[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
RECENT DEVELOPMENTS WHICH MAY IMPACT CONSUMER ACCESS TO, AND DEMAND
FOR, PHARMACEUTICALS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
JUNE 13, 2001
__________
Serial No. 107-34
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
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COMMITTEE ON ENERGY AND COMMERCE
W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
JOE BARTON, Texas HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia SHERROD BROWN, Ohio
STEVE LARGENT, Oklahoma BART GORDON, Tennessee
RICHARD BURR, North Carolina PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
GREG GANSKE, Iowa ANNA G. ESHOO, California
CHARLIE NORWOOD, Georgia BART STUPAK, Michigan
BARBARA CUBIN, Wyoming ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois TOM SAWYER, Ohio
HEATHER WILSON, New Mexico ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona GENE GREEN, Texas
CHARLES ``CHIP'' PICKERING, KAREN McCARTHY, Missouri
Mississippi TED STRICKLAND, Ohio
VITO FOSSELLA, New York DIANA DeGETTE, Colorado
ROY BLUNT, Missouri THOMAS M. BARRETT, Wisconsin
TOM DAVIS, Virginia BILL LUTHER, Minnesota
ED BRYANT, Tennessee LOIS CAPPS, California
ROBERT L. EHRLICH, Jr., Maryland MICHAEL F. DOYLE, Pennsylvania
STEVE BUYER, Indiana CHRISTOPHER JOHN, Louisiana
GEORGE RADANOVICH, California JANE HARMAN, California
CHARLES F. BASS, New Hampshire
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska
David V. Marventano, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Health
MICHAEL BILIRAKIS, Florida, Chairman
JOE BARTON, Texas SHERROD BROWN, Ohio
FRED UPTON, Michigan HENRY A. WAXMAN, California
JAMES C. GREENWOOD, Pennsylvania TED STRICKLAND, Ohio
NATHAN DEAL, Georgia THOMAS M. BARRETT, Wisconsin
RICHARD BURR, North Carolina LOIS CAPPS, California
ED WHITFIELD, Kentucky RALPH M. HALL, Texas
GREG GANSKE, Iowa EDOLPHUS TOWNS, New York
CHARLIE NORWOOD, Georgia FRANK PALLONE, Jr., New Jersey
Vice Chairman PETER DEUTSCH, Florida
BARBARA CUBIN, Wyoming ANNA G. ESHOO, California
HEATHER WILSON, New Mexico BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES ``CHIP'' PICKERING, ALBERT R. WYNN, Maryland
Mississippi GENE GREEN, Texas
ED BRYANT, Tennessee JOHN D. DINGELL, Michigan,
ROBERT L. EHRLICH, Jr., Maryland (Ex Officio)
STEVE BUYER, Indiana
JOSEPH R. PITTS, Pennsylvania
W.J. ``BILLY'' TAUZIN, Louisiana
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Delgado, Jane L., President and CEO, National Alliance for
Hispanic Health............................................ 65
Downey, Bruce L., Chairman and CEO, Barr Laboratories, on
Behalf of the Generic Pharmaceutical Association........... 59
Geiser, Thomas, General Counsel, Wellpoint Health Networks
accompanied by Robert Seidman, Vice President, Pharmacy.... 72
Glover, Gregory J., Ropes & Gray on Behalf of Pharmaceutical
Researchers and Manufacturers of America................... 51
Golenski, John D., Executive Director, RX Health Value....... 70
Kingham, Richard F., Covington and Burling................... 114
Woodcock, Janet, Director, Center for Drug Evaluation and
Research, Food and Drug Administration..................... 16
Material submitted for the record by:
Allergy & Asthma Network Mothers of Asthmatics, prepared
statement of............................................... 136
Downey, Bruce L., Chairman and CEO, Barr Laboratories, on
Behalf of the Generic Pharmaceutical Association, letter
dated July 11, 2001, to Hon. John D. Dingell, enclosing
response for the record.................................... 141
Geiser, Thomas, General Counsel, Wellpoint Health Networks,
letter dated August 1, 2001 to Hon. Michael Bilirakis,
enclosing response for the record.......................... 171
Hansen, Jake, Vice President for Government Affairs, Barr
Laboratories, Inc., letter dated August 10, 2001, to Hon.
Michael Bilirakis, enclosing response for the record on
behalf of Bruce Downey..................................... 194
Kingham, Richard F., Covington and Burling, letter dated
August 1, 2001 to Hon. Michael Bilirakis, enclosing
response for the record.................................... 190
National Association of Chain Drug Stores, prepared statement
of......................................................... 137
Nirenberg, Darryl D., Patton Boggs LLP, letter dated July 19,
2001, enclosing response for the record.................... 164
Plaiser, Melinda, Associate Commissioner for Legislation,
Public Health Service, Food and Drug Administration,
Department of Health and Human Services, letter dated
August 16, 2001, enclosing response for the record......... 202
(iii)
RECENT DEVELOPMENTS WHICH MAY IMPACT CONSUMER ACCESS TO, AND DEMAND
FOR, PHARMACEUTICALS
----------
WEDNESDAY, JUNE 13, 2001
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Health,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2322 Rayburn House Office Building, Hon. Michael Bilirakis
(chairman) presiding.
Members present: Representatives Bilirakis, Greenwood,
Deal, Burr, Norwood, Bryant, Ehrlich, Tauzin (ex officio),
Brown, Waxman, Strickland, Capps, Towns, Pallone, Deutsch,
Stupak, and Green.
Staff present: Brent Del Monte, majority counsel; Marc
Wheat, majority counsel; Kristi Gillis, legislative clerk; and
John Ford, minority counsel.
Mr. Bilirakis. Good morning. This hearing will now come to
order.
Today the subcommittee will consider three matters within
the jurisdiction of the Food and Drug Administration which
impact the demand for, and the price of, pharmaceuticals.
Congress is actively seeking to improve access to
affordable prescription drugs for all Americans, and
particularly our seniors. As we debate various proposals, we
cannot ignore the impact of Federal food and drug laws on the
availability and affordability of drugs. Today, we will focus
on three specific areas which have received a lot of attention
recently; access to generic drugs; the authority of the FDA to
switch drugs from prescription to over-the-counter status
despite a manufacturer's objections; and direct-to-consumer
broadcast advertising.
At our recent Food and Drug Administration Modernization
hearing I mentioned my intent to examine issues related to
generic drugs. And that is one of the purposes of today's
hearing. Generic drugs account for nearly half of all
prescriptions filled, and yet they amount to less than 20
percent of pharmaceutical costs. Generics obviously save
consumers billions of dollars per year, and we should carefully
consider their role as we work to develop a Medicare
prescription drug benefit.
I am particularly interested in learning more about the
science of generics. For instance, how closely must a generic
scientifically resemble the innovator drug for it to receive
FDA approval? I understand that the scientific standard for
generic approval is bio-equivalence, but what exactly does that
mean?
Also, do consumers understand and feel comfortable with,
generic drugs and their role in the modern marketplace? In
addition, I'm interested to learn why, on average, it takes the
FDA longer to approve generic drugs than it does for new drug
applications.
Of course, we can't lose sight of the fact that without a
healthy, vibrant brand-name pharmaceutical industry, there
would be no generic drugs. And I'd like to commend our
colleague, Mr. Waxman, for his work as co-author of the Hatch-
Waxman Act, or as we like to call on this side, the Waxman-
Hatch Act, which increased consumer access to generic drugs,
while strengthening patent protections for new chemical
entities. The Act has proven quite successful for the past 17
years. Both the brand name pharmaceutical and generic
industries have thrived, and consumers have benefited greatly
by access to both new therapies and to cheaper copies of old
therapies.
That being said, concerns have been raised about provisions
of the Waxman-Hatch Act which may lead to anti-competitive
behavior. The Federal Trade Commission is presently conducting
a year-long review to consider this matter. Our witnesses today
will shed light on the continued utility of the automatic 30-
month stay on FDA approval during patent challenges, as well as
how the 180-day generic exclusivity provision is working.
While I know that some of my colleagues may wish to
consider additional generic issues, we simply do not have the
time today to consider all of these matters. Thus, I hope we
can focus on the role of generic pharmaceuticals and not delve
into other areas today.
The subcommittee will also consider the authority of the
FDA to force a drug to be switched from prescription to over-
the-counter status despite the objection of the drug's
manufacturer. We are not looking at whether FDA should switch
specific drugs, and I want to make that clear. We're not
intending to look at whether the FDA should switch specific
drugs, which have been in the news recently, but rather whether
FDA can under the law make the switch. And if they can, what
are the policy impacts of such action?
Last, we'll hear from witnesses who will discuss the impact
of direct-to-consumer broadcast advertising on consumers. In
1997, the FDA changed the guidelines for broadcast drug ads,
and since then this advertising has increased, as we know,
dramatically. While the advertising has mostly focused on the
top selling drugs, it has also served to better inform
consumers. Today, this subcommittee will consider the full
impact of broadcast drug advertising on consumers.
And I now yield with pleasure to Mr. Brown for an opening
statement.
[The prepared statement of Hon. Michael Bilirakis follows:]
Prepared Statement of Hon. Michael Bilirakis, Chairman, Subcommittee on
Health
This hearing will now come to order. Today the Subcommittee will
consider three matters within the jurisdiction of the Food and Drug
Administration which impact the demand for, and the price of,
pharmaceuticals.
Congress is actively seeking to improve access to affordable
prescription drugs for all Americans, and particularly our seniors. As
we debate various proposals, we cannot ignore the impact of federal
food and drug laws on the availability and affordability of drugs.
Today, we will focus on three specific areas which have received a lot
of attention recently: access to generic drugs; the authority of the
FDA to switch drugs from prescription to over-the-counter status
despite a manufacturer's objections; and direct-to-consumer broadcast
advertising.
At our recent Food and Drug Administration Modernization Act
hearing I mentioned my intent to examine issues related to generic
drugs. That is the purpose of today's hearing. Generic drugs account
for nearly half of all prescriptions filled, yet they amount to less
than 20% of pharmaceutical costs. Generics obviously save consumers
billions of dollars per year, and we should carefully consider their
role as we work to develop a Medicare prescription drug benefit.
I am particularly interested in learning more about the science of
generics. For instance, how closely must a generic scientifically
resemble the innovator drug for it to receive FDA approval? I
understand that the scientific standard for generic approval is
bioequivalence, but what exactly does that mean?
Also, do consumers understand, and feel comfortable with, generic
drugs and their role in the modern marketplace? In addition, I am
interested to learn why, on average, it takes the FDA longer to approve
generic drugs than it does for new drug applications.
Of course, we cannot lose sight of the fact that without a healthy,
vibrant brand-name pharmaceutical industry, there would be no generic
drugs. I'd like to commend our colleague, Mr. Waxman, for his work as
co-author of the Hatch-Waxman Act, which increased consumer access to
generic drugs, while strengthening patent protections for new chemical
entities. The Act has proven quite successful for the past 17 years.
Both the brand name pharmaceutical and generic industries have thrived,
and consumers have benefitted greatly by access to both new therapies
and to cheaper copies of old therapies.
That being said, concerns have been raised about provisions of the
Hatch-Waxman Act which may lead to anti-competitive behavior. The
Federal Trade Commission is presently conducting a year-long review to
consider this matter. Our witnesses today will shed light on the
continued utility of the automatic 30-month stay on FDA approval during
patent challenges, as well as how the 180-day generic exclusivity
provision is working.
While I know that some of my colleagues may wish to consider
additional generic issues, we simply do not have the time today to
consider all of these matters. Thus, I hope we can focus on the role of
generic pharmaceuticals and not delve into other areas today.
The Subcommittee will also consider the authority of the FDA to
force a drug to be switched from prescription to over-the-counter
status despite the objection of drug's manufacturer. We are not looking
at whether FDA should switch specific drugs which have been in the news
recently, but rather, whether FDA can, under the law, make the switch.
And if they can, what are the policy impacts of such action?
Last, we'll hear from witnesses who will discuss the impact of
direct-to-consumer broadcast advertising on consumers. In 1997, the FDA
changed the guidelines for broadcast drug ads, and since then, this
advertising has increased dramatically. While the advertising has
mostly focused on the top selling drugs, it has also served to better
inform consumers. Today, this Subcommittee will consider the full
impact of broadcast drug advertising on consumers.
I will now yield to Mr. Brown for an opening statement.
Mr. Brown. Thank you, Mr. Chairman, very much for holding
today's hearings. I want to thank Janet Woodcock and also Bruce
Downey and other witnesses for joining us this morning.
We're looking, as the chairman said, at three prescription
drug issues that are in some ways very different but which
derive their significance in part from the same basic concern;
they have a significant impact on prescription drug costs in
the United States.
Our objective in looking at these issues is not to
dismantle legitimate incentives and rewards for innovative new
drugs and biologics. This subcommittee, this committee, this
Congress have a pressing responsibility to understand the
factors driving the dramatic increase in prescription drug
spending and explore what steps w should take to minimize
wasted spending.
Inflated drug prices rob seniors of dollars they need for
basic necessities; they fuel double digit increases in health
insurance premiums; they drive up the cost of public programs;
they accelerate the erosion of employer sponsored coverage.
Responsibility for establishing a prescription drug benefit
under Medicare rests squarely on our shoulders and we simply
can't afford to waste a single tax dollar on artificially
inflated drug prices.
I want to start with generic drugs and focus on access. I
want to commend my colleague Mr. Pallone for introducing the
Generic Drugs Access Act which tackles bio-equivalency disputes
at the local and State levels. And I want to take this
opportunity to discuss the Greater Access to Affordable
Pharmaceuticals or GAAP Act legislation which I introduced with
Republican Jo Ann Emerson. This is the House version of the Mc-
Cain Shumer Bill.
The explicit goal of the Brown-Emerson, Shumer-McCain Bill
is to restore the original intent of the 1984 Waxman-Hatch Act,
the goal of which was to promote generic competition while
continuing to encourage drug research and development. At
friends at PhRMA are going to make other claims about this
bill. I understand they've already visited some of my
subcommittee colleagues.
PhRMA claims that the GAAP Bill undercuts the incentives
Bill into Waxman-Hatch to reward research and development. In
fact, the bill doesn't touch the provision of Waxman-Hatch that
were intended to reward innovation.
PhRMA claims it would reduce the patent life of brand name
drugs. This bill would have no effect on the statutory patent
life of brand name drugs.
You'll hear it lowers the bio-equivalency standards used to
ensure that a generic drug is identical to and therefore is
safe and as effective as it's brand name counterpart. In fact,
the bill codifies three standards that the FDA already uses to
determine bio-equivalency. Putting the force of law behind
these firmly established standards is one way to fend off
endless and inevitably frivolous lawsuits intended to delay
generic drug approvals.
With all due respect to PhRMA, it makes as little sense to
defer to them on bio-equivalency standards as it does to defer
to the generic drug industry on bio-equivalency standards. Both
parties have a vested interest in the outcome of bio-
equivalence analysis. It's kind of like trusting two oil men to
come up with a balanced global warming policy. Never mind on
that.
So what would the GAAP Bill do?
Mr. Burr's not here, but I didn't want to disappoint him so
he could say that this hearing is partisan, Mr. Chairman.
So what would the GAAP Bill do? It would keep brand name
drug companies from misusing Waxman-Hatch to block legitimate
generic competition. Brand name companies cut deals with the
first generic challenger to keep it off the market because they
know that as Waxman-Hatch is currently written, no generic can
enter the market if the first one doesn't.
Brand name companies file last minute patents on their
drugs because they know that by suing a generic for patent
infringement they can automatically delay FDA approval by 30
months. And brand name companies cut deals with generics to
keep them off the market.
They claim we should protect their right to ``settle court
cases.' What they need to remember, Mr. Chairman, is that
they're settling their case with one generic competitor, not
with every potential generic competitor and every American
consumer. We should not all have to pay to reduce their time in
court.
I look forward to discussing other provisions of the bill
and other generic drug issues, including the chronic under
funding of the Office of Generic Drugs when we hear from our
witnesses later.
I want to briefly touch on DTC advertising and over-the-
counter drugs. In the terms of direct-to-consumer advertising
there clearly are First Amendment implications. But on behalf
of consumers, FDA requires DTC advertising to strike a balance
between promoting and explaining the limitations and risks
associated with prescription drugs. They're also fairly
explicit truth in advertising laws.
Tuesday's article you may have seen in the Washington Post
regarding once-a-week Prozac. There are questions about whether
DTC ads fairly represent their products. It's certain they
don't highlight the relative price of their product and how
that relates to its efficacy. My guess is that if consumers had
the full picture, DTC ads would be much less inflationary than
they are today.
Two thousand increases in sales of just 23 drugs promoted
directly to consumers accounted for half of the $21 billion
increase in pharmaceuticals at retail spending.
In terms of over-the-counter drugs because Congress had the
authority to modify the relevant law, it's important to assess
whether FDA has legal authority to consider the safety of an
over-the-counter determination based on an outside petition.
But the reason the WellPoint case is so important is because
it's promoted us to ask the critical question how should these
determinations be initiated. Is it a conflict of interest when
an insurer initiates this change? Is it a conflict of interest
when a drug company initiates this change, which coincidentally
they do not do until their patent is expired?
It's in the public's best interest to reevaluate the
current process and answer these questions. Prescription drugs
save lives, they prevent illness, they reduce the hardship of
disabilities; that's why it's important to maintain incentives
for prescription drug research and development. That's what
this committee needs to do. But it's also why it's important to
eliminate any kinks in the current system that artificially
inflate prescriptions drug prices. Too much is at stake, Mr.
Chairman, to look the other way.
Thank you.
Mr. Bilirakis. The Chair yields to Dr. Norwood for an
opening statement and would request that we try to stay within
the 5 minute rule, if we possibly could.
Dr. Norwood.
Mr. Norwood. Thank you very much, Mr. Chairman. And I am
grateful to you for this very important, interesting and
hopefully bipartisan hearing.
I don't really think that I can add much to your opening
statement. It said it all pretty well, other than to thank the
witnesses, Dr. Woodcock and others, for being here.
In a sense of timing, I'll yield back my time so we can
hear from the witnesses.
Mr. Bilirakis. The Chair thanks the gentleman.
Mr. Pallone for an opening statement?
Mr. Pallone. Thank you, Mr. Chairman. I want to thank you
and Mr. Brown for holding this hearing on these issues,
particularly the generic drug issue which is very important to
me.
As you know, the high cost of prescription drugs is one of
the most pressing health care issues confronting our country's
senior citizens, employers, managed care plans, State and
Federal drug programs. Although controlling drug costs is not
an easy task, generic competition can have a dramatic impact on
reducing pharmaceutical costs, and I strongly support necessary
changes to Waxman-Hatch that would allow timely access and
availability of generic drugs once the patent on brand name
drugs expires.
The inclusion of generic alternatives in the marketplace is
great for consumers, employers and government purchasers
because generic competition provides access to less expensive,
therapeutically equivalent generic versions of brand name
drugs. Brand name companies have been proficient in
manipulating the Waxman-Hatch law and launching aggressive
campaigns to block or delay generic alternatives from reaching
the market.
The intent of Waxman-Hatch was to provide a balance between
brand name drugs and generic drugs in the marketplace. But
currently the scales are tipped heavily in favor of the brand
name companies. This is clear from the number of pieces of
legislation that have successfully extend the patents on
blockbuster drugs and reaped extraordinary profits for these
brand name companies.
The balance in the marketplace needs to be restored for the
benefit of the consumer and an examination of Waxman-Hatch can
be done, I think, best through the GAAP Bill which Mr. Brown
has sponsored and which he mentioned, the Greater Access to
Affordable Pharmaceuticals Act. I call it GAAP.
I would like to talk a little bit about how the big name
drug companies have several frequently used methods to delay
generic competition. One of their favorite tactics is to make
insignificant changes to their products and secure new patents
just as the patent on the original product is set to expire.
New patents are granted by the Patent Office for frivolous and
invalid reasons, such as changing the color of the bottle,
however you know the problem is that once the new patent is
presented, the current law protects these brand name companies
by prohibiting a generic from going on the market for 30
months.
Another favorite method used by the brand name industry to
manipulate the intent of Hatch-Waxman--oh, did I say Hatch-
Waxman, I'm sorry. Waxman-Hatch. Is inserting patent extensions
into legislative vehicles. In the interest of keeping
pharmaceutical drug costs down, Congress should reject attempts
by the brand name industry to extend patents on profitable
drugs by finding sponsors to inconspicuously insert these
patent extensions into various legislative vehicles.
And last, the misuse of citizen petitions by brand
companies is widely used to delay the approval of generic
drugs. Often times, brand name companies file a citizen
petition with the FDA as a method of blocking the regulatory
process, and as a result brand name companies are afforded
months or even years of monopoly. Agency officials reviewing
these petitions are administratively challenged, and this
leaves the review and approval of generic drugs on the back
burner. Just another example of where legislative changes could
prevent a citizen petition from delaying the approval of a
generic drug that would ensure patient safety and improve
access, and of course the GAAP Bill seeks to accomplish that.
I don't want to keep talking about all these tactics, but
the bottom line is that the brand name industry does delay
generic drugs from entering the marketplace. It's widespread,
it's well known and I think we have to open up Waxman-Hatch to
find avenues that would stop these delays.
Thank you, Mr. Chairman.
Mr. Bilirakis. I thank the gentleman.
Mr. Waxman, for an opening statement.
Mr. Waxman. Thank you very much, Mr. Chairman.
By any definition, pharmaceuticals are important to
Americans. Some people place hope in research toward cures,
some people are struggling to afford the treatments that are
already known. This is the balance, progress and access.
Neither make sense without the other. It is unfair and wasteful
to develop new products that sick people can't afford. It is
pointless to get easy access to products that don't help.
This is a balancing act that I know well. I've been working
on it for almost 20 years now. I'm pleased and proud that the
legislation that bears my name has been so uniformly regarded
as successful in its twin goals.
I'm also always reluctant to open it up to amendment,
whether it be for ad hoc patent extensions or response to
individual court ruling, or for fine tuning to address market
changes. The road to imbalance is paved with good intentions.
But while I'm cautious about opening it up, I will not
stand by as a system is abused. Over the past year I've been
very troubled by reports of collusive arrangements between
brand name and generic companies of near frivolous patent
infringement and of late additions of patents unrelated to the
basic functioning of the drug. I only wish that the
manufacturers who benefit from the system were as cautious
about throwing it into imbalance as I am.
Such clear abuses invite legislative response, and while
I'm cautious about amending the law, I will not let my caution
be abused.
I look forward to the testimony and questioning today of
those witnesses that are before us, and I hope I'll have other
opportunities to explore these very complicated but truly vital
issues further.
Mr. Chairman, just on a diplomatic note of clarification,
both Waxman-Hatch and Hatch-Waxman are acceptable usages. In
fact, if you did a quick computer search it would show that
both are widely used.
It's been the tradition that I refer to this law as the
Hatch-Waxman Act and Senator Hatch call it the Waxman-Hatch Act
just out of courtesy to each other and to the other party.
Again, this is another one of those balancing acts. But I
want to point out that it is not acceptable to call it the
``Wax-Hatchman' or the ``Hatchman-Wax Act.' Any other use of
our names in any order is quite acceptable.
Mr. Bilirakis. I would say, Mr. Chairman, if I might still
refer to you as such, that we are not--we personally are not
bound by that tradition. You may be bound and Mr. Hatch may be
bound, but not us. So it's still the Waxman-Hatch Act on this
side of the Capitol.
Mr. Stupak for an opening statement.
Mr. Stupak. Well, thank you, Mr. Chairman. And thanks for
holding this very important hearing on recent developments in
prescription industry. I believe it's the duty of this
subcommittee to monitor and take necessary action to approve
our Nation's healthcare system, of which prescriptions drugs
play an increasingly large role.
Here are the indisputable facts. Prescription drug spending
has increased by $20.8 billion or 18.8 percent just last year.
Seniors, one-third of whom lack prescription drug coverage,
received a 2.4 cost of living increase in their Social Security
benefit last year.
Less than half of the prescription drug cost inflation is
linked to the increased use of prescription drugs. The rest is
attributable to higher prices, annual price increases and
shifts from lower costs to higher cost drugs.
The hearing today focuses on three major issues facing the
American in today's health market: direct-to-consumer
advertising, over-the-counter drugs, and generic drug issues.
Each of these three issues are substantial in their own right.
The speed of generic drugs into the marketplace is one area
in which I am particularly interested. In 1994 the Waxman-Hatch
Act was passed during a time when the drug approval process was
slow. Now, 17 years later, it's the norm rather than the
exception to have a drug approved in 12 months. This change in
the FDA approval process should also necessitate a change in
the speed in which the FDA is able to approve generic drugs.
Pharmaceutical companies, while indisputably delivering some
excellent products, are using the loopholes in the Waxman-Hatch
Act to extend their strong hold on their products and, thus,
increase their profits.
Another area of particular concern to me is the direct-to-
consumer advertising. While this is seen by many as a necessary
way to gain greater knowledge about drugs and healthcare in
general, I'm alarmed at the incredible amounts of money being
spent on direct-to-consumer advertising, as well as the fact
that the drug companies are responsible for outlining the risk
of their drugs with little oversight from the FDA. Many drug
companies are failing to outline the risk to consumers.
The goal of this hearing is to find the best way to lower
drug prices for consumer while at the same time ensuring
consumer safety, and it's a goal everyone can support.
The three issues we will discuss are seen as possible areas
we can improve upon to lower drug prices, better drugs and
improve healthcare systems.
Mr. Chairman, I sincerely hope this hearing resolves
questions I and others have on these issues. And thank you
again for holding this hearing.
Mr. Bilirakis. And I thank the gentleman.
Mr. Green for an opening.
Mr. Green. Thank you, Mr. Chairman, for holding this
hearing on consumer access to and demands for pharmaceuticals.
It's the interest of all Americans, but especially relevant to
our committee, as we consider ways to provide an affordable
Medicare prescription drug benefit for seniors. According to
the National Institute of Health Management, costs of
prescription drugs has risen dramatically over the last 15
years.
Last year alone, we saw a 19 percent increase in spending
on outpatient pharmaceuticals. Increases in sales of just 23
drugs were responsible for half of this increase, including
Vioxx, Lipitor, Prevacid and Celebrex. It shouldn't be a
surprise to anyone that these drugs are among the most popular,
consumers are bombarded with advertisements for these
medications every time they open a magazine, turn on the
television or surf the Internet. The proliferation of direct-
to-consumer advertising has a strong effect on the consumer
utilization of pharmaceuticals.
Consumers are taking a more activist role in their
treatment. For the first time they're asking their physicians
to prescribe a course of treatment including the
pharmaceuticals that they see advertised.
Mr. Chairman, I believe it's important for consumers to be
informed about their healthcare options and they should work
their doctors for treatment. But it does concern me when we see
marketing costs for pharmaceuticals almost equaling the
research and development costs for pharmaceuticals.
The FDA's recent recommendation to make certain allergy
medications available over-the-counter has sparked fierce
debate on the FDA's right to make such a change absent the
consent of the sponsor. There are questions about how such a
move would impact consumer's access to such drugs, who would
bear the economic burden of the shift and whether such a move
would create a disincentive for the innovation.
Finally, consumer's access for affordable pharmaceuticals
is greatly enhanced by the availability of generic
alternatives. The Drug Price Competition and Patent Term
Restoration Act of 1984, also know as the Waxman-Hatch Act, was
a compromise bill which successfully increased the availability
of generic alternatives and at the same time protecting their
patents for innovation or innovator companies. At the time it
passed, this legislation represented a compromise approach to
meet the needs of both the innovator drug companies and generic
companies. The balance, though, has shifted in recent years as
loopholes in the law have created the opportunity for abuse in
the system.
For example, innovator companies often file a number of
patents, staggering patent applications to extend their patent
protections and, thus, their exclusivity. They're gaming the
system and I don't think Congress should continue them to allow
to do that. By staggering the patents, this loophole creates
the possibility for innovator companies to receive multiple and
unlimited stays for a single drug. This patent stacking results
in lengthy delays and excessive litigation before the problems
are resolved and alternatives can reach the market.
Additionally, these new patents are often for peripheral
issues, such as the pharmaceutical's color, its labeling, or
even are indication. These include minor changes, and that's
why Congress should update the Waxman-Hatch Act.
I know my good friend from Ohio, Sherrod Brown has
introduced legislation which would stem some of these abuses
and level the playing field for the generic pharmaceuticals.
While I've not cosponsored my colleague's bill, I grow more and
more concerned that Congress must take action to close the
loopholes that we've seen develop since 1984.
As we in Congress struggle to provide an affordable
prescription benefit for seniors, we must look at all these
issues.
I look forward to the testimony today. And I yield back my
time, Mr. Chairman.
Mr. Bilirakis. I thank the gentleman.
Ms. Capps for an opening statement.
Ms. Capps. Thank you, Chairman Bilirakis. I'm pleased we
could be here today to address this issue.
The news just this week of the cost of living compared with
the exorbitant increases in medications, prescription
medications, I think is further testimony to the fact that
something's out of control. The prices have skyrocketed, and so
it is high time that Congress take a long hard look at some of
the factors influence the price of prescription drugs.
Today prescription medications are often the preferred, and
sometimes the only method of treatment for many illnesses and
diseases, but the cost in so many cases is a deterrent so that
patients are not getting this often life saving treatment that
they need. Therefore, we on this committee need to address this
issue.
There are certainly no simple solutions. We will need to
closely examine the various factors that effect drug pricing,
such as competition and cost of development and distribution.
Seventeen years ago Congress took a tremendous step in
improving competition with the Waxman-Hatch Act. It has had a
dramatic effect quadrupling the percentage of the market
represented by the generic drugs while continuing to protect
the right of patent holders and encouraging new drug
development. But I'm concerned about reports of abuses by
pharmaceutical companies of the protections and incentives that
this law provides. These reported abuses could impede the
access the generic drugs have to the market and to my
constituents.
Claims have been made that brand name companies are using
loopholes in the 30 month day and the 180 day market
exclusivity provisions to indefinitely delay the production of
generic drug competition. In light of these charges, it is time
for us to look at improving the Act. As we take this up, we
certainly must not discourage innovation and new ideas. There
must continue to be strong incentives for companies to spend on
research and development, but we cannot follow these
incentives--we cannot allow these incentives to prevent our
constituents from being able to afford the medications that
they need.
The increased competition that generic drugs bring to the
marketplace has saved purchasers $8 billion to $10 billion
according to a 1998 CBO study. Clearly, this is important
because if we are to implement a real prescription drug benefit
for our seniors, we are going to have to find ways to contain
costs.
