[Congressional Record Volume 144, Number 151 (Wednesday, October 21, 1998)]
[Senate]
[Pages S12846-S12847]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         DRUG PRICE COMPETITION AND PATENT TERM RESTORATION ACT

  Mr. HATCH. Mr. President, 14 years ago, when I served as Chairman of 
the Senate Labor and Human Resources Committee, I teamed up with 
Representative Henry Waxman, Chairman of the Subcommittee on Health and 
the Environment of the House Energy and Commerce Committee, to lead 
passage of the Drug Price Competition and Patent Term Restoration Act 
of 1984.
  The bottom line of this law was to improve the health of the American 
people. The statute accomplishes this in two primary ways: First, it 
essentially created the market for more moderately priced generic drugs 
by allowing generic manufacturers to demonstrate their equivalence to 
pioneer products without duplicating all of the original safety and 
efficacy data. Relieved of this costly burden, generic drug firms can 
provide their products at competitive prices which are attractive to 
many consumers.
  Second, pioneer drug firms became eligible for restoration of some of 
the patent term lost due to the extensive

[[Page S12847]]

FDA review of safety and efficacy that all new drugs must undergo. This 
partial restoration of patent term--up to five years in certain 
circumstances when such restoration would not result in a greater than 
14 year effective patent life--allowed pioneer drug firms additional 
time to recoup the enormous investments required to bring a new drug to 
market. This helped attract the investment capital that pioneer firms 
need to develop the next generation of life-saving drugs.
  Consumers benefit from this win-win dynamic because the American 
public gets both new drugs and competitively priced off-patent 
medications.
  As we start the 15th year since the enactment of this important 
health and consumer law, we have a generic pharmaceutical sector that 
has developed into an integral part of the health care system, which 
together with innovator pharmaceutical and biotechnology companies lead 
the world in the development and marketing of new health care products.
  While I think that the track record of the Hatch-Waxman Act is 
enviable, I hope that we can even do better for the American public in 
the future.
  Accordingly, I intend to devote time during the next Congress to 
begin the necessary examination into how we can make changes in the law 
that will increase our ability to produce both the innovative products 
that we have come to expect and the lower priced generic products that 
are so attractive to the family budget.
  I intend for this examination to include a serious study of how well 
the Drug Price Competition and Patent Term Extension Act has functioned 
over the past 14 years, whether the Act has fulfilled its initial 
promise, how the courts have interpreted the Act, and indeed, how it 
has been implemented. I hope to work closely in this endeavor with my 
good friend and colleague Senator Jim Jeffords, Chairman of the Labor 
and Human Resources Committee, which shares jurisdiction over the Act 
with the Judiciary Committee.
  A major test of such a review will be to assemble a package of 
initiatives that will retain the delicate but essential balance between 
the innovator and generic sectors of the industry. This will be a 
difficult task but it is a worthwhile endeavor for the American people.
  Even during this session of Congress, some have proposed changes to 
our nation's drug discovery laws. There has, for example, been some 
discussion about changing one of the most controversial provisions of 
the 1984 law--the so-called Bolar Amendment. Section 271(e) of the 
Title 35, contains language to overturn a 1984 Federal Circuit Court of 
Appeals ruling in the case of Roche v. Bolar Pharmaceutical Co., which 
held that conducting the tests required to secure approval of generic 
copies of pioneer drugs constituted patent infringement. Section 
271(e)(1) establishes an exception to patent infringement laws to 
authorize generic pharmaceutical companies to conduct testing on patent 
approved pharmaceutical products for purpose of filing an abbreviated 
new drug application.
  Recently, the application of section 271(e)(1) has been a matter of 
some controversy in an on-going legal battle between two pioneer drug 
firms, one company holding existing patent protection and FDA product 
approval and the other company asserting its own patent rights and 
seeking pioneer rather than generic approval from FDA. While ultimately 
the courts must decide whether this is a case of patent infringement, 
