Announced Actions for November 8, 1999

The Federal Trade Commission today announced the following actions:

Hearings/Testimony Before Congress: FTC Chairman Robert Pitofsky will deliver Commission testimony on Telecommunications Mergers before the Senate Commerce Committee. (Copies of the testimony are available on the agency's Web site.)

Comment filed by FTC staff: Staff of the Bureau of Competition and Office of Policy Planning have provided comments on the U.S. Food and Drug Administration's proposed rule amending its regulations governing the 180-day marketing exclusivity provisions of the Drug Price Competition and Patent Restoration Act of 1984 (the Hatch-Waxman Act). A summary is provided below.

The FTC is an independent administrative agency charged with promoting the efficient functioning of the marketplace by increasing consumer choice through the promotion of vigorous competition and other means. The FTC has a strong interest in the prompt entry of generic drug products into the marketplace to ensure that consumers receive the benefits of generic drug competition.

The Hatch-Waxman Act has provided the competitive benefits of lower prices and greater innovation in the pharmaceutical industry by helping to streamline the approval process for generic drugs. Under the provisions of the Act, the first generic drug company to file an Abbreviated New Drug Application (ANDA) challenging a branded company's patents for a particular drug effectively has 180 days of marketing exclusivity, during which time no other generic competitors may market their product. This provision was enacted to encourage generic companies to bring their products into the marketplace promptly if they contend that "either the proposed generic drug does not infringe the patent or the patent is invalid."

The proposed rule is designed to address the FDA's concern that the first generic applicant to file this type of application can delay generic competition by entering into certain commercial arrangements with the branded company. That may have the effect of delaying the start of the 180-day period of marketing exclusivity and may bar other generic firms from entering the market even when their products would not infringe a valid patent. To remedy this situation, the FDA's proposed rule includes a 180-day time limit on when the first-filed ANDA applicant must trigger its rights to obtain the 180-day marketing exclusivity period, and by clarifying which applicants are eligible for the 180-day marketing exclusivity.

According to the Commission's comment, the "triggering period" proposed by the FDA would help ensure that competition in the generic drug marketplace would not be delayed. Such a "use-it-or-lose-it" triggering period "appears to be helpful in implementing the Hatch-Waxman's intent to 'make available more low-cost' generic drugs," and "appears more than adequate to permit the applicant to prepare to launch the generic product."

In addition, the comment notes that only the first-filed ANDA applicant would be eligible for the 180-day marketing exclusivity. The comment supports the FDA's proposed rule not to implement "roving eligibility" if the first applicant later loses its status as the first filer (for example, by withdrawing or changing its application as a result of losing or settling its patent suit). Accordingly, the comment states that "the proposed policy appears to be a reasonable part of a solution to the delay of generic competition that the FDA has observed."

Finally, the comment suggests that the FDA may wish to consider requiring that 1) patent litigation agreements (either full or partial settlements) between branded and generic companies and 2) agreements related to the filing of an ANDA by a potential applicant, be filed confidentially with the agency in a timely manner and be accessible to federal antitrust authorities on a nonpublic basis so that these agencies will be aware of any possible anticompetitive issues involved with such agreements. The Commission has recently initiated several investigations of agreements between branded companies and their generic counterparts that may have the effect of forestalling generic competition in this marketplace, the comment states, and "a system of filing with the FDA could assure better detection of anticompetitive arrangements that harm consumer welfare."

The Commission vote to approve the filing of staff comments was 4-0.

Copies of the documents mentioned in this FYI are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580; 877-FTC Help (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.