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Generics: Long drawn journey! - Views on News from Equitymaster
 
 
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  • Aug 18, 2004

    Generics: Long drawn journey!

    US markets have been very lucrative for the Indian pharma companies and many companies such as Ranbaxy and Dr Reddy's capitalized on this opportunity. At the start, these companies entered the US as a supplier of bulk drugs, but with time they started looking at the more profitable generics business. In this article, we try to give you a perspective of what generics is all about and how do companies do generics business.

    Generics pharmaceutical products are bio-equivalents of their respective branded (patented) products. By bio-equivalence we mean that the therapeutic use or effect of the generic product and the patented product will be the same on certain set parameters. These products are providing a cost efficient alternative to the branded products. When patent or other regulatory exclusivity no longer protects a branded product, opportunities for other participants in the industry emerge and they introduce off-patent or generic counter part to the branded product.

    To get an approval to launch a generic is an uphill task, as the regulations of USFDA regarding the quality of drug are very stringent. A company seeking to foray into generics space with a certain drug has to first file an abbreviated new drug application (ANDA) with the USFDA. This ANDA should contain data regarding the bio-equivalence of the drug with the branded product. The approval of ANDA does take time and apart from establishing bio-equivalence, USFDA checks up the manufacturing facilities and operations. The timing of an ANDA approval depends in part on patent protections for the original drug. The ANDA should contain information regarding the patented drug, which is published by the USFDA 'Orange book'. Based on this information from the book, the applicant for the generic version of the drug can file application under following Paragraphs (Para).

    • Para I:  The application states that the required patent information relating to such patent has not been filed, i.e. the drug is not patented.

    • Para II:  It says that the patent has expired

    • Para III:  It says that the patent will expire on a particular date

    • Para IV:  It says that that such patent is invalid or will not be infringed by the drug, for which approval is being sought.

    A certificate by USFDA in Para I and Para II permits the ANDA to be approved immediately, if it is eligible from the regulatory side. A certificate under Para III indicates that the ANDA may be approved on the patent expiration date. However, the most contentious is the Para IV certification.

    A paragraph IV certification begins a process in which the question of whether the listed patent is valid or will be infringed by the proposed generic product, may be answered by the court prior to the expiration of the patent. The ANDA applicant who files for a Para IV certification on a listed patent must notify the patent owner or the patent holder that it has filed an ANDA containing a patent challenge. If the current patent owner files a patent infringement suit against the Para IV applicant within 45 days of the receipt of notice, FDA may not give final approval to the ANDA for at least 30 months from the date of the notice. This 30-month stay will apply unless the court reaches a decision earlier in the patent infringement case. If this period expires, the court can lengthen the period for the stay.

    The law provides an incentive of 180 days of market exclusivity to the "first" successful generic applicant who challenges a listed patent by filing a Para IV certification and running the risk of having to defend a patent infringement suit. Dr. Reddy's got a Para IV certification for the drug Fluxotine and got 180-exclusivity. The 180-day period of exclusivity begins from the date the ANDA applicant starts commercial marketing of the generic drug (this was introduced in the recent amendment, which is favourable to generics companies. Earlier the 180 days exclusivity began the day court gave the decision). 180-days marketing exclusivity holds good only for the Para-IV applicants.

    However, if the generic company loses the case in court, the application for generic drug is deemed to be filed under Para III. But 180 days exclusivity is not given in this case. Although Para IV certification is difficult to get, this is a way Dr. Reddy's has chosen, because it will help company get a critical mass in the generics space in one shot. Many generics companies adopt this strategy. However, this should be supplemented with non-Para IV filings, which will also help companies to create a critical mass in US generics space. Ranbaxy has adopted this strategy quiet successfully.

    With over US$ 50 bn drugs likely to go off patent over the next 5 years, the companies are willing to take on this circuitous route, if it helps them change fortunes overnight.

     

     

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