So I'm looking forward to hearing the panel's perspective
on how we can do this, eager to hear their thoughts on direct-
to-consumer advertising or DTC. DTC may have the potential to
improve the public's understanding of their health needs and
options, but I am concerned about the resources being spent
here, resources that add to the cost of drugs and ultimately
come from the consumer's pocket.
We cannot permit companies looking for a way to increase
their profits to exploit their consumers, our constituents. And
I also think we must make sure that any such advertising meets
the strictest guidelines to protect American safety.
I want to thank Mr. Waxman for his years of leadership on
this issue and recognize the leadership of Representatives
Brown, Pallone, Eshoo and Dingell on these matters. They've
worked hard to find ways for the public to have more access.
And I look forward to working with you, Mr. Chairman, to
continue this work and improve our health system.
I yield back the balance of my time.
Mr. Bilirakis. The gentlelady's time has expired.
I'd like to very much to be able to get through the opening
statements before we run over to vote.
Mr. Deal for an opening statement.
Mr. Deal. I'll assist you, Mr. Chairman, by passing.
Mr. Bilirakis. I thought you might do that. Thank you.
Mr. Deutsch.
Mr. Deutsch. Thank you, Mr. Chairman. I thank the chairman
and ranking members for calling this hearing.
Mr. Chairman, while all the issues we will hear about today
are serious and deserving of attention, there's one aspect of
this hearing that I think is particularly important to focus on
today: Patent issues under Waxman-Hatch Act.
While direct-to-consumer advertising and over-the-counter
switches may have some impact on the high cost of drugs,
nothing contributes to the prices our constituents pay at the
pharmacy like delaying generic entry into the market.
I hear everyday from constituents who are struggling with
paying the high cost of drugs. I also frequently hear from the
pharmaceutical industry giving me reasons why drugs are so
expensive and why I should help to maintain these extraordinary
prices. And while I agree that research into life saving
therapies is a cost and necessary venture, we should address
how brand name companies game the patent and Orange Book
Listing, thereby inflating drug prices even further and
delaying entry of low cost generics into the market.
We should also address the FDA's role in this system and
failure to adequately ensure the validity of many patents.
I have seen and heard of numerous examples during my years
in Congress of a generic drug set to go to market only to be
delayed because a brand name company has filed an Orange Book
Listing with the FDA stating that they deserve additional
market exclusivity on an active ingredient because they've
changed some part of the pill, it's shape, color or size.
And then another generic company is forced to delay entry
of its product into the market until the new patent expires or
they can successfully challenge the patent. Amazingly, FDA is a
full partner in this process, simply listing patents in the
Orange Book without regard to the value of the patent. That
makes no sense to me since the FDA deals with patents on drugs,
devices, cosmetics and other products every single day.
Recently Biovail, a brand drug company listed a patent in
the Orange Book that they said applied to their drug Tiazac,
which was about to lose its original patent coverage. During
litigation FDA testified that it believed the new patent
actually did not and could not apply to Tiazac. Additionally,
the FDA testified that it was unilaterally prepared to delist
the patent from the Orange Book. Nevertheless, after all this
testimony the FDA turned around and sent a letter to Biovail
telling the company that they would continue to list the patent
as applying to Tiazac as long as Biovail sent a letter to them
confirming the same.
Essentially the FDA said to Biovail help us help you lie to
us. If that is what Congress intended in Waxman-Hatch Act 17
years ago, I doubt it.
The question we have before us is what do we do now?
Frankly, I don't blame the brand companies for exploiting these
loopholes. That's just plain business sense. It's now up to us
in Congress to prevent this kind of abuse of the patent and
Orange Book systems.
I fully support Ranking Member Brown's legislation, part of
which requires brand name manufacturers to list all the drugs
relevant to that and certify with the FDA that the list is
complete and accurate. This bill also expedites the legal
process for challenging late listed patents.
We may also want to look at limiting patents that can be
listed in the Orange Book to the active ingredient and the
first mode of use. Whatever we do, we need to ensure that FDA
becomes a more willing partner in this process.
I'm interested to hear from the witnesses and what they
have to say.
And I yield back the balance of my time.
Mr. Bilirakis. The Chair thanks the gentleman.
We will break now. The opening statements are hereby ended.
The written opening statement of all members of the
subcommittee are hereby made a part of the record without
objection.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. Fred Upton, a Representative in Congress
from the State of Michigan
Mr. Chairman, thank you for holding today's timely hearing on
recent developments which may have an impact on consumers' access to
and demand for prescription drugs. These are complex issues, and we
need to have a good grasp of them as we work together to craft a
Medicare prescription drug benefit.
It was my pleasure to serve with you on the House Leadership's
Prescription Drug Task Force in the last Congress and to see the plan
we crafted win bipartisan approval by the House. I sought to serve on
this task force because I strongly believe that no senior citizen
should be forced to forego needed medication, take less than the
prescribed dose, or go without other necessities in order to afford
life-saving medications. Our nation leads the world in the development
of new drugs that enable us to effectively treat diseases and
conditions. But if people cannot afford to buy these drugs, their
benefits are lost to many in our population.
Mr. Chairman, I am looking forward to working with you and my
colleagues on both sides of the aisle and with the new Administration
to craft a plan that can win the bipartisan support necessary to move
quickly through Congress and be signed into law by President Bush. We
cannot allow another Congress go by without providing relief to the
millions of seniors without prescription drug coverage.
______
Prepared Statement of Hon. Barbara Cubin, a Representative in Congress
from the State of Wyoming
Pharmaceutical products have come a long way over the course of the
past two decades, reaching new heights in innovation and research and
development.
Because of that, many lives have been saved. Heaven forbid we
should do anything to jeopardize that continued success in the future.
Since passage of the Hatch-Waxman Act in 1984, we have seen more
generic drugs make their way into the market and into the hands of
consumers.
In 1980, before Hatch-Waxman, CBO estimated that 13 % of
prescriptions filled were generic; by 1998, generics comprised 58 % of
total prescriptions. Those numbers tell us that Hatch-Waxman has played
a pivotal role in making generic drugs more accessible to patients.
At the same time, Hatch-Waxman has helped foster research and
development. Pharmaceutical companies have increased their R&D spending
from $3.6 billion in 1984 to over $30 billion in 2001.
That is very encouraging, especially for those of us, presumably
most, who depend on drugs everyday for quality of life.
Hatch-Waxman is not, however, without its controversies--namely
when it comes to pharmaceutical patents. To the extent Hatch-Waxman has
caused some grumblings in this area, we will soon discover through the
course of this hearing today.
I look forward to hearing the testimony of our witnesses, and yield
back the balance of my time.
______
Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee
on Energy and Commerce
Mr. Chairman: I'd like to begin by commending you for calling this
very important, and timely, hearing today.
Our purpose today is to consider three important matters: Access to
generic drugs, direct-to-consumer broadcast advertising, and the
government's authority to switch prescription drugs to over-the-counter
status over the objection of drug sponsors. These three issues directly
impact our constituents who want the best quality pharmaceuticals at
the lowest possible prices.
In 1984 the Congress passed the Hatch-Waxman, or as my friends on
the other side of the aisle call it, the Waxman-Hatch Act. This Act did
two primary things: it restored patent terms to innovators which had to
navigate the lengthy FDA drug approval process prior to marketing, and
it provided an expedited drug approval process for generic drugs. In my
view, the 1984 Act has proven to be a resounding success. In 1984, the
market share for generic drugs was less than 20%, and today that figure
stands at nearly 50%. So consumers now have greater access to lower-
priced therapies. At the same time, we've seen an explosion in
innovator investment in research and development. Research-based
pharmaceutical companies have increased their R&D spending from $3.6
billion in 1984 to over $30 billion today. Knowing that innovator drugs
will face competition immediately upon patent expiration forces the
innovators to do what they do best: innovate.
That being said, there are some who urge that the 1984 Act needs
some fine-tuning; that certain loopholes have been abused, thus
delaying consumer access to lower-cost generics. The primary focus of
these comments concern the automatic 30 month stay on generic approval
at FDA when the generic challenges an innovator patent as invalid or
not infringed, and the 180 day generic exclusivity provision of the
Act.
There have been a few recent, high profile examples of abuse of the
30 month stay provision. And while these few examples have led some to
call for major revisions of Hatch-Waxman, I say let us keep things in
perspective. While some reforms may be necessary, we cannot lose sight
of the fact that between 1984 and January, 2001, 8,259 generic
applications were filed with FDA, and only 478 generic applications, or
5.8% of the total, raised any patent issues. In essence, the 30 month
stay is rarely a barrier to generic access to the market. That is not
to say, however, that the Congress must turn a blind eye if the stay
acts as an artificial barrier to generic competition. These are issues
we must consider today.
Further, we must explore how the 180 day generic exclusivity
provision is working. I believe there should be incentives for generics
to challenge weak patents. In 1984 it was thought that 180 days of
generic exclusivity would ensure this. But the market place has changed
dramatically since then. Now we see three, four, some times five
generics lining up to challenge patents on blockbuster drugs, even
though only the first generic to challenge is eligible for the
exclusivity. Further, the courts have determined that to be eligible
for the exclusivity all the generic has to do is file the challenge
first, not successfully defend a patent infringement case. These
developments raise many issues we need to explore: For example, should
the exclusivity roll to subsequent challengers when the first
challenger settles its case? Or, is the statutory incentive even
necessary now, given the market incentives which lead to multiple
generic applicants with no chance of exclusivity challenging patents?
Regarding direct-to-consumer, or DTC, broadcast advertising, I am
especially interested in learning whether these ads lead to increased
utilization of inappropriate therapies, educate consumers to seek
therapies which lead to healthier lives, or maybe a bit of both. There
has been a lot of anecdotal information on this subject, and I know
that FDA is presently conducting a review of DTC's impact.
While increases in DTC broadcast advertising spending have
coincided with increases in overall expenditures on pharmaceuticals, I
think it is premature to draw a causal connection between the two,
though the existence of a connection must be studied. There is
information pointing to DTC broadcast ads having an overall positive
impact. For instance, a 1999 FDA survey found that 27% of those who
sought information from their doctors after seeing a DTC ad asked their
physicians about a condition they had not discussed before. Further, a
recent Prevention Magazine survey found that 76% of Americans believe
DTC ads help them become more involved in their own health care. At the
same time, there is no denying that the advertising is concentrated on
a relatively short list of drugs. The most recent statistics show that
about 12 drugs accounted for nearly half of all DTC broadcast spending.
And it probably comes as no surprise that these drugs are some of the
biggest sellers.
Last, the Subcommittee will focus on whether the FDA has the
authority to switch a drug from prescription status to over-the-
counter, or OTC, status over the objection of drug sponsors. This issue
just recently came to the fore when one of our witnesses before us
today, WellPoint, filed a citizens petition urging such a switch. The
issue to me isn't whether the drugs at issue in the WellPoint petition
are safe enough to be switched, but rather whether the FDA has the
authority to make the switch without the consent of the sponsor.
For past decades, it was widely understood that the only way to
sell an OTC drug was to either comply with a monograph, or to petition
the FDA for a switch of your prescription drug through a new drug
application. However, there is no denying that Section 503(b)(3) of the
Code states that the ``Secretary may by regulation remove drugs [from
prescription status] when such requirements are not necessary for the
protection of the public health.'' While this provision in the Code is
a half-century old, it's plain meaning seems evident. I need to hear
from our witnesses why my understanding of this provision may be
misinformed, or whether I understand it correctly.
And if it turns out that the Secretary does have the authority
under the Code to make the switch, we must explore what kind of process
must be afforded to drug sponsors who object to the switch. Are they
entitled to evidentiary hearings? Will they be forced to conduct label
comprehension studies? Will the switch amount to a Constitutional
taking? We should consider all of these issues at our hearing today.
Thanks again, Chairman Bilirakis, for considering these very
important issues today. I look forward to the testimony of our
witnesses.
______
Prepared Statement of Hon. Anna G. Eshoo, a Representative in Congress
from the State of California
Thank you, Mr. Chairman. I share your interest in these issues
which strike at the core of consumer access to prescription medicines.
I'm concerned, however, that by dealing with all three in one hearing,
we are giving them short shrift. Each of these issues raises numerous
questions. So I hope this will be the first hearing for each.
That said, I'm looking forward to the testimony from today's
witnesses. As the representative of California's 14th Congressional
District, home to the largest concentration of biotech companies in the
world, I have a keen interest in each of these issues.
I'm particularly interested in hearing from FDA on their recent
decision to move three antihistamines from prescription status to over-
the-counter. This has received quite a bit of attention recently and it
raises numerous legal questions, not the least of which is whether FDA
has the statutory and constitutional authority to take this kind of
action over the objections of the drug manufacturer.
But even more important is the impact on consumers. Will safety be
compromised and will the risk of this kind of unauthorized ``switch''
negatively impact future development of breakthrough medicines? These
are just some of the questions this Committee and FDA must consider as
we forge new ground on this issue.
I'm also keenly interested in the direct-to-consumer advertising
issue. When FDA finalized its guidance in 1999, it opened the door and
allowed drug companies to advertise their products--on TV, in
magazines, even in newspapers. For the first time, doctors weren't the
only ones holding the knowledge. Consumers were coming to their doctors
armed with information and demanding a higher level of care.
Prior to these ads, prescription medicines were a mystery with
names we couldn't pronounce and side effects we didn't even try to
understand. Today, consumers know the drugs they're taking, any
potential side effects, even how they interact with other drugs. Gone
are the days when we simply accepted what our family doctor told us. We
read, we surf the web and, yes, we listen to advertisements.
One of the issues before this Committee is whether the current
system for direct-to-consumer advertising is providing consumers with
enough information.
Finally, we cannot go home today without acknowledging that all
these issues are tied to a larger policy debate which has plagued this
Congress and the nation--the need for prescription drug coverage in
Medicare. We're so wrapped up in trying to get at the pricing issue
that we're failing to do the one thing that will provide relief--a
Medicare drug benefit. We're missing the forest for the trees. Rather
than spending time trying to shorten patent lives and switching drugs
from prescription to over-the-counter--which may actually increase the
prices for many beneficiaries--let's put our heads together and come up
with a meaningful prescription drug benefit for every senior. The
American people want it, they need it, and they deserve it. It's time
we paid attention.
______
Prepared Statement of Hono. John D. Dingell, a Representative in
Congress from the State of Michigan
Mr. Chairman, thank you for scheduling this hearing. All three
topics of this hearing, Over-the-Counter drugs (OTC) switching, Direct-
to-Consumer (DTC) advertising, and the Waxman-Hatch Act are matters in
which I have a long-standing interest. The pharmaceutical marketplace
is of ever-increasing importance to citizens, and Committee attention
to these matters has been lax for the past several years. We know that
millions of Americans cannot afford, and therefore do not take, the
drugs that they need. As a general matter, I will be curious to learn
what our panel knows about the competitive nature of the
pharmaceuticals market.
With respect to DTC advertising, I have long-standing concerns
about commercialization of the doctor-patient relationship as it
applies to prescription drugs. I agree that well done advertisements on
public health issues can provide a substantial public health benefit.
Ads on tobacco, sexually transmitted diseases, vaccines, domestic
violence, drug abuse, and other causes of premature death and disease
have worked. That is an entirely different matter than the case of a
prescription drug product sponsor running an advertisement for its
product. The latter case moves from the general message of urging
people to take some action of benefit to their health to a related, yet
distinct, effort to urge persons to consume a particular product. Are
DTC ads improving the health of this country and, if so, how and to
what extent?
There is no doubt in my mind that the Waxman-Hatch Act has saved
consumers billions of dollars in prescription drug costs and, in doing
so, has improved the health of millions of persons. That said, I wonder
if this law any longer can realize its full potential as tens of
billions of dollars of prescription drugs are scheduled to go off
patent in the next several years. My point is that a very good law has
acquired some tattered edges due to judicial decisions, administrative
actions, and clever lawyering by brand name drug manufacturers. This
law was enacted in 1984 and has not been revised since then. That is a
long time in the life of any public policy, especially one that affects
the disposition of many billions of dollars. I understand that our
witnesses today will not discuss ideas for fundamental reform, but will
limit their remarks to proposals aimed at restoring the original
balance of the Waxman-Hatch Act between product innovation and price
competition.
Finally, we will hear two very different opinions on the issue of
who can initiate the switch of a prescription drug to over-the-counter
status. The arguments pro and con are intriguing and I look forward to
the testimony.
Mr. Chairman, I hope this hearing is only the beginning of a
substantial Subcommittee effort to address pharmaceutical market
issues. Thank you.
Mr. Bilirakis. And we will break now and show our
appreciation to Dr. Woodcock for her patience. I'm sure you
understand what we go through here. Thank you.
[Brief recess.]
Mr. Bilirakis. The committee is pleased to welcome as our
first panelist Dr. Janet Woodcock, who is a Director for the
Center for Drug Evaluation and Research with the FDA.
Dr. Woodcock, of course, your written statement is a part
of the record. I will set the clock at 10 minutes, please do
the best that you can in that regard. We certainly won't cut
you off if you should go over. Please proceed.
STATEMENT OF JANET WOODCOCK, DIRECTOR, CENTER FOR DRUG
EVALUATION AND RESEARCH, FOOD AND DRUG ADMINISTRATION
Ms. Woodcock. Thank you.
Mr. Chairman and members of the subcommittee, I'm Janet
Woodcock, Director of the Center for Drug Evaluation and
Research at the Food and Drug Administration. I'm pleased to be
here and be able to provide information on FDA programs that
may effect consumer's demand for, and access to
pharmaceuticals.
As you're aware, the FDA is not involved in drug pricing.
However many of our programs can impact directly or indirectly
on health care costs related to drugs. Our generic drug review
program is the best example. The availability of lower cost
generic versions of innovator drugs has a substantial impact on
lower cost to consumers in the healthcare system.
Today I will discuss issues related to three FDA programs:
Generic review, the agency's regulation of direct-to-consumer
advertising, and the process of switching drugs available under
prescription to over-the-counter status.
The generic drug program has the most straight forward
impact on drug costs. In fiscal year 2000 alone, FDA approved
232 generic drugs. Some of these were first time approvals,
while others represented additional competitive entries into
the marketplace. It has been well documented that when generic
competition is introduced, drug prices drop. Because FDA review
provides assurance that generic products are fully
substitutable for the innovator drug, patients can save money
on their medicines without fear of getting a lower quality
product.
FDA's generic drug review program implements that Drug
Price Competition and Patent Term Restoration Act of 1984, also
known as the Waxman-Hatch Amendments. These amendments were
intended to balance two important public policy goals. First,
to provide meaningful market protection incentives to encourage
the development of valuable new drugs. And second, to provide
for the rapid availability of generic versions once the
statutory patent protection and marketing exclusivity of the
innovator drug expired. And overall, as we've already heard,
the program has, and is currently achieving these goals.
However, as might be expected when so much is at stake
financially, certain provisions have proved challenging to
implement. In particular, the 180 day generic exclusivity
procedure has been marked by litigation, court decisions, and
course directions for FDA. These problems are too complex to
discuss in my brief statement, but they're fully covered in my
written testimony, and I'll be glad to answer any questions you
might have.
The bottom line is that the generic drug program is
functioning well, but there are difficulties in implementation
of certain parts of the statute. And I would like to also add
that these difficulties have increased in recent years, and we
may project that the trajectory of problems may be increasing.
Now I'd like to turn to the issue of direct-to-consumer
advertising. First, I'd like to point out that direct-to-
consumer advertising has always been legal in the United
States. Neither the Food, Drug and Cosmetic Act nor the
implementing regulations, which were first issued in the
1960's, prohibit promotion to consumers or patients.
People often ask us when FDA lifted its ban on direct-to-
consumer advertising. In fact, this activity was never banned.
Product sponsors back in the 1960's just didn't advertise to
consumers. In the early 1980's, however, a few firms started
advertising their prescription products directly to patients.
As a result of the ensuing concerns, FDA requested in 1983 that
sponsors voluntarily suspend these ads to give FDA time to
conduct research and hold public meetings, which was done and
the industry complied with this request.
In 1985 FDA withdrew the voluntary moratorium stating that
the regulations provided sufficient safeguards to protect
consumers. After that there was a steady growth of print
direct-to-consumer ads for prescription drugs.
By the late 1990's increasing numbers of reminder ads began
to appear on television. These ads can mention the name of the
drug, but don't mention its use, which is very confusing to the
public, although not to health professionals who are familiar
with drug names.
In 1997, in response to the changed information environment
in the country, as well as the confusing broadcast situation
and the demand from patients and consumers for understandable
prescription drug information, FDA issued a draft guidance
explaining how sponsors could meet the regulatory requirements
for consumer access to complete label information. Sponsors
followed this guidance and used it to run broadcast ads.
In 1999 FDA issued the guidance in final form and stated
our intention to assess the impact of the guidance and of DTC
promotion in general on the public health, and we will do this.
From the public health perspective direct-to-consumer
advertising is a double edged sword. On one side we know that
many conditions with preventable, serious consequences are
severely undertreated in the U.S. population. Examples include
hypertension, high cholesterol and mental illnesses. Many
people are suffering, or will die prematurely, because they
have not utilized available treatments for these conditions.
This is such a severe problem that some public health advocates
have suggested to the FDA that certain medicines for
cardiovascular problems be switched to over-the-counter status
so more people would have access.
Advertising and promotion can strongly influence behavior,
that's why firms pay for it. Ads could reach out to untreated
individuals and motivate them to seek care. And, in fact, when
we've looked at broadcast ads, a significant number of them
target these serious and undertreated disorders.
The sword's other edge, though, is that patients and
consumers could be motivated by advertising to seek medication
that was not right for them and even to pressure prescribers
into inappropriate choices. We certainly have heard stories
from some health care professionals of patients coming to the
office waving such an ad for an inappropriate drug for them.
Again, I cannot cover all issues raised by DTC advertising
in a brief statement. When discussing DTC ads and drug costs
it's important to stress that not all drug cost increases are
negative from a public health standpoint. If more citizens take
drugs to prevent heart attacks, strokes, or weakened bones as a
result of direct-to-consumer advertising, that is for the
public good. If cost increases reflect inappropriate
prescriptions or preferential prescribing of more expensive
choices, then that's a poor bargain indeed for the public.
Finally, I'd like to say a word about switching drugs from
prescription to over-the-counter status. Usually when such
switches are considered, the benefits that we think of at FDA
involve consumer access and convenience. We do not think about
drug costs. In the vast majority of cases historically the drug
manufacturer proposes and supports such a switch.
Recently FDA was petitioned by a health care payer group to
switch certain prescription antihistamines to over-the-counter
status. While FDA does not consider costs in making OTC switch
decisions, it is likely that both the petitioner's desire for
the switch and the manufacturer's reluctance about the switch
is at least in part related to economic factors.
In summary, FDA operates a number of programs that impact
people's access to, and knowledge about, available drug
treatment. We strive to do this in a way that produces the
maximum public health benefit within the current statutory
framework that's available to us.
Thank you.
[The prepared statement of Janet Woodcock follows:]
Prepared Statement of Janet Woodcock, Director, Center for Drug
Evaluation and Research, Food and Drug Administration, Department of
Health and Human Services
introduction
Mr. Chairman and Members of the Subcommittee, I am Dr. Janet
Woodcock, Director of the Center for Drug Evaluation and Research
(CDER), Food and Drug Administration (FDA or the Agency). I am here
today to update you on three important areas that CDER is continuing to
work on:
(1) FDA's implementation of provisions of the Drug Price Competition
and Patent Term Restoration Act of 1984 (Hatch-Waxman
Amendments) that govern the generic drug approval process.
(2) The promotion that manufacturers of prescription drugs (product
sponsors) direct toward consumers and patients. This is
referred to as ``direct-to-consumer'' promotion or DTC.
(3) The mechanism for reclassification of drugs from prescription to
over-the-counter (OTC) status, namely, the request for the OTC
switch by a third party, a novel situation FDA is presently
facing.
i. generic drugs
FDA's implementation of provisions of the Drug Price Competition
and Patent Term Restoration Act of 1984 (Hatch-Waxman Amendments)
govern the generic drug approval process. These provisions give 180
days of marketing exclusivity to certain generic drug applicants. The
180-day generic drug exclusivity provision is one component of the
complex patent listing and certification process, which also provides
for a 30-month stay on generic drug approvals while certain patent
infringement issues are litigated.
The Hatch-Waxman Amendments are intended to balance two important
public policy goals. First, drug manufacturers need meaningful market
protection incentives to encourage the development of valuable new
drugs. Second, once the statutory patent protection and marketing
exclusivity for these new drugs has expired, the public benefits from
the rapid availability of lower priced generic versions of the
innovator drug.
Statutory Provisions
The Hatch-Waxman Amendments amended the Federal Food, Drug, and
Cosmetic (FD&C) Act and created section 505(j). Section 505(j)
established the abbreviated new drug application (ANDA) approval
process, which permits generic versions of previously approved
innovator drugs to be approved without submission of a full new drug
application (NDA). An ANDA refers to a previously approved NDA (the
``listed drug'') and relies upon the Agency's finding of safety and
effectiveness for that drug product.
The timing of an ANDA approval depends in part on patent
protections for the innovator drug. Innovator drug applicants must
include in an NDA information about patents for the drug product that
is the subject of the NDA. FDA publishes patent information on approved
drug products in the Agency's publication ``Approved Drug Products with
Therapeutic Equivalence Evaluations'' (the Orange Book) (described in
more detail below). The FD&C Act requires that an ANDA contain a
certification for each patent listed in the Orange Book for the
innovator drug. This certification must state one of the following:
(I) that the required patent information relating to such patent has
not been filed;
(II) that such patent has expired;
(III) that the patent will expire on a particular date; or
(IV) that such patent is invalid or will not be infringed by the drug,
for which approval is being sought.
A certification under paragraph I or II permits the ANDA to be
approved immediately, if it is otherwise eligible. A certification
under paragraph III indicates that the ANDA may be approved on the
patent expiration date.
A paragraph IV certification begins a process, in which the
question of whether the listed patent is valid or will be infringed by
the proposed generic product may be answered by the courts prior to the
expiration of the patent. The ANDA applicant who files a paragraph IV
certification to a listed patent must notify the patent owner and the
NDA holder for the listed drug that it has filed an ANDA containing a
patent challenge. The notice must include a detailed statement of the
factual and legal basis for the ANDA applicant's opinion that the
patent is not valid or will not be infringed. The submission of an ANDA
for a drug product claimed in a patent is an infringing act if the
generic product is intended to be marketed before expiration of the
patent, and therefore, the ANDA applicant who submits an application
containing a paragraph IV certification may be sued for patent
infringement. If the NDA sponsor or patent owner files a patent
infringement suit against the ANDA applicant within 45 days of the
receipt of notice, FDA may not give final approval to the ANDA for at
least 30 months from the date of the notice. This 30-month stay will
apply unless the court reaches a decision earlier in the patent
infringement case or otherwise orders a longer or shorter period for
the stay.
The statute provides an incentive of 180 days of market exclusivity
to the ``first'' generic applicant who challenges a listed patent by
filing a paragraph IV certification and running the risk of having to
defend a patent infringement suit. The statute provides that the first
applicant to file a substantially complete ANDA containing a paragraph
IV certification to a listed patent will be eligible for a 180-day
period of exclusivity beginning either from the date it begins
commercial marketing of the generic drug product, or from the date of a
court decision finding the patent invalid, unenforceable or not
infringed, whichever is first. These two events--first commercial
marketing and a court decision favorable to the generic--are often
called ``triggering'' events, because under the statute they can
trigger the beginning of the 180-day exclusivity period.
In some circumstances, an applicant who obtains 180-day exclusivity
may be the sole marketer of a generic competitor to the innovator
product for 180 days. But 180-day exclusivity can begin to run--with a
court decision--even before an applicant has received approval for its
ANDA. In that case, some, or all, of the 180-day period could expire
without the ANDA applicant marketing its generic drug. Conversely, if
there is no court decision and the first applicant does not begin
commercial marketing of the generic drug, there may be prolonged or
indefinite delays in the beginning of the first applicant's 180-day
exclusivity period. Approval of an ANDA has no effect on exclusivity,
except if the sponsor begins to market the approved generic drug. Until
an eligible ANDA applicant's 180-day exclusivity period has expired,
FDA cannot approve subsequently submitted ANDAs for the same drug, even
if the later ANDAs are otherwise ready for approval and the sponsors
are willing to immediately begin marketing. Therefore, an ANDA
applicant who is eligible for exclusivity is often in the position to
delay all generic competition for the innovator product.
Only an application containing a paragraph IV certification may be
eligible for exclusivity. If an applicant changes from a paragraph IV
certification to a paragraph III certification, for example upon losing
its patent infringement litigation, the ANDA will no longer be eligible
for exclusivity.
Court Decisions and FDA Actions
This 180-day exclusivity provision has been the subject of
considerable litigation and administrative review in recent years, as
the courts, industry, and FDA have sought to interpret it in a way that
is consistent both with the statutory text and with the legislative
goals underlying the Hatch-Waxman Amendments. A series of Federal court
decisions beginning with the 1998 Mova 1 case describe
acceptable interpretations of the 180-day exclusivity provision,
identify potential problems in implementing the statute, and establish
certain principles to be used by the Agency in interpreting the
statute.
---------------------------------------------------------------------------
\1\ Mova Pharmaceutical Corp. v. Shalala, 140 F.3d 1060, 1065 (D.C.
Cir. 1998).
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In light of the court decisions finding certain FDA regulations
inconsistent with the statute, the Agency proposed new regulations in
August 1999 to implement the 180-day exclusivity. Since then many
comments have been submitted and there have been additional court
decisions further interpreting the 180-day exclusivity provision and
complicating the regulatory landscape. The Agency has not yet published
a final rule on 180-day exclusivity. As described in a June 1998
guidance for industry, until new regulations are in place, FDA is
addressing on a case-by-case basis those 180-day exclusivity issues not
addressed by the existing regulations.
