Report Assesses the Impact of Authorized Generics on Paragraph IV Patent Certifications

On April 18, 2007, Analysis Group, Inc. announced the release of a report assessing the effects of the market entry of authorized generics on paragraph IV patent certifications.  FDA has described an authorized generic as “[a]ny marketing by an NDA holder or authorized by an NDA holder, including through a third-party distributor, of the drug product approved under the NDA in a manner equivalent to the marketing practices of holders of an approved ANDA for that drug.”  The introduction of an authorized generic may be timed to coincide with either the end of the NDA holder’s period of marketing exclusivity for the brand name drug before there is generic competition, or with a generic applicant’s 180-day exclusivity.

The Analysis Group report, titled “Do Authorized Generic Drugs Deter Paragraph IV Certifications,” was authored by Ernst R. Berndt of MIT’s Sloan School of Management and the National Bureau of Economic Research and Richard Mortimer  and Andrew Parece from the Analysis Group.  According the authors, who analyzed three datasets on paragraph IV certifications:

[D]espite increasing and relatively high rates of authorized generic entry, the rate of paragraph IV certifications is higher than it has ever been. . . .  [E]ven when authorized generic entry reduces the expected gains from filing paragraph IV challenges, the recent evidence is clear that sufficient incentives remain so that in spite of recent increased authorized generic entry, the intensity of filing Paragraph IV challenges remains high.  There is no evidence to suggest that authorized generic entry causes delayed generic entry.

The Analysis Group report is one of several reports released over the past year on authorized generics, including reports by the Congressional Research Service, GPhA, and IMS Consulting for PhRMA.  GPhA’s report concludes that authorized generics “significantly reduce incentives for independent generic firms to challenge invalid brand name patents and to develop non-infringing processes.”  The report prepared for PhRMA concludes that authorized generics lead to lower drug prices for consumers.

Congress has also taken an interest in authorized generics.  In January 2007, Sen. Jay Rockefeller (D-WV) introduced S. 438, the Fair Prescription Drug Competition Act.  If enacted, S. 438 would prohibit the marketing of authorized generics during a generic applicant’s 180-day exclusivity period.  The House version of S. 438, H.R. 806, was introduced by Rep. Jo Ann Emerson (R-MO) in February 2007.  The bills have been referred to committee.  Also, as discussed in the RAPS Focus article below, Congress has changed the Medicaid rebate calculation to include sales to authorized generic distributors in the brand manufacturer’s price calculation.

RELATED READING:

• RAPS Focus Article on Authorized Generics