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When President George W. Bush unveiled a proposal last week to get generic drugs on the market more quickly, almost everyone found something to criticize. Too harsh on brand name companies, said some. Doesn’t go far enough to help the generics, said others. But the fact that its plan was attacked from all corners may be the best back-handed compliment the administration could have expected. By leaving both generic and brand name drug manufacturers with less than they want, the administration’s proposed rules follow a long line of compromise solutions in the brand name-generic battles dating all the way back to the Solomon-like bargain of the Hatch-Waxman Act, the original law enacted in 1984 that outlined drug approvals and patent enforcement. “Everybody seems to be criticizing it, but it strikes me as a reasonable proposal for the agency to put on the table,” says Daniel Kracov, a food and drug law partner at Patton Boggs. “Everybody was upset by Hatch-Waxman.” On Oct. 21, Bush released a proposal to have the Food and Drug Administration alter its Hatch-Waxman regulations. For the past few years, there has been a serious effort to revisit Hatch-Waxman. Both sides have provisions of the law they want revised. Court cases and FDA rules have also muddied the law’s boundaries in the 18 years since it was passed. And the fortunes of each side have also been in flux. Pharmaceutical companies have been pilloried in recent years, both for the prices of their brand name drugs and for their increasingly creative legal attempts to stave off generic competition. Generics’ market share and lobbying power has been rising. In July, the Federal Trade Commission issued a report on the issue and recommended some legislative changes to eliminate the most egregious efforts by large pharmaceuticals to fend off generics. The Senate then passed a bill to reform Hatch-Waxman that was almost a generic industry wish list. The Pharmaceutical Research and Manufacturers of America (PhRMA) opposed it, as did the administration. And House Republicans kept it off the floor. The Bush administration suddenly stepped in with a new proposal it hoped would assuage critics and the generic industry. “We think that our proposal will go a very long way toward cutting down on the sharp practices and speeding generic drugs to the market,” said an FDA official. “There is no need for legislation after this proposed rule.” The main element of the Bush proposal limits the number of automatic time delays on generic-drug approvals when there is a patent dispute. Under Hatch-Waxman, a company can apply to the FDA to make a generic product before the brand name’s patent expires, if the manufacturer of the generic drug states that the patent is invalid or that its product will not infringe the patent. The brand name company can challenge with a patent infringement suit. If a suit is filed, an automatic stay kicks in barring the FDA from approving the generic for 30 months or until the case is resolved in court. Generics complain that brand name companies have begun getting new, frivolous patents after a generics company has applied, and then reaping the benefits of multiple 30-month stays for each disputed patent. The FDA has always interpreted the law to allow as many stays as there are disputed patents. But in the proposed rules, the administration says the agency will now change its interpretation to allow only one stay per drug. The other proposed changes modify so-called Orange Book procedures. Hatch-Waxman requires drug companies to list certain drug patents in the Orange Book, which lists the patents that can trigger a 30-month stay. Generics want to limit the types of patents brand names can list. The new rules would put some limits in place and toughen the declaration companies must file attesting that the patent belongs in the Orange Book. “It’s a compromise proposal,” says Arthur Tsien, an FDA partner at Olsson, Frank & Weeda. “On the one hand the generic industry is getting a single 30-month stay. But the pharmaceutical companies are getting recognition that they can list a broad variety of patents.” “It is a middle ground,” says Richard Berman, a partner at Arent Fox Kintner Plotkin & Kahn who has represented both generic and brand name companies. “It does have some advantage over [the Senate legislation]. That went a little too far on the generic side.” But generics manufacturers still do quite well in Bush’s plan. “One of the surprising things is just how pro-generic this administration is turning out to be,” says Jake Hansen, a lobbyist for the generics maker Barr Laboratories. A spokesman for the Generic Pharmaceutical Association says 60 percent to 70 percent of what the industry wanted was in the proposed rule. But generics companies still want legislation, hoping to add in what the administration proposal does not include, and to ensure the single 30-month stay provision gets enshrined in the statute itself. PhRMA is staying quiet, saying the trade association is reviewing the rules and will not comment on them until they file official comments with the FDA. They won’t be the only ones filing comments. The rules must be publicly reviewed before being finalized, and many are predicting a flood of papers, legal analyses and criticism. Some say the agency may be overwhelmed by the criticism and may never issue final rules. If the FDA does put forth a new final rule, it will be sure to face a legal challenge. “I am not confident just exactly what FDA’s statutory authority is to draw these lines,” says James Spears, a partner at the Washington, D.C., office of Ropes & Gray who previously served as FTC general counsel. The argument is that the FDA’s new interpretations might be vulnerable in a court fight because they may not be a reasonable interpretation of Hatch-Waxman. The FDA has had a very poor record in recent years defending some of its previous interpretations of other portions of Hatch-Waxman. The most effective weapon the FDA may have to defend its rules is its general counsel, Daniel Troy. A highly respected lawyer who was successful in getting agency rules tossed out while in private practice, Troy is now seen as the best possible legal defender for the FDA in this arena. At the beginning of this year, Troy brought in generics and brand name lawyers for a seven-hour discussion on Hatch-Waxman. Earlier this month, Troy told a congressional hearing he thought rules should be changed to allow only one 30-month stay, and that the agency could make that happen. “If there is a way to make this work under the statute,” says Spears, “then Dan Troy has figured it out.”

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