Generics Added to Medicare Reform Measure

Published August 1, 2003

The Senate voted 94-1 on June 19 to approve a proposal aimed at speeding the market entry of generic drugs by eliminating some patent extension practices used by brand-name drug manufacturers.

Under current law, brand-name companies can obtain from the Food and Drug Administration (FDA) multiple 30-month stays of their patents in an effort to protect their intellectual property from patent violations.

The Senate amendment, also passed by the Senate Health, Education, Labor and Pensions Committee as a separate bill (S. 1225), would amend the 1984 Hatch-Waxman Act to allow brand-name companies only one 30-month extension in cases where the brand-name company claims patent infringement by a generic drug company. Senator Orrin Hatch (R-Utah) cast the only dissenting vote.

The Senate bill expands on new FDA regulations announced by President George W. Bush in late June. Those regulations will allow brand-name pharmaceutical companies only one 30-month delay in patent infringement cases and will make brand-name pharmaceutical companies liable for criminal charges if they make false claims in the patent process.

Unlike the Senate measure, however, the Bush rule does not eliminate a provision of current law that gives the first generic form of a brand-name drug to come to market 180 days of exclusivity. The Senate bill would eliminate the exclusivity period if a generic drug company fails to come to market with its product in a timely manner, or if it is determined the company had entered into an anticompetitive deal with a brand-name manufacture.

The Bush rule also does not allow generic drug makers to file counterclaim lawsuits. Such suits would be allowed, although not without limits, under the Senate measure.


Senator Charles Schumer (D-New York), one of the proposal’s sponsors, said the changes would save consumers between $60 and $70 billion over the next 10 years and could shrink Medicare costs by $18 to $20 billion. According to reports in the New York Times, Schumer said the plan would do away with the “frivolous patents, lawsuits, and legal mumbo-jumbo” used by brand-name drug makers to delay the availability of generic medicines.

Senator Judd Gregg (R-New Hampshire), also a sponsor, said the measure would make “generic drugs more available to consumers on a faster time frame” but would not limit “innovation in our brand-name [drug] companies.”

Jeff Trewhitt, spokesperson for the Pharmaceutical Research and Manufacturers of America, was less certain of the measure’s effects on the industry. He warned, “It is important that the tilt in incentives not be given to the generics industry, since it is the innovative brand-name industry that researches and develops new medicines that patients need.”

Uncertain Chances

According to the Los Angeles Times, the measure was approved as part of the broader Medicare reform bill because some legislators and activist groups have complained the bill, although it provides new insurance for drug expenses, would do little to solve the related problem of soaring prescription drug costs.

Although similar legislation passed the Senate last year and died in the House, the bill’s Senate sponsors are more optimistic this time around. They have changed the bill to include provisions sought by House Republicans.

Conrad F. Meier is managing editor of Health Care News. His email address is [email protected].