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FTC: ‘Authorized generics’ don’t hurt consumers
Consumers benefit from a form of competition between brand-name and generic drugs that many generic manufacturers believe is anticompetitive, the Federal Trade Commission said Wednesday.
The FTC released a final report on the drugs known as "authorized generics." The first generic to successfully challenge a brand-name drug’s patent gets six months on the market without competition from other generics. Federal law provides that protection as an incentive for generics to challenge brand-name drugs’ patents and come to market sooner.
But the FTC said consumers ultimately benefit from the competition, which lowers prices for the two competing drugs and for future generics. The companies that make generic drugs usually build in the cost of losing revenue to an authorized generic, according to the FTC report.
"As noted in the report, by creating competition early between generic medicines, the presence of authorized generics is associated with lower prices for the generic medicines on the market," the Pharmaceutical Research and Manufacturers of America said in a statement.
But the FTC said authorized generics open the door for settlements in which brands pay generics to stay off the market. The commission believes those settlements are anticompetitive.
"Brand-name drug companies use anticompetitive agreements to keep prices high and overcharge consumers," Rep. Henry Waxman (D-Calif.) said in a news release. "The FTC and Congress should act to halt these abusive practices."
— This post was updated at 5:35 p.m.
