Monday, October 28, 2002

Volume 38, Issue 43; ISSN: 0511-4187

Remarks on prescription drugs

George W Bush

� October 21, 2002

� The President. Good morning. For more than a year, the Federal

Trade Commission has investigated delays and abuses in the process

of bringing generic drugs to the market. I have reviewed the FTC

findings, and I am taking immediate action to ensure that lower

cost, effective generic drugs become available to Americans without

any improper delays. By this action, we will reduce the cost of

prescription drugs in America by billions of dollars and ease a

financial burden for many citizens, especially our seniors.

� I appreciate so very much the Secretary of the Department of Health

and Human Services, Tommy Thompson, for his good, steady, and hard

work on this issue.

� Secretary Thompson. Thank you, Mr. President.

� The President. I want to thank Les Crawford, who is the Deputy

Commissioner of the FDA, who so ably led this agency for the last

year. I appreciate your hard work, Les. And I'm proud, also, that

Mark McClellan is with us, who is the newly confirmed FDA

Commissioner. Mark has been on my staff with the Council of Economic

Advisers, and he will soon take over the FDA to work with Les to

make sure the policy I'm announcing is fully implemented.

� We live in an age of miracle drugs. Millions of Americans and

citizens from many other lands, for that matter, have found healing

and hope from medicines discovered and created in this country. New

drugs allow children with rheumatoid arthritis to walk and to go to

school. New drugs shrink cancerous tumors, and they control the

advance of HIV, slow the progression of multiple sclerosis. In the

treatment of many diseases, major surgery has been replaced by a

single pill. And this has been a special blessing to many Americans,

particularly our seniors, who are living longer and better lives.

� As a nation, we are committed to encouraging the promise of new

miracle drugs in two different ways. First, we recognize innovators

must be able to be financially rewarded for their creativity and

hard work so they will continue investing and researching, putting

new resources and talents in the creation of new drugs. Every time

we hope for a cure or a breakthrough, we're counting on the success

of a researcher and the success of a drug company. Second, we want

these breakthroughs to become affordable and widely available, Both

of these goals, innovation and accessibility, are essential; both

are possible.

� In America, one of the ways we reward innovation is by granting a

patent. If you take a risk and you make an investment and succeed,

you have the exclusive right to sell what you invent, and you have

the right to profit if you can. A new drug can cost as much as $800

million to develop and bring to the market. Without patent

protection, few would take such a risk, few would be willing to

invest. With patent protection, America's brand-name drug companies

have become the greatest in the world, and health care systems

around the world depend on American innovations they could not

possibly duplicate.

� Patents, of course, expire after a number of years, and this is one

of the ways we are able to make drugs more accessible. After the

patent expires, other companies are free to offer the drug in

generic form at far lower prices. Last year, the average brand-name

drug cost more than $72 per prescription. The average price for

generic drugs, which are just as safe and effective as the brandname

drugs, was less than $17 per prescription. Generic drugs make

America health care far more affordable.

� Current Federal law and regulations attempt to carefully balance

the goals of innovation and accessibility. New drugs, on average,

are sold for 11 years under patent protection, then generic versions

become available. Unfortunately, the careful balance of the law is

being undermined.

� The FTC investigation discovered that some brand-name drug

manufacturers may have manipulated the law to delay the approval of

competing generic drugs. When a drug patent is about to expire, one

method some companies use is to file a brand new patent based on a

minor feature, such as the color of the pill bottle or a specific

combination of ingredients unrelated to the drug's effectiveness. In

this way, the brand-name company buys time through repeated delays

called automatic stays that freeze the status quo as the legal

complexities are sorted out.

� In the meantime, the lower cost generic drug is shut out of the

market. These delays have gone on, in some cases, for 37 months or

53 months or 65 months. This is not how Congress intended the law to

work. Today I'm taking action to close the loopholes, to promote

fair competition, and to reduce the cost of prescription drugs in

America.

� The Food and Drug Administration is issuing a proposed rule that

will permit only one automatic stay per generic drug application, a

move that in many cases will reduce the public's wait for generic

drugs by years. Some patents will no longer be entitled to

protections like the 30-month stay, including patents on packaging

and others that have little or nothing to do with valuable

innovation and drug therapy.

� These steps we take today will not undermine patent protection.

Instead, we are enforcing the original intent of a good law. Our

message to brand-name manufacturers is clear: You deserve the fair

rewards of your research and development; you do not have the right

to keep generic drugs off the market for frivolous reasons.

� Over the next 3 years, about 200 drug patents are set to expire. By

cutting out delays and maneuvering, our reforms will yield cost

savings of more than $3 billion a year. Those savings will come to

employer health plans, to State Medicaid programs, and to seniors

when they buy medicines on their own.

� This is another important advance in the cause of bringing

affordable prescription drugs to our seniors. Already, we have

cleared the way for States to provide prescription drug coverage to

more seniors with modest means through our Medicaid Pharmacy Plus

Program. We're working to provide seniors on Medicare with drug

cards that provide discounts from drug manufacturers on brand-name

drugs, like the ones available in private health plans. And we will

not rest until we've reformed and strengthened the Medicare program,

itself, so that a prescription drug benefit is available to every

senior in America.

� The House of Representatives took strong action in passing

legislation to improve Medicare. The Senate failed to act. The

challenge of health care reform is to increase access to quality

care, while we preserve the finest health care system in the world.

� I thank the good people at the FTC and the FDA for helping in this

effort and for working to make these critical drugs more affordable

for every American.

� Thank you for coming.