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GPhA Praises Emerson’s House Companion Version of Rockefeller Authorized Generic Bill

Momentum to Close Loopholes, Preserve Hatch-Waxman Patent Challenge Incentive Gaining Strength in Congress

ARLINGTON, VA, August 1, 2006 -- The Generic Pharmaceutical Association (GPhA) today praised legislation introduced by Representative Jo Ann Emerson (R-MO), which represents the House companion of similar legislation introduced by Senator John D. Rockefeller IV (D-WV) last week. Both measures would amend the Federal Food, Drug, and Cosmetic Act to prohibit the marketing of authorized generics during the 180-day exclusivity period of generic pharmaceutical patent challengers. The House version of the bill is co-sponsored by Representatives Marion Berry (D-AR), Dennis Moore (D-KS), John Boozman (R-AR) and Zach Wamp (R-TN).

"We are pleased that Representatives Emerson, Berry, Moore, Boozman and Wamp have introduced a companion version of the Senate bill so that both chambers of Congress can act to eliminate a tactic that has been utilized extensively by the brand pharmaceutical industry over the past three years, to the detriment of consumers," said Kathleen Jaeger, President and CEO of GPhA. "Authorized generics have upset the balance of the Hatch-Waxman Act by discouraging investment in generic patent challenges that have previously delivered billions of dollars in savings to American consumers and they reward the brand companies for undermining the Hatch-Waxman System."

An independent analysis of authorized generics, released by GPhA on July 31, 2006, conclusively demonstrates that the anti-competitive brand pharmaceutical practice of introducing authorized generics (AGs) "significantly reduce incentives for independent generic firms to challenge invalid brand name patents and to develop non-infringing processes." The study concluded that "authorized generics will lead generic firms to be less aggressive in competing against brand name firms and the ultimate losers will be consumers."

"Clearly, momentum in Congress to preserve Hatch-Waxman incentives that result in significant savings for American consumers is gaining strength," Jaeger continued. "The brand industry is intent on abusing every loophole it can find in search of greater profits. Since September 2003, when MMA closed many of the loopholes previously used by brand companies to delay generic competition, authorized generics have flourished. To GPhA’s knowledge, the brands have launched an authorized generic during every 180-day generic exclusivity period prior to MMA becoming law. GPhA and its member companies will work hard with Representative Emerson and her colleagues in the House, and Senator Rockefeller and his colleagues in the Senate, to close this loophole and preserve the savings that patent challenges create for consumers."

Patent Challenge Process and Authorized Generics

The Hatch-Waxman Act of 1984 created the 180-day exclusivity period as an incentive to encourage generic companies to challenge questionable or frivolous brand pharmaceutical patents as part of the complex, intellectual property-based U.S. generic drug approval process. The 180-day exclusivity provision provided the incentive for generic companies to provide the check and balance for the non-adversarial drug patenting process. It also provides generic companies with a mechanism to recoup the significant costs of litigation and with incentives to challenge more questionable patents in the future.

An authorized generic is the brand’s own product repackaged and marketed either through a subsidiary or third-party. Because the brand is selling part of its product as a generic, it has been permitted to compete with the true generic during the exclusivity period, without any action being required by the U.S. Food and Drug Administration.

The patent challenge exclusivity period enables the generic company to recoup its investment and, significantly, to invest in the development of additional patent challenges that create significant savings for consumers. For example, the Prozac challenge resulted in the introduction of generic competition two years earlier than would have otherwise been possible, and subsequently saved consumers more than $2 billion. By devaluing the incentive, authorized generics have discouraged future patent challenges, inevitably leading to less competition, unnecessarily long brand monopolies, and a loss in significant savings for consumers.

GPhA represents the manufacturers and distributors of finished generic pharmaceuticals, manufacturers and distributors of bulk active pharmaceutical chemicals, and suppliers of other goods and services to the generic drug industry. Generics represent 56% of the total prescriptions dispensed in the United States, but less than 13.1% of all dollars spent on prescription drugs. For more information about the industry, visit www.gphaonline.org.

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