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Pediatric Monopoly Extension for Drug Companies Badly Flawed, Gives Windfall Profits to Drugmakers and Drives Up Prices

July 16, 2001

Pediatric Monopoly Extension for Drug Companies Badly Flawed, Gives Windfall Profits to Drugmakers and Drives Up Prices

Key Senate Committee to Take Up Monopoly Extension Bill in July That Could Yield Industry $29 Billion

WASHINGTON, D.C. ? The practice of extending marketing monopolies for prescription drugs if their manufacturers agree to test the drugs for use in children is seriously flawed, according to an analysis released today by Public Citizen. Instead, Congress should require companies to test all new drugs for use in children as a condition of their original approval for marketing by the federal government.

Under so-called “pediatric exclusivity,” drug companies are granted an additional six months of monopoly protection if they voluntarily test their drugs in children. This was Congress? solution to the drug industry?s refusal to test its products for use in children and was intended to encourage more tests to assure the safety and effectiveness of drugs prescribed for children.

But this exclusivity gives a windfall to the prescription drug industry. The U.S. Food and Drug Administration (FDA) has estimated that pediatric exclusivity will increase brand-name drug company sales by $29 billion and cost consumers an additional $14 billion over the next 20 years. Further, the profits enjoyed by the drug companies from the patent extensions greatly exceed the cost of conducting the studies, which are estimated at between $1 million and $7.5 million.

The law permitting pediatric exclusivity expires on Jan. 1, 2002, and Congress is currently debating a bill that would extend it. However, that bill (S. 838), which is scheduled to be marked up in the Senate Health, Education, Labor and Pensions Committee as early as July 25, would continue to leave many key drugs untested, increase the cost of drugs for consumers ? particularly the elderly ? and give a huge windfall to drug companies, Public Citizen has determined.

“This is Senate Democrats? first test on the issue of prescription drug costs, and it appears as though they are poised for failure,” said Frank Clemente, director of Public Citizen?s Congress Watch. “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. 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.”

Among the key problems of the policy of pediatric exclusivity:

It fails to ensure that drugs likely to be used in children will be tested in children before they are prescribed for their use. The FDA has said that the current law will leave more than 100 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.

S. 838, sponsored by Sens. Christopher Dodd (D-Conn.) and Mike DeWine (R-Ohio), reauthorizes pediatric exclusivity with minor changes, so it preserves most of the program?s flaws. The bill fails to assure that drugs likely to be prescribed for children will be tested for safety, and it does nothing to address the industry?s enormous profits.

A better alternative would be to end pediatric exclusivity for new drugs and require drug companies to test new drugs for use in children as a condition of the drugs? approval by the FDA. For drugs already on the market, Congress should give the FDA authority to require testing and end the six months of additional patent protection, Clemente said.

“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 newfound clout to stop corporate welfare for the drug industry.”