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.