American consumers and health care providers increasingly rely on blockbuster miracle drugs that essentially have changed the practice of medicine and delivery of health care in the last 20 years. Pharmaceutical companies invest millions of dollars in scientific research and development costs each year to keep pace with market demands for the next miracle cure. A big profit incentive exists to land the latest, greatest drug. Brand-name manufacturers profit handsomely when approval is granted from the Food and Drug Administration and they win a patent for their drug.
Americans clearly benefit from prescription medicines that allow them to enhance their quality of life and live longer and stronger. According to a report issued this summer by the Federal Trade Commission, it appears in at least a handful of cases that pharmaceutical companies are colluding to keep profits up for brand-name makers by paying off generic applicants so lower-priced pills stay off the market.
Specifically, the FTC found some companies were exploiting the Hatch-Waxman law by entering into secret deals where the generic manufacturer who won first-time approval to begin marketing an alternative drug would withhold its sales in exchange for payment by the brand-name company. It sounds far-fetched, but the profit motive is substantial. The FTC cited one deal where a brand-name drug maker paid a competitor $90 million to delay a generic alternative for heart patients. In turn, the FTC says consumers were forced to pay $100 million in higher prices
because the cheaper drug was kept off the market and there was no competition.
In its report, the FTC identified abuses to the Hatch-Waxman law that keep more affordable prescription drugs out of consumers' medicine cabinets. By unfairly cornering the lucrative pharmaceuticals market, some brand-name and generic drug makers essentially are inflating higher out-of-pocket co-pays and insurance premiums for consumers. And it's creating substantial pressure on the bottom line for doctor's groups, hospitals, insurers and employer-sponsored health plans. It's no wonder the temperature is rising in Washington to address the affordability and accessibility of prescription medicines.
I'm a long-time believer that unfettered competition helps to keep the marketplace honest and offers consumers more choices at better prices. Whether working to increase competition among meatpackers, railroads or pharmaceutical companies, I apply the same philosophy. Consider an example from the agriculture sector. As a farmer-legislator, I'm concerned about the erosion of competition in rural America for family-sized farms and independent livestock producers. Letting the sun shine in on production contracts between meatpackers and large-scale livestock producers would arm independent producers with important information when the time comes to market their own livestock. I've worked hard to improve the integrity and effectiveness of contract reporting requirements and to curb other anti-competitive business practices in the meatpacking industry.
The same theory goes for the pharmaceuticals industry. As a senior Republican on the Senate Judiciary Committee, which bears jurisdiction over the U.S. patent laws, I teamed up with the top Democrat on the committee, Sen. Patrick Leahy, and others to advance the 'Drug Competition Act of 2001.' Our bipartisan bill would empower the FTC and U.S. Justice Department to crack down on anti-competitive agreements between brand-name and generic drug manufacturers. It would require generic drug companies and brand-name competitors who enter into certain marketing agreements to file disclosure documents both with the FTC and the anti-trust division of the Department of Justice. If the drug manufacturers fail to make timely notification, they would face financial penalties. This would give federal anti-trust investigators the opportunity to scrutinize these deals and crack down on improper agreements.
Again, our patent laws are designed to give drug companies the necessary incentives to research and develop innovative, life-saving medicines. Likewise, other federal laws exist to ensure generic drug companies can get to the marketplace to offer more choices and drive down prices for consumers. It appears that in some cases, both prescription and generic medicine companies are misusing or abusing the careful legal balance of the Hatch-Waxman law. The laws need some adjustment to prevent this kind of abuse and guarantee that consumers aren't hurt.
Folks who rely on the blockbuster category of drugs to manage what ails them, whether it's hypertension, heartburn, asthma or allergies, want to make sure they are getting the best treatment available on the market. Unfortunately, in some cases they are paying more than they should because drug companies are gaming the system.
The hefty profit incentives built into the system should keep drug manufacturers hungry to research and market their next blockbuster. Despite the sticker shock, Americans have come to expect more and more miracle drugs. As a federal lawmaker who must consider both sides of the equation, I want to see public policies put in place that continue to encourage the amazing breakthroughs in pharmaceutical research, but also help American consumers get the best for less.
That's why I'll continue working towards a bipartisan solution to improve the current laws yet also protect the integrity of our patent system. At the end of the 107th Congress, the U.S. Senate approved our bipartisan bill to demolish the artificial roadblocks being put up by the pharmaceuticals industry to stall generic alternatives from reaching the marketplace. When Congress begins a new session in January, I'll resume my legislative efforts on this issue so
consumers will have faster access to affordable prescription medicine sooner rather than later.