One of the most fundamental changes to the 180-day exclusivity
program that has resulted from the legal challenges to FDA's
regulations is the determination by the courts of the meaning of the
phrase ``court decision.'' The courts have determined that the ``court
decision'' that can begin the running of the 180-day exclusivity period
may be the decision of the district court, if it finds that the patent
at issue is invalid, unenforceable, or will not be infringed by the
generic drug product. FDA had interpreted the ``court decision'' that
could begin the running of 180-day exclusivity (and the approval of the
ANDA) as the final decision of a court from which no appeal can be or
has been taken--generally a decision of the Federal Circuit. FDA's
interpretation had meant that an ANDA applicant could wait until the
appeals court had finally resolved the patent infringement or validity
question before beginning the marketing of the generic drug. FDA had
taken this position so that the generic manufacturer would not have to
run the risk of being subject to potential treble damages for marketing
the drug, if the appeals court ruled in favor of the patent holder. The
current interpretation means that if the 180-day exclusivity is
triggered by a decision favorable to the ANDA applicant in the district
court, the ANDA sponsor who wishes to market during that exclusivity
period now may run the risk of treble damages if the district court
decision is reversed on appeal to the Federal Circuit. As a practical
matter, it means that many generic applicants may choose not to market
the generic and thus the 180-day exclusivity period could run during
the pendency of an appeal.
In one of the cases rejecting FDA's interpretation of the ``court
decision'' language in the statute, the court determined that the
applicant who relied in good faith on FDA's interpretation of the 180-
day exclusivity provision should not be punished by losing its
exclusivity. The court, therefore, refused to order FDA to begin the
running of 180-day exclusivity upon the decision of the district court
in the patent litigation at issue. FDA has taken a similar approach in
implementing the courts' decisions: the new ``court decision''
definition will apply only for those drugs for which the first ANDA was
submitted subsequent to March 30, 2000. In adopting this course, a
primary concern for the Agency was to identify an approach that would
minimize further disruption and provide regulated industry with
reasonable guidance for making future business decisions.
To advise the public and industry of this position, FDA published a
Guidance for Industry in March 2000. FDA intends to incorporate the
courts' interpretation of the ``court decision'' trigger for 180-day
exclusivity into the final rule implementing the changes in 180day
exclusivity.
Orange Book Listings
There have been concerns expressed over FDA's role in the listing
of patents in the Orange Book, which can have an impact on generic drug
approvals by delaying approval and 180-day exclusivity. Under the FD&C
Act, pharmaceutical companies seeking to market innovator drugs must
submit, as part of an NDA or supplement, information on any patent that
1) claims the pending or approved drug or a method of using the
approved drug, and 2) for which a claim of patent infringement could
reasonably be asserted against an unauthorized party. Patents that may
be submitted are drug substance (active ingredient) patents, drug
product (formulation and composition) patents, and method of use
patents. Process (or manufacturing) patents may not be submitted to
FDA.
When an NDA applicant submits a patent covering the formulation,
composition, or method of using an approved drug, the applicant must
also submit a signed declaration stating that the patent covers the
formulation, composition, or use of the approved product. The required
text of the declaration is described in FDA's regulations. FDA
publishes patent information on approved drug products in the Orange
Book.
The process of patent certification, notice to the NDA holder and
patent owner, a 45-day waiting period, possible patent infringement
litigation and the statutory 30-month stay mean there is the
possibility of a considerable delay in the approval of ANDAs as a
result of new patent listings. Therefore, these listings are often
closely scrutinized by ANDA applicants. FDA regulations provide that,
in the event of a dispute as to the accuracy or relevance of patent
information submitted to and subsequently listed by FDA, an ANDA
applicant must provide written notification of the grounds for dispute
to the Agency. FDA then requests the NDA holder to confirm the
correctness of the patent information and listing. Unless the patent
information is withdrawn or amended by the NDA holder, FDA will not
change the patent information listed in the Orange Book. If a patent is
listed in the Orange Book, an applicant seeking approval for an ANDA
must submit a certification to the patent. Even an applicant whose ANDA
is pending when additional patents are submitted by the sponsor must
certify to the new patents, unless the additional patents are submitted
by the patent holder more than 30 days after issuance by the U.S.
Patent and Trademark Office.
FDA does not undertake an independent review of the patents
submitted by the NDA sponsor. FDA does not assess whether a submitted
patent claims an approved drug and whether a claim of patent
infringement could reasonably be made against an unauthorized use of
the patented drug. FDA has implemented the statutory patent listing
provisions by informing interested parties what patent information is
to be submitted, who must submit the information, and when and where to
submit the information. As the Agency has stated, since the
implementation of the 1984 Hatch-Waxman Amendments began, FDA has no
expertise or resources with which to resolve complex questions of
patent coverage, and thus the Agency's role in the patent-listing
process is ministerial. The statute requires FDA to publish patent
information upon approval of the NDA. The Agency relies on the NDA
holder or patent owner's signed declaration stating that the patent
covers an approved drug product's formulation, composition or use.
Generic and innovator firms may resolve any disputes concerning patents
in private litigation. As noted above, if the generic applicant files a
paragraph IV certification and is sued for patent infringement within
45 days, there is an automatic stay of 30 months, substantially
delaying the approval of the generic drug and, thus, the availability
of lower cost generic drug products.
conclusion
FDA continues to implement the Hatch-Waxman Amendments exclusivity
provisions in the best manner possible given the text of the
legislation, the history of the legislation and the numerous court
challenges. Again, as previously noted, FDA has tried to balance
innovation in drug development and expediting the approval of lower-
cost generic drugs.
ii. direct to consumer advertising
Statutory and Regulatory Authority
The promotion that manufacturers of prescription drugs (product
sponsors) direct toward consumers and patients is referred to as
``direct-to-consumer'' promotion or DTC. Such promotion uses multiple
avenues for reaching lay audiences, including, but not limited to:
television and radio advertisements, print advertisements, telephone
advertisements, direct mail, videotapes and brochures. It is important
to understand the scope of FDA's authority in this area. It is also
important to understand the different types of advertisements that are
directed toward consumer audiences.
The FD&C Act and regulations do not distinguish between
professional and consumer audiences. Section 502(n) of the FD&C Act
specifies that prescription drug advertisements must contain ``a true
statement of . . . information in brief summary relating to side
effects, contraindications, and effectiveness'' of the advertised
product. The implementing regulations (Title 21, Code of Federal
Regulations [CFR] Section 202.1), originally issued in the 1960s,
specify, among other things, that prescription drug advertisements
cannot be false or misleading, cannot omit material facts, and must
present a fair balance between effectiveness and risk information.
Further, for print advertisements, the regulations specify that every
risk addressed in the product's approved labeling must also be
disclosed in the advertisements.
For broadcast advertisements, however, the regulations require ads
to disclose the most significant risks that appear in the labeling. The
regulations further require that the advertisement either contain a
summary of ``all necessary information related to side effects and
contraindications'' or convenient access must be provided to the
product's FDA- approved labeling and the risk information it contains.
Finally, the FD&C Act specifically prohibits FDA from requiring
prior approval of prescription drug advertisements, except under
extraordinary circumstances. Also, the advertising provisions of the
FD&C Act do not address the issue of drug product cost.
Types of Advertisements
There are three different types of ads that product sponsors use to
communicate with consumers: ``product-claim'' advertisements, ``help-
seeking'' advertisements, and ``reminder'' advertisements.
Advertisements that include both a product's name and its use, or that
make any claims or representations about a prescription drug, are known
as ``product-claim'' advertisements. These ads must include a ``fair
balance'' of risks and benefits. In addition, they must provide all
risk information included in the product's FDA-approved labeling or,
for broadcast advertisements, provide convenient access to this
information. In our regulations, the phrase ``adequate provision'' is
used to identify the convenient access option. Unlike the ``product
claim'' ads, ``help-seeking'' advertisements and ``reminder'' ads need
not include any risk information.
A ``help-seeking'' advertisement discusses a disease or condition
and advises the audience to ``see your doctor'' for possible
treatments. Because no drug product is mentioned or implied, this type
of ad is not considered to be a drug ad and FDA does not regulate it.
The second type of advertisement that does not need to include risk
information is called a ``reminder'' advertisement. The regulations
specifically exempt this type of ad from the risk disclosure
requirements. Like ``help-seeking'' ads, the ``reminder'' ad is
limited, although in a different way from ``help-seeking'' ads.
``Reminder'' ads are allowed to disclose the name of the product and
certain specific descriptive (e.g., dosage form) or cost information,
but they are not allowed to give the product's indication or dosage
recommendations, or to make any claims or representations about the
product. The exemption for ``reminder'' ads was included in FDA's
regulations for promotions directed toward health care professionals,
who presumably knew both the name of a product and its use.
``Reminder'' ads serve to remind health care professionals of a
product's availability. They specifically are not allowed for products
with serious warnings (called ``black box'' warnings) in their
labeling.
Evolution of DTC Promotion
Prior to the early 1980s, prescription products were not promoted
directly to consumers and patients. Instead, product sponsors often
produced materials that were given to health care professionals to pass
on to patients if they thought this would be appropriate for particular
patients. In the early 1980s, a few companies started advertising
products directly to patient audiences (specifically, older people
concerned about pneumonia and people taking prescription ibuprofen to
treat arthritis pain). As a result of questions and concerns about
promotion directed toward non-health care professionals, in 1983 FDA
requested that sponsors suspend DTC ads to give the Agency time to
study the issue.
The industry complied with this request, and during the ensuing
moratorium FDA conducted research and sponsored a series of public
meetings. In 1984, the University of Illinois and Stanford Research
Institute jointly sponsored a symposium to discuss consumer-directed
prescription drug advertising from a broad research and policy
perspective. On September 9, 1985, FDA withdrew the moratorium in a
Federal Register (FR) Notice (50 FR 36677), which stated that the
``current regulations governing prescription drug advertising provide
sufficient safeguards to protect consumers.''
During the early 1990's, product sponsors increasingly used
consumer magazines to advertise their products. These ads typically
included a promotional message together with the ``brief summary'' of
adverse effects, similar to that used in physician directed ads. The
``brief summary'' statement, which frequently appears in small print,
is not very consumer friendly. In the 1990s, product sponsors also
started using television advertisements in a limited fashion.
Television advertisements were limited because FDA and industry did not
believe that it was feasible to disseminate the product's approved
labeling in connection with the ad. The extensive disclosure needed to
fulfill this requirement essentially precluded the airing of such ads.
For example, one way to satisfy this requirement would be to scroll the
``brief summary,'' which would take a minute or more even at a barely
readable scrolling rate. The industry, therefore, resorted to
television ads that did not require risk disclosure.
By the mid-1990s, product sponsors started placing ``reminder'' ads
on television. Because these ads only mentioned the name of the drug,
however, they were extremely confusing to consumers, who, unlike health
care professionals, were not knowledgeable about the name and the use
for these products.
In response to increasing consumer demand for information, FDA
began to consider whether broadcast advertisements could be constructed
to ensure access to product labeling, the only alternative to including
all of an advertised product's risk information. FDA considered
suggestions about providing access to multiple sources of product
labeling as a means of satisfying the requirement that consumers have
convenient access to FDA-approved labeling when manufacturers broadcast
a ``product-claim'' advertisement.
In August 1997, FDA issued a draft guidance entitled: ``Guidance
for Industry: Consumer-Directed Broadcast Advertisements'' that
clarified the Agency's interpretation of the existing regulations. The
Guidance described an approach for ensuring that audiences exposed to
prescription drug advertisements on television and radio have
convenient access to the advertised product's approved labeling. The
proposed mechanism consisted of reference in the broadcast
advertisement to four sources of labeling information: a toll-free
telephone number, a website address, a concurrently running print
advertisement, and health care professionals. Following a comment
period, and detailed review and consideration of the comments, FDA made
only minor changes to the draft guidance, and issued it in final form
in August 1999 (64 FR 43197, also found at http://www.fda.gov/cder/
guidance/1804fnl.htm). In announcing the final guidance, FDA advised
that the Agency intended to evaluate the impact of the guidance, and of
DTC promotion in general, on the public health, within two years of
finalizing the guidance.
Stakeholder Perspectives
A number of stakeholder groups have expressed strong interest in
DTC promotion. Those that are positive about DTC promotion assert that
this practice will:
Improve consumers' knowledge of drugs and drug availability.
Encourage consumers to talk with their health care providers
about their health problems.
Allow consumers and patients to have a greater role in
decisions about their own health care that they say they
desire.
Improve communication between patients and their physicians.
Improve appropriate prescribing by allowing physicians to get
more information about their patients from their patients.
Lower the cost of prescription drugs. Not all stakeholders are
positive about DTC promotion. Opponents assert that DTC
advertising will:
Confuse consumers about drugs.
Make it appear that prescription drugs are safer than they
are.
Interfere with the patient-physician relationship because
patients will insist that their physicians prescribe the
advertised products.
Increase inappropriate prescribing.
Raise the cost of prescription drugs.
Finally, there is a group of stakeholders with a less polarized
view of DTC promotion. They believe that such promotion has both
benefits and risks, but that it should be strictly regulated, and that,
preferably, all DTC materials should be ``pre-approved'' by FDA. They
often assert that there are potential public health benefits associated
with patients visiting health care providers about untreated diseases
or conditions, particularly those that appear to be under treated in
the population and that are responsible for long-term harm (for
example, high cholesterol, high blood pressure, diabetes and
osteoporosis).
Current Situation
FDA recognizes that drug promotion raises certain issues for health
care professionals and different issues for consumers, in light of
differences in medical and pharmaceutical expertise. For this reason,
FDA has monitored DTC promotion, and especially broadcast promotion,
very closely to help ensure that adequate contextual and risk
information, presented in understandable language, is included to
fulfill the requirement for fair balance and to help the consumer
accurately assess promotional claims and presentations.
Product sponsors of prescription advertisements are required to
submit their promotional materials to FDA around the time these
materials are initially put into public use. FDA receives approximately
32,000 of these submissions per year, for all types of promotion,
including promotion to health care professionals. Product Sponsors also
can submit draft materials to FDA for review and comment prior to using
them. Division of Drug Marketing, Advertising and Communications
(DDMAC) has made it a high priority to provide comments to product
sponsors on voluntarily submitted draft broadcast advertisements within
a reasonable time. In fact, although it is not required, a majority of
product sponsors voluntarily submit their broadcast advertisements to
DDMAC for prior review and comment at some point as advertising
materials are being produced. Product sponsors may ask for review and
comment at the very initial stages of production (by supplying the
words they intend to use along with rough drawings of their proposed
graphics), or at the later stages of final videotape production. DDMAC
only gives final comments on final videotapes because inappropriate
presentations can turn an otherwise acceptable advertisement into an
unacceptable one (for example, by pacing the risk disclosure too
rapidly, including multiple distracting visual images during the risk
disclosure, or including images that overstate the efficacy of the
product beyond what is supported by substantial clinical evidence).
Since January 1997, sponsors of about 65 prescription drugs have
aired ``product-claim'' advertisements on television or radio. A small
number of prescription biological products also have been advertised.
Nine products fall into the allergy category (nasal and ocular anti-
histamines, and nasally administered corticosteroids), while another
eight products treat skin or hair-related problems (acne, cold sores,
rosacea, baldness, unwanted facial hair, nail fungus). More
importantly, ten products are designed to treat diseases that are
believed to be under treated, including high cholesterol and heart
disease, and mental health problems like depression. Five products to
treat or prevent osteoporosis or menopausal symptoms have been
advertised. Other advertised products are approved to treat such
conditions or diseases as asthma, Alzheimer's Disease, arthritis,
chronic obstructive pulmonary disease, diabetes, insomnia, migraine,
obesity, overactive bladder, serious heartburn, smoking cessation, and
sexually transmitted diseases. Most of these are serious problems where
patients are in the best position to recognize symptoms.
It is important to note that DDMAC does not know how many different
advertisements have aired in broadcast media for these 65 drugs. There
have been multiple campaigns for a number of the products, including
the allergy and high cholesterol products. In addition, many campaigns
include different length ``product-claim'' commercials, as well as
multiple short ``reminder'' commercials. DDMAC does not track the
number of different broadcast advertisements that are submitted.
Further, because ``help-seeking'' advertisements, if done properly, are
not considered to be drug ads, most product sponsors do not send them
to DDMAC under the submission requirements for prescription drug
promotional materials. Therefore, we have no measure of how many of
these have been in the public domain.
Enforcement Related to DTC Promotion
Since August 1997, FDA has issued:
26 ``untitled'' (or ``Notice of Violation'') letters on
``product-claim'' broadcast advertisements. Such letters
request that the violative promotion be stopped immediately.
Product sponsors virtually always comply immediately with this
request.
3 ``warning letters'' on broadcast advertisements. This is a
higher-level enforcement action, and requests that a remedial
campaign be conducted by the company to correct the impressions
left by the ad.
13 ``untitled'' letters on purported ``reminder'' broadcast
advertisements.
3 ``untitled'' letters on purported ``help-seeking'' broadcast
advertisements.
Most of the violations cited were because the ad overstated or
guaranteed the product's efficacy, expanded the indication or the
patient population approved for treatment, or minimized the risks of
the product, through either inadequate presentation or omission of
information.
Since January 1997, the Agency has issued:
43 ``untitled'' letters that addressed DTC print
advertisements or other promotional materials, including
purported ``reminder'' and ``help-seeking'' materials.
1 ``warning letter'' that included a DTC print advertisement
as part of an overall misleading campaign.
Generally, the violations involving print ads making ``product-
claim'' ads were similar to those cited above. Nearly all ``reminder''
ad violations were the result of representations about the product that
triggered the need for full disclosure of benefits and risks. ``Help-
seeking'' ad violations were due to a particular product being implied
in the message. As noted above, however, FDA cannot determine how many
specific advertisements serve as the denominator for assessing how many
have resulted in enforcement action compared with those that have not.
Research on DTC Promotion
A number of groups have been conducting research on DTC promotion.
Much publicly available research consists of surveys utilizing samples
of consumers or patients to examine attitudes about DTC promotion and
self-reported behaviors related to DTC promotion in the context of
patient-physician visits and use of prescription drugs. The groups
sponsoring this research include: Prevention magazine, TIME Inc., the
National Consumers League, and American Association of Retirement
People. A few surveys of physicians have been made partially publicly
available. FDA remains concerned, however, about the representation of
the physician surveys. In 1999, FDA sponsored a telephone survey that
focused on a national probability sample of patients who had seen a
physician for a problem on their own within the three months prior to
the survey. The results of this patient survey suggested that patients
are seeking additional information as a result of DTC promotions that
they have seen. This information was sought primarily from health care
professionals, and secondarily from reference texts and family.
Generally, between 10 and 20 percent of respondents said that they
sought additional information from the sources referenced in broadcast
advertisements--toll-free telephone numbers, web sites, print
advertisements. A major result, and one that is consistent with results
of Prevention's national surveys, is that a significant minority of
respondents said that a DTC ad has caused them to ask a doctor about a
medical condition or illness they had not previously discussed. This
could represent a significant and positive public health benefit,
particularly if these patients are talking about undiagnosed heart
disease or other serious disorders.
The survey results also suggest that DTC advertisements are not
significantly increasing visits to a physician's office. For the most
part, patients said that they had recently visited their doctors for
the traditional reasons: because it was time for a check-up (53
percent), because they were feeling ill (42 percent), or because they
had had a sudden symptom or illness (41 percent). Only two percent said
that they had visited their doctor because of something they had seen
or heard. Of those patients who had a conversation with their doctor
about a prescription drug: 81 percent said that their doctor had
welcomed the question, 79 percent said that their doctor discussed the
drug with them, and 71 percent said that their doctor had reacted as
though the conversation was an ordinary part of the visit. Only four
percent said that their doctor seemed upset or angry when the patient
asked about a prescription drug. According to the patients, therefore,
physicians seem to be reacting well to questions about prescription
drugs. Finally, only 50 percent of these patients said that their
doctor gave them the medication discussed. Thirty-two percent said that
the doctor recommended a different drug. Twenty-nine percent of the
respondents indicated that behavioral or lifestyle changes were
suggested by the doctor. It therefore appears, from FDA's data, that
physicians are comfortable denying prescriptions when the prescription
would not be right for the patient.
A small number of patients who were denied prescriptions said that
their doctors told them why. Reasons included: the drug wasn't right
for the patient; the doctor wanted the patient to take a different
drug; the drug had side effects of which the patient was unaware; the
patient did not have the condition treated by the drug; the patient did
not need a prescription drug; the patient could use a non-prescription
drug; and, there was a less expensive drug available.
Patients also were asked about their attitudes about prescription
drug advertisements. Their answers indicated somewhat mixed feelings.
Eighty-six percent agreed that these ads help make them aware of new
drugs, 70 percent agreed that the ads give enough information to help
the patient decide if they should discuss the product with a doctor,
and 62 percent agreed that ads help the patients have better
discussions with their doctors about their health. Only 24 percent
agreed that DTC ads make it seem like a doctor is not needed to decide
whether a drug is right for someone. In contrast, 58 percent agreed
that DTC ads make drugs seem better than they really are, 59 percent
agreed that ads do not give enough information about the advertised
product's risks and negative effects, and 49 percent agreed that these
ads do not give enough information about the benefits and positive
effects of the advertised product.
Next Steps
In issuing both the draft and the final broadcast advertisement
guidance, FDA stated its intent to assess the impact of the guidance,
and of DTC promotion in general, on the public health. FDA is also
aware that privately funded research is being planned to examine the
effects of DTC promotion. At present, FDA is not aware of any evidence
that the risks of DTC promotion outweigh its benefits. FDA intends to
carefully examine all available data, to determine whether the public
health is adequately protected.
iii. prescription drug switch to over-the-counter status
The FDA is responsible for the reclassification of many drugs from
prescription to OTC status. These are often referred to as ``switch
drugs,'' and the reclassification process is referred to as ``switching
from prescription to OTC.'' Nearly forty ingredients incorporated into
drug products have been reclassified since 1972 when the OTC drug
review began.
Under the FDA's Office of OTC Drug Evaluation, a process was
established for producing a final regulation to set standards for each
drug product-treatment category. Nearly forty ingredients has been
reclassified using this process since 1972 using this process.
Switches are covered by the prescription exemption procedures,
found in 21 CFR 310.200. Switches can be initiated by FDA, the sponsor
of a new drug application, or by any interested party. The OTC drug
product can be marketed under a NDA or under the process established by
regulation. The switch may be:
1. A complete switch whereby all of the indications and dosage forms
are switched from prescription to OTC status;
2. A partial switch whereby some of the prescription indications and
dose regimens are switched to OTC status and the others remain
prescription.
Historically, the majority of drugs that have been switched from
prescription-only to OTC marketing were at the initiated by the
sponsor. The FD&C Act restricts drugs to prescription only status if a
learned intermediary is required for the proper use of the drug. As
written, the default assumption of the Act is for drugs to be marketed
OTC without a prescription unless a decision is made that consumers are
not able to appropriately diagnose their condition nor able to
correctly choose the remedy and safely use it based on OTC labeling.
Anyone may submit a citizen petition. Individuals sometimes submit
petitions, but most come from the regulated industry or consumer
groups. For the first time, a third party has asked the FDA to
reclassify a drug through the citizen petition process. Because the
petition is still under review, we cannot comment on it at this time.
FDA may use a wide range of public procedures (e.g., conferences,
meetings, correspondence, hearings) during the process of evaluating
the petition and to assist in the formulation of a final response.
In the process of responding to a petition, the Agency creates an
administrative record, a comprehensive documentary foundation for the
agency's final decision. The Agency's grant or denial of a petition,
which usually is in the form of a letter to the petitioner, constitutes
a final agency action. The Agency may also issue a tentative response
explaining that the Agency has not yet reached a final decision on
whether to grant or deny the petition. When FDA issues a final
decision, however, it may be appealed through the court system.
As with any petition, FDA is studying the scientific and legal
issues it raises in an effort to make the best science-based decision
under the law.
We look forward to the Committee's continued interest in this area
and would be happy to answer any questions.
Mr. Bilirakis. Thank you, Dr. Woodcock.
I'll start the questioning and depending on how the day
goes and calls for votes, we might go into a second round of
questioning of Dr. Woodcock. I've already discussed this with
Mr. Brown.
In this first round at least, Dr. Woodcock you used the
term, if I heard you correctly, directly substitutable
referring to the approval of generics. Do you believe that the
public recognizes the fact--well, maybe I should ask you. Do
you believe that generics are bio-equivalent directly
substitutable to innovator drugs when they've been approved by
the FDA?
Ms. Woodcock. Yes. We have scientific basis for our
decisions on bio-equivalence and substitutability. And we would
not approve a generic drug that was not fully substitutable for
the innovator drugs.
Mr. Bilirakis. Do you believe that the public recognizes
the fact that they are in fact directly substitutable and use
the term bio-equivalent to those drugs?
Ms. Woodcock. I know that members of the public, the
pharmacy community and the medical community, some of them have
serious doubts about substitutability perhaps for certain drug
classes or perhaps overall. There's a lot of misunderstanding
about the program.
Mr. Bilirakis. We've heard physicians on both sides of the
aisles. We had Dr. Coburn who served on this panel who used to
make comments, at least to me personally, that he didn't think
that all the drugs that were approved as being bio-equivalent
actually fell into that category.
What does it mean when we say the drug is bio-equivalent to
another drug?
Ms. Woodcock. What we mean is that the active ingredient in
the drug is available in the same concentration in the pill or
injection, or whatever it might be, it's exactly the same as
the innovator product and that we know that the rate and extent
of absorption into the body of that active ingredient is
equivalent. That's what we mean by bio-equivalence; that when
you take that pill, for example, you get the same drug level
within the body as you would by taking the innovator product.
Mr. Bilirakis. Is there any room for error? Is there a
safety factor in there somewhere?
Ms. Woodcock. All of these measurements have variability to
them, particularly bio-equivalence. If you took a drug and I
took a drug, it would be very likely we would wind up with
slightly different blood levels for a variety of reasons. We
have to take that into account when we test generic drugs for
bioavailability. But a recent survey that was done showed that
innovator products and generic products on absorption into the
body, looking at the actual data there was less than 3 percent
difference in the tests.
Now, if you tested an innovator product from day-to-day or
lot-to-lot, you may well see the same amount of variability,
and that's what people don't understand.
Mr. Bilirakis. If a patient were on a drug therapy using an
innovator drug, could they in the middle of the stream, so to
speak, switch into a generic drug that is considered to be bio-
equivalent and no problems develop from that essentially?
Ms. Woodcock. That is correct.
Mr. Bilirakis. That is correct?
Ms. Woodcock. And there's no need for additional tests or
titration or changes of the dose if they switch to an
equivalent generic product.
Mr. Bilirakis. In my opening statements, Doctor, thank you
for that statement, there's a concern out there I think among
many members of the public and still among the medical
profession, as we both already said, that they are not bio-
equivalent.
Ms. Woodcock. That's right.
Mr. Bilirakis. I think that's one of the things that I
wanted to do in this hearing. I know the subject matter is
varied in this hearing, but I wanted to be sure that we were
able to project to the American people a feeling of confidence.
In my opening statement I made the comment that FDA seems
to take longer to approve generic drugs. Is that true?
Ms. Woodcock. The mean time for generic drug approval right
now is about 18 months, whereas for a new drug it's around 12
months. That's correct.
Mr. Bilirakis. Is there a reason why it takes longer?
Ms. Woodcock. Well, significant resources were placed into
the new drug review process. FDA added over a 1,000 scientists
and reviewers as a result of the Prescription Drug User Fee Act
and subsequent changes to that.
Mr. Bilirakis. Should it be 18 months versus 12 months?
Why? Is there a greater emphasis on safety there, just the fact
that we are saying that this non-innovator drug is bio-
equivalent and thereof it takes us longer to do it?
Ms. Woodcock. The reason the generic drug takes longer,
usually, is that the application goes through several cycles.
We are responsible for reviewing a generic drug within 180 days
and getting an answer back. We only do that right now--we do
that about 55 percent of time. We get them reviewed within 180
days. But that's much shorter than 18 months.
The problem is the answer is frequently no, that the
generic drug applicant does not meet all the standards and
there are remaining questions. Therefore, it must go back to
the sponsor. The application must be resubmitted and then
another review cycle occurs, and sometimes even a third review
cycle occurs that's causing the actual time to getting on the
market to be up to 18 months.
Mr. Bilirakis. Thank you.
I think we're having problems with the clock. But my time,
I believe, has expired.
Mr. Brown to inquire?
Mr. Brown. Thank you, Mr. Chairman.
I'm not sure I understood that. I understand that it's 12
months--typically an NDA is 12 months and ANDA amended for the
generic is 18 months. Part of the reason for that is Congress
passing--I understand part of the reason is Congress passing
PDUFA 2 or whatever we ended up calling it under the New
Prescription Drug User Fee Act. There are no generic user fees,
correct?
Ms. Woodcock. That's correct.
Mr. Brown. But explain why beyond resources, and
understanding resources are a big part of it, why is the
generic company not able when submitting its application to, in
a sense, do it right the first time? Is that a product of
inadequate resources in the agency?
Ms. Woodcock. I believe there are several factors, and that
if the agency were able to provide more assistance to generic
firms, then we would have better applications and we would have
lower cycles. That's actually what happened under the
Prescription Drug User Fee Act. Much of the resources that we
have under the User Fee Act go to providing advice and
explaining the standards to the sponsors so that the
applications are of good quality when they are first submitted.
So, of course, there are other factors that are involved.
Some generic firms are smaller, they may be inexperienced, it
may be the first time they put a product forward and they have
to go through many cycles.
Mr. Brown. If you assume that name brands have--the name
brand approval process, the NDA approval process is adequately
resourced, funded, staffed, whatever from the FDA's vantage
point and if you would make that same assumption for ANDA if we
could in fact fund it however it might be done at an equally
adequately, what would the time be--the 18 months would be able
to be knocked down to what time period?
Ms. Woodcock. It's probably unlikely that we could get to 6
months or something like that.
Mr. Brown. But certainly less than 12, correct?
Ms. Woodcock. Probably that's correct.
Mr. Brown. I mean it shouldn't--let me interrupt. Sorry.
It should be easier--we should be able to accomplish it
more quickly the ANDA than the NDA, right?
Ms. Woodcock. I was just going to say that. Exactly, it is
a simpler application.
One of the issues is to what extent can we get the generic
drug sponsors to submit an approvable application on the first
cycle so that it could be reviewed and approved on the first
cycle. If that doesn't happen, then the clock will run twice,
at least, and it's going to be 1 year.
Mr. Brown. It seems, Mr. Chairman, that one of the goals of
this subcommittee and this full committee should be to bring
that period down, that should be something we can agree on
across the board in both parties. If it takes 12 months for the
new application, that we can't get it to 12 or fewer months for
the ANDA. And I know we've talked about it, and your interest
is that for sure, too, that it's something we ought to be able
to do.
Ms. Woodcock. Could I say one more thing about this? There
are several factors that are related.
Many of the drug manufacturers for generic drugs are
located overseas, particularly the bulk drug applications. And
to try and--bulk drug manufacturers. To get to those overseas
firms in a timely manner is a challenge, because they're all
over the world.
