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FTC Charges Drug Companies with Keeping Lower-Priced Generic Drugs Off Market

Aired March 17, 2000 - 2:38 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU WATERS, CNN ANCHOR: The federal government charges two drug companies with trying to keep lower priced generic drugs off the market. The cases involve blood pressure medication. The companies deny wrongdoing.

We have more from CNN's Allan Dodds Frank.

(BEGIN VIDEOTAPE)

ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): The Federal Trade Commission sent a message to the pharmaceutical industry, stop delaying the introduction of generic substitutes for far more expensive drugs developed under patent.

HERMAN SAFTLAS, PHARMACEUTICALS ANALYST: The companies with the most exposure to generic competition are actually the leading companies in the industry.

DODDS FRANK: In two cases made public Thursday, the commission said several companies holding patents that were about to expire have illegally been paying generic manufacturers to keep their products from reaching the market for as much as three years.

One case involves Hex Marionne Loseel (ph), maker of Cardamin (ph), a brand name hypertension drug, and the generic company Andrex (ph), which was paid to keep its products drug off the market.

RICHARD PARKER, FEDERAL TRADE COMMISSION: The manufacturers of brand name drugs, such as Cardamin-CD cannot extend the exclusive right that they are given under the patent laws by, in essence, paying a generic competitor to stay out of the market.

DODDS FRANK: The second FTC case, which was settled out of court, involved Abbott Labs, it's prostate drug Hidrin (ph) and generic manufacturer Geneva Pharmaceutical.

PARKER: The agreement we're talking about kept them off the market for 17 months at an estimated consumer loss of $300 million.

DODDS FRANK: The maker of the drug gets patent protection for 20 years. Then the Food and Drug Administration gives the first maker of the generic substitute an additional six months exclusive. But under the guise of lawsuit settlements brand name drug companies often found a way to pay off a generic company.

KEVIN ARQUIT, ATTORNEY: The brand-name company gets to continue to sell at the monopoly price. It shares a small part of a that monopoly price with the one generic that would have entered, and it is everybody else, the other generic companies and consumers, that get harmed.

DODDS FRANK: Last year, nearly 300 new generic drugs were introduced, The industry did nearly $10 billion of business and, according to the FTC, generics reduced the cost of drugs by 25 percent in the first year of introduction and they ultimately cut costs in half.

(on camera): In the first two cases, the FTC decided to take it easy by not seeking fines, but late Thursday, the five-member commission warned that if the anti-competitive practices continue, they will seek disgorgment (ph) of profit.

Allan Dodds Frank, CNN Financial News, New York.

(END VIDEOTAPE)

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