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MCCAIN’S FLOOR STATEMENT ON GENERIC DRUG REFORM
June 23, 2003
Washington, D.C. - U.S. Senator John McCain (R-AZ) delivered the following statement today on the generic drug reform:
“Mr. President, I rise in support of this amendment which will enhance competition and restore a level of sanity to the pharmaceutical market. This amendment closes loopholes in the current food and drug laws that allow brand pharmaceutical companies to protect themselves from generic competition by unfairly extending drug patent life – maximizing company profits on the backs of American consumers.
“Our amendment ensures that lower cost generic drugs will get to market faster and with more competition, allowing substantial savings for both consumers and taxpayers. With this measure we are one step closer to the larger goal of providing better access to affordable health care for the all Americans.
“Several years ago my good friend Senator Schumer and I began this effort when we introduced the first Greater Access to Affordable Pharmaceuticals (GAAP) Act in the fall of 2000. I joined Senator Schumer then in order to put a stop to the anti-competitive actions in the pharmaceutical industry that artificially inflate prices and keep lower cost prescription drugs out of the hands of American consumers. I am here today because those loopholes remain.
“Last summer, when the Senate was mired in partisan gridlock debating a Medicare prescription drug benefit, the later version of our bill, the GAAP Act of 2002, was used as the vehicle for the Medicare debate. Although the Senate failed to pass a Medicare prescription benefit package last summer, the GAAP Act passed by an overwhelming margin of 78 to 21. That bill set consumers on course to save an estimated $60 billion over ten years, while providing seniors and all Americans with access to more affordable prescription drugs. Unfortunately, after our astounding victory for consumers, the bill was not subsequently passed or even considered by the House of Representatives.
“Today we are once again debating Medicare prescription drug benefits. We have before us a plan that is estimated to cost a minimum of $400 billion over the next ten years, but will surely cost substantially more upon implementation. Unlike the majority of the amendments that have been and will be considered during this debate, the amendment we are offering will not cost the taxpayers a dime. In fact, it will save money for both the federal government and American consumers.
“The amendment we are offering is the result of a carefully crafted bipartisan compromise which senators Schumer, Gregg, Kennedy and I reached several weeks ago. This amendment achieves the same goals Senator Schumer and I have been striving to achieve over the last few years. It closes loopholes in the law, encouraging competition, without sacrificing incentives for innovation, while discouraging anti-competitive behavior on the part of brand or generic drug companies.
“Of the many elements contributing to the rapid growth in our nation’s health care costs, the rising cost of prescription drugs is one of the most significant. This year alone, prescription drug costs are expected to rise by 19%. Skyrocketing health care costs have left many businesses struggling to provide coverage for their employees and an increasing number of Americans without any health insurance. Subsequently, access to affordable prescription drugs represents one of the most serious problems facing our nation’s health care system today. Not isolated to one segment of society, this issue affects individuals, families, companies, and government alike.
“The financial burdens associated with rising prescription drug costs have left many companies struggling to provide employees with health care coverage. This January, workers at General Electric staged a two day strike over increased co-payments for prescription drugs covered under the company’s insurance plan. General Motors, one of the largest providers of private sector health care coverage, spends billions of dollars a year on workers, retirees and their dependants, over $1 billion of which is on prescription drugs alone. Even with aggressive cost-saving mechanisms in place, GM’s prescription drug costs continue to rise between 15-20% a year.
“Given the crises in both corporate America and our nation’s health care system, anti-competitive behavior in the marketplace is particularly onerous. Such abuse simply has no place in our health care system. My intention in supporting this amendment is not to weaken patent laws to the detriment of the pharmaceutical industry, nor is it to impede the tremendous investments they make in the research and development of new life-sustaining drugs. The purpose of the underlying legislation is to close loopholes in the Hatch-Waxman Act, which established the generic drug industry we know today, and to ensure more timely access to generic medications. This is an important distinction which must be made clear.
“Nonetheless, to believe that patent laws are not being abused, is to ignore the mountain of testimony from consumers, industry analysts, and the Federal Trade Commission (FTC). Over the past three years several Senate and House committees have heard testimony regarding the extent by which pharmaceutical companies, including generic manufacturers, engage in anti-competitive activities and impede access to affordable medications. During a hearing at the Senate Commerce Committee, Chairman Muris of the FTC testified that “[in] spite of this remarkable record of success, the Hatch-Waxman Amendments have also been subject to abuse. Although many drug manufacturers, including both branded companies and generics, have acted in good faith, some have attempted to “game” the system, securing greater profits for themselves without providing a corresponding benefit to consumers.”
“The intent of the Hatch-Waxman Act was to address the escalating costs of prescription drugs by encouraging generic competition, while at the same time providing incentives for brand name drug companies to continue research and development into new and more advanced drugs.
"To a large extent, Hatch-Waxman has succeeded in striking that difficult balance between bringing new lower-cost alternatives to consumers, while encouraging more investment in U.S. pharmaceutical research and development. In the nineteen years since the enactment of Hatch-Waxman, research and development in the pharmaceutical industry has increased exponentially. Unfortunately, however, some bad actors have manipulated the law in a manner that delays and, at times, prohibits generics from entering the marketplace.
“I believe that this amendment will improve the current system while preserving the intent of Hatch-Waxman. This legislation is not an attempt to jeopardize the patent rights of innovative companies, nor does it seek to provide an unfair advantage to generic manufacturers. Rather, the intent of this amendment is to strike a balance between these two interests so that we can close the loopholes that allow some companies to engage in anti-competitive actions by unfairly prolonging patents or eliminating fair competition. In doing so, we offer consumers more choice in the marketplace.
“It is imperative that Congress build upon the strengths of our current health care system while addressing its weaknesses. This should not be done by imposing price controls or creating a universal, government-run health care system. Rather, a balance must be found that protects consumers with market-based, competitive solutions without allowing those protections to be manipulated at the consumers’ expense -- particularly senior citizens and working families without health care insurance.
“I want to thank my friend, Senator Schumer, with whom I have enjoyed working over the last few years. His dedication to American consumers and his commitment to restoring fairness to the drug industry must be commended.
“I also want to thank Senator Gregg for reaching out to Senator Schumer, Senator Kennedy and myself, to find middle ground. He recognized that this problem existed and joined us to ensure that loopholes in the system are closed and consumers have access to the best and most affordable medicines. Senator Gregg’s leadership enabled the expeditious introduction and successful Committee markup of this legislation, where under his chairmanship the bill was reported out by unanimous consent last Wednesday.
“Senator Kennedy’s support of this measure must also be recognized. His experience and technical expertise have been invaluable thought the process. The staffs of all three of these senators have worked seven days a week for the last few weeks, to ensure that the language we have crafted is as technically sound as possible -- without any unintended consequences.
“It is my strong belief that this measure represents a significant and immediate step that Congress can take to help to improve the lives of many Americans. I look forward to debating this issue and working with my colleagues on both sides of the aisle to protect the health care needs of older Americans while also eliminating the anti-competitive abuses of both pioneer and generic drug companies.”
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