Also, right now we have queues, waiting time, within the
Office of Generic Drugs before picking up an application. They
have to wait in a queue until the ones in front. We have very
strict timeframes. So that's another factor that impacts on our
ability to get these out quickly.
Mr. Stupak. We'll run this point on the drugs. The generic
drugs when they do an application do they pay a fee under the
User Fee Act?
Ms. Woodcock. No.
Mr. Stupak. But a regular drug, a new drug applications
pays about $309,000 I think is the average for a fee?
Ms. Woodcock. That's correct.
Mr. Stupak. So what you're really saying, the process is
really driven by whose paying the fee at the time of the
application?
Ms. Woodcock. The process is driven by the statutory
structure that's set up. The fees for prescription drugs--the
prescription drug user fees are only allowed to be used for the
process of review of new human drugs.
Mr. Stupak. Well, what you're telling this committee is if
you're a generic when you make your application, your chance of
being approved in 180 days is 55 percent. But now the new drug
companies when they put down a $309,000 fee, the last 2 years
you've approved all those within a 100 percent of the time
isn't that correct?
Ms. Woodcock. This is a continual source of confusion. The
review time, time to answer for a generic would be 180 days. It
might often be no. That's----
Mr. Stupak. What's the time to answer on a regular drug, a
new drug application?
Ms. Woodcock. Twelve months.
Mr. Stupak. Twelve months.
Ms. Woodcock. Yes.
Mr. Stupak. But you do those 100----
Ms. Woodcock. Ten to 12 months.
Mr. Stupak. [continuing] percent of the time for the last 2
years, right?
Ms. Woodcock. We make those deadlines, right. We don't
approve them all in that time, but we get an answer back 100
percent of the time, that is correct.
Mr. Stupak. Thank the gentleman for yielding.
Mr. Bilirakis. The gentleman's time has expired.
Mr. Deal to inquire.
Mr. Deal. Thank you, Mr. Chairman.
And thank you, Dr. Woodcock, for being here today.
I'd like to explore with you briefly the issue of switching
a drug from a prescription drug status to an over-the-counter
status. And in order to understand that, let me first of all
ask you are there some drug applications that FDA approves that
are initially nonprescription and over-the-counter? And if so,
what percentage would you estimate that might be of
applications?
Ms. Woodcock. The answer is yes, there are some drugs that
are approved directly for the first time as an over-the-counter
drug under a new drug application. And it's a very small
percentage, perhaps 1 percent. I can't--I don't have the data.
Mr. Deal. Are those usually at the request of the
manufacturer that they be over-the-counter or is that a
decision that FDA makes initially in those cases?
Ms. Woodcock. We might discuss it. Frequently it is the aim
of the manufacturer from the start, but we have discussed it
with some manufacturers as to whether--what market their
product is most appropriate for.
Mr. Deal. So in 99 percent of the cases or roughly
thereabouts they are asking for a protected prescription type
status?
Ms. Woodcock. That's correct.
Mr. Deal. And is the determination in most cases to switch
it from prescription to over-the-counter status made during the
timeframe of their initial patent protection exclusivity period
or is it normally made after that exclusivity has expired?
Ms. Woodcock. It's normally made afterward, and there are
several factors that go into that.
Mr. Deal. But normally they have had their initial
protected period in which they are allowed to be by
prescription only in most cases?
Ms. Woodcock. Yes, these things are not exactly linked, all
right, and they may be linked economically. But the
prescription status has to do with safety and effectiveness
concerns about the drug, prescription versus nonprescription
status. But you're right.
Mr. Deal. But in that regard your statement was that the
determination by FDA to switch it was not based on a cost
factor?
Ms. Woodcock. That's correct.
Mr. Deal. So therefore I assume it is based on a
determination that it is now safe to be in a nonprescription
status. Does that mean then that FDA conducts ongoing
investigations and research to make that determination?
Ms. Woodcock. No, we usually do not. I think I ought to
stress that most drugs never switch to over-the-counter. The
vast majority of drugs remain prescription, and this has to do
with what we call OTC-ness, if you'll excuse the term. And that
has to do with, can the consumer diagnose this condition
themselves, all right, No. 1. And then No. 2, is the drug safe
enough to be used in the consumer's hands as far as side
effects and so forth.
So we go through a series of factors. Most drugs never
switch off prescription status, either because the doctor is
needed to diagnose the condition or monitor the condition or
because the drug has safety or other issues around it that
would not permit it to be used by a consumer. But in cases
where there is a possibility for a switch, typically the
manufacturer will pursue the additional studies required to
demonstrate that OTC-ness.
Mr. Deal. But I gathered from your initial testimony that
in most cases the switches are without the consent and
sometimes over the objection of the manufacturer. If that is
the case and FDA does not conduct ongoing research to make the
determination about whether or not the individual is able to
prescribe his own medication, in effect, then how is that
determination made? If the manufacturer is in effect saying
they don't think it is ready to be over-the-counter, but you're
saying that it is but you've conducted no research, how do you
arrive at that conclusion?
Ms. Woodcock. I'm afraid I was unclear. The vast majority
of manufacturers want to switch their products, but in this
current situation that we're facing, in fact, FDA had to do--
had to assume some of the burden of evaluating the safety of
these products in response to citizen petition, and also the
petitioner submitted data to us as well.
Mr. Deal. One final question, Mr. Chairman.
Does FDA take the position that it has the authority to
switch from prescription to over-the-counter status without the
request being made by the manufacturer?
Ms. Woodcock. Yes, we have that authority.
Mr. Deal. And what is the basis, in your opinion, of that
authority, which statute?
Ms. Woodcock. The Food, Drug and Cosmetic Act, Durham-
Humphrey Amendments. We feel there is a presumption of
nonprescription marketing of drugs unless there is a need for
the learned intermediary to be interposed for safety or
effectiveness reasons.
Mr. Deal. Would that be the authority of Section 503(d)(3)?
That's all right to ask, I was given that number myself.
Ms. Woodcock. We can get back to you.
Mr. Deal. All right.
Ms. Woodcock. Sorry.
Mr. Deal. Thank you, Mr. Chairman.
Mr. Bilirakis. Mr. Pallone to inquire.
Mr. Pallone. Thank you, Mr. Chairman.
Dr. Woodcock, in your testimony you went through some
detail about this Orange Book Listing, and I have to say it's a
little confusing to me. But it's my understanding that with the
patent listing process that the FDA is required to list all
patents in this Orange Book and you're not in the business of
determining the validity of the patents coming out of the
Patent Office, you state that, you just list the submitted
patents. And then further on you said if the generic applicant
files a paragraph IV certification and is sued for patent
infringement within 45 days, there's an automatic stay of 30
months substantially delaying the approval of the generic drug
and the availability of lower cost generic drug products.
Now, I guess what I wanted to ask is that it seems like
this is an open invitation to submit frivolous patents, you
know, just to trigger the 30 month hold on approval for a
generic. And in our--Mr. Brown's bill in the GAAP Bill we
eliminate this automatic 30 day delay, you know, when the brand
name sues a generic. And, you know, I think that is a good
thing because, you know, the public has a lot to gain from
eliminating these frivolous suits. And, as you say, trying to
bring the generics on the market so we can low cost affordable
drugs.
I just wanted you--if you would comment on that? I mean,
would you be in favor of this provision in the bill, in the
GAAP Bill?
Ms. Woodcock. The Administration has not finalized its
position on that, so I really can't comment.
I will say that, as I indicated in my oral testimony, that
in recent years we have seen an increase in paragraph IV
certifications and all the ramifications around that, it's been
a fairly remarkable increase. And this may reflect the impact
of court cases in the last decade and those decisions. And I am
concerned about the implications of this for our continuing to
operate the generic drug review program.
Mr. Pallone. Do you have any kind of analysis of that that
we could have that you could send us?
Ms. Woodcock. We can provide that, yes.
Mr. Pallone. All right. I'd certainly appreciate it.
Ms. Woodcock. We'd be glad to do that.
Mr. Pallone. But the problem is, it's not so much the law
doesn't allow you to look at this, but you just don't have the
resources, is that what you're saying?
Ms. Woodcock. The statute, if I understand correctly, says
FDA shall list--is that correct? Shall publish patent submitted
by the innovator----
Mr. Pallone. So you don't think you legally have the right
to look into it?
Ms. Woodcock. No, I'm not a lawyer, but that is what our
legal interpretation----
Mr. Pallone. It's more resources, the law's not clear.
Ms. Woodcock. Well, I can't interpret the law. I'm sorry.
But if we were asked to do such a thing, I would have to
say it would significantly divert resources from the scientific
review of generic drugs that we are currently undertaking.
Mr. Pallone. Okay. Well, I appreciate it if you could send
us some information of what you've seen develop in that regard.
That would be helpful, I think.
I also wanted to ask you a question about generic
biologics. Senator Hatch in a recent speech pointed out that
unless a way is found for the FDA to approve generic biologics
with the same efficiency that it currently approves other
generic drug products, neither the government nor I guess the
private sector would be able to afford to pay for the drugs of
the future. Do you agree with that? Does the FDA have the
authority to approve generic biologics?
Ms. Woodcock. Products that are approved under the Public
Health Service Act are often considered biologics. It depends
on what you mean by biologics. But that statute does not have
the provision for generics. So, there's actually no statutory
framework.
There are also major scientific issues that relate to the
approval of recombinant protein products.
Mr. Pallone. So, again, it's partially you think that the
statute impartially, you know, resources or ability to do it?
Ms. Woodcock. That's correct. There are some recombinant
products that are approved as drugs and regulated by the Center
for Drugs under Section--under the Food, Drug and Cosmetic Act
and we are certainly evaluating what path we could follow,
because those are subject to Waxman-Hatch Act.
Mr. Pallone. Okay. Thank you.
Thank you, Mr. Chairman.
Mr. Bilirakis. Mr. Bryant to inquire.
Mr. Bryant. Thank you, Mr. Chairman.
And let me add my welcome to Dr. Woodcock.
Also, in just following up, I have a couple of quick
questions about the advertising issue and understanding that
your testimony I think reenforces to some extent an
appropriateness of advertising insofar as it reaches under
treated conditions and diseases. Could you elaborate on that
just a little bit more? Very quickly. I know you referenced it
earlier.
Ms. Woodcock. Certainly. We looked at, for example, the top
causes of death, the diseases that are top causes of death in
the United States now, and we looked at the direct-to-consumer
advertising that is currently occurring, and many of the
conditions leading to death, premature death in the United
States are subject to direct-to-consumer ads that have been
aired in the last few years.
Now, we recognize that the ads being driven by commercial
considerations may not advertise all drugs that are available,
only the ones probably that are on patent, for example. But
they may have the potential to increase awareness among
consumers and patients of these conditions and the availability
of effective treatments.
Mr. Bryant. And ultimately a down side, of course, is that
the patient goes to the doctor's office and demands this drug
whether it's necessary or not? Of course, the ultimate in that
case, too, as the gatekeeper in this situation the doctor has
clearly, you know, a duty to say you don't need that drug, you
don't have that condition or whatever. So that should work
itself out in most every case, I would hope, if the doctor's a
competent physician he certainly wouldn't prescribe a drug for
a patient that he believed did not need it?
Ms. Woodcock. One would hope so. I think we have done some
surveys of patients, and that's detailed in my written
testimony, and from the patient's point of view this
advertising has provided an opportunity for them to go and talk
to their doctor and mention their condition and ask is the drug
right for me. In many of those cases their physician has said
the drug is not right for you, and there have been a variety of
reasons; you don't have the condition, this drug is too
expensive you should use another drug, or these are side
effects you may not wish to face.
Mr. Bryant. Good. On the over-the-counter issue I
understand your testimony that the bulk of FDA's decisions to
move it over from a prescribed status over to OTC status, by
far and away the majority of these decisions are with the
manufacturer's agreement and consent. And, in fact, I assume
these are all initiated by the manufacturer. But now----
Mr. Bilirakis. Is that right, are they all initiated----
Ms. Woodcock. Generally, a vast majority. That's correct.
Mr. Bryant. Who else would initiate it if not the
manufacturer?
Ms. Woodcock. Well, sometimes the FDA in past cases have
said ``Look, this drug looks a lot more like an over-the-
counter drug than a prescription drug, maybe you ought to
reassess your target or your market.''
Mr. Bryant. Based on what types of studies to show that it
was safe to do so?
Ms. Woodcock. Right, and based on the----
Mr. Bryant. Well, who would make the those studies when the
FDA initiates it?
Ms. Woodcock. The sponsor has agreed with that and gone
ahead and targeted the product toward the OTC world.
Mr. Bryant. Do you have other entities or groups that have
initiated these types of requests before?
Ms. Woodcock. Not historically, but we can't foresee what
the future may hold. It may become more common.
Mr. Bryant. Can you give me any example of where there's
been another party, particularly a third party payer or an
insurance company that's done this before?
Ms. Woodcock. We tried to search our memory banks for this,
and we could not come up with an example where this exact
scenario has occurred before.
Mr. Bryant. The reason I asked this is that I take one of
the drugs that's in play here, and I was back in my District
over the weekend and I had a constituent come up to me
unsolicited not knowing we were going to have this hearing and
ask about this, and they take that same drug. And they're not
really happy, as I'm not really happy about this being perhaps
transferred over to an OTC category simply based on economic
reasons. And I know an awful lot of the physicians out there
that originally were in this business also are concerned with
this. And I would hope that the FDA would take all this into
consideration.
I think we're breaking new ground here, if I'm not wrong,
and perhaps setting some bad precedent and perhaps too much
interference in allowing economic driven reasons to have too
much of a play in terms of medical treatment.
So, again, I would hope that if indeed--and I stress the
word if the FDA has that authority to make this switch even
over the objection of the manufacturer, I would hope the FDA
would look down the road also and say ``Well, whose going to do
the safety testing'' if you've got a manufacturer who opposes
this transfer and, again, to look at those types of
considerations, too.
Do you have an opinion? This would be my last question in
this round. You know, over the objection of manufacturer, who
would perform the safety tests that are necessary before the
FDA would--to allow the FDA in effect to make this switch in
categories?
Ms. Woodcock. These are very product line specific. In the
case of the antihistamines, as you know, all sorts of allergy
medicines and antihistamines are over-the-counter already. In
addition, there's been a marketing history of these products in
question. That would be quite different for some other product
at some other stage of its marketing, for example.
So I can't give a specific question, but obviously we need
the safety data base, FDA, to make these kind of evaluations.
And I can assure you that economics will not play a role in our
decisionmaking. I understand, and we all understand there are
economic factors on both sides of this particular issue. And
that's not the basis for FDA's evaluation of these issues.
Mr. Bilirakis. Should the FDA have that authority, the
unilateral authority that you insist they have? Should they
have it?
Ms. Woodcock. To switch a product over-the-counter? Yes,
we----
Mr. Bilirakis. You think you should have or you shouldn't
have that authority?
Ms. Woodcock. Yes, I think that is appropriate. We think
that's appropriate. We have that authority now.
Mr. Bilirakis. And you think it's appropriate.
Mr. Bryant. Mr. Chairman, again, could I just follow up,
and I'm not sure I had the answer on who will do the safety
testing under those----
Mr. Bilirakis. We're going to have a second round, Ed.
Mr. Bryant. Thank you, Mr. Chairman.
Mr. Bilirakis. Mr. Stupak?
Mr. Stupak. Thank you, Mr. Chairman.
Doctor, in the direct-to-consumer advertising in your
testimony you said in August 1999 that you did a final
regulation on it and then you go on to say that in announcing
the final guidance, the FDA advised the agency intended to
evaluate the impact of the guidance and of direct-to-consumer
promotion in general on the public health within 2 years of
finalizing the guidance.
Ms. Woodcock. Yes.
Mr. Stupak. So it'll be August of this year? Two years from
1999?
Ms. Woodcock. Yes.
Mr. Stupak. So are you going to wait until August of 2001
or have you been reviewing the impact?
Ms. Woodcock. We have been reviewing the impact. We have
some addition--as I said, we've done consumer survey, which of
course doesn't totally evaluate public health impact. It gives
one side of the picture. We're trying to work with private
parties in academia and do further surveys.
Mr. Stupak. So in response to I think it was Mr. Bryant's
question, you said something about deaths related to--you were
concerned about that. Explain that again to me.
Ms. Woodcock. Death?
Mr. Stupak. Yes, I thought you said deaths, maybe I
misheard you.
Ms. Woodcock. No. I'm sorry. I don't know what part of----
Mr. Stupak. All right. Okay. So thus far in your 2 year
review that's been going on how is direct-to-consumer
advertising working? You mentioned about patients coming in
saying I want this. Has it increased the risks of improper
drugs being supplied and have all the risk with direct-to-
consumer advertising then been given to the consumer before
they go into that doctor waving this advertisement to them?
Ms. Woodcock. Right. As I said, we have done a consumer
survey. We have--the Consumer's Report about their encounters
with physicians, and that is detailed in my testimony. And what
they have said is that this has spurred their conversations
with their doctors, but in not all cases have they received the
drug that they went to ask about or the condition.
Mr. Stupak. You know, consumers tell us that they spend
less time with their doctors. Are you saying direct-to-consumer
advertising actually have patients spending more time with
their doctors discussing?
Ms. Woodcock. Well, what we hope that one of the benefits
is that it will focus on the discussion between the physician
and the patient on what is appropriate therapy, if any, for
that condition.
Mr. Stupak. And the final decision for the therapy, though,
is left to the physician, correct?
Ms. Woodcock. Always for prescription drugs.
Mr. Stupak. Let's get back to the application fee submitted
by new drug applications and generic drugs. In PDUFA, it was,
wasn't it? Prescription Drug User Fee Act, when that came about
did it distinguish that the money as generated from these new
applications would only be used for new drug applications or
did it distinguish that--did it say that generics could not be
used?
Ms. Woodcock. Yes. It restricted the use of the funds to
new drug applications or the process of review of new human
drugs. We also use it for IND investigational drug review.
Mr. Stupak. But would it exclude generics?
Ms. Woodcock. Yes. We have to keep very careful books and
we cannot expend any funds from user fees on generic review.
Mr. Stupak. Well, if the generics put forth the user fee,
would that get them processed quicker?
Ms. Woodcock. Well, I guess that would be up to the
Congress.
Mr. Stupak. Well, you tell me that, you know, you have 180
days to make a decision on generic.
Ms. Woodcock. That's correct.
Mr. Stupak. But on a new drug, it's 1 year?
Ms. Woodcock. Yes.
Mr. Stupak. And generics have to go through two or three
cycles, but it seems like new drug applications only have to go
through one cycle, which is a 12 months deal and they get
approved.
Ms. Woodcock. Many of them. By no means all of them.
Mr. Stupak. But in the last 2 years according to the L.A.
Times article they would have been approved 100 percent. So for
the last 2 years those new drug applications been a 100 percent
approval within the cycle?
Ms. Woodcock. No. People mix up approval and making our
review times. We've 100 percent met our review times, many of
those are a turn down.
Mr. Stupak. Okay. What about review time with generic
drugs, do you meet all of those?
Ms. Woodcock. No, only 55 percent.
Mr. Stupak. 55 percent?
Ms. Woodcock. Right now.
Mr. Stupak. So if you meet a 100 percent review time but
only 55 with generics, would that number improve if there was
money attached to the application?
Ms. Woodcock. I think we could always do more with more.
Mr. Stupak. Sure. So it really comes down to whether or not
you're dedicating the resources to generic drugs is really the
issue?
Ms. Woodcock. It's certainly one of the factors that goes
into the current approval times, which are 18 months.
Mr. Stupak. Okay. So it's really not poor application by
generic drug applications, it's just you don't have the
resources available at the FDA to process them in a timely
manner?
Ms. Woodcock. Well, for example, in the Prescription Drug
User Fee program back in the 1990's when this was started, one
of the factors that was identified in the 3 year time to
approval was that a poor quality of applications.
Mr. Stupak. Okay.
Ms. Woodcock. And part of that program was to work to
develop very clear standards and guidance and assistance in
meeting the standards.
Mr. Stupak. Okay.
Ms. Woodcock. And having high quality applications. That is
something that could--we could ramp up our effort in the
generic drug program.
Mr. Stupak. You haven't done that with the generics saying
here's how you improve your applications, the standards and
here's what you've got to meet?
Ms. Woodcock. We've done it within--we've done a lot within
our limits of our ability and we have brought the times down.
Mr. Stupak. Thank you, Mr. Chairman.
Mr. Bilirakis. Mr. Burr to inquire.
Mr. Burr. Thank you, Mr. Chairman.
Welcome, Dr. Woodcock.
Ms. Woodcock. Thank you.
Mr. Burr. It's been a while. We're glad to have you back.
Ms. Woodcock. Thank you.
Mr. Burr. Let me ask you a few questions, if I could. I've
tried to do catch up and reading your testimony that the FDA
fully feels they have the authority to make a switch. Let me
ask you about the process of that. Is that a written procedure
of what the FDA goes through when petitioned either by a
company for a switch to over-the-counter status, an outside
group or in this most recent case, a third party?
Ms. Woodcock. Yes. The OTC office established procedures
that we go through.
Mr. Burr. And how much interaction would they have with the
line folks who actually go through the new drug applications on
prescription drugs? How much are they involved in the process?
Ms. Woodcock. They're very deeply involved in the process.
Mr. Burr. Well, we would hope that they are.
If the FDA can make a switch over the objection of a drug
manufacturer, which I think we conclude you believe you can,
can it do so without disclosing information which is otherwise
protected by the Food, Drug Act and the Trade Secrets Act?
Ms. Woodcock. I don't think so. I'd like to ask our
lawyers. I have Kim Dettelbach here. Would you like to comment
on that? You'll have to come up to the table. Or would you
prefer not to comment?
Mr. Burr. Would one interrupt that all the information is
available post approval or is there information that is
protected?
Ms. Woodcock. I think the answer, perhaps, to your question
is that we obviously can't disclose trade secret information
and that is an issue that we would have to deal with.
Mr. Burr. And is there a written process as to how you deal
with that?
Ms. Woodcock. As I said in my testimony, we really haven't
faced this particular set of issues previously.
Mr. Burr. If a manufacturer objects to a forced switch to
over-the-counter status and refuses to remove the Rx from its
label, the prescription from its label, what recourse would the
FDA have and would this be misbranding in violation of Food,
Drug and Cosmetic Act?
Ms. Woodcock. I'd prefer not to answer that question right
now, because it's a legal question. But I believe we would have
legal recourse that we could take.
Mr. Burr. Okay. That's sufficient.
Ms. Woodcock. All right.
Mr. Burr. Upon the submission of a new drug application can
the FDA force a drug to be sold over-the-counter though the
manufacturer may wish to sell the drug by prescription only? In
other words, can you make the determination of an over-the-
counter direction at the beginning of the application based
upon your authority today?
Ms. Woodcock. Yes, I believe that would be the same as our
authority to force a switch. It would be much less likely
because of the lack of data available on that particular drug
at the beginning of the process.
Mr. Burr. So it is unlikely that the FDA would use their
authority to make that determination at the beginning of the
filing process of an application?
Ms. Woodcock. Only if adequate data were available to
satisfy all the criteria for OTC-ness.
Mr. Burr. Are there any other classification of drugs that
you can think of that would be considered today for over-the-
counter status?
Ms. Woodcock. The FDA had a meeting, a public meeting in
June of this year, last year. I'm sorry. Of last year to
discuss the whole OTC program, and at that time a wide variety
of medicines, classes of medicines were brought up and
discussed as far as being candidates for OTC switching. In the
vast majority of cases, in all the other cases I think except
the one we're talking about here today, the antihistamines, the
manufacturers were supportive of such switches.
Mr. Burr. So there's no other classification that the FDA
can perceive today where one would consider it a forced switch
where a manufacturer was not in agreement?
Ms. Woodcock. Not to my knowledge.
Mr. Burr. Okay. One last question if I could. How much
money is spent today on direct-to-consumer advertising by
pharmaceutical companies?
Ms. Woodcock. I think $2.5 billion.
Mr. Burr. $2.5 billion. Is the FDA fairly confident of that
number, because I think Members of Congress have heard--per
year, yes.
Ms. Woodcock. Per year.
Mr. Burr. But I think the trade journals have had it as
high as $11 billion at some point, and I'd love to have an
accurate number of direct-to-consumer advertising?
Ms. Woodcock. Yes. Well, we're not an economic agency. We
don't go out and directly survey these things. We rely on
commercially published information. The information that we
have is that the vast majority of pharmaceutical advertising is
still directed toward the physicians or other prescribers, and
that's about $13-14 billion a year total advertising, of
which----
Mr. Bilirakis. Does the FDA keep track of dollars that are
spent for that type of advertising?
Ms. Woodcock. That's not required to be submitted to us. We
do not have jurisdiction over that, over those type of
economics.
Mr. Bilirakis. So where did we get this? That's from the
broadcasters?
Ms. Woodcock. This is from published information on firms
that commercially keep track of these matters. And we can
provide you our sources.
Mr. Burr. Dr. Woodcock, I'm told that $2.5 billion is
inclusive of samples and other marketing efforts, not--11 is
inclusive?
Ms. Woodcock. Yes.
Mr. Burr. $2.5 is broadcast?
Ms. Woodcock. That's correct.
Mr. Burr. Okay.
Ms. Woodcock. No, not broadcast. Direct-to-consumer.
Mr. Burr. Direct-to-consumer advertising.
Mr. Bilirakis. The gentleman's time has expired.
Mr. Burr. I thank Dr. Woodcock. I hope she won't be a
stranger to this committee.
And, Mr. Chairman, let me say that I'm disappointed that I
wasn't here for Mr. Brown's opening statement. He told me it
was elegant, and I believe every word of it.
Mr. Bilirakis. It was directed to the gentlemen.
Mr. Green to inquire.
Mr. Green. Thank you, Mr. Chairman.
And to follow up my colleague from North Carolina, I
appreciate the chairman calling this hearing today so we can
talk about Mr. Brown's legislation.
Dr. Woodcock, I appreciate your being here, and I know the
issue is the over-the-counter versus prescription, and I know
the FDA's interest is only the consumer safety. It's
interesting that for the protagonists in this case, whether
they are WellPoint or the pharmaceutical industry, obviously
their interest is cost. And our concern overall is the cost to
our constituents, whether it's cheaper over-the-counter because
they have insurance coverage, or if it's cheaper on
prescription.
In knowing that it didn't--the FDA didn't move into this
area very quickly. This was actually filed in 1998, so it's
taken 3 years. The FDA didn't move very lightly in making this
decision.
But also, you did not look at all into the cost factors, it
was only in the consumer safety?
Ms. Woodcock. Right. We have not made a decision. We have
completed an advisory committee that has advised us on safety.
And we're still evaluating what we're going to do. But, no, we
did not move quickly, very quickly. We had to gather a lot of
data, as was already alluded to, and we did not take cost into
account.
Mr. Green. The committee didn't take cost? Will the FDA
take the cost into consideration?
Ms. Woodcock. No. We've certainly heard a lot about it on
both sides from many parties, but that's not part of our role.
Mr. Green. Okay. Let me go on and ask some questions about
a lot of our concern on the generics.
Out of the approximately 500 cases where a generic has
filed for a paragraph IV certification, how many of these cases
were settled out of court, do you know, just a rough
percentage? I understand it's about 90 percent. Is that
correct?
Ms. Woodcock. All right. Well, I don't know. I don't have
that data right now. I can provide it to you to the extent we
know that.
Mr. Green. So 90 percent, use that as an example and that's
what I understood that 90 percent. And does the FDA have any
jurisdiction over these settlement agreements?
Ms. Woodcock. No.
Mr. Green. And so the Waxman-Hatch statute requires that
settlement agreements contain provisions to ensure that
generics market their products immediately, and yet the FDA
doesn't have any authority under Waxman-Hatch Act to be able to
overlook or oversee those settlement agreements that extend the
patent?
Ms. Woodcock. Right, that's correct. That's correct.
Mr. Green. But the FTC, Federal Trade Commission, has
authority or jurisdiction over anti-competitive behavior?
Ms. Woodcock. That's correct.
Mr. Green. Is there ever any correlation or work between
the FDA and the FTC?
Ms. Woodcock. Certainly. We talked to them when these
issues first arose, in fact.
Mr. Green. Okay. And it seems like if the percentages are
500 cases are filed and there's 90 percent settlement, and yet
our regulatory agency the FDA is taken out of it, it seems like
that would impact the cost to the consumers in generics versus
the patent drugs.
If a brand company could file a new patent at the end of
the original patent expiration and receive an automatic 30
month stay and then negotiate for additional time because of
the 180 day exclusivity this could result really in years of
patent extension?
Ms. Woodcock. Yes.
Mr. Green. And that's a concern I know, and like I said, I
haven't really focused on my colleague Mr. Brown's bill until
today and this hearing has caused me to do that and realize
that, and even Mr. Waxman agrees that we need to fix it.
The other concern we hear from the next panel the talk
about the patent stacking. And I understood I think in one of
your answers you were interested or the FDA was going to look
at the issue of patent stacking?
Ms. Woodcock. Yes.
Mr. Green. So where a brand company introduces a new patent
toward the end of the patent's original expiration date to give
it even longer time of market exclusivity. Is there anything in
the statute that would prevent these brand companies from doing
this now?
Ms. Woodcock. Not to my knowledge.
Mr. Green. There's no regulatory authority FDA would have?
Ms. Woodcock. No.
Mr. Green. In fact, again, these companies receive an
automatic 30 month stay if their patents are challenged.
Ms. Woodcock. That's correct.
Mr. Green. So another 2\1/2\ years?
Ms. Woodcock. That's right.
Mr. Green. And again, my colleague who used to sit here,
but Peter Deutsch and I, we actually in our opening statements
didn't collaborate but both of us were concerned about it, and
I don't fault someone who is a lawyer in an earlier life for
using the system but, obviously, they're gaming the system to
the detriment of our consumers.
So, thank you, Mr. Chairman.
Mr. Bilirakis. Mr. Ehrlich.
Mr. Ehrlich. Doctor, thanks first of all.
Your testimony is very illuminating and it's not only
educational for us but it helps us educate our constituents
with regard to--in fact, I'm meeting a number of my
constituents in an hour. I'm going to relay some of your
observations, but particularly over weekends when we go home we
get a lot of these questions.
I think your observation with regard to truth in
advertising is well taken. It certainly can be consumer
friendly with regard to education, but it also obviously drives
demand, which is one of the issues we're trying to deal with
here.
Just a couple observations with regard to what you said.
Clearly an application fee with regard to generics and the
additional income that would bring into the agency would
shorten the review time. That's your testimony today, is that
fair?
