Key Senate Committee to Debate Bill Giving Windfall Profits to Drug Makers; Fails to Assure Safety of All Kids? Drugs

July 31, 2001

Key Senate Committee to Debate Bill Giving Windfall Profits to Drug Makers; Fails to Assure Safety of All Kids? Drugs

Aug. 1 Is Senate Committee Markup of Bill That Would Cost Consumers $14 Billion

WASHINGTON, D.C. ? On Wednesday (Aug. 1), the Senate Health, Education, Labor and Pensions Committee will take up legislation sponsored by Sens. Chris Dodd (D-Conn.) and Mike DeWine (R-Ohio) that gives drug companies a six-month extension on their lucrative monopoly patents just for testing the safety of such drugs in children. Dodd?s legislation, however, fails to assure that all drugs likely to be used in children will be tested for safety prior to marketing.

Monopoly extensions first were made available to drug companies in exchange for testing in children by legislation sponsored by Dodd and enacted in 1997. The new legislation ? the “Best Pharmaceuticals for Children Act,” S. 838 ? would continue the practice of granting what is known as “pediatric exclusivity” to the drug companies.

Consumer advocates have been appealing to Dodd to address the higher costs for drugs that his legislation would impose on already-overburdened consumers, particularly the elderly. They also have asked Dodd to support changes to the bill that would assure that all drugs likely to be used in children are first tested for safety.

Pediatric exclusivity gives a windfall to the prescription drug industry. The U.S. Food and Drug Administration (FDA) has estimated that the six months of pediatric exclusivity that would be granted for hundreds of drugs over the next 20 years, as their patents expire, would increase brand-name drug company sales by $29 billion. The cost to consumers would be an additional $14 billion over that time because access to lower-priced generics would be delayed six months.

The profits enjoyed by the drug companies from the patent extensions greatly exceed the cost of conducting the studies, a Public Citizen analysis shows. The FDA estimates that drug companies will reap $592 million in additional annual profits under pediatric exclusivity. It also estimates that the annual cost of conducting studies if they had been required between 1993 and 1997 was only $80 million.

“If senators want to assure that drugs are tested before they are given to children, they should support legislation that requires this testing to be done as a condition of FDA?s approval of drugs,” said Frank Clemente, director of Public Citizen?s Congress Watch. “This would be the courageous approach. But it requires the Senate to stand up to the drug industry. It is also the only solution that puts the burden for the safety of drugs where it should be, squarely on the shoulders of the drug industry, the most profitable industry in the nation, rather than on the backs of consumers.”

In 2000, the 11 biggest brand name drug manufacturers made $28 billion in profits, prompting Fortune magazine to once again rank the drug industry as the most profitable in America. During the 1990s, the average profits of the Fortune 500 drug companies have been three to four times the average profits of all Fortune 500 industries.

Among the key problems with the Dodd-DeWine bill:

  • It fails to ensure that drugs likely to be prescribed to children will be tested in children before being prescribed for their use. Public Citizen analysis of FDA documents reveals that the current law, to which the Dodd bill makes only minor modifications, will leave many drugs important for children untested.
  • It doesn?t guarantee that companies will make the results of their studies known through the labeling changes necessary for drugs to be used safely and effectively in children.

In 1998, the FDA issued a rule that would require testing for all new drugs that are likely to be used by “a substantial number of children,” or that would provide “meaningful therapeutic benefit” to children. But enforcement of the rule has been blocked by litigation.

Public Citizen endorses the FDA?s proposal and believes that pediatric exclusivity for new drugs should be ended and that drug companies should be required to test new drugs for use in children as a condition of getting FDA approval to market their product. For drugs already on the market, Congress should give the FDA authority to require testing and end the six months of additional patent protection.

“It?s bad enough giving drug companies a huge windfall for something that should be required as part of the FDA drug approval process,” Clemente said. “What?s worse is that after consumers pay out an extra $14 billion for pediatric exclusivity, many of the drugs most needed by children will remain untested.

“Some advocates for children support the pediatric exclusivity incentive out of frustration and desperation, fearing that drug companies would conduct no pediatric tests without a hefty financial reward. This attitude makes it easy for members of Congress to support S. 838. Senators may see a vote for the Dodd-DeWine bill, which would continue the handout to the industry, as a safe vote for children. But Senate Democrats need to use their new-found clout to stop corporate welfare for the drug industry.”

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