The first generic copy of a branded drug to get to market and be awarded market exclusivity should be the “the first to win the patent case without settlement” rather than the first to file, US lawmakers have been told.

If a company wins a court challenge to a weak patent, it would expect to be the sole beneficiary of the 180-day exclusivity period - which starts when that patent is knocked out and is currently awarded to the first generic filer - regardless of its position among other firms which had also filed, Bill Kennedy, co-owner of generics maker Nephron, told a Congressional hearing yesterday.

Therefore, he added, the exclusivity period should be expanded from six months to one year. A company investing in a successful challenge to a weak patent deserves to achieve a reasonable rate of return on its investment, and an expanded exclusivity period would give it more incentive and protection, Mr Kennedy told the hearing, which was held by the House Judiciary Committee’s Subcommittee on Courts and Competition Policy to discuss The Protecting Consumer Access to Generic Drugs Act of 2009 (HR 1706), which seeks to prohibit “pay-for-delay” patent settlements under which brand-name drugmakers pay potential generic competitors to stay out of the market.

After that year's exclusivity period expired, the market for the new generic would be open to all respective Abbreviated New Drug Application (ANDA) holders, and four to five competitors would readily enter and compete in the market place for the new generic drug one day after the expiration of the exclusivity period, thus creating “an extremely competitive marketplace,” Mr Kennedy forecast.

William Vaughn, senior health policy analyst at Consumers Union (CU), agreed that the Hatch Waxman Act should be amended to give generic firms that are not the first to file a patent challenge the opportunity to secure exclusivity if they do successfully challenge. Under the current system, there is little incentive for them to take on the burden of expensive patent litigation, since they cannot secure any exclusivity if they succeed, he said.

Moreover, the first generic competitor usually “shadow-prices” the brand, he added; “consumers usually do not really see sharp, dramatic drops in price until there are several generic competitors.”

Mr Vaughan also urged the legislators to act to curb “authorised generics,” which enter the market under licensing arrangements with the branded firm and “seem intended to undermine” the reward of the six-month exclusivity period awarded to the first generic filer under Hatch-Waxman.

A ban on authorized generics would also re-establish a level playing field for generic companies, agreed Heather Bresch, chief operating officer at Mylan.

“Authorized generics are, in fact, the same exact products as their branded counterparts made on the same production lines with the exact same ingredients, but before packaging, they are given a different label. Same product, same bottle, different label,” she told the panel. Brand companies’ practice of not releasing authorized generics until the first true generic begins its 180 days of exclusivity can “all but eliminate the incentive for a generic filer to identify frivolous or invalid patents, invest in the R&D necessary to produce a bioequivalent and affordable generic product and accept the risk of expensive patent litigation,” she added.

But HR 1706’s aims were opposed by Guy Donatiello, vice president for intellectual property at Endo Pharmaceuticals. A ban on settlements would restrict the ability of both branded and generic companies to settle ANDA patent cases logically, forcing them to engage in patent disputes that might otherwise be settled “reasonably, quickly and in the public interest,” and require them to spend significant resources on litigation, diverting those resources from valuable investment in future innovation, he said.

HR 1706 “would add cost and uncertainty to bringing new branded and generic medicines to patients. Instead of an across-the-board ban, enforcement agencies and courts should continue to evaluate patent settlements on a case-by-case basis, examining all relevant facts including the strength of the patent and whether the settlements benefit consumers,” Mr Donatiello told the hearing.

- Also yesterday, the House Energy and Commerce Committee’s subcommittee on commerce, trade and consumer protection voted in favour of HR 1706, a move welcomed by the chairman of the Federal Trade Commission (FTC) Jon Leibowitz.

“We urge Congress to pass this legislation to restore the full benefits of generic competition so that consumers will benefit from earlier access to generic drugs, which are substantially less expensive than branded drugs,” he said.