Ms. Woodcock. Well, as I said, we can do more with more. I
think we are performing well in getting generic drugs out, but
clearly there are limitations now.
Mr. Ehrlich. With regard to clearly a lot of questions on
the OTC process, and that's really the purpose of this hearing
today, your testimony in that regard has been educational as
well. You've cited individual criteria, and that's one of the
most important pieces of your testimony that we're going to
take away today as we go back and talk to our constituents are
those individual elements that really make up the process. And
what I've heard you talk about, you've been very clear that
money, cost is irrelevant and you've talked about convenience,
clearly.
Ms. Woodcock. Yes.
Mr. Ehrlich. And safety, obviously. And this more
subjective, I guess, test with regard to self diagnoses. I'd
like to hear a little more about that. And then with regard to
a number of questions from colleagues, in that you've talked
about available data not generated in house, but generated by
manufacturers?
Ms. Woodcock. Yes.
Mr. Ehrlich. Any other individual criterion that you would
cite today with regard to the entire process and then a
further--if you can, further objective description with regard
to the self-analysis?
Also, a personal note as a sufferer at this time of the
year I appreciate what you all have been doing with regard to
bringing this stuff out quicker, including antihistamines and
the like. So, that's a personal note.
But if you can just give me your comments with regard to
the process?
Ms. Woodcock. Well, certainly. For all OTC drugs, if I
understand your question, you're asking what kind of criteria
are there for a drug to be OTC versus prescription, is that
right?
Mr. Ehrlich. Correct. Correct. The list?
Ms. Woodcock. The list? All right.
One of the major criteria would be that the condition that
the patient is able to figure out that they have the condition.
And there has been an evolution over the last 20 years on what
we as a society feel, think that patients can diagnose and
manage. And we've already basically decided that patients can
diagnose what we all allergic rhinitis. In other words, hay
fever. They can tell when they have hay fever and select
choices, because there are many choices out in the OTC market.
So that's very important.
For many of the other drugs that there's a lot of debate
about right now about OTC switching, there are still
significant questions that remain about self-diagnoses, and
those are drugs--we're requests for drugs for cholesterol
lowering, for example, to go over-the-counter. And the question
is can the consumer adequately diagnose the fact they have high
cholesterol and that this would be appropriate intervention for
them. And that story is still evolving.
So, that's the major criterion. If the consumer cannot
appropriately select for themselves, diagnose their condition,
then OTC is off the table.
Then for any particular drug to treat that condition would
have to have certain characteristics. It would have to have an
adequate safety profile. It wouldn't have to need medical
monitoring to maintain its safety or its effectiveness.
As you know, when you go to the doctor sometimes they will
take tests of your blood or whatever while you're taking a drug
or an EKG, or they'll do different things to make sure that
drug is still right for you; it's working or it's safe. Those
kind of interventions can't be used in the OTC setting.
We also frequently have what's called label comprehension
studies. And that sounds complex, but what it means is can you
write directions for use for that product that the average
consumer who has that condition can read and understand and
then will go ahead and use the product appropriately? Because
people do all sorts of things, as we all know. Sol that's
another piece that we look at. Can a label be written that's
comprehensible to a consumer.
So those are the kind of criteria. Effectiveness also would
need to be something that the consumer in some way could tell
whether the drug was working or not. And traditional OTC drugs
have been for symptomatic conditions where you know you have a
problem.
Mr. Bilirakis. The gentleman's time has expired. And we do
have a second record.
Mr. Ehrlich. Thank you for the specificity. I appreciate
that.
Ms. Woodcock. Certainly.
Mr. Bilirakis. Mr. Towns inquire.
Mr. Towns. Thank you very much, Mr. Chairman.
Dr. Woodcock, given the explosion in the use of the
Internet, even if the FDA modified its guidance on advertising,
aren't we still likely to have product promotion occur? Only
this time it won't be from the manufacturer, but from users of
the Internet?
Ms. Woodcock. That's true, and that's been going on for a
long time in the print and other media. And the Internet is no
different, except that the information can get around a lot
faster to a lot more people. But FDA only regulates promotion
by sponsors or manufacturers, distributors, repackers and so
forth. We don't regulate statements by other citizens about
drug use.
Mr. Towns. Well, I think the problem here is how likely is
that Internet generated promotional information to be accurate
and contain the necessary safety warnings for the consumers? I
mean, you have to be concerned about that.
Ms. Woodcock. We certainly have been monitoring that, and
there's a wide variety of quality of information on the
Internet. Some of it is very high quickly and some of it is
highly inaccurate, and that is a general safety problem.
Mr. Towns. And that's going to get--I mean continue.
Ms. Woodcock. Right. Well, that's part of the importance of
the prescriber in making sure that when people get prescription
drugs that they're appropriate for them.
Mr. Towns. Right. I think you might have answered this
question before. I think when I came in I thought I heard part
of it.
In your experience do generic manufacturers have the
expertise to produce the kind of information that the FDA would
require to move a prescription to over-the-counter status?
Ms. Woodcock. Could you repeat the question?
Mr. Towns. Yes. I asked do generic manufacturers have the
expertise to produce the kind of information that the FDA would
require to move a prescription to over-the-counter status?
Ms. Woodcock. Absolutely not. We have generic copies of
innovator over-the-counter drugs available.
Mr. Towns. In your opinion why have there been so few
patent issues raised in regard to the generic applications with
the FDA since the inception of the Waxman-Hatch Act in 1984?
Ms. Woodcock. I don't know. That would require me to read
into the minds of the people who would file these, and I don't
know.
Mr. Towns. No, in your opinion?
Ms. Woodcock. Well, I think there have been quite a few in
recent years, and they were fewer in the past and the
prominence of different court decisions and the impact of those
court decisions has changed the landscape, that's what I
believe.
Mr. Towns. Well, let me ask this then: In your opinion if
there was one element of the Waxman-Hatch Act that should be
changed to promote the production of more generics, what would
it be?
Ms. Woodcock. Well, as I said, the Administration hasn't
finalized its evaluation of that and I don't have an opinion at
this point.
Mr. Towns. All right. Let me try it another way. I'm not
going to give up.
If there was one element that should be changed to protect
the interests of brand name products, in your opinion what
would it be?
Ms. Woodcock. The interests of brand name products?
Mr. Towns. Yes. Then I'll try it another way. No, go ahead.
Ms. Woodcock. Well, it hasn't really been posed to me that
way. Much of this hearing has been about protecting the
interests of brand name products yet providing for prompt
availability of generic products once the patents expire. I
think that is the central issue that we're discussing here.
Mr. Towns. I agree, but I mean in your opinion--I mean,
could you--you wouldn't want to make a comment on it?
Ms. Woodcock. Well, I believe that the subjects that have
been discussed here today, the 180 day exclusivity, the 30
month stay are central issues that we're going to have to deal
with.
Mr. Towns. All right. Thank you.
I yield back, Mr. Chairman.
Mr. Bilirakis. Are you suggesting that we should take
another look at the 180 day exclusivity and the 30 month stay?
Ms. Woodcock. Well, I believe FDA has really been
struggling with these issues, with the court decisions and the
changing landscape. It's been difficult for us.
Mr. Bilirakis. Let me ask you on the OTC situation, does
FDA have set up any sort of a remedy, if you will, or an appeal
process or whatever on the part of--since you feel that you
have the unilateral authority to make that decision, do you
have any sort of a process for the manufacturer to take or even
the public? Because as long as it's prescription, there would,
depending on the insurance policy and that sort of thing, there
would be coverage to a large degree. But once it goes over-the-
counter generally there won't be any coverage.
Ms. Woodcock. Well, there's administrative--we have a
formal appeals process with the center for appealing decisions.
And there's also the administrative process, formal
administrative process in hearings and so forth that could be
pursued by anyone who disagrees with an FDA decision.
Mr. Bilirakis. You haven't experienced that yet insofar as
this particular issue is concerned?
Ms. Woodcock. No. No, but this is a new issue.
Mr. Bilirakis. Yes. And you're expecting to experience it
on this issue?
Ms. Woodcock. I don't know.
Mr. Bilirakis. You don't know? All right.
Just very quickly, Doctor. You're an M.D., have you
practiced medicine?
Ms. Woodcock. Yes.
Mr. Bilirakis. You have? Okay. So as a medical doctor
because you're concerned and care about patients, would say
without any hesitation that if a generic drug is approved by
the FDA, that it is directly substitutable and bio-equivalent
to the innovative drug?
Ms. Woodcock. That's correct. I use generics when they're
available. I use generics for my family. Prescribe generics for
patients. I believe there's a lot of ignorance and
misunderstanding out there about the generic program.
Mr. Bilirakis. Good. Thank you for that.
Mr. Brown, we're in the second round now, and we're going
to have to break right after Mr. Brown inquires. We will break
until we have the vote, and then unfortunately we'll have to
ask you to wait.
Mr. Brown. Thank you for that very direct answer to the
chairman, too, and putting people's mind at rest I think in
large part. And the chairman and I have talked about that from
time-to-time. Thank you for that.
The PhRMA witness in the next panel wrote that ``generic
applications have not raised or encountered any patent issues
that have delayed their approval.'' Is that statement
essentially correct in your experience?
Ms. Woodcock. I've not encountered any patent issues----
Mr. Brown. I mean generic applications according to the
former witness in the next panel, ``have not raised or
encountered any patent issues that have delayed their
approval.''
Ms. Woodcock. No, they have not. Okay. I'd like to ask Gary
Buehler, who is the head of the Office of Generic Drugs to
answer that question, if I may.
Mr. Brown. Mr. Chairman?
Mr. Bilirakis. It's all right with me if he'll speak up.
Mr. Buehler. We presently have nine active litigation cases
going in the Office of Generic Drugs. Five of them involve
patents. And each of these cases involves basically a challenge
that is holding up generic drug work or could possibly.
Mr. Brown. And that's another word, phrase for delay their
approval, correct?
Mr. Buehler. Correct.
Mr. Brown. Okay.
Mr. Buehler. It may not actually right now be delaying the
approval, but it could if it continues.
Ms. Woodcock. For any of them?
Mr. Buehler. Yes.
Ms. Woodcock. There are some that are actually delaying
approval is your comment.
Mr. Brown. So I wonder why PhRMA would make that statement?
I guess is that a good reason for all of you to stick around
and find out in the next panel.
Most of the blockbuster drugs coming off their initial
patents in recent years, Prozac and Prilosec and others, have
been involved in paragraph IV certifications that challenge in
many cases successfully essentially invalid patents designed to
perpetuate the monopoly of the innovator firm well after their
original patent has expired, right? I mean, it's done through
these paragraph IV applications, correct?
Ms. Woodcock. Yes.
Mr. Brown. Okay. Well, Mr. Chairman, one thing I would like
to also ask and ask consent if you could to keep the record
open for written questions for other panelists?
Mr. Bilirakis. Yes. That is routine. By all means that will
be the case and I'm sure you don't mind responding to those as
soon as you can?
Ms. Woodcock. Not a bit.
Mr. Bilirakis. We should really break now unless Mr.
Pallone wants to limit his inquiry to maybe about a minute or
so.
Mr. Pallone. You don't want her to wait until we come back?
Mr. Bilirakis. Well, I'd rather excuse her if we can. But
on the other hand, I don't want to cut you off.
Mr. Pallone. There could be others, too, that want to ask.
Why don't we wait.
Mr. Bilirakis. All right. I guess we'll have to wait.
Ms. Woodcock. That's fine.
Mr. Bilirakis. All right. We're going to recess for a few
minutes until we cast this vote.
[Brief recess.]
Chairman Tauzin. The committee will please come back to
order. Mr. Bilirakis has had to be excused for a while. I
apologize for that.
I understand we're on the second round of questions right
now, and the clerk will advise me as to whose up next. Mr.
Pallone is recognized for a round of questions.
Mr. Pallone. I just wanted to yield to Mr. Brown briefly.
Mr. Brown. Thank you. And, Mr. Chairman, welcome, good to
have you here.
Chairman Tauzin. Good to be here.
Mr. Brown. I wanted to correct a statement of so that it's
not that I do not misconstrue PhRMA's testimony. I'd said that
there were no patent delays--PhRMA's actual words was that
there are an overwhelming number of cases there are no delays.
And I would content, while I apologize for the slight
misquoting that I did, I think that they're still as, Dr.
Woodcock said, there are several very significant very costly
issues involved there where there are delays. And it's not just
a significant problem, it's a growing problem. So for the
slight misquote, I apologize, but I think the issue is still
very much in front of us.
And I thank the gentleman.
Mr. Pallone. Thank you.
I wanted to ask Dr. Woodcock, following up on your
statement you made to Mr. Brown about the bio-equivalency of
generics and your use of generics, I have a bill the Generic
Drug Access Act that prohibits states from passing laws keeping
generic drugs off the market once the FDA has determined that a
generic drug is therapeutically equivalent to a brand name
product. And I guess I wanted to ask you two things.
First of all, if you can express an opinion on that whether
you think that's a good idea, which you probably won't. But
second, you know, to what extent you have seen states act in
this to go beyond that in ways that you think are really not
effective or really don't make sense and if you have any
reports or anything on that?
Ms. Woodcock. Yes, I can't comment specifically on the
bill, proposed bill. But I can say that I think there is a lot
of misunderstanding about the generic program. I think
sometimes it is promulgated by innovator companies either in a
sincere belief that their product is different than the generic
product, or through other motives. And that believe is
widespread in the community and some of the pharmacy and
medical community that some generics are not equivalent to the
innovator product. And these misconceptions are really a
problem because we've never--we always follow up on reports we
get of therapeutic in equivalence. We get many reports; we
switched our patient and the drug didn't work. We've never
found a problem with these products when we followed up.
Mr. Pallone. Have you any--I mean I believe strongly that a
lot of times these efforts are made in the State legislature
by, you know, brand names just to basically create more
problems for generics to come to the market. I mean, is there
evidence of that or would you comment on that?
Ms. Woodcock. Well, we certainly have seen efforts by
innovator firms to state that their product is different than
the generics and that there are problems with the generics. We
certainly have seen that. We feel--we've had to tell firms they
can't make these statements because it's kind of comparative
claim that they can't make.
We don't feel these warrant. But you recognize human
behavior, you get a pill that's a different color or it looks
different or something, and then you think well this is
different and I'm really worried it's going to have a different
effect.
Mr. Pallone. Okay. Let me ask you a second question. You
know, again, I have difficulty following these things. You
commented extensively on the 180 day exclusivity period and the
court decisions, and your having to come up with new
guidelines, I guess some of which are still outstanding. And,
you know, it seems to me again going back to our GAAP Bill,
under the GAAP Bill the 180 day exclusivity period granted to
the first to file generic applicant would become available to
the next filed applicant if the first to file generic company
reaches a financial settlement with the brand name to stay out
of the market or fails to go to market within reasonable
period. It seems to me that that's a way of preventing, you
know, some of the problems that you've identified with the 180
day market exclusivity, and I just wanted to know if you would
comment on that? I mean, it seems that if we could change the
law, then when we don't have you constantly having to deal with
all these court decisions and coming up with new guidelines. If
you'd comment on that?
Ms. Woodcock. I can't comment specifically on the bill,
however I think whatever legislation is approached would have
to be approached very carefully because of the law of
unintended consequences.
I'm sure when the Waxman-Hatch Amendments were put into
place some of these outcomes were not necessarily foreseen at
the time. And now our regiment or statutory and regulatory
regiment is extremely complicated and----
Mr. Pallone. Do you have any other suggestions maybe in
lieu of that to deal with the problem, in lieu of what GAAP
proposed?
Ms. Woodcock. No, I can't comment. I can't make
suggestions. Sorry.
Mr. Pallone. Okay. Thank you.
Thank you, Mr. Chairman.
Chairman Tauzin. I thank the gentleman.
The Chair is going to going to ask a round of questions.
And, Dr. Woodcock, I want to ask you to give your own
opinion on this. I understand you cannot--are not prepared to
give FDA's position on this, but I want to ask you with
reference to the 180 day generic exclusivity provision of
Waxman-Hatch Act, and basically I want to know whether you
think it's still necessary?
The fact is that some people, including the original folks
who negotiated the bill for the generic industry, Mr. Engleberg
and I understand Liz Dickinson of the FDA's general counsel's
office speaking for herself have both commented that there's so
much of a financial incentive to challenge patents, that
challenges will occur irrespective of exclusivity. What's your
personal opinion on that?
Ms. Woodcock. I'm not qualified, you know, I'm a physician.
I'm not really qualified to comment on the financial incentives
for companies. I would defer to those trade associations and
other people who really----
Chairman Tauzin. But you're aware of the fact that people
are lining up to challenge, isn't that correct?
Ms. Woodcock. Yes, that's correct.
Chairman Tauzin. And isn't that quite evident now in the
history of Waxman-Hatch Act that challengers do in fact line up
because the financial incentives are so great?
Ms. Woodcock. No, they're lining up----
Chairman Tauzin. I suppose it must be because financial
incentives are great.
Ms. Woodcock. They're lining up to challenge, but also at
this point there's a 180 day exclusivity is provided.
Chairman Tauzin. Yes, but again only through the first
challenge?
Ms. Woodcock. Right.
Chairman Tauzin. So there's still a lot of other people
challenging?
Ms. Woodcock. Sure.
Chairman Tauzin. And, you know, the comments of the folks
who negotiated this are basically questioning whether you still
need the 180 day exclusivity provision if in fact challengers
are lining up without the benefit of it. And without asking you
again to comment on the financial incentives, you will concede
that that is in fact the case that there is a growing list of
challenges now, right?
Ms. Woodcock. That's correct.
Chairman Tauzin. Okay. Second, has the FDA perceived any
recent trends wherein manufacturers of larger selling drugs are
listing patents in the Orange Book shortly before the previous
patents are set to expire?
Ms. Woodcock. Yes, we feel that we have observed this
trend.
Chairman Tauzin. It's a clear trend, is it not?
Ms. Woodcock. That we believe, yes.
Chairman Tauzin. If so, does that concern you at all?
Ms. Woodcock. As I said earlier, we are concerned with the
recent court cases, with the other problems that we're
encountering in implementing this provision it's going to
become even more complicated and difficult to promptly approve
generic drugs.
Chairman Tauzin. Okay. And finally, does the FDA believe
that the rolling exclusivity provision contained within the
Brown-Emerson legislation would be an impedient to generic
competition in that the exclusivity would continue to bounce
from the first to the second to the third challenger if the
previous challenge is lost in court?
Ms. Woodcock. I'm sorry, but again I'm not able to comment
on that. I feel, based on my experience in trying to administer
some of----
Chairman Tauzin. We understand there was testimony on the
Senate side indicating that on a personal level again, that the
FDA representative there believed that that was of great
concern. You're not ready to share that concern?
Ms. Woodcock. Not as--no. No. What I was going to say,
though, is that with many of these provisions simplicity is a
virtue.
Chairman Tauzin. All right. Thank you very much.
Mr. Greenwood is next, right. Mr. Deal in the Chair.
Mr. Greenwood is recognized for 5 minutes.
You want to Chair?
Mr. Deal. No, no, you go ahead. Play musical chairs.
Mr. Greenwood.
Mr. Greenwood. Mr. Chairman, I'm going to pass for the
moment. I just arrived and I need to get a little organized.
So, if Mr. Brown----
Mr. Brown. I don't have any second round questions.
Mr. Greenwood. Well then neither do I. I'll just pass and
wait for the next ones.
Mr. Deal. Dr. Woodcock, we want to thank you very much for
being here today. We apologize for the fact for the fact that
some of us had to come in and out, the votes and other things
conflicted, but we do appreciate your appearance today. And I
do recall that there were several issues that you indicated you
would get back to us in writing, and we would appreciate a
follow up response.
Ms. Woodcock. That's correct. I will do that. And thank
you.
Mr. Deal. Thank you.
We'll call the second panel today, would they please to
come to the table.
Lady and gentlemen, we wish to thank you for appearing here
today, and I'll introduce the panel very briefly.
First of all, Dr. Gregory Glover who is partner with a
Washington firm and is appearing on behalf of the
Pharmaceutical Research and Manufacturers of America.
Mr. Bruce Downey, who is the Chairman and CEO of Barr
Laboratories and also, I understand, is appearing on behalf of
the Generic Pharmaceutical Association.
And Dr. Jane Delgado, who is President and CEO of the
National Alliance for Hispanic Health.
And Mr. John Golenski, who is the Executive Director of
RxHealthValue here in Washington.
Mr. Thomas Geiser, who is General Counsel for WellPoint
Health Networks. And I believe Dr. Seidman is accompany you as
well and Vice President of Pharmacy.
And Mr. Richard Kingham, who is a partner in Covington &
Burling here in Washington.
Lady and gentlemen, we appreciate your patience in waiting
for your appearance here on this panel.
And, Dr. Glover, we will begin with you.
STATEMENTS OF GREGORY J. GLOVER, ROPES & GRAY ON BEHALF OF
PHARMACEUTICAL RESEARCHERS AND MANUFACTURERS OF AMERICA; BRUCE
L. DOWNEY, CHAIRMAN AND CEO, BARR LABORATORIES, ON BEHALF OF
THE GENERIC PHARMACEUTICAL ASSOCIATION; JANE L. DELGADO,
PRESIDENT AND CEO, NATIONAL ALLIANCE FOR HISPANIC HEALTH; JOHN
D. GOLENSKI, EXECUTIVE DIRECTOR, RX HEALTH VALUE; THOMAS
GEISER, GENERAL COUNSEL, WELLPOINT HEALTH NETWORKS ACCOMPANIED
BY ROBERT SEIDMAN, VICE PRESIDENT, PHARMACY; AND RICHARD F.
KINGHAM, COVINGTON AND BURLING
Mr. Glover. Thank you. Mr. Chairman and members of the
subcommittee, on behalf of the Pharmaceutical Research and
Manufacturers of America I thank you for inviting me here today
to testify on the Waxman-Hatch Act. I am a licensed physician
and a practicing attorney with the law firm of Ropes & Gray,
and I specialize in intellectual property law and FDA
regulatory issues.
PhRMA companies are the source of virtually all new drugs
in the United States and the evidence confirms that our
innovation in our industry benefits consumers. The research
based pharmaceutical industries investment in R&D has jumped
more than $30 billion this year. During the last decade the
industry has developed more than 370 new life saving cost
effective medicines and the pace of innovation is increasing.
Our industry now has more than 1,000 medicines in development.
We strongly believe the U.S. pharmaceutical market is
robust, competitive and working to the benefit of consumers and
patients. It is working, in fact, as Congress intended when it
passed the Waxman-Hatch Act.
We believe that advocates of change have a burden to show
that change is necessary and would not upset the balance
between innovation and generic competition achieved by
Congress. But advocates for change have not met that burden.
Today almost all innovative medicines face generic competition
after their patents expire. The generic industry's share of the
prescription drug market is almost 50 percent today compared to
less than 20 percent in 1984. And today generic copies often
come to market as soon as the patent in an innovative produce
expires, whereas before in 1984 it took 3 to 5 years for a
generic drug to enter the market.
Contrary to the assertions of the generic industry, this
system is working well. Of the more than 8,000 generic
applications that have been filed since 1984, fewer than 500
have raised any patent issues, meaning 94 percent have raised
no patent issues whatsoever.
Despite the success of the Waxman-Hatch Act generic
manufacturers are advocating major change in the legislation
that would jeopardize future innovation. I would like to
respond specifically to four of the issues that have been
raised.
The first issue is patent dispute settlements between
pioneers and generics. The actions of the Federal Trade
Commission in challenging some recent settlements demonstrate
that the anti-trust authorities are actively and adequately
monitoring settlements between partner companies and generic
manufacturers. Accordingly, there is no need to amend the
Waxman-Hatch Act to deal with this issue.
The second issue is Orange Book Listings. FDA's Orange Book
serves two purposes. First, it provides notice to a generic
applicant of the patents that cover a pioneer product, and
second it provides a mechanism by which innovator companies can
initiate litigation of patent disputes prior to FDA approval of
a potentially infringing product.
The generic industry proposes to restrict the ability of
pioneers to litigate patent disputes prior to FDA approval by
limiting the types of patents that can be listed. Restricting
Orange Book Listings will hurt both the pioneer and the generic
companies. It is in the interest of both parties to have
complete and full listings of patents.
The third issue is the 30 month stay of approval. The
generic industry contends that it is unfair for FDA to be
barred from approving a generic application for up to 30 months
while the pioneer attempts to resolve any patent disputes. The
generics cannot have it both ways. If it were not for the
Waxman-Hatch compromise, an innovator could sue an infringing
generic manufacturer when it begins product development. The
generic industry cannot reasonably claim the right to engage in
development activity that normally would be considered patent
infringement and at the same time assert there should no
opportunity to resolve these patent disputes prior to product
approval. The research based industry should not be condemned
for defending patents that are presumed to be valid under U.S.
law.
The fourth issue is the so called late listed patents. The
purpose of the preapproval litigation procedure is to protect
innovator companies from the injury that would occur if generic
manufacturers sell infringing products and are unable to pay
the potentially large amounts that would be due at the
conclusion of the litigation. This rationale applies to all
patents regardless of when the patent is issued. Innovator
companies should not be deprived of one of the most important
rights conferred by the Waxman-Hatch Act simply because a
patent is issued by the Patent and Trademark Office after NDA
approval and is timely listed in the Orange Book.
None of the proposed changes have merit, none can be made
without jeopardizing future innovation and, accordingly, none
of these changes should be considered in isolation from the
needs of those patients awaiting cures.
I'll be pleased to answer any questions that members of the
committee may have.
Thank you.
[The prepared statement of Gregory J. Glover follows:]
Prepared Statement of Gregory J. Glover, for the Pharmaceutical
Research and Manufacturers of America
Mr. Chairman and Members of the Subcommittee: On behalf of the
Pharmaceutical Research and Manufacturers of America, I am pleased to
appear at this hearing today on the Hatch-Waxman Act, direct-to-
consumer advertising of prescription drugs, and the switching of drugs
from prescription to over-the-counter status. I am a physician and an
attorney with the law firm of Ropes & Gray, specializing in
intellectual-property and FDA regulatory issues. PhRMA represents the
country's major research-based pharmaceutical and biotechnology
companies, which are leading the way in the search for new cures and
treatments that will enable patients to live longer, healthier, and
more productive lives.
hatch-waxman
Turning first to Hatch-Waxman, PhRMA strongly believes that the
U.S. pharmaceutical market is robust, competitive, and working to the
benefit of consumers and patients--is working, in fact, as Congress
intended when it passed the delicately-balanced Drug Price Competition
and Patent Term Restoration Act of 1984 (commonly known as the Hatch-
Waxman Act after its principal sponsors). We believe that advocates of
change have a heavy burden to clearly show that change is needed and
would not upset the careful balance achieved by Congress, as discussed
immediately below. They have not met that burden.
Generics Flourish
On the one hand, the generic industry has flourished since the
passage of the 1984 compromise law eliminated the barriers to entry and
made it much easier, far less costly, and quicker for low-cost generic
drug manufacturers to get their copies of innovator medicines to market
following patent expiration.
Since 1984, the generic industry's share of the prescription-
drug market has jumped from less than 20 percent to almost 50
percent.
Before 1984, it took three to five years for a generic copy to
enter the market after the expiration of an innovator's patent.
Today, generic copies often come to market as soon as the
patent on an innovator product expires. And in most cases,
sales of pioneer medicines drop as much as 75 percent within
weeks after a generic copy enters the market.
Prior to 1984, only 35 percent of top-selling innovator
medicines had generic competition after their patents expired.
Today, almost all innovator medicines face such competition.
Research Incentives Preserved
On the other hand, the research-based pharmaceutical industry--the
source of virtually all new drugs in the U.S.--was provided limited
incentives for innovation under the 1984 law, which restores part of
the patent life lost by pioneer medicines as a result of regulatory
review by the Food and Drug Administration (FDA). The industry, spurred
by accelerating scientific and technological advances, continues to
increase its investment in R&D and to develop new, more advanced, and
more effective medicines.
The industry's investment in pharmaceutical R&D has jumped
from $3.6 billion in 1984 to more than $30 billion this year.
During the 1990s, the industry developed 370 new life-saving,
cost-effective medicines--up from 239 in the previous decade.
The research-based pharmaceutical industry now has more than
1,000 new medicines in development--either in human clinical
trials or at FDA awaiting approval. These include more than 400
for cancer; more than 200 to meet the special needs of
children; more than 100 each for heart disease and stroke,
AIDS, and mental illness; 26 for Alzheimer's disease; 25 for
diabetes; 19 for arthritis; 16 for Parkinson's disease, and 14
for osteoporosis.
The Public Benefits
What these data show is that the Hatch-Waxman compromise is both
promoting competition--by making it easier, cheaper, and quicker for
low-cost generic copies of pioneer medicines to enter the market--and
providing limited incentives for innovation--by restoring part of the
patent life lost by pioneer products due to FDA regulatory review. As a
result, consumers are receiving the benefits of early access to low-
cost generic copies and of an expanding stream of new, more precise,
and more sophisticated medicines.
The Hatch-Waxman Compromise
How has the Hatch-Waxman compromise both promoted competition and
preserved incentives for innovation? A little history helps to explain.
Prior to 1984, there were few generic copies of pioneer drugs that
had been approved after 1962. The safety and effectiveness data
supporting the approval of a post-1962 drug was considered to be trade-
secret information that could not be used to approve generic copies.
Apart from repeating the long, costly clinical studies performed by an
innovator company, a generic applicant could obtain approval of a post-
1962 drug only by using a literature-based (so-called ``paper'') New
Drug Application (NDA), which was possible only when published
scientific literature demonstrated a drug's safety and effectiveness.
To permit the approval of generic copies of all post-1962 drugs,
the Hatch-Waxman compromise in effect revoked the trade-secret status
of innovators' safety and effectiveness information. Instead of proving
safety and effectiveness, a generic manufacturer was allowed to show
only that its copy is ``bioequivalent'' to a pioneer product and FDA
could rely on the pioneer's safety and efficacy data to approve the
copy.
Bioequivalence means that a copy's active ingredient is absorbed at
the same rate and to the same extent as that of the pioneer medicine.
As a result of the 1984 law, generic manufacturers are able to avoid
the huge cost (estimated at $500 million on average) of discovering and
developing a new drug. It costs only a very small fraction of that
amount for generic manufacturers to demonstrate bioequivalence--which
is why they can market their copies at reduced prices.
