Patent Baristas

The Analysis Group released a report on the impact of authorized generic entry on paragraph IV certifications. The report, “Do Authorized Generic Drugs Deter Paragraph IV Certifications?,” was co-authored by academic affiliate Professor Ernst R. Berndt of MIT’s Sloan School of Management, Analysis Group Vice President Richard Mortimer, and Managing Principal Andrew Parece.

In looking at the increase in authorized generic, the group looked at the implications for competition between generic and brand drug manufacturers, and for consumers’ welfare. One issue is the impact of anticipated authorized generic entry on incentives provided under the Hatch-Waxman Act for generic manufacturers to file paragraph IV certifications and potentially expedite generic entry. That is, do they put a damper on generic entry?

The authors found no evidence that paragraph IV certifications have declined in response to increased authorized generic entry — although the study received funding from the Pharmaceutical Research and Manufacturers of America (PhRMA) so take it for what it’s worth.

To determine the extent of the impact authorized generic entry had on paragraph IV certifications, the researchers examined three datasets on paragraph IV certifications: one compiled by the FDA; a second containing information based on a survey of The Pharmaceutical Research and Manufacturers of America (PhRMA) members; and the third containing information on court cases involving paragraph IV certifications.

In referring to “harm” or “benefits” to consumers, the group looked at brand and generic prices, generic shares, and the timing of generic entry, but do not consider the effect on consumers of other factors such as new drug innovation.

The Hatch-Waxman Act allows generic manufacturers to file an ANDA demonstrating bioequivalence to an innovator drug, rather than an NDA, which is far costlier as it requires data establishing safety and efficacy. Under the Hatch-Waxman Act, a generic manufacturer may file an ANDA prior to the expiration of the innovator’s patents. Moreover, the first generic manufacturer to file a substantially complete ANDA with a paragraph IV certification (a patent challenge or claim of non-infringement) may be awarded an 180-day marketing “exclusivity” period during which no other ANDA filers can market their version of the drug dose.

Authorized generics rely on the brand manufacturer’s NDA rather than on an ANDA. Consequently, authorized generics are currently allowed to enter during a traditional generic’s 180-day exclusivity period.

The study found little change in the number of drugs facing paragraph IV certifications, the total number of paragraph IV certifications filed, or the timing of paragraph IV certifications relative to new chemical entity (“NCE”) approvals over the past five years.

They concluded that even when authorized generic entry reduces the expected gains from filing paragraph IV challenges, sufficient incentives remain so that Paragraph IV challenges remains high. There is no evidence to suggest that authorized generic entry causes delayed generic entry. You may or may not agree.

Basically, drugs with relatively high pre-generic entry revenues are more likely to have authorized generic entry and to have a larger number of generic manufacturers filing paragraph IV certifications against them. Big surprise.

The report concludes that while authorized generic entry reduces the gains of generic manufacturers that are eligible for the 180-day exclusivity period for these high-revenue drugs, there are still substantial incentives for filing paragraph IV certifications.

The full report can be seen here.