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Features - Pathfinder on the Generic Pharmaceutical Industry

By Sarah Spear, Published on October 20, 2006

Sarah Spear received her J.D. in May 2006 from Florida Coastal School of Law, and is now pursuing an L.L.M in Taxation, also at FCSL. She received her B.S. in English Literature with a minor in Financial Economics from Vanderbilt University in 2003. In law school, Sarah served as a Research Assistant for Professor Alexander Moody, assisting him with gathering empirical data relating to Delaware appraisal rights. Additionally, Sarah served as recruitment officer for the United Way's Real Sense Prosperity Campaign and the Volunteer Income Tax Assistance ("VITA") Program. Before entering law school, Sarah worked for U.S. Senator Bob Graham as a Constituent Advocate in the fields of Social Security and Medicare.

Table of Contents

I. Introduction
II. The Basics
A. Terminology
B. Where to Start
C. Searching According to Your Needs
III. Governing Law
A. Federal Statutes
B. The Abbreviated New Drug Application
C. Litigating Pharmaceutical Patents
IV. Other Primary Sources
A. Books
B. Periodicals
C. Case Law
V. Secondary Sources
VI. Public Policy
VII. Conclusion
VIII. Appendix
I. Introduction

Food and drug production has been regulated by the United States since 1906. The Food and Drug Administration ("FDA") is one of the oldest consumer protection agencies in this country. The FDA protects the public from unsafe foods and drugs to medical devices and cosmetics. It also protects the rights and safety of patients in clinical trials of new medical products.

The Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act ("Act"), was passed to expedite the FDA's approval of generic drugs. Studies show that since its inception, the Act increased the number of generic drugs by 50%, with almost every leading drug, off-patent, competing with at least two generic brands. The generic drug industry has become a multi-billion dollar industry.

The Act attempts to increase competition and drive down drug prices while simultaneously maintaining the brand name drug companies' incentive to invest in new research. It is arguable that the Act has achieved its purpose. Brand name drug companies ("Branders"), however, are fighting to retain their monopoly on patents. These Branders have found loopholes in the Act by which they extend their patents and tie up generic approval. To put the story in context, one week of patent extension translates into hundreds of millions of dollars for Branders. In response, legislators are fighting to close these loopholes and to lower healthcare costs. This paper is a research guide for individuals interested in the generic pharmaceutical industry, whether it is a consumer, chemist, consultant or attorney. The rise in healthcare costs and the inclusion of prescription drug coverage by the Medicare Program are just two of the catalysts for this growing field. This paper guides individuals to current laws, regulations, cases and news-worthy articles concerning the industry. Furthermore, the paper explores public policy arguments and political rhetoric surrounding generic pharmaceuticals.

II. The Basics

a. TerminologY: The amount of time you spend searching a subject is decreased when the correct spelling and terminology are employed. When I first started searching the internet and library cataloging systems, I grew frustrated because the search yielded an unfocused result. I have included the following search terms to help you with your search and allow you to supplement this pathfinder with updated searches. Here are the Trigger Words: (1) generic drug, (2) pharmaceutical drug, (3) Hatch-Waxman Act, (4) pharmaceutical patent, (5) abbreviated new drug application, (6) generic pharmaceutical, and (7) pharmaceutical patent extension.

b. Where to Start

By today's standards a thorough search begins with Google. It's true, Google's search engine yields a plethora of websites, information and advertisements. Many of the hits, however, will be worthless to your research. Nevertheless, begin your search with Google and if you see any interesting sites, click on the link.

A word of advice: if a website ends in ".gov," it is government sponsored, ".org," organizationally sponsored, ".edu," school sponsored, and ".com" is a catch-all. Be careful to evaluate the websites to make sure you are not receiving any false or misleading information.

I would suggest you arm yourself with a background and history of the industry before you dive into particularized research. A wealth of knowledge as to patents, generic drugs and the regulation of the industry can be found on www.fda.gov. FDA.gov contains links to the Orange Book, Center for Drug Evaluation and Research ("CDER"), and the majority of information that anyone would need. The website also provides a Drug Information Pathfinder.

