Generics Jihad

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  • 11/01/2005

Bob Goldberg’s article on branded generics in last Wednesday’s Washington Times generated this reply from Kathleen Jaeger, President and CEO of the Generic Pharmaceutical Association. I thought the letter was foolish — Bob (not surprisingly) had a stronger reaction.

First Ms. Jaeger …

I read with interest Robert Goldberg’s views (“May Reagan GOP R.I.P.,” Op-Ed, Wednesday) on the Senate Medicaid proposal regarding brand products that are masquerading as generics, also known as “authorized generics.” To be clear, authorized generics are brand products marketed under a different label by the brand company or a third-party distributor. Mr. Goldberg is proposing a double standard for the brand industry. On the one hand, he wants authorized generics to be considered generics by the Centers for Medicare and Medicaid Services (CMS) for purposes of the agency’s best price calculation, which is the lowest price at which CMS purchases medicines. On the other hand, he wants authorized generics to be considered brand products so they can bypass the Food and Drug Administration’s rigorous generic drug approval system and take advantage of a loophole in the federal law known as the Hatch-Waxman Act. One provision in the Senate Medicaid proposal would clarify CMS’ treatment of authorized generics to ensure that the federal government is not overpaying for these medicines. Currently, brand companies obtain a major windfall by not including in their CMS best-price calculation brand products that are dressed up as generics to the detriment of the federal and state government programs. In other words, when it comes to federal reimbursement, the brand company benefits by calling the “authorized generic” a generic product. Mr. Goldberg’s views would indicate that this overpayment is an acceptable practice that taxpayers should embrace. While there are other issues of concern in the Medicaid bill currently under consideration in Congress, this provision would clarify the inconsistencies in the treatment of these brand products. The brand industry can’t have it both ways.

And here is Bob’s response …

Very interesting, a brand drug which has already received FDA approval after going through 15 years of review which then goes generic undergoes a less rigorous review than a copy of that product which only has to show that it shows up in the blood at the same levels in a handful of people a generic firm puts up in a hotel room? As for best price, once a generic version of a product hits the market, the brand product loses market share. The total cost to consumers — including the government, goes down. The only losers are the generic companies who, having spent a few hundred thousand suing drug companies to challege their patent, don’t get a crack at the six months of monopolistic pricing and the millions the Hatch Waxman law affords them for challenging the originator patent. The return on the investment the generic firm makes in lawyers is about 3000 percent. Generic firms who challenge patents get competition all the time and even share market exclusivity. They just don’t want more competition. Pretty amusing and hypocritical from an industry that prides itself on promoting competition in the first place. Ms. Jaeger’s letter is fiction masquerading as truth.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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