FOR IMMEDIATE RELEASE May 1, 2001

MCCAIN, SCHUMER UNVEIL INITIATIVE TO SAVE CONSUMERS $71 BILLION ON PRESCRIPTION DRUGS

Schumer-McCain legislation to increase availability of affordable generic alternatives to brand name drugs by cleaning up abuses of Hatch-Waxman Act

Senators: Grassroots support building momentum for bipartisan effort to bridge the divide in Congress on prescription drugs

Standing with a broad coalition of consumer groups, insurers, employers, and unions, as well as consumers who are overwhelmed by the prohibitively high cost of prescription drugs, US Senators Charles E. Schumer (D-NY) and John McCain (R-AZ) today introduced the Greater Access to Affordable Pharmaceuticals Act (GAAP), bipartisan legislation to improve access to generic drugs. Schumer and McCain said that by easing the entry of generic alternatives to the marketplace, their legislation could save consumers $71 billion over ten years.

"At a time when every attempt to lower the cost of prescription drugs gets bogged down in partisan wrangling, Senator McCain and I believe we have found a fresh approach that can break through the gridlock," said Schumer. "The broad coalition supporting this bill is a testament to the way it achieves monumental savings for seniors and families not by redrawing ideological battle lines, but by simply restoring the intent of our patent laws."

"The GAAP bill will provide Americans with choices when buying their medicine by ensuring that all safe and effective pharmaceuticals are made available to them in a timely manner and not kept off the market for frivolous or financially profitable reasons," said McCain.

The 1984 Hatch-Waxman Act was designed to promote the growth of a generic drug industry, while providing additional patent protection for research-based brand-name drugs. But while the law has established a market for generics, it has been seriously undermined by patent law loopholes that have allowed brand-name drugmakers to use a host of tactics - including colluding with generic drug manufacturers - to delay the approval of lower-cost alternatives by several years.

These abuses have resulted in monopolies for the brand-name manufacturers - and soaring prescription drug prices. In fact, the gap between the cost of brand name drugs and their generic alternatives has skyrocketed in the last decade. In 1990, the average cost per prescription for brand- name medications was $27.16, while the average cost for generic drugs was $10.29. By 2000, the average cost per prescription reached $65.29, while the generic increased to only $19.33
Schumer and McCain's legislation would streamline the generic drug approval process and bring affordable alternatives to market by removing many of the most common obstacles to fair competition. Under the Schumer-McCain legislation:

1. The automatic 30-month stay granted by the FDA to brand-name drug makers who file suit against a generic manufacturer's patent challenge would be eliminated. Instead, brand name manufactures would seek a preliminary injunction from the courts. In an effort to clarify and expedite certification, brand-name manufacturers would be required to list all of a drug's relevant patents and certify with the FDA that the list is complete and accurate.
2. Generic drug makers would be able to seek a declaratory judgement on any patent listed in the Orange Book, the FDA's catalog of currently-held patents, just as brand-name manufacturers have standing to sue on any patent challenge.
3. The 180-day exclusivity period granted to the first generic applicant would become available to the next-filed applicant if the first applicant: reached a financial settlement with the brand- name to stay out of the market until the patents have expired; fails to go to market within 90 days once their application is effective; does not get FDA approval within 30 months; fails to challenge a new patent within 60 days; withdraws their application; or is determined by the Health and Human Services Secretary to have engaged in anti-competitive activities.
4. Individuals or groups filing citizen petitions would be required to certify that their petitions are factually-based, warranted by existing laws or regulations, and are not submitted for any anti-competitive purposes, such as to cause unnecessary delay. Any petitions that are believed to be used for anti-competitive purposes would be investigated by the FTC and any company making false statements would be subject to existing criminal penalties.
5. The multiple methods of establishing bioequivalence that are currently recognized by FDA regulations will be incorporated into statute, reducing frivolous legal challenges and accelerating consumer access to those drugs that require alternative forms of testing.
6. The Federal Trade Commission would study the bill's effectiveness within five years of its enactment to see whether it has increased consumer access by promoting competition and has enabled generics to come to market in a fair and expeditious matter consistent with the intellectual property rights of patent holders.

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