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Mylan drops case challenging authorized generics

| Tuesday, Aug. 31, 2004

MORGANTOWN, W.Va. (AP) -- Mylan Pharmaceuticals on Monday abruptly dropped its federal lawsuit against the U.S. Food and Drug Administration over an agency ruling that had forced the company to compete with so-called "authorized generics."

Mylan attorney William Rakoczy declined to comment on the company's motion for dismissal of the complaint without prejudice, and Mylan spokeswoman Heather Bresch did not immediately return telephone messages.

Mylan had been seeking a preliminary injunction in U.S. District Court to stop Cincinnati-based Procter & Gamble from selling an authorized generic version of Macrobid, a drug used to treat urinary tract infections, during a time that Mylan expected to enjoy sole rights to the generic.

Generally, the first generic drug company to successfully challenge a brand-name patent enjoys 180 days of marketing exclusivity, meaning its product is the only generic sold during that time. Congress created the provision as an incentive for generic companies and to get lower-cost drugs to market more quickly.

Mylan sued the FDA, saying it failed to enforce the congressional intent behind the Hatch-Waxman amendment to the Food, Drug and Cosmetics Act.

U.S. District Judge Irene Keeley had been expected to rule yesterday on Mylan's complaint.

At a hearing last week, she called Mylan's case "extremely compelling" and said Congress had left "a gaping black hole" in federal prescription drug laws by apparently failing to anticipate the advent of so-called authorized generics.

Since September 2003, brand makers like P&G have been introducing authorized generics, renaming their own product and selling it through a licensed distributor. The product is the same as the brand name but sells at a cheaper price.

Under current law, Keeley said, "any brand can go out and market its product as a generic at any time because it's not covered in the law."

"Authorized generics look to me like a gaping black hole that's been ignored or avoided," she said.

The FDA contends it lacks the power to stop a brand-name drug maker from selling its product at generic prices through another company.

Drake Cutini, an attorney with the Justice Department's Office of Consumer Litigation, said during last week's hearing that in Mylan's case, the public benefits because there is more than one drug on the market. Cutini did not immediately return a call yesterday.

Mylan argued that the second drug would not have appeared without the development of a true generic. It contends authorized generics are designed not only to help brand producers keep a portion of the market but also to punish the generic producers.

The Generic Pharmaceutical Association sided with Mylan, arguing that the practice threatens the industry's existence by giving brand-name producers total control of the market.

Though its 180 days will expire Sept. 19, Mylan had argued it will lose millions between now and then to P&G's licensed agent, Watson Pharmaceuticals Inc. of Corona, Calif.

An attorney for P&G did not immediately comment on Mylan's motion.

Mylan shares fell 15 cents to close at $17.26 yesterday on the New York Stock Exchange, where P&G shares fell 47 cents to close at $55.51.

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