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[Page: S7908] GPO's PDF---
Mr. LEAHY. Mr. President, I have heard a lot of outrageous examples of greed in my life but one of the worst is where pharmaceutical giants pay generic drug companies to keep low-cost drugs from senior citizens and from families.
If Dante were still alive today I am certain he would find a special resting place for those who engage in these conspiracies.
The Federal Trade Commission and the New York Times deserve credit for exposing this problem. Simply stated: some manufacturers of patented drugs--often brand-name drugs--are paying millions each month to generic drug companies to keep lower-cost products off the market.
This hurts senior citizens, it hurts families, it cheats healthcare providers and it is a disgrace.
These pharmaceutical giants and their generic partners then share the profits gained from cheating American families.
The companies have been able to get away with this by signing secret deals with each other not to compete. My bill, which I am introducing today, will expose these deals and subject them to immediate investigation and action by the Federal Trade Commission, or the Justice Department. This solves the most difficult problem faced by federal investigators--finding out about the improper deals. This bill does not change the so-called Hatch -Waxman Act, it does not amend FDA law, and it does not slow down the drug approval process. It allows existing antitrust laws to be enforced because the enforcement agencies have information about deals not to compete.
Fortunately, the FTC was able to get copies of a couple of these secret contracts and instantly lowered the boom on the companies
Mr. President, I ask unanimous consent that an editorial in the July 26, New York Times, called ``Driving Up Drug Prices'' be printed in the RECORD.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
Driving Up Drug Prices
Two recent antitrust actions by the Federal Trade Commission and a related federal court decision have exposed the way some pharmaceutical companies conspire to keep low-priced drugs out of reach of consumers. Manufacturers of patented drugs are paying tens of millions of dollars to manufacturers of generic drugs if they agree to keep products off the market. The drug companies split the profits from maintaining a monopoly at the consumer's expense. The commission is taking aggressive action to curb the practice. It needs help from Congress to close loopholes in federal law.
Dissatisfied with the supply of generic drugs, Congress passed the Hatch -Waxman act in 1984 to encourage manufacturers to challenge weak or invalid patents on brand-name drugs. The act grants temporary protection from competition to the first manufacturer that receives permission from federal authorities to sell a generic drug before the patent on a brand-name drug expires. For 180 days, the federal government promises to approve no other generic drug.
But as reported Sunday by Sheryl Gay Stolberg and Jeff Gerth of The Times, drug companies are undermining Congress's intent. Hoechst Marion Roussel, the maker of drugs to treat hypertension and angina, agreed in 1997 to pay Andrx Pharmaceuticals to delay bringing its generic alternative to market. The commission brought charges against the companies last March and a federal judge declared last month in a private lawsuit that the agreement violated antitrust laws.
In a second case, Abbott Laboratories paid Geneva pharmaceuticals to delay selling a generic alternative to an Abbott drug that treats hypertension and enlarged prostates. Geneva's drug could have cost Abbott over 30 million a month in sales. In both cases, the manufacturer of the generic drug used its claim to the 180-day grace period to block other generic drugs from entering the market.
The drug companies deny that their agreements violate the antitrust laws, presenting them as private preliminary settlements between companies engaged in patent disputes. That is untenable. The agreements are overly broad, temporarily stopping all sales of generic drugs. Typically in settlement of a patent dispute, the company infringing on the patent would pay the patent holder. In these cases it is reversed, stunting competition. The agreements are also private, going into effect before a court reviews the public interest.
Not all private settlements are anti-consumer. That is why the commission has taken a careful case-by-case approach. It could use a little help from congress. The 180-day grace period was designed to encourage generics to enter the market. Since it is being manipulated to impede competition, the grace period needs to be fixed so that the production of generic drugs cannot be blocked by a single company that decides not to compete.
Mr. LEAHY. This editorial neatly summarizes the problem and concludes that the FTC ``is taking aggressive action to curb the practice. It needs help from Congress to close loopholes in federal law.''
My bill slams the door shut on would-be violators by exposing the deals to our competition enforcement agencies.
Under current law, manufacturers of generic drugs are encouraged to challenge weak or invalid patents on brand-name drugs so that consumers can enjoy lower generic drug prices.
Current law grants these generic companies a temporary protection from competition to the first manufacturer that gets permission to sell a generic drug before the patent on the brand-name drug expires.
This approach then gives the generic company a 180-day headstart on other generic companies.
That was a good idea--the unfortunate loophole exploited by a few is that secret deals can be made that allow the manufacturer of the generic drug to claim the 180-day grace period--to block other generic drugs from entering the market--while, at the same time, getting paid by the brand-name manufacturer to not sell the generic drug.
The bill I am introducing today will shut this loophole down for companies who want to cheat the public, but keeps the system the same for companies engaged in true competition with each other. This bill would give the FTC or the Justice Department the information it needs to take quick and decisive action against companies driven more by greed than by good sense.
