A little over a year ago, the Federal Trade Commission announced that it would “conduct a study of the use, and likely short- and long-term competitive effects, of authorized generics in the prescription drug marketplace.”  Antitrust Review analyzed the FTC’s announcement and comments it received (one, two and three posts on the comments).  Earlier today, the FTC approved for publication a Federal Register Notice regarding its study.  According to the FTC press release:

the Commission proposes to undertake a study to examine both the likely short-term competitive effects of authorized generic drug entry and, to the extent possible, its likely long-term impact on competition by generic drug manufacturers. In its Notice, the Commission responds to public comments regarding its original proposal and describes how it has tailored its information requests to the needs of the planned study. Pursuant to requirements of the Paperwork Reduction Act, the FTC is providing a second opportunity for public comment while requesting that the Office of Management and Budget grant clearance for the proposed information requests. Comments are due to the Commission on or before June 4, 2007.

The Notice itself notes that:

The likely effects of [authorized generics] 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.

It goes on to state that:

Among other things, the proposed study will examine prices (including rebates, discounts, etc.) for brand-name and generic drugs, both with and without competition from authorized generics; business reasons that support authorized generic entry; factors (including product development and litigation costs) relevant to the decisions of generic firms about whether and under what circumstances to seek entry prior to patent expiration; and licensing agreements regarding authorized generics. This information will enable the proposed study to make new contributions on the effects of authorized generic drug entry on prescription drug prices and, in particular, permit an evaluation of the impact of authorized generic drugs on the incentive offered by the period of 180-day exclusivity afforded to generic drugs that enter the market as the result of an ANDA with a paragraph IV certification.

The Notice also has lengthy and detailed responses to the comments, most of which concerned the potentially burdensome document requests.

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