[Congressional Record (Bound Edition), Volume 145 (1999), Part 9]
[House]
[Pages 12721-12723]
[From the U.S. Government Publishing Office, www.gpo.gov]



              COST OF PHARMACEUTICAL DRUGS AT RECORD HIGH

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Rhode Island (Mr. Kennedy) is recognized for 5 minutes.
  Mr. KENNEDY of Rhode Island. Madam Speaker, the cost of prescription 
drugs is certainly at a record high.
  Prescription drugs represent the highest out-of-pocket medical care 
cost for 75 percent of the elderly. Only long-term care costs more than 
these prescription drugs. And approximately 37 percent of seniors do 
not have the drug coverage necessary for them to be able to buy these 
drugs and afford them.
  But here in the Congress, a bill has been introduced that will 
further, I repeat, further increase the cost. That is right, not lower 
cost, not reduce the burden on our senior citizens, but a bill that 
will actually increase the cost to consumers and to market monopolies.
  H.R. 1598, the Patent Fairness Act, is anything but fair. What the 
bill would do is simple. It allows a back door for multi-billion-dollar 
patent extensions to go to seven pharmaceutical companies, possibly 
more. It continues monopolies for these drugs for more than 3 years 
and, therefore, deprives senior citizens as well as other consumers the 
choice of selecting a more affordable generic version.
  The estimated windfall for pharmaceutical companies for the extension 
will be at minimum $6 billion.
  The bill ignores a compromise reached in 1984 that gave those drugs 
under review by the FDA a 2-year extension and gave a future 
eligibility for extensions to drugs that have been filed at the FDA.
  In order to be fair, however, they still received an additional 2 
years of patent protection in order to foster their growth. These 
extensions have added up and have had the effect of giving these 
companies a monopoly on the marketplace. As a matter of fact, one of 
these drugs, Claritin, had a 1998 U.S. sales total of $1.8 billion.
  There is no need to continue the monopoly and, therefore, to continue 
the market exclusivity of these drugs and the high cost.
  In the meantime, however, several companies that are gearing up to 
provide more affordable generic versions of these drugs are being 
stifled because of these patent extensions. These patent extensions 
subvert the drug patent system and turn it into an anti-competitive 
shield to protect profits.
  And while the companies suffer, so do the average American citizens 
who are trying to afford these prescription drugs. The monopolies allow 
increased prices for their drugs and, therefore, the consumers pay 
more.
  Prescription drug costs have risen 85 percent in the last 5 years. 
Every day we hear more and more about the fact that many seniors and 
their families are forced to choose between dinner on the table and 
medicine in their bodies.
  As my colleagues can see from this graph here to my right, the 
average prescription drug price to consumers in the past 5 years has 
risen nearly $18 per prescription. Given the fact that generic drugs 
are usually priced between 30 and 60 percent less than the brand name 
drugs, we are seeing this monopoly raise prices and profits for these 
companies.
  Conservative groups like Citizens for a Sound Economy and Citizens 
Against Government Waste have criticized this proposal in the past. The 
Consumer Federation of America said that ``this is yet another attempt 
to slip a special-interest provision into an appropriations bill which 
will prove very costly to consumers.''
  Public Citizen called it the ``greedy special-interest grab at the 
expense of consumers and the health care industry.''
  This year we will let this issue be brought up and we will make sure 
that the affordability of prescription drugs will be paramount amongst 
our side, on the Democratic side, to make sure that we will not extend 
this drug monopoly and block generic drug competition.
  H.R. 1598 continues this high prescription drug prices, which we 
intend to fight every step of the way and make sure that we have more 
affordable generic medicines to provide our senior citizens with a 
choice.
  Prescription drug costs have skyrocketed. Senior citizens' cost for 
out-of-pocket expenses for these prescription drugs are occupying an 
ever increasing percentage of their out-of-pocket expenses. And if my 
colleagues think about it, we will actually save money by covering 
prescription drugs and reducing these drug prices by going for generic 
brands, as well.
  Because if senior citizens can afford these drugs, guess what, they 
do not end up in the hospital sick because they are not able to take 
the medications that their doctors tell them they must take if they are 
to remain well.
  This is a classic case of an ounce of prevention is worth a pound of 
cure. I would ask my colleagues to keep in mind that this is an 
important issue that we need to keep alive so that we focus our 
attention on this issue and preserve generic drugs for the consumers in 
this country.
  Mr. PALLONE. Madam Speaker, will the gentleman yield?
  Mr. KENNEDY of Rhode Island. I yield to the gentleman from New 
Jersey.
  Mr. PALLONE. Madam Speaker, I just want to thank my colleague the 
gentleman from Rhode Island (Mr. Kennedy) for organizing this special 
order.
  I want to add my voice to his tonight because we share the view that 
H.R. 1598 is a misguided and bad piece of legislation.
  One of the most pressing issues on Congress' agenda this year, if not 
the most pressing issue, has been looking for a way to make 
prescription drugs more for all Americans, and seniors in particular. 
It is unfortunate, however, that there is a movement in this body to do 
just the opposite. And let there be no mistake about it, the ``Patent 
Fairness Act of