To search for books, use the Trigger Words and search Amazon.com. It is nice to search Amazon before going to your local library because a search yields the most popular and current books in the market. Additionally, you can browse the books online before searching for the hard copy. The search on Amazon will also yield journal articles and periodicals that you can order for a low price without having to subscribe to the journal.

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c. Searching According to Your Needs

1. The Consumer

Start your search on FDA.gov. The website provides links to information on drugs, pricing, generics, recalls and public safety. If you would like facts about any drug on the market, whether over-the-counter or prescription, you should visit the Division of Drug Information Website, accessible through FDA.gov. If you would like information on how to participate in a clinical study or how to gain access to unapproved drugs you can visit www.clinicaltrials.gov.

2. The Chemist

Start your search on FDA.gov. The homepage provides links to the Orange Book that contains a complete listing of the drugs approved by the FDA and their active ingredients. If the chemist is interested in submitting either a new drug application or an abbreviated new drug application, the best site for information is the through the Drug Information Pathfinder. The Pathfinder contains links to the drug review process and drug development. The FDA homepage also contains a link to clinical trial research and guidance documents pertaining to the FDA's approval process.

3. The Attorney

Start by researching Westlaw and LexisNexis using the Trigger Words provided. Choose the Headnotes that correspond to your specific search. Next, search FDA.gov for the statutes. Continue to Search Legal Trac, which is a law library database and available online (to those who have access via their respective institutional affiliation). If litigation ensues, use American Jurisprudence Trial or Matthew Bender's guides and checklists for litigating pharmaceutical patents. Furthermore, the Pierce Law Library is an incredible resource for the attorney.

III. Governing Law

a. Federal Statutes

1. The Constitution

A patent is a property right granted by the United States Government. The Government is authorized to grant patents by Article I, section 8 of the Constitution, which reads, "Congress shall have the power....to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries."

2. United States Code Title 35 - Patents - http://www.uspto.gov. The United States Patent and Trademark Office (USPTO) promotes the progress of science and the useful arts by securing for limited time to inventors the exclusive right to their respective discoveries. This government sponsored website provides useful information on patents, filing documents, forms, and links to the laws governing patents. These links take you to the most current and updated patent laws.

3. Title 37 Code of Federal Regulations Patents, Trademarks and Copyrights - http://www.uspto.gov. This is the same website that provides the U.S.C. statutes as described above. The Code of Federal Regulations can be accessed via the USPTO website. The USPTO administers patent laws as they relate to the granting of patents for inventions.

4. Federal Food Drug and Cosmetic Act - http://www.fda.gov/opacom/laws/fdcact/fdctoc.htm. This Act gives the FDA the authority to govern and regulate food, drug, and cosmetic labeling. The FDA is the government agency in charge of regulating drugs, food and other products to ensure consumer safety. The FDA website is government sponsored and provides links to the Agencies organized under the FDA, i.e., the Center for Drug Evaluation and Research and the Office of Generic Drugs.

5. Drug Price Competition and Patent Term Restoration Act of 1984 (Hatch-Waxman) codified as amended at 21 U.S.C.A. §355 and 35 U.S.C.A. §271(e) - http://www.fda.gov. The Hatch-Waxman Act can be accessed through the links provided on the FDA's homepage. Additional information, guidance documents, and articles can be accessed via the CDER website, which is accessed by clicking "drugs" on the FDA's website. The FDA website is government sponsored and the link is to the Act as amended.

b. The Abbreviated New Drug Application ("ANDA")

1. Overview

An ANDA applicant must include a patent certification described in section 505(j)(2)(A)(vii) of the Hatch-Waxman Act codified as amended at 21 U.S.C.A. §355 and 35 U.S.C.A. §271(e). The certification must make one of the following statements: (I) no patent information on the drug product that is the subject of the ANDA has been submitted to FDA; (II) that such patent has expired; (III) the date on which such patent expires; or (IV) that such patent is invalid or will not be infringed by the manufacture, use, or sale of the drug product. A notice of the paragraph IV certification must be provided to each owner of the patent that is the subject of the certification and to the holder of the approved FDA patent to which the ANDA refers.

