The Generic Pharmaceutical Association's challenge to "authorized" generics includes pushing for a change in how the Medicaid "best price" for a branded product and its authorized generic are reported.

GPhA will urge the Centers for Medicare & Medicaid Services to require that the best price for a brand drug be the same as for its authorized generic.

The best price for both drugs should be the same regardless of whether the generic is marketed through a brand company's subsidiary or by a third party, GPhA said.

Currently, CMS treats the authorized generic as a separate product from the brand for purposes of Medicaid reporting, GPhA CEO Kathleen Jaeger said at an Institute for International Research Generic Drugs Summit in Washington, D.C. Sept. 28-29.

"The brands and the authorized generic are exactly the same products but are treated differently for the purposes of reimbursement," Jaeger said.

As a result of CMS' approach, "brand companies obtain a major windfall by not including in their CMS best price calculation the authorized generic product, to the detriment of the federal and state programs," GPhA said.

"We're working with the Administration on best price calculation issues," Jaeger said. "Right now the federal government and state governments are losing substantial dollars with respect to the best price issue."

The decision to approach CMS on Medicaid rebate reporting requirements marks another step in GPhA's attack on authorized generics.

The trade association maintains that authorized generics devalue the 180-day marketing exclusivity period and reduce the incentive for generic companies to challenge questionable patents on brand products (¹ Also see "GPhA Wants “Authorized” Generics Stopped; Will FDA Help?" - Pink Sheet, 8 March, 2004., p. 3).

However, the industry's complaints have not persuaded FDA to step in and prohibit authorized generics. The agency said such deals between brand and generic companies are pro-competitive and that it lacks the authority, absent safety or efficacy concerns, to prohibit marketing of authorized generics under an innovator's NDA during a first-filer's 180-day exclusivity (² Also see "FDA Signs Off On “Authorized” Generics; Mylan Expected To Sue" - Pink Sheet, 12 July, 2004., p. 6).

FDA's decision has led authorized generic opponents to seek relief through other avenues (³ Also see "Medicaid “Best Price” May Be Avenue To Challenge “Authorized” Generics" - Pink Sheet, 12 July, 2004., p. 7).

GPhA's arguments could hold some sway at CMS if the trade group can successfully make the case that Medicaid programs are losing money due to the differential price reporting for brands and their authorized generics.

The association also plans to join individual generic companies in arguing to the Federal Trade Commission that authorized generics are anti-competitive.

Several generic companies, led by Mylan, have been trying to persuade the FTC that authorized generics lead to fewer Paragraph IV challenges and do not result in lower prices for consumers (⁴ Also see "Mylan Takes “Authorized” Generics Fight To Congress, FTC, Courts" - Pink Sheet, 23 August, 2004., p. 13).

GPhA said it hopes to meet with FTC soon. The commission is not currently undertaking a formal study of authorized generics.

However, Senate Health Committee Chairman Judd Gregg (R-N.H.) is interested in FTC's views on authorized generics and could request that the agency undertake a study or investigation.

Steve Irizarry, health counsel to Gregg, noted that FTC's 2002 report on patents and generic drugs was "incredibly helpful" in developing Waxman/Hatch reforms that were included in the Medicare Modernization Act.

"We are very much looking forward to hearing from the FTC" on authorized generics, "both on their evaluation on impact on competition as well as any recommendations they might have on how this can best be addressed," he said. "We are very wary of additional gamesmanship that is intended to essentially gut...the industry's incentive to sometimes go after some of these blockbuster drugs."

The staffer suggested that issues relating to authorized generics might best be addressed through the "regulatory process," rather than trying to again reopen Waxman/Hatch.

GPhA Seeks Change On Medicaid “Best Price” For “Authorized” Generics

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