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Ask Pharmie: Only one of my prescription drugs is available as a generic. Why does it take so long for generic drugs to become available?
Only one of my prescription drugs is available as a
generic. Why does it take so long for generic drugs to become available?
Generic drugs only become available when the original manufacturer’s patent expires. Drug companies are granted “patents” on new drugs they discover or invent. A patent gives the company a monopoly for up to 20 years – during that time no one else can sell that drug. This does not mean, however, that drug companies actually get a full twenty years to sell the drug. They usually apply for a patent early in the process of developing a new drug. Only after the FDA has approved the drug can the company sell it. This usually takes at least a few years after the company has gotten its patent. So the real amount of time that a drug company can be the only one selling a new drug is less than 20 years.
These “patent monopolies” are extremely valuable. Most of the profits that a company will earn from a drug are earned while they have a patent and there is no competition. Once the patent expires (that is, the 20 years runs out), other drug companies can make “generic” versions of the drug. The competition drives the price of the drug down, and the original drug company makes much less money on that drug. This system, of giving drug companies a monopoly for a certain number of years, is intended to encourage them to invest in researching and developing new drugs by guaranteeing them a period when no one else can sell that drug and compete with them.
Unfortunately, this system
also encourages drug companies to try to extend their patent monopoly, even if
doing so hurts consumers or is illegal. Every year that there’s no competition
for a drug can mean literally billions in extra sales. So brand-name drug companies
will often do everything they can to extend their patent monopoly.
This is just one of the many tactics that brand-name drug companies use to keep cheaper generics out of consumers’ hands. Brand-name drug companies also pay generic drug companies to delay bringing their drugs to the market. PAL member Sergeants Benevolent Association are challenging such a payment in a case concerning the sleep disorders drug, Provigil (see article on p.1)
Another tactic drug companies use is to create a so-called Authorized Generics.
What are Authorized Generics?
When the patent for a brand name drug expires or is found invalid, generic drug manufacturers apply to the FDA to allow them to sell a generic version. The first generic drug manufacturer to do so successfully is granted 180 days (6 months) during which no other generic version will be sold. That 180 days is extremely important to generic drug manufacturers because it gives them some time to recoup their costs. Bringing a generic drug to market, while not as costly as developing a new drug, is expensive: generic drug companies often have to fend off a patent infringement lawsuit in court for several years, a process that can cost many millions. The 180 days gives generic drug companies an incentive to stick their necks out to make a cheaper generic available at the earliest possible time.
Unfortunately brand name companies have found a way to take advantage of a loophole. This loophole allows them to introduce “authorized generic” drugs to the market during the 180 days. These are really “fake generics” – they are just the original brand-name drug marketed and sold as a generic. Often, it is the exact same pill, made in the exact same factory, but with a different logo stamped on the pill.
Authorized generics are a problem because they further undermine the ability of generic drug companies to bring cheaper drugs to consumers. By decreasing the value of the 180 days when the generic company has no other generic competition, they add yet another obstacle in the way of generics becoming available as quickly as possible. Already generic drug companies face delays in getting their drugs approved (the FDA has a backlog of over 800 generic drugs awaiting approval) and have to defend against patent infringement lawsuits. Authorized generics just further tip the balance against the generic drug company and raises the possibility that fewer generic companies will take the risk and make the effort to bring new generics to market.
Unfortunately, the FDA ruled in 2004 that it does not consider authorized generics to violate federal law. But not all experts agree. Authorized generics certainly undermine the intent of the law that allows generics to come to market (called “the Hatch-Waxman Act”), if not the letter of that law as well.
The Prescription Access Litigation Project and our members have consistently spoken out against authorized generics and other tactics used to keep cheaper generics off the market. In addition to helping PAL members participate in lawsuits such as those described above, PAL submitted testimony this past summer to the Federal Trade Commission (FTC), on Authorized Generics. The FTC, the federal agency that is supposed to ensure that corporations don’t undermine competition and harm consumers, is doing a study on the effects of authorized generics on prescription drug competition. PAL recommended that the federal government prohibit the marketing of authorized generics during the 180 day period, and prohibit and prosecute agreements between brand companies and traditional generic companies that keep generics off the market.
Removing the obstacles to generics
Ultimately, ensuring that consumers have access to generics sooner requires closing the loopholes that allow brand-name drug companies to stifle generic competition. Brand-name drug companies must be prohibited from filing bogus patents, marketing fake generics, filing frivolous patent infringement lawsuits, and paying off generic companies not to bring generic drugs to market. The FDA must have enough funding to eliminate the backlog of over 800 generic drug applications. These changes will only be achieved when consumers demand them, and PAL will continue to do our part to call attention to these problems.