Bill Would Limit ‘Authorized Generics’

Three U.S. senators launched an effort Thursday to ban a practice that they say could lead to higher drug prices for consumers by undermining competition in the country’s $250-billion pharmaceutical market.

The lawmakers introduced a bill to limit the marketing of “authorized generics,” which are cheaper versions of branded prescription drugs that are licensed or manufactured by the brand owners. They are essentially the same medicine with a different label, usually introduced as the branded drug loses its patent protection.

Brand makers defend the practice, saying they are simply competing with generics at their own game and helping drive prices down.

Critics say authorized generics are designed to undermine true generic drug makers, whose sole business is to copy drugs cheaply, not to invent them.

“Authorized generics are wolves in sheep’s clothing,” Sen. Charles E. Schumer (D-N.Y.) said in a written statement announcing the bill. The bill was cosponsored by Sens. John D. Rockefeller IV (D-W.V.) and Patrick J. Leahy (D-Vt.).

The branded-drug industry, represented by trade association Pharmaceutical Research and Manufacturers of America, is likely to lobby aggressively against the bill.

Less expensive generic drugs account for more than half of all prescriptions filled in the country. But increasingly, the copies are facing early competition from brand-sponsored generics.

Most recently, Merck & Co. launched an authorized generic for its blockbuster cholesterol drug Zocor, whose patent expired in June.

Under federal law, a generic maker that successfully contests a brand’s patent in court gains 180 days to exclusively market its generic version, during which it can make a larger profit in the absence of competition from other generic makers.

The law was meant as an incentive for drug companies to challenge patents and to establish a generics market that others can enter later. But authorized generics are not bound by the 180-day exclusivity period because technically they are the branded drug.

The Senate bill seeks to ban authorized generics during the 180-day period.