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- BUSINESS, Page 56A Prescription for ScandalPayoffs and faked lab results taint the generic-drug industry
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- For many consumers, generic drugs have been a welcome remedy
- for sticker shock at the pharmacy counter. Designed to work as
- effectively as their brand-name counterparts, generics often sell
- for half the price. Since 1984, when Congress sought to make
- generics more readily available by speeding up the
- Government-approval process, competition has skyrocketed -- and so
- has the opportunity for abuse. Now a yearlong investigation by the
- Justice Department and the Food and Drug Administration is
- uncovering evidence that some makers of generic pharmaceuticals
- falsified laboratory test results and paid off FDA chemists to gain
- quick Government approval for their products. While no drugs have
- been found so far to be harmful or ineffective, the fraud is
- shaking the reputation of the $7 billion generic-drug industry.
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- Hastening to restore confidence in its imprimatur, the FDA last
- week launched a crash program to re-evaluate 30 of the most
- commonly prescribed generic medications, including such prevalent
- antibiotics as ampicillin and oral penicillin. Over the next six
- weeks, the agency will test more than 1,000 samples to make sure
- they are biologically equivalent to their brand-name counterparts.
- In addition, the FDA, which had cut back its commercial inspections
- because of budget restraints, announced that it will hire more
- field inspectors and seek tougher punishments for unscrupulous
- manufacturers.
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- Compared with an original, patented drug, a generic is much
- less expensive to develop. After the patent on a brand-name product
- has expired, usually involving a period of 17 years, a
- pharmaceutical company simply replicates the original drug's
- components. But in a two-year study released earlier this month,
- the American Academy of Family Physicians found that many generics
- are not as potent as their originals. Reason: unless certain
- production tricks are used, it is often difficult to produce a
- formulation that will work as well in the body as the brand-name
- drug. In its approval process, the FDA relies on a generic-drug
- manufacturer's in-house lab tests to establish a product's
- effectiveness. But the temptation for the manufacturer to cut
- corners can be strong, since the first companies to gain approval
- are likely to carve out the largest market shares.
-
- The current scandal started to unravel after Roy McKnight, head
- of Pittsburgh-based Mylan Laboratories, began to suspect the FDA
- of favoritism. Frustrated that a rival firm consistently won FDA
- approval for its products before his company did, McKnight hired
- private detectives to spy on the Government. The detectives'
- snooping produced enough evidence of corruption to encourage the
- Justice Department to initiate a probe. In July, Charles Chang, 47,
- former head of the FDA's generic-drug division, and two co-workers
- pleaded guilty to accepting a total of $24,300 in illegal gifts in
- exchange for preferential treatment. The favored firms: American
- Therapeutic Inc., Bohemia, N.Y.; Par Pharmaceutical, Spring Valley,
- N.Y.; and Par's subsidiary Quad Pharmaceuticals of Indianapolis.
- American Therapeutic has not been charged so far and denies any
- wrongdoing.
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- As the FDA pursued its own probe, it discovered that Vitarine
- Pharmaceuticals of New York City had taken a more drastic step to
- ensure approval of its generic version of Dyazide, a standard
- antihypertension drug developed by SmithKline. The generic-drug
- company substituted Dyazide for its own capsules and sailed right
- through the efficacy tests. Vitarine admitted the deception earlier
- this month and has recalled the product.
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- Even if the misdeeds are limited to a few unscrupulous firms
- and some greedy bureaucrats, the entire generic-drug industry is
- likely to suffer. Generic products are so anonymous, says Dee
- Fensterer, president of the Generic Pharmaceutical Industry
- Association, that "when one company has a problem with one drug,
- it is jumped on as a problem of all generic drugs."