AMNews: May 13, 2002. Patent law's impact on patients debated ... American Medical News

Patent law's impact on patients debated

Lawmakers, FTC probe what they see as anti-competitive practices by brand-name drug manufacturers.

By Markian Hawryluk, AMNews staff. May 13, 2002.

Washington -- Senators are trying to decide which side to support -- Marion Wolff's or Shelbie Oppenheimer's -- in a congressional debate over drug patent laws.

Wolff, a retired mathematics teacher, was diagnosed with gastritis and Barrett's esophagus. She spends nearly $1,200 a year of her own money to purchase Prilosec (omeprazole) to prevent her condition from developing into cancer of the esophagus.

Oppenheimer is waiting for a cure for amyotrophic lateral sclerosis. Without treatment, most ALS patients die two to five years after diagnosis.

Wolff would like to see a generic version of Prilosec hit the market. The drug's manufacturer, AstraZeneca, is vigorously defending its patents in suits against 13 generic manufacturers.

"It infuriates me to know that dozens of lawyers are busy exploiting legal loopholes in the patent laws to postpone the marketing of generic drugs at the expense of people like me," Wolff told senators at a recent hearing.

On the other side of the issue is Oppenheimer, who is worried that opening the market to greater generic competition will stifle research for an ALS cure. "I want innovative companies to have the desire to apply their skills to ALS drug development, and I want their business considerations to be protected," she said at the hearing

Drug costs rose 17% in 2001.

As escalating drug costs threaten the viability of private health plans, state Medicaid budgets and even the potential Medicare outpatient prescription drug benefit, Congress is feeling the pressure to choose between Wolff and Oppenheimer soon.

At issue is the 1984 law known as the Hatch-Waxman Act that attempted to strike the balance between patent protection and generic access. The measure has been credited with increasing generic penetration from less than 20% to almost 50% of U.S. prescriptions. But recently generic manufacturers have accused brand-name manufacturers of shady maneuvers to keep them out of the market. As pharmaceuticals continue to add costs to the health care system, those arguments are finding their mark.

Drug costs rose 17% in 2001 -- due to both increased utilization and price inflation -- and are expected to grow 12% annually over the next 10 years unless changes are enacted. Some studies suggest generics could save Americans $8 billion to $10 billion a year.

"I support the right of pharmaceutical manufacturers to have their legitimate patents protected and to make a profit with them," said Sen. Byron Dorgan (D, N.D.). "But these allegations that some drug companies file frivolous patents and infringement suits with the intent to delay generic competition and extending brand monopolies are serious."

The Federal Trade Commission is investigating the practice of listing additional drug patents when the original patent is due to expire. Last month, it announced a settlement in such a case. The FTC claimed that Biovail Corp. unlawfully acquired an exclusive patent license and wrongfully listed the patent in the "Orange Book" to protect its monopoly in the market for Tiazac (diltiazem hydrochloride), a drug used to treat high blood pressure and chronic chest pain. The proposed consent order calls for Biovail to divest part of its exclusive rights on the drug.

Under Hatch-Waxman, brand-name manufacturers must list the patents that apply to each drug. Rather than requiring a generic to repeat the extensive and costly new drug application process, it allows the company to incorporate the original manufacturer's safety and efficacy data by showing the generic drug is equivalent to the brand-name product.

Generics could save Americans $8 billion to $10 billion a year.

Generics must certify equivalency for every patent listed for a drug, or assert that a patent is invalid or not infringed. If the original manufacturer sues to challenge those assertions, it triggers a 30-month protection against generic competition.

By timing the addition of new patents, pharmaceutical manufacturers have been able to extend the patent protection well beyond the original patent expiration date, critics charge.

"If a brand company strategically manages the timing of its patent applications, it can stack multiple, 30-month stays on top of each other and keep competition out of market indefinitely, regardless of the merits of the patent case," said Kathleen Jaeger, president and CEO of the Generic Pharmaceutical Assn.

Reform proponents point to GlaxoSmithKline's Paxil (paroxetine hydrochloride). In 1998, the company sued the first applicant seeking to market a generic version of the drug, whose patent was due to expire in 2006. During the ongoing litigation, Glaxo has now added nine additional patents on Paxil, the last of which is set to expire in 2021.

That's not what Hatch-Waxman intended, FTC Chair Timothy Muris said. The FTC has filed suit against three brand-name manufacturers that it charges paid generic companies not to compete. Two of the three cases have been settled.

Because the revenue lost to generic competition is often greater than the profit a generic manufacturer can garner, the brand-name manufacturer can essentially purchase additional market exclusivity, critics say.

Last year, Sens. John McCain (R, Ariz.) and Charles Schumer (D, N.Y.) introduced a bill that would revisit the Hatch-Waxman Act. Among other provisions, it would eliminate the automatic 30-month stay and require pharmaceutical companies to seek an injunction to prevent generics from marketing the drug before the patent litigation is resolved. The bill would also allow other generic manufacturers to step in if a drug company paid a generic competitor not to compete.

Manufacturers push for status quo

Pharmaceutical manufacturers counter that changes to Hatch-Waxman are unwarranted. Out of more than 8,000 generic applications filed with the FDA since the act was passed, fewer than 500 raised any patent issues, industry sources said. And of those 500 patent disputes, only three have been challenged by the FTC.

Greg Glover, MD, an attorney in the Washington, D.C., office of Ropes & Gray, who testified on behalf of the Pharmaceutical Research and Manufacturers of America, said those three cases would have violated antitrust and patent laws whether Hatch-Waxman existed or not. The McCain-Schumer bill would not have addressed the problems in those three cases, he added.

Dr. Glover said eliminating the 30-month stay would erode innovators' intellectual property protection. The bill would also threaten patient safety by allowing the approval of generics that do not duplicate their referenced drugs, he said.

While patent laws were intended to provide a 20-year protection, most industries enjoy an average of 18.5 years of patent protection. Because of the lengthy research, testing and filing requirements for prescription drug development, pharmaceuticals introduced in the 1990s had an average effective patent life of only 11.5 years, Dr. Glover said.

PhRMA recently launched an ad campaign touting the results of a physician survey on patent protection issues. The PhRMA-funded survey found that two-thirds of physicians felt weakening existing patent protection would hurt drug research and development. About 69% said it was realistic to fear that pharmaceutical companies would raise prices to recover their costs in fewer years if patent protections were shortened.

GOVERNMENT & MEDICINE

Patent law's impact on patients debated

Lawmakers, FTC probe what they see as anti-competitive practices by brand-name drug manufacturers.

Manufacturers push for status quo