it is clear that this is not merely a simple, garden variety patent 
infringement case because it also raises the question of precisely what 
type activities that section 271(e)(1) should allow, and should not 
allow, in the context of developing not only generic drugs but new 
drugs and biologicals that they potentially compete directly with.
  While I do not take a position on the merits of the actual patent 
rights in dispute in the current Amgen v. Hoechst Marion Roussel 
litigation, I must say this case is of some concern to me, especially 
with regard to court's initial findings which are not consistent with, 
and broaden, Congress' intent in enacting 271(e).
  I do believe Congress would be wise to reassess the breadth of 
section 271(e)(1) in light of this and a number of court decisions 
since 1984 that have tended to expand the scope of this provision. One 
case in particular is the 1990 Supreme Court decision in Lilly v. 
Medtronic.
  My position on these questionable decisions has been clear for some 
time. I was, in fact, a signatory to an amicus brief in the Lilly case 
that argued for a somewhat narrower interpretation of 271(e)(1) than 
has evolved in the courts.
  One proposal worthy of serious consideration is to more clearly limit 
the applicability of 271(e)(1) to exclude testing and other activities 
necessary for approval of NDAs and BLAs from the patent infringement 
exemption. Of course, the 271(e)(1) question is only one of many issues 
that will undoubtedly be proper for further discussion in the next 
Congress.
  Some are concerned about whether drugs that were already in FDA 
review at the time of enactment of Hatch-Waxman (the ``pipeline 
drugs'') have received adequate and fair patent protections in view of 
subsequent delays that were encountered. Congress should undertake 
complete review of this proposal during our study of Waxman-Hatch next 
year, as I believe the evidence will show that there are inequalities 
we should take steps to remediate.
  Others are concerned about the application of the 180 day generic 
drug exclusivity rule in the aftermath of the Mova decision. Indeed, 
some are advocating report language that will give FDA new leeway to 
adopt a ``first-to-succeed'' in patent litigation approach rather than 
the ``first-to-file'' an ANDA that the courts have found.
  Frankly, I have concerns about the current outcome whereby some ANDA 
applicants appear to be handsomely rewarded by pioneer firms for not 
selling generic competitors.
  Still others advocate in the spirit of international harmonization 
adopting the European rule of a 10 year marketing exclusivity period 
for all new drugs. And others point out that the advent of the new 
GATT-required 20 year from filing patent term may change the 
traditional incentives in coordinating PTO and FDA approvals.
  It is time, some argue, to do away completely with current rule by 
which only 5 years of patent life may be restored to compensate time 
lost at FDA and only if the effective patent term does not exceed 14 
years. Some would also like to revise the rule that limits patent 
restoration for time lost during the IND phase in a for each 2-days 
lost, 1-day restored ratio.
  On the generic side of the industry, there is concern that as NDA 
approvals speed up due to user fees, generic approvals continue to lag 
and take much longer than NDAs. There is also great frustration about 
what some describe as challenges to the bioequivalence of generic 
products that are more a delaying and harassing tactic than a bona fide 
scientific dispute.
  And then, there are those in the generic industry who believe that 
FDA's Orange Book, which records the patents in effect for FDA approved 
drugs, should be renamed as the ``Evergreen Book''!
  So there are many issues that merit consideration as we reassess the 
adequacy of the laws pertaining to the generic and pioneer sectors of 
the pharmaceutical industry.
  Our focus should be on ascertaining what steps we can take that will 
most benefit the American people in terms of providing incentives both 
for the development of new drugs and the production of competitively 
priced generic products. This has and will continue to require a 
delicate balance. There is an inherent tension between the twin goals 
discovering the next generation of drugs while at the same time 
providing generic versions of today's medications.
  My goal is to reconcile these somewhat conflicting but wholly 
meritorious goals in the interest of the American people, and I look 
forward to working with my colleagues in the House and Senate on this 
complex issue next year.

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