Some Drug Companies Using Loophole To More Quickly Put Generic Drugs on Market

The Wall Street Journal on April 17 examines "branded generics," prescription drugs that "exploit a loophole" in a brand-name drug's existing patent by slightly altering the drug's ingredients. Typically, generic drug makers must wait for the patent on a brand drug to expire, and then must demonstrate that their version contains the active ingredient of the brand-name drug and works in an identical way in the body. However, lawyers for companies that manufacture branded generics argue that the drugs contain the same active ingredient as a brand-name drug, but work somewhat differently or contain slightly different ingredients. Such patent challenges became possible in 1997, when the FDA began extending exclusive rights to sell a generic for six months to the first company to file and win a patent suit against a brand-name drug. In 2002, generic drug makers filed 83 patent challenges, up from seven in 1992. Generic drug makers "have little to lose" because the cost of filing a patent challenge is "dwarfed by the potential windfalls," according to the Journal. Because of the six months of market exclusivity, branded generic manufacturers have set prices "much higher" than those for traditional generic drugs. While the total number of prescriptions for branded generics last year was less than 33% of the number for traditional generic drugs, total sales for branded generics were $16.9 billion, compared to $15.4 billion for generics.

'Fighting Back'
Brand-name drug makers have begun "fighting back" by filing for patents on everything from a drug's color to its coating. According to analysts, the average number of patents protecting branded drugs has increased from two to 12 in the last decade. Officials from large, brand-name drug makers say lawyers for generic drug makers are becoming overly aggressive in their attempts to side-step existing patents. "We're dealing with premature and unwarranted attacks on the validity of our patents, and ... we end up spending enormous time and money litigating," Peter Richardson, senior assistant general counsel for Pfizer, said. Still, the Journal reports that "[e]very major generics company" predicts sales of branded generics will become "an important contributor to future profits" (Harris/Slater, Wall Street Journal, 4/17).