In the US, the first generic competitor to a brand-name drug can be granted a 180 day exclusivity period during which no other generic company will receive approval to sell its product. However, brand-name companies may introduce their own authorised generic drugs during the exclusivity period.
It has become increasingly common for brand-name companies to start marketing authorised generics at the same time a generic firm commences its exclusivity period. The US Federal Trade Commission (“FTC”) has recently reported that:
- when brand-name companies introduce an authorised generic of their brand name drug, it can reduce both retail and wholesale prices;
- authorised generics have a substantial effect on the revenues of competing generic companies;
- lower expected profits could affect a generic company’s decision to challenge patents on products with low sales. In spite of this, however, patent challenges by generic competitors remains robust; and
- there is evidence that some brand-companies may have used agreements not to launch an authorised generic as a way to compensate would-be generic competitors for delaying entry into the market.
The FTC previously reported a 60% year on year increase in the number of deals where manufacturers of branded products settled (with payment) patent disputes with generic challengers and delayed the introduction of lower-cost generic medicines. The FTC found that settlements that included a payment delayed generic entry by, on average, 17 months as compared against settlements that did not include a payment. See our previous alert on the competition implications of pay-for-delay agreements.
According to an FTC report released on 25 October 2011, the trend for pay-for-delay settlements has continued during the 2011 fiscal year.