FTC Report on "Authorized Generic" Drugs
The Federal Trade Commission (FTC) has issued an interim report on the impact of authorized generic drugs on competition in the prescription drug marketplace. Authorized generics are drugs sold by a pharmaceutical manufacturer under both a brand-name and generic label. In short, the FTC found that retail drug prices average 4.2% lower when authorized generics are marketed against a single generic drug during the 180-day marketing exclusivity period than when they are not. Authorized generic entry during this period also reduces the revenues of a first-filer generic firm by 47% to 51% – much greater than the price decline for consumers. To prevent this loss of revenue, generic firms may agree to delay entry in return for a brand manufacturer’s agreement not to launch an authorized generic during the 180-day marketing exclusivity period. According to the report, between fiscal years 2004-08, about 25% of the final patent settlements reviewed by the FTC contained provisions related to authorized generics.
