Rep. Henry Waxman (D-Cal) introduced the Non-Prescription Drug Modernization Act of 2007 (H.R. 4083) legislation in the House. The bill was co-sponsored by Rep. Tom Allen (D-ME) and was referred to the House Energy and Commerce Committee.

The bill will “amend the Federal Food, Drug, and Cosmetic Act to provide for the amendment or repeal of monographs, to expand the Food and Drug Administration’s (FDA) authority to regulate drug advertising.”

The Act is a reaction to a recent FDA advisory panel recommendation that the FDA should ban OTC cough and cold medications for children under the age of six. Under current law, if the FDA wants to follow its committee’s recommendations, the Agency would have to go through a lengthy rulemaking process that could take years to complete.

The Non-Prescription Drug Modernization Act would give the FDA the authority to act quickly to remove unsafe or ineffective OTC drugs, by allowing the Agency to revoke authorization to market such drugs without a lengthy rulemaking process.

The Act would allow FDA to bypass these procedures and amend or repeal a monograph in a more timely fashion in two circumstances:

1)  When FDA, on its own initiative, finds that a monograph must be amended or repealed because a drug under the monograph may pose a significant risk; or

2)  After a meeting of one of the Agency’s Advisory Committees, when FDA finds that a drug under the monograph lacks evidence of effectiveness.

The Modernization Act would also give the FDA the authority to regulate OTC drug advertisements. Currently, the FDA regulates advertisements for prescription drugs, while the Federal Trade Commission (FTC) regulates advertisements for OTC drugs. It would also provide for civil monetary penalties for direct-to-consumer OTC drug advertisement violations.

The bill would also require the FDA to report to Congress on whether any of the current OTC drug monographs are in need of review, amendment, or repeal.

(Side Note:  Join a Fantasy Congress League and you can follow the progress of this bill here.)

Posted December 11th, 2007 by Stephen Albainy-Jenei in Drug Legislation, FTC, FDA
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While not as fundamentally important as Bong Hits 4 Jesus, the U.S. Supreme Court declined to hear a case profoundly important to the pharmaceutical industry. For the second time, the Court rebuffed a challenge to a “reverse payments” deal — this one where an AstraZeneca company paid off a Barr Pharmaceuticals company to delay marketing of generic tamoxifen.

Earlier, the Solicitor General’s Office submitted a brief to the Supreme Court urging the Court to deny certiorari in the reverse payment case Joblove v. Barr Labs (S.Ct. No. 06-830). The Supreme Court had asked for the government’s views on the antitrust effects of settlement agreements between holders of drug patents and generic drug makers enjoying the 180-day market exclusivity after Food and Drug Administration approval. This case involves the same legal issue that was raised in FTC v. Schering-Plough Corp., No. 05-273 (Jun. 26, 2006; denying certiorari).

The issue is the appropriate antitrust standard applicable to an agreement between a brand pharmaceutical manufacturer (and patent holder) and a generic market entrant (and alleged patent infringer) whereby the patent holder shares a portion of its future profits with the alleged infringer in exchange for the latter’s agreement to not market its competitive product. The three Circuit Courts of Appeals that have addressed the issue have rendered inconsistent decisions.

Zeneca manufactures and markets tamoxifen citrate (tamoxifen), a drug for the treatment of breast cancer, under the brand-name Nolvadex®. Zeneca’s former parent, Imperial Chemical Industries PLC (ICI), held the patent for tamoxifen, U.S. Patent 4,536,516. In 1987, Barr amended its ANDA for tamoxifen to include a Paragraph IV Certification, which prompted a patent infringement suit by ICI (Zeneca’s parent). In 1992, the ‘516 Patent was held invalid and unenforceable.

