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Antitrust, UCL and Privacy

Competition: Winter 2017-18, Vol. 27, No. 1

EMPIRICAL EVIDENCE OF DRUG COMPANIES USING CITIZEN PETITIONS TO HOLD OFF COMPETITION

By Robin Feldman,1 John Gray,2 & Giora Ashkenazi3

I. INTRODUCTION

The United States patent system is designed to reward innovation and spur new technological growth. While this is incredibly effective in most fields, it can be especially problematic in the pharmaceutical industry where the inelasticity of demand for products has allowed for exorbitant drug prices. This is most clearly seen in the effect that the entry of generic drugs has on the market. Since 1984, more than 10,000 generics have entered the market,4 and the percentage of prescriptions filled with generics rose from just 13 percent in 19805 to around 86 percent by 2013.6 Notably, the dramatic rise of generics has saved the public inordinate amounts of money. The Food and Drug Administration (FDA) estimates that consumers saved more than $217 billion through the use of generics in 2012 alone, with total savings of $1.68 trillion from 2005 to 2014.7 It is, therefore, of the utmost importance to ensure that generic drugs enter the market properly as patents expire. Brand-name pharmaceutical companies have long been known to play a myriad of games to delay generic entry for as long as possible.

In a recently published book and article,8 co-authored by team members at the UC Hastings Institute for Innovation Law, we expose troubling behavior in which pharmaceutical companies use the FDA’s citizen petition process to delay entry of generic competitors. Examining more than a decade of FDA data related to citizen petitions, along with data related to generic drug approvals, the study provides broad empirical evidence that citizen petitions at the FDA have become an important pathway for strategic behavior by pharmaceutical companies.

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