Drug Litigation Newsroom

FTC Testifies On Barriers To The Entry Of Generic Drugs

Testifying today on behalf of the Federal Trade Commission before the U.S. Senate's Special Committee on Aging, Commissioner Jon Leibowitz described the FTC’s work in the area of branded and generic pharmaceutical competition and discussed barriers that can lead to the delay of generic entry into the U.S. marketplace. Despite the Congress's “remarkable record of success” in working to ensure that consumers gain access to generic drugs as quickly as possible, he said “there have been, and continue to be, competitive problems in pharmaceutical markets.”

Opening with a discussion of pharmaceutical prices, the testimony noted that “pharmaceutical expenditures are a concern not only to individual consumers, but also to government payers, private health plans, and employers. Generic drugs play an important role in containing rising prescription drug costs, by offering consumers therapeutically identical alternatives to brand-name drugs, at a significantly reduced cost.” To address the cost issue, Congress passed the Hatch-Waxman Amendments to the Food, Drug, and Cosmetic Act in 1984, establishing a regulatory framework that sought to balance innovation by research-based drug companies with opportunities for entry by generic drug manufacturers. Under Hatch-Waxman, the Congressional Budget Office estimated that consumers saved between $8 billion and $10 billion on retail drug purchases in 1994 alone.

After Hatch-Waxman went into effect, however, some drug companies entered into anticompetitive agreements, effectively settling patent infringement suits in a way that harmed consumers by illegally delaying generic entry. The FTC has “aggressively protected competition” in the pharmaceutical industry by bringing enforcement actions challenging such agreements, as well as by filing amicus briefs on competition-related issues in a range of drug cases. On a policy level, the FTC has promoted greater understanding of the role of competition in the industry through multiple studies, including 2002's “Generic Drug Entry Prior to Patent Expiration.” The FTC now reviews all agreements between drug companies settling patent infringement disputes to ensure they are not illegally anticompetitive. Read more at ftc.gov