While an appeal from the judgment invalidating the patent was pending in the Federal Circuit, Zeneca and ICI, the patent holders, and Barr, the alleged infringer, agreed to settle the case. Zeneca and ICI agreed to: (1) pay Barr $21 million; (2) pay Barr’s supplier $35.9 million; and (3) supply Barr with Zeneca-manufactured tamoxifen for resale in the United States at a high royalty rate. In return, Barr agreed to: (1) abandon its successful challenge of the tamoxifen patent; (2) withdraw its Paragraph IV Certification to manufacture and market generic tamoxifen prior to the patent’s expiration; and, if possible, and (3) prevent competitive entry by future generic manufacturers.

Now, the FTC alleges that the agreements unlawfully restrained competition in the market for tamoxifen in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and analogous state statutes. The question presented being:

“Under what circumstances is an agreement by a brand pharmaceutical manufacturer (and patent holder) to share a portion of its future profits with a generic market entrant (and alleged patent infringer), in exchange for the generic’s agreement not to market its product, a violation of the antitrust laws?”

In FTC v. Schering-Plough, the Solicitor General urged that no conflict existed that would warrant the Court’s review of this issue, based on the same body of case law that exists today.

Oddly, while stating up-front that this case “raises important and complex issues“:

There may be particular reason to be concerned about the competitive consequences of a settlement that includes a substantial payment from the patent holder to the alleged infringer. Such a “reverse payment” can be a device for the sharing of the monopoly rents that are preserved when the alleged infringer is induced to stay out of the relevant market and drop its challenge to the validity of the patent.

and while noting that “the court of appeals adopted an insufficiently stringent standard for scrutinizing patent settlements that include reverse payments”:

The dissenting opinion below correctly suggested that a court reviewing an antitrust challenge to a settlement of a patent infringement claim that includes a reverse payment should apply the rule of reason—and that, in doing so, a court should consider “the strength of the patent as it appeared at the time at which the parties settled.” Pet. App. 125a-126a. The panel majority, however, rejected that approach and instead held that such a settlement would be valid unless (1) the settlement “extend[ed] * * * the monopoly beyond the pat-ent’s scope”; (2) the settlement involved fraud; or (3) the underlying lawsuit was “objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits.” Id. at 52a (internal quotation marks and citation omitted). That standard is erroneous.

The SG turned around and pleaded that “this case does not present a good vehicle for addressing the question presented”:

Although the court of appeals applied an erroneous standard for scrutinizing patent infringement settlements that include reverse payments, this case is not an attractive vehicle for the Court’s consideration of the difficult and context-sensitive questions involved in assessing the legality of such settlements. The federal antitrust claims in this case appear to be moot, the factual setting is atypical and unlikely to recur, and subsequent regulatory changes may undercut one of the theories of competitive harm advanced by petitioners. For those reasons, the petition should be denied.

An official at the U.S. Federal Trade Commission said the FTC remains committed to pursuing cases against reverse payments by pharmaceutical companies that it deems to be anti-competitive. The FTC had filed an appeal but did not file a brief in this case.

See the Solicitor General’s Office Brief.

Posted June 27th, 2007 by Stephen Albainy-Jenei in Generic drugs, FTC
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In another stirring chapter of the on-going Plavix debacle, the Bristol-Myers Squibb pleaded guilty to two criminal counts of two violations of the federal False Statements Act and will pay a $1 million fine (the maximum penalty) for lying to the federal government about a patent deal involving the anticoagulant drug Plavix (clopidogrel bisulfate).

The Department of Justice claimed that Bristol-Myers acted to supress competition for Plavix that could have reduced the cost the drug. In 2006, Bristol-Myers and Apotex were in litigation over the validity of the patent for Plavix and were negotiating a settlement of that litigation. However, at the same time, Bristol-Myers was subject to a separate consent decree for unrelated conduct with the Federal Trade Commission that required it to submit any proposed patent settlements for review and approval by the FTC.

The FTC warned Bristol-Myers that it would not approve a settlement of the Plavix litigation if the company agreed not to launch its own generic version of Plavix that would compete against Apotex for generic sales.

