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Easier US generic drug access can be a double-edged sword

LiveMint logoLiveMint 23-06-2017 Ravi Ananthanarayanan

The US president wants to lower the cost of medicines. One way of doing that is to improve access to generic medicines. A proposed plan to do that, however, may end up targeting generic companies as well. How? More generic competition in drugs that have already turned generic could hasten price erosion, which can worsen the problem of falling prices. Secondly, the regulator wants to sweep the market to end practices that may be hindering access to generics. That could be more trouble.

A blog post by Scott Gottlieb, the new commissioner at the US food and drug administration (FDA), says they are working on a Drug Competition Action Plan, to give patients access to more affordable drugs. A public consultation has been notified to hear suggestions.

Generic companies find it difficult to get access to test samples, which are needed to conduct studies before a generic drug is taken up for approval. Innovator firms use various means to block access. FDA intends to tackle this. This should be music to the ears of generic companies, if FDA ensures they get easier access to test samples.

While this is a good development, others may not be. The notice of the public meeting gives more details on what FDA is seeking to examine. It says that the US Congress gave incentives to certain first generic companies, such as a 180-day exclusivity period, to challenge patents. Investors value these filings more than ordinary generic applications, as they bring substantial gains.

The notice says that these incentives were meant to expand availability but in some cases, the legal framework may have been used to delay generic competition. The innovator company is one source. But generic entry may also be affected by external factors, such as private patent litigation and commercial decisions to not market approved innovator or generic drugs.

The target seems to be patent settlements between innovator and generic drug companies. That’s where the Federal Trade Commission (FTC) comes in. FDA plans to work with FTC to identify anti-competitive practices. FTC has for long frowned upon pay-for-delay patent litigation settlements. In such cases, the generic company is compensated, directly or indirectly, to delay the generic launch. FTC maintains these are anti-competitive. The industry says these are legal and avoid costly litigation, and actually ensure generic access for medicines even if with a delay.

In fiscal year 2013, for example, FTC said that of 145 patent dispute settlements, 29 created potential pay-for-delay agreements between innovator and generic companies. These settlements involved products with revenue of $4.3 billion then. FTC has been fighting a lonely battle but will now be backed by FDA.

These are just a few examples that the notice mentions, and more areas may emerge after the public consultation on 18 July. How can it affect Indian companies? They have been facing delays in getting approvals. If the consultation speeds up the process, they will benefit. It can hurt them too, if markets where they already have a generic product face more competition. Lastly, if patent litigation settlements become difficult or if existing ones are scrutinized, it can mean trouble. FDA’s move adds to the existing uncertainty facing them in the US generic drug market.

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