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Supreme Court Considers Competition in Rx Market

AARP is asking the U.S. Supreme Court to uphold federal efforts to speed safe and reliable generic drugs to market.


Manufacturers who obtain patents for new pharmaceuticals enjoy a period of exclusivity during which time they hold the rights to the new drug and can develop a market for it. After that period of exclusivity (generally seven years, unless extended under specific circumstances), generic manufacturers can apply to the federal Food and Drug Administration (FDA) to produce generic versions of the brand name drug.

Congress enacted the Hatch-Waxman Act to spur competition; among the law's provisions was an expedited approval process for generic competitors (Abbreviated New Drug Application process, or ANDA), which seeks to balance the need for public safety and health with the ability to bring new less-expensive medicines to market as quickly as possible.

ANDA allows generic manufacturers to bypass submissions of independent clinical testing if they can show that the generic drug contains the same active ingredients and is bioequivalent to a brand pharmaceutical already on the market. However, a loophole in that law allows brand name pharmaceutical companies to erode ANDA by tailoring the drug's indications in order to prevent approval of generic versions. If a generic manufacturer proposes to use the drug differently (for instance, if a brand name drug is routinely used in a different manner than that described and it is that manner in which the generic manufacturer proposes to compete), the ANDA shortcuts may not be available, slowing the generic's introduction into the market.

Congress sought to close this loophole in 2003 by providing a process in which a generic ANDA applicant can ask a brand name manufacturer to "correct or delete the patent information" at issue. Brand name manufacturers sued, and a federal trial court agreed with them that this counterclaim provision is only available if the brand name manufacturer leaves the use language blank – that is, if a brand name manufacturer listed any single use, this counterclaim provision is not available. An appeals court reversed that decision, ruling that could not be what Congress intended, and the dispute came to the Supreme Court.

AARP's brief in Caraco v. Novo Nordisk, filed by attorneys with AARP Foundation Litigation, urges the Court to uphold the appellate court's ruling. The brief parses the language of the law, reviews the debates leading up to its enactment, details the skyrocketing escalation of pharmaceutical drug costs and the devastating effect these costs have on public health, and reviews the "gamesmanship" brand name manufacturers use to protect their exclusivity.

What's at Stake

Health care costs are alarmingly high, and generic drugs provide an opportunity for consumers to receive the care they need at a more affordable price. Study after study shows that when generics are precluded from avenues for market entry, prices remain high, and the effects of that are felt by purchasing consumers as well by federal, state and local governments in the form of the costs of their public health programs.

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