FTC seeking to restrict drug-makers on generics

Report finds laws thwart less-costly medicines

July 31, 2002|By BLOOMBERG NEWS

WASHINGTON - Congress should restrict drug-makers' ability to delay government approval of generic alternatives that save consumers and insurance companies millions of dollars, the Federal Trade Commission said yesterday.

In a report to Congress, the FTC urged lawmakers to change the 1984 Hatch-Waxman Act, which requires the Food and Drug Administration to delay new medicines for 30 months when a brand-name company charges patent infringement.

The report listed eight instances since 1992 in which repeated 30-month stays delayed generic drugs for as much as 40 months. In four cases, courts later declared the patent-infringement claims invalid, the FTC said.

The law is "susceptible to abuse" by encouraging multiple claims to the same generics, delaying them for years, the FTC said in its 15-month study.

"Both pharmaceutical innovation and cheaper generic drugs bring enormous benefits to American consumers," FTC Chairman Timothy J. Muris said. Congress should promote competition and "maintain appropriate incentives for the development of new drug products." he said.

The FTC has supported an antitrust suit by 29 states and two makers of generic drugs that accuses Bristol-Myers Squibb Co. of thwarting competition to its anti-anxiety drug BuSpar by filing invalid patent-infringement claims. The FTC is investigating Bristol-Myers Squibb.

The report also supported a proposal by Sen. Patrick J. Leahy, a Vermont Democrat, to prevent makers of brand-name drugs from paying makers of generics to delay lower-priced alternatives. Leahy's bill is likely to be debated by the Senate this week, as are other proposals to close loopholes in the 1984 law.

Leahy's proposal would require brand-name and generic manufacturers to disclose to U.S. antitrust enforcers any agreements they reach that delay low-priced alternatives.

Leahy said the FTC report increases the prospects for Senate adoption of his proposal, which also is sponsored by Sen. Charles E. Grassley, an Iowa Republican.

Under the 1984 law, the first maker of a generic drug that wins FDA approval gets 180 days of exclusive distribution.

The FTC report said brand-name companies have reached agreements with original makers of generics to delay any other generics. Such agreements "had the potential to `park' the 180-day period for some time," the FTC said.

In 20 patent settlements since 1998, 14 "had the potential to delay the start of a generic's 180-day marketing exclusivity and thus to delay all subsequent generic entry," the FTC said.

Both sides in the Senate debate over the legislation seized on the FTC report to support their positions.

The Generic Pharmaceutical Association said the FTC study confirmed its argument that "abuses of the 30-month stay have delayed consumer savings," said Kathleen D. Jaeger, the group's president.

The Pharmaceutical Research and Manufacturers of America, a trade group of brand-name makers, also hailed the study. The organization said it doesn't support "the radical proposals to undermine the patent law" proposed by two Democratic senators, Edward M. Kennedy of Massachusetts and Charles E. Schumer of New York.

The FTC report says many of the proposed changes being considered by the Senate "are a politically expedient overreaction that may not achieve their intended effect," said Sen. Orrin G. Hatch, a Utah Republican and co-author of the 1984 law.

Since 2000, the FTC has obtained settlements in three cases alleging that brand-name manufacturers colluded with generic makers to delay low-priced alternatives.

In February, American Home Products Corp. agreed to settle claims that it accepted $30 million from Schering-Plough Corp. to keep a low-cost alternative to a heart drug off the market for 2 1/2 years. Schering-Plough contested the charges before an FTC administrative law judge, who ruled against the agency. The FTC says it will appeal.

Last year, Aventis SA settled charges that it paid Andrx Group $90 million to delay a generic version of Cardizem CD, which treats high blood pressure.

In 2000, Novartis AG's Geneva Pharmaceuticals Inc. and Abbott Laboratories settled charges that they colluded to block a generic form of Abbott's Hytrin hypertension and prostate drug from the market.

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