Generic Drugs -- the Clearinghouse for the Future of Pharmacy Benefits

Biologic Drugs, Biosimilars, and Barriers to Entry
By Joanna Shepherd, Ph.D., Emory University School of Law
Health Matrix: Journal of Law-Medicine (forthcoming)

Congress has recently created a biosimilars approval pathway that would allow less expensive versions of biologic drugs to reach patients more quickly. However, original biologics manufacturers have sought to extend their monopoly profits by erecting various legal and regulatory barriers to entry. This paper discusses the various barriers and explores their market consequences.

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Study on the Market Effects of Authorized Generics
Federal Trade Commission, Authorized Generic Drugs: Short-Term Effects and Long-Term Impact, (August 2011).

In 2011, the FTC analyzed the competitive effectiveness of authorized generic (AG) drugs from both a short-term and a long-term perspective. Authorized generics are approved as brand named drugs but marketed as generics. Since the brand name company already has approval, the firm can sell its generics during the 180 day exclusive period usually reserved for a ‘first-filer’ generic manufacturer. During this period, the report estimated that retail prices of generics were lowered by 4-8% and the wholesale prices fell by 7-14% when AGs were present in the market. When AG competition was introduced, first-filer generic competitors’ revenue experienced a 40-52% reduction in revenue during the exclusivity period and at least that for the following 30 months. However, AG competition did not reduce the number of patent challenges by generic companies. The report concludes that, overall, AGs play the role of aggressive competitors in the generics market.

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