Goaded into action by election-year politics, President Bush took steps yesterday to close legal loopholes that have allowed manufacturers of brand-name drugs to keep cheaper generic versions off the market through devious delaying tactics. It was a modest step, but one that most people involved in the acrimonious debates over prescription drug prices will be able to support — except, of course, the pharmaceutical companies that have profited from the loophole.
Some brand-name manufacturers have been extending the effective lives of their patents by tactics that are underhanded at best and appear fraudulent at worst. Ordinarily manufacturers are granted patents that give them a monopoly for 20 years, which is ample time to recover development costs and make a profit before generic competitors are allowed on the market. But through loopholes in current law, the companies can get an automatic 30-month extension simply by filing suit against a generic manufacturer asserting that the generic product will infringe secondary patents on packaging and other minor items.
In some cases, manufacturers have been able to get even longer extensions by filing multiple patent-infringement suits. A study by the Federal Trade Commission issued in July cited eight cases since 1982 where brand-name companies got additional delays, beyond the first 30-day stay, ranging from 4 to 40 months. In the four cases that have reached a court decision, the brand-name manufacturers lost each time, suggesting that their suits were little more than legal ploys to gain additional time to reap monopoly profits, not serious litigation.
President Bush, in a Rose Garden ceremony designed to show his concern over high drug prices as the midterm elections approach, said the Food and Drug Administration would soon propose a new rule to close the loopholes. One provision would allow only one automatic 30-month stay at most in patent infringement litigation against a generic competitor. Another provision would prohibit drug companies from listing patents with the F.D.A. on secondary issues like packaging that could be used to trigger automatic delays for frivolous reasons.
These steps should help to reduce the shady maneuvering by unscrupulous pharmaceutical companies. But the Bush plan is actually weaker than a bill already approved by the Senate over the administration's objections. That bill, co-sponsored by Charles Schumer of New York and John McCain of Arizona, would allow generic companies to challenge frivolous patents inappropriately listed with the F.D.A., would resolve most patent issues before a generic is ready for market, and would give generic companies greater certainty that they won't be sued after coming to market. The bill would also tighten a loophole that allows brand-name companies to pay generic competitors not to bring their drugs to market promptly.
The president's announcement was welcomed by the generic drug industry and by groups representing consumers and the elderly. In a year when Congress failed to pass prescription drug coverage under Medicare and bills designed to rein in high drug prices, this was the best they could get.