I think it is important for Congress not to overreact in this case and throw out the good with the bad. Most generic companies want to take advantage of this 180-day provision and deliver quality generic drugs at much lower costs for consumers. We should not eliminate the incentive for them.
Instead, we should let the FTC and Justice look at every single deal that could lead to abuse so that only the deals that are consistent with the intent of that law will be allowed to stand.
This bill was quickly drafted because I wanted my colleagues to be able to look at it over the recess so that we can be ready to act when we get back in session.
I look forward to suggestions from other Members on this matter and from brand-name and generic companies who will work with me to make sure this loophole is closed. I am not interested in comments from companies who want to continue to cheat consumers.
I ask unanimous consent to print the bill in the RECORD.
There being no objection, the bill was ordered to be printed in the RECORD, as follows:
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION. 1. SHORT TITLE
This Act may be cited as the ``Drug Competition Act of 2000.''
SEC. 2. FINDINGS.
Congress finds that--
(1) prescription drug costs are increasing at an alarming rate and are a major worry of senior citizens and American families;
(2) there is a potential for drug companies owning patents on brand-name drugs to enter to private financial deals with generic drug companies in a manner that could tend to restrain trade and greatly reduce competition and increase prescription drug costs for American citizens; and
(3) enhancing competition between generic drug manufacturers and brand name manufacturers can significantly reduce prescription drug costs to American families.
SEC. 3. PURPOSE.
The purposes of this Act are--
(1) to provide timely notice to the Department of Justice and the Federal Trade Commission regarding agreements between companies owning patents on branded drugs and companies who could manufacture generic or bioequivalent versions of such branded drugs; and
(2) by providing timely notice, to--
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(A) enhance the effectiveness and efficiency of the enforcement of the antitrust laws of the United States; and
(B) deter pharmaceutical companies from engaging in anticompetitive actions or actions that tend to unfairly restrain trade.
SEC. 4. DEFINITIONS.
In this Act:
(1) AGREEMENT.--The term ``agreement'' means an agreement under section 1 of the Sherman Act (15 U.S.C. 1) or section 5 of the Federal Trade Commission Act (15 U.S.C. 45).
(2) ANTITRUST LAWS.-- The term ``antitrust laws'' has the same meaning as in section 1 of the Clayton Act (15 U.S.C. 12), except that such term includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section applies to unfair methods of competition.
(3) ANDA.--The term ``ANDA'' means an Abbreviated New Drug Application, as defined under section 505(j) of the Federal Food, Drug and Cosmetic Act.
(4) BRAND NAME DRUG COMPANY.--The term ``brand name drug company'' means a person engaged in the manufacture or marketing of a drug approved under section 505(b) of the Federal Food, Drug and Cosmetic Act.
(5) COMMISSION.--The term ``Commission'' means the Federal Trade Commission.
(6) FDA.--The term ``FDA'' means the United States Food and Drug Administration.
(7) GENERIC DRUG.--The term ``generic drug'' is a product that the Food and Drug Administration has approved under section 505(j) of the Federal Food, Drug and Cosmetic Act.
(8) GENERIC DRUG APPLICANT.--The term ``generic drug applicant'' means a person who has filed or received approval for an ANDA under section 505(j) of the Federal Food, Drug and Cosmetic Act.
(9) NDA.--The term ``NDA'' means a New Drug Application, as defined under 505(b) of the Federal, Food, Drug, and Cosmetic Act et seq. (21 U.S.C. 355(b) et seq.)
SEC. 5. NOTIFICATION OF AGREEMENTS AFFECTING THE SALE OR MARKETING OF GENERIC DRUGS.
A brand name drug manufacturer and a generic drug manufacturer that enter into an agreement regarding the sale or manufacture of a generic drug equivalent of a brand name drug that is manufactured by that brand name manufacturer and which agreement could have the effect of limiting--
(1) the research, development, manufacture, marketing or selling of a generic drug product that could be approved for sale by the FDA pursuant to the ANDA; or
(2) the research, development, manufacture, marketing or selling of a generic drug product that could be approved by the FDA;
both shall file with the Commission and the Attorney General the text of the agreement, an explanation of the purpose and scope of the agreement and an explanation of whether the agreement could delay, restrain, limit, or in any way interfere with the production, manufacture or sale of the generic version of the drug in question.
SEC. 6. FILING DEADLINES.
Any notice, agreement, or other material required to be filed under section 5 shall be filed with the Attorney General and the FTC not later than 10 business days after the date the agreements are executed.
SEC. 7. ENFORCEMENT.
