Statement of Sen. Chuck Grassley, of Iowa, Senate Committee on the Judiciary Hearing The FTC Study on Barriers to Entry in the Pharmaceutical....

Statement of Sen. Chuck Grassley, of Iowa
Senate Committee on the Judiciary Hearing
The FTC Study on Barriers to Entry in the Pharmaceutical Marketplace

Mr. Chairman, thank you for scheduling this important hearing. We want to ensure that all Americans, especially seniors, have access to the life-saving prescription drugs they need in the most timely manner possible. The FTC plays an important role in making sure that competition is fair and open, and that consumers are not hurt by anti-competitive behavior.

I'd like to say a few words about the FTC report and the Drug Competition Act of 2003. The study that the FTC recently completed looking at competition in the prescription drug area has brought to light problems that I believe can be addressed by Congress.

The Hatch-Waxman law was designed to create a balance in the prescription drug market. This law gives drug companies an incentive to develop and research new drug opportunities, while at the same time ensures that generic drug companies can introduce prescription drugs into the market in a timely fashion so that there is competition. Maintaining a balance that facilitates competition translates into lower prices for consumers.

However, some companies have disrupted this careful balance by entering into secret agreements with the brand name companies. In these instances, the brand name drug companies have paid generic companies not to release their product into the market as soon as possible, in such a way as to not trigger the start of the 180-day grace period required under the Hatch-Waxman law. This has resulted in prices remaining high for certain drugs because other companies are prevented from competing with their products.

In the report, the FTC indicated that the Drug Competition Act, introduced by Senator Leahy, would help ensure that these companies not enter into these anti-competitive agreements. I'm a co-sponsor of the Drug Competition Act, which is designed to end the exploitation of the 180-day period of exclusivity, and to make sure that consumers can benefit from lower priced drugs.

Under this bill, if prescription drug companies enter into agreements concerning the 180-day period, they must file those documents with both the FTC and the Department of Justice. If documentation is not filed within a certain timeframe, then the companies will be subject to sanctions. I think that this is a modest step that can do much in terms of ensuring that companies are contracting in a way that complies with the spirit of the law and that does not hurt consumers.

Congress should do all that it can to promote the development of new and more effective prescription drugs. It is just as important that Congress do everything in its power to facilitate competition in the marketplace, and to make prescription drugs affordable for all Americans.