[Weekly Compilation of Presidential Documents Volume 38, Number 43 (Monday, October 28, 2002)]
[Pages 1816-1817]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
 Remarks on Prescription Drugs

 October 21, 2002

     The President.  Good morning. For more than a year, the Federal 
Trade Commission has investigated delays and abuses in the process of 
bringing generic drugs to the market. I have reviewed the FTC findings, 
and I am taking immediate action to ensure that lower cost, effective 
generic drugs become available to Americans without any improper delays. 
By this action, we will reduce the cost of prescription drugs in America 
by billions of dollars and ease a financial burden for many citizens, 
especially our seniors.
     I appreciate so very much the Secretary of the Department of Health 
and Human Services, Tommy Thompson, for his good, steady, and hard work 
on this issue.
     Secretary Thompson. Thank you, Mr. President.
     The President.  I want to thank Les Crawford, who is the Deputy 
Commissioner of the FDA, who so ably led this agency for the last year. 
I appreciate your hard work, Les. And I'm proud, also, that Mark 
McClellan is with us, who is the newly confirmed FDA Commissioner. Mark 
has been on my staff with the Council of Economic Advisers, and he will 
soon take over the FDA to work with Les to make sure the policy I'm 
announcing is fully implemented.
     We live in an age of miracle drugs. Millions of Americans and 
citizens from many other lands, for that matter, have found healing and 
hope from medicines discovered and created in this country. New drugs 
allow children with rheumatoid arthritis to walk and to go to school. 
New drugs shrink cancerous tumors, and they control the advance of HIV, 
slow the progression of multiple sclerosis. In the treatment of many 
diseases, major surgery has been replaced by a single pill. And this has 
been a special blessing to many Americans, particularly our seniors, who 
are living longer and better lives.
    As a nation, we are committed to encouraging the promise of new 
miracle drugs in two different ways. First, we recognize innovators must 
be able to be financially rewarded for their creativity and hard work so 
they will continue investing and researching, putting new resources and 
talents in the creation of new drugs. Every time we hope for a cure or a 
breakthrough, we're counting on the success of a researcher and the 
success of a drug company. Second, we want these breakthroughs to become 
affordable and widely available. Both of these goals, innovation and 
accessibility, are essential; both are possible.
    In America, one of the ways we reward innovation is by granting a 
patent. If you take a risk and you make an investment and succeed, you 
have the exclusive right to sell what you invent, and you have the right 
to profit if you can. A new drug can cost as much as $800 million to 
develop and bring to the market. Without patent protection, few would 
take such a risk, few would be willing to invest. With patent 
protection, America's brand-name drug companies have become the greatest 
in the world, and health care systems around the world depend on 
American innovations they could not possibly duplicate.
     Patents, of course, expire after a number of years, and this is one 
of the ways we are able to make drugs more accessible. After the patent 
expires, other companies are free to offer the drug in generic form at 
far lower prices. Last year, the average brand-name drug cost more than 
$72 per prescription. The average price for generic drugs, which are 
just as safe and effective as the brand-name drugs, was less than $17 
per prescription. Generic drugs make America health care far more 
affordable.

[[Page 1817]]

     Current Federal law and regulations attempt to carefully balance 
the goals of innovation and accessibility. New drugs, on average, are 
sold for 11 years under patent protection, then generic versions become 
available. Unfortunately, the careful balance of the law is being 
undermined.
     The FTC investigation discovered that some brand-name drug 
manufacturers may have manipulated the law to delay the approval of 
competing generic drugs. When a drug patent is about to expire, one 
method some companies use is to file a brand new patent based on a minor 
feature, such as the color of the pill bottle or a specific combination 
of ingredients unrelated to the drug's effectiveness. In this way, the 
brand-name company buys time through repeated delays called automatic 
stays that freeze the status quo as the legal complexities are sorted 
out.
     In the meantime, the lower cost generic drug is shut out of the 
market. These delays have gone on, in some cases, for 37 months or 53 
months or 65 months. This is not how Congress intended the law to work. 
Today I'm taking action to close the loopholes, to promote fair 
competition, and to reduce the cost of prescription drugs in America.
     The Food and Drug Administration is issuing a proposed rule that 
will permit only one automatic stay per generic drug application, a move 
that in many cases will reduce the public's wait for generic drugs by 
years. Some patents will no longer be entitled to protections like the 
30-month stay, including patents on packaging and others that have 
little or nothing to do with valuable innovation and drug therapy.
     These steps we take today will not undermine patent protection. 
Instead, we are enforcing the original intent of a good law. Our message 
to brand-name manufacturers is clear: You deserve the fair rewards of 
your research and development; you do not have the right to keep generic 
drugs off the market for frivolous reasons.
     Over the next 3 years, about 200 drug patents are set to expire. By 
cutting out delays and maneuvering, our reforms will yield cost savings 
of more than $3 billion a year. Those savings will come to employer 
health plans, to State Medicaid programs, and to seniors when they buy 
medicines on their own.
     This is another important advance in the cause of bringing 
affordable prescription drugs to our seniors. Already, we have cleared 
the way for States to provide prescription drug coverage to more seniors 
with modest means through our Medicaid Pharmacy Plus Program. We're 
working to provide seniors on Medicare with drug cards that provide 
discounts from drug manufacturers on brand-name drugs, like the ones 
available in private health plans. And we will not rest until we've 
reformed and strengthened the Medicare program, itself, so that a 
prescription drug benefit is available to every senior in America.
     The House of Representatives took strong action in passing 
legislation to improve Medicare. The Senate failed to act. The challenge 
of health care reform is to increase access to quality care, while we 
preserve the finest health care system in the world.
     I thank the good people at the FTC and the FDA for helping in this 
effort and for working to make these critical drugs more affordable for 
every American.
     Thank you for coming.

  Note:  The President spoke at 8:33 a.m. in the Rose Garden at the 
White House. The Office of the Press Secretary also released a Spanish 
language transcript of these remarks.