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11/17/2000

Possible Anticompetitive Agreements Between Brand, Generic Companies to be Studied

Nancy Tarleton Landis

The Federal Trade Commission (FTC) plans to investigate agreements between brand-name and generic drug manufacturers to delay competition from generic versions of patent-protected drugs. The proposed study is intended to ensure that consumers have timely access to generics.

Before gaining approval for the study, FTC was required to solicit public comments. A notice of the proposed study was published in the October 17 Federal Register; comments are due 60 days after the notice.

Announcement of the study came just five months after FTC filed complaints against four drug companies for allegedly entering into agreements that effectively stopped the generic version of two brand-name drugs, Cardizem CD (extended-release diltiazem hydrochloride; Aventis) and Hytrin (terazosin hydrochloride; Abbott), from coming to market. FTC's complaint against Abbott and Geneva Pharmaceuticals concerning terazosin resulted in a settlement under which the companies agreed to not engage in similar behavior in the future. The complaint against Hoechst Marion Roussel (now Aventis) and Andrx Corporation concerning diltiazem was scheduled to be heard before an administrative law judge late this year. In both cases, FTC alleged significant consumer harm through the multimillion dollar arrangements between the companies. FTC is investigating the possibility of similar anticompetitive behavior by Bristol-Myers Squibb and American Bioscience regarding the cancer drug Taxol (paclitaxel).

Manipulating Hatch-Waxman? In the proposed study, FTC plans to look at whether companies have manipulated provisions of the Drug Price Competition and Patent Term Restoration Act of  1984, commonly known as the Hatch-Waxman Act. Under Hatch-Waxman, a company can seek FDA approval to market a generic drug before the expiration of a patent relating to the brand-name drug upon which the generic is based. In these cases, the generic drug manufacturer certifies in its abbreviated new drug application (ANDA) that the branded product's patent(s) is invalid or will not be infringed by the generic drug for which the ANDA applicant seeks approval.

The act then provides a 45-day window during which the patent holder may bring a patent-infringement suit against the applicant. If such a suit is filed, the act forbids FDA from approving the ANDA for 30 months or until the litigation is completed, whichever comes sooner ("30-month stay"). The provision is generally thought to protect branded companies against patent infringement. To encourage generic competition, the first company to file an ANDA with FDA is given the exclusive right to market the generic drug for 180 days. No other generic can gain FDA approval until this 180-day period expires ("180-day marketing exclusivity").

Proposed study. The proposed study would examine whether the 30-month stay and 180-day marketing exclusivity provisions of Hatch-Waxman have encouraged generic competition or facilitated the use of anticompetitive strategies. In addition, in light of FTC's investigations of several cases in which the manufacturers of brand-name drug products and generic competitors have allegedly entered into anticompetitive agreements to delay generic entry, the proposed study would examine the use of agreements between pharmaceutical companies, and any other strategies, that may delay generic drug competition.

Before beginning the study, FTC was required to seek public comment on the information requests (detailed in the Federal Register notice) that would be sent to approximately 30 innovator drug companies and 60 generic firms. FTC is requesting submission of all agreements between generic and brand-name companies relating to drugs for which generic companies have filed ANDAs, all patents that have been filed relating to drugs for which ANDAs have been filed, all lawsuits filed involving ANDA-covered drug products, information on company sales of brand-name products and generic versions, and information on whether generic companies have claimed that patents were listed improperly or in an untimely manner.