The Hatch-Waxman compromise also helped generic manufacturers by
overruling a 1984 Court of Appeals decision in the Bolar case. The
Court had held that it constituted patent infringement for a generic
company to manufacture and test a medicine before its patent expired
even if its only purpose was to prepare a marketing application. In a
unique exception to patent law, the Hatch-Waxman compromise allows
generic manufacturers to use innovator medicines still under patent to
obtain bioequivalency data for their FDA applications (a use that
ordinarily would be a patent infringement) so they can be ready to
market their copies as soon as the pioneer patents expire.
The 1984 law also sought to increase the number of generic copies
by providing an incentive for generic manufacturers to challenge
pioneer patents. The first generic manufacturer to certify to FDA that
a patent on an innovator medicine is invalid or is not infringed by its
product obtains 180 days of exclusive marketing rights if the copy is
approved before the patent expires. During that 180-day period, FDA
cannot approve any other copies.
To attempt to balance the generic provisions, the Hatch-Waxman
compromise provided limited incentives to pioneer companies to help
spur innovation. The law restores part of the patent life--but not
all--lost by innovator products as a result of FDA review:
A pioneer drug receives a half-day in restored patent life for
every day the product is in clinical trials prior to FDA
review.
A pioneer drug receives day-for-day restoration of patent life
for the time it is under review by FDA. However, the effective
patent life of a drug cannot exceed 14 years, regardless of how
much time is lost in clinical testing and review. And the total
time restored is limited to no more than five years (even if
more than five years is lost during drug development and
review).
Innovator drugs introduced in the 1990s that obtained patent
restoration enjoyed an average effective patent life of less than 11.5
years--substantially less than the 18.5 years enjoyed by inventors of
other products. (The full patent term in the U.S., as with all member
nations of the World Trade Organization, is 20 years from the date a
patent application is filed with the Patent and Trademark Office.)
In addition to partial patent restoration, the Hatch-Waxman law
provides that FDA is prohibited from approving generic copies of a
pioneer drug for five years after approval of an innovator product in
the case of new chemical entities and for three years in the case of
other drugs and innovations in existing drugs. These exclusivity
periods are to protect an innovator's data when there is no patent
protection. The law also creates a procedure for litigating patent
disputes before FDA approves an allegedly infringing generic copy.
Few Patent Disputes
Despite the generic industry's arguments to the contrary, data
compiled by FDA conclusively show that, in the overwhelming majority of
cases, generic applications have not raised or encountered any patent
issues that have delayed their approval. The facts speak for
themselves:
From 1984 through January 2001, 8,259 generic applications
were filed with FDA.
Of these applications, 7,781--94 percent--raised no patent
issues.
Only 478 generic applications--5.8 percent--asserted a patent
issue, either challenging a patent's validity or claiming non-
infringement of a patent.
Further research shows that:
Only 58 court decisions involving just 47 patents have been
rendered resolving generic challenges to innovator patents--a
tiny fraction of the number of generic applications.
Only 3 of the patent disputes settled between innovator and
generic companies have reportedly been challenged by the FTC--
an infinitesimal percentage of the applications.
A Heavy Burden to Justify Change
Even though the Hatch-Waxman compromise stimulates competition and
provides limited research incentives, generic manufacturers are
advocating major changes in the legislation. We believe that, in view
of the balanced nature of the law, any proponent of change has a heavy
burden to clearly demonstrate that change is necessary and would not
upset the delicate compromise achieved in 1984. We do not believe this
burden has been met with regard to any of the changes that have been
proposed. Therefore, we strongly oppose such changes that would, we
believe, unfairly skew the law in favor of generic manufacturers and
impede the ability of the research-based industry to realize in a
timely way the promises that the accelerating biomedical advances hold
for patients in all parts of the world.
The generic industry has raised concerns in four areas in
particular, which are addressed to various extents and in various ways
in the Brown-Emerson bill, H.R. 1862. (See also the Schumer-McCain
bill, S. 812.) The research-based industry is convinced that the
changes sought by the generic industry would overturn some of the main
trade-offs of the Hatch-Waxman compromise, as briefly described below.
We would be pleased to discuss these and other such issues in more
detail with any Member of the Committee or staff member who so desires.
Patent-Dispute Settlements: The generic industry has proposed to
place limits on settling patent litigation between innovators and
generic manufacturers that are different from the rules that apply to
the settlement of other types of patent litigation. There is no need to
amend the Hatch-Waxman compromise to deal with this issue. Settling
cases is encouraged by the courts, it avoids the expenses of
litigation, and it can create results that accommodate the interests of
both parties.
Any settlements that are anti-competitive are subject to regulatory
challenge under existing law. The actions of the Federal Trade
Commission (FTC) in challenging some recent settlements demonstrate
that the antitrust authorities are actively and adequately monitoring
settlements between pioneer companies and generic manufacturers.
Orange-Book Listings: The generic industry would change the
procedure by which innovator companies can litigate patent disputes
prior to FDA approval of an allegedly infringing product. This would
upset a major feature of the Hatch-Waxman compromise. The provision was
intended to offset the loss by pioneer companies of trade-secret status
for their safety and effectiveness data and the loss of patent rights
that had been recognized in the Bolar case that was overruled by the
1984 law.
Prior to 1984, FDA approved a marketing application for a generic
product even if the patent holder contended that the product would
infringe its patent. Although patent holders could sue infringers,
recovery of damages was questionable, particularly when the infringer
was a small generic manufacturer that was potentially responsible for
treble damages that accumulate during the patent litigation.
Under Hatch-Waxman, innovators are required to have their patents
listed in the FDA Orange Book, and a generic applicant must file a
``Paragraph IV certification'' if it wants the agency to approve its
application before the listed patent expires. A generic applicant may
file such a certification only if it contends that the unexpired patent
is invalid or would not be infringed by its product. The generic
applicant must send a copy of the certification to the patent holder
and the manufacturer of the innovator drug. If the patent holder sues
for infringement within 45 days, FDA is automatically barred from
approving the generic application for up to 30 months while the case is
litigated.
The generic industry has complained that this process has been
abused and has argued that the law should be changed to limit the
patents that can be listed, such as only listing patents on active
ingredients. The data presented earlier conclusively show that the
process has not been abused as the overwhelming majority of generic
applications--94 percent--have not raised or encountered any patent
issues.
There is no sound rationale why a generic manufacturer should be
able to avoid pre-approval patent litigation by making small changes
from the marketed product, such as by changing the crystalline form,
when the changed product still infringes an innovator's patent. Pre-
approval patent litigation should be linked to a generic applicant's
reliance on an innovator's safety and effectiveness data--that was one
of the trade-offs in the Hatch-Waxman compromise.
If a generic product would both rely on an innovator's data and
infringe one of the innovator's patents, pre-approval patent litigation
should be allowed. Thus, any patent that covers a product that could be
approved based on an innovator's data should be listed in the Orange
Book to permit pre-approval litigation.
Thirty-Month Bar: The generic industry contends that, once the
patent-dispute procedure is triggered as described above, FDA should
not be automatically barred from approving a generic application for up
to 30 months. The industry also contends that innovator companies
should be required to post a bond that a generic manufacturer could
collect if it prevails in patent litigation.
Patent disputes involving generic drugs are a special case under
the law because the Hatch-Waxman compromise overruled the Bolar case
and permits generic manufacturers to develop and test a competitive
product before its patent expires, thus barring patent holders from
asserting their rights during this period. Such otherwise-infringing
testing is not permitted in any other U.S. industry.
Since the 1984 compromise gave generic manufacturers a multi-year
head start on getting to market by authorizing product-development that
would otherwise constitute patent infringement, innovator companies
were given the offsetting benefit of being allowed to litigate a patent
before FDA approves the product.
If it were not for the Hatch-Waxman compromise, an innovator could
sue a generic manufacturer when it begins product development and the
litigation might well be concluded by the time a product is ready for
FDA approval. The generic industry cannot reasonably claim the right to
engage in development activity that normally would be considered patent
infringement and at the same time assert that there should be no
special rules governing the related patent litigation.
``Late-Listed'' Patents: The Hatch-Waxman compromise requires that,
if a patent has been issued at the time an NDA is submitted to FDA, the
patent information must be included in the NDA. If a patent is issued
after FDA approves an NDA, the patent information must be submitted to
FDA within 30 days after the issuance of the patent for listing in the
Orange Book.
If a patent is listed in the Orange Book within 30 days of
issuance, it is treated the same as all other listed patents. The
generic industry has argued that the pre-approval litigation process
should not apply to patents issued when generic drugs are close to
being approved. The generic industry refers to these as ``late-listed''
patents even though they are listed promptly after they are issued in
accordance with the Hatch-Waxman compromise.
The purpose of the pre-approval litigation procedure is to protect
innovator companies from the injury that would occur if generic
manufacturers sell infringing products and are unable to pay the
potentially large amounts that would be due at the conclusion of
litigation. This rationale applies to all patents, regardless of when
issued. Innovator companies should not be deprived of one of the
important rights conferred by the Hatch-Waxman compromise simply
because a patent was issued after a drug was approved or because the
Patent and Trademark Office (PTO) was slow in processing a patent
application.
There are sufficient protections in existing law against abuse of
the pre-approval litigation procedure. For example, patents are issued
only if the PTO determines that they meet the statutory standards;
innovator companies are subject to criminal penalties if they knowingly
make a false statement to FDA to obtain listing of a patent in the
Orange Book, and the Federal Rules of Civil Procedure provide sanctions
if an innovator files a frivolous or improper patent suit. Further, if
a patent is truly late-listed--i.e., listed more than 30 days after it
is issued--FDA's rules exempt generic applicants with pending
applications from filing a certification regarding the patent.
dtc advertising
On DTC advertising, PhRMA strongly supports direct-to-consumer
advertising of prescription medicines as currently regulated by FDA and
opposes any further restrictions on this pro-patient, pro-health
activity. Left sitting on pharmacy shelves, medicines don't do anyone
any good. Unless they are prescribed for patients, prescription
medicines cannot prolong life, ease pain, reduce disability or improve
the quality of life. And unless medicines are prescribed and used, they
will not generate the funds needed for private industry to continue to
research and develop new and more effective medicines.
In 1997, FDA under the Clinton Administration issued guidelines
that clarified the agency's broadcast requirements. FDA no longer
required radio and television ads to contain voluminous information
about a drug's side effects. Under the draft guidance, ads still have
to list major health risks as well as side effects and must set forth
four ways for consumers to receive additional information.
FDA's 1997 decision was in reaction to a policy that had generated
ineffective and confusing advertisements. Prior to the guidance, FDA
required that a brief summary of the prescribing information for a drug
had to be included in all advertisements--including broadcast
advertisements--that both named a prescription drug and stated its
purpose. The brief summary is an FDA-approved document that advises
physicians, in very technical language, how to appropriately use a
drug. Because of its technical, scientific wording, this summary is
very difficult for ordinary patients and consumers to understand.
In announcing the clarifying guidance in August 1997, then FDA Lead
Deputy Commissioner Michael Friedman, M.D., said: ``Today's action can
help promote greater consumer awareness of prescription drugs.'' Robert
Temple, M.D., Associate Director for Medical Policy at FDA's drug
division, added that, under the new guidance, ads could inform
consumers about new products they might not learn about through other
means. As an example, he cited a new generation of antihistamines that
do not cause drowsiness. ``You need to be told by someone that those
products are out there or you'll never know,'' he said.
Patients are now more actively involved in their own health care
than ever before. The consumer movement and the information explosion
have empowered patients to participate in these decisions. Armed with
information, patients have become active partners with health-care
professionals in managing their own health care and they are savvy
consumers. Rather than remaining uninformed and relying entirely on an
increasingly complex health-care system, patients are asking questions,
evaluating information, and making choices.
Direct-to-consumer advertising provides a valuable resource for
patients to obtain information about specific diseases and conditions,
particularly in rural areas of the country where access to providers
and health-care information may be difficult. Too often, many common
yet serious conditions go untreated even though effective treatments
are available. Affected individuals may not realize they have a health
condition. Others are aware of their symptoms, but may not know that
treatment is available. Patients suffering from chronic conditions may
be dissatisfied with current treatment, but are unaware that different
options are available with fewer side effects or easier dosing
regimens.
Pharmaceutical advertisements raise awareness of conditions and
diseases that often go undiagnosed and untreated. For example, the
American Diabetes Association estimates that of the 16 million
Americans who have diabetes, 5.4 million don't know it. One third of
the people with major depression do not seek treatment and millions of
Americans are unaware that they have high blood pressure. By informing
people about the symptoms of such diseases and the availability of
effective, non-invasive treatments, direct-to-consumer advertising can
improve public health.
There are encouraging signs that this is happening:
A survey by Prevention magazine found that, as a result of DTC
advertising, an estimated 24.7 million Americans talked to
their physicians about a medical condition they had never
previously discussed with a doctor. In other words, millions of
people who had suffered in silence were encouraged to seek
help.
A 1999 survey by FDA found that 27 percent of respondents
asked their doctors about a condition they had not discussed
before. These conditions ranged from diabetes and heart disease
to arthritis and depression.
In the two years that ads for a medicine for erectile
dysfunction have appeared, millions of men have visited their
doctors to request a prescription for the drug. For every
million men who asked for the medicine, it was discovered that
an estimated 30,000 had untreated diabetes; 140,000 had
untreated high blood pressure, and 50,000 had untreated heart
disease. These numbers are striking--and this is just one drug.
A study by IMS Health, a health-information company, found
that, in the one year after an advertising campaign for an
osteoporosis drug began, physician visits by women concerned
about the disease doubled.
A growing body of evidence suggests that consumers like DTC
advertising. A 1999 survey by FDA found that those who liked these ads
outnumbered those who did not by nearly two to one. Eighty-six percent
said the ads ``help make me aware of new drugs,'' while 62 percent said
the ads helped them to have better discussions with their physician
about their health. A survey by Prevention magazine found that 76
percent of respondents thought the DTC ads ``help people be more
involved in their health care'' and 72 percent felt the ads ``educate
people about the risks and benefits of prescription medicines.''
Advertising is only one source of user-friendly information
available to consumers. Some 50 consumer magazines that deal with
health care are published every month. The Physicians' Desk Reference,
or PDR, once confined to doctors' offices, is now available in a
consumer edition at pharmacies. Internet users can surf tens of
thousands of sites dedicated to health-care topics. In fact, according
to health-care consultant Lyn Siegel, about 25 percent of online
information is health-related, and more than half of the adults who go
on the web use it for health-care information. So, while DTC
advertising is an important source of information for consumers, it is
clearly not their sole source of information--even though it is the
most accurate because it is regulated by FDA.
Critics contend that increasing expenditures on DTC advertising are
driving up the price of drugs, but the amount spent by pharmaceutical
companies on advertising has remained fairly constant and price
increases have been relatively modest. As health care shifts from a
physician-directed to a patient-directed system, companies are shifting
the allocation of expenditures within their marketing budgets away from
doctors to patients, although the distribution of free samples by
pharmaceutical companies (provided to physicians for trial use by
patients) continues to grow and remains by far the largest part of
their advertising budgets.
And, while total pharmaceutical expenditures are rising, price
increases have been in line with inflation in recent years. According
to IMS Health, a health-information company, total drug expenditures
rose 14.7 percent in 2000. Of that figure, only 3.9 percent of the
increase resulted from price increases. Most of the increase in drug
expenditures came from the increased use of prescription medicines,
including the use of newer, more expensive, and more effective
therapies. The increased use of prescription drugs is a healthy trend.
Drugs not only save lives--they save money in many cases by reducing
the need for alternative, more expensive care. They keep patients out
of hospitals, out of nursing homes, out of surgery, out of doctors'
offices--and on the job. Still, only 8.2 percent of every health-care
dollar is spent on prescription medicines, compared to 32 percent on
hospital care and 22 percent on physician and clinical services.
In summary, direct-to-consumer advertising helps to meet the
increased demands of consumers for information about diseases and
treatments. It fosters competition among products, which can improve
the quality of care for consumers. Most important, DTC advertising can
improve public health. It is intended to start a dialogue between
patients and doctors. Often, the dialogue will not result in a
physician prescribing the drug mentioned by a patient. But it will
prompt a discussion that may lead to better understanding and treatment
of a patient's condition. And, whatever happens, it is important to
remember that it is a physician who ultimately decides whether a drug
should be prescribed and, if so, which medicine is most appropriate for
a particular patient.
rx/otc switches
The issue has recently arisen as to whether a party other than a
sponsor of a New Drug Application (NDA) can request that FDA switch a
prescription medicine to over-the-counter (OTC) status. It has been a
long-term policy of FDA that such a request can be made only by an NDA
sponsor, or by another with its approval, through the submission of an
NDA supplement with extensive data to support safe and effective OTC
use with appropriate OTC labeling. PhRMA strongly supports this
practice that has long been followed for good reasons.
There are compelling legal reasons against forced switches of
prescription drugs. These reasons have been spelled out in submissions
to FDA. Without elaboration in this testimony, such switches would
violate the confidentiality provisions of the Federal Food, Drug, and
Cosmetic Act, the Trade Secrets Act, and the Fifth Amendment to the
U.S. Constitution.
The process of discovering and developing new medicines, and new
uses for existing medicines, is risky, expensive, and time-consuming.
It is undertaken principally by private companies at their own
initiative through the investment of huge sums in research and
development ($500 million on average for one drug). This process has
led to enormous progress in preventing and treating disease and in
improving public health.
The sponsor of an NDA has the most comprehensive and detailed
knowledge of its drug and is in the best position to design, finance,
and conduct additional studies necessary to evaluate the safety and
effectiveness of the drug for OTC use and to prepare the appropriate
OTC labeling. Every recent switch has been based on the development and
submission of substantial amounts of data demonstrating that a
prescription drug would be safe, effective, and properly labeled for
OTC use.
Such data have been almost universally submitted through NDA
supplements, which give manufacturers the opportunity to earn
exclusivity rights established by Congress as an incentive to invest in
the necessary research. The NDA holder is in the best position to take
all of the relevant information into account and to decide whether and
when to initiate a switch. Forced switches are being proposed by
insurers seeking to shift costs to patients. These third parties lack
the necessary data to determine whether a switch is appropriate and are
not themselves proposing to conduct the extensive studies needed to
support a switch. Rather, they are seeking switches on the basis of
assertions, anecdotal evidence, and other flawed and incomplete data.
FDA would be acting arbitrarily and capriciously if it applied a
lower standard to switches initiated by the agency itself or by third
parties than it applies when an NDA sponsor seeks such action. Forced
switches also would alter revenue streams and expose manufacturers to
different product-liability risks than anticipated when they planned
their research investments.
There are good reasons to retain the process that has been of great
benefit to FDA, industry, and the public for many years. It is the
process most likely to generate the needed data and to ensure that only
drugs that are actually safe for over-the-counter use can be obtained
without a prescription. Switches based on insufficient data could put
the public at risk. In fact, the one time FDA initiated a switch
without the active support of the NDA holder--for a bronchodilator
almost 20 years ago--the agency quickly rescinded its decision after
receiving numerous adverse comments.
If third parties were allowed to initiate switches, moreover, there
likely would be an outpouring of such requests--and it would be
difficult, if not impossible, for FDA to control the process and decide
who should and should not be permitted to seek these changes.
FDA certainly plays a critical role in the drug-development process
in general and in switching drugs in particular. If the agency believes
that a drug is an appropriate candidate to be switched, it can consult
with the NDA holder to determine whether there is an interest in such a
change and in developing a study program to support an application for
a switch. Industry has long cooperated with FDA on issues of mutual
interest and is ready to do the same on this important issue. But
forced switches would be unprecedented, would violate the rights of NDA
holders, and could be detrimental to public health.
This concludes my written testimony. I would be pleased to answer
any questions or to supply any additional materials requested by
Members or Committee staff on these or any other issues.
Mr. Deal. Thank you, Dr. Glover.
Mr. Downey.
STATEMENT OF BRUCE L. DOWNEY
Mr. Downey. Thank you, Mr. Chairman.
At the outset I'd like to thank the committee for holding
this hearing. I think it addresses some very important subjects
and I hope to contribute to that dialog.
As the chairman noted, I'll be testifying not only on
behalf of myself, but also on behalf of the Generic
Pharmaceutical Association and its 150 members that provide
virtually all the generic drugs in this country.
I have submitted a written statement. I would ask that that
statement be made a part of the record before I expand on those
remarks.
Mr. Deal. Without objection.
Mr. Downey. Thank you. I'd also like to thank Congressman
Brown and Congressmen Emerson for introducing their
legislation. I think that legislation has many very positive
features that would help speed generic products to market and
add considerable savings to American consumers and to
Congressman Pallone for his legislation which, if enacted,
would eliminate some of the artificial barriers that we
confront state-to-state as we try to market our products.
It really is a privilege to be here today because this
legislation that we're addressing, the Waxman-Hatch
legislation, was transforming. It created an entire industry.
It's saved consumers tens of billions of dollars over the last
15 years. It's increased the amount of investment in R&D from
the pharmaceutical companies, the branded companies. And it's
done all of this in the context of free markets where there is
really little State or Federal participation in that. It's all
been done in the marketplace, which I think is a tremendous
accomplishment.
On a personal level, it's also given me a very good job in
an exciting industry, and I'm very pleased for that.
I would like to really respond to some of the questions
that have been asked today and try to put or thoughts together
to respond on several issues. First the patent process.
As we have discussion about the 180 days of exclusivity and
patent settlements and the 30 month stay, it really glosses
over what I think is the underlying problem. And the underlying
problem I think is twofold. One, the process in which you
obtain a patent is loaded in favor of patent issuance and many
patents that are not patent worthy get issued. And second, we
have a broad definition of what's patentable in the United
States, such that ideas that I don't believe necessarily merit
patents earn them.
I want first to talk about the process. As you go to the
Patent Office to make an application, you make a submission,
there's an examiner, there's no opponent. So there's no one
saying to the examiner or the judge this patent should not be
issued because or this idea is not patent worthy because. All
of the disclosure is made by the proponent. And in that
context, it shouldn't be surprising when billions of dollars,
literally, are at stake. Many proponents push the envelop to
the bursting point in advocating in favor of patentability in
the absence of opponent advocating to restrict the patent.
Unpatentworthy ideas obtain patent protection. So I think that
basic system leads to some of the problems that we've tried to
overcome.
Also, I think some of the ideas that we consider patent
worthy in this country really shouldn't be. Things like
formulation patents on how to use an active ingredient in
combination with other compounds to deliver a dose to a
patient. How to score the tablets so they can be broken in a
certain way to titrate the dose. All of these ideas are
patentable under current law, but in my view add very little to
the intellectual capital of the country.
Given this situation it seems to me the 180 days of
exclusivity is our only line of defense. It's that exclusivity
which gives us in the generic industry the incentive to go out
after the patents issued, attack that patent in a way to get
our products to market earlier than the patent law would
otherwise provide.
Those who would say the 180 days of exclusivity is not
important aren't responsible to shareholders and to the public
for the profitability of our firms. We invest literally
millions of dollars in these patent challenges and we do so, as
Dr. Glover pointed out, in the face of a presumption of
validity of the patent and in face of a situation where if we
launch the product in the market that's subject to the patent,
we could be subject to treble damages. In a company of our
size, even one of the largest generic companies, we would be
bankrupt if we were to launch, say, a Prozac into the market,
market it for a year or so, and ultimately lose the patent
case.
And Prozac is a very good example, because recently we did
challenge the patents on Prozac, and there were two; one that
expired in February 2001 and one scheduled to expire in
December 2003. The 30 months passed before we got to trial. We
could have theoretically launched that product to market and
subjected ourselves to treble damages prior to the final
decision of the case.
We lost the first patent, the one that expires in 2001, and
we would have been out of business. But we won the second
patent, and as a consequence of winning that second patent
we'll bring generic Prozac to market 30 months in advance of
that patent expiry at a savings of literally $4 or $5 billion
to the healthcare system.
We invested 5 or 6 years in that case. We invested with our
partner in excess of $8 or $10 million. And we did it all in
the face of a presumption of validity that we had to overcome
to bring the product to market. Without the exclusivity,
without the return on that investment, we would simply not have
undertaken that process.
We at Barr have undertaken six and completed six patent
cases. We've won two, we've lost two and we've settled two. And
I want to take up the question of settlements, because it's not
the settlement that keeps you out of the market, it's the
patent. If the patent's valid, you can't launch the product in
defiance of that patent without subjecting yourself to
unacceptable risks.
In our settlements, for example, in both cases we'll be
launching a product under license from the innovator into the
market prior to the patent expiry. In one case, 10 years prior
to patent expiry. So that settlement brought economic benefits
to us, less than we would have earned if we had taken the case
to trial and won but more than we'd have earned if we had gone
to trial and lost. And I think it's very significant because
both cases we settled the subsequent challengers lost. And I
think in retrospect that shows the wisdom of the settlement and
I think an essential part of the patent process to be able to
settle cases in order to keep--or actually to bring products to
market faster to provide the incentive for the cases and bring
generic products to the consumer.
I have lots of other remarks that I'd like to make, but I
think the stop sign is on, and I'll pass the mike and answer
questions when everyone's finished.
[The prepared statement of Bruce L. Downey follows:]
Prepared Statement of Bruce L. Downey, Chairman, Barr Laboratories,
Inc.
Mr. Chairman, members of the Sub-committee, thank you for the
opportunity to testify. My name is Bruce L. Downey, and I am Chairman
of Barr Laboratories, Inc., which has facilities in New York, New
Jersey and Virginia and manufactures and distributes a wide range of
prescription medicines for the treatment of diseases ranging from
breast cancer to heart disease to depression. Barr Laboratories is a
member of the Generic Pharmaceutical Association.
Today, I am speaking on behalf of the GPHA and its more than 140
member companies, which manufacture nearly all generic pharmaceuticals
distributed in the United States today. No other industry has made, nor
continues to make, the contribution to affordable health care that is
made by a robust generic pharmaceutical industry.
I want to thank Chairman Bilirakis, Chairman Tauzin, Congressman
Dingell and Congressman Brown for focusing on an issue that has such
significance for our industry and for the American consumer. This is
the first House-sponsored hearing in some time that has looked
specifically at the value and contribution of generic pharmaceuticals
to consumers, and how our industry makes a significant contribution to
affordable healthcare.
Often, when industries come to Congress, they bring an agenda that
would impose significant costs on American taxpayers. The generic
industry comes before you today to discuss ways to create a direct and
immediate benefit for consumers by reducing health care costs by
billions of dollars. A strong generic industry will allow the
government to do much more for all Americans--particularly the elderly,
under-insured and uninsured--for much less. The opportunity to create
immediate consumer benefits, at no additional cost, deserves serious
consideration.
As I intend to demonstrate in my testimony, the generic
pharmaceutical industry has saved, and continues to save, consumers
billions of dollars a year in prescription costs. The problem is,
however, that the legislative balance that created significant annual
savings for consumers has gradually been eroded.
In just the past week, the value of America's pharmaceutical
industry has been in the spotlight, as articles in newspapers and
magazines across the nation focused on the 20th anniversary of the AIDS
crisis. Universally, these stories addressed two issues: the
extraordinary power of pharmaceutical research and development; and the
extraordinary financial burden that has been created by these life-
saving pharmaceutical therapies.
I want to stress that the generic pharmaceutical industry
recognizes the risks in the investment made by the brand pharmaceutical
industry in new pharmaceutical therapies. We also recognize that the
brand industry deserves to receive incentives for its innovation. In
addition, the health of the generic industry is tied substantially to
the health of the brand industry and our future is directly linked to
the ability of the brand industry to innovate and to bring new
therapies to market.
As always, however, in the nearly 20-year history of the generic
pharmaceutical industry, the challenge continues to be rewarding
innovation but assuring competition at the end of brand exclusivity.
Both the House and Senate, through recently introduced legislation,
have taken the first steps in an effort to restore that balance. We
welcome these initial first steps, but we respectfully call upon
Congress to do much more to preserve the consumer savings that result
from a healthy brand and generic pharmaceutical industry.
Since its inception in 1984, with the implementation of the Drug
Price Competition and Patent Term Restoration Act, (commonly called the
Hatch-Waxman Act), the generic pharmaceutical industry has been
responsible for saving consumers and taxpayers billions of dollars each
year.
According to the Congressional Budget Office Report of 1998,
generic pharmaceutical competition returns a minimum of $8-10 billion a
year in savings into the pockets of American consumers. With
pharmaceutical sales in the United States in excess of $138 billion in
the past year, sales of generic medicines accounted for less than 10%
of the total dollars, but accounted for nearly one out of every two
prescriptions filled. In fact, when you rank the top five
pharmaceutical companies on the basis of prescriptions dispensed, three
of the top five are generic pharmaceutical companies: Watson, Mylan and
Teva, all members of our association.
Interestingly, this savings has not come at the expense of
innovation. According to the same CBO Report, ``Between 1983 and 1995,
investment in R&D as a percentage of pharmaceutical sales by brand name
drug companies increased 14.7 percent to 19.4 percent. Over the same
period, U.S. pharmaceutical sales by those companies rose from $17
billion to $57 billion.''
The evidence is compelling. The underlying premise of the Hatch-
Waxman Act works--consumers benefit if a proper balance is maintained
between rewarding innovation and guaranteeing competition.
Unfortunately, the delicate balance struck by Congress in 1984 has
gradually grown lopsided in favor of the brand pharmaceutical industry,
hostile to the generic industry, and as a direct result, become a
threat to the expansion of consumer savings. The reason is simple: the
brand industry discovered years ago that competition is good for
consumers but bad for their bottom line.
When Hatch-Waxman was implemented, the assumption was that the
brand products would lose about 30% of their market, but would recover
this loss through price increases. However, the introduction of a
generic product often results in such a significant market share loss--
as much as 80-90%--that the brand company is not able to recover its
loss. After starting their own generic businesses, and implementing
other strategies, it became clear to brand companies that the only way
to succeed was to delay competition for as long as possible.
Additionally, laboring under the burden of significant expectations
from the financial markets to maintain strong profits, brand companies
have increasingly found that they are unable to generate a consistent
pipeline of new products to meet profit and growth expectations. The
investment in new product innovation continues, but the value of
extending the market exclusivity of existing products is increasingly
viewed as a prudent financial investment.
The results of this investment in delaying competition have been
significant. Delays in the introduction of generic competition,
combined with the nearly $3 billion spent annually on direct-to-
consumer marketing for new products that often displace generic sales,
have resulted in a stagnation of the growth of generic substitution.
Nearly two decades after Hatch-Waxman, generic substitution rates hover
in the low 40% area, rather than the 50-65% that was predicted by many
experts just a few years ago.
