Copyright 1999 Federal News Service, Inc.
Federal News Service
JULY 1, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
2156 words
HEADLINE: PREPARED STATEMENT OF
CONGRESSMAN HENRY A. WAXMAN
AND CONGRESSMAN PETE STARK
BEFORE THE
HOUSE JUDICIARY COMMITTEE
SUBCOMMITTEE ON COURTS AND
INTELLECTUAL PROPERTY
SUBJECT - PATENT EXTENSIONS,
INCLUDING H.R. 1598,
THE AMGEN PROPOSAL AND ALTERNATIVE FUELS INDUSTRY
PROPOSAL
BODY:
Thank you, Mr. Chairman. I am
pleased to have this opportunity, to address two of the patent
extension proposals being considered today, H.R. 1598 and the Amgen
proposal to be introduced by Congressman Gallegly. And I am joined in my remarks
by our colleague, Pete stark, who is unable to attend this afternoon's hearing.
I am particularly interested in this hearing because both proposals
contemplate major changes to the Drug Price Competition and Patent Term
Restoration Act of 1984, better known as the Waxman-Hatch Act. Fifteen years
ago, as the Chairman of the House Commerce Subcommittee on Health and
Environment, I was the law's primary sponsor in the House. and my friend Senator
Orrin Hatch of Utah was the primary sponsor in the other body.
I am very
proud of the Act. Its success has truly exceeded my expectations. The Act
balances the interests of the brandname drug industry, which gained patent term
extensions to restore time expended obtaining FDA approval, and the generic drug
industry, which obtained clear and fair statutory standards for the timely
approval of their products.
As a result, generic drugs have saved American
consumers and the Federal government billions of dollars. Today, America has a
uniquely thriving and competitive generic drug industry. At the same time, the
brandname drug industry has prospered like never before, posting record profits
while tripling its research and development spending in the past ten years.
Waxman-Hatch Reform Must Be Comprehensive and Based on Consensus
From
the onset, I want to emphasize something upon which both Senator Hatch and I
agree. The 1984 Act succeeds because it strikes a very careful balance between
promoting innovation and ensuring that consumers have timely access to
affordable medicines. Both Senator Hatch and I have publicly and repeatedly
emphasized that any revisions to the 1984 Act must preserve that balance and
must be made in a comprehensive manner.
For many years, we have emphasized
to the regulated industries and to consumers that they must work together to
reach consensus before legislation action can reasonably be contemplated. They
have done that, and I would be extremely disappointed now if the brandname drug
industry, the generic drug industry or consumer groups diverged from this path.
There's a simple reason why piecemeal changes to the 1984 Act won't work:
every revision contemplated unquestionably necessitates changes elsewhere in the
Act to preserve its careful balance of interests. In this regard, I would
caution this Subcommittee to recognize that any changes it considers to the
patent provisions of the 1984 Act will have a direct impact on consumer health
and safety.
Everyone recognizes that extending monopolies will mean
increased costs to American consumers and taxpayers. We should be especially
conscious of making prescription drugs more costly for the elderly while at the
same time we are trying to create a Medicare drug benefit. We should be
particularly concerned about the impact on consumers of patent
extensions in light of the dramatic 10 to 20 percent increase in the
prices of the best-selling prescription drugs since 1997. as reported by
Tuesday's Wall Street Journal.
Just as importantly, the regulated
industries, consumers and Congress have only begun to consider the legislative
changes that will undoubtedly be necessary to greatly expand competition for
biotechnology drugs, speed the availability of genetic drugs, and prohibit some
of the anticompetitive practices employed by the prescription drug industry. No
consensus exists among these interests, so much more needs to be done before we
can seriously consider a legislative solution.
H.R. 1598 Linked to History
of Secretive Lobbying
Let me turn to the first patent
extension proposal, H.R. 1598. For my colleagues who are unfamiliar
with its history, this bill is the newest version of a patent
extension which ScheringPlough has repeatedly attempted to sneak into
law. For many years, Schering has sought to extend its patent protections for
Claritin, a prescription antihistamine with over $900 million in annual U.S.
sales.
Last year, Schering tried to sneak this patent
extension into the omnibus appropriations bill. and was only stopped
because of public attention and determined opposition by Members in both the
House and Senate.
In 1997. Schering lobbied the Senate for an amendment to
omnibus patent reform legislation granting outright five-year patent term
extensions for a number of drugs, including Claritin. And in 1996, Schering
tried unsuccessfully to attach Claritin patent extensions to
the omnibus appropriations bill, the continuing resolution and the agriculture
appropriations bill. In the first half of that year alone, Schering spent over
$1 million in lobbying the Congress.
Despite this history, Schering-Plough
now claims that H.R. 1598 would "depoliticize" the secretive efforts to secure
patent extensions. I guess that's a fancy way of saying they'll
quit trying to weaken the law in backdoor maneuvers. In reality, however, H.R.
1598 would simply and permanently institutionalize the fruits of Schering's
lobbying within an administrative agency.
H.R. 1598 is Premised on a
Misinterpretation of the Waxman-Hatch Act
Before I turn to the substance of
H.R. 1598, I want to set the record straight about the legislative history of
the 1984 Act.
It has been alleged that Schering and the five other companies
that would benefit from this special-interest legislation -- Smith Kline
Beecham, Bristol Myers Squibb, Bayer, Rhone Poulenc Rhorer and Hoechst Marion
Roussel -- somehow were arbitrarily or unexpectedly penalized by the
Waxman-Hatch Act. Because these companies were the sponsors of drugs in the
"pipeline" seeking Food and Drug Administration (FDA) approval at the time of
the Act's enactment in 1984, these pipeline products are only eligible for a
2-year patent extension, and not the 5-year patent
extension available to products approved after 1984.
