A handful of Senate Democrats have revived a bill that would restrict brand-name drugmakers from being able to market an authorized generic during the 180-day exclusivity period that follows the first successful challenge to a patent by a generic rival. Known as the Fair Prescription Drug Competition Act, the bill was first introduced by US Senator Jay Rockefeller, a West Virginia Democrat, in 2007.
Authorized generics, as you know, may be sold by brand-name drugmakers after a patent expires, although marketed differently. However, a 2009 report by the US Federal Trade Commission found that consumers are harmed by deals between brand-name and generic drugmakers in which a generic entry is delayed. The FTC noted that the arrival of an authorized generic during that 180-day exclusivity period can reduce the revenue of the first-filer generic drugmaker by 47 percent 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," the FTC concluded, noting that prices are lower when authorized generics are marketed against a single generic than when they are not. And so consumers would not benefit from lower-cost generics.
"First, generic drugs, and accompanying price discounts, would not be available to consumers as soon as otherwise would have been the case," the FTC wrote. "Second, consumers would lose the benefit of price discounts from authorized generic competition during the 180-day marketing exclusivity period, because the brand has agreed not to compete against the generic drug during that time" (read the report here).
At the time, Rockefeller first introduced the proposal, he called authorized generics a "sham" and described the legislation as a way to close a "prominent loophole" used by brand-name drugmakers that are "desperately trying to protect their market share and prevent consumers from cashing in on savings from generic drugs."
"This practice of re-labeling a brand product and placing it on the market to undermine the 180-day exclusivity period will only serve to reduce generic competition and lead to longer brand monopolies and higher healthcare costs over the long-term," he argued (here is the complete statement and you can read the bill here by clicking on 'bill number' and typing in S 373). Co-sponsors include Hawaii's Dan Inouye; Vermont's Pat Leahy; New York's Chuck Schumer; New Hampshire's Jeanne Shaheen and Michigan's Debbie Stabenow.