Authorized generic drugs are essentially brand name drugs packaged and sold as generics by an innovator drug company under its own NDA, through either the innovator's generic subsidiary or an independent generic drug company. With increasing frequency, innovator drug companies are launching authorized generics simultaneously with the first ANDA filer's launch of its generic drug product, thereby limiting the value of the 180-day exclusivity period. Last year, in Teva v. Crawford, the D.C. Circuit held that the practice of selling authorized generics during the 180-day exclusivity period is perfectly legal.
The FTC announced in March that it is initiating a study of the effects of authorized generics in the prescription drug marketplace. The FTC plans to use its subpoena power to obtain information from 80 brand name drug makers, 10 authorized generic companies, and 100 independent generic companies. According to the FTC's news release:
The goal of the Commission’s study will be to assess the likely short- and long-run effects of market entry by authorized generics on generic drug competition. Among other things, the study will examine actual wholesale prices (including rebates, discounts, etc.) for brand-name and generic drugs, both with and without competition from authorized generics; business reasons that support authorized generic entry; factors relevant to the decisions of generic firms about whether and under what circumstances to seek entry prior to patent expiration; and licensing agreements with authorized generics. The data collected will enable the FTC to advance the understanding of the effects of generic entry on prescription drug prices – in particular, the role of the 180-day exclusivity period in generic competition prior to patent expiration – beyond what is available in the economic literature today.
The FTC is accepting public comments regarding its study until June 5, 2006. During the public comment period the Commission seeks information on the following:
- whether the proposed information collection is needed for the proper performance of the agency’s functions and whether what is collected will have practical utility;
- the accuracy of the FTC’s estimate of the burden of the information collection;
- ways to limit the number of companies included in the study without undermining the validity and reliability of the study results;
- ways to enhance the quality, utility, and clarity of the information to be collected; and
- ways to minimize the burden of collecting the information on companies asked to respond.
The Federal Register notice regarding the FTC's study includes detailed information for submitting comments. The FTC expects to issue its final report sometime in 2007.
