[Ip-health] FTC Testifies on Barriers to the Entry of Generic Drugs

[Mike Palmedo]

http://www.pharmalive.com/News/index.cfm?articleid=3D358653&categoryid=3D27

FTC Testifies on Barriers to the Entry of Generic Drugs - There Have
Been, Continue to Be, Competitive Problems in Pharmaceutical Markets

WASHINGTON, July 20, 2006--Testifying today on behalf of the Federal
Trade Commission before the U.S. Senate=92s Special Committee on Aging,
Commissioner Jon Leibowitz described the FTC=92s work in the area of
branded and generic pharmaceutical competition and discussed barriers
that can lead to the delay of generic entry into the U.S. marketplace.
Despite the Congress=92s =93remarkable record of success=94 in working to
ensure that consumers gain access to generic drugs as quickly as
possible, he said =93there have been, and continue to be, competitive
problems in pharmaceutical markets.=94

Opening with a discussion of pharmaceutical prices, the testimony noted
that =93pharmaceutical expenditures are a concern not only to individual
consumers, but also to government payers, private health plans, and
employers. Generic drugs play an important role in containing rising
prescription drug costs, by offering consumers therapeutically identical
alternatives to brand-name drugs, at a significantly reduced cost.=94 To
address the cost issue, Congress passed the Hatch-Waxman Amendments to
the Food, Drug, and Cosmetic Act in 1984, establishing a regulatory
framework that sought to balance innovation by research-based drug
companies with opportunities for entry by generic drug manufacturers.
Under Hatch-Waxman, the Congressional Budget Office estimated that
consumers saved between $8 billion and $10 billion on retail drug
purchases in 1994 alone.

After Hatch-Waxman went into effect, however, some drug companies
entered into anticompetitive agreements, effectively settling patent
infringement suits in a way that harmed consumers by illegally delaying
generic entry. The FTC has =93aggressively protected competition=94 in the
pharmaceutical industry by bringing enforcement actions challenging such
agreements, as well as by filing amicus briefs on competition-related
issues in a range of drug cases. On a policy level, the FTC has promoted
greater understanding of the role of competition in the industry through
multiple studies, including 2002's =93Generic Drug Entry Prior to Patent
Expiration.=94 The FTC now reviews all agreements between drug companies
settling patent infringement disputes to ensure they are not illegally
anticompetitive.

The testimony next addressed how patent litigation settlements can delay
generic drug entry. It discussed the types of patent settlements that
the Commission believes are anticompetitive =96 presenting possible
legislative solutions to this problem =96 as well as how brand-name
pharmaceutical manufacturers have used the 180-day marketing exclusivity
period granted by Hatch-Waxman for generic first-filers to block generic
entry. It also discussed how recent Court of Appeals rulings may have
led to companies entering into more of such settlements.

=93In the current fiscal year, we have seen significantly more settlements
with payments and restriction of entry =96 seven of ten agreements between
brand-name and generic companies included a payment from the brand-name
to the generic company and an agreement to defer generic entry,=94 the
testimony stated, citing the most recent information on such settlements
provided to the Commission.

Continuing, the testimony reviewed the antitrust implications of
agreements entered outside the context of patent litigation, discussing
the FTC=92s ongoing litigation against Warner-Chilcott and Barr
Laboratories regarding the Ovcon=AE oral contraceptive, and its
enforcement actions against agreements between generic companies that
delay generic entry and competition.

Finally, the testimony discussed the Commission=92s plans to study the
impact of authorized generic drugs on pharmaceutical markets, stating
that the FTC received public comments on the proposed study through June
of this year and is now reviewing those comments prior to seeking OMB
approval to collect information from drug manufacturers.

The Commission vote authorizing the presentation of the testimony and
its inclusion in the formal record was 5-0.

Copies of the Commission=92s testimony are available on the FTC=92s Web sit=
e
at www.ftc.gov. The FTC=92s Bureau of Competition seeks to prevent
business practices that restrain competition. The Bureau carries out its
mission by investigating alleged law violations and, when appropriate,
recommending that the Commission take formal enforcement action. To
notify the Bureau concerning particular business practices, call or
write the Office of Policy and Evaluation, Room 394, Bureau of
Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W.,
Washington, DC 20580, Electronic Mail: antitrust@ftc.gov; Telephone
(202) 326-3300. For more information on the laws that the Bureau
enforces, the Commission has published =93Promoting Competition,
Protecting Consumers: A Plain English Guide to Antitrust Laws,=94 which
can be accessed at http://www.ftc.gov/bc/compguide/index.htm


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