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Bush’s Proposed Generic Drug Rule: Days Late, Billions of Dollars Short

Oct. 22, 2002

Bush’s Proposed Generic Drug Rule: Days Late, Billions of Dollars Short

Senate-Passed Legislation Opposed by the Administration Would Have Provided Significantly More Price Relief for Consumers

WASHINGTON, D.C. — The Bush administration’s proposed generic drug rule is a “weak” effort to defend consumers against tactics used by the brand-name drug industry to extend its lucrative patents, Public Citizen said today. The administration’s failure will deny consumers timely access to lower-priced generic drugs.

“This weak proposal is days late and billions of dollars short,” said Frank Clemente, director of Public Citizen’s Congress Watch. “This election-eve ploy is designed to get votes, not give consumers the prescription drug price relief they deserve.”

The administration’s proposed rule is a weak vehicle for delivering savings to consumers compared to legislation the administration opposed in the waning days of this Congress: S. 812, the Greater Access to Affordable Pharmaceuticals Act (GAAP). That bipartisan legislation passed the Senate in July by a vote of 78 to 21, with a majority of Republicans and almost all Democrats supporting the legislation. But House leaders blocked the bill from being considered due to opposition from the drug industry. Bush and his congressional representatives failed to urge the House to take up the measure.

The administration estimates that its proposed rule would save consumers and government health programs $3.3 billion per year. The GAAP Act would save consumers and government health programs $60 billion over 10 years, an average of $6 billion a year, according to the Congressional Budget Office.

The Bush rule would lead to cost savings due to the elimination of multiple automatic 30-month stays that brand-name drug companies use to keep lower-cost generics off the market. However, because it is a regulation instead of legislation, it is subject to challenge in court by brand-name drug companies, which may claim that the administration lacks the legal authority to promulgate the rule. By contrast, GAAP would have written the prohibition on multiple 30-month stays into law.

Listing a patent with the U.S. Food and Drug Administration (FDA) is a step brand-name drug companies must take before a patent can become the basis for an automatic 30-month stay of generic competition. If enforced, the Bush rule would no longer allow brand-name drug companies to list with the FDA certain types of patents that have inappropriately delayed timely availability of generic drugs. However, without new legislation, the agency lacks the “expertise, resources, and legal authority” to examine the “listability of patents,” the agency acknowledges in the same Federal Register notice where the new proposed generics rule is announced. Without the legislative changes embodied in GAAP, the administration’s proposed regulation will do little to address the problem of frivolous patents becoming the basis of even a single automatic 30-month stay.

Ironically the administration opposed GAAP, which would have addressed this problem. If enacted, GAAP would have given generic drug companies the ability to challenge patents inappropriately listed with the FDA in court, thereby eliminating them as a barrier to bringing lower-cost generics to market.

“Without legislation, the brand-name drug industry can still play games to extend their patents and prevent consumers from being able to buy less expensive generic drugs,” said Ben Peck, legislative representative of Public Citizen’s Congress Watch. “Given this industry’s focus on the bottom line, the administration’s inadequate approach won’t work.”

Finally, the administration’s proposed rule does not address the problem of brand-name drug companies paying generic companies to keep their lower-priced competitors off the market. This problem is addressed by the GAAP Act.