[Ip-health] Senate effort to close Hatch-Waxman loopholes that delay generic entry

[Mike Palmedo]

Senators Gregg, Schumer, McCain and Kennedy will soon put forth
legislation to close loopholes in the Hatch-Waxman Act and speed up
generic entry in the US. Last year, similar legislation sponsored by
Schumer and McCain passed the Senate, but the House version did not
pass. More info on this can be found on the CPTech page on the
Hatch-Waxman Act and efforts to reform it:
http://www.cptech.org/ip/health/generic/hw.html

Although the bill number and text won't be available for a couple of
days, the Senators have made statements calling for passage:

1. Sen. Gregg's press release
2. Sen. Schumer's press release
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1. Sen. Gregg's press release

http://gregg.senate.gov/press/press060503.pdf

Thursday, June 5, 2003 Contact: Erin Rath/Jeff Turcotte

GREGG SECURES BREAKTHROUGH BIPARTISAN AGREEMENT: WILL CREATE MORE ACCESS
TO MORE AFFORDABLE PRESCRIPTION DRUGS

WASHINGTON=96 People will soon have more prescription drugs available at
lower cost thanks to an agreement negotiated this week by Senator Judd
Gregg, Chairman of the Senate Health, Education, Labor and Pensions
Committee. The agreement marks the end of more than five years of
negotiations and discussions over the issue of generic drugs.

=93After five years of negotiation and discussion, this breakthrough
legislation is just whatthe doctor and the American people ordered,=94
Chairman Judd Gregg (R-NH) stated. =93This landmark legislation makes more
prescription drugs available more quickly to more people at a lower cost
with fewer lawyers involved and with more incentive for innovation. This
is a major accomplishment and we intend to move this legislation through
the committee as early as next week and on to the floor as soon as
possible.=94

The agreement reached by Senators Judd Gregg, Charles Schumer (D-NY),
John McCain (R-AZ) and HELP Ranking Member Ted Kennedy (D-MA) will
enable less expensive generic drugs to be sold in pharmacies. The
Gregg-Schumer proposal overhauls provisions of Hatch-Waxman (drug patent
laws) that have created a significant stifling of the system with
frivolous law suits, which delay life-saving drugs from reaching
consumers in efficient and less expensive means. The plan also
strengthens a Food and Drug Administration proposal from last fall that
was intended to pave the way for generics to come to the market faster
and shield that proposal from legal challenges. The Senate Health,
Education, Labor and Pensions Committee is expected to consider this
bill on June 11, 2003.


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2. Sen. Schumer's press release

http://schumer.senate.gov/SchumerWebsite/pressroom/press_releases/PR01756.h=
tml

*FOR IMMEDIATE RELEASE:* June 5, 2003

*GREGG, SCHUMER, McCAIN, KENNEDY REACH AGREEMENT ON GROUNDBREAKING
GENERIC DRUG PLAN *

/Senate HELP Committee expected to approve new Gregg-Schumer plan next
week that would improve access to less expensive prescription drugs/

/Bill would eliminate loopholes that are used to keep generic drugs from
being sold in pharmacies, enabling seniors to access Rx drugs that are
almost two-thirds cheaper/

US Senators Judd Gregg and Charles Schumer, along with Senators John
McCain and Edward Kennedy, today announced that they have reached
agreement on a plan that would enable less expensive generic drugs to be
sold in pharmacies. The landmark agreement is expected to pave the way
for approval by the Senate Health, Education, Labor and Pensions (HELP)
Committee next week and the Senate shortly thereafter. It would mark a
significant victory in the effort to help working Americans secure more
affordable access to prescription drugs.

"After five years of negotiation and discussion, this breakthrough
legislation is just what the doctor and the American people ordered,"
said Gregg, Chairman of the HELP Committee. =93This landmark legislation
makes more prescription drugs available more quickly to more people at a
lower cost with fewer lawyers involved and with more incentive for
innovation. This is a major accomplishment and we intend to move this
legislation through the committee as early as next week and on to the
floor as soon as possible."

"Anyone in America who takes prescription drugs is going to benefit from
this bill," Schumer said. "It's a market-based approach that doesn't
cost the government a penny and gives the drug industry a desperately
needed dose of competition. As a result, it will do more to help working
Americans than just about any other prescription drug legislation in
recent memory, easing the burden on everyday people who are forced to
rely on higher-priced name brand drugs because no cheaper alternative is
available."

"This solid compromise will promote competition within the
pharmaceutical industry and ensure that all Americans, particularly our
most vulnerable, have access to more affordable prescription drugs. I
look forward to working with Senators Gregg, Schumer and Kennedy, to see
this bill through to passage," McCain said.

