"Authorized" generic deals are not good for consumers, Teva Group VP-North America William Fletcher maintained during a Feb. 17 earnings call.

"I think they're anti-consumer in the long term," Fletcher declared. The legality of those deals is "still an evolving question...that FTC itself has to look at," he said. "It is a difficult argument whichever way you look at it."

Brand companies are increasingly using the authorized generic route as part of patent defense strategies, with a typical arrangement allowing an "authorized" supplier to enter the market immediately after an "unauthorized" generic launch.

The Federal Trade Commission appears to see the agreements as pro-consumer because they make a second generic more quickly available - and often accelerate the price erosion for the ingredient.

FTC did not challenge an agreement between GlaxoSmithKline and Par for an authorized generic of Paxil (paroxetine). A federal court judge also ruled that the agreement is not anti-competitive as part of the underlying patent case (¹ Also see "GSK/Par Paxil Generic Deal Upheld In Court; FTC Closes Patent Investigation" - Pink Sheet, 10 November, 2003., p. 19).

However, some generic companies maintain that the agreements reduce the incentive to challenge patents by diminishing the value of the 180-day exclusivity period granted to first-to-file ANDA holders.

Teva maintains that it is not concerned about the use of "authorized" generics from a competitive standpoint.

"We believe that the benefits for the brand companies are less than they expected, as we continue to demonstrate our ability to compete effectively in the context of this new threat," CEO Israel Makov said.

Fletcher suggested Teva is not interested in pursuing an authorized generics strategy. However, "if we were going to launch any authorized generics - and that's a big if - we wouldn't disclose that," he said. Teva believes it holds 17 pending first-to-file ANDAs.

Barr also has expressed disdain for authorized deals, saying that only generic firms with the least productive R&D programs would undertake such agreements (² Also see "Barr Seasonale Print DTC Begins In March; TV Ads Debuting In Second Half" - Pink Sheet, 9 February, 2004., p. 9).

“Authorized” Generic Deals Are Anti-Consumer, Teva Says

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