2. The Application - http://www.fda.gov/cder. The CDER has an incredible link to the Drug Information Pathfinder. This Pathfinder is divided into categories such as (1) generic drugs, (2) drug review process, (3) drug approval, and (4) drug development. The ANDA can be accessed from the CDER homepage or via the Office of Generic Drugs website, which is a link on the Pathfinder. Both links to the application provide guidance documents, laws, regulations, and electronic filing forms.

3. The Generic Drug (ANDA) Review Process - http://www.fda.gov/cder. The Office of Generic Drugs Homepage, which is accessible via the FDA homepage, provides a link to an interactive chart that diagrams the FDA's review process. The website also describes, with particularity, the processes undertaken by the FDA to determine the safety and bioequivalence of generic products.

4. Guidance Documents - http://www.fda.gov/cder. Guidance Documents give consumers insight into the process and governance of the FDA. These documents can be accessed via the Office of Generic Drugs homepage and the CDER's link to the ANDA. The guidance documents cover topics from advertising to clinical pharmacology. The FDA also encourages individuals to contact the FDA if they have any questions.

5. The Orange Book - http://www.fda.gov/cder/orange/default.htm. The Orange Book can be accessed from the FDA's homepage; it is under "Quick Links." The Orange Book is a yearly publication by the FDA and is a comprehensive list of drugs approved by the FDA. The Orange Book provides generic manufacturers with a list of approved drugs, the length of their patents, and the possibility of bio-equivalence studies.

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c. Litigating Pharmaceutical Patents

1. Overview

Since the enactment of the Act, Branders have attempted to block the approval of generic patents in three primary ways: (1) the 180 Day Exclusivity Provision, (2) the 30 Month Automatic Stay, and (3) the Citizens' Petition. Following is an analysis of the courts' holdings and rationales. Note that in 2003 the 108th Congress enacted legislation, Title XI of H.R. 1, which amended the Act. The discussion below incorporates these Amendments.

2. Matthew Bender - http://bender.lexisnexis.com or Matthew Bender, Intellectual Property Counseling and Litigation, Part III "Litigating the Intellectual Property Case." If you want to understand the litigation process of pharmaceutical patents, Matthew Bender Authority is a great place to start. It provides you with boilerplate language, checklists, and strategies. The resource is an invaluable outline of litigation procedures ranging from pre-filing discovery to damages. The resource also contains an appendix for local patent rules of practice. Other volumes that may be of help in preparing for litigation are: (1) American Jurisprudence Trial and (2) Proof of Fact. All three of these secondary sources can be found at your nearest law library.

3. 180 Day Exclusivity Provision

The first generic applicant to file a paragraph IV certification is awarded a 180-day exclusivity period by the FDA. Prior to the 2003 Amendments, this provision was abused by generic companies and Branders. For example, Branders would offer to pay the generic company a premium over what they would make in the market. In return, the generic company would not market the product and the exclusivity period would not initiate. Thus, other generic companies were blocked from entering the market because the exclusivity period never ran.

The 2003 Amendments, however, require abandonment of the 180 day exclusivity if marketing is not initiated within a regulated time frame. For more detailed information on how the FDA deals with the exclusivity period visit FDA.gov. Case Law includes Abbott Lab. v. Geneva Pharm., Andrx Pharm., Inc. v. Biovail Corp. Intern, and McGrew v. Schering-Plough Corp., all of which are cited within this pathfinder under the subsection "Case Law."

4. The 30 Month Automatic Stay

If a Brander indicates its intent to bring a patent infringement suit, the FDA is prohibited from approving the drug for 30 months or until such time that the patent is found to be invalid. Prior to the 2003 Amendments, abuse of this provision occurred when the Branders amended and added to their listings in the Orange Book. Additional listings required the generic companies to file additional notices, which allowed the Branders to file additional infringement suits, thereby forcing another 30 month stay. The Amendments changed this procedure and now allow only one 30 month stay. Case law includes Mylan Pharm., Inc. v. Thompson and F.T.C v. Mylan Labs., Inc.