(a) CIVIL FINE.--Any person, or any officer, director, or partner thereof, who fails to comply with any provision of this Act shall be liable for a civil penalty of not more than $20,000 for each day during which such person is in violation of this Act. Such penalty may be recovered in a civil action brought by the United States, or brought by the Commission in accordance with the procedures established in section 16(a)(1) of the Federal Trade Commission Act (15 U.S.C. 56(a)).
(b) COMPLIANCE AND EQUITABLE RELIEF.--If any person, or any officer, director, partner, agent, or employee thereof, fails to comply with the notification requirement under section 5 of this Act, the United States district court may order compliance, and may grant such other equitable relief as the court in its discretion determines necessary or appropriate, upon application of the Commission or the Assistant Attorney General.
SEC. 8. RULEMAKING.
The Commission, with the concurrence of the Assistant Attorney General and by rule in accordance with section 553 of title 5, consistent with the purposes of this Act--
(1) may require that the notice described in section 5 of this Act be in such form and contain such documentary material and information relevant to the agreement as is necessary and appropriate to enable the Commission and the Assistant Attorney General to determine whether such agreement may violate the antitrust laws;
(2) may define the terms used in this Act;
(3) may exempt classes of persons or agreements from the requirements of this Act; and
(4) may prescribe such other rules as may be necessary and appropriate to carry out the purposes of this Act.
SEC. 9. EFFECTIVE DATES.
This Act shall take effect 90 days after the date of enactment of this Act.
By Mr. ROBB:
S. 2994. A bill to amend the Internal Revenue Code of 1986 to provide tax incentives to encourage small business health plans, and for other purposes; to the Committee on Finance.
THE HEALTH INSURANCE EQUITY ACT
Mr. ROBB. Mr. President, I rise to introduce a new legislative proposal to help level the playing field for small businesses that try to provide health insurance for their employees and make health insurance more affordable for all Americans.
While our economy is the strongest it's ever been, the number of uninsured Americans has gone from 32 million in 1987 to more than 44 million today. And that number is rising. While our nation continues to forge ahead in improving the world's greatest health care system, we face the increasing problem of having a significant percentage of our population that has no way to access it.
One of the largest sectors of the uninsured is employees who work for small businesses. While small businesses are the lifeblood of our economy, they also face some of the greatest challenges--particularly when it comes to providing health benefits for their employees. While the number of uninsured among employees who work for companies with more than 500 people is 1 in 8, that number soars among companies with fewer than 25 employees--to 1 in 3. This is because large employers can spread the costs of providing health insurance among their multitude of employees, while smaller companies have a much more difficult task. We need to help small business owners--and the employees who work for them--better afford quality health insurance.
Today, I propose that we lend a hand to the hardworking small businessmen and women of America, and their employees, to help them erase the gap in coverage between large and small businesses. The legislation I am introducing--the Health Insurance Equity Act--will give small businesses with less than 50 employees a 20% tax credit toward the cost of buying health insurance for their employees. To encourage small businesses to pool together and take advantage of the same benefits that their larger counterparts have, the credit will increase to 25% if the businesses join new ``qualified health benefit purchasing coalitions'' that can help them easily administer their new health plans and negotiate better rates with insurers.
In addition, this legislation makes a change in the tax code to ensure that these new coalitions can enjoy the full benefit of charitable contributions from private foundations. While some private foundations have indicated that they are willing to help fund some of the start-up costs of health purchasing coalitions, current law does not specify that these sorts of contributions would qualify as a charitable donation. For this reason, private foundations have been reluctant to make grants or loans to these coalitions. The bill I am introducing today will clarify that aid to qualified health benefit purchasing coalitions are entirely tax-deductible, which can help encourage private foundations and other interested parties to help the coalitions with their important duties.
By helping people get better access to basic health insurance--before they get very sick--we can save money for both hospital and patient, while helping millions of Americans live more healthy lifestyles.
With that Mr. President, I send my legislation to the desk, and ask that it be appropriately referred. I also ask unanimous consent that it be printed in the RECORD. I yield the floor.
There being no objection, the bill was ordered to be printed in the RECORD, as follows:
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Health Insurance Equity Act of 2000''.
SEC. 2. CERTAIN GRANTS BY PRIVATE FOUNDATIONS TO QUALIFIED HEALTH BENEFIT PURCHASING COALITIONS.
(a) IN GENERAL.--Section 4942 of the Internal Revenue Code of 1986 (relating to taxes on failure to distribute income) is amended by adding at the end the following:
``(k) CERTAIN QUALIFIED HEALTH BENEFIT PURCHASING COALITION DISTRIBUTIONS.--
``(1) IN GENERAL.--For purposes of subsection (g) and section 4945(d)(5), a qualified health benefit purchasing coalition distribution by a private foundation shall be considered to be a distribution for a charitable purpose.
``(2) QUALIFIED HEALTH BENEFIT PURCHASING COALITION DISTRIBUTION.--For purposes of paragraph (1)--
[Page: S7910] GPO's PDF
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