Washington Editor

WASHINGTON - Following the pace set by the Senate earlier this summer, a House subcommittee on Wednesday began looking at ways of stopping brand-name drug companies and generic drug manufacturers from "gaming" the system to keep the competition off the market.

It started earlier this summer when the Senate took a stand to close some gaping loopholes in the Hatch-Waxman Act of 1984, the legislation that created the generic drug industry. (Biologics are not included under Hatch-Waxman.)

The Senate approved legislation (S.812) crafted by John McCain (R-Ariz.) and Chuck Schumer (D-N.Y.) that limits pharmaceutical companies to one 30-month postponement when a generics developer seeks to challenge a patent. Current law allows unlimited extensions, giving companies the ability to stall generics for years. (See BioWorld Today, Sept. 3, 2002.)

Meanwhile, the Republican-controlled House has been unable to reach such a consensus.

Thus, the House Energy and Commerce Subcommittee on Health held a hearing to collect information on Hatch-Waxman and to hear results of a Federal Trade Commission report on how easily generics enter the market.

Timothy Muris, chairman of the FTC, used the term "gaming" to describe the lengths that some generics and brand-name companies will go to corner the market. For example, he cited an agreement between Abbott Park, Ill.-based Abbott Laboratories and Geneva Pharmaceuticals Inc. that is related to Abbott's drug, Hytrin. The FTC alleges that Abbott paid Geneva about $4.5 million per month to delay entry of its generic Hytrin product into the market.

A generic company is granted 180 days of market exclusivity on FDA approval, but this period can be extended nearly indefinitely if court decisions referencing patent disputes are resolved.

The market exclusivity and patent stays are the two areas in which most abuses take place, Muris told the subcommittee. To resolve the issues, he recommended that the House consider legislation limiting the patent stay to one 30-month extension. To mitigate the possibility of abusing the 180-day exclusivity provision, he asked the subcommittee to consider a requirement that generics and brand-name companies provide copies of certain agreements formed between them to the FTC and the Department of Justice.

Rep. Sherrod Brown (D-Ohio), who is highly critical of the drug industry, said Hatch-Waxman loopholes have given drug manufacturers a lucrative alternative to innovation.

"Rather than develop new drugs, they simply squeeze additional revenues out of their old ones," he said. "Blocking generic competition to earn a buck doesn't help patients, it hurts them."

Brown said the relationship between the House leadership and the pharmaceutical industry is to blame for its inaction on Hatch-Waxman reform.

"I recognize that leadership in this committee is under tremendous pressure to tow the drug industry's line," he said.

Furthermore, he said the pharmaceutical lobby claims if S.812 is passed, all research and development would dry up. "The truth is, closing the loopholes in Hatch-Waxman would invariably boost medical innovation," he said.

Rep. Billy Tauzin (R-La.), chairman of committee, said since Hatch-Waxman was passed, generic prescriptions have increased from 20 percent to 50 percent. "At the same time, the brands continue to innovate, spending roughly $30 billion per year on research and development," he said. "So while some may complain the act is not working perfectly, I assume all would concede that it's working pretty well. Certainly, I do not expect to hear anyone call for a repeal of the act."

Passing McCain-Schumer would not help reduce the price of prescription drugs, he added. "Let me be perfectly clear," he said. "The best way to reduce the prices paid by seniors for their prescription drugs is to pass a comprehensive prescription drug benefit in Medicare."

In June, the House passed The Medicare Modernization and Prescription Drug Act of 2002 (HR4956), legislation considered favorable to the drug industry. (See BioWorld Today, June 24, 2002.)

It's the Senate that has been unable to reach a consensus on prescription drugs. However, the Senate included other drug issues in McCain-Schumer, such as an amendment to permit the reimportation of FDA-approved drugs from foreign countries. The Senate will require Tommy Thompson, secretary of Health and Human Services, to certify that reimportation is safe before it is allowed. (See BioWorld Today, Aug. 2, 2002.)