[Federal Register Volume 66, Number 39 (Tuesday, February 27, 2001)]
[Notices]
[Pages 12512-12522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-4758]


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FEDERAL TRADE COMMISSION


Agency Information Collection Activities; Submission for OMB 
Review; Comment Request

AGENCY: Federal Trade Commission (FTC).

ACTION: Notice.

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SUMMARY: The FTC has submitted to the Office of Management and Budget 
(OMB) for review and clearance under the Paperwork Reduction Act (PRA) 
information collection requests contained in its study investigating 
how generic drug competition has developed in light of certain 
provisions in the Hatch-Waxman Act (the Act) that govern entry of 
generic drug products. The FTC proposes to seek information from 
members of the pharmaceutical industry. To do this, the FTC first seeks 
OMB clearance and additional public comment regarding this notice, 
which is the second of two notices required by the PRA for information 
collection requests.

DATES: Comments on the proposed information requests must be submitted 
on or before March 30, 2001.

[[Page 12513]]


ADDRESSES: Send comments regarding the information collection requests 
to the following addresses: Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, Room 10202, Washington, DC 20503 ATTN: Desk Officer for the 
Federal Trade Commission; and to Secretary, Federal Trade Commission, 
Room H-159, 600 Pennsylvania Avenue, NW., Washington, DC 20580 or by e-
mail to <a href="/cdn-cgi/l/email-protection#90f7f5fef5e2f9f3f4e2e5f7e3e4e5f4e9d0f6e4f3bef7ffe6"><span class="__cf_email__" data-cfemail="c9aeaca7acbba0aaadbbbcaebabdbcadb089afbdaae7aea6bf">[email protected]</span></a>. The submissions should include the 
submitter's name, address, telephone number, and, if available, FAX 
number and e-mail address. All submissions should be captioned 
``Generic Drug Study--FTC File No. V000014.''

FOR FURTHER INFORMATION CONTACT: Requests for additional information 
should be addressed to Michael S. Wroblewski, Advocacy Coordinator, 
Policy Planning, Federal Trade Commission, 600 Pennsylvania Avenue, 
NW., Washington, DC 20580. Telephone: (202) 326-2155, E-mail: 
<a href="/cdn-cgi/l/email-protection#a5c8d2d7cac7c9c0d2d6cecce5c3d1c68bc2cad3"><span class="__cf_email__" data-cfemail="214c56534e434d4456524a48614755420f464e57">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: On October 17, 2000, the FTC sought public 
comments on information collection requests for a proposed study on the 
development of generic drug competition. See 65 FR 61334.
    The FTC received 11 comments on the proposed information collection 
requests.\1\ Eight of the comments (BCBSA, GM, HIAA, Keats, Microbix, 
NACDS, Pharmacy Defense, and RxHealth) endorsed the proposed study, 
indicating, for example, that the ``proposed requests for information 
are necessary to the FTC's function as the primary governmental agency 
charged with protecting consumers from anticompetitive practices.'' 
HIAA Comment at 1. Four of the commenters endorsing the study (GM, 
Keats, NACDS, and Pharmacy Fund) also suggested that the Commission 
broaden its proposed study to include investigation of various 
practices of pharmaceutical companies that may have an effect on 
generic drug competition.
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    \1\ BlueCross BlueShield Association (BCBSA) (federation of 
independent Blue Cross and Blue Shield health insurance plans), The 
Center for Regulatory Effectiveness (CRE) (self-described 
independent organization to provide Congress with analyses of agency 
regulations), Geneva Pharmaceuticals (Geneva) (generic drug 
manufacturer), General Motors Corporation (GM) (automaker), Health 
Insurance Association of America (HIAA) (trade association 
representing the private health care system), George Keats (Keats) 
(private citizen), Microbix Biosystems, Inc (Microbix) 
(pharmaceutical company), National Association of Chain Drug Stores 
(NACDS) (trade association representing chain drug stores), 
Pharmaceutical Research and Manufacters of America (PhRMA) (trade 
association representing research-based pharmaceutical and 
biotechnology companies), Pharmacy Defense Fund (Pharmacy Fund) 
(advocacy organization on behalf of pharmacists), and RxHealth Value 
(RxHealth) (a coalition representing consumers, labor unions, 
provider organizations, health plans and insurers, business health 
groups, large employers, and pharmacy benefit management 
organizations).
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    No generic drug company opposed the Commission's proposed study or 
questioned its practical use, but Geneva recommended that the 
Commission narrow the proposed study ``in ways that should not 
compromise the Commission's objectives.'' Geneva Comment at 1.
    PhRMA and CRE asserted that the Commission had not yet complied 
with the requirements of the PRA; PhRMA also included suggestions for 
narrowing the study if undertaken.
    The proposed study will enable the Commission to provide a more 
complete picture of how generic competition has developed under the 
Hatch-Waxman Act.\2\ The FTC already has taken enforcement action 
against alleged anticompetitive agreements whose operation depended in 
part on certain Hatch-Waxman provisions. The study will shed light on 
matters such as whether the agreements the FTC has found are isolated 
instances or more typical, and whether particular provisions of the Act 
have operated appropriately to balance the legitimate interests of 
pharmaceutical companies in protection of their intellectual property 
and the legitimate interests of generic companies in providing 
competition, or have instead unintentionally invited anticompetitive 
strategies that delay or deter market entry by generic drugs.
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    \2\ The proposed study is consistent with the FTC's statutory 
authority to ``gather and compile information concerning, and to 
investigate from time to time the organization, business, conduct, 
practices, and management of any person, partnership, or corporation 
engaged in or whose business affects commerce, excepting banks, 
savings and loan institutions * * *, Federal credit unions * * *, 
and common carriers * * *.'' FTC Act section 6(a), 15 U.S.C. 46(a).
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    In light of the agreements already challenged by the FTC, and given 
enormous potential costs to consumers from anticompetitive activities, 
Representative Waxman, one of the co-authors of the Act, requested that 
the FTC ``investigate and produce a study on the use of agreements 
between and among pharmaceutical companies and potential generic 
competitors and any other strategies that may delay generic drug 
competition throughout the U.S.'' In addition, other members of 
Congress, such as Senators McCain and Schumer, proposed legislation in 
the last Congress to amend various portions of the Act, including the 
sections that the Commission's study would address.\3\ Thus, a study 
based on information of the type the Commission proposes to collect 
will respond to Representative Waxman's request and also be relevant to 
consideration of various legislative proposals.
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    \3\ S. 3051, 106th Cong. (2000).
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    Over the next five years, brand name drugs with combined U.S. sales 
approaching $20 billion will go off patent.\4\ This will provide an 
enormous opportunity for the generic industry and, conceivably, a 
commensurate obstacle to the brand-name pharmaceutical industry. 
Pharmaceutical drug manufacturers seeking to protect the sales of 
branded drugs may have an incentive and ability to enter into 
agreements with would-be generic competitors, or engage in other types 
of activities, that would slow or thwart the entry of competing generic 
drug products.
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    \4\ National Institute for Health Care Management, 
``Prescription Drugs and Intellectual Property Protection'' (August 
2000) at 3.
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    The study will be tailored for each individual innovator and 
generic company so that only agreements relating to certain specified 
drug products will be subject to the request. The Commission 
anticipates that approximately 70 percent of both innovator companies 
and generic companies will be requested to provide information on no 
more than three drug products.
    As discussed below, the Commission incorporates several of the 
suggestions to narrow the study to reduce burden and to avoid 
collecting documents that the Commission did not intend to collect. 
However, other proposals to narrow the proposed study would 
unnecessarily limit the study's usefulness. Likewise, the Commission 
has not followed the suggestions to broaden the proposed study to 
investigate the pricing and distribution practices of pharmaceutical 
companies, because the magnitude of such an investigation is beyond the 
proposed study's scope and the resources available to complete it in a 
timely manner. The discussion of issues raised by the comments is 
organized into four sections: (1) The practical utility of the proposed 
study and why it is necessary for the proper performance of the FTC's 
functions; (2) suggestions to narrow the focus of the study; (3) 
suggestions to broaden the focus of the study; and (4) other aspects of 
how the information collection request complies with the PRA.