Bristol-Myers wanted to protect its patent and struck a deal with Apotex to refrain from selling generic Plavix in the U.S. until mid-2011. But the proposed deal was rejected by state regulators in the U.S., leading Apotex to sell generic Plavix in August 2006. A federal judge issued a injuction three weeks later.

After entering into the agreement, Bristol-Myers allegedly concealed it from and then lied about its existence to the FTC. The Department of Justice charged Bristol-Myers with filing two false statements to the FTC as part of its effort to hide part of its agreement with Apotex.

The plea remains subject to a judge’s approval, and authorities continue to investigate the deal. At the same time, the injunction against Apotex remains in place while a federal judge decides a patent-infringement claim against.

The FTC has challenged similar arrangements, arguing that they are anti-competitive and hurt consumers, and asked the Supreme Court to hear a case involving Schering-Plough in which a similar deal was struck. Although the Supreme Court declined to take on that case, the FTC has signalled that it will continue to strike down deals between big drug companies and generic manufacturers that involve so-called “reverse payments”.

Meanwhile, Sanofi-Aventis SA was last seen acting like it doesn’t know Bristol-Myers.

Posted June 8th, 2007 by Stephen Albainy-Jenei in FTC
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In the reverse payment case Joblove v. Barr Labs (S.Ct. No. 06-830), the Supreme Court has now asked for the government’s views on the antitrust effects of settlement agreements between holders of drug patents and generic drug makers enjoying the 180-day market exclusivity after Food and Drug Administration approval. This case involves the same legal issue that was raised in FTC v. Schering-Plough Corp., No. 05-273 (Jun. 26, 2006; denying certiorari), as well as three other recent petitions.The issue is the appropriate antitrust standard applicable to an agreement between a brand pharmaceutical manufacturer (and patent holder) and a generic market entrant (and alleged patent infringer) whereby the patent holder shares a portion of its future profits with the alleged infringer in exchange for the latter’s agreement to not market its competitive product. The three Circuit Courts of Appeals that have addressed the issue have rendered inconsistent decisions.

These antitrust class actions involve the prescription drug tamoxifen citrate (tamoxifen), a drug for the treatment of breast cancer. Zeneca manufactures and markets tamoxifen under the brand-name Nolvadex®. Zeneca’s former parent, Imperial Chemical Industries PLC (ICI), held the patent for tamoxifen, U.S. Patent 4,536,516 (‘516 Patent). In 1987, Barr amended its ANDA for tamoxifen to include a Paragraph IV Certification, which prompted a patent infringement suit by ICI (Zeneca’s parent which was then the patent holder). In 1992, the ‘516 Patent was held invalid and unenforceable.

While an appeal from the judgment invalidating the patent was pending in the Federal Circuit, Zeneca and ICI, the patent holders, and Barr, the alleged infringer, agreed to settle the case. Zeneca and ICI agreed to: (1) pay Barr $21 million; (2) pay Barr’s supplier $35.9 million; and (3) supply Barr with Zeneca-manufactured tamoxifen for resale in the United States at a high royalty rate. In return, Barr agreed to: (1) abandon its successful challenge of the tamoxifen patent; (2) withdraw its Paragraph IV Certification to manufacture and market generic tamoxifen prior to the patent’s expiration; and, if possible, and (3) prevent competitive entry by future generic manufacturers.

Now, the plaintiffs allege that the Agreements unlawfully restrained competition in the market for tamoxifen in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and analogous state statutes. The question presented being “Under what circumstances is an agreement by a brand pharmaceutical manufacturer (and patent holder) to share a portion of its future profits with a generic market entrant (and alleged patent infringer), in exchange for the generic’s agreement not to market its product, a violation of the antitrust laws?”

