By BILLY TAUZIN

As a Congress and as a nation, we must ensure that competition in the drug marketplace remains vibrant. Without adequate competition, all Americans would pay too much for their drugs. At the same time, if we skew the marketplace so much as to allow for immediate competition upon FDA approval, we would stifle innovation.

In 1984, the Congress passed the Hatch-Waxman Act, which governs generic drug entry into the marketplace. In exchange for streamlining the generic drug approval process, brand name drugs had patent life restored so as to take into account the time lost during the FDA drug approval process. Since the Act was passed, we have seen generics go from less than 20 percent of the prescriptions filled in the United States, to nearly half of all prescriptions dispensed. At the same time, the brands continue to innovate, spending roughly $30 billion per year on research and development. So while some may complain the Act is not working perfectly, I assume all would concede that it’s working pretty well. Certainly, I do not expect to hear anyone call for a repeal of the Act.

Recently, the FTC issued a report examining generic entry into the market prior to the expiration of brand patent rights. The important words to stress here are ‘prior to the expiration of brand patent rights.’ The sole focus of the report was whether generics were obtaining access to the market when a brand holds a valid patent issued by the Patent and Trademark Office. To be sure, some patents may be improperly granted by the PTO. But, according to the FTC, this is not the rule, but rather the exception. Since passage of Hatch-Waxman, roughly 95 percent of all generics seeking access to the market raised no issue about the validity of brand patents. With few exceptions, generic access to the market has not been stymied through a system of gaming.

What the FTC focused upon were eight drugs where brand manufacturers received multiple 30-month stays. At the outset, let me state that I support the notion of a 30-month stay. A 30-month stay allows for a cooling-off period so that tricky patent issues can be litigated. We believe that a 30-month stay is appropriate because Hatch-Waxman allows generic manufacturers to commit activities that would otherwise be considered patent infringement prior to generic approval. So when a person tells me that brand drugs should be treated the same in patent litigation, through a requirement that they seek injunctive relief to keep the FDA from approving the generic, I tell them that should be the case only if we treat generic manufacturers like all other manufacturers prior to approval. That is, you should not be allowed to infringe on the front end and then demand to be treated like all others on the back end.

The question becomes, however, “Is more than one 30-month stay ever legitimate?” Truthfully, I don’t know the answer. The FTC has studied this issue very carefully, and recommends one 30-month stay per drug. I want to hear this reasoning explained to me today.

Further, the FTC recommends that when brands settle patent litigation with generics, the FTC should be given notice of the settlement. This, to me, may be sensible. I understand that FTC is not calling for approval of the settlement, but rather a simple notice. Since anti-competitive settlements do nothing to bring lower-priced generics to the market, this seems like a good starting point for discussion.

Again, Chairman Bilirakis, I appreciate you calling this hearing on this very important topic. While it’s easy to say we must rush to reform Hatch-Waxman, the one thing we cannot do is reform it in a way which threatens innovation. Without innovation, patients are harmed. Without innovation, research moves overseas. Without innovation, there is no generic pharmaceutical industry. Let us always remember: Hatch-Waxman has worked very well. If reforms are needed, we must draft these reforms correctly.

Finally, let me mention one more thing before we go into the arcane details of the Hatch/Waxman Act. You will hear a great deal of rhetoric at this hearing about why we must quickly approve S. 812 or some other similar legislation. Our friends on the other side of the aisle will say that such legislation is sorely needed to bring down the price of prescriptions for seniors.

Let me be perfectly clear. The best way to reduce the prices paid by seniors for their prescription drugs is to pass a comprehensive prescription drug benefit in Medicare. The bill we passed through the House in June will reduce some seniors drug spending by well over 50 percent. Approximately, 44 percent of Medicare beneficiaries will pay only nominal co-pays and no cost-sharing. That’s legislation that should be signed into law right away.

At the Energy and Commerce Committee, we have a proud history of bipartisanship. As our Committee delves into the minutia of Hatch/Waxman, I hope that we do so in the spirit of that finest bipartisan tradition and examine this law on the merits. We have many important issues before us today. Let both sides approach them with an open mind and a willingness to be educated.

BILLY TAUZIN represents Louisiana in the United States Congress.