[Congressional Record Volume 153, Number 18 (Tuesday, January 30, 2007)]
[Senate]
[Pages S1351-S1352]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER (for himself, Mr. Schumer, Mr. Kohl, and Mr. 
        Leahy):
  S. 438. A bill to amend the Federal Food, Drug, and Cosmetic Act to 
prohibit the marketing of authorized generic drugs; to the Committee on 
Health, Education, Labor, and Pensions.
  Mr. ROCKEFELLER. Mr. President, I rise today with Senators Schumer,

[[Page S1352]]

Kohl and Leahy to reintroduce an important bill for all Americans. The 
bill that we are reintroducing today would reduce barriers to 
affordable prescription drugs by eliminating one of the prominent 
loopholes brand name drug companies use to limit access to generic 
drugs.
  Our bill, the Fair Prescription Drug Competition Act of 2007, would 
end the marketing of so-called ``authorized generics'' during the l80-
day period Congress created exclusively for true generics to enter the 
market. I have spoken with my colleagues many times about this 
important issue.
  In an effort to balance the need for returns on research facilitated 
by brand name prescription drug companies with the need for more 
affordable prescription drug options for consumers, Congress passed the 
Hatch-Waxman law in 1984. This law provided brand name companies with a 
number of incentives for investing in the research and development of 
new medications. These included a 20-year patent on drugs, 5 years of 
data exclusivity, 3 years of exclusivity for clinical trials, up to 5 
years of patent extension, 6 months exclusivity for conducting 
pediatric testing, and a 30-month automatic stay against generic 
competition if the generic challenges the brand patent. Generic 
prescription drug manufacturers, on the other hand, received a l80-day 
exclusivity period, awarded to the first company to successfully 
challenge a brand name patent and enter the market.
  This 6-month exclusivity period has been crucial to encouraging 
generic drug companies to make existing drugs more affordable. 
Challenging a brand name drug's patent takes time, money, and involves 
absorbing a great deal of risk. Generic drug companies rely on the 
added revenue provided by the 180-day exclusivity period to recoup 
their costs, fund new patent challenges where appropriate, and 
ultimately pass savings onto consumers.
  Since 1984, there have been many attempts to exploit loopholes in the 
law in order to delay generic entry to the market and extend brand 
monopolies. The 2003 Medicare law addressed many of these loopholes. 
However, brand name manufacturers have found another loophole in 
current law, so-called ``authorized generics.''
  An authorized generic drug is a brand name prescription drug produced 
by the same brand manufacturer on the same manufacturing lines, yet 
repackaged as a generic in order to confuse consumers and shut true 
generics out of the market. Because it is not a true generic and does 
not require an additional FDA approval, an authorized generic can be 
marketed during the federally mandated 6-month exclusivity period for 
generics. This discourages true generic companies from entering the 
market and offering lower-priced prescription drugs.
  As I have said many times, authorized generics are a sham. This 
practice of re-labeling a brand product and placing it on the market to 
undermine the 180-day exclusivity period will only serve to reduce 
generic competition and lead to longer brand monopolies and higher 
healthcare costs over the long-term.
  Brand name drug companies are expected to lose as much as $75 billion 
over the next 5 years as some of their best sellers go off-patent and 
generic competition increases. So, not surprisingly, these big 
pharmaceutical companies are desperately trying to protect their market 
share and prevent consumers from cashing in on savings from generic 
drugs,
  Today, generic medications comprise more than 56 percent of all 
prescriptions in this country, and yet they account for only 13 percent 
of our nation's drug costs. In fact, generic drugs provide 50 to 80 
percent cost-savings over brand name drugs. These savings make a big 
difference in the lives of working families. That is why we must 
protect the true intent of Hatch-Waxman.
  The bill we are introducing today eliminates the authorized generic 
loophole, protects the integrity of the 180 days, and improves consumer 
access to lower-cost generic drugs. I urge my colleagues to support 
this timely and important piece of legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 438

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair Prescription Drug 
     Competition Act''.

     SEC. 2. PROHIBITION OF AUTHORIZED GENERICS.

       Section 505 of the Federal Food, Drug, and Cosmetic Act (21 
     U.S.C. 355) is amended by adding at the end the following:
       ``(o) Prohibition of Authorized Generic Drugs.--
       ``(1) In general.--Notwithstanding any other provision of 
     this Act, no holder of a new drug application approved under 
     subsection (c) shall manufacture, market, sell, or distribute 
     an authorized generic drug, direct or indirectly, or 
     authorize any other person to manufacture, market, sell, or 
     distribute an authorized generic drug.
       ``(2) Authorized generic drug.--For purposes of this 
     subsection, the term `authorized generic drug'--
       ``(A) means any version of a listed drug (as such term is 
     used in subsection (j)) that the holder of the new drug 
     application approved under subsection (c) for that listed 
     drug seeks to commence marketing, selling, or distributing, 
     directly or indirectly, after receipt of a notice sent 
     pursuant to subsection (j)(2)(B) with respect to that listed 
     drug; and
       ``(B) does not include any drug to be marketed, sold, or 
     distributed--
       ``(i) by an entity eligible for exclusivity with respect to 
     such drug under subsection (j)(5)(B)(iv); or
       ``(ii) after expiration or forfeiture of any exclusivity 
     with respect to such drug under such subsection 
     (j)(5)(B)(iv).''.

  Mr. LEAHY. Mr. President, I am pleased today to join Senators 
Rockefeller, Kohl and Schumer in introducing legislation to end the use 
of so-called ``authorized generics'' during the 180-day period that 
Congress intended for true generic market exclusivity. Authorized 
generics are nothing more than repackaged brand name drugs purporting 
to be a generic, but without the benefit of a true generic's lower 
cost. This practice is anticompetitive and anti-consumer.
  Amendments to the Hatch-Waxman Act of 1984, enacted as part of the 
Medicare Modernization Act (Title XI, PL 108-173) in 2003, generally 
grant a generic company that successfully challenges the patent of a 
name brand pharmaceutical company 180 days of marketing exclusivity on 
that generic drug. Having co-sponsored those amendments, I know that 
they were designed to give greater incentives for generic manufacturers 
to bring generic drugs quickly to the market, thus promoting 
competition and lowering prices for consumers.
  In 2005, Senators Grassley and Rockefeller and I raised concerns 
about the practice of manufacturing authorized generics. We feared that 
practice could have a negative impact on competition for both 
blockbuster and smaller drugs, because the generic industry would be 
less inclined to invest in their production. According to a recent 
Generic Pharmaceutical Association study, our fears were well founded: 
Authorized generics diminish Hatch-Waxman incentives for generic firms 
to challenge brand name patents, resulting in higher consumer prices.
  The legislation we introduce today bars brand name drug firms from 
producing ``authorized generics.'' Slapping a different name on a 
patented drug and calling it generic is not real competition, and it 
saps incentives from real generic drug makers to compete by making 
lower-cost generic drugs. Consumers deserve the lower costs and real 
choices of truly generic medicines.
  I look forward to working with my colleagues on both sides of the 
aisle to make this good bill into a good law.

                          ____________________