CONGRESS TARGETS ABUSE OF "AUTHORIZED GENERICS"

Congress is considering new legislationto outlaw the marketing of"authorized generics" during the 180-day exclusivity period of generic pharmaceuticalpatent challenges. Genericdrug industry leaders say that thismove is necessary to restore the pharmaceuticalmarket balance created bythe Hatch-Waxman Act of 1984. Thatlaw created the 180-day exclusivityperiod as an incentive to encouragegeneric companies to challenge questionableor frivolous brand pharmaceuticalpatents as part of the complex,intellectual property-based US genericdrug approval process.

When a drug patent holder repackagesits own branded drug and markets itthrough a subsidiary or third party as anauthorized generic during the 180-dayperiod of exclusivity, the incentivesdesigned to produce generic competitionare reduced or eliminated, industry officialscontend.

A bill to curb this practice was introducedin the House by Rep Jo AnnEmerson (R, Mo). It is a companion to similarSenate legislation sponsored by SenJohn D. Rockefeller IV (D,WVa).

The House proposal drew immediatesupport from officials at the GenericPharmaceutical Association (GPhA). Theysaid that the restrictions on authorizedgenerics would "eliminate a tactic that hasbeen utilized extensively by the brandpharmaceutical industry over the past 3years, to the detriment of consumers."

GPhA President and Chief ExecutiveOfficer Kathleen Jaeger said that "authorizedgenerics have upset the balance ofthe Hatch-Waxman Act by discouraginginvestment in generic patent challengesthat have previously delivered billions ofdollars in savings to American consumers."At the same time, this strategytends to "reward the brand companiesfor undermining the Hatch-Waxman system,"she said.

A new independent analysis of authorizedgenerics released by GPhA concludesthat the practice of introducing authorizedgenerics could "significantly reduce incentivesfor independent generic firms tochallenge invalid brand name patents andto develop noninfringing processes." Thestudy also found that the continued introductionof authorized generics "will leadgeneric firms to be less aggressive in competingagainst brand name firms, and theultimate losers will be consumers."