Last Thursday July 20, the Senate Special Committee on Aging held a hearing on “The Generic Drug Maze: Speeding Access to Affordable, Life Saving Drugs.” One of the witnesses, the FDA’s Director of Generic Drugs explained that

Prior to the passage of the Drug Price Competition and Patent Term Restoration Act (Hatch-Waxman Amendments) of 1984, FDA’s primary statute, the Federal Food, Drug, and Cosmetic (FD&C) Act, did not provide for the approval of generic drugs. The Hatch-Waxman Amendments established the ANDA approval process, which permits FDA to approve generic versions of previously approved innovator drugs without the submission of clinical studies and other kinds of data that are required in a full new drug application (NDA). An ANDA refers to the previously approved NDA of the innovator drug and relies upon the Agency’s finding of safety and effectiveness for that drug. Also, with respect to each unexpired patent submitted to FDA by the owner of the innovator drug and published by FDA in the Orange Book1, an ANDA contains a certification that the ANDA applicant either will wait for the patent to expire before marketing the drug or that the applicant challenges thepatent as invalid or not infringed.

The first company to obtain such FDA receives the exclusive right to offer the generic product for 180 days after patent expiration subject to one exception.

The FDA representative urged Congress to provide more funding for his office which has a backlog of ANDAs. Sen. Herb Kohl (D Wisc.) reportedly has arranged for an additional $10 million of funding.

A brand name drug manufacturer with the expiring patent can offer its own “authorized generic” during this otherwise exclusive sales period. At the hearing, a generic drug manufacturer representative opposed this practice as undercutting the Hatch Waxman amendments, and the Pharmaceutical Research and Manufacturers of America’s (PhRMA) president supported the practice’s conttibution to a competitive market. Following the hearing, Sen. Jay Rockefeller (D Ark) introduced a bill (S. 3695) that would prohibit the marketing of “authorized generics.”

Also at the hearing a Federal Trade Commission representative explained to lawmakers that

there have been, and continue to be, competitive problems in pharmaceutical markets. Although many drug manufacturers – including both brand-name and generic companies – have settled their patent suits in a manner that does not harm competition, others have entered anticompetitive settlements without providing a corresponding benefit to consumers. Responding to some of these abuses, in 2003 Congress included provisions in the Medicare Modernization Act (“MMA”) that amended the Hatch-Waxman Act to require notice of settlement between brand and generic firms to the FTC and Department of Justice.

However, according to the FTC testimony, two federal courts of appeals rulings (Schering-Plough Corp. v. F.T.C., 403 F.3d 1056 (11th Cir. 2005); In re Tamoxifen Citrate Antitrust Litig., 429 F.3d 370 (2d Cir. 2005))have rejected FTC objections to patent litigation settlements in favor of “a lenient view of exclusion payment settlements, essentially holding that such settlements are legal unless the patent was obtained by fraud or that the infringement suit itself was a sham.” The Supreme Court declined to review the 11th Circuit ruling last month.

According to the FTC representative, “The economic implications of the courts of appeals’ rulings, which seem to invite collusive arrangements between brand-name drug companies and generic challengers, are staggering.” The FTC representative expressed the Commission’s “strong support [for] the intent behind S. 3582, the ‘Preserve Access to Affordable
Generics Act’ – bipartisan legislation introduced by Senators Kohl, Leahy, Grassley, and Schumer” on June 27, 2006.

Congress is only scheduled to be in session for one more week before its August recess begins on July 31.