By the turn of the 21st century and the developments in the field of medical sciences, the cost as well as the competition with regard to what amongst major players of pharma and healthcare sector has increased many folds. So as to bridge this gap, the US govt in its revolutionary act way back in 1984 enacted Drug Price Competition and Patent Term Restoration Act-1984 commonly known as Hatch-Waxman Act. The Act was designed to promote generics while leaving intact a financial incentive for R&D. It allows generics to win FDA marketing approval as well as grants a period of additional marketing exclusivity to make up for the time a patented pipeline drug remains in development.
Innovator companies world over have been adopting the strategy of evergreening so as to delay the generic onset and to increase their patent life by the concept of patent life cycle management. But by the turn of the present decade, third force began to make its presence which was about to change the face of the US pharma market scenario for all times to come and which eventually bears the testimony of the fact that the pharma world is dynamic in nature. The said third force which made its presence felt and whose prominence would be debated in times to come is the very concept of authorised generics.
Authorised generic is a pharma concept under which the alleged generic company is entitled to sell its products with the prior permission and consent of brand/innovator company. Authorised generics are also known as “branded,” “flanking,” or “pseudo” generics. It also known as relabelled branded products marketed under the generic product name. These are the mirror image of branded products which are priced at the disadvantages of the other generic pharma companies and at the advantage of the innovator company. They also serve as an easy tool for the innovator company for early and cost effective market penetration via its generic subsidiary. On the other hand, authorised generics gain the flagship of the innovator without undergoing lengthy, tedious and cumbersome litigation procedures. Choosing the option as authorised generics, the brand drug company may aim to settle the patent litigation with a generic company by partnering with it to participate in the generic market, once generic competition starts or to maintain manufacturing capacity for the drug substance.
Authorised generics have recently been in the focus of both pharma and the US regulatory and enforcement authority. It seems to defeat the very basis of the guidelines underlying the Hatch-Waxman Act and may pose a grave threat to the very establishment and essence of the generic pharma industry. Hence, this concept of authorised generic serves as a potential discouragement for the establishment of SME which are working in the domain of pharma generics and may further deter large generic pharma from either manufacturing generics or to challenge the innovator’s Orange Book listed patents. Authorised generics could influence the timing of generic entry, branded and generic price of the drug and the generic market penetration.
Genesis of generic pharma
‘Generic’ a genuine description in mundane terms is best described as a chemical makeup of a brand drug or the copies of brand-name drugs that have exactly the equivalent dosage, intended use, effects, side effects, route of administration, risks, safety and strength as the original drug. Genesis of generic/generic drug addresses the need to develop a generic approach that would permit one form and replicate parallel forms on a single platform.
Authorised generics preserve the inducements necessary for the brand companies to research and develop new therapies, and enable lower cost generic products to reach the market. Although authorised generics is beneficial in terms of economical gains for the companies, but its practice has proven controversial due to the Hatch-Waxman Act’s construction and spur structures.
The generic drug industry has gone through phenomenal growth and development following the route of the Drug Price Competition & Patent Term Restoration Act. The Act came into existence in 1984, produced the platform for generic drugs to compete with brand-name drugs. When taken as a whole, the policy and environment provided by the act succeeded in lowering market entry barriers for the potentially capable generic drug manufacturers. The Act aims at to encourage generics while leaving untouched a financial inducement for R&D. It encourages a greater price rivalry in the prescription-drug market without jeopardizing the intellectual property rights of the brand-name drug manufacturers, which had spent many years and considerable money researching and developing the drugs. (The exclusive right given to the brand-name drug company/innovator by virtue of a patent, which enables the brand-name drug company/innovator to sell the drug while the patent remains alive). This Act overcomes the threats of expensive and extensive requirements for the potential generic drug manufacturers to perform the extravagant uneconomical activities and shorten the approval process for generic drug manufacturers. Through an ANDA, generic drug companies are required only to establish that their product is bioequivalent to the original drug, and their manufacturing processes meet the FDA standards. Further the ANDAs mean that the generic drug manufacturers no longer have to replicate the clinical trials that had been conducted by the brand-name manufacturers. The Act adjudicates the patent disputes between brand-name manufacturers and generic drug firms. More specifically it resolves and settles down the legal conflicts between the brand-name manufacturers and generic drug manufacturers.
