Drug Makers To Be Subpoenaed
The Federal Trade Commission on Wednesday announced that it plans to subpoena 190 drug companies in an investigation of possible anti-competitive practices in the pharmaceutical industry, the AP/Los Angeles Times reports. The subpoenas, which require approval from the Office of Management and Budget, would be part of a probe into whether pharmaceutical companies are suppressing competition by releasing authorized generic versions of their own brand-name drugs to coincide with the introduction of products from generic drug makers.
Under federal law, after a generic pharmaceutical company successfully challenges a patent held by a brand-name manufacturer, it has six months of exclusivity to sell the drug in the generic market by itself. However, a loophole allows brand-name manufacturers to authorize their own generic versions, which increasingly are entering the market at the beginning of the six-month exclusivity period.
Generic drug manufacturers depend on that exclusivity period to recover their costs and make a profit, but with authorized generics entering the generic market sooner, profit margins are falling for generic manufacturers.
FTC plans to study whether the authorized-generic loophole benefits brand-name companies in the long run by discouraging generic drug makers from challenging patents. Lawmakers requested in May 2005 that the FTC conduct the investigation, and a final report is due by late 2007 (Bridges, AP/Los Angeles Times, 3/30).