GATT Ya

By Conlan, Michael F | Drug Topics, March 18, 1996 | Go to article overview
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GATT Ya


Conlan, Michael F, Drug Topics


The tangled, multibillion-dollar battle between the brand-name and generic drug industries over patents and trade treaties is getting another look from Congress. At issue is whether a couple of dozen drugs, led by Zantac (ranitidine, Glaxo Wellcome), will get generic competition later rather than sooner through extended patents. Of course, nothing in Washington, D.C., is ever as simple as it seems, so domestic politics, international relations, and Congressional intent are also involved. The latest round played out late last month at a three-hour public hearing before the Senate Judiciary Committee.

"We are here to determine whether a handful of large drug companies should reap billions of undeserved dollars from American consumers because of a mistake made by Congress," said Sen. Edward M. Kennedy (D, Mass.). Sen. David Pryor (D, Ark.) talked about "an error of omission" created by Congress. Sen. John Chafee (R, R.I.) said Congress and the Clinton Administration "made a small-but very costly-mistake in a 653-page bill." The three Senators vowed to seek a vote on legislation to fix what they consider to be a mistake.

But committee chairman Orrin Hatch (R, Utah) challenged those assertions. "To say that there was an 'unintended' and 'technical oversight' that resulted in a 'windfall' to the innovator companies at the expense of consumers and the generic industry is a vast oversimplification," Hatch stated. "In fact, it is more than an oversimplification. It is wrong."

Gerald Mossinghoff, president of the Pharmaceutical Research & Manufacturers of America, said the generic drug industry "is seeking additional preferential treatment in a process that already gives them enormous advantages that no other imitator industry enjoys." The facts that are not in dispute are In 1993, after seven years of negotiationd, 123 nations agreed to a host of changes designed to lower worldwide trade barriers, a treaty known as the General Agreement on Tariffs & Trade (GATT). One change for the United States in the free trade agreement was to shift patent terms from 17 years from the time the application was approved to 20 years from its filing. As part of 1994 legislation that implemented GATT, Congress said that all patents in force on June 8, 1995, would be extended to the longer of 17 years from grant or 20 years from filing. For some companies the extensions are up to 20 months.

Congress also said companies that had made a "substantial investment" in preparing to bring a copy to market based on the 17-year patents could go ahead if they paid the innovator firm "equitable remuneration"--a royaltyduring the time of extra exclusivity.

But the Food & Drug Administration said that the implementing legislation had not made necessary changes in the 1984 Waxman-Hatch Act, so it would have to honor the extended patents, not the 17-year originals.

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