[[Page 12722]]

1999'' is an attempt by some in the pharmaceutical industry to protect 
market share, and force consumers to continue to pay the highest 
possible price for prescription drugs.
  The brand name industry is well aware that generic competition has a 
dramatic impact on pharmaceutical costs. When a generic comes to 
market, it typically costs 30 percent less than the brand name version. 
After two years on the market, the prices drop further to 60 or 70 
percent of the brand name drug. The price of some generic drugs drop by 
as much as 90 percent.
  While these competitively priced alternatives are good for consumers, 
employers, government purchasers, and particularly the elderly, they 
are not good for the brand name producer trying to maintain 
monopolistic pricing. If there is no generic alternative available, 
consumers who need medicine have no choice but to buy the available 
brand drug and pay whatever it costs. It is for precisely this reason 
that a few brand name drug companies have been working so hard to get 
the so called ``Patent Fairness Act of 1999'' signed into law. A patent 
extension is the only way to protect the windfall profits these 
blockbuster drugs have been generating.
  In addition to keeping low cost, generic alternatives out of the 
reach of consumers, the ``Patent Fairness Act'' of 1999 is bad public 
policy for two other reasons. The first is that it turns the whole 
intent of the drug patent system on its head.
  The purpose of the patent system is to promote the research and 
development of new drugs. By granting patent extension above and beyond 
what is called for in current law, the Patent Fairness Act would create 
an anti-competitive environment, which is precisely opposite the 
intention of the 1984 Hatch-Waxman bill. That bill, which is in part 
named after my colleague from California, Henry Waxman, was designed to 
lower drug prices through competition, not to protect monopolies. It 
has been enormously successful in achieving that objective and Congress 
should not carve out a special exemption for a few companies seeking to 
squeeze a few more billion dollars out of American consumers.
  Secondly, it would also affect the federal government's ability to 
control health care costs. There are a number of legislative proposals 
that have been introduced to add a prescription drug benefit to 
Medicare, which is essential to modernizing the program. Indeed, the 
President is expected to unveil his plan to achieve this goal before 
the month is out. Carving out special exemptions for companies seeking 
to extend patents on blockbuster drugs for no good reason will 
complicate efforts to include a prescription drug benefit by driving up 
costs for the federal government. If the ``Patent Fairness Act'' 
becomes law, every major drug producer in America will be knocking on 
Congress' door for a patent extension, and the fight Democrats are 
already waging to include a meaningful prescription drug benefit in 
Medicare will get that much harder.
  Congress' energy would be much spent trying to make prescription 
drugs more affordable, not more expensive. I urge all of my colleagues 
in the House to recognize the Patent Fairness Act of 1999 for what is 
and oppose this misguided and ill-conceived effort to charge the 
American people billions of dollars to line the pockets of a few 
pharmaceutical companies.
  Mr. KENNEDY of Rhode Island. Madam Speaker, reclaiming my time, that 
these drugs are so costly; and we need to do everything in our power in 
this Congress to make sure seniors and other consumers are not 
overburdened by the cost of prescription drugs.
  Mr. PALLONE. Madam Speaker, if the gentleman would continue to yield, 
I appreciate that; and I agree.
  Mr. WAXMAN. Madam Speaker, I rise to join my colleagues in speaking 
against the ill advised, anti-consumer legislation, H.R. 1598, ``The 
Patent Fairness Act of 1999.''
  My first observation is that, having reviewed this bill, I would 
suggest it deserves a more appropriate title, like ``The Claritin 
Monopoly Extension Act'' or ``The Patently Unfair to Consumers Act of 
1999.''
  This proposal is a multibillion dollar assault on consumers. By 
keeping out competition, the drug companies which benefit from H.R. 
1598 can rake in money out of the pockets of Americans who already find 
it hard to pay for their medicines.
  The best estimates of this bill's cost to consumers range in the 
billions of dollars. We have no idea as yet of its potential costs to 
the Federal government, but it will undoubtedly line the pockets of a 
handful of companies with money taken directly from the pockets of 
American taxpayers, including the indigent and the elderly.
  H.R. 1598 is nothing more than a recycled versions of the patent 
extension which the pharmaceutical manufacturer, Schering-Plough, has 
attempted on repeated occasions to sneak into law. For many years, 
Schering has sought to extend its patent protections for Claritin, a 
prescription antihistamine with over $900 million in annual U.S. sales.
  Let me share with my colleagues the sordid history of this bill. Last 
year, Schering tried to sneak this patent extension into the omnibus 
appropriations bill. You may recall this is the legislation renowned 
for having been enacted into law with scarcely any Member claiming to 
have read it in its entirely. Only through vigorous opposition and 
publicity was this effort defeated.
  The year before, Schering lobbied the Senate for an amendment to 
omnibus patent reform legislation granting outright five-year patent 
term extensions for a number of drugs, including Claritin. And in 1996, 
Schering tried unsuccessfully to attach Claritin patent extensions to 
the omnibus appropriations bill, the continuing resolution and the 
agriculture appropriations bill. In the first half of that year alone, 
Schering spent over $1 million in lobbying the Congress.
  This year, H.R. 1598 has been introduced. I have reviewed this 
legislation and can state unequivocally that, owing to many serious 
problems this legislation should not be enacted into law.
  First, I am deeply concerned by the misreading of legislative history 
which has characterize the introduction of H.R. 1598. As the coauthor 
of the 1984 Waxman-Hatch Act, I want to set the record straight about 
the legislative history of the Act.
  It has been alleged that Schering and the five other companies which 
would benefit from this special-interest, pork barrel legislation--
Smith Kline Beecham, Bristol Myers Squibb, Bayer, Rhone Poulenc Rhorer 
and Hoechst Marion Roussell--somehow were arbitrarily or unexpectedly 
penalized by the Waxman-Hatch Act. Because these companies were the 
sponsors of drugs in the ``pipeline'' seeking approval at the time of 
the Act's enactment in 1984, those products are only eligible for a 2-
year patent extension, and not the 5-year patent extension available to 
products approved after 1984.
  The proponents of H.R. 1598 have called this provision in the Act 
``arbitrary'' and unfair. It is no such thing. It is eminently fair and 
motivated by sound public policy. The pipeline drugs were not made 
eligible for 5 years of patent extension precisely because the point of 
the patent extensions was to encourage the research and development of 
future products. All products which had not yet undergone teasing or 
review by the Food and Drug Administration (FDA) were judged to be 
appropriately eligible for the full 5 years of patent extension.
  I seriously doubt that Schering has told anyone that it already 
received a 2-year patent extension under this law. The company just 
wants another pass at the trough. But to make clear why the Act's 
intent in this regard is precise and fair, I want to quote the 
legislative history from the 1984 House committee report on this point:

