Consumers Union Supports The "Greater Access To Affordable Pharmaceuticals (Gaap) Act"

CONSUMERS UNION SUPPORTS THE "GREATER ACCESS
TO AFFORDABLE PHARMACEUTICALS (GAAP) ACT"

This legislation will prevent brand name companies from employing many anticompetitive tactics that prevent cheaper generic alternatives from coming to market. The Senate version of the bill, S. 812, is co-sponsored by Senators Charles Schumer and John McCain. The House version of the bill, H.R. 1862, is co-sponsored by Representatives Sherrod Brown and Jo Ann Emerson.

Health care costs have been spiraling out of control for consumers and employers, with prescription drug spending now the fastest-growing part of these costs.(1) From 1990 to 2000, per capita spending on prescription drugs increased by 206.6%.(2) Between 1999 and 2000 alone, prescription drug spending increased by 17.3% -- the sixth year of double-digit increases.(3)

In 1984, the Hatch-Waxman patent reform law sought to strike a balance between drug companies that wanted increased patent life due to the long time it took for FDA to approve a new drug, and generic companies that wanted to increase competition by bringing generic alternatives to market. Since enactment, brand name drug companies have taken advantage of loopholes that allow them to extend their patents and monopolistic prices beyond what the law intended. These anticompetitive activities have unfairly delayed the introduction of generic drugs, and have denied consumers significant cost savings available with generic alternatives. For example, in 2000, the average retail price of a prescription for a brand name drug was more than 3 times the price of a generic drug ($65.29 vs. $19.33).(4) The top 20 drugs in 2000 by dollar sale were brand name.(5) Wider availability of generics would also, among other benefits, help make a meaningful Medicare drug benefit an achievable goal.

The GAAP Act will improve generic drug makers' ability to bring products to market unhindered by anticompetitive tactics. The legislation would make the following improvements:

1. The bill would stop the filing of frivolous citizen petitions with the U.S. Food and Drug Administration ("FDA") designed to delay generic drug approval.

Filing citizen petitions has been an important method for the public to raise concerns about FDA-regulated products -- but the process has been subject to abuse. This legislation would require an entity submitting a citizen petition to certify that the petition is well grounded in fact, that all relevant information has been included, and that it has not been submitted for an improper purpose -- such as the improper delay of a generic drug application. In addition, the bill directs the Federal Trade Commission (FTC) to investigate citizen petitions that may have been submitted for anticompetitive purposes.

2. The bill addresses wrongful patent filings designed to prevent generic competition.

Hatch-Waxman sought to assure brand name drug companies that their patented products would not be infringed upon by generic drug makers who "jumped the gun" and introduced a competing product before the drug patent had expired. The law requires the FDA to stay approval of any generic drug for 30 months if the brand name company sues the generic drug maker for patent infringement. Brand name companies have improperly claimed additional patents for their products (often for non-essential features of the drug product, such as color or shape of pill), and then brought patent lawsuits to trigger 30 additional months of competition-free sales. The bill would eliminate the requirement that the FDA stay approval of the generic drug. In addition, before a generic drug company is sued, the bill will allow the company to seek a court judgment that bringing its product to market will not infringe on the patent of the brand name drug company.

3. The bill would prevent brand name companies from delaying approval of generic drugs by challenging the "sameness" or "bioequivalence" of generic products.

FDA will only approve a generic drug if it is found to be "substantially equivalent" or "bioequivalent" to the brand name drug it will substitute. Traditionally, this determination of "sameness" is made by measuring the level of drug in a patient's body over time, i.e, through the measurement of blood levels. Brand name drug companies have delayed the introduction of generic drugs where the FDA must measure bioequivalence by an alternate method (e.g., dermatological or inhaled drugs). This bill's modified definition will make clear that FDA can evaluate and find bioequivalence through a method other than the measurement of blood levels.

4. The bill would provide "rolling exclusivity" to generic drug applicants, preventing generic companies from delaying the marketing of competing products by failing to bring a drug to market.

Currently, the first company to file a generic drug application with the FDA can market its product free from competition from other generics for 180 days. If the first to file does not bring its drug to market, the 180 day clock never begins to run, and no other generic drug company can introduce a generic alternative. This legislation would increase competition by taking exclusivity away from any generic drug company that does not vigorously attempt to bring its product to market, or has been determined by the Secretary of Health and Human Services (in consultation with the FTC) to have engaged in illegal, anticompetitive, or collusive practices.

5. The legislation calls for additional study to determine the impact of the legislation.

The bill will require the FTC to submit a report to Congress within five years of the date of enactment, assessing whether the provisions of the Act are enabling generic drug products to come to market in a more fair and expeditious manner.

Footnotes:
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(1) Altman, Stuart H., Ph.D., "Controlling Spending for Prescription Drugs," New England Journal of Medicine, Vol. 346, No. 11, March 14, 2002, at 855.

(2) Carey, Mary Agnes, "Analysts See a Seismic Shift in Health Policy Debate," CQ Weekly, March 23, 2002, at 794.

(3) Steinbrook, Robert, M.D., "The Prescription Drug Problem," New England Journal of Medicine, Vol. 346, No. 11, March 14, 2002, at 790.

(4) Prescription Drug Trends, a chartbook update, The Henry J. Kaiser Foundation, November 2001, at 7.

(5) Id. at 10.