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McCain Urges Senate to Pass Generic Drug Bill Quickly
July 17, 2002
Washington, DC -- U.S. Senator John McCain (R-AZ) today urged his Senate colleagues to pass the "Greater Access to Affordable Pharmaceuticals Act," S. 812, that would provide better access to affordable health care for the elderly and uninsured. The bill, co-sponsored with Senator Chuck Schumer (D-NY), would make prescription drugs more affordable. McCain's statement follows:"Access to affordable prescription drugs is 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. This debate represents an important step in the effort to increase access, particularly for the millions of seniors and uninsured Americans who lack prescription drug coverage and are struggling to purchase their medications on a fixed income.
"Last week, the Senate Committee on Health, Education, Labor and Pensions passed out a revised version of S. 812, the Greater Access to Affordable Pharmaceuticals Act (GAAP), which I joined my good friend, Senator Schumer, in introducing last year. My hope is that this measure represents a significant step toward the larger goal of providing better access to affordable health care for the elderly and the uninsured.
"However, I am concerned that this relatively simple bill, which I believe has the potential to improve access to affordable prescription drugs, is being used as a vehicle for the larger, and more controversial issue of prescription drug benefits for Medicare. Although I remain committed to comprehensive Medicare reform, including prescription drug coverage for seniors and the disabled, I do not believe that GAAP is the appropriate vehicle through which to debate those reforms. I will work tirelessly with my friend, Senator Schumer, to ensure that the bill we co-authored is not used as a pawn in partisan wrangling.
"Today, health care costs are skyrocketing, and will undoubtedly continue to grow as more businesses struggle to provide coverage for their employees and as the number of uninsured Americans continues to rise. 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. A few months ago, the nation's largest public provider of health care, the California Public Employee's Retirement System (CalPERS), announced that it would be forced to increase its members' premiums by 25% next year.
"According to Allen Feezdr, CaIPERS' Assistant Executive Officer for Health Benefits, “In two of the past three years, pharmaceutical costs have increased more than any other component in our CaIPERS. health rates. In our Medicare Choice/Supplemental plans, pharmacy trend can account for over 50% of the increase in premium rates that we see in our retiree plans one year to the next. It should be noted that in both our hospital and RX trends, a measurable portion of the trend is due to increased utilization by our enrollees but this can not take away from the extraordinarily high trends in both pharmacy and hospital pricing.”
“The rising cost of prescription drugs is also playing a significant role in the growing financial burden companies experience as they struggle to provide employees with health care coverage. For example, General Motors, the largest provider of private sector health care coverage, spends over $4 billion a year to insure over 1.2 million workers, retirees and their dependents, $1.3 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 has no place in our health care system. My intention in supporting S. 812 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 drugs. The purpose of the underlying legislation is to close loopholes in the Hatch-Waxman Act, and to ensure more timely access to generic medications. This is an important distinction which must be made clear.
“However, to believe that patent paws are not being abused, is to ignore the mountain of testimony from consumers, industry analysts, and the Federal Trade Commission (FTC). The Commerce Committee heard testimony regarding the extent by which pharmaceutical companies, including generic manufacturers, engage in anti-competitive activities that impede access to affordable medications. During that hearing, 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 fifteen years since the enactment of Hatch-Waxman, research and development has increased from $3 billion to $21 billion. However, some bad actors have manipulated the law in a manner that delays and, at times, prohibits generics from entering the marketplace.
“I believe this bill 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, not does it seek to provide an unfair advantage to generic manufacturers. Rather, the intent of this legislation 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.
“It is my strong belief that a significant and immediate step that Congress can take for helping to improve the lives of many Americans is to pass S. 812 as quickly as possible, without letting it get bogged down in election year partisan politics. 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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