As the first company to market a generic version of nitrofurantoin, a drug used to treat urinary tract infections, Mylan was entitled to a 180-day exclusivity period under the Hatch–Waxman Act. But just as it began selling its generic drug, a third party under license from Procter & Gamble launched an authorized generic version — a brand drug re-labelled and marketed under a generic product name by the parent company, a subsidiary or under license — causing Mylan to lose sales of “tens of millions” of dollars.
Mylan sued the FDA, arguing that the agency did not have the authority to approve an authorized generic of nitrofurantoin and had made an arbitrary decision when it denied the company's request to respect its 180-day period of exclusivity. But the validity of authorized generics was upheld by the US Court of Appeals, which, despite acknowledging that an authorized generic would reduce the economic benefit of exclusivity awarded to the first generic applicant, maintained that there was no legal basis for the FDA to prohibit the approval of authorized generics that encroach on that exclusivity.
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