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Drug Price Competition and Patent Term Restoration Act of 1984

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Drug Price Competition and Patent Term Restoration Act of 1984 S. HRG. 98-1102 DRUG PRICE COMPETITION AND PATENT TERM RESTORATION ACT OF 1984 HEARING BEFORE THE COMMITTEE ON LABOR AND HUMAN RESOURCES UNITED STATES SENATE NINETY-EIGHTH CONGRESS SECOND SESSION ON S. 2748 TO AMEND THE FEDERAL FOOD, DRUG, AND COSMETIC ACT TO REVISE THE PROCEDURES FOR NEW DRUG APPLICATIONS AND TO AMEND TITLE 35, UNITED STATES CODE, TO AUTHORIZE THE EXTENSION OF THE PATENTS FOR CERTAIN REGULATED PRODUCTS, AND FOR OTHER PURPOSES JUNE 28, 1984 Printed for the use of the Committee on Labor and Human Resources U.S. GOVERNMENT PRINTING OFFICE 39-604 O WASHINGTON : 1984 COMMITTEE ON LABOR AND HUMAN RESOURCES ORRIN G. HATCH, Utah, Chairman ROBERT T. STAFFORD, Vermont EDWARD M. KENNEDY, Massachusetts DAN QUAYLE, Indiana JENNINGS RANDOLPH, West Virginia DON NICKLES, Oklahoma CLAIBORNE PELL, Rhode Island JEREMIAH DENTON, Alabama THOMAS F. EAGLETON, Missouri LOWELL P. WEICKER, JR., Connecticut DONALD W. RIEGLE, JR., Michigan CHARLES E. GRASSLEY, Iowa HOWARD M. METZENBAUM, Ohio JOHN P. EAST, North Carolina SPARK M. MATSUNAGA, Hawaii PAULA HAWKINS, Florida CHRISTOPHER J. DODD, Connecticut STROM THURMOND, South Carolina RONALD F. DOCKSAI, Staff Director KATHRYN O'L. HIGGINS, Minority Staff Director (II) CONTENTS STATEMENTS THURSDAY, JUNE 28, 1984 Page American Cyanamid Co. and its Lederle laboratories division, prepared state­ ment 274 American Federation of Labor and Congress of Industrial Organizations, pre­ pared statements 324 Cape, Dr. Ronald E., chairman and chief executive officer, Cetus Corp., pre­ pared statement 166 Consumers Union, prepared statement 322 Denton, Hon. Jeremiah, a U.S. Senator from the State of Alabama 3 Dorsen, Norman, faculty member, New York University School of Law, pre­ pared statement 179 Engman, Lewis, president, Pharmaceutical Manufacturers Association, ac­ companied by John E. Robson, executive vice president, G.D. Searle 36 Prepared statement 40 Greenfield, Louise, staff attorney, Public Citizen's Congress Watch, accompa­ nied by Sidney Wolfe, Public Citizen Health Research; William Schultz, Public Citizen Litigation Group; and Joseph Anderson, president of OCAW Local 8475 228 Prepared statement 233 Haddad, William F., president and chief executive officer, Generic Pharma­ ceutical Industry Association 52 Prepared statement 56 Hawkins, Hon. Paula, a U.S. Senator from the State of Florida 3 Ingram, Robert A., vice president for public affairs, Merrell Dow Pharmaceu­ ticals, Inc., accompanied by C. Joseph Stetler, Dickstein, Shapiro & Morin.... 65 Prepared statement 67 Lautenberg, Hon. Frank R., a U.S. Senator from the State of New Jersey, prepared statement 266 Lee, Philip R., M.D., prepared statement 333 Miles Laboratories, Inc., prepared statement 308 Miller, Richard, research associate, the Labor Institute, New York City, NY, prepared statement 286 Mossinghoff, Gerald J., prepared statement 154 Nader, Ralph, prepared statement 350 National Council of Senior Citizens, prepared statements 269 Natural Resources Defense Council, Inc., prepared statement 315 Nickles, Hon. Don, a U.S. Senator from the State of Oklahoma 4 Novitch, Mark, M.D., Acting Commissioner of Food and Drugs, Food and Drug Administration, Public Health Service, Department of Health and Human Services, accompanied by Thomas Scarlet, Esq., Chief Counsel, FDA, and James Morrison, Deputy Director, Office of Drug Standards 5 Prepared statement 10 Saphire, Dan, American Association of Retired Persons, accompanied by Jack Christy, legislative representative, American Association of Retired Persons 221 Prepared statement 223 Schuyler, William E., Jr., prepared statement 204 Service Employees International Union, prepared statement 368 Shainwald, Sybil, prepared statement 328 Swanson, Robert A., president, Genentech, Inc 77 Prepared statement 79 (in) IV Thurmond, Hon. Strom, a U.S. Senator from the State of South Carolina, Page prepared statement . 4 Warden, Dick, UAW legislative director, prepared statement 369 Willaman, Verne, member, executive committee, Johnson & Johnson, accom­ panied by John R. Stafford, president, American Home Products, and Irwin Lerner, president/chief executive officer, Hoffman-Laroche, Inc 105 Prepared statement 110 ADDITIONAL MATERIAL Articles, publications, etc.: Excerpts from statement by John R. Stafford before the House Judiciary Committee on H.R. 3605, as amended, June 27, 1984 135 Notes of Lewis A. Engman (without accompanying appendix), which were retained in committee files 365 Potential impact on exports, capital investment, and jobs if the U.S. drug export ban on human drugs was lifted 304 Resolution opposing export of unapproved drugs, by Village Independent Democrats 349 Questions and answers: Responses of Mr. Ingram to questions submitted by Senator Hatch 76 DRUG PRICE COMPETITION AND PATENT TERM RESTORATION ACT OF 1984 THURSDAY, JUNE 28, 1984 U.S. SENATE, COMMITTEE ON LABOR AND HUMAN RESOURCES, Washington, DC. The committee met, pursuant to notice, at 9:40 a.m., in room 430, Dirksen Senate Office Building, Senator Orrin Hatch (chairman of the committee) presiding. Present: Senators Hatch, Quayle, Nickles, Denton, and Hawkins. OPENING STATEMENT OF SENATOR HATCH The CHAIRMAN. It is my pleasure this morning to convene a hearing of the Labor and Human Resources Committee on two im­ portant and far-reaching bills: The Drug Price Competition and Patent Term Restoration Act of 1984, and the Pharmaceutical Export Reform Act. Both of these bills have been carefully crafted to address impor­ tant policy issues in the pharmaceutical field, and I want to say up front that I support both of them. As they are submitted to scruti­ ny in congressional hearings and in continuing negotiations, I am sure we will identify points where improvements can be made, and the committee welcomes suggestions in that regard. This hearing is an expression of my own determination that differing points of view on these bills should receive an open hearing. S. 2748, the Drug Price Competition and Patent Term Restora­ tion Act of 1984 is the response to dual problems our country has experienced in the pharmaceutical field. First, our people are paying too much for drugs whose patents have expired. Second, the domestic drug industry is gradually losing its once-unchallenged prominence in pharmaceutical innovation to European and Japa­ nese firms. This bill addresses both problems by striking a balance among the varying interests of research drug firms, generic firms, and consumers. On the one hand, lower drug prices—tens of millions of dollars a year in total savings—will flow from increased generic competition made possible by a new abbreviated new drug applica­ tion which we will refer to as ANDA, for off-patent drugs approved after 1962. The FDA currently has an ANDA practice for pre-1962 drugs. This bill extends that practice to post-1962 drugs. No longer will generic competitors have to duplicate the same safety and ef­ fectiveness data which has already been received and approved by the FDA from other sources. On the other hand, the number of (l) 2 beneficial new drugs, and consequently our national leadership in this field, will increase as research and development expenditures increase. The added research and development will flow from added patent protection which will compensate the research drug companies for the years of exclusive marketing time under their patents lost be­ cause of the lengthy FDA testing and review period. The bill truly promises us less costly drugs today and better drugs tomorrow. The Pharmaceutical Export Reform Act has also been many months in development. It has been widely circulated in draft form. The bill addresses the present total prohibition on the export of non-antibiotic pharmaceuticals which have not been approved by the Food and Drug Administration for use in this country. The effect of this prohibition is not to ban pharmaceuticals from foreign markets. All a domestic company needs to do to serve such a market with an unapproved drug is to move its production plant overseas. Rather, its effect is to needlessly deprive the American economy of plants, jobs, and tax revenues which are channeled to foreign countries. Further, our current policy makes no allowance for the many le­ gitimate reasons that a drug may be properly marketable overseas while not approved here. Among these are the fact that the FDA review and approval is slower than that of other developed nations' agencies. As witnesses will testify today, if Great Britain approves a drug a year before our FDA, the U.S. market will be served from plants built overseas and the jobs do not come back from abroad. There are also diseases and conditions which plague the populations of other countries, tropical countries for example, but which are not significant prob­ lems here. In these cases a manufacturer would have no reason to apply for FDA approval for domestic use of such a drug. Now, I am aware of the traditional concerns of those who sup­ port the present policy—concerns that allowing the export of unap­ proved drugs will be the same as allowing the export of dangerous and unproven drugs. However, the Pharmaceutical Export Reform Act assures protec­ tion for those who cannot protect themselves while retaining for our economy the benefits of the legitimate pharmaceutical trade. It does this by a long series of requirements which must be met prior to export, including in most cases that an exported drug be under continuing FDA review, and that it have already been approved in at least one country possessing an adequate
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