Since 1984, no less than a half dozen different acts of Congress
have delayed the introduction of generic competition for specific
products. According to a National Institute for Health Care Management
(NIHCM) Foundation study issued earlier this year, the slow erosion of
Hatch-Waxman through legislation, and the increasing exploitation of
legal and regulatory loopholes in the Act, has extended anticipated
market exclusivity from approximately 12 years to more than 18 years
for some drug products.
The cumulative effect of these actions has resulted in extending
product monopolies by almost 50%. With national prescription drug
spending continuing to increase at an alarming rate, it is incumbent
upon Congress to re-set the 1984 balance. In other words, its time to
put the health of Americans first, with the challenge of re-achieving
the optimal balance of rewarding innovation and assuring public access
of affordable medicines immediately at the end of brand exclusivity.
Over the past decade, as it has become clear to the brand industry
that delaying competition is one sure bet to ensuring a healthy profit
stream, the number of other gimmicks applied to extend the life-cycle
of products nearing the end of their patent life has increased
dramatically.
Certainly, the stakes in this game are high. Products representing
annual sales of more than $37 billion are due to lose patent protection
in the next five years. Many of these are the blockbuster names that we
all know. To preserve their monopolies, brand companies have turned to
such tactics as patent evergreening, citizen petitions, application of
the automatic 30-month stay in patent litigation, application for
pediatric exclusivity, and other techniques that delay generic approval
or prevent timely introduction of generic competitors.
I would like to cite two recent examples of the techniques used to
``game the system.''
The cancer agent Taxol enjoyed nearly 8 years of market
exclusivity. But tactics employed by the brand manufacturer, Bristol-
Myers Squibb, resulted in a two-and-one-half year delay in generic
approval.
Taxol, an anti-cancer agent, was originally discovered and
developed by federal researchers over a thirty-year period. Although
BMS testified before Congress in 1991 that the compound was neither
patented nor patentable and, therefore, BMS would not have any
intellectual property rights, BMS received several patents on certain
methods of administration and stabilizing the compound following FDA
product approval. Another egregious fact is that prior to the
expiration of five years of product exclusivity granted under Hatch-
Waxman, BMS unsuccessfully appealed to Congress for additional market
protection.
In a complex series of legal maneuvers involving patent listings in
the Orange Book, that followed, BMS was able to delay generic approval.
Part of these delays resulted from the 30-month stay provision of
Hatch-Waxman that automatically prevents approval of a generic product
for this period, while patent litigation is underway. These tactics,
assuming a modest generic penetration of only 50%, at a 50% price
reduction, cost consumers more than $500 million.
Another recent example is the anti-anxiety drug, Buspar, which had
annual sales of $700 million. The product was in its 14th year of
market exclusivity, when the brand company, again Bristol-Myers Squibb,
filed a surprise last-minute new patent on Buspar one day ahead of
generic competition.
The last-minute patent sought to protect a metabolite created by
digestion of the drug in the human body. Again, because of the patent
filing, the company was able to invoke the 30-month stay of approval of
a generic competitor. Although this listing was ultimately overturned,
these tactics, assuming a modest generic penetration of only 50%, at a
50% price reduction, cost consumers more than $57 million.
Both of these examples highlight two issues that Congress must
address. First, patent law allows the listing of any number of patents
on drug products, making it impossible for generic competition to begin
on a date certain, as long as the brand company can find some aspect of
the product that can be patented. This issue is an area where Congress
could make significant and immediate changes, simply by conforming U.S.
patent law to that practiced throughout the world.
The second issue is that of the 30-month stay. Delay equates to
profit preservation, so the brand company has much to gain by
initiating patent litigation against the generic competitor. They face
no financial or other penalty if the case is ultimately found to be
groundless. But they do get an automatic extension of their exclusivity
while the case is in review. The burden rests entirely on the generic
competitor. Congress could address this deficiency in Hatch-Waxman by
requiring the brand holder to post a bond as part of any patent
litigation. This would place them at risk for taking actions that have
no other purpose than to delay competition.
These are only two examples of a systematic process of investing in
legal and regulatory innovation to prevent generic competition. These
types of abuses need to be curbed.
How can we work together to fix this problem, and increase both
access and cost savings? I believe that the answer rests in the
combination of encouraging the increased usage of generic medicines
today and strengthening Hatch-Waxman to restore the balance first
established in 1984. Each of these steps can generate billions of
dollars in savings for America's health care system, while increasing
access to medicines that can improve and prolong life.
I would like to briefly address both points.
First, I would like to address the potential and immediate savings
that can result from increasing the utilization of generic medicines.
The price difference between an equivalent generic product and its
brand equivalent can be as much as 70-80%. A decade ago, the price
differential between a brand product and an equivalent generic product
was approximately $17. Last year, that price differential had grown to
approximately $46.
According to a study published last September by Tim R. Covington,
Executive Director of The Managed Care Institute at Samford University,
``An increase of only 1% in the nation's generic prescription
utilization rate (approximately 27 million scripts) would generate a
payer savings of $1.3 billion each year.'' Action by Congress to
encourage the maximum utilization of generic medicines in federal and
state prescription drug programs, and to develop national educational
programs that communicate the sameness, safety and savings of generic
medicines would be an investment that could return significant and
immediate value to taxpayers.
Estimates suggests that total pharmaceutical spending in the next
decade will triple to more than $330 billion by 2010. Clearly,
increased utilization of generic drugs represents the only immediate,
significant opportunity to put the brakes on this runaway escalation of
America's pharmaceutical bill.
Second, I am encouraged that Congress has begun the process of
considering ways to restore the intended balance of Hatch-Waxman. While
it is too early in the legislative process for the generic industry to
unconditionally endorse any current proposal, we strongly support
Congressional initiatives that represent meaningful and substantive
reforms of Hatch-Waxman, and that restore the balance necessary to
remove the barriers that delay the introduction of more affordable
generic pharmaceuticals.
Proposals that have been introduced on the Hill have been
criticized for being too pro-generic. If that is the case, then they
must also be criticized for being too pro-consumer. The facts are
simple: investment by brand industry innovation in the legal and
regulatory arenas can carry less risk and more reward than new product
development.
Working together, I am confident that our industry and members of
the House of Representatives and the Senate can find ways to increase
consumer savings by restoring balance to the competitive landscape.
The membership of GPHA has identified a number of areas where
Hatch-Waxman reform would accelerate the introduction of more
affordable generic medicines. These proposals include eliminating the
30-month stay component of patent challenges, and requiring brand
manufacturers to post a bond if they challenge generic product
applications.
We believe that these and other proposals would dramatically
encourage the competition that saves consumers more than $10 billion a
year in prescription drug costs. GPHA is committed to working with the
Senate and the Congress to ensure that any legislative initiatives:
preserve the intent of Hatch-Waxman; result in a balance between the
interests of the brand and generic industries; and, create a vibrant
competitive environment in which substantial pharmaceutical savings
reach American consumers.
In summary, the brand and generic industry agree that affordable
medicines are the key to longer, healthier and more productive lives.
We also agree that innovation must be rewarded. But the generic
pharmaceutical industry is unwavering in its belief that after the
expiration of a fair and equitable period of patent protection and
market exclusivity, consumers should be allowed to enjoy the benefits
that competition creates in lower costs and increased access.
Let us work together with you to resolve the problems of dispensing
medicines to all Americans, including the under-insured and uninsured,
by promoting the increased usage of generic medicines and working to
ensure the timely introduction of generic competition.
I am happy to answer any questions you might have.
Mr. Deal. Thank you, Mr. Downey.
Dr. Delgado.
STATEMENT OF JANE L. DELGADO
Ms. Delgado. Good afternoon. My name is Dr. Jane Delgado.
I'm President, CEO of the National Alliance for Hispanic
Health, known as the Alliance.
It's been very interesting for me to sit here, read my
testimony and think I have so much more to say, but I only have
5 minutes.
I should let you know I was also the consumer member of the
Edwards Commission, which worked to restructure the FDA in the
late 1980's, early 1990's. So I'm very familiar with some of
the issues that were raised. I'm also familiar with the saying
``to tell the truth, the whole truth and nothing but the
truth.'' And two out of three is not enough, so I will do all
three and my daughter is here, and I'm here in front of you.
So let me tell you what our concerns are. One of the major
concerns we have, and it's not in my testimony, is this whole
discussion about generic and brand. And I raise it because of
the issue that what we know about physical science is changing.
For example, in our community, Hispanics, many people know
things about us. They know that we're overweight, they know
that we're diabetic, but they didn't know that we have less
heart disease than non-Hispanic whites. They didn't know that
what we also do is we live longer than non-Hispanic whites.
They didn't know we have less breast cancer. They also didn't
know how the differences are in how we metabolize our drugs.
So when people say generics, I say generic for whom? The
FDA will also be able to tell you that if you look at who
participates in these clinical trials, there are very few
people who represent the diversity in this Nation. And there
are differences.
As Dr. Woodcock says ``Well, you know, you can take one
medicine and you can take another one and it's okay, and it's a
little different for you and it's a little different for
them.'' Well, that little difference can mean a big difference
for a patient. And I think in terms of your constituents, they
can tell you what has happened with them when they use drugs.
Constituents don't take drugs or medicines because one is
cheaper, one is expensive. That may help. They take them
because it works. If it's cheaper and it doesn't work for them,
they're not going to take it. So please go back to the idea
that we want things that work for the patient.
I want to move on to one of the important facts that we
also think is important is the idea of information to
consumers. Someone said well, you know, these consumers are
coming in and they're asking the doctor ``I'm diabetic, I want
some Zoloft.'' And it's the wrong thing they're asking for.
Well, we have changed our healthcare system from a physician
hospital based system to one which is more patient driven and
one which is more at home. And that patient should be
congratulated for having the nerve to come in and ask for
something, even if it's the wrong thing. And if the
communication is incorrect, well great. What a great way to
start a discussion. If we only talk to people who knew
everything, we'd be very bored. We need new viewpoints, even
mistakes to correct them; that's why we're here because
obviously some people are saying one thing, other people saying
another thing, and we're trying to make more sense of it. But
this idea of correcting or talking to a patient is something
which is not part of our healthcare system, is driven too often
by factors of cost.
I got this publication yesterday from the American Academy
of Family Physicians, and it said ``life balance from doctor-
to-doctor. Tip One: Don't try to be too efficient. Take time to
really listen to a couple of patient's stories a day. We need
to be fed by our patients.'' That is where medicine is today,
and that's why direct to consumer advertising is important.
If more people are getting more medicines, good, they're
getting treatment. If we have generic and we have brand, let
the decision be made by the healthcare provider and the
patient, not by anyone else. Those are the challenges we face,
because our system is changing.
And if you look at the way is science is ongoing, they will
look back upon us and say ``Can you believe those people
thought that if you gave 100 people the same medicine, they
were supposed to respond the same. Ha, ha, ha.'' They will
laugh because in the future medicine's going to be tailored to
the individual.
And as medicines change, what becomes law or the policies
we develop have to be able to incorporate those changes.
Medicine is not of the past, it is of the future. And those are
the things that we as Hispanics are very concerned about.
We know that we are now 12 percent of the population of the
United States, that's even though the Census didn't include the
3.5 million people in Puerto Rico. But we're there, 12 to 13
percent. For us there are differences.
We also know for people who are over 75 only 2 years ago
the FDA started to record what was going on with them.
If you add all the groups for which we really don't have
the specificity of data on drugs and their impact, you have
most of your constituents, gentlemen.
So, thank you very much. I'll be open for questions later.
[The prepared statement of Jane L. Delgado follows:]
Prepared Statement of Jane L. Delgado, President and CEO, National
Alliance for Hispanic Health
Good morning. My name is Dr. Jane L. Delgado and I am President and
CEO of the National Alliance for Hispanic Health (the Alliance). I am
pleased to be here today to present the Alliance's perspective on
pharmaceutical access and direct to consumer advertising. Before
presenting these views, however, I'd like to provide you with a short
background on who the Alliance is so that you may better understand our
perspective and our reasons for being here today.
The Alliance is the oldest and largest network of Hispanic health
and human service providers. Alliance members serve over 10 million
(one in four) Hispanic health consumers annually. Our members are
community-based organizations, provider organizations, government,
national organizations, universities, for-profit corporations, and
individuals. We have a bi-partisan board and three things make the
Alliance unique: (1) belief in community-based solutions, (2)
representation of all Hispanic groups, and (3) refusal of funding from
alcohol or tobacco companies. We are a principled and strong
organization.
To meet the needs of our communities, the Alliance operates state-
of-the-art services in four program centers: Consumers, Providers,
Technology, and Science. We develop national model community-based
initiatives for service delivery in areas currently covering: cancer,
environmental health, HIV/AIDS, prenatal care, substance abuse, tobacco
control, and women's health. In addition, we directly reach Hispanic
health consumers nationwide by connecting them to local services and
information (using zip code) through our
--National Hispanic Family Health Helpline (1-866-SU-FAMILIA),
--National Hispanic Prenatal Helpline (1-800-504-7081), and
--National Hispanic Indoor Air Quality Helpline (1-800-SALUD-12)which
have bilingual (Spanish and English) information specialists.
As one of the organizations that established the field of cultural
proficiency for health providers, the Alliance operates a significant
support network for health professionals including training and
education programs for cultural proficiency. We maintain and update a
national database of 16,000 community health providers, representing
the largest network of health providers serving Hispanic communities.
As the organization that established the first Hispanic on-line
presence in 1991, the Alliance continues to foster cutting edge
initiatives in science and technology. We operate hispanichealth.org
and this year will unveil a redesign of the site that will include
community health chats, training resources, and a portal to accurate
health information that will continue the Alliance's role as the
Hispanic community's trusted source for the best in health information.
An innovator in health science, the Alliance operates a national
network of university-based researchers working with community-based
organizations. Alliance research was the first to show over eight years
ago that the Hispanic community was growing at a faster rate than
Census predictions and would be the largest racial or ethnic minority
group by the year 2000. Our research has challenged long held notions
of health and well-being by showing that while Hispanics are more
likely to be uninsured and in poverty, we also live longer than non-
Hispanic whites. We have demonstrated the positive role of community,
culture, family, and faith in a healthy life and the negative impact of
some U.S. cultural norms on health and well-being.
Alliance research has also shown, that while Hispanics live longer
than non-Hispanic whites, it is a life often marked by chronic illness
and disease. Hispanics are more likely to suffer from diabetes,
depression, asthma, and other chronic illnesses and diseases yet we
live longer than non-Hispanic whites. Our chronic conditions benefit
from early identification and a treatment plan that includes the
appropriate pharmaceutical regimen. For this reason, full access to
available pharmaceuticals and information made available through
direct-to-consumer (DTC) advertising is a critical issue for the
Hispanic community.
access to pharmaceuticals.
Hispanics are the group least likely to have regular access to
health care services. More than one third (37%) of Hispanics are
uninsured compared to 14% of non-Hispanic whites.1 The
impact is that about one-third of the uninsured reported no usual
source of health care (38%), skipping a recommended medical test or
treatment (39%), or not filling a prescription (30%).2 This
lack of access to health care, including pharmaceuticals, is a
significant barrier for Hispanic communities. The picture for
pharmaceutical access is further complicated by formularies and other
administrative strategies that limit access to the full range of
pharmaceutical products. This is of particular concern to Hispanic
consumers as research has shown that a number of pharmaceutical
products have a different metabolic pathway for Hispanics. Finding the
right product with the least side effects requires access to the full
range of pharmaceutical products in a given class. However, many
Hispanic consumers find that while a pharmaceutical product that works
well for a majority of the population is on their formulary, other
products which work better for them may not be accessible. The goal of
a responsible pharmaceutical policy should be to make the full range of
approved pharmaceuticals available to all so that a medical rather than
cost-limiting decision can be made between a doctor and patient. It is
disturbing that the discussion on pharmaceutical policy has focused on
pharmaceutical spending as a negative for the health care system. Quite
the opposite, pharmaceutical products are the most cost effective
sector of health care. Increased spending on pharmaceuticals is a sign
of our evolving health system, which has less of a focus on
hospitalization. With improved products coming to market and a healthy
research base there are new alternatives for those currently without
adequate treatment options.
---------------------------------------------------------------------------
\1\ The Kaiser Commission on Medicaid and the Uninsured. Uninsured
in America: A Chart Book. May 2000.
\2\ Ibid.
---------------------------------------------------------------------------
The facts of increased pharmaceutical spending argue for a
responsible and patient-based policy that will expand rather than limit
access to pharmaceutical products.
More than two-thirds (71%) of increased spending on pharmaceuticals
is a result of increased utilization. According to IMS Health, in 2000,
total prescription drug spending increased 14.7 percent. Of that
amount, only 3.9 percent represented price increases, the remaining
10.8 percent reflects the fact that more patients are getting new and
better medicines. Also according to IMS Health, the rate of increase in
drug spending in 2000 (14.7%) was substantially lower than the rate in
both 1999 (18.8%) and 1998 (16%).3
---------------------------------------------------------------------------
\3\ IMS Health Reports. A 14.9% Growth in U.S. Prescription Sales
to $145 billion in 2000. May 31, 2001.
---------------------------------------------------------------------------
Value of new prescription drugs explains increased utilization.
Utilization of pharmaceuticals is increasing because untreated patients
are coming in for treatment and patients have access to new and better
medicines. In the 1990's, according to the industry trade association
PhRMA, over 300 new medicines were made available to patients. These
mean new and better options for patients. For example, in a study
published in The New England Journal of Medicine, it was reported that
in the 16 months following the introduction of antiretroviral therapy
for HIV, there was a 43 percent decrease in hospital inpatient care.
According to Samuel A. Bozzette, a physician with the Veterans Affairs
San Diego Healthcare System, who headed the study, ``The drugs are
almost a perfect substitute for hospital care. We can afford them
because, in fact, we were already spending the money on HIV care'' in
the form of hospitalization.4
---------------------------------------------------------------------------
\4\ ``Providing Antiretroviral Therapy for HIV Infection,'' The New
England Journal of Medicine, Vol. 344, No. 11, March 15, 2001.
---------------------------------------------------------------------------
Increased utilization is good news--decreases spending on more
expensive treatments and means improved health care for consumers.
Since the 1960s, spending on prescription drugs as a percent of total
national heath expenditures has remained below 10%; with nearly four
times as much spent on hospital care.5 Pharmaceuticals
remain the most cost effective segment of the health care industry. The
real story of increased pharmaceutical spending is that patients are
getting treated with improved regimens or untreated patients are
getting treated before a more costly acute episode arises, leading to
reduced spending on other more expensive health care treatments and
improved patient satisfaction. For example, a recent study of patients
with severely weakened hearts due to heart failure found that use of a
new beta blocker, not only reduced deaths by 35 percent compared with
patients given a placebo, it also sharply reduced hospital admissions,
hospital stays and the use of tests and procedures in the
hospital.6 Another study published in The New England
Journal of Medicine found that the use of ACE inhibitors for patients
with congestive heart failure reduced mortality by 16%, avoiding $9,000
in hospital costs per patient over a three-year period. Considering the
number of people with congestive heart failure, additional use of ACE
inhibitors could potentially save $2 billion annually.7
---------------------------------------------------------------------------
\5\ Health Care Financing Administration, Office of the Actuary,
National Health Statistics Group, 2001.
\6\ Ron Winslow, ``GlaxoSmithKline's Coreg Benefits Heart Patients
in Two Big Studies,'' The Wall Street Journal, March 21, 2001.
\7\ The SOLVD Investigators, The New England Journal of Medicine,
Vol.325, No.5, pp.293-302, 1991; Walsh/America/PDS.
---------------------------------------------------------------------------
Pharmaceutical innovation is critical to improved health care. The
aging of the population means that chronic illness and disease in this
country will increase. The most cost effective to this evolving health
challenge is access to the full range of pharmaceutical products and
development of new and improved products to avoid hospitalization and
costly (in human and economic terms) impact of not treating chronic
illness and disease early. For example, about 70% of seniors (28
million) now suffer from cardiovascular disease. If this trend
continues, over 50 million elderly could face this disease by
2050.8
---------------------------------------------------------------------------
\8\ Scott-Levin, Integrated Share of Voice Services IMSHEALTH/CMR,
2001.
---------------------------------------------------------------------------
Access to Information. New research is showing that health care
disparities among black, Hispanic, and white Americans cannot be
explained wholly by disparities in income and health insurance coverage
among these groups, but that other factors such as lack of information
play a critical role. Indeed, a new study sponsored by the federal
Agency for Healthcare Research and Quality (AHRQ) has found that one-
half to three-fourths of the disparities observed in 1996 would have
remained even if racial and ethnic disparities in income and health
insurance were eliminated.9 Access to information is a
critical piece in the access picture for Hispanic and other underserved
communities.
---------------------------------------------------------------------------
\9\ Weinick, Robin, et. al. ``Racial and ethnic differences in
access to and use of health care services, 1977 to 1996,'' Medical Care
Research and Review, November 2000, No. 57 (Suppl. 1), pp. 36-54.
---------------------------------------------------------------------------
DTC pharmaceutical advertising is a responsible approach of
discussing benefits and risks. DTC pharmaceutical advertising is more
in the model of public health patient education rather than the Madison
Avenue tradition of advertising. Indeed, a survey by the U.S. Food and
Drug Administration (FDA) found that as many consumers recalled seeing
DTC ads that contained information about ``benefits of the drug'' (87%)
as did seeing ``risk or side effects'' (82%).10 The FDA
plays a vital and appropriate role in ensuring the patient's concerns
are primary in DTC advertising. Unlike other sectors of the health care
market (e.g. dietary supplements, over-the-counter drugs), DTC
pharmaceutical advertising is required to use a ``fair balance'' of
potential risks and benefits in consumer-friendly language. In
addition, print advertising must include a brief summary of product
information and broadcast advertising must make reference to label
information sources (toll-free number, print ad, web site) and
encourage discussion with a health care professional. Furthermore, all
advertising is submitted to the FDA at first use. This responsible
approach to advertising is one that should be used as a model for other
sectors of the industry whose advertising by focusing on benefits
without adequate discussion of risks does little to empower and inform
consumers.
---------------------------------------------------------------------------
\10\ FDA 1999 Survey, question 7.
---------------------------------------------------------------------------
DTC advertising helps health consumers recognize untreated disease.
The $2.5 billion spent by the pharmaceutical industry of DTC
advertising in 2000 is less than 10% of the $26 billion spent in 2000
by the industry on research on development. Furthermore, this spending
has dramatically increased patients' awareness of and ability to
recognize untreated disease. A survey by Prevention Magazine found that
since 1997, DTC advertising has prompted an estimated 54.2 million
health consumers in the U.S. to talk to their doctors about a medical
condition or illness they had never discussed with their physician
before. This is critical to the 50% (6-8 million) people with diabetes
who are not being treated as well as individuals with a range of other
untreated conditions for which treatments are available. Furthermore,
the Prevention Magazine survey of DTC advertising and consumers found
that one-third (33%) of patients using a prescription medication were
reminded to take their medication by a DTC ad.11 This
compliance benefit is significant for many chronic illnesses and
conditions that require long-term compliance with a treatment regimen.
---------------------------------------------------------------------------
\11\ Prevention Magazine. International Survey on Wellness and
Consumer Reaction to DTC Advertising of Prescription Drugs: 2001.
---------------------------------------------------------------------------
DTC advertising encourages discussion between patients and health
providers. Patient-provider communication is being improved with DTC
advertising. A study conducted by Harris Interactive found that 64% of
doctors thought DTC ads help educate and inform the
public.12 Furthermore, a 1999 FDA survey of DTC advertising
found that 81% of patient's reported that their doctor welcomed their
question about a drug as a result of DTC advertising.13 In
addition, the FDA study also found that 27% of people who spoke to
their physician as a result of DTC advertising, talked to them about a
previously undisclosed medical condition.14 Also, of
consumers who spoke to their physician as a result of DTC advertising,
a majority (53%) of physicians discussed non-drug therapy with their
patient.15
---------------------------------------------------------------------------
\12\ Prevention Magazine. International Wellness and DTC Study.
2001.
\13\ FDA 1999 Survey, question 7.
\14\ FDA 1999 Survey, question 7.
\15\ Prevention Magazine. International Wellness and DTC Study.
2001.
---------------------------------------------------------------------------
Health care is in transition from a physician-directed, hospital-
based system to a patient driven, at-home system. Responsible DTC
advertising is another tool that empowers consumers with information
that includes both benefits and risks so that the consumer can make an
informed choice. Unfortunately, much information for consumers
available through the internet and other venues is not subject to FDA
standards nor does it benefit from a balance or benefit and risk
information found in responsible DTC advertising.
Our challenge is to maintain the information, rather than image,
base of DTC advertising and carry-over the high standards employed in
pharmaceutical DTC advertising to other health care product
advertising.
Mr. Deal. Thank you.
Mr. Golenski.
STATEMENT OF JOHN D. GOLENSKI
Mr. Golenski. Thank you, Mr. Chairman. My name is John
Golenski. I'm the Executive Director of RxHealthValue, a
national coalition of consumer groups, labor unions, provider
groups, business groups and employers, insurers and health
plans, pharmacy benefit management organizations and academic
researchers committed to improving American's access to health
improving prescription drugs.
As you can understand, a deliberative body comprised of
nearly 40 organizations will rarely arrive at a full consensus
regarding any issue. Remarkably, our membership has achieved
consensus regarding the recommendations that I'm offering about
direct-to-consumer advertising of pharmaceutical drugs to
consumers and patients. I believe the fact of these consensus
recommendations indicates the fundamental importance of this
issue for the members of RxHealthValue. It is our belief that
this form of advertising affects the health and safety of
American patients and consumers.
The tremendous increase in the extent of DTC advertising of
prescription drugs since the FDA removed the requirement for
the brief summary of risk information in 1997 is well
documented. It is almost impossible to open a general news
magazine or view a prime time television program or listen to
the radio and not see or hear advertising for prescription
drugs. Given that the prescribing physician is the
decisionmaker regarding the use of these medications, it is all
the more startling that so many resources are expended by drug
manufacturers to affect the attitudes of consumers and
patients.
Although there is little evidence currently available
regarding whether consumer and patient attitudes affect
physician choice in prescribing, no stakeholder in the health
system and health economy has suggested that the impact of such
advertising is insubstantial. Given the FDA's expressed
interest in assessing the effects of DTC advertising, we expect
more direct evidence of impact will be available in the near
term future.
While we await the results of planned and pending studies
on the effects of DTC advertising on attitudes, behaviors and
medical outcomes of the consumers and patients, RxHealthValue
members are concerned that risk information in particular is
not adequately reflectively conveyed in DTC advertising.
One of our member organizations, AARP, recently conducted a
survey of members to assess the impact of DTC advertising
finding that nearly a third of those surveyed could not recall
ever seeing risk information in the ads. Two-thirds of the
survey population felt that the information presented in such
advertising was not particularly helpful in assessing
recommendations about whether to take prescription medications.
This poses a serious safety risk to consumers and patients.
In our first recommendation to the FDA presented publicly 1
year ago at the National Press Club RxHealthValue emphasized
the fundamental importance of protecting the safety of patients
and consumers who are confronted with DTC advertising. Thus,
RxHealthValue recommends that the Congress direct the FDA first
to convene a task force of key stakeholders, including the
pharmaceutical manufacturers who advertise prescription drugs,
as well as consumer groups, patient organizations, provider
groups, payers and relevant experts to develop and test
standards for information disclosure on DTC advertising.
Second, to more carefully define the concrete meaning of
``fair balance'' in disclosing benefits and risks of advertised
medications to include disclosure of other appropriate
therapies in addition to alternative medications.
And third, to further define ``fair balance'' to mean that
full disclosure of risks and side effects be given equal print
and air time as the description of benefits in the same
communication.
RxHealthValue recommends that the Congress direct that the
appropriate agencies of the Federal Government conduct on-going
research to evaluate the effects of DTC advertising on the
health of American consumers and patients. It is a given that
many Americans appreciate the increased awareness of diseases
and conditions and potential therapies which DTC advertising
makes possible. It is also true that such advertising can
obscure potential hazards of the pharmaceutical advertised and
neglect the relative value of other forms of therapy. Only
thorough, independent research can demonstrate the differential
impact of such advertising upon the health choices of American
patients and physicians.
In conclusion, the members of RxHealthValue applaud the
committee for engaging this dialog about the effects of this
increasingly pervasive influence on the therapeutic choices of
American consumers and patients. We pledge our assistance in
implementing any of the recommendations we have offered and
thank the committee for this opportunity to comment. And we
will be glad to answer questions.
[The prepared statement of John D. Golenski follows:]
Prepared Statement of John D. Golenski, RxHealthValue
Mr. Chairman, Members of the Committee, I am John D. Golenski,
Executive Director of RxHealthValue, a national coalition of consumer
groups, labor unions, provider groups, business groups and employers,
insurers and health plans, pharmacy benefits management organizations,
and academic researchers committed to improving Americans' access to
health-improving prescription drugs. (Our membership list is appended
below.) As you can understand, a deliberative body comprised of nearly
30 organizations will rarely arrive at full consensus regarding any
issue. Remarkably, our membership has achieved consensus regarding the
recommendations I am offering regarding Direct-to- Consumer (DTC)
advertising of prescription drugs to consumers and patients. I believe
the fact of these consensus recommendations indicates the fundamental
importance of this issue for the members of RxHealthValue. It is our
belief that this form of advertising affects the health and safety of
American patients and consumers.
The tremendous increase in the extent of DTC advertising of
prescription drugs since the FDA removed the requirement for the
``brief summary'' of risk information in 1997 1 is well
documented.2 It is almost impossible to open a general news
magazine, view a prime time television program or listen to the radio
and not see or hear advertising for prescription drugs. Given that the
prescribing physician is the decision-maker regarding the use of these
medications, it is all the more startling that so many resources are
expended by drug manufacturers to affect the attitudes of consumers and
patients. Although there is little evidence 3 currently
available regarding whether consumer and patient attitudes affect
physician choice in prescribing, no stakeholders in the health system
and health economy have suggested that the impact of such advertising
is insubstantial. Given the FDA's expressed interest in assessing the
effects of DTC advertising, we expect more direct evidence of impact
will be available in the near term future.
---------------------------------------------------------------------------
\1\ Draft Guidance for Industry: Consumer Directed Broadcast
Advertisements: Availability. Federal Register 1997; 62:43171.
\2\ Findlay, Stephen. Prescription Drugs and Mass Media
Advertising. NIHCM, Sept. 2000.
\3\ Bero, Lisa A. & Lipton, Shira. Methods for Studying the Effects
of Direct-to-Consumer Pharmaceutical Advertising on Health Outcomes and
Health Services Utilization. (Paper to be presented at ASPE Conference
on Methods to Assess Effects of DTC Advertising, May 30, 2001).
