescriptions for Patients Act, proposed by Sens. John Cornyn and Richard Blumenthal in 2023, which proposed limiting the number of patents that biologic manufacturers can assert in a lawsuit against a company seeking to sell a biosimilar version. The bill was passed by the Senate but failed to pass in the House. In March 2025, Sens. Cornyn, Blumenthal, Chuck Grassley, and Dick Durbin reintroduced the bill, which remains under legislative debate.
3. PBMs: A Growing Target for Reform
Pharmacy benefit managers (PBMs) were a central topic during both panels. According to multiple panelists, PBMs:
- Favor brand drugs with high rebates over lower-cost biosimilars
- Keep pricing opaque — even for employers
- Create "rebate walls" that make it hard for biosimilars to gain traction
- In some cases, have created their own private-label biosimilars and marked them up as much as 200%
Panelists emphasized that PBMs can distort competition as much as or more than drug manufacturers do. The panel's interest in PBMs reflects a broader shift in antitrust enforcement priorities in the pharma space. Although PBMs historically have not been a major target of antitrust enforcement in the pharma industry, PBMs have been under the microscope recently. In 2024, the FTC filed a lawsuit against PBMs challenging their rebating practices under Section 5 of the FTC Act, and a private multidistrict litigation involving antitrust claims against several large PBMs and GoodRx is currently pending in federal court in Rhode Island.
4. Obstacles to Biosimilar Competition
Panelists called for a more streamlined approach to FDA biosimilar approval. The panelists critiqued the FDA's "interchangeability" designation for biosimilars, which they claimed can mislead patients and providers into thinking that only certain biosimilars are substitutable. One panelist referred to this designation as a "poison pill" inserted into prior legislation.
There has been a repeated legislative push to pass laws targeting this issue. The Biosimilar Red Tape Elimination Act, proposed for the third time by Sen. Mike Lee in June 2025, seeks to amend the federal code to state that all biosimilars, upon approval, shall be deemed interchangeable. The bill still uses the term "interchangeable" because states have crafted their own laws around interchangeability. According to the bill sponsors, retaining that word would provide for minimal disruption to current biosimilar distribution. The bill is currently under committee review.
What Needs to Change? Panelist Recommendations
Some of the most widely supported ideas included:
- PBM reform and transparency, including allowing Medicare to negotiate prices
- Patent system overhaul, especially targeting low-value, duplicative patents
- Legislative fixes for product hopping and patent thickets
- 340B reform, "so benefits flow to patients, not institutions"
- Streamlining the FDA's biosimilar approvals, including eliminating barriers like interchangeability designations
- A "test case" approach to enforcement — bring and win a strong case to set precedent and deter similar conduct
- Public financing of clinical trials with corresponding shortened period of exclusivity
Upcoming Panels
The FTC and DOJ have scheduled two additional joint listening sessions over the next month:
- Thursday, July 24: Formulary Benefit Practices and Regulatory Abuse Impacting Drug Competition
- Monday, August 4: Turning Insights into Action to Reduce Drug Prices
The Goodwin team will provide continued coverage and updates following these sessions.
* Faith Perry, a 2025 summer associate with Goodwin Procter who is not admitted to practice law in any jurisdiction, also contributed to this article.
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