[Congressional Record Volume 143, Number 148 (Wednesday, October 29, 1997)]
[Extensions of Remarks]
[Pages E2120-E2121]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
LOOK OUT CONSUMERS: PHARMACEUTICAL RIP-OFF BEING PROPOSED
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HON. FORTNEY PETE STARK
of california
in the house of representatives
Wednesday, October 29, 1997
Mr. STARK. Mr. Speaker, following is the testimony of Immunex Corp.
from an October 21, 1997 hearing before the Senate Approrpriations
Subcommittee on Labor-HHS-Education.
It describes why a proposal by a number of drug manufacturers to
extend the patent exclusivity on their drugs is a bad deal for
consumers and America. Everyone is for increased research on the cure
to illnesses--but charging sick people more for existing medicines
while the corporations pocket most of the monopoly windfall for profits
is a lousy deal.
The end of a Congress is a dangerous time, when last minute
sweetheart deals get added to ``must pass'' legislation. The last time
a pharmaceutical company tried this was an anonymous amendment to the
Kennedy-Kassebaum law to provide special patent protection to Lodine.
the result was a national outcry and special action to strip the
``gift'' out of the bill.
Keep your eyes open everyone--we may be facing the same robbery
attempt again.
Statement by Scott Hallquist, Senior Vice President and General Counsel
Immunex Corporation, Before The Subcommittee on Labor, Health and Human
Services, Education, Committee on Appropriations, U.S. Senate
October 21, 1997.
Mr. Chairman and Members of the Subcommittee: On behalf of
the employees and stockholders of Immunex Corporation, I am
grateful to the Subcommittee for affording me the opportunity
to present Immunex's views about the proposed demonstration
project to fund biomedical research through extensions of
market exclusivity for approved drugs. If implemented, this
proposal would deprive our company of the ability to provide
an important cancer drug to patients. Using this drug as an
example, I will illustrate for the Subcommittee the punitive
and anticompetitive impact of the proposed demonstration on
private sector research, health care expenditures, the
federal Medicare budget, and patient access to affordable
drug therapies.
Immunex is a research-based biopharmaceutical company
headquartered in Seattle, Washington. We have approximately
900 employees throughout the U.S. Our mission is to develop
innovative treatments for patients with serious medical
needs. Since the company was founded sixteen years ago, we
have spent $483 million on research and development--
approximately one-half of the company's revenues over that
same period of time. In 1996, our total research investments
exceeded $100 million.
Immunex markets seven products in the U.S. All are used in
the treatment of cancer or to temper the side effects of
cancer therapy. As one example, we received FDA approval to
market a chemotherapy drug called Novantrone for the 80,000
men who suffer from advanced hormone refractory prostate
cancer. Until Novantrone received clearance, there were few
treatment options for these patients. In addition to the
development of innovator drugs like Novantrone, Immunex has
developed a generic form of paclitaxel, a chemotherapeutic
agent used to treat metastatic ovarian and breast cancers
that have not responded to first line therapies. We intend to
market this drug as soon as the exclusivity period granted to
Brisol-Myers Squibb for its brand, Taxol, expires.
Thus, we are able to consider the proposed demonstration
project from a unique perspective--that of a company that is
fiercely committed to research and development, that develops
and markets innovator drugs, and that also has an interest in
generics. In our view, the proposed demonstration runs
counter to sound public policy and would not achieve its
stated objectives.
Proponents of the demonstration offer two principal
justifications: 1) five years of market exclusivity is not
sufficient to provide adequate incentive for companies to
conduct research to develop new drugs; and 2) the
demonstration would provide a source of revenue needed to
maintain support for NIH research. Unfortunately, the
proposal fails on both counts.
Perhaps there should be a reexamination of the purpose and
effect of the Waxman-Hatch market exclusivity law. But the
appropriations process is not the proper forum for that
debate. It requires the same level of scrutiny and
consideration that was applied when the law was first
adopted. This is particularly true in light of the anti-
competitive nature of the demonstration and its likely
adverse impact on patient access to lifesaving therapies.
Moreover, the proposed demonstration does nothing to
incentivize new drug development since it would extend, by up
to five additional years, market exclusivity for existing
drugs only. It actually would deter research to develop new
formulations of drugs that qualify for the additional
protections. Simply put, other companies that otherwise might
produce new versions with fewer side effects, easier delivery
systems, or greater efficacy would be unable to receive
approval and would have no incentive to conduct the research
necessary to achieve these kinds of breakthroughs. Depriving
patients in this
[[Page E2121]]
way goes well beyond current market exclusivity policy.
The projected revenue stream to NIH is another fallacy. As
illustrated in the Taxol example below, the cost to the
government of extending exclusivity periods under this
demonstration would far exceed the projected $750 million of
new revenue for NIH. It also is important to note that the
proposed ``royalty'' would not be absorbed by the
pharmaceutical companies but would be passed on to patients,
private insurers, and government health care programs in the
form of higher prices for drugs that are shielded from
competition. A tax on sick and dying patients is an
inappropriate and unnecessary way to fund biomedical
research.
