- Competition from Authorized Generics During the 180-day Exclusivity Period Leads to Lower Prices for Americans Without Affecting the Rate of Patent Challenges

WASHINGTON; May 2, 2007 —Drs. Kevin A. Hassett of the American Enterprise Institute and Robert J. Shapiro of Sonecon, LLC., released a new study today refuting claims that the prospect of competition from authorized generics has reduced either patent challenges by other generic manufacturers or the development of new generic products. Their study also found that the additional competition from authorized generics during the 180-day exclusivity period produces lower prices for American consumers.
Authorized generics are generic products manufactured by the innovator company and marketed as generics under private or third party labels. An authorized generic can compete in the generic marketplace at any time after initial generic entry, including during the 180-day “exclusivity period” awarded to a generic company that successfully challenges an innovator drug’s patent through a “paragraph IV challenge”, as well as after such an exclusivity period has ended.

The economic team unveiled their independent findings in a report entitled, “The Impact of Authorized Generic Pharmaceuticals on the Introduction of Other Generic Pharmaceuticals.” The study examines the effect of authorized generics on overall generic competition, as well as the economic benefits for U.S. consumers.

“This study clearly demonstrates that the practice of authorized generics provides no meaningful disincentive for generic pharmaceutical companies to challenge questionable patents,” stated Dr. Shapiro, Under Secretary of Commerce for Economic Affairs in the Clinton administration, and currently chairman of Sonecon. “In fact, the review of the literature reveals that competition from authorized generics reduces prices and increases the availability of safe and lower-priced generic medicines, which benefits American consumers,” concluded Shapiro.

The two economists analyzed data from a variety of sources on the financial characteristics of generic firms facing three competitive situations: 1) generic firms without competition from an authorized generic; 2) generic firms facing competition throughout the exclusivity period; and 3) generic firms with competition during part of the exclusivity period.

“The key findings in this study demonstrate the competitive benefits that authorized generics provide to the American consumer,” stated Dr. Hassett, director of economic policy studies and resident scholar at the American

Enterprise Institute. “The study confirms the fact that competition from authorized generics does not reduce R&D by generic manufacturers, and therefore should not reduce or delay the introduction of future generic medicines.”

For a copy of the full report, go to www.authorizedgenerics.com.
CONTACT:
Dr. Robert J. Shapiro
Sonecon, LLC.
101 Pennsylvania Ave., NW Suite 600
Washington, DC 20004
202.742.6620
mailto:RShapiro@Sonecon.com