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Federal Trade Commissioner Jon Leibowitz called Thursday for a study into whether the licensing of “authorized generic” drugs by brand-name makers is inhibiting production of low-cost alternatives by generic makers. Authorized generics are low-cost versions of blockbuster drugs that brand-name pharmaceutical makers issue at, or slightly before, the entrance of a competing generic. This often happens upon expiry of the 180-day period of marketing exclusivity allowed brand-name makers under the 1984 Hatch-Waxman Act. Generic makers say the practice reduces their incentive to produce cheaper versions of a drug. The issue is of critical significance to generics companies, which operate in a sector that is already cutthroat and low-margin. Big Pharma is increasingly doing deals with friendly generics companies that are structured to deprive large generics makers of some of their profits during the coveted exclusivity period. Leibowitz, speaking at a Washington conference on antitrust law and health care, was responding to a request by the Senate Judiciary Committee, which asked the FTC in a letter sent on May 9 to study the impact of authorized generics on competition in the pharmaceutical sector. “I think we would be wise to take this request seriously,” he said. While Leibowitz conceded that authorized generics can lower retail drug costs in the short term, “the long-term implications are potentially troubling,” he said. “The introduction of an authorized generic will likely diminish the incentives for generic firms to challenge patents and incur substantial development and litigation costs,” which can delay the arrival of low-priced alternatives for consumers, he said. The FTC’s involvement with the patented/generic drug dichotomy has increased as the pharmaceutical industry wrestles with the Hatch-Waxman Act, which was an attempt to balance the rights of pharmaceutical patent holders against consumer complaints about high drug costs. The FTC has brought several cases against drug companies that have tried to delay generic entry. A recent case against Schering-Plough Corp. and its arrangement with a generic firm was overturned in March by the 11th U.S. Circuit Court of Appeals in Atlanta. The FTC argued that Schering had effectively paid Upsher-Smith Laboratories Inc. to delay entry of a generic version of a Schering drug. Copyright �2005 TDD, LLC. All rights reserved.

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