[[Page 12514]]

1. Practical Utility of the Proposed Study and its Necessity for 
the Proper Performance of the FTC's Functions

    The Commission has proposed to obtain factual information that 
would provide a more complete picture of how generic competition is 
developing in light of certain provisions of the Act that govern entry 
of generic drug products.\5\
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    \5\ The Hatch-Waxman Act provides a method by which generic drug 
manufacturers can obtain approval of a generic version of a branded 
product through an Abbreviated New Drug Application (ANDA) submitted 
to the Food and Drug Administration (FDA). A generic drug 
manufacturer must certify that the patents listed in the FDA's 
``Orange Book'' that claim the approved drug product are invalid or 
will not be infringed by the generic drug for which the ANDA 
applicant seeks approval (``a paragraph IV certification''). The Act 
provides a 45-day window during which the patent holder may bring a 
patent infringement suit against the ANDA applicant. If a patent 
suit is initiated during this period, the Act forbids the FDA from 
approving the ANDA for the earlier of 30 months or until the 
completion of the litigation (``30-month stay period''). If any 
other generic companies file an ANDA containing a paragraph IV 
certification (``later-filed ANDAs''), the Act provides that the FDA 
cannot approve such ANDA until 180 days (``the 180-day marketing 
exclusivity period'') after the earlier of (1) the date of the first 
commercial marketing of the first applicant's generic drug, or (2) 
the date of a decision of a court in an action holding the branded 
company's patent(s) is (are) invalid or not infringed.
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    Comments: Most comments stated that the proposed study will have 
practical utility. See, e.g., GM Comment at 1; HIAA Comment at 1; and 
NACDS Comment at 1. CRE and PhRMA, however, asserted that the proposed 
study will have no practical utility and that the Commission has not 
articulated how the information collected would be used to meet the 
Commission's stated goals. CRE Comment at 4-7; PhRMA Comment at 1-3, 5. 
In particular, CRE stated that significant portions of FDA's 
implementing regulations for relevant sections of the Act were 
invalidated by a series of court decisions to which FDA has responded 
by issuing interim rules and initiating a rulemaking to develop new 
governing regulations that have not yet issued. CRE further explained 
that an FTC staff comment in that FDA rulemaking proceeding states 
``that such [proposed] revisions may well assuage FTC concerns.'' 
Accordingly, CRE asserted that the information the FTC proposes to 
collect has no practical utility at this time and that the FTC should 
wait until FDA issues final regulations before determining whether to 
undertake the proposed study. CRE Comment at 7. Likewise, PhRMA 
asserted that the proposed study is not necessary because: (1) The 
FTC's past law enforcement actions regarding agreements entered into 
between innovator and generic companies ``have already sent a strong 
message to the industry of the FTC's concerns'' and private litigation 
stimulated by the FTC's investigations has further reinforced its 
message; (2) the FTC staff has indicated in a comment to FDA that FDA's 
proposed revisions ``may remedy the delayed generic competition that 
has resulted from certain types of agreements between generic and 
innovator companies'' and that the proposed study is unlikely to add 
new insight; and (3) the FTC is likely to become aware of agreements 
between innovator and generic companies because these agreements are 
usually publicized given that they often exert a substantial impact on 
the participants' businesses, and thus the study is unlikely to uncover 
new agreements of concern. PhRMA Comment at 2.
    Response: The purpose of the proposed study is to examine the 
extent to which the 180-day marketing exclusivity and 30-month stay 
provisions of the Act have encouraged generic competition or 
facilitated the use of anticompetitive strategies. The information 
requested concerns the use of agreements between innovator and generic 
drug companies relating to these two provisions, the business reasons 
for entering these agreements, and other data regarding how innovator 
and generic drug companies have operated in light of the 180-day 
marketing exclusivity and 30-month stay provisions of the Act. For 
example, the Commission anticipates that the study will analyze matters 
such as how often the 180-day marketing exclusivity provision has been 
used, how it has been triggered (by commercial marketing or court 
orders), the frequency with which innovator companies initiate patent 
litigation, and the frequency with which patent litigation has been 
settled or litigated to a final court decision. In addition, the study 
will provide factual evidence regarding innovator companies' patent 
listings in the Orange Book, and how frequently challenges are made to 
patent listings for drug products as to which generic companies have 
filed ANDAs containing a paragraph IV certification under the Hatch-
Waxman Act. Finally, the information relating to company sales will 
provide evidence of whether the magnitude of revenues associated with 
particular products correlates with possible strategies relevant to the 
180-day marketing exclusivity and the 30-month stay provisions.\6\
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    \6\ The documents and information collected also may provide a 
basis for initiating a law enforcement investigation, but the 
Commission will not exercise its enforcement authority solely on the 
basis of information provided by the companies in response to the 
proposed information collection request. Rather, it would do so only 
after gathering additional information from a company and/or other 
sources apart from the study. The Commission would evaluate whether 
the evidence examined indicates unfair methods of competition. See 
FTC Act section 5, 15 U.S.C. 45.
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    HIAA suggested that ``the information the FTC proposes to collect 
will have significant practical utility in determining whether drug 
manufacturers are engaging in practices that impede generic competition 
and the extent to which consumers are harmed by such behavior.'' HIAA 
Comment at 1. RxHealth suggested that ``there is ample evidence of use 
of Hatch-Waxman by branded manufacturers to prevent or delay timely 
entrance of generic competitors to the market.'' RxHealth Comment at 1. 
Pharmacy Fund strongly supported the proposed study ``for it portends 
an opportunity for the major drug innovators, the generic industry, and 
consumers to better understand and explain behaviors that are now seen 
as murky or unfair.'' Pharmacy Fund Comment at 1. The NACDS stated that 
the ``document collection is necessary because the practices are 
anticompetitive.'' NACDS Comment at 1. And ``GM believes that the FTC 
can and should examine the practices and agreements that extend 
monopoly positions and restrict trade to determine whether there has 
been any violation of the antitrust laws.'' GM Comment at 1. As BCBSA 
noted in its comment, the study has additional utility in light of the 
top-selling brand name drugs (e.g., Claritin, Pravachol, Prilosec, 
Prozac, Vasotec, and Zocor) that will go off patent over the next five 
years. BCBSA Comment at 1.
    GM and BCBSA both described the increasing costs of prescription 
drugs and the importance of generic drug competition to reduce total 
health care expenses without adversely affecting the level of care 
provided. For example, GM stated that its total drug expenditure for 
calendar year 2000 will exceed $1.2 billion and that brand-name drugs 
account for 90 percent of its total drug spending, although its current 
utilization rate for generic drugs is 37 percent. Moreover, for each 
one percent increase in the use of generic drugs, GM can save $3 
million per year. Id. at 2.
    The need for the study has been highlighted by the FTC's 
investigations into several cases in which manufacturers of 
pharmaceutical drug products and generic competitors have allegedly 
entered into anticompetitive agreements to delay generic entry.\7\ In

[[Page 12515]]

