12:00 AM
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Oct 28, 2002
 |  BioCentury  |  Politics, Policy & Law

Bush's generics gambit

There is widespread agreement inside the Washington Beltway that the White House made a brilliant political move last week when it proposed to close legal loopholes used by pharmaceutical companies to extend the market exclusivity of drugs going off patent. According to critics, the proposed new rules for generics are more likely to affect the November elections than they are to be enacted. The rulemaking takes much of the punch away from widespread concerns about prescription drug prices - one of the Democrats’ most potent election issues - and allows Republicans to rebuff charges that they have been corrupted by the drug industry’s enormous campaign contributions. In the proposed rule announced by President Bush and published last week, the administration would limit the number of times an innovator company can extend its market exclusivity once a would-be generic competitor has filed an ANDA (see Online Links, A10). In remarks delivered at the White House, Bush emphasized that the changes would save consumers money. "By cutting out delays and maneuvering, our reforms will yield cost savings of more than $3 billion a year. Those savings will come to employer health plans, to state Medicaid programs and to seniors when they buy medicines on their own," he said. FDA must allow 60 days for public comments, may revise the rule in response to the comments, and is likely to face court challenges from pharmaceutical companies. However, Republican candidates immediately started citing the putative cost savings from increased generic competition in speeches and press releases, as if it were certain that the change will take effect soon. Bush said the proposal is a response to a Federal Trade Commission report in July that highlighted allegations that pharma companies abuse provisions in the Hatch-Waxman Act that allow a manufacturer to obtain a 30-month stay on the introduction of a generic drug. The stay is intended to give an innovator time to contest a generic company’s assertion that all patents pertinent to its version of a drug have expired. Since 1992, FDA has interpreted Hatch-Waxman to allow an innovator to trigger additional 30-month stays by listing new patents in the agency’s Orange Book within 45 days of an ANDA filing. Although the vast majority of drugs go off patent without any manufacturers attempting to obtain multiple stays, the practice has attracted the attention of the FTC, members of Congress and consumer advocates because it is being used with increasing frequency, and because the drugs involved were blockbusters. According to the FTC, there were eight multiple 30-month stays from 1992 to 2001, six of which occurred after 1998. Some of the patent claims used to trigger stays have involved the use of tinted packaging to protect the drug from light, or a minor reformulation. "In all four of the cases so far with a court decision on the validity or infringement of a later-issued patent, the patent has been found either invalid or not infringed by the ANDA," the FTC reported. Nonetheless, according to the FTC, innovator companies have benefited from extended periods of market exclusivity, delaying the launch of generics by an average of more than 23 months while accumulating an average of $1.4 billion in sales (see "Keeping Generics at Bay"). The Bush proposal would limit manufacturers to a single automatic 30-month stay. It also would prohibit listing patents for drug packaging, drug metabolites, and intermediate forms of a drug in the Orange Book. Companies would be required to file statements certifying that patents listed in the Orange Book are valid and meet the new criteria. The proposed rule does not include a number of provisions in S. 812, generic drug reform legislation that passed the Senate this year but was bottled up in the House. The White House said it opposed the bill because it "would unnecessarily encourage litigation around the initial approval of new drugs and would complicate the process of filing and protecting patents on new drugs" (see BioCentury Extra, Thursday July 31). The Biotechnology Industry Organization based its opposition to S. 812 on assertions that it would facilitate the approval of generic versions of biologics and could cause companies to lose patent rights if they failed to comply with administrative technicalities. The Pharmaceutical Research and Manufacturers Association, which lobbied vigorously against S. 812, "has...

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