Washington Matters: More Generics Coming to Market Earlier

The FDA on July 2 gave its blessing to 2 techniques to promote the marketing of generic drugs—techniques which until now have been of questionable legality. These decisions are expected to result in more generic versions to choose from—and lower prices—the 6 months immediately following expiration of a drug patent. The agency says the new policy "increases competition, promoting lower prices for pharmaceuticals," but it leaves some generic drug manufacturers fuming. Stuart Williams, chief legal officer for Mylan Pharmaceuticals, insists that the FDA decisions violate the Hatch-Waxman Act, and a court challenge seems likely.

There's little doubt that the FDA rulings shoot big holes in the 180 days of exclusivity that Hatch-Waxman gives to the first generic maker to get marketing permission for a drug going off patent. But there's also little doubt that that exclusivity has led to prices for those new generics that are significantly higher initially and then drop a half-year later when other manufacturers are allowed to enter the market. The FDA's aim is to get consumers those lower prices sooner.

The marketing technique that got the most attention is known as "authorized generics," which are generics that are turned out under license from the patent holder. Mylan had asked the FDA to ban such deals, noting that on the very day it began what was supposed to be its 180-day exclusivity period for nitrofurantoin following expiration of the patent for Macrobid, Watson Pharmaceuticals and Procter & Gamble began selling an authorized generic version of the drug. Williams says that what is at stake is not just higher prices during the initial marketing period but the "lasting competitive advantage" that the first generic version of a drug enjoys. Teva Pharmaceuticals USA joined Mylan in the petition.

Getting less notice was a second decision by the FDA: turning down a petition from Pfizer. The brand-name pharmaceutical manufacturer wanted the agency to stop generic companies from waiving their 180-day exclusivity once they have won it. But the FDA noted that allowing a waiver of the exclusivity produces the public benefit of getting rival generic agents to consumers faster. Besides, a part of the ruling, which will likely be quoted in other situations, stated that the FDA's main focus is on promoting public health and that it "does not generally call for review of the business dealings of drug manufacturers."

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