Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Tuesday, May 1, 2007

FTC Seeks Comments on Study on Authorized Generic Drugs

Posted by D. Daniel Sokol

According to the FTC website posting:

The FTC is considering conducting a study to analyze the use and likely short- and long-run competitive effects of authorized generic drugs in the prescription drug marketplace. Before investigating these issues, the FTC is seeking public comments on its proposed information requests to firms in the prescription drug industry. The information collection requirements described below will be submitted to the Office of Management and Budget (“OMB”) for review, as required by the Paperwork Reduction Act (“PRA”) (44 U.S.C. 3501-3520).
In recent years and with increasing frequency, brand-name drug manufacturers have begun to market authorized generic drugs at precisely the same time that a paragraph IV generic is beginning its period of 180-day marketing exclusivity. The likely effects of this practice on generic competition have been subject to some debate. In the short run, the entry of an authorized generic drug may benefit consumers by creating additional competition that lowers generic prices further than if only the paragraph IV generic were marketed. Many generic manufacturers assert, however, that in the long run, consumers will be harmed because an expectation of competition from authorized generics will significantly decrease the incentives of generic manufacturers to pursue entry prior to patent expiration. For a generic manufacturer, the additional competition from an authorized generic may result in significantly less profit during the period of 180-day exclusivity than if the generic manufacturer had no authorized-generic competition during that time.
[The paper discusses five issues based on the initial comments that the FTC received]: (A) the practical utility of the proposed study and why it is necessary for the proper performance of the FTC’s functions; (B) suggestions to narrow the scope of the study; (C) suggestions to use alternative sources of information; (D) comments requesting limitations on the use of the information submitted; and (E) suggestions to broaden the scope of the study.

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