Amidst many pressures to restrict  the drugs they offer—witness drug company rebate programs and federal and state efforts to restrict the number of drugs offered in individual classes—formulary administrators ought to be dancing in the street over an initiative to expand the list of drugs to which they have access. Of course, the Bush administration’s proposal to increase the speed with which generic drugs come to market would not change the way formularies are run; however, to the extent that it would give pharmacy benefit managers (PBMs)—and, for that matter, pharmacies and health insurers— quicker access to cheaper medicines, it would allow them more leeway to cut drug costs for their customers.

The Bush proposal, one on which the Food and Drug Administration (FDA) is taking public comment, would limit the ability of brand-name pharmaceutical manufacturers to challenge the marketing of generic drugs based on claims of patent violations. The 1984 Hatch-Waxman law gives the big drug companies the chance to delay, by 30 months, the entry of gener-ics into the market by alleging that the generic company has violated a patent.
In some instances, according to a Federal Trade Commission (FTC) report issued in July 2002, the brand-name companies continue to file patents even after the FDA approves their drugs and for seemingly “nonpatentable” features, such as the drug’s packaging. These patents are then entered into what is called the FDA’s “Orange Book.” Drug companies have sometimes delayed the entry of generic substitutes with repeated chal­lenges and repeated 30-month stays. In its report last summer, the FTC found that the history of multiple 30-month stays so far “appears problematic.” Limiting the availability of 30-month stays to one per drug product, per generic application, according to the FTC report, would facilitate the entry of generic brands.

That was the tack taken by the Greater Access to Affordable Pharmaceuticals Act (S. 812), which was passed by a vote of 7821 by the Senate last summer. Senator John McCain (R-AZ), who sponsored the bill along with Senator Charles Schumer (D-NY), explained the strong vote by alluding to the recent announcement by the nation’s largest public provider of health care, CalPERS (California Public Employees’ Retirement System), which stated that it would have to increase its members’ premiums by 25% next year. Senator McCain tied the size of the increase to pharmaceutical costs.
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The Bush administration’s proposal, announced on October 21, 2002, does not go as far as the Schumer-McCain bill, which has no chance of passage in the House anyway. The key difference is that the FDA proposal would allow companies that manufacture brand-name drugs to continue to file patents long after FDA approval of a new drug; the Schumer-McCain bill says no new patents after drug approval. Both the bill and the FDA’s proposed rule, however, allow only one 30-month stay per drug.

The FDA’s proposed rule would also clarify the types of patents that can be listed in its Orange Book. In particular, the FDA’s regulation would state that drug manufacturers cannot submit patents on aspects of the product such as packaging, metabolites, and intermediates that are unlikely to represent significant innovations. When filing their patents, manufacturers of new drugs would have to provide additional information, which would act as a deterrent to submitting patents that are not permitted to be listed under the statute and the regulations.

Although the Generic Pharmaceutical Association (GPhA) welcomed the FDA’s proposed rule, saying that it had the potential to help consumers save “billions of dollars” on drug costs, the group added that “a lot more savings” could be achieved through the Schumer-McCain bill.
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The Pharmaceutical Research and Manufacturers of America (PhRMA) declined to give an opinion on the FDA’s proposed rule. “We are going to be very methodical in getting the views of our members during the comment period,” explained spokesman Jeff Trewhitt.