“Authorized” Generic Study By FTC To Be Released In 2007

FTC is planning to survey approximately 190 firms, but seeks comments on how to reduce the number without undermining the study’s validity.

The Federal Trade Commission expects to complete its study of the impact of "authorized" generics in 2007.

While the timing of the report suggests that any Congressional activity related to authorized generics will be on hold for some time, the precedent of FTC's 2002 study on patent listings suggests that if the report makes policy recommendations, they have a fair shot at being passed into law.

FTC issued its ¹ request for comments on March 29, and, pending approval by the White House Office of Management & Budget, it expects to issue orders for information to companies later this year.

The study was requested by Sens. Charles Grassley (R-Iowa), Patrick Leahy (D-Vt.) and John Rockefeller (D-W.Va.) nearly a year ago to access the "short-term and long-term effects on competition" of authorized generics (² (Also see "FTC Should Study Competitive Impact Of "Authorized" Generics, Senators Say" - Pink Sheet, 12 May, 2005.)).

The generics industry has been concerned that authorized generics discourage firms from challenging patents because it reduces the profit incentive of the 180-day exclusivity period, while proponents of the practice argue that having multiple generics on the market during that time reduces prices for consumers.

Several petitions and lawsuits by generic firms aimed at getting the FDA to block authorized generics have been rebuffed, and while language including authorized generics in brands best price reporting has been included in congressional budget legislation, the effective date has been postponed and will likely be so again as the FTC study continues. In any event, generic firms do not anticipate the change in reporting to discourage the practice.

FTC's study will ask firms to report for each affected product "total sales, net of discounts, rebates, promotions, returns and chargebacks, to all customers in units, total prescriptions, and dollars" beginning a year before generic entry. Companies will also be requested to break out sales "to hospitals, clinics and long-term care facilities, including but not limited to independent cancer care centers and pain centers."

Approximately 190 firms - 80 brand, 10 authorized generic and 100 independent generic - are expected to be surveyed. FTC is seeking comments, however, on "ways to limit the number of companies included in the study without undermining the validity and reliability" of the results. Possibilities include reducing the number of drug products studied by only including those products in an oral solid form, eliminating generic companies that have filed only one ANDA during the study period, and reducing the study time period.

FTC will send special orders requesting the information "to brand-drug companies with products that have first faced generic competition since Jan. 1, 1999," generic drug companies that have marketed authorized generic drugs since then, and generic drug companies that have filed an ANDA containing Paragraph III and IV certifications since then.

The start date was set at 1999 because of broadening of eligibility for 180-exclusivity created by the Mova decision the year before.

"The Commission has entered into an agreement with the FDA to obtain information to identify the brand-drug companies and independent generic companies that meet these criteria," FTC explained. "Information received from the brand-name companies in response to the special orders will permit the Commission to issue subsequent special orders to authorized generic companies."

The request will include documents from brand firms that analyze how to respond to expected generic entry, "including through pricing changes." Generic firms will be asked for documents that consider "whether to file an ANDA containing a Paragraph III or IV certification (regardless of whether the company filed such ANDA)."

Comments are due to FTC by June 5.

-M. Nielsen Hobbs