Patent Protection Law at Risk

Published August 30, 2002

Failing to pass a prescription drug benefit for seniors in July, the Senate offered consumers legislation that encourages cheaper generic alternatives to brand-name drugs by passing the Greater Access to Affordable Pharmaceuticals Act (GAAP).

Principal sponsors of the GAAP legislation, Senators Charles E. Schumer (D-New York) and John McCain (R-Arizona), claim it would save consumers $60 billion over the next decade by reducing the number of legal disputes over patents on brand-name drugs.

Under the measure, brand-name pharmaceutical companies would no longer be granted an automatic, 30-month extension of patents set to expire. Instead, the drug companies would have to go to court to get the patents extended. According to industry sources, the patent protection for intellectual property, which includes life-enhancing medications, would be severely compromised.

The bill was supported by a coalition of corporate employers, labor unions, and state governors, Business for Affordable Medicine (BAM), a major force pressing for reform of the Hatch-Waxman Act, the ruling authority on patent protection.

Big employers and insurers, including Blue Cross Blue Shield, General Motors, and Caterpillar, also lobbied on behalf of the bill, as did groups such as AARP and the National Governors Association. All see the bill as a way to lower health costs.

A similar bill, sponsored by Reps. Jo Ann Emerson (R-Missouri) and Sherrod Brown (D-Ohio), has been introduced in the House, where it faces an uncertain future. Rep. Billy Tauzin (R-Louisiana) said he will seek action, but House Speaker Dennis Hastert (R-Illinois) made no mention of the bill when he blasted the Senate for failing to pass a prescription-drug benefit.

Hastert’s spokesman, John Feehery, said “We’re not going to even entertain the notion” of a generic drug bill until the Senate takes clearer action on a prescription drug benefit.

If the House passes its version of GAAP, the two measures would be reconciled in a conference committee before being submitted for the President’s signature.

Bad Public Policy

Alan Holmer, president of the Pharmaceutical Research and Manufacturers of America (PhRMA), called the GAAP bills “an example of election-year politics trouncing good public policy.”

The bills would make a variety of changes in the Hatch-Waxman Act aimed at closing loopholes critics say brand-name manufacturers have used to extend patents on certain drugs. The key change: limiting to one the number of 30-month patent extensions routinely granted to brand-name drug makers as their patents near an end.

Brand-name drug makers argue they need the longer monopoly periods assured by the Hatch-Waxman Act to recoup their investments in research and development. Cutting off R&D financing would significantly slow—and in some cases, halt altogether—efforts to bring innovative new drugs to market. Generic drug makers do not innovate new medications. They simply copy and manufacture brand-name medications already developed.

Intellectual Property Issues

Although he did not dispute the possibility that reform is needed, Senator Orrin Hatch (R-Utah) told Congress the GAAP legislation goes too far without a compelling demonstration of alleged abuses. Hatch warned GAAP upsets the careful balance achieved in 1984 with the Bolar provision of Hatch-Waxman, which allows generic drug firms to start the FDA approval process even before a drug’s original patent has expired.

Hatch’s position has support from an important group of experts: physicians. In March and April 2002, Ayres, McHenry & Associates conducted a national survey of physicians regarding their views on intellectual property issues. The survey results indicate physicians see patent protection for new prescription drugs as vitally important to the continued development of new drugs. Among the survey’s findings:

  • Seventy-five percent of doctors say patent protection for new prescription drugs is very important to create the incentives to discover and develop new drugs.
  • Sixty-seven percent of doctors say weakening patent protection will hurt research and innovation. They think it realistic to fear weakening patent protection will lead to less research on cures for rare diseases.
  • Eighty-eight percent of physicians say the continuing development of new prescription drugs is very important to their patients.
  • Eight out of ten doctors give brand name pharmaceutical companies credit for discovering and developing new prescription drugs leading to breakthrough cures.
  • Two-thirds of doctors consider it realistic to fear weakening patent protection for new drugs will increase the price consumers have to pay for medications.

For more information …

The Senate version of GAAP legislation is available at the Thomas Web site at The House version can be found at

More information on the Ayres, McHenry & Associates survey of physicians can be found at the firm’s Web site at