[A-List] US legitimation crisis: health care

["Michael Keaney" <michael.keaney@xxxxxx>]

Bush takes on drugs firms

US drafts new measures to lower prescription costs by $3bn a year

David Teather in New York
Tuesday October 22, 2002
The Guardian

The US government set itself on a collision course with the drugs industry
yesterday as it announced plans to speed up the availability of low-cost
generics and save American consumers billions of dollars.

President Bush revealed proposals to limit the ability of big pharmaceutical
companies to prolong patent protections on brand name drugs, saying that the
measures would lower prescription drug costs by about $3bn a year.

"The message to the big brand drug companies is clear," said Mr Bush. "You
deserve the rewards of your research and development, but you do not have
the right to keep generic drugs off the market for frivolous reasons."

The move delivered a heavy blow to the industry, which is suffering from a
confluence of damaging trends.

The volume of new drugs coming on to the market is at its lowest for eight
years, and the pipeline of potential blockbusters is drying up.

Many best-selling drugs on the market are also reaching the end of their
patent protection period.

AstraZeneca and GlaxoSmithKline, both listed in London, fell by 2% amid
fears of intensifying competition. Pfizer, the world's largest drug maker,
was 4% lower in early trade on Wall Street, while Merck fell 3%.

Democrats questioned the timing of the announcement, just two weeks ahead of
congressional elections.

While the White House has concentrated on Iraq, Democrats have sought to
focus attention on domestic issues, including the economy and the cost of
prescriptions.

The new regulations seek to limit a drug patent holder's ability to delay
the launch of a cheaper generic drug by filing multiple patent protection
lawsuits. Instead it would keep patent holders to one automatic 30-month
stay of a generic drug application while a challenge is contested. They
would also prevent pharmaceutical firms from filing new patents for updated
versions of existing drugs.

Some 200 drug patents are set to expire in the next three years, including
money-spinners such as Glaxo's anti-allergy drug Flonase, its
anti-depression treatment Paxil and Bayer's anthrax drug, Cipro.

President Bush said he aimed to "ease the burdens for millions of Americans,
especially our seniors," adding that the average price for generic drugs is
just $17, compared to $72 for branded versions. US consumers spent $154bn on
prescription drugs last year.

The industry is also facing tougher demands on new applications from the
Food and Drug Administration in the US. The FDA has been chastened by the
likes of Bayer's Baycol - the anti-cholesterol drug that was linked to
numerous fatalities. Bayer said yesterday that it faced 3,500 related
lawsuits - 1,500 more than previously disclosed.

The difficult climate in the drugs industry has forced the pace of
consolidation in the sector, but investors have become cynical about the
ability of large mergers to fulfil a longer term promise to create powerful
research and development laboratories.

Shares in Glaxo have drifted lower since the merger that created the
business two years ago, while Pfizer is having trouble selling its $53bn
takeover of rival Pharmacia to sceptical shareholders.