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 Advisors 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of many diseases, major surgery has been replaced by a single pill.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 brand name 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 three 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 drugs 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.