Health Care Woes Boost Generics Bill

When House Gets Its Turn, Benefits to Brand-Name Drug Makers Could Erode

When the Senate went home this month for its summer break, Congress's vaunted drive to expand prescription drug coverage was in tatters, but senators could boast of a quieter accomplishment: They had helped to make it easier for patients to buy generic medicine.

Of the many flaws in the U.S. health care system, access to generic drugs has not been a prominent political theme. It involves an obscure area of patent law. Until the past few weeks, even enthusiastic supporters saw little hope for the legislation that seeks to bring such medicine to the market more quickly.

Yet it passed the Senate with 78 votes.

And suddenly, this unlikely piece of legislation has catapulted into the front ranks of lobbying and partisan bickering as lawmakers prepare to return for the final weeks of this Congress in September.

The question, which now moves to the House, boils down to this: Should the federal government remove some of the methods that brand-name drug manufacturers have used to prolong their monopolies over the medications they create?

Makers of brand-name pharmaceuticals have fought hard against such a change, arguing that it would erode their profits and, ultimately, their financial incentives to develop new therapies. But this year, the idea has gained quick support from an unusual coalition of consumer advocates, employers, unions and governors -- as well as companies that make generic drugs.

The Senate's surge of enthusiasm for a generic drug bill partly reflects election-year pragmatism. Democrats and Republicans, deadlocked over how to help elderly people pay for prescription drugs, were searching for a way to show sensitivity to Americans' health care worries.

"These guys . . . were so desperate to get something passed after the meltdown on pharmaceutical coverage," said Robert L. Laszewski, a nonpartisan policy analyst who follows the politics of health care.

But more than that, the issue's sudden popularity with senators reflects the place of pharmaceuticals in rising health care costs -- and in public opinion.

Expenditures on prescription drugs have been climbing more rapidly than any other aspect of health care. They have soared by nearly 20 percent annually for the past few years as a result of expensive new medicines, increased demand and heavy industry advertising to consumers. Those costs and the drug industry's assertive lobbying in Washington have bred resentment.

"I think what happened in the Senate is a reflection of the drug industry now having surpassed the managed-care industry as everyone's whipping boy," said Ron Pollack, executive director of Families USA, a consumer health care group.

In the effort to constrain health costs, generic drugs are, their proponents acknowledge, a small part of the solution. But they are significant, nonetheless. Typically, their price is less than half that of the brand-name drugs they mimic. The Congressional Budget Office estimated that the Senate-passed bill would save $60 billion over the next decade.

The bill, sponsored by Sens. Charles E. Schumer (D-N.Y.) and John McCain (R-Ariz.), seeks to alter a balance between the two arms of the drug industry that Congress worked out 18 years ago. Through a law known as the Hatch-Waxman Amendments, Congress changed a portion of the framework by which the Food and Drug Administration (FDA) determines which drugs may come onto the market. That 1984 law sought to give brand-name drug companies incentives and money to develop new drugs. At the same time, it simplified the process for generic drug companies to win government approval of their products.

That change had a marked effect at first, as generic drugs expanded from 18 percent of all prescriptions in the early 1980s to nearly 50 percent today. But the expansion has slowed in recent years, as brand-name manufacturers have found ways to forestall competition -- particularly for their best-selling products.

In particular, critics of the current system cite an arcane facet of the drug law that allows a brand-name company to ask the FDA for an automatic 30-month stay whenever a generic manufacturer challenges a patent. The main problem, the bill's supporters say, is that brand-name companies have gotten repeated 30-month postponements.

These repeated delays occur because the brand-name companies, once challenged, sometimes file additional patents with the FDA that the generic companies must then also contest. The maker of Paxil, a leading drug to treat anxiety and depression, listed nine new patents, prompting five 30-month stays, according to the Generic Pharmaceutical Association. The company that makes Platinol, a cancer drug, filed a new patent for the color of its brown bottle.

A Federal Trade Commission study found a pattern of recent, repeated delays. In most cases, the FTC determined, courts rejected the new patents and the generic was approved. But the delay can be considerable and costly to consumers, the report said.

The Pharmaceutical Research and Manufacturers Association (PhRMA) says patent battles are rare. Gregory J. Glover, a consultant to the group, said the Senate bill is "substantial overkill." He said it contains several provisions that would "change the calculus" as to whether companies will spend the money to develop new drugs.

The Senate bill originally would have eliminated 30-month stays. The final version allows one postponement but not more. The bill's prospects in the House, however, are iffy.

President Bush opposes the bill. White House spokesman Scott McClellan said the administration strongly supports efforts to lower drug prices for the elderly and to foster "fair competition and appropriate use of generic drugs." McClellan said the administration supports the FTC's recommendation -- similar to a central provision of the Senate bill -- to prohibit repeated 30-month stays.

But he said parts of the bill go too far. He predicted they would create "an entire new class of patent litigation," increase drug costs and slow the development of new medicine.

The House's Republican leaders, who pushed through legislation this summer to provide drug coverage for the elderly, are not eager to endorse the Democratic Senate's work on generics.

A matching generics bill is pending in the House. It was introduced last month by Rep. John Thune (R-S.D.), who is getting help from the White House -- which dislikes the measure -- as he tries to unseat Sen. Tim Johnson (D-S.D.) in the home state of Senate Majority Leader Thomas A. Daschle (D).

A spokesman for the House Energy and Commerce Committee said the panel wants to explore "abuses" in the drug-approval system but has not scheduled a vote on Thune's bill.

A lobbyist who favors the legislation predicted it "has a shot" if constituents complain about drug prices while lawmakers are home this month. But he also said there is scant time left in this Congress and that the GOP traditionally is sympathetic to the brand-name pharmaceutical industry.

Regardless of the outcome, the bill gives Senate Democrats some political insulation.

"We are batting .500," Schumer said, moments after the Senate defeated a prescription drug proposal and passed his generics bill. "We wanted greater access [to drug coverage for the elderly], and we wanted lower costs. On the second part -- cost-cutting -- we did real well."