The term generic drug usually refers to a medication whose patent has expired. But what is an authorized generic drug? In this health alert, Dr. Brent G. Petty, a pharmacologist at Johns Hopkins, explains this important drug category.
When a drug is first discovered or produced in the laboratory, it is assigned a generic name to distinguish it from other drugs. This generic name refers to the medication's active ingredient: the chemical that cures diseases or treats symptoms. Throughout the FDA approval process, the generic name is used. Then, when the FDA grants permission to market (sell) the drug, the pharmaceutical company coins a brand name for the medication. For example, atorvastatin is the generic name for the active ingredient in the brand-name drug Lipitor.
Q. What is an authorized generic?
Dr. Petty: When a pharmaceutical company sells one of its brand-name drugs as a lower-priced generic, the product is called an authorized generic. Brand-name companies can do this after the patent on their drug expires and the FDA approves the first generic.
For example, an authorized generic of Zoloft, called sertraline, is sold by a subsidiary of Pfizer, the company that holds the patent on Zoloft. And Merck gave permission to a generic drug company to produce authorized generics of Zocor and Proscar -- simvastatin and finasteride, respectively.
Authorized generics allow brand-name companies to maintain some of their market share in the face of generic competition. But many generic companies are unhappy with the practice, since authorized generics are introduced just as the first company to sell an FDA-approved generic introduces their version. By law, this company gets the exclusive right to be the only seller of the generic for 180 days, to recover the cost of challenging a patent and filing an Abbreviated New Drug Application (ANDA) with the FDA. The brand-name company, meanwhile, can market its drug as a generic without an ANDA because their generic is already approved as a brand.
Generic companies argue that authorized generics take business away from them and could ultimately result in fewer generics and less savings to consumers. But an authorized generic also adds another generic to the market, and the more generics the lower the price to you, the consumer.
