Continued SupportSince the publication of our 2004 article, FDA and two federal courts of appeal have decisively rejected challenges to authorized generics. In response to citizen petitions filed by generic manufacturers Teva and Mylan, FDA determined that a branded company's decision to authorize a generic copy of its innovative drug, either on its own or through an agreement with a third party, was a "marketing arrangement" falling outside the agency's jurisdiction: "FDA does not regulate drug prices and has no legal basis on which to prevent an innovator company from marketing its approved NDA product at a price that is competitive with that charged by a first generic applicant to the market." Moreover, FDA determined that the practice was consistent with the goals of the Hatch-Waxman Amendments: "[I]t can be anticipated to encourage ANDA applicants to offer their products at lower prices during the exclusivity period, thereby reducing the substantial 'mark-up' the ANDA applicant can often apply during the period." Further, in the recently decided Mylan Pharmaceuticals v. FDA, the Fourth Circuit noted that in addition to making generic drugs more speedily available, Congress sought to protect a "countervailing interest ... namely, the intellectual property rights of pioneer drug companies," which have always been "free to license generic versions of their pioneer drugs."
High burden of proof The federal courts are typically disinclined to adopt highly speculative claims of injury that aren't tied to a particular product. A party attacking a specific authorized-generic arrangement would need to prove on a case-by-case, rule-of-reason basis that the presence of an authorized generic prevented the timely entry of other generics and an overall reduction in prices. Indeed, at this time, we are aware of no evidence that the practice of authorized generics has actually deterred any Paragraph IV certification or post-180-day generic entry, let alone a challenge to a patent that was invalid.
Additionally, studies by the Analysis Group, funded by Johnson & Johnson and Bear Stearns, suggest that authorized generics don't significantly decrease the incentives generic companies need to challenge vulnerable patents.