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Generic Manufacturers Stated that Flawed Biogenerics Legislation Creates Ill-Advised Incentives for them to Produce Expensive Brand – Not Generic – Biotech Products

Arlington, VA, July 22, 2009 – The Generic Pharmaceutical Association (GPhA) released the text of a letter sent by 27 generic pharmaceutical companies to Representatives Henry Waxman, Frank Pallone and Nathan Deal stating that the Eshoo/Barton amendment to the House Energy and Commerce Committee health reform bill currently being considered, with a market exclusivity structure of 12 years for both novel products and most all next generation products combined with patent protection, would prevent the creation of any meaningful biogenerics industry. As the letter (printed in full text below) stresses, “(T)he result will be severely limited access to affordable biogeneric medicines and no measurable savings to patients and the health care system.”

“Sadly, the Congress is seriously considering legislation that would undermine the best chance we have to provide a market-based approach to moderate the cost growth in the most rapidly inflating, highest cost element of the pharmaceutical industry – biotech drug products,” said Kathleen Jaeger, GPhA President and CEO. “We had hoped that during the 25th anniversary of the indisputably successful Hatch-Waxman law, the Congress would simply apply that success to the biotech market. While many members on both sides of the aisle, as well as the President of the United States support doing just that, there are others who are seriously considering doing precisely the opposite,” Jaeger explained. The generic pharmaceutical industry CEOs articulated this fact in the letter they sent, saying “The ultimate and most unfortunate consequence of this dynamic would be the failure of this legislation to create a biogeneric industry capable of injecting the competition needed to lower prices and increase accessibility of these important medicines.”

The comments made in the GPhA letter forwarded to the Congress were amplified in strong separate statements from senior leadership of individual generic drug manufacturers. William Marth, President and CEO of Teva North America, stated that his company – the world largest generic maker – would not have a workable business model to produce biogenerics if the Eshoo/Barton amendment passed. Pointing to the skewed legislation, he indicated with regret that Teva “would instead go through the current process for marketing brand biologic drugs...”

Likewise, Heather Bresch, Chief Operating Officer of Mylan Inc., stated, “Legislation that provides excessive exclusivity for brand biologic products does not create a biogeneric industry, and would likely lead Mylan to explore the brand-side of the biologic marketplace.” This sentiment was echoed by the President and CEO of Watson Pharmaceuticals, Inc., Paul Bisaro, who stated that “Excessive exclusivity will create virtual monopolies that will prevent generic competition and result in billions of dollars in lost savings to consumers. He went onto say that, “(t)he current biogenerics legislative proposal represents a false promise for consumers.”

GPhA remains hopeful that the Congress and the Administration will reject the Eshoo/Barton amendment. Jaeger pointed out that “the failure to do so will mean less access to more affordable medications and a lost opportunity to provide more competition and choice in today’s monopoly-controlled biotech market.” “Conversely,” she stated, “embracing a balanced, ‘win-win compromise’ would produce a true ‘game-changer’ policy reform that would increase value and constrain cost growth.” 

The Honorable Henry A. Waxman
Chairman
Committee on Energy and Commerce
2125 Rayburn House Office Building
Washington, DC 20515

The Honorable Frank Pallone
Chairman
Subcommittee on Health
Committee on Energy and Commerce
2125 Rayburn House Office Building
Washington, DC 20515

The Honorable Nathan Deal
Ranking Member
Subcommittee on Health
Committee on Energy and Commerce
2125 Rayburn House Office Building
Washington, DC 20515

Dear Chairman Waxman, Chairman Pallone and Ranking Member Deal:

The undersigned generic pharmaceutical manufacturers, representing businesses who provide Americans with quality, affordable medicines that save this nation’s health care system one billion dollars every three days, want to make the Committee aware that the flawed market exclusivity provisions in the Senate HELP Health Care Reform bill and in H.R. 1548, introduced by Representatives Eshoo and Barton, will skew investment away from biogeneric development and prevent the creation of a biogeneric industry. The result will be severely limited access to affordable biogeneric medicines and no measurable savings to patients and the health care system.

Therefore, unless the market exclusivity policies set forth in the HELP bill and in H.R. 1548 are materially improved, we respectfully request that you withdraw from consideration legislation related to biogenerics and biosimilars.

While safeguarding market protections and intellectual property rights is critical in the pharmaceutical sector, only a healthcare system that balances the interests of innovation and access to lower cost medicine will achieve the greatest success. We have already seen extraordinary achievements in the traditional pharmaceutical market with the 1984 Hatch-Waxman law that forged a delicate, but workable and successful balance. Yet, the double-digit exclusivity policies contained within the Senate HELP bill and H.R. 1548 do nothing of the sort; rather such policies would yield excessive brand product monopolies at the expense of American patients.

Specifically, the exclusivity policy adopted by the Senate HELP Committee and advanced in H.R. 1548 provides a minimum of 12 years not only to original products, but to most all next generation products. This excessive market exclusivity would supplement the robust intellectual property portfolio of a brand biologic product. Primarily because of the length and structure of the excessive period, ample time is provided to brands to successfully achieve numerous life cycle management strategies (e.g. product conversion programs), giving brand companies the ability to evergreen existing products and prevent biogenerics from ever reaching consumers.

The ultimate and most unfortunate consequence of this dynamic would be the failure of this legislation to create a biogeneric industry capable of injecting the competition needed to lower prices and increase accessibility of these important medicines. To be sure, continued monopoly pricing with no savings to patients, payers and the government is an unacceptable and unsustainable position for our health care system. Equally untenable, it presents profound market uncertainty for businesses seeking to invest in the biogeneric space.

We respectfully ask that you give your most thoughtful attention to this matter. We greatly appreciate your bold leadership in working to bring about true and meaningful health care reform, which includes providing timely access to affordable lifesaving medicines.

Sincerely,

__________________________________________________________________

GPhA represents the manufacturers and distributors of finished generic pharmaceuticals, manufacturers and distributors of bulk active pharmaceutical chemicals, and suppliers of other goods and services to the generic drug industry. Generics represent 69% of the total prescriptions dispensed in the United States, but only 16% of all dollars spent on prescription drugs. For more information about the industry, visit www.gphaonline.org.
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