5. The Citizens' Petition - The Citizens' Petition gives ordinary citizens a voice in the FDA approval process. Oftentimes, however, the Branders themselves file the Citizen Petition to generate market attention. Branders have employed scare tactics and caused citizens to become alarmed or concerned about the safety or efficacy of certain generic drugs, prompting additional letters to the FDA. This has the effect of slowing the generic approval process as the scientific merits must be reviewed by the FDA. The Office of Chief Counsel must review the Citizens' Petition along with the Office of Generic Drugs' opinion to render a legal opinion. This process takes time and is a way for Branders to slow and block generic approval. For an example of this tactic, read the recent decision of Glaxo v. Leavitt & Roxane regarding the blockbuster drug Flonase®. Due to the 2003 Amendments' crack down on the 180 day exclusivity petition and the 30 month automatic stay, the Citizens' Petition has become the Branders' tactic of choice. Recently, Scott Gottlieb, Deputy Commissioner for Medical and Scientific Affairs at the FDA gave a speech concerning the recent influx of Citizen's Petitions. An excerpt from this speech, delivered on April 7, 2006, can be found in the Appendix of this paper.

6. CRS Issue Brief for Congress - www.library.piercelaw.edu: The Pierce College of Law contains one of the most prominent Intellectual Property databases online. The college is the premier cataloger and indexer of legal issues involving intellectual property. Anyone can use the database and you need not be a registered student to conduct a search throughout their extensive collection. This CRS Brief provides invaluable information on the current status of the Act. It also provides empirical data and studies on generic patents as gathered by the Federal Trade Commission. Additionally, the brief also provides summaries of the 2003 Amendments to the Act.

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IV. Other Primary Sources

a. Books

1. Beers, Donald O. Generic Drugs: A Guide to FDA Approval Requirements. Aspen Publishers. © 2004.

This book provides a complete reference to significant developments in FDA approval requirements, including extensive coverage of innovator drugs, the drug approval process, and patent term extensions. Additionally, it includes the full text of relevant statutes, regulations, FDA guidelines, memoranda, and correspondence, etc.

2. Voet, Martin A. The Generic Challenge: Understanding Patents, FDA, and Pharmaceutical Life-Cycle Management. Brown Walker Press. © 2005.

This book explains the role of patents, FDA regulations, and the Hatch-Waxman Act. The book suggests that improvements in innovative drug products will provide enhanced benefits to patients while extending the commercial lives of the drugs.

3. Hawthorne, Fran. Inside the FDA: The Business and Politics Behind the Drugs We Take and the Food We Eat. John Wiley & Sons, Inc. Hoboken, NJ. © 2005.

This book takes a closer look at the practices, people, and politics of the FDA in light of the competing pressures and trends of modern society. This book analyzes what the FDA is supposed to do, what it actually does, and what it fails to do.

4. Freedman, Yali. Building Biotechnology: Starting, Managing, and Understanding Biotechnology Companies. Biotech LLC. Amhurst, NY. © 2004.

Building Biotechnology gives a good overview of starting, managing, and understanding biotech companies. This book would be perfect for an entrepreneur, consultant, or attorney.

b. Periodicals

1. Intellectual Property and Technology Law Journal

2. Food and Drug Law Journal

3. Patent World

4. Journal of the Patent and Trademark Office Society

5. Pharmaceutical Law Insight

c. Case Law

1. Abbot Lab. v. Geneva Pharm., 182 F.3d 1315, (9th Cir. 1999).

Patentee brought action against proposed competitors that filed ANDAs, alleging infringement of patent. The 9th Circuit Court of Appeals held that a third party's sales of claimed product prior to critical date rendered patent invalid.

