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The New
York Times
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October 12, 2000, Thursday, Late Edition -
Final
SECTION: Section A; Page 16; Column
1; National Desk
LENGTH: 569 words
HEADLINE: Agency Plans to Study Drug Makers' Records to
See Whether Deals Delay Generics
BYLINE: By JEFF
GERTH
DATELINE: WASHINGTON, Oct. 11
BODY:
The Federal Trade Commission announced plans
today to subpoena records from 90 pharmaceutical companies to see whether drug
industry strategies were keeping lower-cost generic drugs from patients or
harming consumers.
The commission has already filed complaints against
two brand companies and two generic companies, accusing them of making deals
that effectively stopped or delayed the generic version of two brand-name drugs.
Several other such agreements are under investigation.
"There are more
of these agreements than we know about," one commission official said, "so our
desire is to get our arms around the scope of the issue."
The economic
stakes in the brand-generic drug wars are huge. In the next five years, drugs
with $20 billion in annual sales in the United States will have come off patent,
said Robert Pitofsky, the commission chairman. Without patent protection, drug
manufacturers can lose significant profits. At the same time, the availability
of generic competition can mean considerable savings for consumers.
Mr.
Pitofsky said the study was meant to "ensure that the process of bringing new
low-cost generic alternatives to the marketplace -- and into the hands of
consumers -- is not impeded in ways that are anticompetitive."
Jackie
Cottrell, a spokeswoman for the brand drug makers' trade group, the
Pharmaceutical Research and Manufacturers of America, said that any comment was
premature.
"But," Ms. Cottrell said, "we are confident that any balanced
study by the F.T.C. will find the brand-name industry's practices are beneficial
to patients."
The trade commission's proposed study must undergo a
period of public comment and then be approved by White House budget officials.
This will delay any investigation until early next year, after the next
president takes office.
Vice President Al Gore, the Democratic nominee
for president, is a critic of the pharmaceutical industry and has said
brand-generic agreements unfairly deny consumers the benefits of competition.
His Republican opponent, Gov. George W. Bush of Texas, has not addressed this
specific issue, but the pharmaceutical industry has been generally supportive of
his candidacy.
The trade commission's concerns trace to a 1984 law, now
known as Hatch-Waxman, which was designed to
ease greater competition between generic and brand-name drugs. But one of its
co-authors, Representative Henry A. Waxman, Democrat of
California, said some incentives in the law had been used to delay competition,
rather than foster it, costing consumers money and denying patients access to
life-saving drugs.
Whatever the law's shortcomings, however, it has
benefited consumers. A study last year, done for a generic company by Paul
MacAvoy, a Yale University economist who advised Presidents Ronald Reagan and
George Bush, found that from 1985 to 1997, consumers saved $112.5 billion by
buying generic drugs.
Despite the lost sales, the study also found, the
brand-name drug companies actually increased their research and development
outlays, to $18 billion from $4 billion.
Mr. Waxman
wrote Mr. Pitofsky on Aug. 30 asking the commission to produce a study on the
issue of deals between brands and generics. Last month, Senators John McCain,
Republican of Arizona , and Charles E. Schumer, Democrat of New York, introduced
legislation to address the potential for manipulation in the 1984 law.
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LOAD-DATE: October 12, 2000 
