Statements on Introduced Bills and Joint Resolutions S946

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

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. 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.