Senate OKs Bill to Ease Way for Generic Drugs

The Senate, desperate to do something about the increasingly burdensome cost of prescription drugs, overwhelmingly approved legislation Wednesday intended to get cheaper generic drugs to market more quickly.

Moments after rejecting a final proposal to provide Medicare recipients with a prescription drug benefit, senators voted, 78 to 21, for a bill designed to hold down the costs of prescription drugs for everyone.

In addition to easing the way for less expensive generic drugs to get to market, the legislation would allow importers to buy U.S.-made drugs in Canada, where they are significantly cheaper, and resell them in the United States at below-market prices.

Generic drugs, which must be as effective as their brand-name counterparts, often cost as much as two-thirds less. The Congressional Budget Office estimates that the Senate-approved legislation would save consumers, insurers and government agencies $60 billion over 10 years.

The vote was a rare defeat for the big drug companies, which have one of the most powerful lobbies on Capitol Hill.

“I think the pharmaceutical industry today is sort of scratching their head and saying, ‘Gee whiz, we don’t control the Senate. We don’t control the Congress the way we thought we did,’ ” said Sen. Charles E. Schumer (D-N.Y.), an original co-author of the generics legislation.

The Pharmaceutical Research and Manufacturers of America, the industry’s leading trade group, immediately denounced the Senate action, calling it “an example of election-year politics trouncing good policy.”

Coming on the heels of the bruising, weeks-long battle over Medicare drug coverage, the vote in the Senate on whether to revise drug patent law was an easy call for most lawmakers. The Medicare prescription drug benefit would have cost taxpayers a minimum of $300 billion over 10 years; the provision to speed generic drugs to market would reduce medication prices for all consumers and cost taxpayers nothing.

But the Senate bill faces an uncertain future in the Republican-controlled House. Ken Johnson, a spokesman for the House Energy and Commerce Committee, said the panel would consider taking action on generic drugs but would be limited by the fact that only one month remains in the legislative calendar before the November elections.

Several months ago, the generics legislation faced equally long odds in the Senate.

The pharmaceutical industry adamantly opposed revising the 1984 Hatch-Waxman law, named after Sen. Orrin G. Hatch (R-Utah) and Rep. Henry A. Waxman (D-Los Angeles).

Patents now protect drugs from copycat competition for 20 years from the date when the drug maker applies for Food and Drug Administration approval. Because of the length of time consumed by the approval process, the industry says the typical drug enjoys only about 11 years of protection while it is on the market.

But the manufacturer of an original drug can keep a generic version off the market for another 30 months simply by filing a lawsuit alleging patent infringement. In some cases, manufacturers have secured multiple 30-month delays. Manufacturers’ practice of securing multiple patents on the same drug can keep generics off the market for many more years.

Brand-name manufacturers want to protect their market share from the often devastating financial effect of generics. Within two months after the FDA opened the door to generic versions of the antidepressant Prozac, for example, Eli Lilly’s sales of the iconic drug had dropped roughly 70%.

The Senate legislation would allow brand-name manufacturers only one automatic 30-month patent extension. In addition, it would bar them from paying generic companies to keep their copycat versions off the market permanently--thus leaving consumers with only higher-priced brand-name drugs.

Prospects for the Senate bill improved after consumer advocates and sponsors of the generics legislation succeeded in refocusing the debate on rapidly escalating drug prices and the techniques used by brand-name companies to keep generics out of the market.

Prescription drug spending is increasing roughly 17% a year, and health-care costs are again spiraling out of control.

Increasing the market share of generic drugs, which account for almost half of all prescriptions filled but only 8% of the money spent on them, seemed a reasonable step to many lawmakers.

“We were able to take this bill, which seemed like a technical bill, and change it so that people understood that it was cost-cutting, it was money in their pocket,” Schumer said Wednesday in explaining the legislation’s overwhelming support.

Senate passage of the bill also came a day after the Federal Trade Commission issued a report criticizing the brand-name companies’ “abuse” of the original law and calling on Congress to do away with the strategies that delayed the market entry of generic drugs.

Sen. Susan Collins (R-Maine), co-author of the compromise legislation passed by the Senate, called it “a giant step forward in lowering the cost of prescription drugs for all Americans.”

Collins, who is running for reelection in November, faces a Democratic opponent who has made lower prescription drug costs her No. 1 campaign issue.

The drug-price issue is especially critical for Collins, Sen. Paul Wellstone (D-Minn.) and other senators from northern states who are facing reelection. Many seniors in those states travel regularly to Canada, where they can get their prescriptions filled at a fraction of the cost charged by their hometown pharmacy.

From the beginning, the generic legislation had bipartisan support.

Schumer and GOP Sen. John McCain of Arizona wrote the original version, which was then modified by Collins and Democrat John Edwards of North Carolina.

Rep. Sherrod Brown (D-Ohio), the primary sponsor of the House version, predicted that public pressure would force his Republican colleagues to follow the Senate’s example.

“It’s a question of whether the Republicans can wean themselves off of drug company money for the first time and do the right thing,” he said.