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News Release

HHS Moves to Speed the Availability of Generic Drugs
New Regulation Would Help Reduce Drug Costs For Consumers

HHS Secretary Tommy G. Thompson today announced a new Food and Drug Administration (FDA) proposed regulation that would speed the availability of generic drugs and reduce costs for consumers.

The proposed rule would help reduce the cost of drugs by eliminating the current practice that allows manufacturers to repeatedly obtain 30-month stays in order to block the approval of generic versions of their drugs. These stays delay generic competition, often while the brand-name company pursues litigation against the generic manufacturers trying to get lower-cost alternatives on the market.

"This proposed rule change would bring relief from the high prices that American consumers frequently pay for prescription drugs," Secretary Thompson said. "This proposal would not only move generic drugs to market more quickly, but could save consumers approximately $3.5 billion dollars every year."

FDA approves generic drugs, which are lower cost versions of brand-name pharmaceuticals, if the generics' manufacturers can demonstrate that they are equivalent to the brand-name drugs.

The proposed rule change would modify FDA's interpretation of a 1984 law enacted to protect the patent rights of innovator drug companies, while at the same time making generic drugs more widely available. The law created the current process for generic drug approval. This approval process allows for a 30-month delay in the approval of a generic drug. This delay gives the innovator drug company a chance to protect its patent rights in court.

The new approach would eliminate the possibility of a brand name pharmaceutical company receiving multiple 30-month delays related to newly obtained patents. In some instances generic drug approvals have been delayed for multiple 30-month periods. Under this proposal brand name pharmaceutical companies would still be able to protect their patent rights through traditional patent infringement lawsuits.

The proposed rule would also clarify the requirements for listing drug patents in the "Orange Book," limiting the types of patents that have the potential to block generic drug approvals. The proposal would clarify the types of patents that can be submitted to FDA as protection for the brand name drug product and listed in FDA's Orange Book, which is the official compendium of drug products the FDA has approved.

In particular, the regulation would make clear that drug manufacturers could not submit to FDA patents on such product aspects as packaging, metabolites and intermediates that are unlikely to represent significant innovations. And manufacturers of new drugs would have to provide additional information when they file their patents to discourage them from submitting patents that are not permitted to be listed under the statute and regulations. This detailed patent declaration, which will be subject to criminal penalties for misrepresentation, will reduce the need for litigation to delist patents from the Orange Book.

"This proposal provides a common sense balance between providing patent protection for brand name pharmaceutical manufacturers and our desire to speed generic drug approval," said Dr. Lester Crawford, deputy commissioner of the FDA.

The rule changes FDA is proposing today are consistent with recent recommendations made by the Federal Trade Commission (FTC). In its July 2002 study, "Generic Drug Entry Prior to Patent Expiration," FTC recommended that there be only one 30-month approval delay per generic drug application. FTC's study found an increase in the listing of patents, which had been issued by the Patent and Trademark Office after the brand name drug product had been approved and also after a generic application had been filed. For eight drugs, the additional 30-month stays held up approvals of generic drugs for an additional period of from four to 40 months.

FDA's proposed rule change would eliminate a significant impediment to prompt approval of generic drugs while preserving the legitimate incentives necessary for innovative drug development.

The regulation will be published in the Oct. 24th Federal Register. The FDA will accept public comments on its proposal for 60 days and then will move to issue a final rule.

A copy of the proposed rule can be found on FDA's web site www.fda.gov/OHRMS/DOCKETS/98fr/PATENT.pdf..

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Note: All HHS press releases, fact sheets and other press materials are available at www.hhs.gov/news.

Last Revised: October 22, 2002