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The SPEAKER pro tempore (Mr. LaHood). Does the gentleman from
[Page: H5309] GPO's PDF
Mr. GOSS. I regret I am unable to yield the additional 4 minutes.
The SPEAKER pro tempore. The gentleman is recognized for 1 minute.
PARLIAMENTARY INQUIRY
Mr. COBURN. Mr. Speaker, point of inquiry. Is it out of order to make a unanimous consent request outside of the rule for additional time on extension of the rule?
The SPEAKER pro tempore. The manager of the resolution must yield for that request and has not yielded. The gentleman is recognized for 1 minute.
Mr. COBURN. Mr. Speaker, we are having a debate today; and we have heard a lot of partisan bickering back and forth, and it is because what we are doing is the wrong thing, and the politics of Washington is claiming to fix a problem that is very real, but it is fixing the wrong problem. The problem is, there is no competition within the pharmaceutical industry and what is there is limited in its base. As we seek to solve the problem for the very seniors that need our help, if we do not solve the problem on competition, then we will, in fact, have wasted Medicare dollars and cost-shifted another large cost of health care to the private sector.
I would like to introduce into the RECORD the FTC Web site showing four pharmaceutical companies who have been paying their competitors not to bring drugs to market, costing the American consumers over $250 million a year. I would also enter into the RECORD various portions of the paper talking about the pricing of prescription drugs, not the availability but the pricing. If we fail to address that, we have shirked our duty completely. Neither the Republican or the Democrat bill does that.
Why the High Cost of Prescription Drugs Is a Problem We Can't Afford to Ignore
Spending on prescriptions rose a record 17.4% last year. Elderly patients saw the largest increases, with average prescription prices increasing 18% for women aged 70-79 and 20% for women 80 and older. Men in the same age groups fared a bit better, experiencing 9% and 11% increases, respectively. For all Americans, prescription spending averaged $387.09 per person in 1999, up from $329.83 in 1998.--Study by Express Scripts, a St. Louis-based pharmacy benefits manager, which examined claims data from more than 9 million patients, reflecting average wholesale prices, June 27, 2000.
Express Scripts projects that spending on prescription drugs will nearly double over the next five years, reaching $758.81 per person in 2004.--Wall Street Journal, June 27, 2000.
The history of Medicare shows that the federal government has seriously underestimated the future growth of the program. In 1964, the Johnson administration projected that Medicare in 1990 would cost about $12 billion (with an adjustment for inflation); the actual cost was $110 billion--almost a 1,000% cost underestimate. How much of a cost underestimate can we afford for prescription drugs?--The Origins of Medicare by Robert B. Helms, American Enterprise Institute, April 1999.
Express Scripts noted that the introduction of new drugs, such as the arthritis medicines Vioxx and Celebrex, contributed significantly to the rise in spending last year. However, roughly half of the total increase in drug spending was due to higher prescription costs.--New York Times, June 27, 2000.
Of the 50 top selling drugs for seniors in 1999; 11 increased at least 5 times the rate of inflation; 16 increased at least 3 times the rate of inflation; 33 increased at least 1.5 times the rate of inflation, and only 12 increased slower than the rate of inflation.--Families USA, April 2000.
Of the 50 top selling drugs for seniors between 1994 and 2000, 39 of which were marketed for all six years, 6 increased at least 5 times the rate of inflation; 11 increased at least three times the rate of inflation; 22 increased at least 2 times the rate of inflation; 30 increased at least 1.5 times the rate of inflation, and 37 increased faster than inflation.--Families USA, April 2000.
While prescription drugs accounted for about 5% of overall health care spending in 1992, some experts have predicted that that figure could rise to about 15% within 10 years.--Los Angeles Times, May 29, 2000.
Drug spending is increasing 15% to 20% a year even in well-run private health plans.--New York Times, May 15, 2000.
