Authorized generics agreements ' last ditch effort on part of branded pharma

As pay-for-delay agreements look to be on the way out of the pharmaceutical industry in Europe and the US, a new report by independent market analyst Datamonitor* forecasts that the number of authorized generics (AG) agreements will grow, in tandem with the increasing convergence between branded and generics companies. Competitive pressures in the US and Europe have radically altered the brand-generic dynamic, to the extent that the line between the two is beginning to blur, with AG agreements one outcome of these developments. The growing trend for branded companies ' notably GlaxoSmithKline, Sanofi-Aventis, and Pfizer, to bolster their generics presence also means that the strategy of fielding own-generics will gain traction.

Authorized generics in Europe and the US ' same drivers, different impacts

Authorized generic agreements, the strategy by which branded companies market generic versions of their own branded drugs, provide innovators with a means of capitalizing upon the generic erosion of their own brands, thereby maximizing revenue streams from a mature product. Authorized generics are therefore something of a very late-stage drug lifecycle management strategy for branded pharma. The generics industry is more divided on the issue. For those companies with the wherewithal to aggressively challenge patents and get to market early, AGs are a considerable irritant. However, for smaller players these agreements represent a valuable competitive advantage, and this is more true in the US than Europe.

Due to their sale during the 180-day period of market exclusivity awarded to first-to-file generics companies in the US, AGs are considerably more potent in the American market. The increasing use of AGs as a 'bargaining chip' in reverse payment agreements in the US (but not Europe) underlines their greater impact. Indeed, there have been calls from some in the generics industry in the US for the so-called 'Hatch-Waxman loop-hole' to be closed to prevent AG sale during the 180-day market exclusivity period says Datamonitor healthcare strategy analyst Pam Narang. 'Detractors insist that AG sale at this time is anticompetitive and a deterrent to early generics entry. However, given the accelerated price erosion that characterizes AG sale during the 180-days of market exclusivity, an outright ban is unlikely in the short-term,' she says.