1990 Annual Report

the average approval time for the 1A and 1B drugs approved in the last three years of the decade was
24.3 months compared to 19.9 months in the first three years. In all three cases, therefore, the figures
are actually worse for the last three years of the decade than they are for the first three years.
The decade began with President Carter in the White House-and American hostages in Iran.
Carter was followed by President Reagan, the hostages were released and Reagan became
the first President since Eisenhower in the 1950s to serve two full successive terms. President
Bush succeeded Reagan and said he wanted a "kinder, gentler" America-but it was hardball as usual in Washington.
Many new federal laws of major importance to the pharmaceutical industry were enacted during the past decade-none more so than the Drug Price Competition and Patent Term Restoration Act
of 1984. The research-based industry knew, when the law was passed, that it would favor generics in
the short term, but believed it would have a more balanced effect in the long run. The first part of the
equation has come true-and industry continues to hope that the second part proves equally accurate.
So far, thousands of generic products have been approved under the accelerated approval provisions of
the Act, but less than 80 pioneer drugs had had their patents extended as of early 1990 and not one
patent has yet been extended for the full five years allowed by the Act.
Other major federal laws enacted during the past decade include:
* The Orphan Drug Act of 1983, which has spurred the development of new drugs to treat rare diseases.
* The Trade and Tariff Act of 1984, which provided the basis for the pharmaceutical industry's all-out
campaign to strengthen the protection of intellectual property rights abroad.
* The Drug Export Amendments of 1986, which authorized the export of drugs not yet approved
by the FDA to 21 developed countries if such a country has already approved the drug.
* The Omnibus Trade and Competitiveness Act of 1988, which expanded the intellectual-property provisions of the 1984 Trade Act and provided process-patent protection in the U.S. that the pharmaceutical
industry had been seeking for years.
* And the Prescription Drug Marketing Act of 1988, under which companies can continue to use sales
representatives to distribute samples to physicians under a system designed to prevent the diversion of
drug samples.
In addition, the Section 936 Possessions Tax Credit, under which pharmaceutical companies
have invested hundreds of millions of dollars in Puerto Rico, was retained without major change even
though it was revised twice by Congress. And, for the last six years, the industry successfully resisted
annual efforts to authorize the FDA to charge user fees for approving new drugs on the grounds that
such a charge would be a tax on innovation.
MARKET EFFECTS OF 1984 LAW
AVERAGE MARKET SHARE OF PIONEER DRUGS
At Patent Expiration 1 Year Later 2 Years Later

Source: H. Grabowski, Ph.D., Unpublished