Bush Acts to Limit Rx Patent Protections

Published December 1, 2002

President George W. Bush announced on October 21 his plan to speed up the process of getting generic drugs to the marketplace. He called the move “another important advancement in the cause of bringing more affordable prescription medicines to our seniors.”

Under the new Bush rules, which do not require congressional approval but are subject to a public comment period, pharmaceutical companies would be permitted just one 30-month patent extension per patented drug. Currently, brand-name pharmaceutical manufacturers can stave off competition from generics by getting the Food and Drug Administration’s approval for multiple patent extensions on a single medication.

Brand-name drug manufacturers sometimes file lawsuits against generic drug makers getting ready to market a less-expensive version of a brand-name product. The lawsuits invoke the 1984 Hatch-Waxman Act, which was meant to promote competition in the drug industry but gives brand-name makers up to 30 months of patent protection if they go to court to challenge a generic version of their drug on patent infringement issues. By claiming to have a patent on their packaging and various modifications to their brand-name drug, they sometimes win multiple 30-month extensions.

The new rules make it clear that drug companies cannot file patents on such product aspects as packaging changes, metabolites, and intermediates that are unlikely to represent significant innovations to the original drug. Drug makers would also be required to provide the FDA with additional information when filing patents, in order to discourage the filing of patents that are not permitted by law.

“Our message to the brand-name manufacturers is clear: You deserve the fair rewards of your research and development; you do not have the right to keep generic drugs off the market for frivolous reasons,” Bush said.

Emboldened by FTC Report

Until now, the administration has been reluctant to challenge brand-name pharmaceutical manufacturers by taking direct action on the generic drug issue. The centerpiece of Bush’s Rx program to help the uninsured has been a drug discount card, supported by drug manufacturers but opposed by pharmacies and drugstores.

Earlier this year, the Federal Trade Commission concluded an investigation of eight prominent cases in which drug companies used a litigation strategy to delay generic competition on such drugs as Taxol, a chemotherapy drug commonly used for breast cancer, and Paxil, a popular antidepressant. According to administration sources, the President’s proposal comes in response to the FTC report, which was published this past summer.

A top Bush official, asking for anonymity, said the administration is confident the action is legally solid. In essence, the President’s plan closes loopholes in current patent law that allow the big brand-name drug manufacturers to use the courts to delay generic competition once the patent has expired on one of their blockbuster drugs.


Tom Miller, director of health policy studies for the Cato Institute, was cautiously optimistic about the results the Bush plan might achieve. “The proposed regulation will curb the current handful of abuses of the patent process for prescription drugs,” Miller noted, “without undermining broader incentives for innovative research. We need to maintain a balance between encouraging lower drug prices through generic competition and ensuring that brand-name manufacturers will continue to create new lifesaving drugs.”

Health insurance administrators, AARP officials, many Republicans, and the generic drug industry were more effusive in their praise for the new proposal, according to the Washington Post. The Wall Street Journal reported Governor William Janklow (R-South Dakota) as predicting, “This is going to save the public a lot of money.”

Nevertheless, some legislators criticized the President for issuing the rules shortly before last month’s mid-term elections. Rep. Richard Gephardt (D-Missouri) called the announcement a “cynical election-year ploy” intended to attract the votes of seniors facing high prescription drug costs. Senator Tom Daschle (D-South Dakota) said the proposal contains “loopholes and omissions” and has inadequate enforcement mechanisms.

The Bush plan was also criticized for omitting provisions contained in a bill (S. 812) passed in July by the Senate but never approved by the House. The Senate bill includes language giving generic drug makers the right to sue a brand-name manufacturer who files new patents solely to prevent competition. It would also require brand-name makers to file any suits against generic competitors within specific time limits. Sen. Charles Schumer (D-New York), a sponsor of the Senate legislation, said Bush’s proposal “closes one door to the pharmaceutical industry in their attempt to delay generics, but it opens up several others.”

Jake Hansen, vice president of the generic drug company Barr Laboratories, said the new regulations “would probably take care of 70 percent of the problems addressed in the Senate bill.”

The brand-name pharmaceutical industry had few comments following the announcement. Jeff Trewitt, a spokesperson for the Pharmaceutical Research and Manufacturers of America (PhRMA), merely said the proposal was “complex” and would be reviewed.

Several attorneys representing brand-name drug companies predicted the industry would file suit opposing the new Bush rules. In a story from the Washington Post, Marc Scheineson, a former FDA official now specializing in food and drug law, said although the White House appears to be on solid legal ground, the incentive for the industry to litigate is enormous.

The Cato Institute’s Miller urged the administration to improve on the plan by focusing on bigger issues. “Instead of focusing too narrowly on opportunistic short-term fixes,” he said, “we should also reexamine other factors that push drug prices higher: the burdensome FDA drug-approval process that delays entry of innovative products and limits competition, and the excessive growth of third-party insurance coverage of prescription drugs that desensitizes individual consumers to the full cost of their spending decisions.”

Conrad F. Meier is managing editor of Health Care News.

For more information …

The new rule was published in the Federal Register on October 24, opening a 60-day public comment period that closes December 23. The complete text of the new rule and information about how to submit public comments are available on the Internet at http://frwebgate5.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=2241516857+0+0+0&WAISaction=retrieve (HTML) or http://frwebgate5.access.gpo.gov/cgi-bin/waisgate.cgi?WAISdocID=2241516857+0+1+0&WAISaction=retrieve (PDF)