Hatch-Waxman compromise bill in need of reform, author contends - Special Report: Generic Drugs

RIO GRANDE P.R -- One of the lawmakers responsible for the present-day generic drug industry says he is fed up with brand-name pharmaceutical companies' efforts to block the marketing of me-too pharmaceuticals and is pushing for an overhaul of the landmark legislation on generics that bears his name.

Citing "serious abuses" of the 1984 Drug Price Competition and Patent Term Restoration Act, Congressman Henry Waxman, D-Calif., called last month for a dramatic revision of the law to close legal loopholes that keep lower-priced generic drugs off the market "for months and even years."

Waxman, who helped craft the compromise bill that opened the floodgates on generic drug development nearly 19 years ago, said he would work to eliminate key provisions in the law that he said have become targets for abuse. Among them: language that allows brand-name drug makers to block the marketing of generic versions of their products for at least 30 months by filing additional patents on those products. Waxman indicated he would also kill the 180-day period of marketing exclusivity allowed to the first generic manufacturer to gain Food and Drug Administration approval of an equivalent product.

Addressing the opening session of the Generic Pharmaceutical Association's Annual Meeting here Jan. 28, Waxman said "frivolous" lawsuits and 11th-hour patent extension efforts by branded-drug firms had seriously undermined the intent of the original legislation, better known as the Hatch-Waxman Act.

"For many years, the law worked well. The balance between access and innovation held," Waxman told GPhA members. "But more recently, some companies began to undermine this balance deliberately. They began to exploit loopholes in Hatch-Waxman and 'game' the system."

In a speech that was at times combative and at times conciliatory, the veteran lawmaker denounced the increasingly common tactics used by many pioneer drug makers to preserve market share on drugs facing the loss of patent protection.

"Some drug companies' pipelines began to dry out in the 1990s," he asserted. "They apparently saw delaying generic competition as the answer to keeping their profits high. So rather than innovate new drugs, they began to innovate new legal strategies."

Those methods have included the widespread use of new patent applications for processes and ingredients of drugs nearing the end of their patent life. Waxman condemned what he called "11th-hour filings of new, often invalid...patents to obtain that 30-month stay of generic drug approval.

"Let me say unequivocally, we never anticipated that there would be more than one 30-month stay on any given drug," he said. "Filing late patents to obtain successive stays is in my mind a clear abuse of the law. At best, it's a misinterpretation of the law. At worst, it's a scam.

"There's simply no evidence that innovation would be harmed by limiting companies to a single 30-month stay," Waxman added. "I don't think it would be harmed if you eliminated the 30-month stay altogether. In fact, I believe that the best way to get innovation for new drugs would be if the brand-name companies recognize they've got to replenish their supply in the pipeline and not just simply hold on to their monopolies and ignore the research and production of new products."

Pressure for reform still building

Waxman also ripped what he called "collusive agreements between brand and generic companies to keep all generics off the market and maintain monopoly prices for the brand-name drugs. Using these and other strategies--including propagandizing against generic drugs--some companies successfully kept generic competition and even some generic drugs off the market for months and even years beyond the time that Congress intended."

In addition, Waxman reminded conference-goers: "It goes without saying we never intended for generics 180-day exclusivity, which we thought would be an incentive for generics to come on the market. We never thought that would be used to keep all generics off the market for 180 days."

Waxman said the branded drug industry lobby and continuing misperceptions among many lawmakers about the role and efficacy of generics could slow reform as Congress debates new proposals to ease the roadblocks to generic competition. "Several things suggest we still have a hard fight ahead of us," he said. "First, the House never got close to passing generic drug legislation last year. Second, the brand-name drug industry played a hefty role in the last election.

"Republicans control both houses of Congress now, and...it would be native at any time to underestimate the influence of big pharmaceutical companies on the Congress," he continued. "Now, that influence will be even more difficult to counter."

Nevertheless, Waxman predicted that pressure to reform the bill and close loopholes that allow brand-name drug makers to delay generic competition would continue to build. What's more, he told GPhA members, "You have shown that you can be a powerful force" in influencing policy.

"Pharma hasn't always won the day. And I think that when they make their arguments about how if we allow more generics to come on the market, it's going to undermine the incentives for innovation and deprive consumers of new breakthroughs, that cry of wolf is wearing pretty thin," Waxman added.

Praise, but 'serious doubts' about Bush plan

Despite initial misgivings about tinkering with the legal framework established by the bill, the congressman vowed to help lead the charge for reform this year.

"When these abuses of Hatch-Waxman began to come to light at the beginning of the last Congress, I was torn about how to address them. Although I did not want to stand by idly while the law was being abused, I was also concerned that reopening the law could easily spin out of control," said Waxman. " did not want to see amendments pass that would unbalance the act even further.

"At the start of the last Congress, I felt great trepidation, I admit, at the chances of the generic drug industry against the lobbying juggernaut of the branded industry," he told industry leaders. "And yet, we--and you--made major progress toward positive reforms of Hatch-Waxman last year."

Waxman also addressed the Bush administration's proposal for new rules governing generic drugs that would close some of the loopholes now being exploited to keep me-too products off the market. "I'm pleased the administration has recognized the problem created by multiple stays, but I have serious doubts about whether that rule would solve the problem and even bigger doubts about whether the rule would even survive administrative hurdles and court challenges," Waxman asserted.

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