FTC Moves Forward on Rx Industry Probe

By: - June 4, 2001 12:00 am

As the states and U.S. government agencies increasingly scrutinize pharmaceutical manufacturers’ business practices, the Federal Trade Commission is stepping up a probe of alleged agreements that brand-name companies have made to either delay or stop the sale of generic drugs.

The FTC has dedicated a “very substantial portion of resources” to a study of the industry, says Rich Feinstein, assistant director of the FTC’s Bureau of Competition , who spoke at a conference in Washington, D.C. last month.

To some extent, the agency’s efforts are already paying off. Just last month, the U.S. District Court for the District of Columbia gave a preliminary OK to a million settlement between the FTC and 50 states with Mylan Laboratories and several other defendants. The lawsuit states that Mylan, which manufactures generic anti-anxiety drugs, struck exclusive agreements with several companies to corner the U.S. market on its drugs. Mylan then raised the price of the drugs by amounts ranging from 1,900 percent to more than 3,200 percent, court documents reveal.

The Mylan case was just “the opening onslaught” in the commission’s investigation, says Feinstein. “There are a lot of similarities factually [in other cases that have cropped up]. The branded firm pa[ys] the first generic firm to delay generic competition and to refrain from bringing non-infringing products [into the market]. We can’t be completely wrong if we’re being attacked from both [the brand-name and generic] sides,” he says.

As part of its work, the FTC sent 75 surveys or “special orders,” as they’re known, to drug manufacturers on April 24. “The effect is like a subpoena in the sense that you have to respond to it,” Feinstein says. Companies are required to send responses back to the FTC by June 22.

“Special orders are intended to allow us to inform ourselves better and to better inform Congress on [a potential] legislative approach. The hope is if information comes back in June, a few months will be necessary for review,” says Feinstein. FTC hopes to issue a related report on industry practices in the fall.

Clinton-era officials, including presidential health advisor Chris Jennings, have expressed skepticism in recent months that the Bush Administration would support such probes. Just last month, however, Reuters and the Los Angeles Times reported that the Administration okayed the FTC investigating, giving the commission a green light to serve the special orders.

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