Wall Street Journal Chronicles Debate Between Governors, Brand-Name Drug Makers over Patent Laws
The Wall Street Journal today chronicles the debate over brand-name prescription drug patent extensions, which many governors blame for "adding big bucks to their Medicaid costs." A bipartisan group of 10 governors has backed Business for Affordable Medicine, a coalition of employers and labor unions that hopes to block patent extensions for brand-name drugs under the 1984 Hatch-Waxman Act. In addition, the National Governors Association last month urged Congress to hold hearings on the issue. The Hatch-Waxman Act allows generic drug makers to market a version of a brand-name drug after a certain number of years and "bypass the sort of costly clinical research" that brand-name drug makers have to conduct on the treatments. However, the law also provided brand-name drug companies with a "slew of defenses to slow or block" generic competition (Adams/Harris, Wall Street Journal, 3/19). The law, for example, provides brand-name drug makers with three years of additional exclusive marketing rights when they find new uses for their drugs (California Healthline, 12/7/01). According to generic drug makers, brand-name pharmaceutical companies often file "frivolous" applications for patent extensions with the FDA, which can delay generic competition for up to 30 months. In addition, brand-name drug companies can file "citizen petitions" with the FDA that raise safety questions about generic rivals. The Journal reports that although the FDA "substantially rejected" 80% of the petitions filed between 1990 and 2000, the petitions delayed generic competition. Vermont Gov. Howard Dean (D) said that if brand-name drug makers receive patent extensions for all 17 drugs with patents set to expire between today and 2004, it would cost state Medicaid programs an additional $600 million per year. South Dakota Gov. William Janklow (R) said, "I think people are entitled to their patents, but I also think you have to play by the rules in life. If you don't, that's cheating, and that's what's happening right now."
Most brand-name pharmaceutical companies oppose drug patent law reforms and "insist" that the Hatch-Waxman Act provides the "financial incentives that companies need to keep doing costly research." The Pharmaceutical Research and Manufacturers of America has issued a "blistering statement" against drug patent law reforms and has promised to oppose the "theft of innovation" with "every ounce of strength [it] can muster." According to PhRMA, the share of drugs sold by generic drug makers has increased from 19% in 1984 to 49% last year as a result of the Hatch-Waxman Act, an indication that the law "has largely worked." However, generic drug companies point out that their "market penetration has stagnated" in the past few years as brand-name drug makers have become "increasingly aggressive" in efforts to extend their patents. Executives of three large brand-name drug makers -- Merck & Co., Pharmacia Corp. and Eli Lilly & Co. -- also have expressed concerns about "aggressive patent extension tactics," concerned that "perceived abuses" could lead to a "broader dismantling" of their patent protections and "privately suggest" that they could support a "crackdown" against some patent extension techniques.
Several key lawmakers have raised doubts about reforms to the Hatch-Waxman Act. A spokesperson for Rep. Billy Tauzin (R-La.), chair of the House Energy and Commerce Committee, which has jurisdiction over the issue, said that Tauzin would prefer to address the issue of increased drug costs "without reopening Hatch-Waxman." In addition, Sen. Edward Kennedy (D-Mass.), chair of the Senate Health, Education, Labor and Pensions Committee, "hasn't put it among his priorities either," the Journal reports. Some lawmakers who support reforms to the Hatch-Waxman law also have expressed concerns that brand-name drug companies, which have "invested a lot" in campaign contributions and lobbyists, would "manage to make the law more favorable for themselves." However, Sens. Charles Schumer (D-N.Y.) and John McCain (R-Ariz.) introduced legislation last year to reform drug patent laws, and last week, officials from several insurance and consumer groups met with House and Senate staffers to discuss a "strategy for passing the bill." Supporters hope that the election year will prompt lawmakers to create ways to lower drug costs for seniors. Chris Jennings, a health policy adviser to former President Bill Clinton and a consultant for the generic drug industry, said of lawmakers, "If you haven't delivered on a [Medicare] drug benefit, you need to have done something on cost containment" (Wall Street Journal, 3/19).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.