White House Plan to Limit Generic Drug Exclusivity Could Backfire

The Trump administration has proposed restricting generic drug exclusivity as a way to increase competition and lower prices, but attorneys told me this proposal could actually backfire and lead to less generic competition.

The first company to file a generic application at the FDA gets 180 days of exclusivity for their product, meaning that in general no other generic can be sold for a lucrative half-year period once the branded drug loses patent protection. But sometimes a generic maker will essentially park its exclusivity and not sell the drug, meaning the second and subsequent companies cannot reach the market and help lower a drug’s cost.

Generic drugmakers park exclusivity because they sometimes enter agreements with branded drugmakers, called pay-for-delay agreements. Under these agreements, a branded drugmaker pays the generic company to keep its generic off the market for a period of time and if the generic company has exclusivity, other companies also can’t bring their generic versions to market.

In the 2019 budget request released Feb. 12, the administration proposed to essentially start the exclusivity period’s clock running even if a first-filing generic company hasn’t started selling its drug yet. The proposal would make the tentative approval of a second generic drug, if it’s blocked by the first filer’s behavior, a trigger of the first applicant’s 180-day exclusivity.

But Kurt Karst, an attorney at Hyman, Phelps & McNamara in Washington who advises drugmakers, told me profit margins for the generic industry are very low and the proposal would cut into one incentive that companies rely on.

“Ultimately you may end up with less generic competition” because of the proposal, attorney Chad A. Landmon told me. Landmon, an intellectual property and food and drug law attorney, is with Axinn, Veltrop & Harkrider LLP in Hartford, Conn., and Washington.

Read my full article here.

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