In FTC v. Schering-Plough Corp., the Solicitor General concluded that no conflict exists that would warrant this Court’s review of this issue, based on the same body of case law that exists today. The court of appeals, after noting the public policy favoring settlement of litigation and the statutory right of patentees to exclude competition with in the scope of their patents, rejected that this violated the Sherman Act per se by settling, instead of litigating, a legitimate dispute between them over the validity of the patent for the drug tamoxifen. The court agreed that “’simply because a brand-name pharmaceutical company holding a patent paid its generic competitor money cannot be the sole basis for a violation of antitrust law,’ unless the ‘exclusionary effects of the agreement’ exceed the ’scope of the patent’s protection.’”

To add mud to the mix, the Preserve Access to Affordable Generics Act (S. 316) has been introduced into Congress to prohibit brand name drug companies from paying off generic drug companies to delay the entry of a generic drug into the market.

This would amend the Clayton Act (15 U.S.C. 12 et seq.) adding section 28, entitled “Unlawful Interference with Generic Marketing.” This section would read:

(a) It shall be unlawful under this Act for any person, in connection with the sale of a drug product, to directly or indirectly be a party to any agreement resolving or settling a patent infringement claim which (1) an ANDA filer receives anything of value; and (2) the ANDA filer agrees not to research, develop, manufacture, market, or sell the ANDA product for any period of time.

(b) Nothing in this section shall prohibit a resolution or settlement of patent infringement claim in which the value paid by the NDA holder to the ANDA filer as a part of the resolution or settlement of the patent infringement claim includes no more than the right to market the ANDA product prior to the expiration of the patent that is the basis for the patent infringement claim.

We’ll keep you posted on developments.

Posted March 27th, 2007 by Stephen Albainy-Jenei in FTC
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There is more backlash by generic drug companies against the user fees for generic drug reviews proposed in the 2008 budget. The budget proposal would increase funds for FDA by $100 million, including a large increase in user fees for brand-name pharmaceutical companies and the first fees for generic pharmaceutical companies. The $2.1 billion FDA budget includes almost $444 million in user fees from industries regulated by the agency, with $15.7 million in fees from generic pharmaceutical companies.

The user fee program, which was first authorized by the Prescription Drug Use Fee Act (PDUFA) in 1992, helps fund the FDA’s human drug review program achieve demanding performance goals. Over the years, the PDUFA programs, which have to be reauthorized by Congress every five years, have enabled the agency to dramatically reduce its review times for drugs and biological medications while increasing scientific consultations, clarifying issues involving drug development, and increasing oversight of postmarket safety. Pharmaceutical Research and Manufacturers of America (PhRMA) estimates that pharmaceutical companies will fund almost 60% of the cost of FDA reviews of applications for prescription drugs in FY 2008, compared with about 40% in FY 1998.

The biggest recommended increase, of $29.3 million, would provide a major boost for FDA activities to ensure the safety of medications after they are on the market. The increased funds would be available for FDA drug safety activities for marketed medications throughout as long as they remain on the market and would increase FDA’s drug safety capacity for surveillance including hiring an additional 82 employees to perform postmarket safety work.

Another $4.6 million in new user fees and 20 employees will go to help expand FDA’s implementation of guidance for FDA’s reviewers (Good Review Management Principles) and develop guidelines for industry on clinical trial designs and other topics; and additional $4 million to improve the information technology activities for human drug review by moving the agency and industry towards an all-electronic environment.

The Generic Pharmaceutical Association (GPhA) counters that the slow entry of generics on the market are due to the brand name companies actions including citizen petitions and authorized generics (generic drugs launched by brand companies during the 180-day exclusivity period).

The FDA contends that the user fees would help it process applications for generic drugs - the FDA has a backlog of more than 1,200 generic drug applications. They are also looking into ways to address citizen-petition issues. A recent study found that 76 percent of citizen petitions filed between 2000 and 2005 were ultimately dismissed by the FDA as having no merit. GPhA is urging Congress to act against “the abuse of the citizen petition process” while PhRMA is against banning authorized generics or limiting citizen petitions.

