[Ip-health] Speech on Generic Drugs by FTC Commissioner Leibowitz

[James Love]

Begin forwarded message:

From: David Balto <dbalto@YAHOO.COM>
Date: October 7, 2006 5:04:10 PM EDT
To: AT-HCIC@MAIL.ABANET.ORG
Subject: [AT-HCIC] Extremely Interesting Speech on Generic Drugs by
Commissioner Leibowitz

A couple weeks ago FTC Commissioner Leibowitz spoke at the Legal and
Policy Conference of the generic Pharmaceutical  Conference.  It was
an SRO audience and they were not dissapointed.  Here are some
highlights

Leibowitz spoke about areas of agreement with the generic drug
industry and areas of disagreement (obviously the issue of drug
settlements).

Areas of agreement

1.  Citizen petitions.  He agrees that there is a need to reform the
citizen petition process.  As noted by Mylan's testimony at the
recent hearings on pharmaceutical competition before the Senate Aging
committee  brand companies often file these petitions at the 11th
hour before generic entry, and that the vast majority of citizen
petitions are denied (something like 20 of the last 21 petitions --
sort of like Alex Rodriguez's batting average in the playoffs --
sorry Yankee fans).

According to Leibowitz the poor batting average is not surprising
since this is an avenue for efficient cheap exclusion " the cost of
filing a petition is low, but the benefit of delaying a generic even
for a few months can mean hundreds of millions of dollars in
additional profits to brand companies =96 and additional costs to
consumers."


The FTC has made proposals to FDA on ways to minimize the harm from
potential citizen-petition abuse (in comments in 1999, they also
discuss the subject in the Generic Drug Study). Leibowitz says he
supported these reforms, but they were mostly procedural and a
legislative fix may be necessary.  He mentioned the bill by Cong.
Waxman bill that would prohibit the FDA=92s consideration of citizen
petitions after a certain date (unless there is good cause for the
delay) =96 or allowing the generic to go forward while the FDA is
reviewing the petition.

2.  Declaratory judgements.  Leibowitz noted that recent  court cases
(such as Pfizer v. Teva and Pfizer v. Apotex)  have "created a
catch-22 for some generics once the first-filer has settled: the
courts won't let subsequent generics bring a patent challenge, and
the FDA won't let them go to market without first winning one."
Leibowitz said this approach harmed consumers and created a
bottleneck for generic competition.

The FTC proposed a solution to this in the Generic Drug Study.  There
are legislative solutions such as the one in the  Lott-Stabenow and
Waxman bills that are worth serious consideration

Areas that Need More Study

1.  Authorized generics.  Leibowitz mentioned the FTC study of AGs.
Leibowitz observed that although there may be short term benefits the
practice "generally seems designed to send a signal" to generics "
something along the lines of, "If you thought you were going to make
big profits like you used to, forget it."

the FTC is concerned that in the long term these practices may result
in fewer generic challenges.

He briefly commented on the pending study and thanked GPHA for their
comments on the study which suggested that the FTC should look at
more qualitative evidence

2. Generic biologics are an interesting question and he asked  how
often the science will support a methodology for approving a generic
biologic, though that certainly will be the case for some biologics.

Parting company -- the battle over settlements

1. Settlements.  With no modest amount of courage Leibowitz addressed
the issue of settlements and so-called "exclusion payments"   when a
branded pharmaceutical company  pays a generic to stay out of the
market.

He used the Prozac case as an example, suggesting that if Lilly had
settled with Barr that generic prozac would have been delayed off the
market.

Not surprisingly Leibowitz criticized the  Schering and Tamoxifen
decisions.  And he emphasized that the FTC  has "taken such a
resolute, bipartisan stand against these payments."


He then attacked a number of so called myths of the FTC position

1.  The FTC is against all settlements

He noted that Billy Tauzin, the CEO of PHARMA said  "I don't know how
you don't allow two litigants to settle their case if they want to. I
don't know how =96 that's unconstitutional."


He said that Tauzin's comments were silly -- after all the FTC
settles most of their enforcement cases.  And in the drug area the
FTC has challenged only 5 of the 50 drug settlements since 1993

2.  Companies cant settle without exclusion payments

Not so said the Commissioner -- between 1993 and 2004, there were
literally dozens of settlements in which the generic did not receive
a payment for staying off the market =96 the parties settled based on
the patent.


3.  Exclusion payments are in the long term interest of the generic
industry

Not so.  Sure it may be profitable for the generic.  But in the
future generics will just focus on settlements rather than
challenging patents.  "If exclusion payment settlements become
clearly legal, things will change. Instead of racing to file ANDAs to
compete, you will be racing to file ANDAs to be the first to settle =96
the first to be paid not to compete."

Leibowitz closed with a daunting thought.  Congress is considering
reform of the issues mentioned above -- e.g., citizen petitions --
and in doing that they may certainly address the issue of exclusion
payments and ban them altogether

By the way in another speech last week Markus Meier the head of the
Healthcare Division mentioned that in 7 of the 10 settlements filed
this year there was an exclusion payment

many thanks

David Balto