2. Andrx Pharm., Inc. v. Biovail Corp. Intern., 256 F.3d 799, (C.A.D.C. 2001).

In an action challenging FDA approval of ANDA, generic drug manufacturer filed counterclaim against competitor alleging antitrust violations. The Court of Appeals for the District of Columbia held that the manufacturer's complaint should not have been dismissed with prejudice. It remained possible for manufacturer to allege intent and preparedness to enter market, and hence injury-in-fact necessary to establish standing.

3. McGrew v. Schering-Plough Corp., 2001 WL 950790 (D. Kan. Aug. 6, 2001).

Plaintiff alleged violation of Kansas antitrust laws. Defendants removed the case to federal court on June 22, 2001. Plaintiff contends that such removal was improper, because the court lacked subject matter jurisdiction. The court agreed, and denied defendants' motion for an injunction.

4. Mylan Pharm., Inc. v. Thompson, 139 F. Supp. 2d 1, (D.D.C. 2001).

Generic drug manufacturer moved for preliminary injunction ordering brand-name drug manufacturer to de-list its patent from the FDA "Orange-Book" and directing the FDA to approve its ANDA. The District Court held that the generic drug manufacturer was entitled to preliminary injunction since it demonstrated that the public interest favored granting the injunction, and that the balance of harms to the parties did not weigh against granting.

5. F.T.C v. Mylan Labs., Inc., 62 F. Supp. 2d 25 (D.C.C. 1999).

FTC and various states sued manufacturer of generic drugs and suppliers of active ingredients alleging violations of federal and state antitrust laws as a result of allegedly illegal licensing agreements allowing for allegedly excessive pricing of drugs. Defendants moved to dismiss. The District Court held that: (1) FTC could sue for monetary damages, as well as injunction; (2) states could not recover for excess payments for drugs made to competitors of named parties; (3) restitution and disgorgement were available under state statutes only when expressly provided for; (4) monopoly claim was stated; (5) claim of unreasonable restraint on trade was stated; (6) claim of price fixing was stated; and (7) distributor of active ingredients could be included in suit, even though not a signatory to allegedly illegal licensing agreements.

6. Glaxo v. Leavitt & Roxane, 2006 WL 453211 (D.Md. 2006).

Plaintiff Glaxo Group Ltd. ("GSK") filed a Motion for a Temporary Restraining Order. The Court held that the balance of harms and the public interest clearly weigh in GSK's favor. The court ordered that during the FDA's review, the approval and any future approval by the FDA of an ANDA allowing the marketing and sale of a generic version of GSK's Flonase® Nasal Spray shall be suspended.

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V. Secondary Sources

a. Law Reviews

1. Melody Wirz, Are Patents Really Limited to 20 Years? 1 Okla. J.L. & Tech 5 (2003). This paper explores the number of tactics used in the manipulation of patent terms, which includes extending patents through legislative loopholes and lobbying, initiating litigation alleging patent infringement, layering of patents and the combination of drugs to create new patents, as well as advertising and developing brand names to increase barriers for generic entry into the pharmaceutical market.

2. Laura J. Robinson, Analysis of Recent Proposals to Reconfigure Hatch-Waxman, 11 J. Intell. Prop. L. 47 (2003). This article discusses the rising costs of prescription medicines. As the prices of brand name prescription drugs rise, many citizens and politicians are pushing for legislative or regulatory changes that would increase access to more affordable generic alternatives. This article discusses public policy arguments in today's political environment.

3. Robert D. Bajefsky & Gregory Chopskie, Biting the Hand that Feeds: Generic Drugs and Abuse of the Hatch-Waxman Law, 17 Legal Backgrounder 4 (2002). This article explores the tactics employed by the Branders and the attempts by Congress to combat the expanding loopholes.

b. Journal Articles

1. Barry E. Bretschneider, No Way Out? Generic Pharmaceutical Companies' Patents, 173 Pat. World 12 (2005). This article discusses the litigation resulting from the fight between Teva Pharmaceutical's generic and Pfizer's brand-name drug Zoloft. Pfizer had not sued for patent infringement or triggered the 30 month stay, yet Teva sued for a declatory judgment of non-infringement. The court denied the cause of action because Teva could not prove reasonable apprehension that Pfizer would sue and the case was not ripe for litigation.

