Chairman Goodlatte: The United States has been and continues to be a champion of free and open markets. An open marketplace cultivates competition among sellers and is the very foundation of maintaining lower prices, higher quality products and services, and superior innovation. The antitrust laws established in this country serve a valuable role in promoting competition, and the Judiciary Committee routinely exercises its oversight authority to ensure that these laws are applied in a manner that is transparent, fair, predictable, and reasonably stable over time.
One area of essential antitrust oversight is the health care industry. Health care and its related markets have long been subject to extensive antitrust scrutiny and have been a focal point of the Committee for the past several years. This hearing marks the fifth in our series focused on competition in the health care marketplace and continues the Committee’s history of vigilant oversight into this important industry that touches nearly every American. Today, the Committee turns its attention to antitrust concerns surrounding the Food and Drug Administration drug approval process and its impacts on competition between branded and generic drug manufacturers.
As with approval processes for any industry subject to government regulations, the drug approval process can provide a fertile environment to secure and abuse market power. Although Congress has passed laws aimed at facilitating competition from lower-priced generic drug manufacturers, while maintaining incentives for branded drug manufacturers to invest in developing new and innovative drugs, the Hatch-Waxman Act and the surrounding regulatory environment create unique issues that are only present in the pharmaceutical marketplace. For example, a generic drug manufacturer must rely on its competitor’s product in order to test bioequivalence so that FDA approval may be sought.
One of the most common antitrust concerns in pharmaceutical conduct cases occurs when companies engage in activity aimed at delaying the entry of generic drugs, thus leading to higher prices for consumers. Of particular concern today is the potential abuse of certain Food & Drug Administration approval processes intended to ensure safety. Although the FDA has no authority to regulate the cost of a drug, certain FDA policies and practices have substantial ramifications throughout the drug pricing market.
Today, the United States has the largest pharmaceutical market in the world, accounting for roughly 40% of the global market. U.S. firms conduct the majority of the world’s pharmaceutical research and development and currently hold the intellectual property rights pertaining to most new medicines.
While it is imperative that the U.S. continue to remain the world leader and innovator in the pharmaceutical market, it is important that these antitrust concerns be given significant deliberation. The benefits from such leadership and innovation are undermined if our consumers unfairly bear the brunt of anticompetitive conduct through above-market prices.
I look forward to hearing the witnesses’ views on these issues and whether our existing antitrust laws are equipped to address these antitrust concerns in the FDA approval process.
I would like to thank Chairman Marino for holding today’s hearing. Today’s testimony will help the Committee gain a better understanding of the seriousness of these issues and how they might be addressed.