Industry divided on authorized generics issue
One of the most challenging issues facing generic drug manufacturers is that of authorized generics. An authorized generic is a pharmaceutical originally produced by a branded manufacturer but, upon patent expiration, is marketed under a generic name.
Because many authorized generics are launched by subsidiaries of the branded companies, bringing them to market is easy. Authorized generics can bypass the rigorous FDA approval process and do not have to adhere to the 180-day market exclusivity provision granted by the Hatch-Waxman Act to the first generic on the market.
According to Kathleen Jaeger, president and chief executive officer of the Generic Pharmaceutical Association, the practice of authorized generics “is a brand tactic aimed at discouraging generic competition.”
The pipeline for authorized generics| Brand company | Brand product | AG company | Approx AG launch date | Partnership vs. settlement | Timing of AG launch vs. first ANDA launch |
| Sanofi-Aventis | Klaron | Prasco | Jan-07 | Partnership | After |
| Alaven | Rowsawa | Prasco | Jan-07 | Partnership | After |
| Valeant | Efudex | Oceanside | Jan-07 | Subsidiary | Before |
| Warner Chilcott | Ovcon-35 | Watson | Jan-07 | Partnership | After |
| Dava | Vospire ER | Dava | Feb-07 | Subsidiary | Simultaneous |
| GlaxoSmithKline | Zantac | Par | Mar-07 | Partnership | Simultaneous |
| Schwartz | Uniretic | Kremers Urban | Mar-07 | Subsidiary | Simultaneous |
| Pfizer | Norvasc | Greenstone | Mar-07 | Subsidiary | Simultaneous |
| Graceway | MetroGel Vaginal | Prasco | Apr-07 | Partnership | After |
| Sanofi-Aventis | Ambien | Prasco | Apr-07 | Partnership | Simultaneous |
| Sanofi-Aventis | Dermatop | Prasco | Apr-07 | Partnership | After |
| Graceway | MetroGel Vaginal | Prasco | Apr-07 | Partnership | After |
| Abbott | Omnicef | Dava | May-07 | Partnership | Simultaneous |
| Abbott | Omnicef | Dava | May-07 | Partnership | Simultaneous |
Since 2003, 103 authorized generics have been launched onto the U.S. market. Generic companies launched 69 percent of these drugs while brand subsidiaries launched the remainder.
Those statistics beg the question, Why would generic companies who are only hurt by competition from authorized generics, get into that business themselves?
“The one-word answer is revenue,” according to Eric Bolesh, research team leader with Cutting Edge Information. “If you can guarantee investment, it’s hard to turn it down. This is money going in the door and it’s money Wall Street is going to see.”
It also gives smaller generic companies an opportunity to get drugs out there, if they work for the branded companies, he added. “A small company is never going to invest in R&D and in having a law firm to bring the branded companies to court. So authorized generics make sense.”
While GPhA may be firmly against authorized generics, the Pharmaceutical Research and Manufacturers of America last year issued a report stating that authorized generics save consumers money by increasing price competition among drug makers. The report says that the generics are sold to pharmacies and health care facilities at greater discounts than regular generics.
These savings are hard to ignore, said Mark Merritt, president of the Pharmaceutical Care Management Association, which supports payers and consumers “I think it’s unclear whether, long-term, the generics companies will be hurt,” he said. “It’s very hard for us to turn down short-term savings until we know more about the long-term [impact]. It’s a trickier issue than it seems.”
Bolesh questioned the savings, citing studies that have shown prices actually drop more significantly in the long-term if there are many generic products on the market. But, the number of generic products that are launched is typically less if an authorized generic is present during the 180-day exclusivity period.
While the debate over authorized generics continues, bills have been introduced to both the House of Representatives and the Senate, asking for authorized generics to be blocked during a generic drug’s 180-day period of exclusivity. The Federal Trade Commission also is conducting a study of the use, and likely short- and long-term competitive effects, of authorized generics in the prescription drug marketplace, but as yet has drawn no conclusions.
Branded pharmaceutical companies and their authorized generic subsidiaries| Brand company | Authorized generic subsidiary |
| Pfizer | Greenstone |
| Bradley | A. Aarons |
| Johnson & Johnson | Patriot |
| Forest | Inwood |
| Boehringer Ingelheim | Roxane |
| Endo | Endo Generics |
| Schering Plough | Warrick |
| Allergan | Pac Pharma |
| UCB | Upstate |
| Valeant | Oceanside |
| Schwarz | Kremers Urban |
Authorized generics are not the only thing that’s being thrown at generic companies by the branded pharmaceutical giants.
The number of citizen’s petitions, in which the FDA is asked to review a NDA based on legal or scientific reasons, that are filed is on the upswing and there is no sign that the pace is slowing down.
“These petitions have always been around,” said Bill Rakoczy, a partner at law firm Rakoczy Molino Mazzochi Siwik, who represents generic companies. “But they’re increasing because of the sheer number of generics [on the market now]. The brand companies have nothing to lose and it costs them nothing.
“It’s out of control a