these cases, innovator manufacturers and generic competitors were 
alleged to have agreed to delay generic competition, in part through 
manipulation of opportunities created by these two provisions of the 
Act. The proposed study will help determine whether these agreements 
are isolated incidents or indicative of a pattern in the industry.
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    \7\ See, e.g., In the Matter of Abbott Laboratories, Docket No. 
C-3945 (2000); In the Matter of Geneva Pharmaceuticals, C-3946 
(2000); In the Matter of Hoechst Marion Roussel, Inc et. al., Docket 
No. 9293, Administrative Complaint (Mar. 16, 2000).
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    The proposed study falls squarely within the FTC's fact-finding 
authority under section 6 of the Federal Trade Commission Act. See 15 
U.S.C. 46(a). The Commission's power to investigate and report on 
marketplace developments is part of the FTC's original mandate and has 
been the basis for important studies in the past.\8\ In the 
pharmaceutical area, the Commission has used its section 6 authority to 
investigate the issue of advertising and promotion of prescription 
drugs.\9\
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    \8\ For example, a study of the radio broadcasting industry 
influenced passage of the Radio Act of 1927 (a predecessor to the 
Communications Act of 1934), while the FTC's disclosure of 
securities issue abuses played a role in heightening Congress' 
recognition of the need for securities industry regulation and led 
to the Securities Act of 1933. See also FTC v. Rockefeller, 591 F.2d 
182 (2d Cir. 1979); FTC Line of Business Report Litigation, 595 F.2d 
685 (D.C. Cir.), cert. denied, 439 U.S. 958 (1978).
    \9\ Federal Trade Commission, Bureau of Economics, Sales, 
Promotion, and Product Differentiation in Two Prescription Drug 
Markets (1977). And, more recently, the Commission continues to use 
its Section 6 authority to examine cigarette labeling issues. 
Federal Trade Commission Report to Congress for 1998 Pursuant to the 
Federal Cigarette Labeling and Advertising Act (2000) http://www.ftc.gov/os/2000/06/index.htm#27.
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    The FDA's current rulemaking proceeding to revise the regulations 
implementing the Act does not undermine the FTC's proposed study. The 
proposed study seeks to examine whether the 180-day marketing 
exclusivity and 30-month stay provisions of the Act have encouraged 
generic competition or facilitated the use of anticompetitive 
strategies.\10\ The FDA's implementing regulations, regardless of when 
they are issued, cannot change the Act's statutory language, and it is 
the effect of these statutory provisions on generic competition that is 
the focus of the proposed study. Moreover, FDA's final regulations will 
be prospective in effect, and FDA has provided no indication as to when 
they will be completed.\11\ In June 1998, the FDA published industry 
guidance on FDA's current approach to the 180-day marketing exclusivity 
issue,\12\ and it published an interim rule and ``has regulated 
directly from the statute when making exclusivity decisions on a case-
by-case basis.'' \13\ In addition, the information collected also will 
likely shed light on whether FDA's proposed regulations are sufficient 
to remedy any delayed generic competition that results from certain 
types of agreements.\14\
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    \10\ The benefits of generic drug competition for consumers have 
been examined extensively. See, e.g., Staff Report, Bureau of 
Economics of the Federal Trade Commission, The Pharmaceutical 
Industry: A Discussion of Competitive and Antitrust Issues in an 
Environment of Change (Mar. 1999) at 18; Congressional Budget 
office, ``How Increased Competition from Generic Drugs Has Affected 
Prices and Returns in the Pharmaceutical Industry'' (CBO study) 
(July 1998).
    \11\ PhRMA has argued that FDA's proposal, which the FTC staff 
suggested may address several of FDA's concerns about delayed 
generic competition, is neither authorized by the Act nor consistent 
with the policy objective of the 180-day marketing exclusivity 
provision. See Comments of PhRMA, In re 180-Day Generic Drug 
exclusivity for Abbreviated New Drug Applications, 64 Fed. Reg. 
42873, Docket No. 85N-0214 (Aug. 6, 1999) at 5-6. If the FDA were to 
adopt its proposed regulations, they could be challenged in court, 
with a possible delay in their implementation.
    \12\ FDA, Guidance for Industry, 180-Day Generic Drug 
Exclusivity Under the Hatch-Waxman Amendments to the Federal Food, 
Drug, and Cosmetic Act (June 1998).
    \13\ FDA, 180-Day Generic Drug Exclusivity for Abbreviated New 
Drug Applications, 64 Fed. Reg. 42873 at 42874 (Aug. 6, 1999).
    \14\ The FDA recently revised its interpretation of the conduct 
sufficient to constitute ``commercial marketing'' that triggers the 
180-day marketing exclusivity right. See Letter of Janet Woodcock, 
Director, FDA Center for Drug Evaluation and Research, to Deborah A. 
Jaskot, Docket No. 00P-1446/CP1 (Feb. 6, 2001). This action reflects 
FDA's concern that the 180-day marketing exclusivity right not be 
used to impede generic competition.
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    Contrary to PhRMA's suggestion, it is unlikely that the Commission 
would be able to uncover all potentially anticompetitive agreements 
without undertaking the proposed study. See NACDS Comment at 2 (``The 
existence of an anticompetitive agreement is rarely if ever publicized 
by the manufacturers.''). The Commission's enforcement experience in 
this area is that, although it has public notice of an agreement's 
existence (e.g., notice of a court settlement), the Commission cannot 
learn of the specific terms of an agreement until it opens an 
investigation of the matter.

2. Suggestions to Narrow the Focus of the Proposed Study

    The discussion of this section is separated into three subsections 
below. Subsection (a) discusses the suggestions to revise the language 
of Request 1 for both innovator and generic companies. Request 1 seeks 
agreements relating to ANDAs and documents supporting the reasons for 
entering into these agreements. Subsection (b) discusses suggestions to 
revise the three remaining questions, which are asked of only innovator 
companies (Requests 2-4 for innovator companies), and subsection (c) 
discusses suggestions for changes to the remaining four questions for 
generic companies (Requests 2-5 for generic companies).

a. Information Request for Innovator and Generic Companies To Submit 
Agreements and Supporting Documents

    Current Request: Request 1 for both innovator and generic companies 
requires them to produce all agreements entered into since January 1, 
1991 between the company and any other person relating to an ANDA for 
drug products specified for each respondent company.\15\ The request 
lists as examples of such agreements: (a) Patent litigation settlements 
(full or partial); (b) agreements related to the filing (or non-filing) 
of an ANDA by any applicant (or potential applicant); (c) licensing 
agreements between the company and persons that have filed an ANDA; and 
(d) agreements related to any acquisition, divestiture, joint venture, 
alliance, license or merger by the company of any business involving 
the research, development, manufacture or sale of any drug product that 
is the subject of an ANDA. The company is not required to submit 
purchase orders for base active materials, equipment and facility 
contracts, and employment contracts. The second part of the request 
requires the companies to produce any documents prepared by or for any 
officer or director of the company that would provide reasons for why 
the agreement was executed.
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    \15\ The Commission has entered into an agreement with FDA to 
receive information about the filing of ANDAs containing paragraph 
IV certifications by specific product. This information will allow 
the Commission to tailor each company's request to specific drug 
products.
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    Comments on Date Range: Geneva suggested that the Commission modify 
the cutoff date to January 1, 1995, except for still-active agreements 
between innovator and generic companies that prohibit the generic 
company from launching a generic version of the innovator's patented 
product in return for consideration.
    Response: We agree with Geneva's suggestion to modify the date 
range of agreements studied and will request only agreements executed 
after December 31, 1994. We also agree to implement a modified version 
of the backstop that Geneva suggested and request that still-active 
agreements entered into before such date be produced. This change will 
reduce the burden on the responding companies by reducing the time 
period for which they must produce agreements by four years (1991 
through 1994), while still enabling the Commission to provide a more 
complete picture of how generic drug competition has developed.

[[Page 12516]]

