The Federal Trade Commission (FTC) issued its long-awaited final
report on “authorized generic” drugs this week, concluding that
consumers benefit from these drugs, despite the objections of many
generic drugmakers. To provide an incentive for generic drugmakers to
challenge brand-name drug patents and bring cheaper generic versions to
market sooner, the first generic to successfully challenge an existing
brand-name patent gets six months of market exclusivity without
competition from other generics. However, the maker of the original drug
is allowed to market its own so-called authorized generic during that
six months. Many generic manufacturers have agued that this is
anticompetitive and both hampers their incentive to challenge patents
and hurts consumers. FTC disagrees, but acknowledges that the practice
creates an opening for “pay-for-delay” deals where the original
drugmaker strikes a deal with a generic company to keep a generic
version off the market, which FTC does contend is anticompetitive.
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