Copyright 1999 Federal News Service, Inc.
Federal News Service
AUGUST 4, 1999, WEDNESDAY
SECTION: IN THE NEWS
LENGTH:
1794 words
HEADLINE: PREPARED TESTIMONY OF
SENATOR
HOWARD M. METZENBAUM
(RET.),
CHAIRMAN,
CONSUMER FEDERATION OF
AMERICA
SUBJECT - S. 1172, THE DRUG PATENT TERM RESTORATION
REVIEW
PROCEDURE ACT OF 1999
BEFORE THE SENATE COMMITTEE ON THE
JUDICIARY
BODY:
TESTIMONY OF SENATOR HOWARD
M. METZENBAUM (Ret.), CHAIRMAN, CONSUMER FEDERATION OF AMERICA, REGARDING S.
1172, THE DRUG PATENT TERM RESTORATION REVIEW PROCEDURE ACT OF 1999, BEFORE THE
COMMITTEE ON THE JUDICIARY, UNITED STATES SENATE AUGUST 4, 1999
Good
morning, Mr. Chairman, Senator Leahy and members of the Committee. I appreciate
your invitation to offer my comments regarding this legislation. My name is
Howard M. Metzenbaum and I now serve as Chairman of the Consumer Federation of
America (CFA). CFA is a non- profit association of some 240 pro-consumer
organizations, with a combined membership of over 50 million Americans. CFA was
founded in 1968 to advance the consumer interest through advocacy and education.
For 19 years in the U.S. Senate, I opposed patent extensions, even going so
far as to use or threaten to use the Filibuster on many occasions. The
organization for which I speak today, CFA, has worked very hard to improve
access to affordable prescription drugs for all Americans. Unfortunately, the
legislation before you today moves in the opposite direction. At a time when
Americans are calling on Congress to take decisive action to make prescription
drugs more affordable, S.1172 will place an additional financial burden on
American consumers and the health system. The bill is essentially a tax on the
uninsured, the poor, the sick and the elderly. I strongly urge you to reject it.
The bill is also the latest attempt by the drug manufacturer Schering-
Plough to protect its lucrative monopoly and achieve a patent extension for its
best-selling antihistamine, Claritin. Last year, CFA helped defeat an attempt by
Schering-Plough to get a backdoor patent extension by attaching it to the
omnibus appropriations bill. Schering-Plough made similar efforts in 1997 and
1996.
The Hatch-Waxman Act
Senator Hatch, you provided
great and wise leadership when you joined with Congressman Waxman in authoring
the Drug Price Competition and Patent Restoration Act of 1984, also known as the
Hatch-Waxman Act. It represents a careful balancing act. It was
designed to increase access to affordable, generic drugs, while insuring that
drug manufacturers have adequate patent protection to justify substantial
investment in research and development.
In other words, the Act promotes
innovation and affordability. And it has helped bring down drug prices. The
Congressional Budget Office estimated in 1998 that buyers saved roughly $8
billion to $10 billion in 1994 alone in pharmacy purchases, by substituting
generic for brand-name drugs. At the same time, the wider availability of
generic drugs certainly has not affected the profitability of drug
manufacturers.According to researchers at Boston University, the pharmaceutical
industry was the most profitable in the U.S. in 1998 and has been so for the
last thirty years.
Unfortunately, S.1172 would upset the careful balance
achieved by the HatchWaxman Act by allowing the manufacturers of Claritin and
six other "pipeline drugs" to petition the Patent and Trademark Office (PTO) for
additional patent life. If the threeyear extensions are granted--a likely
outcome under the terms of the bill--the cost will be an additional $2.2 to $4.5
billion. It is unthinkable that Congress should consider a patent extension for
Schering-Plough's blockbuster drug Claritin, which had sales of $1.8 billion in
1998. That's nearly $5 million in sales each and every day.
The
Hatch-Waxman Act made allowances for drugs already in the FDA
review "pipeline" at the time of enactment by deliberately granting two
additional years of patent protection, instead of the five years granted to
drugs approved after 1984. After all, the purpose of patent protection is to
provide drug manufacturers with an incentive to pursue future research and
development for new drugs, not to increase profits on existing drugs. At the
time the Hatch-Waxman Act was enacted, drug manufacturers had
already invested heavily in research and development for Claritin and the other
pipeline drugs. Moreover, Claritin received an additional 22.5-month patent
extension in 1994 under the General Agreement on Tariffs and Trade.
Americans Need Access to Affordable Drugs
As I've said already, this
bill couldn't come at a worse time for Americans who desperately need access to
affordable drugs. I'm sure that all of the members of this committee are aware
of the scope of the problem, but let me provide you with a few "hot off the
presses" statistics from the publication, "Affordable Medications for Americans:
Problems, Causes and Solutions." This report was released just last week by Alan
Sager and Deborah Socolar, researchers at the Access and Affordability
Monitoring Project (AAMP) of the Boston University School of Public Health.