These concerns are being driven by the fact that the U.S. generic drug companies are facing shrinking profit margins as global competition increases in the $60 billion market for generic drugs. Patented drugs worth approximately $16 billion a year are set to expire this year alone. This has prompted a lot of outcry from the generic companies over the so-called authorized generics. 

The provisions of the Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman Amendments) which govern the generic drug approval process give 180 days of marketing exclusivity to certain generic drug applicants. The statute provides an incentive of 180 days of market exclusivity to the “first” generic applicant who challenges a listed patent by filing a paragraph IV certification and running the risk of having to defend a patent infringement suit.

The provisions of the (Hatch-Waxman Amendments) which govern the generic drug approval process give 180 days of marketing exclusivity to certain generic drug applicants. The statute provides an incentive of 180 days of market exclusivity to the “first” generic applicant who challenges a listed patent by filing a paragraph IV certification and running the risk of having to defend a patent infringement suit.

The statute provides that the first applicant to file a substantially complete ANDA containing a paragraph IV certification to a listed patent will be eligible for a 180-day period of exclusivity beginning either from the date it begins commercial marketing of the generic drug product, or from the date of a court decision finding the patent invalid, unenforceable or not infringed, whichever is first.

Authorized generics are brand pharmaceutical products re-branded as generics and aimed at discouraging generic companies from challenging questionable brand patents. Under federal law, the generic company that is first to successfully challenge a questionable brand patent, file an abbreviated new drug application (ANDA) with FDA and receive approval to market that drug product is awarded 180 days of marketing exclusivity. During the 180-day period, that generic company alone is permitted to compete with the brand company, allowing the generic to recoup costs incurred for undertaking a patent challenge.

Brand drug makers have figured out that by re-labeling their own product, they can compete directly against the generic during the 180-period. Authorized generics are considered brand products by the FDA, so the authorized generic does not have to go through the abbreviated approval process required by a true generic. Brand companies argue that authorized generics increase competition and lower prices, but the Federal Trade Commission (FTC) thinks differently.  Sales of an authorized generic during the exclusivity period can cut the generic maker’s profits by 59 percent.Prescription Drug User Fee Rates for Fiscal Year 2007 (PDF)

PDUFA Fact Sheet 

Posted February 27th, 2007 by Stephen Albainy-Jenei in FTC, FDA
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The U.S. Federal Trade Commission’s Bureau of Competition issued a summary of agreements filed with the Commission in fiscal year 2006 by generic and branded drug manufacturers. The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 requires drug companies to file certain agreements with the FTC and the U.S. Department of Justice.

Basically, the FTC is concerned about the recent use of anti-competitive drug patent deals — especially the practice of paying generic rivals to keep alternatives off the market, known as reverse payments. The agency contends that in some cases those settlements stifle competition because drugmakers are paying generics to stay out of the market.

In fiscal year 2006, there were 28 final settlements, and in half of those – 14 – the generic both received compensation and agreed not to market its product for a period of time. In contrast, only three of the eleven settlements in 2005 and none of the fourteen settlements in 2004 had both provisions.The compensation to the generic took different forms, including: 1) payments for co-promoting the brand product, 2) payments for supplying, or being available to supply, the brand with raw material or finished drug product; 3) an agreement by the brand not to compete with an authorized generic, 4) payments for intellectual property to the brand, and 5) payments as part of a co-development project between the brand and the generic.

Nine of the 11 settlements involving first-filers contained both a payment to the generic and a restriction on generic entry. The first-filer is the first generic company to file an abbreviated new drug application that claims the patent (or patents) protecting the brand drug are invalid or will not be infringed by the generic’s product. The first-filer receives 180 days of market exclusivity, which means the Food and Drug Administration may not, with limited exceptions, approve another generic filer’s product until 180 days after the first-filer goes to market.

The report notes that all of the agreements reported in FY 2006 occurred after the 11th Circuit Court’s decision in Schering-Plough v. Federal Trade Commission, reversing the FTC decision that two settlements involving a restriction on generic entry and compensation to the generic manufacturers violated the FTC Act.