    Comments on Scope of Agreements Collected: PhRMA recommended that, 
if the proposed study is undertaken, the Commission collect only 
``agreements between an innovator and a person that has filed an ANDA 
or may file an ANDA and in which the ANDA filer or potential ANDA filer 
commits to refrain from or delay its ANDA filing or the commercial 
marketing of a generic product in return for consideration from the 
innovator.'' PhRMA Comment at 5. In addition, PhRMA stated its views 
that the information collection request appears to cover three types of 
agreements that could not have been intended to delay the introduction 
of a competing generic product: (1) Licensing agreements and other 
agreements between innovators and generic manufacturers that relate to 
already marketed generic drug products; (2) agreements entered into 
before the innovator became aware that the generic manufacturer had 
filed or intended to file an ANDA; and (3) merger, acquisition, and 
licensing agreements between two innovator companies if one of them 
manufactures a drug product that is the subject of an ANDA. PhRMA 
Comment at 4. Geneva also provided examples of agreements that would be 
included in the Commission's information request but are not within the 
Commission's perceived concern. To remedy this concern, ``Geneva 
suggests that the request be limited to agreements with innovator 
companies relating to ANDAs, where the innovator company holds the NDA 
[new drug application underlying the branded drug product] 
corresponding to the ANDA that is subject of the agreement.'' Geneva 
Comment at 2. Geneva also suggested that the Commission clarify that it 
will not seek any agreements or documents that the Commission may 
already have as a result of any law enforcement matter.
    Response: PhRMA has suggested that the Commission request only 
agreements whose terms mirror the terms in the agreement that 
Commission alleged to be anticompetitive in its enforcement action 
against Abbott and Geneva.\16\ If the Commission were to accept PhRMA's 
suggestion to limit its investigation to agreements with those specific 
terms, it would lessen the practical utility of the proposed study. One 
objective of the proposed study is to determine whether innovator 
companies and generic drug companies have entered into various types of 
agreements that have affected the development of generic drug 
competition. The request, as currently drafted, may uncover other, 
somewhat different examples of agreements that have affected the 
development of generic competition, but that do not contain the terms 
specified by PhRMA. As NACDS explained in its comment, the ``FTC needs 
to collect relevant documents to discover new examples of [possibly 
anticompetitive agreements].'' NACDS Comment at 2.
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    \16\ See In the Matter of Abbott Laboratories, Docket No. C-3945 
(2000); In the Matter of Geneva Pharmaceuticals, C-3946 (2000).
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    On the other hand, the Commission's experience also has suggested 
that there may be circumstances where agreements between innovator and 
generic drug companies are procompetitive. The request, as currently 
drafted, may uncover such agreements as well. These agreements also are 
likely to assist the Commission's investigation of how generic 
competition has developed in light of the Act. Thus, the proposed study 
may identify procompetitive rationales in support of other agreements 
that have somewhat different terms, thereby illuminating benign reasons 
for conduct that some currently see as ``murky or unfair.'' Pharmacy 
Fund Comment at 1.
    To limit the study as PhRMA suggested would severely limit the 
Commission's ability to examine the use of agreements in this industry. 
One question is whether anticompetitive agreements of the type 
challenged by the FTC are isolated instances or examples of typical 
practices. By asking for a range of agreements over a six-year period, 
the Commission believes it will be able to provide a more complete 
picture of agreements related to generic drug competition and Hatch-
Waxman Act provisions. The much more limited request that PhRMA 
proposed would likely yield, at best, only anecdotal evidence of how 
certain types of agreements between innovator and generic companies 
affect generic drug competition.
    The Commission agrees, nevertheless, with Geneva's and PhRMA's 
assertion that the language specifying the agreements to be produced 
can be narrowed in certain respects without compromising the 
Commission's objectives. The Commission does not intend the request to 
cover agreements not likely to further the study's objectives. 
Accordingly, the language of Request 1 for both innovator and generic 
companies has been modified to make each request symmetrical and more 
narrowly focused. The Commission has incorporated PhRMA's suggestion to 
exclude agreements entered into between innovator companies and generic 
manufacturers that relate to already marketed generic drug products. In 
addition, it has incorporated PhRMA's and Geneva's suggestions 
concerning duplication, to exclude from the request documents that have 
been submitted previously to the Commission pursuant to the Premerger 
Notification Rules (16 CFR parts 801-803 (2000)) and section 7A of the 
Clayton Act (15 U.S.C. 18a) or sections 6, 9, 13, and 20 of the Federal 
Trade Commission Act (15 U.S.C. 46, 49, 53, and 57b-1), although 
responding companies will be required to identify any such documents.
    PhRMA's suggestion to exclude agreements entered into before the 
innovator became aware that the generic manufacturer had filed or 
intended to file an ANDA creates uncertainty as to how companies would 
respond to the request. Agency experience suggests it would be 
difficult to provide objective guidance to define when an innovator 
company ``became aware'' that a generic company intended to file an 
ANDA. Accordingly, and in light of the Commission's actions to narrow 
the request in other significant respects, the Commission declines to 
implement this suggestion.
    In addition, the Commission has not followed Geneva's suggestion to 
exclude licensing arrangements or co-development agreements between 
generic manufacturers. The Commission's law enforcement investigations 
indicate that agreements between generic companies also may affect the 
degree of generic competition that emerges. To exclude such agreements 
could eliminate a substantial number of agreements and documents that 
may help provide a more complete picture of whether agreements among 
generic companies may have delayed the consumer benefits of full 
generic competition.
    Comments on Documents Containing Reasons for Executing Agreements: 
PhRMA further suggested that the second half of Request 1, which 
requires documents relating to the reasons for making the identified 
agreements, is ``extremely ambiguous'' and fraught with potential 
technical difficulties as to which documents a company would be 
required to produce.
    Response: The additional documents called for in the second half of 
Request 1 include only those important enough to be prepared for or by 
an officer or director of the company and that evaluate or analyze the 
company's reasons for entering into agreements identified in response 
to Request 1. These documents will help ensure that the Commission has 
a full picture of the reasons for the agreements, including 
procompetitive reasons. This language

[[Page 12517]]

is routinely used to request documents in connection with premerger 
notification filings pursuant to the Premerger Notification Rules (16 
CFR Parts 801-803 (2000)) and section 7A of the Clayton Act (15 U.S.C. 
18a). Responding companies generally recognize and understand the 
language. Limiting the pre-merger request to documents prepared by or 
for an officer or director of a company usually results in the 
production of a small number of documents (in most cases fewer than 
five).
    The revised text of Request 1 for both innovator and generic 
companies (as well as the remaining Requests) is listed following the 
discussion of all of the comments. The Commission also has made minor 
changes to the Requests to clarify the language of each Request as 
applicable.

b. Remaining Information Requests for Innovator Companies:

    The Commission has proposed three additional information collection 
requests of innovator companies. Request 2 requires a company to 
produce information about patents listed in the Orange Book for 
specified drug products. Request 3 requires a company to produce 
information about litigation to which it is a party and that relates to 
an ANDA containing a paragraph IV certification. Request 4 requires a 
company to produce sales data regarding each specified drug product.
    Comments: PhRMA has suggested that the information sought by 
Requests 2 through 4 is freely available to the FTC, at least once the 
agency receives any agreements called for by Request 1. In addition, it 
suggested that these requests are ``both unnecessary and ambiguous.'' 
Accordingly, it suggested that the FTC use a two-stage process--first, 
collect agreements, and then, if necessary, collect additional 
information--to proceed with the proposed study.
    Response: For the Commission to use a two-stage process, as PhRMA 
suggested, to collect the documents and information sought by Requests 
2 through 4 (i.e., patent listings in the Orange Book, patent 
litigation information, and sales information) would unnecessarily 
delay the study and likely prevent the Commission from producing it in 
a timely manner. The information from the study is most likely to be of 
relevance as the 107th Congress considers possible changes to the 
Hatch-Waxman Act. In its comment, HIAA also suggested that a study 
would be timely given the central role that pharmaceuticals play in 
medical cost inflation, with spending for prescription drugs far 
outpacing all other major categories of health expenditures. HIAA 
Comment at 2. In addition, a two-stage process could unduly burden 
companies by requiring them to search the same files twice--once in 
response to the current requests, and at a later date to comply with a 
second round of information requests.
    The information requested in Requests 2 through 4 is necessary to 
show how and when generic competition has begun for various drug 
products. Request 2 seeks information about patents listed in the 
Orange Book for specified drug products. GM, NACDS, and Microbix 
highlighted the need to examine the practice of listing patents in the 
Orange Book in ways that could potentially delay generic drug entry. GM 
Comment at 2, Microbix Comment at 2, NACDS Comment at 1-2. For example, 
this information is crucial to determine how often and when innovator 
companies have filed new patents after the drug product has been 
approved and thereby triggered the 30-month stay provision. Such 
listings can affect when generic competition starts. Because patent 
listing dates are not provided in the Orange Book, the request seeks 
the listing date of patents in the Orange Book for specified drug 
products.
    Request 3 seeks basic information regarding patent lawsuits 
initiated by the innovator company related to a generic drug product 
for which the innovator company holds the rights to the corresponding 
NDA. This information is useful to examine how the 180-day marketing 
exclusivity period is triggered and how often a court decision is used 
to resolve patent disputes. The Commission has modified the language of 
the request to ensure that the companies do not produce non-responsive 
court documents. Pharmacy Fund has urged the Commission to obtain this 
information and related court documents because courts usually grant 
the innovator companies protective orders that shield the public (and 
the FTC) from knowing the terms by which lawsuits are settled. Pharmacy 
Fund Comment at 2. Thus, this information often cannot be obtained from 
the court directly, and would thus have to be collected from the 
companies themselves.
    Finally, Request 4 seeks information regarding a company's annual 
sales in units and dollars for each specified drug product. This 
information is necessary to evaluate whether companies' actions may be 
correlated to the market value of a particular drug product. This 
information should be readily available at corporate headquarters.