Branded and authorised generics
The innovator company spends a fortune and quantum of its time to develop a nascent molecule into a full fledged drug. Such drugs are known as branded drugs or innovator’s medicine. The branded company in turn of its huge investment and gestation period gets the reward of 5 years marketed exclusivity. Such exclusivity offered to the innovator by virtue of the Hatch–Waxman Act, is known as “NCE exclusivity” than runs in parallel to the product patent of innovator which is normally listed in FDA’s “Approved Drug Products with Therapeutic Equivalence Evaluations” (also known as the “Orange Book”).
Any generic can launch the generic product in the market only after the NCE exclusivity expiry of the innovator. But the interested first-to-file generic player can submit its ANDA to the US FDA one year prior to the expiry of the NCE marketing exclusivity which is commonly known as “NCE-1”. The first-to-file generic can file its ANDA by citing any one of the four certification given under 505 (j).
Para-I - Patent information on the drug has not been filed
Para-II - The original patent has expired
Para-III - The date on which the patent will expire; or
Para-IV - The patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug for which the application is submitted.
An ANDA or 505(j) contains data which when submitted to FDA's Centre for Drug Evaluation and Research, Office of Generic Drugs, provides for the review and ultimate approval of a generic drug product. Once approved, an applicant may manufacture and market the generic drug product to provide a safe, effective, low cost alternative to the American public. In order to obtain ANDA approval, the generic company has to meet the requirement regarding evidence of safety and efficacy for a generic version of a drug, in regards to standards of identity, strength, quality, purity, stability, bioavailability, and bioequivalence as the pioneer drug. The same has to be submitted to the FDA for review. Generic (ANDA) product must have the same active ingredient, strength, dosage form, route of administration or labelling and must be bioequivalent with innovator product (RLD). A Reference Listed Drug (RLD) is an approved drug product to which new generic versions are compared to show that they are bioequivalent. A drug company seeking approval to market a generic equivalent must refer to the RLD in its ANDA.
If the ANDA applicant certifies to FDA that a patent is either invalid or will not be infringed by the new drug (a “Paragraph IV” certification), the applicant is also required to notify the holder of the approved NDA for the drug and each patent holder that an ANDA has been filed. When the Para IV certification is filed for a patent and the patent holder disagrees with the certification, the holder may file an action within 45 days of notice seeking a declaration that the patent is infringed and valid.
Authorised generics – the legal tangle
The Federal Trade Commission (FTC) is an independent agency established by the US govt which aims at promoting an aggressive market strategy by centralizing on the advancement of "consumer protection" and by ceasing anticompetitive unfair business practice. It maintains equilibrium between innovation, competition, patent law and policy. FTC further proposes a lawmaking and regulatory modification to improve patent value by supporting antitrust legislation in terms of price fixing schemes, monopolies, and other unfair illusory business practices.
