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Commentary

The Grassley Drug Plan
Robert Goldberg, Ph.D., Washington Times, 12-15-05

Goldberg, a senior fellow at the Manhattan Institute, takes issue with legislation Senator Grassley advocates that would prevent branded pharmaceutical companies from offering so-called “authorized generics” that compete with products from generic companies.

Mr. Grassley's particular peeve is that brand drug companies under a law designed to promote generic drug competition (the Hatch-Waxman Act) are doing just that -- pricing their products to compete against a generic product once the brand's patent expires and a generic enters the market. Brand products at generic prices are commonly called "authorized generics." The Food and Drug Administration, Federal Trade Commission and a Federal Appeals Court have made it clear that Hatch-Waxman allows for this competition. As the court has noted, nothing prevents a brand company from marketing its product as a generic. Indeed, doing so is consistent with the objective of the Hatch-Waxman Act (the Drug Price Competition and Patent Term Restoration Act).
To prohibit a brand company from marketing its product as a generic drug would require a change in statute. Mr. Grassley asked the FTC to re-examine the impact of authorized generics on competition but apparently isn't interested in waiting for its report or relying on hearings to further vet the issue in the committees that have actual jurisdiction over generic drugs. …
So, in effect, Mr. Grassley is slapping a price control on innovative companies as a penalty for proceeding with generic competition. He and his health-care policy director Mark Hayes have stated that they hope the measure will discourage generic introductions from brand companies. The Senate Finance Committee, which Mr. Grassley chairs, does not have jurisdiction over Hatch-Waxman. But that little detail hasn't deterred the Grassley-generics industry alliance.

If saving consumers money is the purpose behind generic competition, Goldberg argues, authorized generics should be encouraged rather than attacked.



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