FTC Issues Report On Authorized Generics
Yesterday, the FTC issued “Authorized Generics: An Interim Report,” which contains the “first set of results from a study conducted to examine the short-term and long-term effects of ‘authorized generics’ on competition in the prescription drug marketplace.” The press release also notes that:
The Interim Report finds that drug prices are lower when authorized generics are marketed against a single generic drug than when they are not. With authorized generic competition during the 180-day marketing exclusivity period, retail drug prices are on average 4.2 percent lower than the pre-generic branded price, and wholesale drug prices are on average 6.5 percent lower than the pre-generic branded price.Authorized generic entry during this time also substantially reduces the revenues of a first-filer generic firm, with declines ranging from 47 to 51 percent. As a result, because a generic can earn greater revenues if an authorized generic does not enter the market, a generic firm may be willing to agree to defer its market entry in return for a brand’s promise not to launch a competing authorized generic during the 180-day marketing exclusivity period. A review of patent settlement agreements, the Interim Report states, reveals that such agreements appear to be more common now than in the past.
(I personally wonder if a 4% decline can be accurately be termed “substantial”).
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