The other highlights of the summary are that: 1) overall there were 45 agreements reported; 2) eight were interim agreements that occurred during patent litigation between a brand and a generic company, but did not resolve the litigation; and 3) one agreement was between a first-filer generic and a subsequent generic filer.

Meanwhile, the Generic Pharmaceutical Association (GPhA) came out with a statement saying that patent settlements between brand and generic pharmaceutical companies can benefit consumers by bringing affordable medicines to market sooner. The GPhA urges that the Hatch-Waxman Act of 1984 works in allowing the resolution of patent disputes before the expiration of patents thus generating savings for consumers.

Text of the Report

via: Antitrust Review and Blawg Review

Also see:

Senate Committee Hears Arguments Regarding Reverse Payments

How Settlements Make Strange Bedfellows: Or How the Federal Trade Commission has Managed to Unite the Entire Pharmaceutical Industry (but only in Opposition to the FTC’s Position on Exclusion Payment Settlements)

Posted January 17th, 2007 by Stephen Albainy-Jenei in FTC
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Today, the Senate Judiciary Committee held a meeting to discuss the topic of reverse payments in a session entitled, “Paying Off Generics to Prevent Competition with Brand Name Drugs: Should It Be Prohibited?” Sen. Patrick Leahy (D-VT) is chairman of the committee.

Some of the witnesses are Commissioner of the Federal Trade Commission, Jon Leibowitz, former Rep. Billy Tauzen (R-LA), and CEO of Barr Pharmaceuticals, Bruce Downey. Leibowitz was to present the FTC’s views on reverse payments and the effect of reverse payment out-of-court settlements on delaying generic market entry. A reverse payment is the practice where a brand company pays a generic firm to delay the launch of a competing generic product.

The U.S. Federal Trade Commission (FTC) is concerned about the recent use of anti-competitive drug patent deals in light of recent court rulings, which may spur drug companies to step up a practice of paying generic rivals to keep alternatives off the market.

The FTC has filed a series of lawsuits challenging patent settlement agreements between major drugmakers and generic companies. The agency contends that in some cases those settlements stifle competition because drugmakers are paying generics to stay out of the market.

An earlier decision in Schering-Plough makes it very difficult (if not impossible) for parties challenging patent settlements to do so based on the terms of the settlement itself (i.e., the inclusion of a reverse payment). Plaintiffs will need to show that the generic company’s product did not infringe on a valid patent – a high hurdle to get over indeed.

The Supreme Court denied certiorari in Schering-Plough where the FTC asked:

1. Whether an agreement between a pharmaceutical patent holder and a would-be generic competitor, in which the patent holder makes a substantial payment to the challenger for the purpose of delaying the challenger’s entry into the market, is an unreasonable restraint of trade.

2. Whether the court of appeals grossly misapplied the pertinent “substantial evidence” standard of review, by summarily rejecting the extensive factual findings of an expert federal agency regarding matters within its purview.

In a related matter, after declining to take up the issue in Schering-Plough, consumer groups are now petitioning the Court to basically take up the same issue in the similar case In re: Tamoxifen Citrate Antitrust Litigation.

Earlier this month, Sen. Herb Kohl (D-Wis.), the incoming chairman of the Judiciary Committee’s Antitrust, Competition Policy and Consumer Rights Subcommittee, re-introduced the “Preserve Access to Affordable Generics Act,” a bill that would prohibit brand drug manufacturers from using out-of-court settlements known as reverse payments to delay generic entry into the market.
See earlier testimony here.

Also:

Drug Patent Deals Raise FTC Concerns

Are There Competitive Problems in Pharmaceutical Markets? The FTC says “Yes”

How Settlements Make Strange Bedfellows: Or How the Federal Trade Commission has Managed to Unite the Entire Pharmaceutical Industry (but only in Opposition to the FTC’s Position on Exclusion Payment Settlements)

Posted January 16th, 2007 by Stephen Albainy-Jenei in FTC, Current Affairs
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If you’re familiar with the drug industry, it should come as no great shock that the Generic Pharmaceutical Association (GPhA) disagrees with a report put out by the Pharmaceutical Research and Manufacturers of America (PhRMA).

