Issues

Authorized Generics

GPhA Position

GPhA believes that the use of authorized generics undermines the Hatch-Waxman Act by devaluing the 180-day exclusivity period incentive. Ultimately, consumers pay the price as brand companies keep drug prices high and access to affordable medicine is delayed.

GPhA supports H.R. 573, introduced by Representative Jo Ann Emerson(R-MO), which would prohibit the marketing of an authorized generic during the 180-day generic exclusivity period following a patent challenge. The bi-partisan bill is co-sponsored by Representatives Marion Berry(D-AR), Dennis Moore(D-KA) and Zach Wamp (R-TN).

Key Points

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An authorized generic is the brand company's own product repackaged and marketed as a generic either through a subsidiary or third party. Brand companies generally raise the brand drug's price when the authorized generic is introduced—resulting in an even greater expense to consumers.

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In April 2006, the Federal Trade Commission outlined the parameters for a study it is conducting on the competitive effects of the use of authorized generics.

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In 2005, Congress closed a loophole in federal law that allowed brand companies to charge the federal government a higher price for authorized generics.

Background

Authorized generics -- brand pharmaceutical products masquerading as generics -- are an increasingly common brand tactic aimed at discouraging generic companies from challenging questionable brand patents. Although the practice might sound relatively benign, these products take advantage of an unintended loophole in federal law that if left unchecked, could result in fewer affordable medicines coming to market.

Congress rightly established a 180-day exclusivity period for generic manufacturers to inject more competition into the system with the goal of providing more timely access to and greater choices of affordable medicines. The generic company that is first to successfully challenge a questionable brand patent, file an abbreviated new drug application (ANDA) with FDA and receive approval to market that drug is awarded 180-day exclusivity. During the 180-day period, that generic company alone is permitted to compete with the brand company, allowing the generic company to bring affordable medicines to consumers faster.

Brand companies, determined to maintain their market share at all costs, recognized that by simply changing the label of their product, they could compete directly against the generic during the 180-period while still maintaining the higher price for the brand drug. Authorized generics are considered brand products by FDA, so the authorized generic does not have to go through the rigorous, abbreviated approval process required by a true generic

Related Information

Background

March 29, 2006 - FTC Proposes Study of Competitive Impacts of Authorized Generic Drugs

March 29, 2006 - Federal Register Notice for the FTC Study (95.63KB PDF)

May 12, 2005 - FTC Commissioner Leibowitz speech before the American Bar Association (1.81MB PDF)

Letters

May 12, 2005 - Letter from Senators Grassley, Leahy and Rockefeller to the FTC (1.81MB PDF)

March 18, 2005 - Letter from CMS Administrator McClellan to GPhA regarding authorized generics (302.42KB PDF)

Studies

July 31, 2006 - An Assessment of the Effect of Authorized Generics on Consumer Prices (321.71KB PDF)

Testimony & Content

July 26, 2006 - GPhA Comments to the Senate Aging Committee on Affordable Medicines (134.12KB PDF)