Current US drug patent laws (known as Hatch-Waxman) were designed to
strike a balance between rewarding blockbuster drug companies for their
research and development while ensuring that less expensive generic
drugs are available to consumers. But in the years since these laws were
enacted, the namebrand industry has stifled low-cost competition with a
host of tactics - including filing frivolous patents with the FDA on the
color of a pill bottle and paying generic manufacturers not to sell
their drugs. In so doing, these tactics allow the namebrand companies to
keep charging exorbitant prices and delay the arrival of lower-cost
alternatives.

These tactics have caused drug prices to soar and forced the gap between
the cost of brand name drugs and their generic alternatives to skyrocket
in the last decade. In 1990, the average cost per prescription for
brand-name medications was $27.16, while the average cost for generic
drugs was $10.29. By 2000, the average cost per prescription reached
$65.29, while the generic increased to only $19.33. Last summer, the
Senate passed legislation sponsored by Schumer and McCain that
significantly overhauled Hatch-Waxman. For the individual, that
legislation would have meant hundreds of dollars in savings on drug
costs per year.

The Gregg-Schumer proposal would achieve comparable savings to the
original Schumer-McCain measure but uses a different approach to modify
the patent laws. In so doing, it addresses a number of the criticisms
made against Schumer-McCain. As a result, the lawmakers expect that the
bill should be able to garner even more support and stands a very good
chance of being enacted. The Senate HELP Committee is expected to
consider the bill next week on June 11. The key elements of the
Gregg-Schumer proposal are as follows:

1) One 30 Month Stay - The name-brand company would get a single 30
month stay. The stay would be triggered if a name-brand company sues a
generic application for infringing on any patent on a blockbuster drug
that is filed before a generic application is submitted to the FDA.

Once a generic application is filed, the name-brand company has 45 days
to challenge the generic application in court. If the name-brand does
not challenge the generic company's application within 45 days, the
generic can seek a declaratory judgement indicating that it does not
violate the name-brand drug's patents.

The single 30 month stay would run concurrent to the FDA's consideration
of the generic company's application. As such, the 30 month stay would
not be likely to cause significant delay in the generic's introduction
to the marketplace. (It usually takes the FDA 18 to 25 months to approve
a generic drug.) In contrast, the FDA's proposed rule would allow the
stay to be triggered up to the eve of the generic drug coming to market.

2) Enforcement - The Gregg-Schumer plan does not specify which patents
can be listed in the FDA's Orange Book. To ensure that the name-brand
companies do not use frivolous patents to keep generic drugs off the
market, the proposal would create a new enforcement mechanism.

Gregg-Schumer would allow generic companies to file counter-claims if a
name-brand company sues them for violating a patent. For example, if a
name-brand files a frivolous patent and sues a generic applicant for
violating that patent in order to trigger the 30 month stay, the generic
company can counter-sue the name-brand and argue that the patent should
never have been listed in the Orange Book in the first place.

3) 180 Day Exclusivity - Currently, the first generic drug company who
is able to come to market gets 180 days of exclusivity. Gregg-Schumer
sets up "forfeiture provisions" similar to those in earlier generic drug
legislation which prevent the generic companies from abusing this
incentive.

Under the bill, a generic drug company would forfeit its rights to this
exclusivity if it was found to have made an anti-competitive deal with a
brand company or otherwise fails to come to market in a timely manner.
If one of the forfeiture provisions outlined in the bill occurs, the
exclusivity would be forfeited and the marketplace would open up to any
generic company ready to come to market.

4) Bioequivalence - Under the current statute, the primary method by
which the FDA determines whether a generic is equivalent to a brand drug
("bioequivalence") is by measuring the rate and absorption of the drug
into the bloodstream. For certain drugs which are not absorbed into the
bloodstream, such as topicals and inhalers, the FDA uses different tests
to determine bioequivalence, which are defined in their regulations.
Brand companies have challenged FDA's use of these regulations, which
has led to delay in the approval of generic versions of these drugs.
Gregg-Schumer would clarify that the FDA does have the authority to
establish separate tests for determining the bioequivalence of drugs
which are not absorbed into the bloodstream - as long as those tests are
scientifically valid and meet rigorous standards.

Please click here
<http://schumer.senate.gov/SchumerWebsite/pressroom/special_reports/Generic=
s%20Side-by-Side%20Comparison%20wordperfect.pdf>
for a side-by-side comparison of how the Gregg-Schumer proposal compares
to last year's Schumer-McCain bill, Hatch-Waxman, and the proposed FDA
rule from last Fall.

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