[Pharm-policy] JEFF GERTH: FTC to Study Whether Deals Delay Generics

[James Love]

http://www.nytimes.com/2000/10/12/politics/12DRUG.html

Agency Plans to Study Drug Makers' Records to See
Whether Deals Delay Generics

By JEFF GERTH

      WASHINGTON, Oct. 11 - The Federal Trade Commission announced plans
today to subpoena records from 90 pharmaceutical companies to see
whether drug industry strategies were keeping lower-cost generic drugs
from patients or harming consumers.

The commission has already filed complaints against two brand companies
and two generic companies, accusing them of making deals that
effectively stopped or delayed the generic version of two brand-name
drugs. Several other such agreements are under investigation.

"There are more of these agreements than we know about," one commission
official said, "so our desire is to get our arms around the scope of the
issue."


   [snip]

The trade commission's proposed study must undergo a period of public
comment and then be approved by White House budget officials. This will
delay any investigation until early next year, after the next president
takes office.

Vice President Al Gore, the Democratic nominee for president, is a
critic of the pharmaceutical industry and has said brand-generic
agreements unfairly deny consumers the benefits of competition. His
Republican opponent, Gov. George W. Bush of Texas, has not addressed
this specific issue, but the pharmaceutical industry has been generally
supportive of his candidacy.

The trade commission's concerns trace to a 1984 law, now known as
Hatch-Waxman, which was designed to ease greater competition between
generic and brand-name drugs. But one of its co-authors, Representative
Henry A. Waxman, Democrat of California, said some incentives in the law
had been used to delay competition, rather than foster it, costing
consumers money and denying patients access to life-saving drugs.

Whatever the law's shortcomings, however, it has benefited consumers. A
study last year, done for a generic company by Paul MacAvoy, a Yale
University economist who advised Presidents Ronald Reagan and George
Bush, found that from 1985 to 1997, consumers saved $112.5 billion by
buying generic drugs.

Despite the lost sales, the study also found, the brand-name drug
companies actually increased their research and development outlays, to
$18 billion from $4 billion.

Mr. Waxman wrote Mr. Pitofsky on Aug. 30 asking the commission to
produce a study on the issue of deals between brands and generics. Last
month, Senators John McCain, Republican of Arizona , and Charles E.
Schumer, Democrat of New York, introduced legislation to address the
potential for manipulation in the 1984 law.



James Love  mailto:love@cptech.org http://www.cptech.org
Consumer Project on Technology, P.O. Box 19367, Washington, DC 20036
voice 1.202.387.8030  fax  1.202.234.5176