"At-risk" generic launches can be unpredictable

Key Points

"At-risk" generic launches refer to generic pharmaceuticals that are approved by FDA based on the review of an abbreviated new drug application (ANDA) and are subsequently launched while patent litigation is ongoing. Launching these generics is risky because they can be pulled from the market if courts determine that patents protecting a branded reference product are violated or infringed, thus allowing the brand company to seek triple monetary damages.

The key implication of at-risk generic launches is that they create conditions of unpredictability and confusion, said Diana Papshev, PharmD, partner, InformaCeutica ( http://DrugManagementForum.com/), Yardley, Pa., at the 22nd annual meeting of the Academy of Managed Care Pharmacy in San Diego. "Formulary management becomes challenging in this unpredictable environment where at-risk generics might undergo market withdrawal due to the patent litigation outcomes. Uncertainty about generic product availability also creates confusion in the retail pharmacy setting. In fact, surveys show that more than 50% of retail pharmacists are uncomfortable with dispensing at-risk generics."

In the case of ANDAs submitted by generic pharmaceutical companies with a Paragraph IV certification (which basically challenge existing patents), the law grants brand manufacturers a 30-month waiting period in the form of a stay on FDA approval to pursue a generic company that may be infringing on their patent. Once litigation is initiated, companies might settle, courts may affirm contested patents, courts may find in favor of the generic companies, or the 30-month stay can expire prior to case resolution. The last two options can trigger FDA approval even if litigation is still on-going.

Implications for managed care include unpredictability of forecasting products, contract negotiations and formulary management issues, as well as market confusion.