Food and Drug Administration Safety and Innovation Act

Floor Speech

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Mr. BINGAMAN. Mr. President, this amendment is one that is a bipartisan amendment. Senator Vitter is cosponsoring this with me, also Senators FRANKEN, SHAHEEN, KOHL, Tom Udall, Tim Johnson, Klobuchar, Merkley, Sanders, and the Presiding Officer, Senator Brown.

This amendment addresses the very same issue that the Senator from Maine was talking about; that is, how do we bring down the price of prescription drugs? How do we get competition into the market for prescription drugs?

We have a circumstance today in which an anticompetitive, anticonsumer practice is engaged in, and our amendment will change the law so that practice can no longer be engaged in. The practice I am talking about is the entering into so-called pay-for-delay settlements between brand-name drugs--brand-name pharmaceutical companies and generic manufacturers.

These pay-for-delay settlements have the effect of delaying timely access to generic drugs. These agreements between companies shield billions of dollars in sales each year from effective competition. The pharmaceutical companies benefit from this lack of competition and they do so at the expense of consumers and they do so at the expense of the Federal Government, since the Federal Government is a very large consumer and purchases a substantial amount of prescription drugs for the military and in other ways.

A preliminary estimate from the CBO indicates that this amendment will reduce direct spending by hundreds of millions of dollars at a minimum. Frankly, I believe it will, in fact, save us billions of dollars annually at the Federal Government level. The CBO also indicates that the amendment will reduce the average cost for prescription drugs and lower the cost of health insurance plans.

Early access to generic drugs is a key to saving money in the health care system. Kaiser Family Foundation has found this. They concluded that spending in the United States for prescription drugs reached $259.1 billion in 2010. That is nearly six times as much as we spent on prescription drugs in 1990. Since generic drugs are on average four times less expensive--or another way to put that is one-quarter of the cost of the brand-name alternatives--they can be a very important source for reducing the cost in our health care system. To actually receive these savings, consumers have to have access to these generic drugs and have access to them in a timely manner.

In 1984, Congress passed the bipartisan Hatch-Waxman Act to create market-based incentives for generic pharmaceutical companies to bring their drugs to market as quickly as possible. The purpose of the law was to incentivize the early generic drug competition while preserving incentives for pioneer companies to develop innovative new medicines. Unfortunately, pay-for-delay settlements between brand-name drugs that already have their products in the market and generic pharmaceutical manufacturers who have not yet brought their products to market have become commonplace, and these agreements, these so-called settlements, have stifled competition and delayed access to generic drugs at a significant cost to everyone who is involved in the health care system.

There is a table I want to put up. It relates to three particular drugs, and I will talk about the second two of these drugs because this gives some context to what I am concerned about.

This second drug is Lipitor. Everybody knows about Lipitor. It is a cholesterol-lowering drug. It is familiar to most people. It is the best-selling pharmaceutical ever in the history of the world.

According to a 2008 New York Times report, a pay-for-delay settlement delayed generic entry into that market--the entry of a generic version of Lipitor--by 20 month
[Page: S3548]s. The same report stated the generic version of the drug was estimated to sell for less than one-third the cost of the brand-name Lipitor. It pointed out that the brand-named Lipitor had earned $12.7 billion in sales the year before.

According to a letter sent to the FDA Director Hamburg last year from some of my colleagues in the Senate indicating that the Federal Government was spending $2.4 billion a year on Lipitor, they estimated that bringing a generic version to market would generate somewhere between $4 billion and $6.7 billion in savings annually to people who are purchasing this drug in this country.

The second example is Provigil. This is a sleep disorder drug. Due to the pay-for-delay settlement entered into there, a generic version of Provigil just came to market this year. Had this amendment we are offering as part of this bill been law, generics very likely would have entered the market 6 years ago with the expiration of exclusivity.

The chief executive officer of Cephalon--which is the brand-name manufacturer of Provigil--is quoted as saying:

We were able to get six more years of patent protection. That's $4 billion in sales that no one expected.

In other words, the Provigil case represents 6 years and millions of dollars of lost savings to consumers, the largest consumer being the U.S. Government and particularly the U.S. military.

I have a chart that relates to the U.S. military's potential savings from this amendment. This translates this into dollars that are being paid out by the U.S. military as part of the defense budget, which we are going to be passing later this year.

Assuming that a generic version of Provigil would have been released in 2006, the Department
[Page: S3548] of Defense alone would have saved $159 million from this one drug between 2006 and 2011. That is over $150 million from a single prescription drug.

If enacted, this amendment would foster more generic competition, would bring generic drugs to the market sooner, and would do so in a manner that is consistent with the original intent of the Hatch-Waxman Act. Passage of the amendment would significantly cut prescription drug costs for American consumers and help reduce the Federal deficit.

Let me also allude to an article on the front page of the New York Times. I know some of my colleagues take exception to the New York Times occasionally, but this is an article entitled ``New Fervor for Cutting Costs Among Hospitals and Insurers.'' The reporter is Reed Abelson. About three paragraphs into the article, he states:

After years of self-acknowledged profligacy, hospitals, doctors and health insurers say there is a strong effort under way to bring medical costs under control.

I was struck by that phrase ``self-acknowledged profligacy in the health care system.'' I think that is what we have engaged in, in the Congress, frankly, is self-acknowledged profligacy in the health care system. This amendment will help to correct that.

The amendment has the strong support of AARP, of Families USA, Consumer Federation of America, U.S. PIRG, Consumers Union, the Center for Medicare Advocacy, AFL CIO, AFSME, Walmart, the National Committee to Preserve Social Security and Medicare, among other groups and organizations.

If my colleagues favor competition, this amendment helps to promote competition. If we want to see reduced costs to the taxpayer for health care, then this amendment helps to reduce the cost to the taxpayer. If we want to reduce what patients and hospitals and insurance companies have to pay for prescription drugs, this amendment helps to do that as well.

I think this is something that is long past time we corrected this problem. This is a great opportunity for us to do so. I believe it is one of the first amendments that will be considered on this legislation. I hope my colleagues will put aside whatever other considerations they might have had in the past and go ahead and vote for this correction in Federal law. This is a problem, frankly, that we passed legislation that provided the opportunity--unfortunately. It was not intended. But an unintended consequence of the earlier legislation that we passed, the Hatch-Waxman Act, was to allow this kind of blocking, these kinds of pay-for-delay settlements to be entered into. We can correct that today. I hope very much we will.

I urge my colleagues to support the amendment, and I yield the floor.

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Mr. BINGAMAN. Madam President, I thank Senator Vitter for his comments and for his strong support of this amendment. I thank all of the other cosponsors of the legislation.

If we are interested in promoting competition in the health care field so that we can keep prices down, then we need to support this amendment. That is exactly what this does.

Under our law in this country, we provide exclusive rights to a company that develops a drug to sell that drug during the time the patent is in effect. But what we are concerned with here is that after that patent is no longer valid, companies are still extending their exclusivity, extending their time when they don't have any competition by entering into these agreements. So we think they can settle their disputes--we don't have a problem there--but they cannot keep other generic manufacturers from coming to the market who also have demonstrated the invalidity of a patent.

If we are worried about the cost of health care to the Federal Government--the Federal Government is paying too much for prescription drugs because of this flaw in the Hatch-Waxman Act that we are trying to correct. If we are worried about keeping prices down for hospitals, insurance companies, and consumers, this amendment will help to do that.

I urge my colleagues to support the amendment.

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