The 160's weren't illegal, just discontinued, Purdue has listed them available along with the new dosages, they are showing up in the pharmacy's order books. Time will tell if they're dispensed or not.
Your doctor is correct, due to patent infringement litigation only Purdue Frederick can mfr
Oxycontin as of Jan 2008. I haven't heard any data whether or not remaining stock of generics are being dispensed.