For 1999, drug spending is projected to have risen 14% to 18%, according to HCFA. A recent study by Families USA, a health-care advocacy group, said the average cost of the 50 drugs most used by the elderly rose 3.9% last year, outpacing the 2.2% inflation rate, and the prices of some medications jumped as much as 10%.--Wall Street Journal, May 11, 2000.
Pharmacia Corp., which markets a generic version of the drug called Toposar, reported a price of $157.65 for a 20-milligram dose in the 1999 industry guide. But the actual average wholesale price is $9.70, according to a government price list.--Wall Street Journal, June 2, 2000.
Today, federal and state investigators are threatening civil litigation against pharmaceutical makers that authorities believe have induced Medicare and Medicaid to overpay for prescription drugs by $1 billion or more a year.--Wall Street Journal, May 12, 2000.
In 1997, Zachary Bentley, an employee of a Florida company called Ven-A-Care that offered patients the option of receiving intravenous drugs in their homes rather than at a hospital, sent a toilet seat and an overpriced drug to HCFA. Bentley noted that Medicare was paying providers almost $428 a day for a product that could be bought for $49--proof, in Bentley's view, that the agency was wasting tax dollars as the Pentagon did with its high-priced toilet seats in the 1980s.--Wall Street Journal, May 12, 2000.
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FTC Charges Drug Manufacturers with Stifling Competition in Two Prescription Drug Markets
COMPLAINT FILED AGAINST HOECHST MARION ROUSSEL, INC. AND ANDRX CORP.; PROPOSED SETTLEMENT REACHED WITH ABBOTT LABORATORIES AND GENEVA PHARMACEUTICALS, INC.
COMPLAINTS CHARGE MULTI-MILLION-DOLLAR ARRANGEMENTS WERE DESIGNED TO KEEP GENERIC VERSIONS OF CARDIZEM CD AND HYTRIN OFF THE MARKET
The Federal Trade Commission today charged two drug makers, Hoechst Marion Roussel (now Aventis) and Andrx Corporation, with engaging in anticompetitive practices in violation of Section 5 of the FTC Act, alleging that Hoechst, the maker of Cardizem CD, a widely prescribed drug for treatment of hypertension and angina, agreed to pay Andrx millions of dollars to delay bringing its competitive generic product to market. The Commission also announced a proposed settlement with two other drug makers, Abbott Laboratories and Geneva Pharmaceuticals, Inc., resolving charges that the companies entered into a similar anticompetitive agreement in which Abbott paid Geneva substantial sums to delay bringing to market a generic alternative to Abbott's brand-name hypertension and prostate drug, Hytrin.
``The financial arrangements between the branded and generic manufacturers were designed to keep generic versions of Cardizem CD and Hytrin off the market for an extended period of time,'' said Richard Parker, Director of the FTC's Bureau of Competition. ``These types of agreements have the potential to cost consumers hundreds of millions of dollars each year, Parker noted. He further explained that ``the proposed consents with Abbot and Geneva will provide immediate guidance to the drug industry and the antitrust bar with regard to these kinds of arrangements, and the Hoechst-Andrx complaint will allow the Commission to further consider the issues as it examines the arrangement in that case in light of a record developed during an administrative hearing.''
Under legislation commonly known as the Hatch-Waxman Act, a company can seek approval from the Food and Drug Administration (FDA) to market a generic drug before the expiration of a patent relating to the brand name drug upon which the generic is based. Pursuant to this Act, the first company to file an Abbreviated New Drug Application (ANDA) with the FDA has the exclusive right to market the generic drug for 180 days. No other generic can gain FDA approval until this 180-day period expires. The purpose of the exclusivity period is to encourage generic entry.
To begin the FDA approval process, the generic applicant must: (1) certify in its ANDA that the patent in question is invalid or is not infringed by the generic product (known as a ``paragraph IV certification''); and (2) notify the patent holder of the filing of the ANDA. If the patent holder files an infringement suit against the generic applicant within 45 days of the ANDA notification, FDA approval to market the generic drug is automatically stayed for 30 months, unless, before that time, the patent expires or is judicially determined to be invalid or not infringed. This 30-month automatic stay allows the patent holder time to assert its patent rights in court before a generic competitor is permitted to enter.