According to a recent report commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA), wholesale price discounts off brand prices on average were 15.8% greater in markets with authorized generics than in those without them.

The GPhA released its own analysis of authorized generics that concluded that the practice of introducing authorized generics (AGs) “significantly reduce incentives for independent generic firms to challenge invalid brand name patents and to develop non-infringing processes.” This analysis also raised questions about the validity of the PhRMA study. The study concluded that, despite PhRMA’s claims to the contrary, “the long-term effect of allowing authorized generics on the market during the 180-day generic exclusivity period will be less competition and reduced access to cheaper drugs.”

The GPhA study of the PhRMA study concluded that the prices consumers pay will be virtually unchanged by the presence or absence of authorized generics (the GPhA claims that much of PhRMA’s alleged “discount” associated with authorized generics is accounted for by higher brand name drug prices). It should be no big surprise that the GPhA also claims that allowing authorized generic entry during the 180-day exclusivity period harms the incentives generic firms have to challenge invalid patents or develop products.

An authorized generic is the brand’s product repackaged and marketed either through a subsidiary or third-party. Because the brand is selling part of its inventory as a generic, it can currently compete with the true ANDA generic during the exclusivity period.

In creating the Hatch-Waxman Act, Congress determined that it was in the best interest of consumers to create the 180-day incentive to encourage generic companies to challenge questionable or frivolous brand pharmaceutical patents as part of the complex, intellectual property-based U.S. generic drug approval process. The 180-day exclusivity provision of the patent challenge process provides the check and balance in the drug patenting process, while also providing generic companies with a mechanism to recoup the significant costs of litigation and provides incentives to challenge more questionable patents in the future.

When authorized generics are marketed during the Act’s 180-day exclusivity period for first generic entrant, they reduce incentives for independent generic firms to challenge brand name patents and to develop non-infringing processes. Supporters argue that authorized generics offer significant consumer benefits.

The Drug Price Competition and Patent Term Restoration Act, known as the Hatch-Waxman Act, added section 505(j) to the Food, Drug, and Cosmetic Act. This created the Abbreviated New Drug Application (ANDA) process. The Hatch-Waxman Act, and specifically the ANDA process, were designed to provide independent generic firms a strong incentive to develop and introduce lower cost generic drugs to consumers. To implement this policy goal, Congress provided that the first generic ANDA filer that challenged an invalid brand name firm patent on which the brand name product relied, or that developed a non-infringing means to produce the same drug, would be granted a 180-day marketing exclusivity period. This process is known as the paragraph IV certification process.

The brand name firm may challenge the generic firm’s paragraph IV certification, claiming that the generic product violates the brand name firm’s patent rights. If a patent infringement action is filed within 45 days by the brand name firm, the FDA may not approve the ANDA for 30 months, or until the patent dispute has been resolved, whichever is sooner.

An ANDA applicant whose ANDA contains a paragraph IV certification is protected from competition from subsequent generic versions of the same drug product for 180-days after either the first marketing of the first applicant’s drug or a decision of a court holding the patent that is the subject of the paragraph IV certification to be invalid or not infringed.

Don’t look for this sparring over authorized generics to end soon. This political football is hotly contested by the generic and brand-name drug companies, due to the billions of dollars at stake. The fact is that the number of authorized generics produced by the name brand companies has increased considerably over the past few years, and the issue will only get hotter. Where brand name drug pipelines are not as full as they could be, these companies will do whatever it takes to hold on to market share.

See the GPhA Report here.

For more on the FTC’s investigation into the matter, see here.

For the bill introduced to limit authorized generics, see here.

Posted August 25th, 2006 by Stephen Albainy-Jenei in FTC, FDA, Current Affairs
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