c. Remaining Information Request for Generic Companies

    The Commission received several comments from Geneva on three of 
the four proposed information collection requests of generic companies.
    Comments: Geneva requested that Request 2--which seeks, among other 
things, a description of how patent litigation expenses are or have 
been distributed among the parties to the litigation--be stricken, or 
that a further explanation be given as to how the requested information 
will be useful and as to what procedures will be used to keep 
information received confidential. Geneva also suggested that Request 
3, which seeks information about generic drug commercial marketing, be 
narrowed or made less burdensome. Finally, Geneva suggested that 
Request 5, which seeks sales data for specified drug products, be 
amended to request sales data only for those drug products for which 
the company has filed an ANDA containing a paragraph IV certification 
and that actually resulted in patent litigation between the generic 
company and the innovator.
    Response: Request 2 for generic companies seeks information 
relating to how patent litigation expenses are or have been distributed 
among the generic companies party to the litigation. Although there is 
little legislative history, it is commonly understood that the 180-day 
marketing exclusivity period was implemented to reward the first-filed 
paragraph IV ANDA applicant for bearing litigation expenses to 
successfully challenge the branded company's patents and also to 
prevent free-riding by later-filed paragraph IV ANDA applicants. The 
information to be provided for Request 2 will help determine whether 
the provision has operated to achieve that goal. In many cases, the 
innovator company has sued not only the first-filed ANDA applicant for 
patent infringement, but also later-filed applicants, and courts have 
consolidated these cases so that generic companies are often joint 
defendants. As described below in more detail, all information and 
documents submitted pursuant to the information request will be kept 
confidential under the FTC's Rules of Practice.
    Requests 3 and 5 seek information regarding the commercial 
marketing of drug products for which the generic company has submitted 
an ANDA containing a paragraph IV certification. The Commission 
believes it is unnecessary to limit the data collection further as 
suggested by Geneva (only to drug products subject to Paragraph IV 
certifications that actually resulted in

[[Page 12518]]

patent litigation between the generic company and the innovator) 
because each information collection request will be tailored by drug 
product for each company. Based on initial information obtained from 
the FDA, as previously noted, nearly 70 percent of the generic 
companies will be asked to provide information relating to no more than 
three specific drug products. Thus, it should be relatively easy for 
the company to identify when it received regulatory approval and what 
its sales were for each individual drug product for the specified 
number of years.

3. Suggestions To Broaden the Scope of the Proposed Study

    Comments: GM, Keats, NACDS and Pharmacy Fund suggested ways in 
which the Commission should broaden the study's focus. NACDS suggested 
that the Commission ``investigate the extent to which brand name drug 
manufacturers file baseless citizen petitions with the Food and Drug 
Administration that challenge the FDA's approval of a generic drug 
product.'' NACDS, along with GM, Keats, and Pharmacy Fund, also 
suggested that the Commission examine pricing strategies of drug 
manufacturers. NACDS Comment at 2. GM specifically suggested that the 
Commission investigate pricing practices of pharmaceutical companies 
for U.S. consumers compared to Europe or Japan and study the need for 
consumer education in this area (GM Comment at 2); Keats suggested that 
the Commission study how manufacturers influence the distribution of 
their drug products (Keats Comment at 1); and Pharmacy Fund suggested 
the Commission seek information regarding ``the marketing conditions 
that preclude competitive market pricing by the innovator company.'' 
Pharmacy Fund at 2. Pharmacy Fund also suggested that the Commission 
examine the practices of a specific company and examine whether 
innovator companies engage in direct-to-consumer disparagement of 
generic drug products. Id.
    Response: Commission staff has commented to the FDA on the FDA's 
proposed rules governing citizen petitions suggesting changes that 
might reduce the potential for regulatory abuse.\17\ Staff explained 
that there is potential for anticompetitive abuse of nearly any 
regulatory process.\18\ To delay competition may be a lucrative 
strategy for an incumbent, especially in an industry where entry is 
regulated, such as pharmaceuticals. Improper petitioning may be 
appealing in part because it can be used against any size firm, 
regardless of relative resources of the parties. The cost of filing an 
improper citizen petition may be trivial compared to the value of 
securing a delay of a year or more (or possibly as little as a month's 
delay for a blockbuster drug) in a rival's entry into a lucrative 
market.\19\
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    \17\ Comment of the Staff of the Bureau of Competition and of 
Policy Planning of the Federal Trade Commission, Citizen Petitions; 
Actions That Can be Requested by Petition; Denials, Withdrawals, and 
Referrals for Other Administrative Action, FDA Docket No. 99N-2497 
(Mar. 2, 2000) (``staff comment'').
    \18\ Accord, Robert H. Bork, The Antitrust Paradox 347 (1978) 
(``The modern profusion of [. . .] governmental authorities offers 
almost limitless possibilities for abuse.'').
    \19\ Id. at 348.
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    Participation in the regulatory process, however, is often 
protected from antitrust scrutiny by the Noerr-Pennington doctrine.\20\ 
In its simplest terms, the Noerr-Pennington doctrine shields private 
parties from antitrust liability when they engage in concerted but 
genuine efforts to influence governmental action, even though the 
conduct is undertaken with an anticompetitive intent and purpose. If 
regulatory intervention (or a series of interventions) is used to 
impede competition, however, antitrust concerns may be raised if not 
shielded by Noerr-Pennington.\21\
---------------------------------------------------------------------------

    \20\ Eastern Railroad Presidents Conference v. Noerr Motor 
Freight, Inc 365 U.S. 127 (1961); United Mine Workers v. Pennington, 
381 U.S. 657 (1965).
    \21\ Professional Real Estate Investors, Inc v. Columbia 
Pictures Indus. Inc., 508 U.S. 49 (1993); see also Bork, supra n. 
18, at 354.
---------------------------------------------------------------------------

    One of the recommendations in the staff comment was that the FDA 
consider requiring notification of whether the citizen petitioner has 
received, or will receive, consideration for filing the citizen 
petition and identification of the party furnishing the 
consideration.\22\ This information may be important in evaluating the 
likely competitive effect of the petition.\23\ In light of this 
potential, the Commission will seek limited, identifying information 
regarding the filing of citizen petitions by innovator companies for 
specified drug products. The information will be used to determine how 
frequently innovator companies have filed, or contributed to the filing 
of, citizen petitions with the FDA for specified drug products. The 
information will not be used to review the merits of the petitions or 
to evaluate FDA's handling of the petitions.
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    \22\ The Commission recently imposed a similar condition in 
conjunction with its approval of the Coastal Corp and El Paso Energy 
Corp. merger. The Commission required the merged entity to disclose 
publicly whenever it undertook regulatory action on its own or 
through the funding of third parties to oppose the regulatory 
approval of a natural gas pipeline that would compete with the 
merged company. FTC Press Release, ``FTC Clears Merger of El Paso 
Energy and Coastal Corp.'' (Jan. 29, 2001) http://www.ftc.gov/opa/2001/01/elpasocoastal.htm.
    \23\ The Senate bill referenced in note 3 also included a 
provision relating to the use of citizen petitions and their 
potential for delaying generic drug competition.
---------------------------------------------------------------------------

    An investigation of pricing practices of pharmaceutical companies 
is beyond the scope of the study. Likewise, GM's suggestion that the 
Commission use the proposed study to address the need for consumer 
education about generic drugs, although worthwhile, is also beyond the 
scope of the proposed study. The Commission recognizes the importance 
of pricing practices and their effect on generic drug competition. The 
scope of the study, however, is limited to the use of agreements and 
other non-price strategies that are intended to delay generic drug 
competition. The Commission does not have the resources at this time to 
adequately investigate pharmaceutical pricing issues.
    The Commission study is not designed to target any specific 
companies. Pharmacy Fund's request that the Commission do so lies 
outside ths scope of the study.
    Finally, the Commission declines to broaden the study to examine 
direct-to-consumer disparagement of generic drug products. It is beyond 
the scope of the resources allocated for this study to fully examine 
the issues surrounding possible direct-to-consumer disparagement.