Hoechst-Andrx complaint allegations
Hoechst sells Cardizem CD, a once-a-day diltiazem product used to treat hypertension and angina--chronic, severe chest pain due to a reduction in blood flow to the heart. The Hoechst product accounts for approximately 70 percent of all once-a-day diltiazem products sold in the United States. In September 1995, Andrx filed its ANDA with the FDA to manufacture and distribute a generic version of the drug, and, as the first to file, was entitled to the 180-day exclusivity right. Hoechst promptly sued Andrx for patent infringement, which triggered the 30-month stay on FDA approval of Andrx's ANDA. This 30-month period expired in July 1998.
In September 1997, the FTC's complaint alleges, Hoechst and Andrx entered into an agreement in which Andrx was paid to stay off the market. Under the agreement, Andrx would not market its product when it received FDA approval, would not give up or transfer its 180-day exclusivity right, and would not even market a non-infringing generic version of Cardizem CD.
In exchange, Hoechst paid Andrx $10 million per quarter, beginning in July 1998,
[Page: H5310] GPO's PDF
According to the FTC, the agreement acted as a bottleneck that prevented any other potential competitors from entering the market because: (1) Andrx would not market its product and thus its 180 days of exclusivity would not begin to run; and (2) other generics were precluded from entering the market because Andrx agreed not to give up or transfer its exclusivity.
According to the complaint, Hoechst's agreement with Andrx had the ``purpose or effect, or the tendency or capacity'' to restrain trade in the market for once-a-day diltiazem and in other narrower markets. Entry of a generic into the market immediately would have introduced a lower-cost alternative and would have started the 180-day waiting period.
The complaint alleges that the agreement between Hoechst and Andrx constituted an unreasonable restraint of trade; that Hoechst attempted to preserve its monopoly in the relevant market; that Hoechst and Andrx conspired to monopolize the relevant market; and that the acts and practices are anticompetitive and constitute unfair methods of competition, all in violation of Section 5.
Abbott-Geneva: Complaint allegations
Hytrin is the brand-name for terazosin HCL, a prescription drug marketed and sold by Abbott Laboratories. This drug is used to treat hypertension and benign prostatic hyperplasia (``BPH'' or enlarged prostate). Both hypertension and BPH are chronic conditions affecting millions of Americans each year, many of them senior citizens. According to the complaint, Abbott paid Geneva $4.5 million per month to keep Geneva's generic version of Hytrin off the U.S. market. This agreement also resulted in a significant delay in the introduction of other generic versions of Hytrin because Geneva was the first filer with the FDA and other companies could not market their generic products until 180 days after Geneva's entry.
In January 1993, Geneva filed an ANDA with the FDA for a generic version of terazosin HCL in tablet form; Geneva filed a similar ANDA for a generic version of terazosin in capsule from in December 1995. In April 1996, Geneva filed a Paragraph IV certification with the FDA for both ANDAs.
On June 4, 1996, Abbott sued Geneva, claiming patent infringement by Geneva's generic terazosin HCL tablet product. Abbott mistakenly made no such claim against Geneva's capsule version of the product, even though both tablets and capsules involved the same potential infringement issues. Pursuant to the Hatch-Waxman Act, Ab bott's lawsuit triggered a 30-month stay of final FDA approval of Geneva's generic tablet ANDA, until December 1998. Because no similar lawsuit was filed regarding the generic capsule, the FDA's review and approval process regarding this product continued.
