Generics "Disappointment" For Brand-Name Firms

a US Food and Drug Law Institute conference has heard that with changes to the generic market, the Federal trade Commission must change how it applies the law. Not all vertical alliances such as the Lilly/PCS deal present immediate antitrust problems, but they do contain the possibility of antitrust effects, said Mark Whitener, acting deputy director at the FTC Bureau of Compliance.

While balancing promoting competition against restraint of trade, the FTC must consider the possible elimination of future and present competition and the potential for restricting innovative competing markets, he said. Traditional horizontal integration in the industry involves the merger and acquisition of two major brand-name firms (American Home and American Cyanamid), a brand-name firm with a generic (Marion merrell Dow and Rugby), or direct competitors (Ivax and Zenith). The FTC has worked with the Food and Drug Administration on cases involving possible sham litigation, designed to prevent competing products from entering the market, he said; it is difficult to reach decisions on the merit of a claim.

The entry into generics of brand-name firms has not meant the death of the independent generic sector or higher generic prices, said consultant Edward Thomas; many of them have in fact been disappointed with the results. Product and profit opportunities have often not been met, and nor, with the differences in markets worldwide, have hopes of entry into a global generic market. Problems include lack of interest in bundling, the reality that no-one can offer true one-stop shopping, lack of generic brand loyalty among Pharmacy Benefit Managers and minimal amount of therapeutic substitution. Prices have not stabilized, generic profits are low compared to the time and effort needed and to those for patented drugs, there is much competition and health reform is virtually dead. The trend for innovator firms to move into generics has been staunched, with some dropping out last year.