FMI Strongly Supports White House Plan to Increase Availability of Generic Drugs - Proposal Would Save Consumers and Employers $Billions

WASHINGTON, DC — October 23, 2002 — “The White House plan to speed the introduction of generic drugs will save billions of dollars in health care costs for consumers and employers,” said Tim Hammonds, president and CEO of the Food Marketing Institute (FMI), commenting on a regulation proposed this week.

“The rule would make it more difficult for brand-name drug companies to prevent generic alternatives to their drugs from entering the marketplace by filing frivolous or inappropriate patents. These include patents that simply change the shape of pills or health claims on the packaging.

“Food retailers are deeply concerned by prescription drug costs, which are increasing by as much as 10 percent to 20 percent a year. If this trend continues unabated, it will undermine the ability of retailers to provide health care coverage for the 3.5 million employees in our industry. It may force companies to increase employee premiums, raise co-payments and reduce benefits.

“Recognizing that rising drug costs are adversely affecting all consumers — especially seniors with limited incomes, the under-insured and the uninsured — we must act now to increase the availability of generic drugs.”

The White House plan is similar to legislation proposed by the House (H.R. 5311 and H.R. 5272) and Senate (S. 812). The legislation would save consumers $6 billion a year, according to the Congressional Budget Office, while the White House estimates more than $3 billion in savings. The Federal Trade Commission (FTC) also called for such reforms in the 2002 report Generic Drug Entry Prior to Patent Expiration.

“All of these proposals would close gaping loopholes in the Hatch-Waxman law (P.L. 98-417), which governs how generic drugs are allowed to compete with their more expensive brand-name counterparts,” said Hammonds.

The White House plan would implement the recommendations in the FTC report, having the Food and Drug Administration (FDA) issue a new rule that would:

• Limit drug manufacturers to only one 30-month stay per generic application to resolve allegations that a generic drug maker is infringing a patent. According to the FTC report, this is an appropriate time period for courts to resolve patent infringement cases.

• Tighten requirements and increase disclosures for drug patent listings. Manufacturers would be required to submit more detailed and signed attestations accompanying patent submissions. False statements in attestations can lead to criminal charges.

• Provide billions of dollars in savings for public and private health insurance programs. It would also reduce the costs of state Medicaid programs, Medicare prescription drugs and employer-provided coverage.

“FMI will pursue all available means to institute these reforms,” Hammonds said, “working with our member companies, the White House and Congress.”