The complaint alleges that Geneva, confident that it would
win its patent infringement dispute with Abbott, planned to bring its generic
terazosin HCL capsule to market as soon as possible after FDA approval. As the
first filer for approval of generic Hytrin capsules, Geneva would enjoy the
180-day exclusivity period provided under the Hatch-Waxman Act. In exchange, the complaint alleges, Abbott would pay Geneva
$4.5 million per month until the district court ruled on the ongoing patent
infringement dispute. If the court found that Geneva's tablet product did not
infringe any ``valid and enforceable claim'' of Abbott's patent, Abbott agreed
to pay $4.5 million monthly after that decision into an escrow account until the
final resolution of the litigation. Under the agreement, the party ultimately
prevailing in the patent litigation would receive the escrow funds. The court
hearing the patent infringement case was not made aware of the agreement between
the companies.
In accordance with the agreement, Geneva did not introduce
its generic capsules in April 1998, and instead began collecting the $4.5
million monthly payments from Abbott, which exceeded the amount Abbott expected
Geneva to receive from actually marketing the drug. On September 1, 1998, the
district court granted Geneva's motion for summary judgment in its patent
litigation with Abbott, invalidating Abbott's patent. Despite this victory,
Geneva still did not enter the market with its generic product, content to have
Abbott make monthly $4.5 million payments into the escrow account. On July 1,
1999, the Court of Appeals for the Federal Circuit affirmed the decision
invalidating Abbott's patent. Under the agreement, Geneva was to await Supreme
Court consideration of the matter before entering. According to the complaint,
Geneva did not enter until August 13, 1999, when, aware of the Commission's
investigation, it canceled its agreement with Abbott.
The complaint alleges that Abbott's agreement with Geneva
had the ``purpose or effect, or the tendency or capacity'' to restrain
competition unreasonably and to injure competition by preventing or discouraging
the entry of competition into the relevant market. As a result of the
anticompetitive behavior, the complaint alleges, the lower-priced generic
version of Hytrin was not made available to consumers, pharmacies, hospitals,
insurers, wholesalers, government agencies, managed care organizations and
others during the time the agreement was in place.
Entry by a generic competitor would have had a significant
procompetitive effect. The complaint alleges that the agreement between Abbott
and Geneva constituted an unreasonable restraint of trade; that Abbott
monopolized the relevant market; that Abbott and Geneva conspired to monopolize
the relevant market; and that the acts and practices are anticompetitive in
nature and tendency and constitute unfair methods of competition, all in
violation of Section 5.
The proposed consent orders Under the terms of the proposed settlement, Abbott and
Geneva would be barred from entering into agreements pursuant to which a
first-filing generic company agrees with a manufacturer of a branded drug that
the generic company will not (1) give up or transfer its exclusivity or (2)
bring a non-infringing drug to market. In addition, agreements involving
payments to a generic company to stay off the market would have to be approved
by the court when undertaken during the pendency of patent litigation (with
notice to the Commission), and the companies would be required to give the
Commission 30 days' notice before entering into such agreements in other
contexts. In addition, Geneva would be required to waive its right to a 180-day
exclusivity period for its generic terazosin HCL tablet product, so other
generic tablets could immediately enter the market.
The proposed orders, which would expire in 10 years, also
contain certain reporting and other provisions designed to help the Commission
monitor compliance by the companies.
The Commission vote to issue the administrative complaint
against Hoechst/Andrx was 5-0. The vote to accept the proposed consent orders
with Abbott and Geneva was 5-0.
In a unanimous statement, the Commissioners said: ``These
consent orders represent the first resolution of an antitrust challenge by the
government to a private agreement whereby a brand name drug company paid the
first generic company that sought FDA approval not to enter the market, and to
retain its 180-day period of market exclusivity. Because the behavior occurred
in the context of the complicated provisions of the Hatch-Waxman Act, an d becau se this is the first government
antitrust enforcement action in this area, we believe the public interest is
satisfied with orders that regulate future conduct by the parties. We recognize
that there may be market settings in which similar but less restrictive
arrangements could be justified, and each case must be examined with respect to
its particular facts.
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