Copyright 1999 Federal News Service, Inc.
Federal News Service
JULY 1, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
1162 words
HEADLINE: PREPARED STATEMENT OF
THE
HONORABLE MARLON BERRY
BEFORE THE HOUSE JUDICIARY COMMITTEE
SUBCOMMITTEE ON COURTS AND INTELLECTUAL PROPERTY
SUBJECT - H.R. 1598,
A BILL "TO PROVIDE A PATENT TERM RESTORATION
REVIEW PROCEDURE FOR
CERTAIN DRUG PRODUCTS"
BODY:
Thank you Chairman
Coble and Ranking Member Berman for allowing me to testify before your
subcommittee today. My interest in pharmaceutical drug prices led me to
establish, with Tom Allen and Jim Turner, the House of Representatives
Prescription Drug Task Force.
I appreciate having the opportunity to discuss
H.R. 1598, which has been titled the Patent Fairness Act of 1999. I am here
today representing the constituents of Arkansas' First Congressional District
who are concerned about both the high prices charged for prescription drugs and
the ability of the pharmaceutical industry to continue to bring new and more
innovative cures to market. I have also worked as a licensed pharmacist, and
understand the economic and moral values associated with the public having
access to affordable prescription drugs. Supporters of H.R. 1598 claim the
legislation is intended to create a fair and equitable process to extend patent
life. Indeed, I agree with the need for such a process. However, I believe a
sufficient process already exists as it was created under the Drug Price
Competition and Patent Restoration Act of 1984, better known as the Waxman-Hatch
Act. Claritin, a product of the Schering-Plough Corporation, has received very'
equitable treatment under the Waxman-Hatch Act. Last year Claritin had an
estimated $1.8 BILLION in sales. Business Week has referred to the drug as a
"blockbuster that Hollywood would envy." Although Claritin was developed prior
to implementation of the Waxman- Hatch Act, it received a two year
patent extension because it was in the Food and Drug
Administration's (FDA's) approval pipeline at the time. Waxman -Hatch created
patent extensions of up to five years to give pharmaceutical
companies incentives to develop new products. Congress decided at the time of
the legislation's passage that drugs which were already developed should only be
eligible for two years of patent extensions since those drugs
obviously didn't need new incentives to be developed. In addition to the
extension Claritin received under Waxman-Hatch, it also received an additional
22 months of market exclusivity when Congress implemented a GATT agreement. This
legislation will take billions of dollars out of the pockets of patients who
take Claritin and the other medications.
Today's hearing is a result of
excessive corporate lobbying. The legislation would create a new bureaucratic
process in the Patent and Trademark Office (PTO) to virtually guarantee a
patent extension for Claritin and at least six other drugs.
While the legislation does appropriately allow the PTO to consider material
offered by all parties that would be aggrieved by the extension being granted,
it is made clear on page three of the bill that PTO shall grant the extension if
the product was in the FDA approval process for at least a specified amount of
time and "there is no substantial evidence overcoming the rebuttable presumption
that the applicant for patent term restoration for the drug product acted with
due diligence (emphasis added.)" Due diligence in this case means little more
than the applicant was actively seeking to have the patent approved. This
process clearly does not take into consideration the impact such patent
extensions could have on consumers or the government, which is the
largest purchaser of prescription drugs. I also find it problematic that under
H.R. 1598, the PTO will be in the position of interpreting and second guessing
scientific decisions made by experts at the FDA. H.R. 1598 contains no
meaningful procedure to evaluate who actually caused the delays, the FDA or the
companies involved. It is no surprise that Schering Plough and other
pharmaceutical companies support creating the process specified in the bill.
With billions of dollars in profits at stake, it would be foolish for them to
support anything else.
Schering-Plough and other companies manufacturing
prescription drugs knew how the patent system and the FDA approval process
worked when they made the decision to develop the "pipeline drugs." In fact,
prior to the Waxman-Hatch Act becoming law, a study showed that on average drugs
received less than ten years of effective patent life. Now, under existing
patent law, Claritin will receive more than nine years of monopoly pricing
rights. Schering-Plough made a very profitable decision to develop Claritin.
Now, 15 years after passage of Waxman Hatch, the patents on many "pipeline
drugs" have already expired. It is unclear why this handfull of companies should
be entitled to special treatment. Retroactively extending patents on these older
drugs will not give manufacturers additional incentives to develop new drugs. It
will punish consumers and increase profits in what is already the most
profitable industry in existence.
Mr. Waxman, along with several other of
our colleagues, has asked the General Accounting Office (GAO) to examine the
delay in Claritin's approval. There is no reason to consider this legislation
prior to the completion of the GAO study, considering that Claritin's patent
does not expire until June of 2002.
In the past, proponents of
patent extensions for prescription drugs have made the claim
that longer patent life would give manufacturers more time to recoup their
investment in research and development, and would result in lower prices for
prescription drugs. I generally take the view that prescription drug prices are
based on profit maximization and that manufacturers charge the highest price a
large number of consumers in the market place will be able to pay. That is
generally how prices are set for products for which there is a monopoly or
relatively few sellers manufacturing competing products. However, those in the
pharmaceutical industry that claim longer patent lives cause lower prices,
should admit this would simply not be the process set forth in H.R. 1598. When
Schering-Plough and other companies that developed "pipeline drugs" marketed
their products, they knew exactly how much time they had remaining on their
patents. At this time the companies most likely established a price that would
at a minimum recover their original investment and make a reasonable return.
Granting up to three additional years of monopoly pricing rights for these
products now will result in billions of extra dollars in profits at the expense
of sick patients.
Everyone should be entitled to a fair and equitable
process. Schering- Plough is fortune 500 Company with profits that are the envy
of the corporate world. American consumers pay more for prescription drugs than
citizens of any other country. Uninsured customers pay twice as much for their
drugs as the preferred customers of drug makers. There is no fairness or equity
in this process to American consumers. Congress should not be in the business of
passing legislation with the specific purpose of giving billions of dollars in a
financial windfall to a handful of companies.
END
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