Drug Price Controls, Patents Play Role in Prescription Drug Debate

By Christine Hall | July 7, 2008 | 8:29 PM EDT

(CNSNews.com) - As Congress sets the stage to once again debate a Medicare prescription drug benefit this year, patent protections enjoyed by name brand drug companies are likely to resurface as lawmakers look for ways to control prescription drug prices.

Democrats and liberal interest groups accuse the name-brand prescription drug industry of gaming the patent system and price-gouging senior citizens. What's more, Republicans have been too cozy with the industry, critics suggest.

But in a new study, Merrill Matthews of the Institute for Policy Innovation says the evidence doesn't support the accusations.

"They want to try to make the case that the Republicans are somehow in the pockets of the prescription drug industry, and that clearly is not the case," said Matthews. "A number of things that the Republicans want to do have been strongly opposed by the prescription drug industry. But [Senate Democratic Leader Tom] Daschle needs an issue that he can say the Democrats are pushing for."

Patent protections enjoyed by brand name drug companies have been one target of lawmakers and interest groups, like "Business for Affordable Medicine," a coalition of governors, businesses and labor unions.

The Democratic-controlled Senate last year overwhelmingly passed a bill sponsored by Republican John McCain (Ariz.) and Democrat Chuck Schumer (N.Y) that would have limited the amount of time brand name companies could get temporary, court-ordered patent protections to block generic drug competition.

Currently, brand name companies can get a 30-month stay that stops a generic company from bringing a drug to market, until the patent dispute is resolved. Daschle has included this provision in the Democratic Medicare drug plan (S. 7, the Prescription Drug Benefit and Cost Containment Act of 2003).

Critics contend that rule not only costs consumers billions of dollars but could cost taxpayers big bucks when and if Congress passes a Medicare prescription drug plan.

It's already becoming an issue in the 2004 presidential election. Sen. John Edwards (D-N.C.), a former trial lawyer, has been involved in the patent legislation. And fellow Democratic candidate Howard Dean, a doctor and Vermont's governor, says patent laws need to be changed to encourage competition and lower prices, because drug companies can now extend patents indefinitely, he contends.

"The problem is they don't like competition and they pay Congress well to make sure there isn't any," Dean said after launching his campaign.

Matthews says that's all wrong. "The left has demonized the pharmaceutical industry, much like they demonized health insurance between '92 and 1996, during the whole Clinton health care debate, [and] much like they demonized the managed care industry from 1996 to 2000," he said.

They "try to convey the impression that this is an industry that is a bad industry that's out solely for profits, and the reason you can't get what you want in health care is because this industry is making so much in the way of profits and the CEOs are making so much money," said Matthews.

Instead, he suggests, the prescription drug industry is a competitive one that delivers quality products at a reasonable price.

For one thing, Matthews said, even when a company owns a patent, the other companies are free to produce other drugs that address the same ailment. There are 170 different drugs for high blood pressure, both generic and brand name, he notes.

Also, said Matthews, most companies have drug assistance programs that give low-income people free or reduced cost drugs, like GlaxoSmithKline's "Orange Card" program that gives seniors a 25 to 40 percent discount.

Moreover, patent protections are good for consumers, Matthews argues, pointing to the fact that countries with the strongest intellectual property laws have the most prosperous economies.

But the Bush administration has been sensitive to criticism on prescription drug issues. The Food and Drug Administration is working on regulations that would limit brand-name pharmaceutical companies to just one 30-month stay per patent.

Jeff Trewhitt, a spokesman for the Pharmaceutical Research and Manufacturers of America (PhRMA), has criticized the Bush plan, saying it makes the system vulnerable to gaming by the generic industry. But, he said, it's better than the Daschle/Schumer/McCain alternative.

The real solution to drug affordability for seniors, said Trewhitt, is for Congress to pass a Medicare prescription drug plan.

See Earlier Story:
Taxpayer Group: 'You Can't Legislate Cheap Medicine' (July 15, 2002)