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