4. Compliance with the PRA

    Comments: CRE, PhRMA, and Geneva raised various concerns about 
whether the proposed information collection complies with the 
requirements of the PRA. CRE asserted that the proposed information 
collection request does not include a plan for how the Commission would 
use the data collected; does not include a specific, objectively 
supported estimate of burden; fails to disclose the Commission's plan 
for the efficient and effective management and use of the information 
the FTC proposed to collect; fails to explain why a pilot program is 
inappropriate before issuing the information collection requests; 
duplicates information otherwise available to the agency; does not 
explain how it intends to handle trade secret or otherwise confidential 
information and how that information will be protected from disclosure; 
and fails to reduce burdens on small entities (which it asserts are 
likely to be many generic companies).

[[Page 12519]]

    PhRMA suggested that the burden estimates are neither specific nor 
objectively supported, and that the Commission has failed to discuss 
what records respondents might have or how they might keep them. 
Similarly, Geneva suggests that the burden estimates are unrealistic 
given its recent experience.
    Response: The description of the collection of information and its 
proposed use, as well as Commission resources to effectively and 
efficiently manage the information, are discussed below in a separate 
section. Likewise, a refined estimate of burden, based on the comments 
received and the changes made to the language of the proposed 
information collection, is also described below.
    Pilot Program: The PRA provides that it is within the Commission's 
discretion to engage in a pilot program before issuing the proposed 
information collection request. 44 U.S.C. 3506(c)(1)(A)(v). The 
Commission has declined to engage in a pilot program in light of its 
several law enforcement activities in this area. The Commission has 
investigated, and continues to investigate, cases that involve generic 
drug competition and its interface with the Act.\24\ The experience 
gained through these investigations obviates the need to test the 
questions' effectiveness as part of a pilot program, and supports the 
usefulness of asking the questions contained in the information 
requests.
---------------------------------------------------------------------------

    \24\ See, e.g., In the Matter of Abbott Laboratories, Docket No. 
C-3945 (2000); In the Matter of Geneva Pharmaceuticals, C-3946 
(2000); In the Matter of Hoechst Marion Roussel, Inc, et. al., 
Docket No. 9293, Administrative Complaint (Mar. 16, 2000); Brief of 
Federal Trade Commission as Amicus Curiae in American Bioscience, 
Inc., v. Bristol-Myers Squibb Company (Sept. 1, 2000). In addition, 
the Commission has confirmed press accounts about the existence of 
an investigation of Glaxo SmithKline regarding Paxil.
---------------------------------------------------------------------------

    Duplicativeness: The Commission will clarify in the proposed 
information collection requests that respondents do not have to produce 
information already submitted to the agency pursuant to a law 
enforcement investigation authorized by the Premerger Notification 
Rules (16 CFR Parts 801-803 (2000)) and section 7A of the Clayton Act 
(15 U.S.C. 18a), or sections 6, 9, 13, and 20 of the Federal Trade 
Commission Act (15 U.S.C. 46, 49, 53, and 57b-1).
    The Commission has entered into an agreement with FDA to receive 
information regarding the filing of ANDA applications containing 
paragraph IV certifications. This information will allow the Commission 
to tailor each information collection request to the specific innovator 
and generic companies involved with each drug product as to which a 
paragraph IV certification has been filed, thereby reducing the burden 
on each of the respondent companies.
    CRE stated that the Commission has failed to address whether the 
CBO study \25\ obviates the proposed study. The CBO study examined the 
extent to which competition from generic drugs has increased since the 
passage of the Act and analyzed how that competition has affected 
companies' returns on their investment in developing a drug. The CBO 
study does not, however, provide information on whether the 180-day 
marketing exclusivity and 30-month stay provisions of the Act have 
encouraged generic competition or facilitated the use of 
anticompetitive strategies. Thus, the CBO study does not substitute for 
the proposed one.
---------------------------------------------------------------------------

    \25\ See CBO study, supra n. 10.
---------------------------------------------------------------------------

    Confidentiality: Section 6(f) of the FTC Act, 15 U.S.C. 46(f), bars 
the Commission from publicly disclosing trade secrets or confidential 
commercial or financial information it receives from persons pursuant 
to, among other methods, special orders authorized by Section 6(b) of 
the FTC Act. Such information also would be exempt from disclosure 
under the Freedom of Information Act. 5 U.S.C. 552(b)(4). Moreover, 
under section 21(c) of the FTC Act, 15 U.S.C. 57b-2(c), a submitter who 
designates a submission as confidential is entitled to 10 days' advance 
notice of any anticipated public disclosure by the Commission, assuming 
that the Commission has determined that the information does not, in 
fact, constitute 6(f) material. Although materials covered under one or 
more of these various sections are protected by stringent 
confidentiality constraints, the FTC Act and the Commission's rules 
authorize disclosure in limited circumstances (e.g., official requests 
by Congress, requests from other agencies for law enforcement purposes, 
administrative or judicial proceedings). Even in those limited 
contexts, however, the Commission's rules may afford the submitter 
advance notice to seek a protective order. See 15 U.S.C. 57b-2(c); 16 
CFR 4.9-4.11. Finally, the information presented in the study will not 
reveal company-specific data. See 15 U.S.C. 57b-2(d)(1)(B). Rather, the 
Commission anticipates using aggregated totals, on a level sufficient 
to protect individual companies' confidential information, to provide a 
factual summary of how the provisions of the Act have operated for the 
specified period.
    Burden on Small Entities: The information collection request is not 
likely to impose an undue burden on small entities, such as small 
generic drug companies. To the extent that a respondent is a small 
entity, it is likely that the specific list of drug products contained 
in the information collection request will be limited in number. In 
other words, the more drug products specified in the information 
collection request, the less likely that the respondent will be a small 
business. Based on initial information obtained from the FDA, the 
generic drug companies with the largest number of drug products for 
which information will be sought are not small businesses. Moreover, as 
previously noted, approximately 70 percent of innovator companies and 
generic companies will be asked to provide information relating to 
three or fewer specific drug products, thereby limiting their burden. 
Finally, the Commission staff will answer any questions a respondent 
may have relating to the scope or meaning of anything required by the 
information collection request, and will consider possible 
modifications thereto to reduce burdens on small entities.
    Company Records: Based on law enforcement investigations, it is 
likely that most of the agreements requested, as well as information 
concerning litigation, Orange Book listings, FDA approvals, and citizen 
petition information, reside within legal departments at corporate 
headquarters or with outside legal counsel. Supporting documents 
requested in Request 1 (for both innovator and generic companies) 
concerning the reasons for entering into identified agreements are 
likely to reside with the corporate secretary because the information 
requested will have been provided to an officer or director or board 
member. Finally, the commercial sales information requested, which is 
typical of information provided to corporate management, is likely to 
reside with the chief financial officer and to be obtained through 
routine requests of internal management and accounting systems.

Description of the Collection of Information and Proposed Use and 
Proposed Budget

    The FTC proposes to send special orders to approximately 30 
innovator drug companies (i.e., name-brand drug manufacturers) and 70 
generic drug companies to examine their use of agreements and other 
strategies that may affect generic drug competition. The FTC will 
obtain the information sought by interrogatories and document

