[Ip-health] News: Generics group dwindles, threatened by Pharma (NYT)

[Kate Krauss]

September 4, 2002

2 Companies Reduce Roles in Lobby Group for Generics

By MELODY PETERSEN and REED ABELSON

wo corporate members of a powerful coalition that is lobbying for
legislation to bring generic drugs to market more quickly have left the
group or reduced their roles after companies that make brand-name medicines
threatened to end contracts with the companies, a spokesman for the lobbying
group said yesterday.

The spokesman, Brad Cameron of Business for Affordable Medicine, a coalition
of the governors of 12 states and about a dozen large corporations, said
that Georgia-Pacific, the paper company, had asked yesterday that it no
longer be listed as a member on the coalition's Web site after receiving
pressure from Eli Lilly.

Another coalition member, Verizon Communications, left the group recently,
he said, after being pressed, primarily by Wyeth.

Mr. Cameron said that Lilly, Wyeth and other big companies that make
brand-name drugs had been using financial ties to the coalition's corporate
members, including some multimillion-dollar contracts for goods or services,
to try to halt their lobbying efforts, which have been effective.

In July, after lobbying by members of the coalition, generic drug companies
and others, the Senate overwhelmingly passed legislation intended to
increase access to low-cost generic versions of brand-name drugs.

Proponents of the bill, including the coalition, argued that pharmaceutical
companies had taken unfair advantage of loopholes in the existing law to
delay the approval and marketing of generic drugs. The Congressional Budget
Office estimated that the legislation would reduce total spending on
prescription drugs by $60 billion, or 1.3 percent, over the next 10 years.

The pharmaceutical industry has opposed the legislation, and the next battle
is expected to take place in the House, where the outcome is unclear.

The pharmaceutical companies denied yesterday that they had threatened to
end their contracts with the coalition's corporate members.

Lowell B. Weiner, a spokesman for Wyeth, said it had not put pressure on
Verizon or any other coalition member.

Joseph Kelley, executive director for government and public affairs at
Lilly, acknowledged that it had talked with some of the coalition's members,
telling them it was concerned about their lobbying efforts and trying to
explain its position. But he said he knew of no efforts by Lilly to threaten
to cut off business with the companies.

Mr. Kelley said that Lilly's general patent counsel, Robert A. Armitage, had
contacted patent lawyers at the companies to talk with them about the patent
issues involved. Lilly has also contacted some governors who are members of
the coalition, he said.

"We told them we were very, very concerned," Mr. Kelley said. "Intellectual
property is the backbone of our industry."

The coalition still includes many large corporations, including General
Motors, Wal-Mart, Kmart, Motorola, Kellogg and Eastman Kodak. It also
includes the governors of 12 states including Vermont, Washington, Iowa,
Louisiana and Missouri, as well as several labor organizations.

All the members say they are frustrated by the rising cost of prescription
drugs.

Georgia-Pacific executives were among the group's more vocal members.

In May, Jody Hunter, director of health benefits at Georgia-Pacific,
testified before Congress that the company's prescription drug costs for its
employees had increased 21 percent in 2001, to more than $42 million.

Mr. Hunter said the drug cost increase was unsustainable and that unintended
loopholes in the law were giving some brand-name drug companies the
opportunity to engage in anticompetitive practices.

"We cannot survive under the present system," Mr. Hunter testified. "We
believe that enough is enough."

Gregory Guest, a spokesman for Georgia-Pacific, said last night that the
company had decided that it no longer wanted to take such an active role in
the political debate. "We had hoped that more companies would step forward
and pick up the flag," he said.

Mr. Guest said that Georgia-Pacific still considered itself to be a member
of the coalition but had asked the group to take its name off its Web site.

He said the company did not discuss talks it has with customers.

Sharon Cohen-Hagar, a spokeswoman for Verizon, confirmed that the company
dropped out of the coalition in July. She said it was not because of
financial pressure from any of the drug companies. Instead, she said, the
coalition was supporting specific legislation that Verizon could not
completely endorse.