Wall Street Journal Looks at Brand Name Drug Manufacturers’ Efforts to Delay Generic Competition

The Wall Street Journal today examines the increasing "legal attacks" used by brand-name drug manufacturers to stave off generic competition. Once a generic drug enters the market, it "typically" takes about half of the U.S. sales from a brand-name drug during the first six months of competition. By using an "aggressive range of courtroom and regulatory tactics," brand-name drug manufacturers can "postpone" generic competition and continue to earn profits. For example, Schering-Plough's allergy drug, Claritin, will lose its patent in December 2002. If the firm can delay generic versions from entering the market for six months, it could earn as much as $650 million. While the delays create profits for the company, the lack of generic drugs "costs consumers billions of dollars a year," the Journal reports. However, with pharmaceutical pipelines in a "dry spell," delaying generic competition allows the companies to "squeeze" as much money as possible from the "lucrative drugs" already on the market. "The anti-generic strategy by pharmaceutical companies has probably the highest rate of return of any business activity they do right now," Hemant Shah, an analyst at HKS & Co., said.

'Legal Skirmishing'
The Journal reports that brand-name drug makers have used several "popular" methods of delaying generic competition or attempting to win a patent extension. One, called the "metabolite defense," is based on the firms' ability to patent compounds created naturally in the body when a drug is digested. Companies' can hold "separate patents" on the compound, or metabolite, from those held on the drugs themselves, and can argue that any generic competition would violate that patent. Schering-Plough is using this argument to protect Claritin, which posts $3 billion in annual sales. While the metabolite argument has not won a case, the Journal reports that industry lawyers continue use the argument because it has not been "definitively rejected" by federal appeals courts. Other companies have "tinkered" with their drugs' formulations -- changing a twice-a-day pill to once-a-day -- to prevent competition, as the generic would no longer be "strictly equivalent." Also, brand-name firms have filed patent lawsuits over manufacturing processes and the "nonactive" coatings on pills. The Journal reports that the "key weapon" for the industry in patent lawsuits is a 1984 law that requires the FDA to delay approval of a generic drug up to 30 months "if there is a dispute over a patent." Originally intended to protect brand-name drugs during "unusual intellectual-property spats," the law has led to an increase in the number of disputes, as brand-name makers "devis[e] a broadening array of anti-generic legal theories." In addition to lawsuits, brand-name drug makers are attempting to delay "regulatory approval" of generics by raising safety concerns in "citizen petitions." While most of these petitions are "eventually rejected" or withdrawn, they create a "distraction" for the FDA and delay generic approval.

'Improperly Stifling Competition'
While the brand-name pharmaceutical companies say they are "legitimately protecting" their property and patients, generic manufacturers and patient advocates say the companies are "stifling competition." Also, the Federal Trade Commission has expressed "concern" about the trend and has "demanded" information on the situation from both brand-name and generic manufacturers. Ron Pollack, executive director of the consumer group Families USA, said even if a brand-name drugmaker's arguments are rejected, "that company has won a huge victory at the expense of consumers by delaying a generic." Gary Yingling, an attorney who represents generic companies, said that "for the average consumer going to the drug store, the delays ... basically translate into money" (Harris/Adams, Wall Street Journal, 7/12).