WASHINGTON, DC — October 9, 2002 — “It is time to bring reforms to the prescription drug marketplace and provide consumers with more choice of and greater access to affordable medications,” said John Motley III, senior vice president of public and government affairs at the Food Marketing Institute (FMI). “Currently, brand-name pharmaceutical companies are able to unfairly delay less expensive generic drugs from reaching the nation’s pharmacies.”

Motley’s comments were included in a letter to members of the House Energy and Commerce Health Subcommittee, which is currently reviewing proposed drug reform legislation (H.R. 5311 and H.R. 5272). Specifically, the proposal would reform the Drug Price Competition and Patent Term Restoration Act of 1984 (P.L. 98-417) by closing loopholes in the Hatch-Waxman law. The purpose of the 1984 statute extends patent protection for new brand-name medications for up to an additional five years to compensate pharmaceutical manufacturers for the time lost in obtaining market approval from the Food and Drug Administration (FDA).

The proposed reforms to Hatch-Waxman would accelerate generic drug introductions and expedite resolutions of patent disputes. The Federal Trade Commission (FTC) has endorsed the reforms, and the Congressional Budget Office (CBO) estimates that the changes to the 1984 law will save consumers and employers approximately $60 billion over the next 10 years. The reforms would not discourage pharmaceutical companies from making future investments in the development of the next generation of innovative drugs.

“As an industry that has approximately 3.5 million employees, our members are becoming increasingly concerned over the runaway costs for prescription drugs, which are increasing by a much as 10 to 20 percent annually,” Motley said. “If this disturbing trend continues unabated, it will undermine the ability of self-insured companies to provide their associates with health care coverage, and it may in fact force many companies to increase employee premiums, raise their co-payments or reduce benefits in order to offset these rising costs.

“In this regard, it is our firm belief that reform of Hatch-Waxman is needed now so that we can once again have a greater degree of balance and competition in the marketplace in terms of the availability and access to quality, cost-effective generic drugs.”

FMI’s support for H.R. 5311 and H.R. 5272 is further predicated on the fact that many of its members have in-store pharmacy departments. FMI estimates that supermarkets operate close to 12,000 pharmacy departments in the United States, accounting for nearly 14 percent of the outpatient prescription drug market.

“Recognizing that rising drug costs adversely affects all consumers — especially seniors with limited incomes, the underinsured and the uninsured — we must make a concerted effort to increase the availability of more affordable generic drugs,” Motley said. “It is simply wrong to allow brand-name pharmaceutical companies to unfairly extend their patent protection beyond the time allotted by Hatch-Waxman law. Unfortunately, Congress never envisioned a system in which brand-name companies would file questionable last-minute patents to effectively block a generic equivalent from entering the marketplace.”