[Congressional Record Volume 149, Number 62 (Tuesday, April 29, 2003)]
[Senate]
[Pages S5493-S5494]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY (for himself, Mr. Grassley, Mr. Durbin, Mr. 
        Feingold, Mr. Kohl, and Mr. Schumer):
  S. 946. A bill to enhance competition for prescription drugs by 
increasing the ability of the Department of Justice and Federal Trade 
Commission to enforce existing antitrust laws regarding brand name 
drugs and generic drugs; to the Committee on the Judiciary.
  Mr. LEAHY. Mr. President, last November, the Drug Competition Act 
passed the Senate by unanimous consent. This morning, I am proud to 
join Senator Grassley, along with Senators Durbin, Feingold, Kohl and 
Schumer in re-introducing this important bill, I hope that in this 
Congress it is actually enacted into law. Prescription drug prices are 
rapidly increasing, and are a source of considerable concern to many 
Americans, especially senior citizens and families. Generic drug prices 
can be as much as 80 percent lower than the comparable brand name 
version.
  While the Drug Competition Act is small in terms of length, it is 
large in terms of impact. It will ensure that law enforcement agencies 
can take quick and decisive action against companies that are driven 
more by greed than by good sense. It gives the Federal Trade Commission 
and the Justice Department access to information about secret deals 
between drug companies that keep generic drugs off the market. This is 
a practice that hurts American families, particularly senior citizens, 
by denying them access to low-cost generic drugs, and further inflating 
medical costs.
  Last fall, the Federal Trade Commission released a comprehensive 
report on barriers the entry of generic drugs into the pharmaceutical 
marketplace. The FTC had two recommendations to improve the current 
situation and to close the loopholes in the law that allow drug 
manufacturers to manipulate the timing of generics' introduction to the 
market. One of those recommendations was simply to enact our bill, as 
the most effective solution to the problem of ``sweetheart'' deals 
between brand name and generic drug manufacturers that keep generic 
drugs off the market, thus depriving consumers of the benefits of 
quality drugs at lower prices. In short, this bill enjoys the 
unqualified endorsement of the current FTC, which follows on the 
support by the Clinton Administration's FTC during the initial stages 
of our formulation of this bill. We can all have every confidence in 
the common sense approach that our bill takes to ensuring that our law 
enforcement agencies have the information they need to take quick 
action, if necessary, to protect consumers from drug companies that 
abuse the law.
  Under current law, the first generic manufacturer that gets 
permission to sell a generic drug before the patent on the brand-name 
drug expires, enjoys protection from competition for 180

[[Page S5494]]

days--a headstart on other generic companies. That was a good idea--but 
the unfortunate loophole exploited by a few is that secret deals can be 
made that allow the manufacturer of the generic drug to claim the 180-
day grace period--to block other generic drugs from entering the 
market--while, at the same time, getting paid by the brand-name 
manufacturer not to sell the generic drug.
  Our legislation closes this loophole for those who want to cheat the 
public, but keeps the system the same for companies engaged in true 
competition. I think it is important for Congress not to overreact and 
throw out the good with the bad. Most generic companies want to take 
advantage of this 180-day provision and deliver quality generic drugs 
at much lower costs for consumers. We should not eliminate the 
incentive for them. Instead, we should let the FTC and Justice look at 
every deal that could lead to abuse, so that only the deals that are 
consistent with the intent of that law will be allowed to stand. The 
Drug Competition Act accomplishes precisely that goal, and helps ensure 
effective and timely access to generic pharmaceuticals that can lower 
the cost of prescription drugs for seniors, for families, and for all 
of us.
  I regret that some in the Senate stalled action on this worthwhile 
measure until very late in the last Congress and that the House chose 
not to act at all, and I hope that the growing need for more cost-
effective health care solutions will serve as a catalyst for quick 
action on this needed legislation.
  Mr. GRASSLEY. Mr. President, I am pleased to join Senator Leahy today 
in introducing the Drug Competition Act of 2003. This bill will help 
Federal regulators ensure that there is full and unfettered access to 
competition for prescription drugs under the law. As the past Chairman 
of the Special Committee on Aging and now as the Chairman of the 
Finance Committee, I want to make sure that American consumers--
especially our seniors--are able to get the life-saving drugs they need 
in a competitive manner.
  Our patent laws provide drug companies with incentives to invest in 
research and development of new drugs. But the law also provides that 
generic drug companies have the ability to get their own drugs on the 
market so that there can be price competition and lower prices for 
prescription drugs. We have a legal system in place that provides for 
such a balance--the Hatch-Waxman law. Ultimately, we want consumers and 
seniors to have more choices and to get drugs at lower prices.
  So, I was concerned when I heard reports that the Federal Trade 
Commission had brought enforcement actions against brand-name and 
generic drug manufacturers that had entered into anti-competitive 
agreements, resulting in the delay of the introduction of lower priced 
drugs. This bill targets that problem.
  Under the Hatch-Waxman Act, manufacturers of generic drugs are 
encouraged to challenge weak or invalid patents on brand-name drugs so 
consumers can benefit from lower generic drug prices. Current law gives 
temporary protection from competition to the first generic drug 
manufacturer that gets exclusive permission to sell a generic drug 
before the patent on the brand-name drug expires. This gives the 
generic firm a 180-day head start on other generic companies.
  However, the FTC discovered that some companies were exploiting this 
law by entering into secret deals, which allowed the generic drug 
makers to claim the 180-day grace period and to block other generic 
drugs from entering the market, while at the same time getting paid by 
the brand-name manufacturer for withholding sales of the generic 
version of the drug. This meant that consumers continued to pay high 
prices for drugs, rather than benefiting from more competitive and 
lower prices. So the FTC brought enforcement actions against these 
companies.
  In addition, the FTC conducted a comprehensive review of agreements 
that impacted the 180-day exclusivity period. The FTC found that there 
are competition problems with some of these agreements that potentially 
delayed generic drug entry into the market. The FTC recommended:

       Given this history, we believe that notification of such 
     agreements to the Federal Trade Commission and the U.S. 
     Department of Justice is warranted. We support the Drug 
     Competition Act of 2001, S. 754, introduced by Senator Leahy, 
     as reported by the Committee on the Judiciary.

  The Drug Competition Act is a simple solution to the 180-day 
exclusivity problems that the FTC has identified. The bill would 
require drug companies that enter agreements relating to the 180-day 
period to file those documents with the FTC and DOJ. It would impose 
sanctions on companies who do not provide timely notification. This 
process would facilitate agency review of the agreements to determine 
whether they have anti-competitive effects.
  The Drug Competition Act will ensure that consumers are not hurt by 
secret, anti-competitive contracts, so that consumers can get 
competition and lower drug prices as soon as possible. I urge my 
colleagues to support this bill.
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