       By extending patents for up to five years for products 
     developed in the future . . . the Committee expects that 
     research intensive companies will have the necessary 
     inventive to increase their research and development 
     activities.

  This is the clear policy which motivated this provision--to encourage 
additional research, not to simply increase profits on existing 
products. Only now, faced with their imminent patent expirations, are a 
handful of companies lobbying vigorously to defeat this policy. They 
have no interest in research or feature products. Their sole concern is 
preserving their existing monopoly at the expense of consumers.
  Let me make a final point about H.R. 1598. If this patent extension 
bill is snuck into law, it will create a huge loophole which will allow 
other drug companies to come and use it for other patent extensions at 
the Patent Office, a bad policy and worse precedent.
  As consumer groups have made clear, H.R. 1598 is a back-door for drug 
companies to lucrative patent extensions. The bill creates a stacked 
deck in favor of drug companies. It forces the burden of proof into 
opponents of pork-barrel patent extensions. It creates a rebuttable 
presumption in favor of the drug companies. It restricts the FDA from 
providing input about the scientific judgments it had to make about 
safety and effectiveness. And it puts the Patent Office in the 
categorically inappropriate role of second-guessing the FDA about those 
scientific issues. As I've said before, this is like putting the IRS in 
charge of reviewing how NIH grants biomedical research funding.
  This bill creates a terrible precedent of second guessing our public 
health agencies, which protect the public by ensuring drug

[[Page 12723]]

safety and efficacy. What Schering calls ``regulatory delay'' may well 
be the result of its own delays through miscalculations, complications 
in its research and safety problems with its product. Schering 
conveniently never mentions that Claritin's ``regulatory delay'' 
resulted in no small part from the need to be sure that Claritin was 
not linked to cancer, as scientific data suggested during its review by 
FDA.
  One of the points of the Waxman-Hatch Act was to stop companies like 
Schering from lobbying Congress for patent extensions. It has been 
generally successful, with the exception of rogue companies like 
Schering. If Schering believes it was unduly delayed, we have only to 
await the General Accounting Office's review of the circumstances 
surrounding the approval of Claritin. The introduction of H.R. 1598 
leads me to believe that Schering is simply afraid of what the GAO will 
find.
  Mr. Speaker, H.R. 1598 is a terrible deal for consumers. It creates a 
blatantly unfair administrative process which undercuts the public 
health. It does violence to the 1984 Waxman-Hatch Act. And it fulfills 
the public's worst expectations of Congress as a body motivated by the 
interests of lucrative industries, like the prescription drug industry, 
and not of average Americans struggling to afford their medicines.

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