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Recent Developments Which May Impact Consumer Access to, and Demand for, Pharmaceuticals
Subcommittee on Health
Prepared Statement of The Honorable Billy Tauzin
Mr. Chairman: I'd like to begin by commending you for calling this very important, and timely, hearing today. Our purpose today is to consider three important matters: Access to generic drugs, direct-to-consumer broadcast advertising, and the government's authority to switch prescription drugs to over-the-counter status over the objection of drug sponsors. These three issues directly impact our constituents who want the best quality pharmaceuticals at the lowest possible prices. In 1984 the Congress passed the Hatch-Waxman, or as my friends on the other side of the aisle call it, the Waxman-Hatch Act. This Act did two primary things: it restored patent terms to innovators which had to navigate the lengthy FDA drug approval process prior to marketing, and it provided an expedited drug approval process for generic drugs. In my view, the 1984 Act has proven to be a resounding success. In 1984, the market share for generic drugs was less than 20%, and today that figure stands at nearly 50%. So consumers now have greater access to lower-priced therapies. At the same time, we've seen an explosion in innovator investment in research and development. Research-based pharmaceutical companies have increased their R&D spending from $3.6 billion in 1984 to over $30 billion today. Knowing that innovator drugs will face competition immediately upon patent expiration forces the innovators to do what they do best: innovate. That being said, there are some who urge that the 1984 Act needs some fine-tuning; that certain loopholes have been abused, thus delaying consumer access to lower-cost generics. The primary focus of these comments concern the automatic 30 month stay on generic approval at FDA when the generic challenges an innovator patent as invalid or not infringed, and the 180 day generic exclusivity provision of the Act. There have been a few recent, high profile examples of abuse of the 30 month stay provision. And while these few examples have led some to call for major revisions of Hatch-Waxman, I say let us keep things in perspective. While some reforms may be necessary, we cannot lose sight of the fact that between 1984 and January, 2001, 8,259 generic applications were filed with FDA, and only 478 generic applications, or 5.8% of the total, raised any patent issues. In essence, the 30 month stay is rarely a barrier to generic access to the market. That is not to say, however, that the Congress must turn a blind eye if the stay acts as an artificial barrier to generic competition. These are issues we must consider today. Further, we must explore how the 180 day generic exclusivity provision is working. I believe there should be incentives for generics to challenge weak patents. In 1984 it was thought that 180 days of generic exclusivity would ensure this. But the market place has changed dramatically since then. Now we see three, four, some times five generics lining up to challenge patents on blockbuster drugs, even though only the first generic to challenge is eligible for the exclusivity. Further, the courts have determined that to be eligible for the exclusivity all the generic has to do is file the challenge first, not successfully defend a patent infringement case. These developments raise many issues we need to explore: For example, should the exclusivity roll to subsequent challengers when the first challenger settles its case? Or, is the statutory incentive even necessary now, given the market incentives which lead to multiple generic applicants with no chance of exclusivity challenging patents? Regarding direct-to-consumer, or DTC, broadcast advertising, I am especially interested in learning whether these ads lead to increased utilization of inappropriate therapies, educate consumers to seek therapies which lead to healthier lives, or maybe a bit of both. There has been a lot of anecdotal information on this subject, and I know that FDA is presently conducting a review of DTC's impact. While increases in DTC broadcast advertising spending have coincided with increases in overall expenditures on pharmaceuticals, I think it is premature to draw a causal connection between the two, though the existence of a connection must be studied. There is information pointing to DTC broadcast ads having an overall positive impact. For instance, a 1999 FDA survey found that 27% of those who sought information from their doctors after seeing a DTC ad asked their physicians about a condition they had not discussed before. Further, a recent Prevention Magazine survey found that 76% of Americans believe DTC ads help them become more involved in their own health care. At the same time, there is no denying that the advertising is concentrated on a relatively short list of drugs. The most recent statistics show that about 12 drugs accounted for nearly half of all DTC broadcast spending. And it probably comes as no surprise that these drugs are some of the biggest sellers. Last, the Subcommittee will focus on whether the FDA has the authority to switch a drug from prescription status to over-the-counter, or OTC, status over the objection of drug sponsors. This issue just recently came to the fore when one of our witnesses before us today, WellPoint, filed a citizens petition urging such a switch. The issue to me isn't whether the drugs at issue in the WellPoint petition are safe enough to be switched, but rather whether the FDA has the authority to make the switch without the consent of the sponsor. For past decades, it was widely understood that the only way to sell an OTC drug was to either comply with a monograph, or to petition the FDA for a switch of your prescription drug through a new drug application. However, there is no denying that Section 503(b)(3) of the Code states that the "Secretary may by regulation remove drugs [from prescription status] when such requirements are not necessary for the protection of the public health." While this provision in the Code is a half-century old, it's plain meaning seems evident. I need to hear from our witnesses why my understanding of this provision may be misinformed, or whether I understand it correctly. And if it turns out that the Secretary does have the authority under the Code to make the switch, we must explore what kind of process must be afforded to drug sponsors who object to the switch. Are they entitled to evidentiary hearings? Will they be forced to conduct label comprehension studies? Will the switch amount to a Constitutional taking? We should consider all of these issues at our hearing today. Thanks again, Chairman Bilirakis, for considering these very important issues today. I look forward to the testimony of our witnesses.
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