The proponents
of H.R. 1598 have described this provision as arbitrary. It is no such thing.
The pipeline drugs were not made eligible for 5 years of patent
extension precisely because the point of the patent
extensions was to encourage the research and development of future
products. All products which had not yet undergone testing or review by the FDA
were judged to be appropriately eligible for the full 5 years of patent
extension. Let me illustrate how the Act's intent in this regard is
precise and fair by quoting the legislative history from the 1984 House
committee report on this point:
"By extending patents for up to five years
for products developed in the future..
, the Committee expects that
research intensive companies will have the necessary incentive to increase their
research and development activities." This is the clear policy which motivated
this provision -- to encourage additional research, not to simply increase
profits on existing products. Only now, faced with their imminent patent
expirations, are a handful of companies, including Schering Plough, lobbying
vigorously to undermine that policy.
H.R. 1598 Creates Unbalanced Process
and Undercuts FDA
HR. 1598 has several serious flaws. The bill's proposed
administrative process would be weighted in favor of Schering-Plough and other
applicants, creating a stacked deck in favor of drug companies. It forces the
burden of proof onto opponents of the patent extensions. It
creates a rebuttable presumption in favor of the drug companies. And it
restricts the FDA from providing input about the scientific judgements it had to
make about safety' and effectiveness. Were this legislation to be enacted, it
would create an unbalanced forum -- essentially a loophole -- which would create
the possibility of its use for other drugs, other patents, and other companies
-- a bad policy and worse precedent.
H.R. 1598's most serious problem is its
mandate that the Patent Office undercut scientific judgments made by the FDA and
its advisor)' committees in new drug reviews. No one likes "regulatory delay,"
but there are other instances where more time is required to make fundamental
determinations of a drug's safety and efficacy. Often, such "delays" are the
product of sponsor miscalculations, unexpected complications in the conduct of
large-scale clinical trials,and legitimate scientific disagreements concerning a
product's toxicity or carcinogenicity.
Having the Patent Office second guess
the conclusions of a scientific regulatory agency like the FDA and its expert
advisors on such issues would be extremely ill-advised. As I've said in the
past, this would be like putting the IRS in charge of second-guessing how NIH
funds biomedical research.
Let me make a final observation concerning H.R.
1598. One of the points of the Waxman-Hatch Act was to preempt drug companies
from lobbying Congress for patent extensions. It has been
generally successful, with the exception of the ambitious efforts of Schering
Plough, and others. I have heard claims that Schering and other pipeline drug
sponsors were "delayed" at FDA. There is a way to learn the truth, and we are
awaiting a review by the General Accounting Office (GAO) of the circumstances
surrounding the approval of Claritin. In the past, we have relied upon such
objective GAO reviews to evaluate patent extension requests for
products such as Lodine, Olestra, and Ansaid.
We know that GAO is already
evaluating evidence suggesting that Claritin's approval was characterized by
persistent and serious scientific concerns regarding its safety, as well as the
sponsor's own miscalculations regarding their formulation of Claritin. For
example, the FDA's Pulmonary and Allergy Drugs Advisory Committee undertook a
lengthy review of Claritin's potential carcinogenicity. Only in 1991 did the
Committee conclude that Claritin was "not likely" a human carcinogen, yet a 1994
study published in the Journal of the National Cancer Institute only served to
resurrect concerns that Claritin and other antihistamine drugs might cause
cancer.
Given the complex and fact-intensive nature of GAO's inquiry, I
believe that any claims of "regulatory delay" should be viewed with great
skepticism until the GAO has completed its analysis.
The Amgen Proposal
Restricts Current Law When It May Need Expansion
Let me turn to the Amgen
proposal. One of the most significant changes under the 1984 law was the
creation of an exemption from patent infringement for tests and other activities
conducted for the purposes of obtaining FDA approval. The exemption was created
to overturn the ruling in Roche v. Bolar, which held that uses of a patented
drug to prepare a generic drug application to the FDA were infringing.
Since
its enactment, the courts have interpreted the "Bolar exemption" as applying to
prescription drugs, biologic drugs, and medical devices, as well as food and
color additives. This was the holding of the Supreme Court in the 1990 case, Eli
Lilly v. Medtronic, and has been the law for almost a decade.
As I
understand the Amgen proposal, it would restrict application of the Bolar
exemption to prescription drugs. In essence, it overturns the 1990 Supreme Court
decision and subsequent caselaw, and resets the clock to 1984.
But the
litigation between two biotechnology companies, Amgen and TKT, which has led to
this proposal to reform the Waxman-Hatch Act, simply underscores how greatly the
health care marketplace has changed since 1984. Today, there is a thriving
biotechnology industry in which the United States is the global leader. There
are scores of innovative biotechnology-derived drugs on the market.
To
preserve the balance between innovation and affordable access, I question
whether the correct policy is to ignore these changes and seek to narrow current
law. Indeed. there is every indication that we must anticipate the need for
competition and affordable access to the many new drugs being discovered through
biotechnology. When the patents protecting such biotechnology drugs expire,
surely we should ensure that consumers have timely access to competing versions
in the same manner in which they have access to generic versions of
chemically-based prescription drugs.
If this is where the marketplace is
heading, it seems that we should refrain from dramatic changes to the Bolar
exemption until we have established how to encourage generic competition to
biotechnology drugs. That is why I look forward to working with the FDA, as well
as the biotechnology and generic drug industries, in establishing the scientific
basis and conditions for fair and timely generic competition to biotechnology
drugs. If this is where the health marketplace is moving, this is where the law
should undoubtedly follow.
On behalf of myself and Congressman Stark, I
thank the Chairman for the opportunity to testify.
END
LOAD-DATE: July 2, 1999 