Conservatively, at least 21 drugs would receive protection
under the demonstration. But one drug, Taxol, presents the
most egregious case study on why the demonstration would be a
horrible investment for taxpayers and a setback for cancer
patients.
The active ingredient in Taxol is the anticancer compound
paclitaxel. It was discovered, formulated, and introduced
into human clinical trials by the National Cancer Institute
using federal funding. As a result of a cooperative research
and development agreement, or CRADA, Bristol-Myers Squibb was
granted exclusive rights to the NCI paclitaxel research,
continued the clinical trials of Taxol, and obtained FDA
approval in December 1992. In return for its investment,
Bristol received five years of marketing exclusivity under
the Waxman-Hatch Act. This term of exclusivity is
scheduled to expire on December 27, 1997.
Taxol is an expensive drug. A basic treatment costs a
cancer patient more than $2,000. Taxol pricing was the
subject of a negotiated agreement between NIH and Bristol
following a House subcommittee hearing in 1991 at which a
senior Bristol executive testified that the drug ``is neither
patented nor patentable; therefore, we do not have exclusive
intellectual property rights to Taxol.'' Taxol's high price
and five years of marketing exclusivity were part of the
bargain that Bristol struck with the government.
The bargain paid off for Bristol. Bristol does not
separately report U.S. Taxol sales, but the market research
firm IMS America estimated U.S. Taxol sales for 1996 alone to
total $519 million. Other firms have estimated them to be as
high as $590 million. In August of this year, Bristol
reported worldwide Taxol sales of $813 million and sales in
the first half of 1997 of $444 million. Taxol is well on its
way to becoming a billion dollar drug and certainly needs no
additional legislative preference to ensure its success.
Four years ago, Immunex began working with paclitaxel. We
have a supply arrangement with an innovative Colorado
company, Hauser, Inc., that pioneered paclitaxel
manufacturing processes when NCI research on paclitaxel first
began. Immunex and Hauser each have invested heavily to
prepare stockpiles of bulk drug for formulation and sale.
Hauser also has developed a manufacturing process based on
renewable biomass that can assure continued supplies of
paclitaxel. In undertaking this effort, we relied upon the
Waxman-Hatch law and have every intention of introducing on
the market a competitive paclitaxel product in the U.S. upon
the expiration of Bristol's initial exclusivity period for
Taxol. Several other companies have expressed the same
intent.
The positive impact of generic competition to Taxol is
occurring in Canada where Immunex has introduced a
competitive paclitaxel injection product. The prices for
Taxol in Canada are already declining as the market adjusts
to competition. Whereas a breast cancer patient in the U.S.
pays $183 for a vial of Taxol, her Canadian counterpart is
able to obtain the competitive product for less than $100
(U.S. dollars).
NCI has indicated its expectation that generic competition
for Taxol will occur upon the expiration of Bristol's initial
term of exclusivity. In a letter to Senator Ben Nighthorse
Campbell, dated February 26, 1997, Alan Rabson, Deputy
Director of NCI, discussed the Bristol CRADA and stated, ``.
. . [N]ew anti-cancer indications for paclitaxel that
hopefully will arise from research under the extended CRADA
may increase market opportunities for generic manufacturers
of paclitaxel once they are able to enter the market in
January, 1998.''
Nevertheless, Bristol continues to pursue efforts to obtain
extensions of its Taxol exclusivity. At one point, Bristol
was seeking a two-year extension. To better understand the
economic impact of such an extension, Immunex commissioned a
study by an independent economic research firm, National
Economic Research Associates (``NREA''). NERA estimated that
a two-year extension would cost the U.S. health care system
in excess of $1 billion and would cost the Medicare program
alone $288 million.
The proposed demonstration would provide not two, but five
years of additional exclusivity to Bristol for Taxol. In
exchange, NCI would receive a mere three percent royalty.
Based upon the approximately $500 million in U.S. sales now
recorded by Bristol, NCI would receive about $15 million in
royalties in the first year. Comparing the estimated Medicare
cost impact of a two-year extension with two years worth of
royalty payments under the demonstration, taxpayers would
spend an extra $10 on Medicare for every $1 invested in the
demonstration. When one considers the over $1 billion in
added costs to all federal health programs and private sector
plans, the taxpayer cost balloons to nearly $30 for every one
dollar spent with regard to Taxol alone. The numbers are even
more astounding when all drugs covered by the demonstration
are taken into account.
The sweeping protections granted to certain drugs under the
proposal actually would deter other companies from
researching and developing new formulations of paclitaxel or
new methods of using and administering this anticancer
compound, since any drug application relating to this active
compound (even new drug applications directed to uses,
indications, or formulations that are not researched or
developed by Bristol or included in Taxol labeling) would be
frozen for five years.
Thus, the proposed demonstration actually would cost the
federal government billions of dollars that otherwise could
have been dedicated, at least in part, to NIH research. It
would discourage important research, deny patients access to
lower-cost drugs, impose a hidden tax on the sick, and
adversely impact companies that have made significant
investments in researching new uses for drugs that are
reaching the end of their exclusivity periods.
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