FTC to probe practice of authorized generics

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The Federal Trade Commission (FTC) said yesterday it plans to subpoena nearly 200 pharmaceutical companies as part of a probe into the effects of authorized generics in the marketplace. The 190 subpoenas—including 80 to brand-name manufacturers—would come as part of an overall investigation into whether pharma companies are stifling competition through the release of authorized generic copies of their own brand-name drugs, to coincide with the debut of generic challengers from competitors. The subpoenas could go out late this summer, with a final report slated for completion in late 2007. Among other things, the probe will examine actual wholesale prices (including rebates, discounts, etc.) for brand-name and generic drugs, both with and without competition from authorized generics; business reasons that support authorized generic entry; factors relevant to the decisions of generic firms about whether and under what circumstances to seek entry prior to patent expiration; and licensing agreements with authorized generics. The FTC said the data collected aims to advance the understanding of the effects of generic entry on prescription drug prices—in particular, the role of the 180-day exclusivity period in generic competition prior to patent expiration—beyond what is available in the economic literature today.
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