[[Page 12520]]

requests under section 6(b) of the FTC Act, 15 U.S.C. 46(b). Recipients 
of the information requests include name-brand pharmaceutical drug 
companies that have received notice of the filing of an ANDA, as 
defined by 21 U.S.C. 355(j), and generic drug companies that have filed 
such ANDAs. The FDA has agreed to provide the Commission with ANDA 
paragraph IV application information so that Commission staff can 
tailor each information collection request to the respondent company's 
specific drug products that may be subject to generic drug competition. 
In addition to routine questions about the name, address, and 
incorporation date of the responding company and its subsidiaries, and 
the name, business address, and official capacity of the official 
supervising the company's response, the FTC will ask innovator drug 
companies (the company) to provide answers to the following five 
questions about specific drugs:
    1. Submit all agreements between the company and any person \26\ 
(including corporations or other business entities acquired since the 
agreement(s) was (were) executed) executed after December 31, 1994,\27\ 
relating to\28\ an ANDA involving any Drug Product,\29\ where the 
company holds the rights to the NDA corresponding to the ANDA that is 
the subject of the agreement. Examples of such agreements include, but 
are not limited to: (a) Patent litigation settlements (full or partial) 
between the company and persons that have filed an ANDA involving any 
Drug Product; (b) agreements related to the filing (or non-filing) of 
an ANDA by any applicant (or potential applicant) involving any Drug 
Product; (c) licensing agreements between the company and persons that 
have filed an ANDA involving any Drug Product; and (d) agreements 
related to any acquisition, divestiture, joint venture, alliance, 
license or merger by the company of any business involving the 
research, development, manufacture or sale of any Drug Product that is 
the subject of an ANDA. The company is not required to submit purchase 
orders for raw material supplies, equipment and facility contracts, or 
employment or consulting contracts, nor is the company required to 
submit agreements executed after the generic manufacturer had begun 
commercial marketing of the generic Drug Product corresponding to the 
ANDA for which it had received FDA approval. The company also is not 
required to submit information that has already been submitted to the 
Commission pursuant to the Premerger Notification Rules (16 CFR Parts 
801-803 (2000)) and section 7A of the Clayton Act (15 U.S.C. 18a), or 
sections 6, 9, 13, and 20 of the Federal Trade Commission Act (15 
U.S.C. 46, 49, 53, and 57b-1), although the company must identify such 
information as having been previously submitted. For any such agreement 
submitted, also submit all studies, surveys, analyses and reports that 
were prepared by or for any officer(s) or director(s) of the company 
(or, in the case of unincorporated entities, individuals exercising 
similar functions) that evaluate or analyze the reasons for making such 
agreement (or any of the provisions in such agreement), and indicate 
(if not contained in the document itself) the date of preparation and 
the name and title of each individual who prepared each such document.
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    \26\ The term ``person'' means any natural person, corporate 
entity, partnership, association, joint venture, or trust which is 
engaged in research and development, planning and design, production 
and manufacturing, distribution, or sales and marketing of any Drug 
Product.
    \27\ As well as such agreements that were executed prior to 
January 1, 1995 but remain in force as of the date of the 
information collection request.
    \28\ The term ``relating to'' means in whole or in part 
constituting, containing, concerning, discussing, describing, 
analyzing, identifying or stating.
    \29\ The term ``Drug Product'' means each finished dosage form 
of the drug the company has listed in the publication ``Approved 
Drug Products with Therapeutic Equivalence Evaluations'' (the 
``Orange Book'') (regardless of whether the Drug Product is 
currently listed in the Orange Book) and specifically includes those 
Drug Products including the following active ingredients: (a list of 
such active ingredients will be tailored specifically for each 
company).
---------------------------------------------------------------------------

    2. Identify all patents that the company has filed in the Orange 
Book and the date of listing (regardless of whether currently listed in 
the Orange Book) relating to each Drug Product for which the company 
has been notified of the filing of an ANDA by another person. Indicate 
if the patent(s) was (were) filed in the Orange Book after the company 
received approval of the New Drug Application, as defined under 21 
U.S.C. 355(b) et seq., for the Drug Product. Also submit a copy of each 
such patent identified and identify whether the patent is owned by, 
assigned to, or licensed to the company.
    3. Identify and list all lawsuits (including the court, date filed, 
docket number, parties, current or final status (including dates), 
current or final docket sheet, any reporter cites, and any appellate 
history relating to the lawsuit) to which the company is or was a party 
that involve an ANDA paragraph IV certification related to any Drug 
Product. Submit the complaint, the answer, any motion(s) for summary 
judgment, any pretrial memoranda, and any court orders and opinions on 
any dispositive issue for each such lawsuit.
    4. For each Drug Product for which the company has been notified 
that an ANDA containing a paragraph IV certification had been filed 
with the FDA, state the company's sales,\30\ in units and dollars, by 
each finished dosage form for each calendar year since, and including, 
the year the company was notified of the filing of such ANDA. If the 
company has its own generic version of the Drug Product, separate the 
sales for the branded product and the generic product.
---------------------------------------------------------------------------

    \30\ The term ``sales'' means net sales, i.e., total sales after 
deducting discounts, returns, allowances and excise taxes. ``Sales'' 
includes sales of the Drug Product whether manufactured by the 
company itself or purchased from sources outside the company and 
resold by the company in the same manufactured form as purchased.
---------------------------------------------------------------------------

    5. For each Drug Product for which the company has been notified 
that an ANDA containing a paragraph IV certification has been filed 
with the FDA, state whether the company has filed, or contributed to 
the filing of, in whole or in part (e.g., provided funds, legal or 
regulatory assistance to support the filing), a citizen petition with 
the FDA concerning an ANDA related to that Drug Product and identify 
the FDA docket number assigned to such citizen petition.
    In addition to routine questions about the name, address, and 
incorporation date of the responding company and its subsidiaries, and 
the name, business address, and official capacity of the official 
supervising the company's response, the FTC will ask generic drug 
companies (the ``company'') to provide answers to the following five 
questions:
    1. Submit all agreements between the company and any person\31\ 
(including corporations or other business entities acquired since the 
agreement(s) was (were) executed after December 31, 1994,\32\ relating 
to\33\ any ANDA involving any Drug Product.\34\ Examples of such 
agreements include, but are not limited to: (a) Patent litigation 
settlements (either full or partial) between the company and any 
Innovator Company\35\; (b) agreements

[[Page 12521]]

between the company and any other person related to the filing (or non-
filing) of an ANDA by the company involving any Drug Product; (c) 
licensing agreements entered into with any Innovator Company; and (d) 
agreements related to any acquisition, divestiture, joint venture, 
alliance, license or merger by the company of any business involving 
the research, development, manufacture or sale of any Drug Product that 
is the subject of an ANDA. The company is not required to submit 
purchase orders for raw material supplies, equipment and facility 
contracts, or employment or consulting contracts, nor is the company 
required to submit agreements executed after the company had begun 
commercial marketing of the generic Drug Product corresponding to the 
ANDA for which it had received FDA approval. The company also is not 
required to submit information that has already been submitted to the 
Commission pursuant to the Premerger Notification Rules (16 CFR Parts 
801-803 (2000)) and section 7A of the Clayton Act (15 U.S.C. 18a), or 
sections 6, 9, 13, and 20 of the Federal Trade Commission Act (15 
U.S.C. 46, 49, 53, and 57b-1), although the company must identify such 
information as having been previously submitted. For any such agreement 
submitted, also submit all studies, surveys, analyses and reports that 
were prepared by or for any officer(s) or director(s) of the company 
(or, in the case of unincorporated entities, individuals exercising 
similar functions) that evaluate or analyze the reasons for making such 
agreement (or any of the provisions in such agreement), and indicate 
(if not contained in the document itself) the date of preparation and 
the name and title of each individual who prepared each such document.
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    \31\ See n. 26.
    \32\ See n. 27.
    \33\ See n. 28.
    \34\ The term ``Drug Product'' means each finished dosage form 
of the drug listed in the publication ``Approved Drug Products with 
Therapeutic Equivalence Evaluations'' (the ``Orange Book'') 
(regardless of whether the Drug Product is currently listed in the 
Orange Book) and specifically includes those Drug Products including 
the following active ingredients: (a list of such active ingredients 
will be tailored specifically for each company).
    \35\ The term ``Innovator Company'' means each person or company 
(including its predecessors in interest, subsidiaries, affiliates, 
successors, and assigns) that has filed a New Drug Application, as 
defined under 21 U.S.C. 335(b) et seq. for any Drug Product (NDA), 
or holds the rights to any such NDA.
---------------------------------------------------------------------------

    2. Identify and list all lawsuits (including the court, date filed, 
docket number, parties, current or final status (including dates), 
current or final docket sheet, any reporter cites, and any appellate 
history relating to the lawsuit) to which the company is or was a party 
involving an ANDA containing a paragraph IV certification. In those 
cases in which the company is not the sole defendant, describe how 
litigation expenses are or have been distributed among the defendants.
    3. Identify when the company first began commercial marketing of a 
generic version of any Drug Product approved by the FDA, by each 
finished dosage form (or, if applicable, indicate that no such 
commercial marketing has occurred). Identify when the company received 
tentative and final approvals from the FDA for such Drug Product.
    4. Identify each instance in which the company has asserted before 
a court or before the FDA that a patent was improperly or untimely 
listed in the Orange Book as defined in 21 U.S.C. 355(b) or (c). For 
each such assertion, submit the pleading(s) in which such assertion was 
made and any responsive pleading(s).
    5. For each Drug Product for which the company has filed an ANDA 
containing a paragraph IV certification, state the company's sales\36\ 
(if any), in units and dollars, by each finished dosage form for each 
calendar year since, and including, the year the company received FDA 
approval of such ANDA.
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    \36\ See n. 30.
---------------------------------------------------------------------------