FTC in the interim has come across different anticompetitive practices besides ‘evergreening’ such as Tottered Orange Book listings, brand migration, unhealthy agreements/trading between innovator and generic companies and unhealthy agreements/trading between generic companies. Tottered Orange Book listings means the generic company before launching its product in the market has to file paragraph certifications against each and every patent listed in the Orange Book against the innovator’s product. This gives the opportunity to the brand companies to play by delaying the listing of some of their patents in the Orange Book. The brand company has the advantage to sue the generic company which thus induces an automatic 30-month stay, regardless of the merits of the new patent. A stay on each patent stay triggers the automatic delay in the corresponding generic approval of the product (until the stay expires or the court resolves the dispute.) Tottered Orange Book patent listings gives the innovator companies to extend their market exclusivity indefinitely. This tricky way used by the innovator companies to achieve multiple 30-month stays has lead to anticompetitive practices which has drawn the attention. It was argued that Congress was never in favour of more than one 30-month stay on a given product. Finally the Medicare Prescription Drug, Improvement & Modernization Act of 2003 (MMA) came in to force and amend the Hatch-Waxman Act in order to tackle some of the inadequacy and to further reduce the barriers to more generic drug entrant in to the market. It wipes out the anticompetitive practices by the pioneer company by eliminating the multiple 30-month stay on the ANDA applicant with a Paragraph IV Certification that result in a lawsuit is effective within 30-month, weather or not the innovator “late lists” any newer patents during the pending lawsuit.
The detailed compromises of Hatch-Waxman Act were proposed to stimulate research by strengthening patent protection and then facilitating the revenue to the generic market at patent expiration, represent a sound compromise that should not be dissipated by legislative efforts to undercut the use or duration of existing research patents. The sole purpose of this Act was to encourage greater price competition in the prescription-drug market without jeopardizing the intellectual property rights of the brand-name drug manufacturers, which had spent many years and considerable money in researching and developing the drugs and further protecting the drug through the patent. Introduction of authorised generic in market by the brand name company has both good as well as bad effect on the consumer and the economy of the pharma companies in turns create a monopoly and anti-trust issue. Further the FTC plays an important role by providing directly and proactively protection to the consumers rather than only offer indirect protection by protecting business competitors. It establishes an equilibrium status in between the brand and generic drug manufacturers. It bolstered the Sherman Antitrust by coping the new threats to the competitive free market. The Sherman Antitrust Act (1890) acts to combat anticompetitive practices, reduce market domination by individual corporations, and preserve unfettered competition as the rule of trade. It forms the foundation and the basis of trust and produce hindrance towards the monopoly policies by the market entrant. It impedes the anticompetitive behaviour of the brand name drug companies. It checks the burglary act of monopolization, attempts to monopolize, and conspiring to monopolize by prohibiting either the per se violation or as a violation of the rules. FTC shows its significance and correlation with the antitrust act by direct or indirect involvement in the antitrust litigations. In recent years the Sherman Antitrust Act indirectly has played vital role by scrutinizing the patent litigation and by settling the agreements between brand name pharma companies and potential generic entrants.
Authorised generics – a tool for patient welfare
Authorised generics or branded generics paves the way for the welfare of the public i.e. consumers by striking a balance in itself. This balance in authorised generics has the ability to benefit the consumers without harming the generic market competition. Authorised generics have the potential of recuperating buyer welfare mainly by introducing price competition. The authorised generics could lower the average cost of the medicines thus resulting in greater infiltration to the market. As we are in the age of branded products, there are certain consumers who are accustomed to the brands. It is easier for them to switch off to the authorised generics instead of other generics as it will help consumers to remain connected to their brands and for a cheaper cost which ensures them cost benefits. Thus, it is like icing on the cake for the consumers
The primary benefit of authorised generics is that the ease with which the patient on existing innovator branded medicine migrates to the generic medicine under the flagship of innovator. The authorised generics also have the advantages of the availability of the generic medicine much ahead of the anticipated Para IV litigants which eventually have been sued by the innovator and shall undergo 30-month stay under the provisions of Hatch-Waxman Act.
For many drugs, the expected profits accruing to an exclusive independent generic might be sufficient to recoup the costs of patent challenges even with authorised generic entry. Even for those drugs where authorised generic entry discourages some patent challenges, the timing of generic entry would not necessarily be affected, and consumers would not necessarily be harmed. Furthermore, authorised generics will lower the cost of the generic medicines as they compete with the Para IV filer thereby reducing the cost of the generic medicine which will be available to the patient.
(The authors are with Panacea Biotec Ltd, India)