Review of generic drugs industry to go ahead, says trade commission

The US Federal Trade Commission is to conduct a wide ranging probe of whether the US drug industry conspires to keep lower cost generic drugs out of consumers' hands.

The move, announced in a statement issued by the commission, counters fears that the Bush administration, about to appoint a new head of the commission, might quash the investigation.

“We are preparing absolutely to go ahead with the study,” said commission spokesman Howard Shapiro, after it was reported that the Bush administration's Office of Management and Budget, headed by Mitch Daniels, a former executive of th/cdrug company Eli Lilly, gave the commission the go-ahead to subpoena US drug companies. Mr Shapiro said that the commission was not sure exactly when the subpoenas would be sent to the drug manufacturers.

Commission officials allege that deals that delay the introduction of generic drugs have cost consumers hundreds of millions of dollars. At issue are deals in which companies manufacturing brand name drugs allegedly pay the companies manufacturing generic counterparts to keep lower cost drugs off the market. Since last year, the commission has filed three separate complaints against seven drug companies, accusing them of cutting deals of this sort.

Disputes about patents are also a concern, with the manufacturers of brand name drugs often adding patents to existing products just as the original patents are about to expire.

The study comes as the US Congress is expected to debate adding a prescription drug benefit to Medicare, the heath insurance plan for people aged 65 and over. In addition, several leading drugs, with combined US sales of about $20bn (£14.3bn), are scheduled to go “off patent” within the next five years.

Five months after the first lawsuits were filed, the commission's chairman, Robert Pitofsky, announced that the body would begin an industry-wide examination to determine whether manufacturers of brand name and generic drugs have entered into agreements, or have used other strategies, to delay competition from generic versions of patent protected drugs.

President Bush has already said, however, that he will replace Mr Pitofsky, appointed by Bill Clinton, with a conservative anti-trust attorney as head of the commission. The new agency head has not been formally nominated yet, but he is expected to take over later this spring.

Some Washington attorneys, noting the Bush administration's selection of a political conservative to head the Office of Management and Budget, had expressed doubts about whether the probe would go forward at all. Now that the probe is in the hands of the commission, it is unclear if the commission's incoming chief will continue the investigation with the same vigour with which it was pursued under Mr Pitofsky.

“This is a remarkable opening shot by a president who is otherwise perceived as pro-business and pro-pharmaceutical,” said Frank Rapoport, an attorney at the law company McKenna and Cuneo in Washington, DC, which represents pharmaceutical clients.