This post will be of interest to several of our clients. Last Thursday, three U.S. senators launched an effort to ban a practice that they say could lead to higher drug prices for consumers by undermining competition in the country’s $250-billion pharmaceutical market.
The lawmakers introduced a bill to limit the marketing of “authorized generics,” which are cheaper versions of branded prescription drugs that are licensed or manufactured by the brand owners. They are essentially the same medicine with a different label, usually introduced as the branded drug loses its patent protection.
Sen. Charles E. Schumer (D-N.Y.), who introduced the bill along with Sens. John D. Rockefeller IV (D-W.V.) and Patrick J. Leahy (D-Vt.), said in a written statement announcing the bill, ”Authorized generics are wolves in sheep’s clothing.”
Brand makers defend the practice, saying they are simply competing with generics at their own game and helping drive prices down.
Critics say authorized generics are designed to undermine true generic drug makers, whose sole business is to copy drugs cheaply, not to invent them.
It is expected that Pharmaceutical Research and Manufacturers of America (“PhRMA”) will lobby aggressively against the bill.
Under federal law, a generic maker that successfully contests a brand’s patent in court gains 180 days to exclusively market its generic version, during which it can make a larger profit in the absence of competition from other generic makers.
I anticipate that this will be a long, drawn out battle between generic companies, R&D pharmaceutical companies, Congress and the White House. It should make for good sound bytes going forward.