    The Commission plans to compile the information received to provide 
a factual description of how the 180-day marketing exclusivity and 30-
month stay provisions of the Hatch-Waxman Act have influenced the 
development of generic drug competition. For example, the Commission 
anticipates that the study will analyze how often the 180-day marketing 
exclusivity provision has been used, how it has been triggered (by 
commercial marketing or court orders), the frequency with which 
innovator companies initiate patent litigation, and the frequency with 
which patent litigation has been settled or litigated to a final court 
decision. The Commission will use the agreements provided, along with 
the underlying documents related to the reasons for executing the 
agreement, to provide a discussion of whether it appears that 
agreements between innovator and generic companies (or between generic 
companies) may have operated to delay generic drug competition. In 
addition, the study will provide factual evidence about innovator 
companies' patent listings in the Orange Book, and how frequently 
challenges are made to these listings by generic companies. The study 
also will provide evidence of innovator company use of citizen 
petitions relating to generic versions of their brand-name drug 
products. Finally, the study will examine whether the size of a drug 
product's sales influence the likelihood of use of strategies to delay 
generic competition.
    The FTC's office of Policy Planning has considered the resources 
necessary to complete the study in a timely manner and has determined 
that it can do so with available personnel. Policy Planning will 
conduct the study and will utilize resources within the Bureaus of 
Competition and Economics for additional expertise as the need arises.

Estimated Hours Burden

    FTC staff will ask members of the pharmaceutical industry to answer 
several written questions about specific drug products and to produce 
certain documents related to the answers provided. We believe that the 
burden estimates are reasonable given the refinements to the wording of 
Request 1 for innovator companies and generic drug companies (request 
seeking agreements and documents explaining the reasons for executing 
the agreements) to delete four years from the time period and to ensure 
that the question's language does not cover agreements that the 
Commission did not intend to be produced. Staff has increased the low-
end estimate given the additional question now asked of innovator 
companies concerning citizen petitions.
    The burden estimates were based in the first instance on experience 
in administering the Antitrust Improvements Act Notification and Report 
Form (Form) that implements the notification requirements of the 
Premerger Notification Rules and section 7A of the Clayton Act. Request 
1 for both innovator and generic companies is comparable to the 
information required for question 4(c) of the Form. Based on historical 
experience, respondents require an average of 39 hours to complete the 
Form.\37\ This average formed the basis for the estimated hours needed 
to respond to Request 1,\38\ premised on the above-stated assumption 
that the Commission will ask most companies for information on no more 
than three drug products. Commission staff allocated 15 hours to 
respond to the additionally requested information based on its 
knowledge of how the requested information is generally maintained by 
companies that respond to such Commission requests. Thus, an additional 
45 hours (3 questions  x  15 hours each) initially were allocated for 
innovator company questions for a total of 84 hours (39 hours + 45 
hours) and

[[Page 12522]]

an additional 60 hours (4 questions  x  15 hours each) for generic 
companies for a total of 99 hours (39 hours + 60 hours).
---------------------------------------------------------------------------

    \37\ Federal Trade Commission, Submission for OMB Review, 64 FR 
36877 (July 8, 1999); 66 FR 8679, 8705 (February 1, 2001).
    \38\ This is a conservative estimate in that the Form requires 
more data to be described and produced than merely the information 
sought by Request 1. Moreover, the estimate does not factor in that 
some companies may not have entered into any of the agreements 
described in Request 1.
---------------------------------------------------------------------------

    Now that the Commission has added a question for innovator 
companies concerning citizen petitions, which it also estimates will 
require approximately 15 hours to answer, the lower-end estimate is 
approximately 100 hours for innovator companies as well as generic 
companies. The revised, high-end of the estimated range (500 hours) 
recognizes that some companies (approximately 30 percent of innovator 
companies and generic companies) will have to produce information for 
more than three drug products, with fewer than five percent of the 
companies having to produce information on more than 10 drug products. 
At the same time, the upper-end estimate, though based on this higher 
volume, also recognizes inherent economies of scale for the process of 
organizing, identifying, and retrieving information responsive to these 
requests.
    The estimated burden of answering the questions and producing 
documents per respondent on a functional basis breaks down as follows:

------------------------------------------------------------------------
                                                                 Hours
------------------------------------------------------------------------
Organize document and information retrieval..................      20-50
Identify requested information...............................     20-200
Retrieve responsive information..............................     25-100
Copy requested information...................................      10-50
Prepare response.............................................     25-100
                                                              ----------
                                                                100--500
------------------------------------------------------------------------

    The cumulative hours burden to produce documents sought and prepare 
the response will be between 9,000 hours (100 hours  x  90 companies) 
and 45,000 hours (500 hours  x  90 companies).
    Associated Labor Cost: It is not possible to calculate precisely 
the labor costs associated with answering the questions and producing 
the documents requested, as responses will entail participation by 
management and/or support staff at various compensation levels among 
many different companies. Individuals among some or all of those labor 
categories may be involved in the information collection process. Based 
on Geneva's comments, staff has increased the dollar figure per hour to 
reflect the use of outside legal counsel along with mid-management 
personnel for handling most (an assumed 90 percent) of the tasks 
involved to gather and produce the responsive information. For such 
labor costs, we estimate an average hourly wage of $250/hour. In 
addition, staff estimates an average hourly wage of $10 for the labor 
of clerical employees who will copy the responsive materials. Thus, the 
labor costs per company should range between $22,600 [(90 hours  x  
$250/hour) + (10 hours  x  $10/hour)] and $113,000 [(450 hours  x  
$250/hour) + (50 hours  x  $10/hour)], with approximately 70 of the 100 
companies (70 percent  x  70 generic companies plus 70 percent x 30 
innovator companies) averaging approximately $22,600 to respond to 
information requests. Assuming the remaining 30 companies average 
approximately $67,800 each in labor costs (the mean within the 
estimated range), then total estimated labor cost is $3,616,000 ((70 
x  $22,600) + (30  x  $67,800)). By comparison, for example, the 
Commission alleged that Abbott paid Geneva a sum of $4.5 million per 
month to keep the generic version of Hytrin off the market.\39\ Thus, 
the Commission believes that the estimated cost is reasonable in light 
of the size of the markets involved, the potential consumer harm, and 
Congressional interest in the area.
---------------------------------------------------------------------------

    \39\ See note 7.
---------------------------------------------------------------------------

    Geneva estimates that the burden will be ``in excess of $300,000'' 
to respond to the information collection request as proposed. Geneva 
Comment at 2. The Commission believes Geneva's estimate is based on a 
misunderstanding of the scope of the information collection request. 
First, the Commission has clarified the language of Request 1 to 
exclude agreements not intended to be covered by the request. Second, 
the Commission has significantly shortened the time period (by four 
years) for which it seeks such documents. Third, for each request, a 
company will only have to produce documents and information about 
specific drug products that are listed in each company's information 
collection request, rather than for ``all products as to which the 
generic company has made a Paragraph IV certification.'' Geneva Comment 
at 3. Thus, Commission staff continues to believe that the estimates 
provided above are reasonable.
    Estimated capital/other non-labor costs: The capital or other non-
labor costs associated with the information requests will be minimal. 
Although the information requests may require that respondents retain 
copies of the information provided to the Commission, industry members 
should already have in place the means to store information of the 
volume requested. In addition, respondents may have to purchase office 
supplies such as file folders, computer diskettes, photocopier toner, 
or paper in order to comply with the Commission's requests. Staff 
estimates that each respondent will spend $500 for such costs regarding 
the information request, for a total additional non-labor cost burden 
of $45,000 ($500  x  90 companies).

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 01-4758 Filed 2-26-01; 8:45 am]
BILLING CODE 6750-01-P


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