-- Roughly 70 million Americans of all ages--about one in four--have no
prescription drug coverage, according to AAMP estimates. Under- insurance for
medications is also rising.
-- Retail prescription drugs will consume 8.4%
of U.S. health spending in 1999, up from 7.2% in 1997.
-- Prescription drug
spending is rising about three times as fast as overall health costs.
Prescription drug prices are rising 2.4 times as fast as the overall Consumer
Price Index, from April 1998 to April 1999.
-- In 1998, pharmaceuticals were
the most profitable industry in the U.S. in return on equity, on revenue and on
assets. In fact, drug manufacturing has been the most profitable U.S. industry
over the past thirty years. The median return on equity was 1.5 times the all-
industry in the 1970s and 1980s, increasing to 2.3 times the industry average in
the 1990s.These statistics provide compelling evidence of the need for more
affordable prescription drugs, and of the fact that the drug manufacturing
industry is in no need of the unjustifiable windfall that this bill would
provide.
Specific Concerns with S.1172
Although Senator Torricelli
deserves credit for making this legislation somewhat less problematic than its
House counterpart, H.R. 1598, it is still fatally flawed.
1. S. 1172 would
turn the intent of patent protection on its head. Patent life is intended to
encourage research and development before a drug is granted approval, not to
reward a drug manufacturer with additional profits after the drug comes to
market. Despite the elevated rhetoric about intellectual property rights and FDA
review timelines and procedures that you will hear this morning, this bill is
really about one thing: protecting Schering Plough's lucrative monopoly on
Claritin.
The irony is that Claritin has undoubtedly earned back the
investment made by its manufacturer in research and development many times over.
Moreover, as mentioned above, Claritin has already received patent extensions of
nearly four years.
2. S. 1172 could cost consumers and the health system
billions of dollars. A 1996 Congressional Research Service report found that
generic competition reduced the price of a drug between 30 and 60 percent.
According to an analysis prepared by Public Citizen, this would mean savings on
Claritin of between $1.6 billion and $3.2 billion over three years. Savings on
all seven "pipeline" drugs would be between $2.2 billion and $4.5 billion over
three years. Some consumers, especially older Americans, will pay hundreds of
dollars a year more in out-of-pocket costs.
3. S. 1172 would cut the agency
with the most expertise on drug review, the FDA, out of the decision-making
process. The PTO is not equipped by experience or training to make a judgment
call in this area. Questions involving the drug review process are well beyond
its area of expertise. Right now, the PTO performs a function regarding
prescription drug patent disputes that can only be characterized as ministerial.
Although the PTO makes a final judgment on patent extension, the entire decision
is based on key determinations made by the FDA. The FDA's determinations involve
issues such as a drug's eligibility for patent extension, the appropriate length
of extension based on the regulatory review period, and whether the manufacturer
acted with "due diligence" during the FDA review process. If a "due diligence"
determination is challenged, the FDA will make a determination on the validity
of the challenge and then convene a hearing to consider appeals. S. 1172, on the
other hand, would hand this decision-making authority over to an agency with no
experience in drug review, the PTO.
4. S. 1172 mandates a review process
that is biased in favor of the drug manufacturer. Although the review process in
S.1172 is less flawed than that outlined in H.R.1598, the bill's short decision-
making timelines and narrow criteriaare still biased toward approval of patent
extension. For example, while ostensibly requiring the Commissioner of the PTO
to consider "public interest and fairness", S. 1172 defines those terms to
exclude consideration of the consumer's interest in lower prices, or the
negative impact of high prescription drug costs on taxpayers and the health care
system, when the Commissioner decides whether to grant patent extension
approval. The bill also automatically grants an extension to drugs for which the
patent expires during the bill's review process. Even if the application is
denied, the applicant is authorized to apply to the Court of Appeals to continue
the extension pending judicial review. All the dice are loaded to keep the
patent extant while the appellate process drags on.
5, S.1172 could subject
Congress to an onslaught of "copy cat" legislation. Passage of S.1172 will serve
as a bad precedent for drug manufacturers who will want to push Congress to pass
similarly unjustifiable patent extensions. If it is good for one, why not for
all?
You probably know that the General Accounting Office is investigating
allegations that Schering-Plough may have contributed to the delay in approval
of Claritin at the FDA. This delay is obviously the basis for Schering Plough's
claim that they deserve a patent extension. As you have heard from my testimony,
CFA believes that using an FDA delay as justification for this legislation, no
matter what the cause, represents a serious misreading of the
Hatch-Waxman Act. This legislation should be rejected outright
as unjustifiable and costly to consumers.
In closing, let me thank both
Senators Hatch and Leahy again for the opportunity to offer our comments on this
misguided legislation. I urge you both to continue your high-profile leadership
on the issue of affordable prescription drugs by vigorously opposing this bill.
It will promote high prescription drug prices and deny your constituents---our
members--timely access to more affordable generic medicines.
Thank you.
END
LOAD-DATE: August 5, 1999
