Bill would ease access to generic drugs

The Senate measure would limit pharmaceutical brand-name patent extensions and allow reimportation from Canada.

By Markian Hawryluk, amednews staff. Aug. 19, 2002.

Washington -- Unable to pass a Medicare prescription drug benefit, the Senate instead approved a number of measures aimed at making drugs more affordable to all Americans.

Before departing for a month-long recess in August, the Senate voted 78-21 in favor of a bill designed to ease the entry of generic drugs when brand-name manufacturers move to protect their markets.

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The legislation, sponsored by Sens. John McCain (R, Ariz.) and Charles Schumer (D, N.Y.), would close several loopholes used by brand-name pharmaceutical manufacturers to extend their patent protections.

Manufacturers have been accused of filing frivolous patents to gain additional 30-month periods of market exclusivity when companies seek to market a generic alternative.

Under the Hatch-Waxman Act, passed in 1984, brand-name manufacturers must list the patents that apply to each drug.

Rather than requiring a generic to repeat the extensive and costly new drug application process, the act allows the company to incorporate the original manufacturer's safety and efficacy data by showing the generic drug is equivalent to the brand-name product.

Generics must certify equivalency for every patent listed for a drug, or assert that a patent is invalid or not infringed.

If the original manufacturer sues to challenge those assertions, it triggers a 30-month protection against generic competition. With carefully timed filings of additional patents, a brand-name drug manufacturer can extend its patent life almost indefinitely, critics say.

The McCain-Schumer bill would limit brand-name drugmakers to only one 30-month stay and would provide a legal means by which generic drug manufacturers can challenge frivolous patent filings.

Opponents of the bill said the legal challenge provision would spawn a cottage industry of attorneys hoping to profit from the suits. However, the legislation would not allow for any monetary damages to be claimed as part of the challenge.

The measure would also preclude drugmakers from entering into agreements with generic companies not to market a generic version.

The nonpartisan Congressional Budget Office estimated the bill would result in a savings of $60 billion over the next 10 years. The legislation was backed by consumer groups and large employers eager to reduce their health care costs.

The Pharmaceutical Research and Manufacturers of America opposed the legislation and lobbied heavily to defeat it. Drugmakers said the bill would not significantly lower drug costs but could stifle innovation.

The group pointed to a report from the Federal Trade Commission as evidence the measures included in the bill were, at best, unnecessary.

The FTC report found that the Hatch-Waxman Act has resulted in an increased number of generic products coming to market and cited only limited incidents of brand-name manufacturers misusing patent protection laws.

PhRMA said the FTC report is proof that concerns about abuses of patent protections can be handled by vigorous enforcement of the current antitrust laws, rather than what it calls a radical rewrite of patent law.

"It's clear from the FTC report findings and recommendations that the generic bill is based upon misinformation and gross exaggeration of the actual facts surrounding a very limited number of patent disputes," PhRMA President Alan Holmer said.

However, the FTC report also recommended limiting manufacturers to a single 30-month stay and requiring agreements between a brand-name manufacturer and its first generic competitor to be submitted to the FTC.

The report added that creating a process to challenge the relevance of patents listed by the brand-name company "may warrant consideration."

Drug reimportation passed

The Senate bill was also amended with other prescription drug-related measures. Lawmakers approved an amendment that would allow pharmacies and drug wholesalers to import U.S.-made drugs from Canada. However, the bill would require the Health and Human Services secretary to certify the practice was safe and cost-effective. The Bush Administration has already said it would not approve the measure.

A second amendment passed by the Senate would allow states to use the buying power of their Medicaid programs to secure discounts for individuals who do not qualify for Medicaid.

The Senate considered a series of amendments to the generic drug bill that would have added a Medicare prescription drug benefit.

However, all failed because they did not garner enough votes under budgetary rules to increase spending beyond the $300 billion amount set in the Senate's budget blueprint.

The House has passed a Medicare prescription drug benefit but has not voted on changes to patent protection laws or drug reimportation. House Energy and Commerce Committee Chair Billy Tauzin (R, La.) said his committee is planning to look at both issues.

Rep. Sherrod Brown (D, Ohio), the ranking member on the committee, introduced a drug patent bill with provisions similar to McCain-Schumer in May.

A bill introduced in July by Rep. Jack Kingston (R, Ga.) would allow reimportation of pharmaceuticals. But unlike the Senate measure, the Kingston reimportation legislation would not require the HHS secretary's approval and would not limit the countries from which drugs could be reimported.

ADDITIONAL INFORMATION:

Making it affordable

Key provisions of Senate-passed Greater Access to Affordable Pharmaceuticals Act (S 812) would:

Limit brand-name drug manufacturers to one 30-month extension of patent protection.
Ban collusion between a brand-name manufacturer and its generic competitor to prevent a generic alternative from coming to market.
Provide a means for competitors to challenge the relevancy of patents listed by brand-name manufacturers.
Allow reimportation of U.S.-made drugs from Canada with the Health and Human Services secretary's approval.
Permit states to use the buying power of Medicaid to negotiate discounts for non-Medicaid individuals.