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But the problem with Kennedy's logic and the Greater Access to Affordable Pharmaceuticals Act, which was introduced by Senators John McCain and Charles Schumer, is this: Where will the research dollars come from for treatments tailored to an individual's genetic signature if Americans spend more on yesterday's drugs from generic drug firms that invest nothing in "miracle cures" and everything on litigation? For that is what the McCain-Schumer bill would do: make it easier for generic drug firms to sue innovative biotech and pharmaceutical firms in order to market versions of their drugs before the full life of a patent expires. Shorter effective patent life means less revenue for innovation. Under current generic-drug law — the Hatch-Waxman Act — generic firms can manufacture and then test a patented drug, using the innovator's own patented information before a patent expires. That allows them to hit the market the day after a drug goes off patent. They also have the only real monopoly the Act provides: 180 days of market exclusivity if they can prove in court that an innovator's patent is invalid or doesn't exist. Challenging patents and the six months of monopoly makes money for generic firms. Indeed, Bruce Downey, the CEO of Barr Labs, one of the leading generic firms told an investment conference last year: "We see no end to the patent-challenge opportunities [through litigation] as long as branded firms continue to get patents. I look at it as them generating business opportunities for Barr." To that end, McCain-Schumer generates more business for the generic drug industry than it could ever imagine. Under Hatch-Waxman, generic firms had to wait until the innovator's patents had expired — or a court had the opportunity to sort through patent infringement issues — before it marketed copies. Under McCain-Schumer, generic firms can challenge a patent's validity and sell copycat drugs under the 180-day exclusivity period without having to prove legally the patent is invalid. Innovator companies will also be barred from defending patents that are not listed in a Food and Drug Administration directory (the Orange Book) within a month after the FDA approves the drug. Hence, a generic firm could legally infringe on an innovator's patent and get the 180-day exclusivity status simply because a biotech or pharmaceutical firm failed to leap a bureaucratic hurdle. Finally, to make it even easier, McCain-Schumer weakens the standard of bioequivalence which requires the generic firm to submit material for FDA approval that confirms that their drug is as safe and effective as the product it is copying. McCain-Schumer allows the FDA to approve generic products that are merely chemically equivalent to patented drugs without requiring the generic to prove it is a safe or works as well as the original. This creates a lower public-health standard for generic biotech products than for new products undergoing initial FDA review. Under McCain-Schumer medical progress and public health will suffer in two ways. First, reduced patent protection will cause innovator companies to do less research different applications for each drug. Most people are unaware that these firms do not just obtain patents for a particular drug — they also get patents whenever they discover new uses or dosing regimens for the drug that improve public health. Since their patent protection permits them to recoup the tens or hundreds of millions of dollars needed to obtain FDA approval, they are willing to make these gargantuan expenditures. Without that protection, why should they make those investments? Do McCain-Schumer backers think generic firms will expend those sums when they can get huge payoffs for the few million dollars needed for patent litigation? Second, fewer new drugs will be produced because of lost revenue for innovator companies. An earlier Congressional Budget Office analysis of the impact of generic competition in the wake of Hatch-Waxman found a 12-percent-lower expected value for the after-tax profits from R&D due to shorter patent life. Those returns will shrivel even more as patents effectively become shorter still under McCain-Schumer. Many new products will not be launched at all. The likelihood of shorter patent life will particularly affect biotechnology, where Kennedy's miracle cures and tailored medicines may be developed. The mapping of the genome, and related advances in fields like proteomics and bioinformatics has led to an abundance of new disease targets. Nevertheless, some industry analysts have hypothesized that these developments may actually cause R&D costs to rise in the short run. The basic reason is that these new technologies require substantial up-front investments, and to date they have generated many disease targets that are not yet well understood. Thanks to shorter patent life under McCain-Schumer, many cures will sit on the shelves. Encouraging more generic drugs will enrich generic-drug firms, large corporations, and insurance companies at the expense of patient health now and medical progress against the most expensive and prevalent illnesses in the future. Yesterday's drugs for tomorrow's diseases? That's a bargain consumers can afford to pass up. — Robert Goldberg is director of the Manhattan Institute's Center for Medical Progress. |
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Ted Kennedy's reason for passing a bill that would make it easier for
generic drug firms to make copies of biotech and pharmaceutical-based
medicines: "Deciphering the code of life will have profound implications
for preventing and curing disease. Treatments can be tailored to an individual's
genetic signature. But the soaring cost of prescription drugs threatens
to price these miracle cures out of the reach of ordinary Americans."
