Coalition Says Changes in 1984 Hatch-Waxman Act Could Save States $600M in Rx Drug Costs Over Three Years

Business for Affordable Medicine, a coalition of governors, businesses and labor unions, said yesterday that changes to the 1984 Hatch-Waxman Act could save state Medicaid programs $600 million in prescription drug costs over the next three years, USA Today reports (Appleby, USA Today, 2/26). The Hatch-Waxman law allows brand-name drug companies to hold patents on drugs for a certain number of years before generic drug makers can market the medicines (California Healthline, 1/9). The law grants pharmaceutical companies a number of reasons to delay the introduction of generic versions of their drugs (Fulton, CongressDaily, 2/25). The coalition seeks to prevent drug makers from using provisions in the Hatch-Waxman law to fight patent expirations. Although it did not specify how it would change the law, the coalition said that changes could save states $600 million over the next three years on the cost of 17 brand-name drugs with patents set to expire in the next few years, including the allergy medicine Claritin, the asthma drug Flovent and the cancer treatment Lupron. The savings would come when the drugs lose their patents and less expensive generic versions became available (USA Today, 2/26). According to the coalition, states spent about $1.2 billion on the 17 drugs in 2001 (CongressDaily, 2/25). The coalition includes the governors of Alabama, Hawaii, Louisiana, Missouri, New Hampshire, Vermont, Washington and West Virginia. In addition, the coalition includes employers such as General Motors Co., Georgia-Pacific and Eastman Kodak Co. and the Ohio and Utah state chapters of the AFL-CIO.

The coalition has asked Congress to hold hearings on the law to "determine if there are provisions which are contributing to the high cost of prescription drugs" (USA Today, 2/26). One provision in the law, for example, awards pharmaceutical companies that claim generic drug makers violated their patents a 30-month delay on approval of generic versions of their drugs (Hastings, Manchester Union Leader, 2/26). Sens. John McCain (R-Ariz.) and Charles Schumer (D-N.Y.) introduced a bill (S 812) last year to address the issue. In addition, CongressDaily reports that the House Energy and Commerce Committee is expected to reauthorize the Prescription Drug User Fee Act, which could "serve as a vehicle" for drug patent legislation (CongressDaily, 2/25). Under that law, last renewed in 1997, the FDA charges drug makers a fee in exchange for an expedited review process (California Healthline, 1/28). Scott Ingham, executive director of the coalition, said, "What we're saying is fair is fair. When the patent is up, enough is enough" (USA Today, 2/26). According to Vermont Gov. Howard Dean (D), a member of the coalition, "We're not after drug company profits ... we are after abuse of a law" (CongressDaily, 2/25). New Hampshire Gov. Jeanne Shaheen (D), another coalition member, added, "It's time we make sure that when drug patents expire, they really expire" (Manchester Union Leader, 2/26).

The Pharmaceutical Research and Manufacturers of America said that reforms to the Hatch-Waxman law would reduce revenue for drug makers and "money needed for research and discovery of new medicines." Richard Smith, vice president of policy for PhRMA, said, "It would be a devastating blow to America's patients." He said that the law has helped increase the percentage of prescriptions written for generic drugs from 18% to 47% (USA Today, 2/26). According to Smith, the coalition proposes to "put a dagger in the heart of Hatch-Waxman" (CongressDaily, 2/25).

Regarding yesterday's "demand" by governors that the Bush administration and Congress "take immediate action to slow the explosive growth" of Medicaid, NPR's "Morning Edition" today interviewed Kentucky Gov. Paul Patton (D) and Arkansas Gov. Mike Huckabee (R) on that and other subjects. The full segment will be available in RealPlayer Audio at http://search.npr.org/cf/cmn/cmnpd01fm.cfm?PrgDate=02/26/2002&PrgID=3 after noon ET (Neary, "Morning Edition," NPR, 2/26).