FTC to study generic drug competition

The Federal Trade Commission has announced that it will conduct a focused study of generic drug competition. The proposed study would examine whether brand-name and generic drug manufacturers have entered into agreements, or have used other strategies, to delay competition from generic versions of patent-protected drugs. Among the issues to be explored by the proposed study is whether drug companies have manipulated certain provisions of the Hatch-Waxman Act to delay the marketing of generic drug products. A public comment period is required prior to approval from the office of management and budget to collect the necessary information.

"Over the next five years, brand-name drugs with combined U.S. sales approaching $20 billion will go off patent," FTC Chairman Robert Pitofsky said. "The goal of this study would be to continue the commission's look at the business relationships between brand-name and generic drug manufacturers to ensure that the process of bringing new, low-cost, generic alternatives to the marketplace - and into the hands of consumers - is not impeded in ways that are anticompetitive."

The commission's announcement comes just five months after it filed complaints against four drug companies for allegedly entering into agreements that effectively stopped the generic versions of two brand-name drugs from coming to market.

Hatch-Waxman

Under the Hatch-Waxman Act, a company can seek approval from the Food and Drug Administration to market a generic drug before the expiration of a patent relating to the brand-name drug that the generic is based on. In these cases, the generic drug manufacturer certifies in its abbreviated new drug application that the branded product's patent (or patents) is invalid or will not be infringed by the generic drug for which the ANDA applicant seeks approval.

The act then provides a 45-day window during which the patent holder may bring a patent infringement suit against the applicant. If such a suit is filed, the act forbids the FDA from approving the ANDA for 30 months or until the litigation is completed, whichever comes sooner.

The provision is generally thought to protect branded companies against patent infringement. To encourage generic competition, the first company to file an ANDA with the FDA is given the exclusive right to market the generic drug for 180 days. No other generic can gain FDA approval until this 180-day period expires.

The proposed study would examine whether the 30-month stay and 180-day marketing exclusivity provisions of the Hatch-Waxman Act have encouraged generic competition or facilitated the use of anticompetitive strategies. In addition, in light of the FTC's investigations of several cases in which the manufacturers of brand-name drug products and generic competitors have allegedly entered into anticompetitive agreements to delay generic entry, the proposed study would examine the use of agreements between pharmaceutical companies and any other strategies that may delay generic drug competition. PR