New Law Reins in “Authorized Generics” Despite Generic Industry Court Losses, But Leaves Several Ambiguities

“Authorized generics” have increasingly been the subject of debate as brand-name firms more frequently incorporate them into lifecycle management strategies, often to dilute the effects of generic competition. The recently enacted Deficit Reduction Act of 2005 (DEFRA) may curb the marketing of some authorized generics through changes in the treatment of authorized generic pricing under the best price requirements of the Medicaid Drug Rebate Program, but the new law leaves several unanswered questions. This article discusses recent authorized generic litigation and DEFRA’s effects and ambiguities with respect to such products.