RAY SUAREZ: As we all know from visits to the drugstore, generic drugs cost less than their brand name counterparts. As health care costs continue to grow, policymakers have grappled with how to make more of the cheaper generics available and bring them to market faster.
Last summer, the Senate passed a measure, but the House never acted, and it died. Today, President Bush stepped in with some new rules. Here to tell us about it is our health correspondent, Susan Dentzer. Well, what did the president do?
SUSAN DENTZER: Ray, what the president did, in effect, and through the Food and Drug Administration, was to look back at a 1984 law that helped generic drugs come to market, and, in fact, what the president did was propose a new interpretation of a provision of that law that would deal with some legal ploys that pharmaceutical manufacturers have been engaging in from time to time to keep generic drugs off the market as those brand name drugs come up for patent expiration.
And, in fact, what the FDA has said now, in two months if this regulation does, in fact, go into effect, it will speed approval of generic drugs and entry into the market of generic drugs, that being a very important provision since generic drugs now account for one out of every two prescriptions received in America.
RAY SUAREZ: Now, that 1984 law was written to help generic drugs get through all the rigmarole and make to it the shelves in your pharmacy. Were the name brand drug makers not acting by the letter or the spirit of the law? How were they slowing up the process?
SUSAN DENTZER: In fact, what they had been doing, some of them, not all companies have been engaging in this practice, but some companies have been exploiting a loophole in the law. It's a very technical provision in the law, but essentially what it means is this. When a generic company was to bring out a generic version of a branded drug, essentially it files a request to do that with the Food and Drug Administration.
That often triggers a lawsuit from the brand name manufacturer, and in fact an automatic thirty-month or two and a half year stay is put on the FDA's ability to approve that generic drug for market. That is the way the law was written, that seems fine to everybody.
What brand name manufacturers have done in some instances is go back and file new patents on those same drugs, some of them frivolous patents. In one instance, for example, a company suddenly went back and decided to pa tend the brown bottle that the cancer drug came in, because it said this brown bottle will preserve the potency of this drug. So it filed that patent anew. That triggered another 30-month stay.
So in fact what brand manufacturers have done in some instances is stack one 30-month stay on top of another 30-month stay on top of another 30-month stay, in effect delaying the entry of a generic competitor to the market for in some instances as much as 40 months, or almost four years.
RAY SUAREZ: And in effect allows them to continue to control the price on their own, because no one else can make what is the same drug?
SUSAN DENTZER: That's absolutely right. And in fact if you look at one example, the drug Paxil, which is an antidepressant, the original manufacturer Smith Kline, now Glaxo-Smith-Kline, has managed to stack as many as eight patents on top of one another, delaying in effect a new generic product that would compete with Paxil onto the market for a number years, costing consumers an estimated two and a half billion dollars over that additional patent period that it has now claimed.
RAY SUAREZ: So by shortening the process, giving you in effect one 30-month bite at the apple, if a brand name drug maker really has some problems with formulation, with method of production, some people say some generics are not as effective in some cases, they'll have that two and a half years to fight that case.
SUSAN DENTZER: That's right. That's right. In fact there's still this 30-month stay, that's what the FDA regulation would do is create one single 30-month stay on the process. In addition to that, the FDA would also restrict the number of patents that a brand name manufacturer can file in the so-called orange book, which is the bible of drugs that the FDA has approved, it would limit the number of patents that the companies, not the number, but the type of patents that those companies could file, and there by restrict the kinds of frivolous patents that many of the generic manufacturer have complained have been an anti-competitive device.
RAY SUAREZ: One of the most influential lobbies in Washington is that of the pharmaceutical industry. Have they gotten behind the President on this, agreed with his rationale? What's been Pharma's response?
SUSAN DENTZER: Well, publicly Pharma is not saying anything, but privately it is known that Pharma was very concerned about the fact that the Senate did pass that legislation last summer, which would actually have gone much farther than the FDA rule today would have gone in terms of baring the kinds of legal maneuvers that some companies were engaging in.
Actually, Pharma had proposed with a rule change that the FDA came out with today, as the compromise position, they thought this was at least a change that some of the companies, not all of the pharmaceutical companies, but some could live with.
So, in fact, what the president has done through the FDA is essentially do something that most companies can live with in this environment. They recognize that they are under a great deal of political pressure now, that the pharmaceutical prices have been rising, and more important pharmaceutical expenditures have been rising and driving up health care costs so, this was one way for some of the branded manufacturers to give in a certain area and basically help to ameliorate or lessen some of the political pressure that was brought to bear on them.
RAY SUAREZ: Did the generics producers get everything they wanted?
SUSAN DENTZER: They did not. They are still very supportive of the Senate provision and they hope in the next Congress there will be an over the pass that provision. They say, for example, that some additional measures need to be under taken. They had wanted, for example, to have only one set of patents filed at the time that a brand manufacturer sought approval from the FDA, and those would be the only patents that the brand manufacturer could ever claim.
They say this FDA provision leaves a little wiggle room for companies now to come back and file some additional patents, provided that they pertain to the actual makeup of the drug. So they still think that not all has been done that could be done to eliminate this anti-competitive set of maneuvers, so they hope very much the Senate will take this up next year, and most important that the House will take up analogous legislation, because, of course, as we noted the House did not act on legislation that was introduced in the House to do the same thing.
RAY SUAREZ: Susan, thanks a lot.
SUSAN DENTZER: Thanks, Ray.