Leahy And Others Introduce Bill
To Bar Big Drug Firms
From The Gambit Of Pushing 'Authorized Generics'

WASHINGTON (July 20) --  In an effort to fight unfair practices by brand name drug manufacturers and provide consumers ongoing access to lower-priced generic drugs, Senators John D. (Jay) Rockefeller IV (D-WV), Charles Schumer (D-NY), and Patrick Leahy (D-VT) have introduced legislation to end the use of so-called “authorized generics” during the 180-day period that Congress intended for true generic market exclusivity.  Recent news reports have detailed how many brand name pharmaceutical companies game the system.  The legislation introduced, S. 3695, would provide real competition between generic companies producing low-cost medicines and the pharmaceutical giants.

“Authorized generics are a sham,” said Rockefeller.  “They are nothing more than repackaged prescription drugs without the benefit of a true generic’s lower cost.  This practice undermines congressional intent and harms consumers by preventing generic competition and eliminating billions of dollars in prescription drug savings over the long-term.”

“Authorized generics are wolves in sheep’s clothing, and when big drug companies push them onto the market, they undermine competition and raise prices for millions of Americans who struggle with high drug costs,” Schumer said. “When it comes to lowering drug prices, authorized generics are like a placebo – they don’t do any good. We have seen an onslaught on generic drug makers that threatens to slam the door on cheaper alternatives to high-priced brand name drugs and authorized generics have been the weapon of choice.  At a time when drug prices continue to soar, authorized generics make it harder for those most in need.”

“The giant drug companies keep coming up with ways to avoid real competition, and consumers need to be able to count on Congress to close each new anticompetitive loophole they come up with,” said Leahy.  “This bill targets their latest gambit of slapping a different name on a patented drug and calling it ‘generic.’  That’s fake competition, not real competition, and it can sap incentives from real generic drugmakers to compete by making lower-cost generic drugs.  Consumers deserve the lower costs and real choices of truly generic medicines.”   

In 1984, Congress passed the Hatch-Waxman legislation to provide consumers greater access to lower-cost generic drugs.  The intent of this law was to improve generic competition, while preserving the ability of brand name manufacturers to discover and market new and innovative products.   As part of this law, the first generic company on the market after challenging an expiring brand name patent is granted 180 days of exclusive market rights, which is just a fraction of the up to 20 years of exclusive market rights given to brand companies.

Authorized generics are drugs that are manufactured or contracted out by the brand company under a generic label.  They compete with the true generic drug during the period of time during which there is only supposed to be one generic on the market, and are intended to cut into the true generic's market share. 

Authorized generics significantly decrease the profit earned by generic manufacturers during the statutory 180-day exclusivity period. These profits are a key incentive for generic manufacturers to pursue entry prior to patent expiration, and taking them away will cause harm to consumers. This spring, the FTC announced that it would conduct a major study of the anticompetitive effects of authorized generics, which Senator Rockefeller requested with Senators Leahy and Charles Grassley (R-IA).

The issues of “authorized generics” has taken on even greater importance this year as the patents for blockbuster drugs such as Pravachol, Zocor, and Zoloft have expired or will expire.

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