For Immediate Release
Office of the Press Secretary
October 21, 2002

President Takes Action to Lower Prescription Drug Prices By Improving Access to Generic Drugs

TODAYS PRESIDENTIAL ACTION

• President Bush announced a new rule to lower prescription drug costs for millions of Americans by improving access to generic drugs, which are safe and effective and can be much less costly alternatives to brand-name prescription drugs. The proposed rule is expected to lead to savings in drug costs of over $3 billion per year for Americas consumers.

• This regulatory action will close loopholes in the implementation of the Hatch-Waxman law, which governs how generic drugs can compete with brand-name drugs. As a result, patients will benefit from greater and more predictable access to safe, effective, low-cost generic alternatives to brand-name drugs.

DETAILS OF FDAS PROPOSED RULE ON GENERIC DRUGS

The new FDA rule will:

• Implement Federal Trade Commission (FTC) recommendations for improving access to generic drugs by making significant changes in the use of automatic 30-month stays and in the drug patent listing process.

• Allow one 30-month automatic stay at most in patent infringement litigation involving a generic drug application: Drug manufacturers would be limited to only one 30-month stay per generic application, to resolve allegations that a generic drug maker is infringing a drug patent. According to the FTC, this is an appropriate time period for courts to resolve cases of patent infringement. Multiple 30-month stays, which have led to delays in generic entry of an additional 4 to 40 months, would not be permitted.

• Tighten requirements and increase disclosures for drug patent listings: Drug manufacturers would no longer be allowed to list patents in the FDA Orange Book for drug packaging, drug metabolites, and intermediate forms of a drug. Permitted listings include patents on active ingredients, drug formulations, and uses of a drug. In addition, a more detailed signed attestation accompanying a patent submission will be required, and false statements in the attestation can lead to criminal charges. This will significantly reduce opportunities to list inappropriate patents just to prevent fair competition from generic drugs.

• Provide billions of dollars in savings for public and private health insurance programs: The rule will not only provide savings for patients by giving them more safe and effective, low-cost prescription drug alternatives; it will reduce budgetary pressures on state Medicaid programs, and reduce the cost burdens facing employer-provided coverage.

• Lower the cost of improving Medicare with prescription drug coverage: The rule provides important relief for seniors, but it is only a first step. Seniors really need an improved and strengthened Medicare program like the President has proposed, with better and more secure coverage options. While the House of Representatives took an important first step this year by passing legislation to provide drug coverage, the Senate failed to act. The President is calling on the leadership of the Senate to put politics aside and pass a prescription drug benefit for Medicare. The proposed rule makes this job easier by reducing the cost of a Medicare prescription drug benefit.

BACKGROUND ON TODAYS PRESIDENTIAL ACTION

Todays Presidential action improves the FDA regulations implementing the Hatch-Waxman law. These regulations govern when generic drugs can compete with brand-name drugs. As a result, patients will benefit from greater and more predictable access to effective, low-cost generic alternatives to brand-name drugs.

• Under the Hatch-Waxman law passed in 1984, generic competition is allowed when a new drugs patent and market exclusivity protection expires, or when a 30-month stay terminates. The intent of the law is to provide incentives to develop valuable new drug treatments through patent protection, but also to facilitate access to generic versions of the drug after the innovators patent expires.

• FDA-approved generic drugs are safe and effective alternatives to many brand-name prescription drugs, at a cost that is often only one-third as great. Almost half of all prescriptions filled today are for generic drugs, and generic alternatives exist for many commonly-used brand name medications providing an equally safe and effective but much less expensive alternative for millions of Americans.

• In recent years, however, access to generic drugs has sometimes been delayed by litigation. Under FDAs past interpretations of the Hatch-Waxman law and the Orange Book patent listing process, drug manufacturers have been able to file additional patents on packaging, ingredient combinations, and other minor matters in order to get repeated 30-month automatic stays in court that significantly delay access to generic drugs.

• In response to bipartisan Congressional concern about this issue, the FTC conducted a detailed study of Generic Drug Entry Prior to Patent Expiration. The study was issued in July 2002. It identified cases involving seven major brand-name drugs between 1994-2000 where the repeated use of automatic stays on late-filed patents had delayed access to generic drugs. The FTC made the following recommendations:

• Allow only one automatic stay per generic drug application; and
• Tighten the Orange Book patent listing process to help ensure that only appropriate patents are filed.

The proposed rule can be viewed at www.fda.gov/ohrms/dockets.

For more information on the Presidents initiatives please visit www.whitehouse.gov

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