Prepared Remarks Of Chairman Patrick Leahy Senate Judiciary Committee Executive Session Thurs., Oct. 18, 2001 11:15 a.m., President's Room (off the Senate Floor) RE: The Drug Competition Act Author and chief sponsor: Sen. Patrick Leahy I am pleased that after months of work this year and more effort last year it appears that we finally will be able to report out the Drug Competition Act. I only wish we could have passed this bill last Congress when it was first introduced. If we had passed it then, generic alternatives to Cipro might have been on the market today. Bayer, the Cipro patent holder, allegedly entered into a deal to delay the production of cheaper generic versions of Cipro. They are currently under investigation by the Federal Trade Commission. This is precisely the situation where this bill could have made a major difference and provided American families with generic alternatives to Cipro. But better late than never. This bill will ensure that law enforcement agencies can take quick and decisive action against companies that are driven more by greed than by good sense. It will give the FTC and the Justice Department access to information about secret deals between drug companies to keep generic drugs off the market. This is a practice that hurts American families, particularly senior citizens, by denying them access to low-cost generic drugs, and further inflating medical costs. It also, in situations such this anthrax threat, could help ensure that we do not have shortages of life-saving medicines. This has been a bipartisan effort, and I must thank all my colleagues, including Senator Hatch who has a long-standing interest in these issues, Subcommittee Chairman Kohl, who has worked with me from the start on this effort, and particularly Senator Grassley, who has worked hard to reach consensus on this bill that will help protect consumers. Senator Schumer, a cosponsor of the bill, has already recently alerted America to concerns about shortages of Cipro. The issue of drug companies paying generic companies not to compete was exposed by the FTC, and by articles in major newspapers, including an editorial in the July 26 New York Times titled "Driving Up Drug Prices." This editorial concluded that the problem "needs help from Congress to close loopholes in federal law." Under current law, the first generic manufacturer that gets permission to sell a generic drug before the patent on the brand-name drug expires, enjoys protection from competition for 180 days a head start on other generic companies. That was a good idea, but it created an unfortunate loophole that could be exploited. Secret deals can be made that allow the manufacturer of the generic drug to claim the 180-day grace period to block other generic drugs from entering the market while, at the same time, getting paid by the brand-name manufacturer to not sell the generic drug. This bill closes this loophole for those who want to cheat the public, but keeps the system the same for companies engaged in true competition. The deals would be reviewed only by those agencies -- the agreements would not be available to the public. I think it is important for Congress not to overreact in this case and throw out the good with the bad. Most generic companies want to take advantage of this 180-day provision and deliver quality generic drugs at much lower costs for consumers. We should not eliminate the incentive for them. Instead, we should let the FTC and Justice look at every deal that could lead to abuse, so that only the deals that are consistent with the intent of that law will be allowed to stand. This bill accomplishes precisely that goal, and it is a tribute to the hard work on both sides of the aisle that it has done so. I want to mention one point in terms of interpretation of this bill. In section 9 the bill gives the FTC the authority to exempt classes of persons or agreements from the reporting requirements of the bill. The FTC should certainly start by looking at whether packaging or confidentiality agreements should be exempted under this section. # # # # #