Senators Introduce Bill To Limit Agreements on Authorized Generic Medications

Several senators on Thursday introduced a bill (S 3695) that would limit the marketing of authorized generic drugs, saying the practice raises drug prices for consumers by reducing competition in the pharmaceutical market, the Los Angeles Times reports (Yi, Los Angeles Times, 7/21). Under the practice, brand-name pharmaceutical companies repackage and market their own products as generics as soon as the brand-name version loses a patent challenge. Critics say the authorized generic versions of the drugs are frequently more expensive than normal generic drugs and cut into the 180-day market exclusivity period for a generic drug company after it wins a patent challenge (Reichard, CQ HealthBeat, 7/20). Pharmaceutical companies that manufacture authorized generics "defend the practice, saying they are simply competing with generics at their own game and helping drive prices down," the Times reports. However, Sen. Charles Schumer (D-N.Y.), in a statement announcing the bill, said, "Authorized generics are wolves in sheep's clothing." The bill, which was cosponsored by Sens. Jay Rockefeller (D-W.Va.) and Patrick Leahy (D-Vt.), calls for a ban on authorized generics during the 180-day exclusivity period of generics. According to the Times, the bill is likely to face significant opposition from the Pharmaceutical Research and Manufacturers of America (Los Angeles Times, 7/21).

Larger Effort To Promote Generic Drugs
According to CQ HealthBeat, the bill is part of a movement in Congress to lower the "obstacles" to generic drugs reaching the market. The Senate Special Committee on Aging on Thursday held a hearing that focused on so-called payoff settlements, in which brand-name drug companies pay their first generic competitor to delay the generic drug's entry to the market. Federal Trade Commission Commissioner Jon Leibowitz said the economic implications of the agreements are "staggering," noting that consumers and insurers spend over $100 billion annually on prescription drugs and generic versions of drugs can reduce the cost of a drug by up to 80%. Leibowitz said the number of payoff agreements began increasing after two U.S. appeals court rulings recognized them as legal. Leibowitz said legislation banning such payoffs "could provide a swifter and a more comprehensive approach" to addressing the issue than waiting for the Supreme Court to hear a case on it. Meanwhile, Sen. Herb Kohl (D-Wis.) has secured an additional $10 million in funding for the FDA Office of Generic Drugs to speed approvals of generic versions of brand-name products. However, Gary Buehler, director of the office, said an additional $16 million to $19 million per year is needed to reach equilibrium between the number of generics applications the office receives and the number it processes (CQ HealthBeat, 7/20).