FTC: ‘Authorized generics’ don’t hurt consumers

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In some cases, the brand-name manufacturer sells an "authorized generic" during that six-month window. Generic manufacturers say the practice weakens their incentive to challenge brand-name drugs’ patents, meaning fewer generics might become available.

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.