2. Kathleen A. Tyrrell, Edward Greiff and Edward T. Lentz, Decisions from the Court of Appeals for the Federal Circuit on Validity, Enforceability and Infringement of Pharmaceutical Patents, 75 J. Pat. & Trademark Off Soc'y 957 (1993). This article outlines cases decided by the US Court of Appeals for the Federal Circuit from 1989 through 1992. Issues highlighted from the cases surveyed include obviousness, willfulness of infringement and inequitable conduct.

3. Stephanie Greene, A Prescription for Change: How the Medicare Act Revises Hatch Waxman to Speed Market Entry of Generic Drugs, 30 J. of Corp. L. 309 (2005). This law review article was written in 2005. It examines the loopholes and game playing by the innovator drug companies. It describes the 30 month stay and 180 day exclusivity abuse. Furthermore, the author discusses the new provision of the Medicare Act that President Bush has signed into being and how it combats these loopholes.

4. Strategies for Attacking and Defending Pharmaceutical Patents. Intellectual Property& Technology Law Journal Dec 2005 v17 i12 p5. This article includes court decisions concerning the pharmaceutical industry. In the first case, Purdue Pharma v. Endo Pharms, Oxycotin manufacturers were found guilty of making misleading statements to the patent office and their patents were rendered unenforceable. In Merck KGaA v. Integra LifeSciences I, Ltd., the Supreme Court endorsed a broad reading of the 35 U.S.C. 271(e)(1) safe harbor provision, which creates an experimental use exception that allows drug makers to use patented compounds "in research that, if successful, would be appropriate to include in a submission to the FDA."

c. In the News

1. Pharmaceutical Patent Extension in Exchange for Promise of Cheaper Generics? http://patentlaw.typepad.com. This article provides a forum for the debate on generic drugs. The website combines proposed legislation with practitioners' arguments and responses to that legislation. The website is a blog, so all information posted on the discussion board is not necessarily truthful or accurate. Nevertheless, the website provides interesting dialogue from many viewpoints.

2. Hurdles Block Generic Drugs - The Seattle Times is a reputable newspaper and their website provides links to their archive of articles. This article describes the tactics used by Branders as "procedural roadblocks to keep generics stuck in regulatory limbo." The article provides the statistic that 150 Citizens' Petitions were filed with the FDA in 2005; of the 150, generic drug applications were the subject of at least 43.

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V. Public Policy

1. Pharmaceutical Research and Manufacturers of America (PhRMA) - http://www.phrma.org/news_room/. PhRMA represents the country's leading pharmaceutical research and biotechnology companies. This link is to PhRMA's newsroom and is continually updated with information about the pharmaceutical industry. The website publishes yearly newsletters with information on all the new technology and innovation emerging from the pharmaceutical industry.

2. Generic Pharmaceutical Association (GPhA) - http://www.gphaonline.org. The Generic Pharmaceutical Association provides a link to all their press releases. Many of their press releases make it into court opinions and holdings. This is a wonderful resource for the attorney in preparation for litigation. It also helps to stay current on the position of the major lobbying groups.

3. Patients Not Patents - http://www.patientsnotpatents.org/. This website is a wonderful resource for attorneys interested in the work of Jeffrey Light, a graduate of Georgetown University Law Center. The major activity of Patients not Patents is challenging the validity of medical patents before the United States Patent and Trademark Office. This website tracks patents currently in litigation.

5. Cato Institute - www.cato.org. Thomas J. Philipson, Between vs. Within-Patent Competition: Name-Brand Drug Competition May Have More Effect on Innovative Returns and Prices Than Generic Competition, 26 Cato Inst. 42 (2003). The Cato Institute is a non-profit public policy research foundation that conducts research projects so as to increase the public forum and debate on pressing issues throughout the United States. The Cato Institute conducts research on a broad range of topics from the government to health care. Attorneys or Chemists should reference the website and link to the FDA and pharmaceutical drugs subtopic.

