Authorized Generics: A Prescription for Hatch-Waxman Reform

Abstract

Authorized generics present the latest controversy in the perennial battle between pioneer and generic drug manufacturers. Under these arrangements, a pioneer firm will "authorize" a generic version of its brand-name drug to enter the market during another generic competitor's 180-day exclusivity period. This practice has generated intense debate within the pharmaceutical industry regarding its potential impact on Paragraph IV patent challenges, in addition to the proper operation and intent of the Hatch-Waxman Act. Because of the immense economic and public health consequences at stake, and previous patterns of Hatch-Waxman abuse, the Federal Trade Commission has recently launched an investigation of authorized generics.

This Note explores the qualitative nature of pharmaceutical competition, specifically focusing on the interaction between pharmaceutical supply chain economics and consumer behavior. From these observations, I propose a theory of competitive harm and conclude that authorized generics are an anticompetitive strategic behavior which violate the antitrust laws by deterring Paragraph IV entry. I find normative support within the Hatch-Waxman and patent law regimes to corroborate my antitrust analysis. Finally, I recommend potential solutions to the authorized generics controversy, including Hatch-Waxman legislative reform.

Keywords: authorized generic, Hatch-Waxman, patent, antitrust