Healthy Skepticism Library item: 3916

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

FTC to subpoena drug companies
Associated Press 2006 Mar 30
http://www.journalnow.com/servlet/Satellite?pagename=WSJ%2FMGArticle%2FWSJ_BasicArticle&c=MGArticle&cid=1137835037786&path=!nationworld&s=

Notes:

Ralph Faggotter’s Comments:

It may surprise readers to know that expensive brand-name drugs and their cheaper generic competitors often come off the same production-line and are produced, owned and marketed by the same company!

The same thing happens in many other areas of manufacturing, such as the sports shoe industry, where consumers will pay a premium for a brand name shoe even though the product is identical to a much cheaper un-branded version!

Full text:

Thursday, March 30, 2006
FTC to subpoena drug companies
Manufacturers may be trying to restrain competition, it says

THE ASSOCIATED PRESS

WASHINGTON

The Federal Trade Commission said yesterday that it plans to subpoena nearly 200 pharmaceutical companies as part of an investigation into possible anticompetitive practices in the prescription-drug industry.

The subpoenas, which require approval from the Office of Management and Budget, would form part of an investigation into whether pharmaceutical companies are stifling competition by releasing authorized generic copies of their own brand-name drugs to coincide with the introduction of generic challengers made by competitors.

The 190 subpoenas, including to 80 brand-name manufacturers, could go out late this sum-mer, the FTC said. A final report would be completed next year.

Federal law gives a generic pharmaceutical company – af-ter it has successfully challenged a patent held by a brand-name manufacturer – a six-month period of exclusivity during which it is supposed to have the generic marketplace for the drug to itself.

Once the period expires, other manufacturers can apply for approval for their own gene-ric versions of a drug, further increasing competition but cutting profit margins.

A loophole in the law, however, lets brand-name companies authorize their own generic versions of a drug, which increasingly have reached the market at the start of the supposed six-month exclusivity period.

That practice can harm the brand-name company’s business in the short term, because the increased number of producers further erodes its share of the market.

They benefit consumers, how-ever, who generally get even lower prices.