VI. Conclusion

I hope that this pathfinder aids individuals interested in the pharmaceutical industry. The industry provides an interesting forum for debate as well as endless amounts of jobs. In today's society, the independent contractor has a unique opportunity to capitalize on the pharmaceutical industry. One can create a particularized specialty and carve out a niche in this market. The more informed one is on the political rhetoric and the status of the FDA, the easier it will be to take advantage of the opportunities.

I enjoyed my research on this topic because the case law is new, the articles are opinionated, and the laws are changing. President Bush's agenda includes many changes to the FDA and the generic pharmaceutical industry. Generic drugs increase competition among the pharmaceutical companies and ultimately drive prices down for the consumer. Many big businesses, like Ford and Delta, need this type of price reduction because their payouts for family healthcare plans have become unmanageable.

Branders are some of the leading lobbyists in today's society. Their wealth allows them to carry a heavy hand in Washington, D.C. As the generic industry grows, they too will have the funds with which to lobby. The legislation pending is uncertain, and this pathfinder serves to provide you with the tools capable of staying at the forefront of these changes. For any additional questions, please feel free to e-mail me at spear.sarah@gmail.com.


Appendix

Scott Gottlieb, MD, Deputy Commissioner for Medical and Scientific Affairs, Food and Drug Administration -- Annual Generic Drug Forum -- April 7, 2006.

Note: this is an excerpt from the speech and is does not represent the entire speech.

It's a pleasure to be here with you today and to continue to learn about all of the ways that the generic drug industry's tremendous progress is helping patients get access to better, more affordable care. At FDA, one of our highest priorities is to enable this progress. As a practicing physician, I am well aware of the enormous contribution to our nation's health by the more than twelve thousand medications on the market for which American patients will spend an estimated $248 billion last year. I know first-hand some of the improvements in health that have been made possible by the introduction and appropriate use of better medications.

The price of a generic drug can be as low as 20 percent of the price of the brand name product it mimics, according to our analysis of IMS data that is being posted today to our website. Most of these price reductions occur after only two or three generics enter the market. Further, generics are a large and growing part of total medicine use. Newly-completed analysis by FDA shows that about two-thirds of all prescription drugs used in the U.S. in 2004 was generic according to IMS data on U.S. retail sales. Generic drugs represented 66.4 percent of the total prescription doses (extended units) sold in 2004, compared with 61 percent in 2001. Generic drugs are going to continue to grow in importance. According to IMS, brand name medication with annual sales of approximately $64 billion will come off patent in the next 5 years.

The Office of Generic Drugs receives about 40 to 50 first generic submissions a year and has a very strong record of timely approvals for the first generic to reach the market after the parties resolve any patent issues. These first generics have the greatest impact on the market and the public health. They can significantly reduce costs to patients. We promptly review and approve these first generics. Generic companies often receive our approval to market their products on the same day that any patents or exclusivities expire.

Moreover, even after the FDA issued a tentative approval, some potentially important generic drugs have remained unavailable because of legal challenges. In particular, the process of filing citizen's petitions has come under attack recently by some who assert that sometimes "frivolous" petitions are being used solely to delay the generic approval process.

On that issue, we believe these petitions provide the public an invaluable tool for getting good scientific arguments in front of FDA, and we do not support efforts to close off this important route of dialogue. But we are also looking at ways to make additional improvements in our process for handling these petitions, to make sure that they don't inappropriately delay entry of legitimate generic drugs because of inefficiencies in our own process.

We are also going to take a strong stand against sponsors who use the litigation process to cast doubts about the generic drug approval process through overly aggressive PR that undermines our finding of safety and effectiveness. Legal battles shouldn't be allowed to spill out of the courtroom and into the doctor-patient environment and stoke patients' fears.

The Office is also exploring expediting the review of first generic applications for which there are not patent or other issues that would delay full approval. This approach would focus scarce review efforts on applications that can be approved and made available sooner to the American public. Since the goal is to get generic drug products into the marketplace more quickly, after appropriate patents have expired, it is more effective to focus efforts on reviewing applications that can be approved and marketed while reviewing other applications closer to the time the products could actually be marketed.

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