Congress urged to clear path for generic drugs
Well, as you’ll read some action is happening in the US Senate to address the authorized generics conundrum. You’ll recall that the issue has sparked consternation among major generics makers–and some lawmakers–who compete for 180-day exclusivity under Hatch-Waxman. The authorized generic effectively undermines the first-to-file generic house from enjoying the 6-month monopoly aimed at encouraging challenges to innovator patents and thus earliet possible generic entries. However, Merck’s recent tactic of undercutting the price of a first-to-file generic (Teva) with their brand drug (Zocor) would not be affected by pending legislation that seeks to limit authorized generics until after the 180-day exclusivity period has expired.
It remains to be seen how effective Merck’s Zocor strategy will be relative to (1) the no-generic (i.e. “usual”) approach and (2) the authorized-generic approach, and whether it will be imitated by other innovators. In particular, analysts will be looking at whether low Zocor prices return the same profit to Merck as does Merck’s authorized generic simvastatin sold by Dr. Reddy’s. As pricing for Zocor will be likely be more variable than the pricing for the authorized generic, with little local-market overlap between the two, apples to apples comparisons will be difficult. Was Merck anticipating legislation limiting AGs, and did anticipation lead to their bold pricing experiment with Zocor? If they were, they haven’t said so publicly.
