"Authorized generics undermine the incentive for bringing affordable generic medicines to market," said Kathleen Jaeger, GPhA President and CEO. "I hope that an FTC study will shine some light on the problem of authorized generics and put fairness back into the pharmaceutical industry."

During a speech today, FTC Commissioner Jon Leibowitz noted that with authorized generics, "[W]e could very well see fewer generic applications for smaller drugs ... this could lead to fewer generic products on the market, which could then result in less competition down the road. That would be bad for consumers." With respect to the Senators' request for a study, Leibowitz said, "I think we would be wise to take this request seriously."

Authorized generics are brand products masquerading as generics. They are identical products that go through the same brand manufacturing line, yet one bears the brand label, whereas the other bears the generic label. Two federal agencies, the Food and Drug Administration (FDA) and the Centers for Medicare and Medicaid Services (CMS), treat authorized generics inconsistently, resulting in two undesirable results. Specifically, FDA treats authorized generics as "brand products" for purposes of product approval and, thus, allows authorized generics to compete with the generic products awarded generic exclusivity (180 days). Authorized generics, therefore, devalue the 180-day exclusivity provisions of the Hatch-Waxman Act that provide the incentive for generic pharmaceutical companies to challenge weak and questionable pharmaceutical patents. Successful patent challenges significantly accelerate consumer access to affordable pharmaceuticals.

"In the long term, authorized generics could result in generic companies undertaking fewer patent challenges, which would result in higher drug costs for American consumers," said Jaeger. "At a time when programs like Medicare and Medicaid are struggling to manage increasing prescription drug costs, authorized generics only exacerbate their problems."

In contrast, CMS treats authorized generics as "generic products" for purposes of its Best Price calculation. The untoward result is that brand companies obtain a major windfall by not including in their CMS Best Price calculation the authorized generic product to the detriment of the federal and state government programs.

GPhA represents the manufacturers and distributors of finished generic pharmaceuticals, manufacturers and distributors of bulk active pharmaceutical chemicals, and suppliers of other goods and services to the generic drug industry. Generics represent 53% of the total prescriptions dispensed in the United States, but only 12% of all dollars spent on prescription drugs. For further information, please contact GPhA at 703-647-2480, or visit our web site at http://www.gphaonline.org/ .

Commissioner Leibowitz's speech is available online at http://www.ftc.gov/speeches/leibowitz/050512healthcare.pdf

Source: Generic Pharmaceutical Association

CONTACT: Andrea Hofelich, +1-703-647-2495, for Generic Pharmaceutical
Association

Web site: http://www.gphaonline.org/
http://www.ftc.gov/speeches/leibowitz/050512healthcare.pdf