---------------------------------------------------------------------------
While we await the results of planned and pending studies on the
effects of DTC advertising on the attitudes, behaviors and medical
outcomes of consumers and patients, RxHealthValue members are concerned
that risk information in particular is not adequately or effectively
conveyed in DTC advertising. One of our member organizations, AARP,
recently conducted a survey of members to assess the impact of DTC
advertising 4 finding that nearly a third of those surveyed
could not recall ever seeing risk information in the ads. Two thirds of
the survey population felt the information presented in such
advertising was not particularly helpful in assessing recommendations
about whether to take prescription medications. This poses a serious
safety risk to consumers and patients. In our first recommendations to
the FDA, presented publically one year ago at the National Press Club,
RxHealthValue emphasized the fundamental importance of protecting the
safety of patients and consumers who are confronted by DTC
advertising.5
---------------------------------------------------------------------------
\4\ Foley, Lisa A. & Gross, David J. Are Consumers Well Informed
About Prescription Drugs? The Impact of Printed Direct-to-Consumer
Advertising. AARO: Public Policy Institute, April 2000.
\5\ Policy Recommendations. RxHealthValue May 10, 2000.
---------------------------------------------------------------------------
Thus, RxHealthValue recommends that the Congress direct the FDA:
To convene a task force of key stakeholders, including the
pharmaceutical manufacturers who advertise prescription drugs,
as well as consumer groups, patient organizations, provider
groups, payers and relevant experts, to develop and test
standards for information disclosure in DTC advertising.
To more carefully define the concrete meaning of ``fair
balance'' in disclosing benefits and risks of advertised
medications to include disclosure of other appropriate
therapies in addition to alternative medications.
To further define ``fair balance'' to mean that full
disclosure of risks and side effects be given equal print and
air time as the description of benefits in the same
communication.
RxHealthValue recommends that the Congress direct that the
appropriate agencies of the Federal Government conduct on-going
research to evaluate the effects of DTC advertising on the health of
American consumers and patients. It is a given that many Americans
appreciate the increased awareness of diseases and conditions and
potential therapies which DTC advertising makes possible. It is also
true that such advertising can obscure potential hazards of the
pharmaceutical advertised and neglect the relative value of other forms
of therapy. Only thorough, independent research can demonstrate the
differential impact of such advertising upon the health choices of
American patients and physicians.
In conclusion, the members of RxHealthValue applaud the Committee
for engaging this dialogue about the effects of this increasingly
pervasive influence on the therapeutic choices of American consumers
and patients. We pledge our assistance in implementing any of the
recommendations we have offered and thank the Committee for this
opportunity to comment.
Mr. Deal. Thank you, sir.
Mr. Geiser.
STATEMENT OF THOMAS GEISER
Mr. Geiser. Mr. Chairman and members of the committee, I'm
Thomas Geiser, General Counsel of WellPoint Health Networks.
I'm here with Dr. Robert Seidman, our chief pharmacy officer
who is also available to answer your questions today.
Three years ago Dr. Seidman wrote a letter to the Food and
Drug Administration pointing out that the safety profiles of
the prescription allergy drugs Claritin, Zyrtec and Allegra may
have been candidates for a switch to over-the-counter status.
He asked that the FDA consider his letter a citizen's petition
for FDA to undertake the switch. On May 11, 2001 the FDA
convened an expert advisory committee to determine whether
Claritin, Allegra and Zyrtec were safe for OTC use. The FDA
noted that the other conditions for OTC use that laypeople
could self diagnose allergies, that appropriate labeling could
be prepared and that the products were effective to relieve the
symptoms of allergic rhinitis, that is runny nose, itchy watery
eyes had already been settled. What remained for the expert
advisory committee to determine was that the drugs were safe
for use by laypeople OTC.
After hearing testimony from two of the three drug
manufacturers from WellPoint and from other interested parties
for a full day, the expert committee voted overwhelming that
each of the drugs was, indeed, safe for OTC use.
Most importantly, these products surpassed the safety
profiles of drugs already available OTC for use in connection
with allergies. More than 1000 combinations of antihistamine
products that were once Rx are now available OTC. These first-
generation products have more significant side-effects,
including drowsiness, dizziness, blurred vision, and dry mouth
than any of the second-generation prescription antihistamines.
The FDA's expert advisory committee noted their superior safety
profiles throughout the discussion at the hearing.
We were asked by this committee today to address the legal
authority of the FDA to switch prescription drugs to OTC use as
a result of a citizen's petition such as that provided by
WellPoint. A number of comments submitted to the FDA in
connection with the May 11 hearing questioned the FDA's
authority to make such a switch, and therefore WellPoint has
submitted to the FDA a supplement to our citizen's petition to
address those comments. The text of the supplement's contained
in my written statement, which I'd like to summarize for you.
The Food, Drug and Cosmetic Act and the FDA's implementing
regulations make it clear that Congress gave FDA the expressed
legal authority to compel a switch from Rx to OTC status. Under
the statute drugs are to be marked OTC with adequate directions
for use by the lay public, unless they're exempted from this
requirement. Section 502(f) of the Act states that a drug is
misbranded unless it bears adequate directions for use.
Section 503(b) in turn grants the FDA the authority to
exempt prescription drugs from the adequate directions for use
requirement when a drug is safe for use only under the
supervision of a medical practitioner.
Viewed in combination, these sections show that Congress
intended that all drugs, unless exempted, bear directions for
use that permit the lay public to use the drug safely OTC.
Now within the framework where all drugs must be available
OTC unless exempted, the Act also grants FDA the authority to
switch a product to OTC use where the product no longer fits
the prescription labeling exemption. Again, the statutory grant
of this authority is very, very clear. Section 503(b)(3)
provides that the Secretary may by regulation remove drugs
subject to Section 505--that's the new drug application
section--when the requirements of paragraph 1 of this
subsection--that is the prescription labeling exemption--when
such requirements are not necessary for the protection of the
public health.
Based on the plain meaning of the statute, it's difficult
for me to come to any conclusion other than that Congress
intended to grant the FDA the authority to perform the type of
action we have requested. In addition, under its regulations,
the FDA is actually required to make a switch when the agency
finds that the exemption is no longer necessary to protect the
public health. The regulation, like the statute, I believe is
very clear and unambiguous. It reads ``Any drug limited to
prescription use shall be exempted from prescription dispensing
requirements when the Commissioner finds such requirements are
not necessary for the protection of the public health.''
Furthermore, the regulation states that the proposal to
switch may be initiated by the Commissioner or by any
interested party.
We believe the plain meaning of both the statute and the
regulations could not be more clear.
In conclusion, the Food, Drug and Cosmetic Act, under that
Act the FDA clearly poses statutory authority to initiate a
switch. And, in fact, under its own regulations the FDA is
actually required to initiate the switch when the Rx only
requirement is not necessary for the protection of the public
health.
Mr. Chairman, Dr. Seidman and I would be happy to answer
any questions the members of the committee may have.
[The prepared statement of Thomas Geiser follows:]
Prepared Statement of Thomas Geiser, General Counsel, WellPoint Health
Networks, Inc.
Mr. Chairman and members of the Committee. My name is Thomas Geiser
and I am the General Counsel for WellPoint Health Networks, Inc.
WellPoint Health Networks (``WellPoint'') serves the health care needs
of nearly 9.8 million medical and more than 40 million specialty
members nationally through Blue Cross of California, Blue Cross and
Blue Shield of Georgia, and UNICARE. I am pleased to have the
opportunity to testify before you today regarding WellPoint's Citizen
Petition to the Food and Drug Administration (``FDA'').
Let me introduce to you Rob Seidman, PharmD, MPH, our Chief
Pharmacy Officer. Three years ago, in 1998, as Vice President of
Pharmacy for Blue Cross of California, Dr. Seidman wrote a letter to
the FDA pointing out that the safety profiles of the prescription
(``Rx'') allergy drugs Allegra, Claritin, and Zyrtec made them
candidates for a switch to over-the-counter (``OTC'') status. He asked
that the FDA consider his letter, which is appended to our testimony, a
Citizen Petition for FDA to undertake the switch. Six months later, Dr.
Seidman received a reply from the FDA, which said that it was studying
the issue. Eighteen more months passed, and last June (2000) the FDA
held a two-day hearing, at which Dr. Seidman testified, on the process
of switching a variety of types of drugs from Rx to OTC status.
In May this year, the FDA convened a joint meeting of two expert
advisory committees to determine whether Allegra, Claritin and Zyrtec
were safe for OTC use. The FDA noted that the two additional conditions
for OTC use--that lay people could self-diagnose allergies and use
appropriately labeled OTC antihistamines safely without supervision of
a licensed professional--had already been settled. What remained for
the advisory committees to determine was that the drugs were safe for
use by lay people OTC. After reviewing volumes of medical data
collected over many years and hearing testimony from two of the three
drug manufacturers, WellPoint, and other interested parties for a full
day, the two committees voted overwhelmingly that each of the three
drugs was, indeed, safe for OTC use. We have attached WellPoint's May
11 presentation to today's testimony for your reference.
In fact, these products surpass the safety profiles of drugs
already available for use in the treatment of allergies OTC. More than
100 combinations of antihistamine products that were once Rx are now
available OTC. These first-generation products have more significant
side effects, including drowsiness, dizziness, blurred vision, and dry
mouth, than any of the three leading second-generation prescription
antihistamines. The FDA's advisory panels noted their superior safety
profiles throughout discussion at the hearing.
We were asked by the Committee today to address the legal authority
of the FDA to effectuate the conversion of prescription drugs to OTC
use as a result of a Citizen Petition. A number of comments submitted
to the FDA contested the FDA's authority to make such a switch, and so
WellPoint has submitted to the FDA a supplement to our Citizen Petition
to address those comments. The text of that supplement is restated
below and will constitute the bulk of my testimony.
Whether a switch is initiated by a manufacturer, the FDA, or a
third party through a Citizen Petition, it is WellPoint's position that
the FDA has express legal authority to compel a switch to OTC status
from Rx if the FDA finds that a given drug or drugs meet the
requirements NOT to be exempted from the labeling requirements for OTC
drugs. Indeed, we would argue that the Food, Drug, and Cosmetics Act
(``FDCA'' or the ``Act''), as amended, requires the FDA to make the
switch. These arguments are outlined below.
summary
On July 22, 1998, WellPoint (through its subsidiary Blue Cross of
California) submitted a Citizen Petition requesting that the FDA remove
the prescription exemption for three second-generation antihistamines:
Allegra' and Allegra-D' (fexofenadine),
Claritin' and Claritin-D' (loratidine), and
Zyrtec' (cetirizine). On May 11, 2001, the FDA convened the
Non-Prescription Drugs Advisory Committee and the Pulmonary-Allergy
Drug Advisory Committee for a joint meeting and vote on whether the
above three allergy drugs were safe and effective for OTC status. See
66 Fed. Reg. 17,431 (March 20, 2001). The two committees voted
overwhelmingly that the data presented demonstrated that the 2nd
generation antihistamine products were safe and that adequate
directions for use by the lay public can be developed for OTC
use.1
---------------------------------------------------------------------------
\1\ The advisory committee's votes were 19-4 for Claritin and
Zyrtec and 18-5 for Allegra.
---------------------------------------------------------------------------
Despite the overwhelming votes by the scientific expert advisory
committees that the safety data fully support an OTC switch for these
products, there have been comments suggesting that either the FDA does
not have the legal authority to initiate a switch of its own accord, or
that for reasons not related to safety and effectiveness, the agency
should choose not to initiate such a switch. However, an analysis of
both the FDCA and FDA's implementing regulations demonstrate that not
only does the FDA possess the statutory authority to initiate a switch,
but under the FDA's regulations the Agency is required to initiate a
switch when it finds that ``such requirements are not necessary for the
protection of the public health by reason of the drug's toxicity or
other potentiality for harmful effect, or the method of its use, or the
collateral measures necessary to its use, and [the Commissioner] finds
that the drug is safe and effective for use in self-medication as
directed in proposed labeling.'' See 21 CFR Sec. 310.200. The FDA
acknowledged as much in its April 5, 2001, Memorandum on the Advisory
Committee Meeting to Discuss OTC Antihistamines when it stated that it
interprets the FDCA to mean, ``any drug that can be used safely over
the counter should be.''
For the reasons explained below, because: (1) the safety and
effectiveness of these 2nd generation antihistamine drug products have
been examined by a committee of scientific experts and by overwhelming
majority were found to be safe and effective for OTC drug use; (2) the
FDA clearly possesses the statutory and regulatory authority; and (3)
there has been ample opportunity for substantive public input and
comment, the agency should, without due delay, initiate a switch from
Rx to OTC status for these 2nd generation antihistamine drug products
since the Rx exemption from adequate directions for use is no longer
necessary for the protection of public health.
i. the federal food, drug, and cosmetic act establishes a clear mandate
that all drug products must be sold otc unless they meet the exemption
criteria for prescription classification
Section 502(f) of the FDCA states that a drug is misbranded unless
its labeling bears:
(1) adequate directions for use; and
(2) such adequate warnings against use in those pathological
conditions or by children where its use may be dangerous to
health, or against unsafe dosage or methods or duration of
administration or application, in such manner and form, as are
necessary for the protection of users . . .
Provided, that where any requirement of clause (1) is not
necessary . . . [FDA] shall promulgate regulations exempting
[the product].
21 U.S.C. Sec. 352(f). This section was passed in the original 1938 Act
in order to protect the public from drugs that did not clearly explain
their usage or potential dangers and required all such drugs to bear
labeling that the lay public could understand. Although the Act has
undergone significant changes since its passage in 1938, this provision
has never been removed. FDA regulations have documented this
interpretation by defining ``adequate directions for use'' as
``directions under which the layman can use a drug safely and for the
purposes under which it is intended.'' See 21 CFR Sec. 201.5. Thus,
under this provision of the Act, all drug products, unless exempt, are
to be labeled OTC with adequate directions for use for the average
consumer.
Section 503(b) of the Act provides a definition of an Rx drug and
then authorizes the exemption from the OTC labeling requirement for Rx
drugs. This section reads:
A drug intended for use by man which--
(A) because of its toxicity or other potentiality for harmful
effect, or the method of its use, or the collateral measures
necessary to its use, is not safe for use except under the
supervision of a practitioner licensed by law to administer
such drug; or
(B) is limited by an approved application under section 355
of this title to use under the professional supervision of a
practitioner licensed by law to administer such drug;
hall be dispensed only upon a written prescription of a
practitioner licensed by law to administer such drug . . .
* * *
Any drug dispensed by filling or refilling a written or oral
prescription of a practitioner licensed by law to administer
such drug shall be exempt from the [adequate directions for
use], if the drug bears a label containing the name and address
of the dispenser, the serial number and date of the
prescription or of its filling, the name of the prescriber,
and, if stated in the prescription, the name of the patient,
and the directions for use and cautionary statements, if any,
contained in such prescription.
21 U.S.C. Sec. 353(b). This section provides a classification structure
for Rx drugs, grants an exemption from OTC labeling requirements, and
authorizes separate Rx labeling for products dispensed upon the
prescription of a licensed practitioner.
Viewed in combination, these two sections unequivocally demonstrate
that Congress intended that all drugs, unless exempted, bear directions
for use that permit the lay consumer to use the drug safely OTC. An
analysis of the legislative history of the Act further supports this
analysis.2
---------------------------------------------------------------------------
\2\ Comments from the statement of Sen. Copeland shed light on what
Congress was attempting to do, ``There is no more common or mistaken
criticism of this bill than that it denies the right to self-
medication, or as the objector usually fit it, ``You can't take an
aspirin tablet with a doctor's prescription.'' Nothing could be further
from the truth. The proposed law simply contributes to the safety of
self-medication by preventing medicines from being sold as ``cures''
unless they are really cures . . . There must be plain and explicit
directions for use, as well as warnings that in certain pathological
conditions the use of drugs would not be safe . . . When public health
cannot be protected otherwise, the bill authorizes control through
licensing.'' 79 Cong. Rec. 4567 (1934) (reprinted in, Charles Wesley
Dunn, Federal Food, Drug, and Cosmetic Act: A Statement of Its
Legislative Record 90 (FDLI 1987)). Sen. Copeland further stated, ``It
requires that all drugs bear explicit directions for use and
appropriate warnings against their consumption by children or in
certain disease conditions where the use is contra indicated and may be
dangerous to health.'' Id. at 162.
Comments of Mr. Walter G. Campbell, Chief of the Food and Drug
Administration of the Department of Agriculture, ``But what is desired
by this particular paragraph [requiring that the product bear the
common name of the drug and the ingredients] and by others which impose
restrictions on statements made about the remedial properties of the
drugs is to make self-medication safe.'' Id.
---------------------------------------------------------------------------
Although today most new drugs that are approved under section 505
of the FDCA are exempted from the adequate directions for use provision
because they are found unsafe for use except under the supervision of a
medical practitioner and thus have the ``Rx Only'' designation, this
longstanding statutory scheme and classification system has (1) served
as the foundation for development of product labeling, (2) despite many
changes to the FDCA, has never been removed or questioned by Congress;
and (3) is only being questioned by certain factions of the
pharmaceutical industry in the effort to prevent wide access to the 2nd
generation antihistamines.
ii. the fdca is clear in its granting of this authority to the fda
A. The FDCA Clearly and Unambiguously Grants the FDA the Authority to
Remove Drugs Subject to Section 505 From the Prescription
Labeling Requirements
Section 503(b)(3) of the FDCA grants the agency the clear authority
to remove drugs that have been approved by the new drug application
(``NDA'') process from the prescription labeling requirement where it
is no longer necessary to protect the public health. It states:
[FDA] may by regulation remove drugs subject to section 505
[i.e., NDAs] from the requirements of paragraph (1) of this
subsection [the prescription labeling exemption] when such
requirements are not necessary for the protection of the public
health.
21 U.S.C. Sec. 503(b)(3).
This section of the Act was added in 1951 by the Durham-Humphrey
Amendment (``DH Amendment''). See ch. 578 Sec. 1, 65 Stat. 648 (Oct.
26, 1951).3 Congress passed the DH Amendment to give the FDA
greater authority over the labeling of products which due to the
circumstances of the time had created inconsistencies among similar or
even identical products. Its stated dual purposes were to (1) protect
the public from abuses in the sale of potent prescription drugs and (2)
to relieve pharmacists and the public from unnecessary restrictions on
the dispensing of drugs that are safe for use without the supervision
of a physician. See Sen. R. No. 946 at 1, reprinted in 1951
U.S.C.C.A.N. 2454. The clear language of this statutory provision and
its underlying purpose is applicable to the situation presented in the
WellPoint petition, as it was to the situation that existed when the
provision was promulgated in 1951. In the instant situation,
pharmacists and the public should be and would greatly benefit from
being relieved from unnecessary restrictions on the dispensing of
drugs, i.e., the 2nd generation antihistamines that are safe for use
without the supervision of a physician.
---------------------------------------------------------------------------
\3\ The 1938 Act had set up a new drug application process whereby
manufacturers would submit an NDA and unless FDA objected to the
application, it would be deemed approved. Thus, the DH Amendment was
passed during a period where many new drug applications had become
effective by the NDA process. In addition to these drug ``approvals,''
large numbers of products came onto the market as ``me-too'' versions
of drugs already marketed, where manufacturers concluded on their own
that their products were ``generally recognized as safe.'' As a result
of this system, at the time of the DH Amendment, it was not unusual for
numerous drug products, each with the same active ingredient, each
bearing different labeling. In fact, it was not unusual for some
products to be labeled as prescription while others with the same
active ingredient were marketed as OTC.
---------------------------------------------------------------------------
B. When the Statute's Plain Meaning is Clear and Unambiguous the
Analysis Stops
Under the well-established laws of statutory interpretation, when
the statute is clear and unambiguous in its granting of authority,
there is no need to conduct any further analysis. That is the case in
the instant situation. The FDCA clearly grants the agency the authority
to remove the exemption from adequate directions for use. When the
plain meaning of the statute is clear and unambiguous, the inquiry must
end.
Chevron Step I--Under Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984), courts employ a two-step
test in determining whether an agency has presented a permissible
interpretation of a statute it administers. See id. at 842-43. First,
courts consider the plain meaning of the statute. The plain meaning of
a statute is derived from both the statutory language itself ``as well
as the language and design of the statute as a whole.'' See K Mart
Corp. v. Carter, Inc., 486 U.S. 281, 291 (1988); Bethesda Hospital
Ass'n. v. Bowen, 485 U.S. 399, 403-405 (1988). If the court determines
that Congress has spoken to the precise question presented by the
parties, the court must give effect to the unambiguously expressed
intent of Congress. See Chevron, 467 U.S. at 842.
Congress clearly and unambiguously granted FDA the authority to
remove the prescription exemption when it said ``[FDA] may by
regulation remove drugs subject to section 505 . . .'' It is difficult
to imagine a more clear, concise, and unambiguous statement than
section 503(b)(3) of the Act. The plain meaning of the statute makes it
wholly unnecessary and inappropriate to look any further beyond the
language of the statute.
C. Assuming Arguendo that the Statute is Ambiguous, the FDA's
Interpretation is Followed as long as it is Reasonable
Chevron Step II--Although the statute is clear on its face,
assuming for the sake of argument that section 503(b)(3) is ambiguous
in its granting of authority, the FDA's regulations at Sec. 310.200 are
a reasonable and permissible interpretation of the statute.
If a court determines that Congress has not spoken to the precise
issue because ``the statute is silent or ambiguous with respect to the
specific issue,'' the court advances to the second step of Chevron. See
Chevron, 467 U.S. at 843. Under Chevron step two, the court determines
whether the agency's answer is based on a permissible construction of
the statute. Id. Chevron step two is not invoked when the court first
encounters a potential ambiguity:
[G]iven that the judiciary remains the ``final authority on
issues of statutory construction,'' abdication of that
authority and deference to an administrative construction is
legitimate only where the court confronts a gap in the statute
that cannot be bridged by traditional tools of statutory
construction and which can properly be characterized as an
express or implied delegation of authority by Congress to an
agency.
See Abbott Lab. v. Young, 920 F.2d 984, 995 (D.C. Cir. 1990) (Edwards,
C. J., dissenting o.g.) (citing Chevron, 467 U.S. at 843 n. 9).
If, however, the court advances to Chevron step two, the court must
defer to the agency's reasonable interpretation so long as it does not
conflict with the statute's plain meaning. See K Mart, 486 U.S. at 281.
With respect to section 503(b)(3), although it is difficult to discern
any ambiguity, to the extent there may be an ambiguity in the statute,
the agency's regulatory interpretation in 21 CFR Sec. 310.200 is
clearly reasonable.
Given that statute is so clear and unambiguous on this issue it is
not surprising that other comments have argued not that the statute
does not grant FDA the authority, but rather that the statute does not
really mean what it clearly says. Such arguments should be dismissed.
Attempts have also been made to argue that the section is obsolete, or
has been superseded. Such arguments are also without merit however,
since Congress has several times made major alterations to the statute
(including 1962, 1984, and 1997) which did not include or even
contemplate removing this section. Further, whether an agency has used
its power in the past has no bearing on whether it possesses that power
in the first instance. See Jones Et Ex. v. Alfred H. Mayer Co., 392
U.S. 409, 437 (1968); Sanders v. Dobbs Houses, Inc, 431 F.2d 1097 (5th
Cir. 1970).
iii. fda's implementing regulations give it clear authority to remove
the labeling exemption for products that are safe for use without
medical supervision and in fact require it to do so when the exemption
is no longer necessary
A. The FDA's Regulations Require the Agency to Switch a Product to OTC
Status When Prescription Labeling Is No Longer Necessary for
the Protection of Public Health and Authorize the Agency to Do
So On Its Own Initiative
With a classification system where drugs are presumptively OTC, it
is not surprising that the statute and FDA regulations permit the
agency to switch a product from Rx to OTC status where Rx labeling is
no longer necessary to protect the public health. In spite of several
comments challenging this authority, not only does the statute permit
FDA to make such an Rx to OTC switch, but the FDA's implementing
regulations require that the FDA remove the prescription drug
dispensing requirements when it finds the requirements are no longer
necessary for the protection of public health. 21 CFR Sec. 310.200
reads:
[a]ny drug limited to prescription use [under the FDCA] shall
be exempted from prescription-dispensing requirements when the
Commissioner finds such requirements are not necessary for the
protection of the public health by reason of the drug's
toxicity or other potentiality for harmful effect, or the
method of its use, or the collateral measures necessary to its
use, and he finds that the drug is safe and effective for use
in self-medication as directed in proposed labeling. A proposal
to exempt a drug from the prescription-dispensing requirements
of section 503(b)(1)(C) of the act may be initiated by the
Commissioner or by any interested person. Any interested person
may file a petition seeking such exemption, which petition may
be pursuant to part 10 of this chapter, or in the form of a
supplement to an approved new drug application
21 CFR Sec. 310.200 (emphasis added).
This regulation is consistent with the FDCA's granting of this
authority in section 503(b)(3) and the Act's presumption that drug
products should be available to consumers OTC if medical supervision is
not required.
Certain comments have stated that the Kefauver-Harris Drug
Amendments (``KH Amendments'') in 1962 fundamentally altered the FDCA
so that section 503(b)(3) and its implementing regulations were
rendered ineffective. This argument is belied by an examination of the
history and timing of 21 CFR Sec. 310.200. In fact, the regulation
stating FDA shall switch products OTC when the agency finds the
restrictions are no longer necessary was proposed in 1963, shortly
after the passage of the KH Amendments. See 28 Fed. Reg. 1449 (February
14, 1963). This disputes any argument that the KH Amendments so altered
section 503(b)(3) as to render them inoperative. Based on the final and
proposed rule it is clear that FDA considered the KH Amendments
consistent with their authority to mandate an Rx to OTC switch. The
final rule published on June 20, 1963 is substantially similar to that
which remains today.
The provisions of the final rule published on June 20, 1963 are set
forth below:
Any drug limited to prescription use under section
503(b)(1)(c) of the act shall be exempted from prescription-
dispensing requirements when the Commissioner finds such
requirements are not necessary for the protection of the public
health by reason of the drug's toxicity or other potentiality
for harmful effect, or the method of its use, or the collateral
measure necessary to its use, and he finds that the drug is
safe and effective for use in self-medication as directed from
proposed labeling. A proposal to exempt a drug from the
prescription-dispensing requirements of section 503(b)(1)(c) of
the Act may be initiated by the Commissioner or by any
interested person. Any interested person may file a petition
seeking such exemption, stating reasonable grounds therefor,
which petition may be in the form of a supplement to an
approved new-drug application. Upon receipt of such a petition,
or on his own initiative at any time, the Commissioner will
publish a notice of proposed rule making and invite written
comments. After consideration of all available data, including
any comments submitted, the Commissioner may issue a regulation
granting or refusing the exemption, effective on a date
specified therein''.
21 CFR Sec. 130.101 (published at 28 Fed. Reg. at 6385 (June 20, 1963),
(emphasis added).4
---------------------------------------------------------------------------
\4\ 21 CFR Sec. 130.101 was re-codified by the agency in 1974 and
is now Sec. 310.200. See 39 Fed. Reg. 11,680 (March 29, 1974).
---------------------------------------------------------------------------
Thirteen years later, the FDA again opined on this regulation. In
1976, the agency published a final rule on the OTC review procedure
found at Part 330. See 41 Fed. Reg. 32,580 (August 4, 1976). In the
proposed rule the FDA outlined the two procedures ``by which a
prescription drug ingredient may lawfully be marketed for OTC use.''
See 40 Fed. Reg. 56,675 (December 4, 1975). In the preamble the agency
explains:
Prior to the OTC drug review, the procedures for obtaining
approval to market a prescription ingredient as an OTC
ingredient were by petition to the [FDA] following procedures
set forth under Sec. 310.200 . . . This procedure may be
initiated by the Commissioner or by a petition from any
interested person . . .
Id. Section 310.200 clearly grants the FDA the authority for the type
of switch requested by WellPoint and arguments that it is an obsolete
provision are not supported by the FDA's actions and preambles to its
regulations. Moreover, the FDA's regulations were promulgated through
notice and comment rulemaking. The final regulations were adopted
without any substantive comments from the industry or public. The only
comments have come forth recently, after the expert advisory panel
voted that the 2nd generation antihistamines are safe and can be
adequately labeled for OTC use.
B. The Regulations Do Not Require that A Manufacturer Consent to a
Switch in a Product's Status from Rx to OTC
The regulations require a medical, scientific and factual based
inquiry to determine whether Rx labeling is required for the protection
of public health. Once these protections are no longer medically/
scientifically justified, the regulations specify they should be
removed. For this reason, the regulations do not require that a switch
be initiated by the drug manufacturer or that the manufacturer agrees
to the proposal. Although for obvious reasons in such a situation it is
preferable that the manufacturer concurs with the switch, there is no
basis in either the regulations or the statute for a manufacturer to be
permitted to ignore a determination that Rx labeling is no longer
necessary for the product. Clearly, the manufacturers of Allegra,
Claritin and Zyrtec have a right to be heard and submit data on the
issue, but it is the FDA and not the drug manufacturers who have the
final say on whether a product is safe and effective or in this case
whether is a product is safe and effective for self-medication. Both
Schering and Aventis were unable to specifically identify any safety
concern or study, whether contemplated or underway, to address a safety
concern with respect to the OTC marketing of the products. Two expert
scientific advisory committees have reviewed the data, evaluated the
issues presented by Pfizer, Schering, Aventis and the FDA, and voted
overwhelmingly that Allegra, Claritin and Zyrtec are safe for OTC use.
iv. the comments are incorrect when they claim that removal of the
exemption is a deprivation of property
A. Companies May Possess a ``Property Right'' in Their Approval and
Proprietary Data
Several comments have argued that drug companies possess a
``property right'' in the ownership of a drug's approval and the data
contained in the NDA. This fact is not disputed. The issue is whether
the switch in labeling from Rx to OTC would be considered a regulatory
``taking.'' It is clear that no court has ever found a government
``taking'' in a regulatory switch of a product's marketing status from
Rx to OTC. This seems logical since in most cases such a switch is
desired by the drug manufacturer because such a switch may lead to
further exclusivity 5 and/or increased sales.
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\5\ At the May 11, 2001 Advisory Committee meeting, Agency staff
clearly stated that no additional information would be essential for
approval of the switch. Thus, the companies would not be eligible for
three years of market exclusivity under Section 505(j)(5)(D)(iv).
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The Supreme Court has treated the issue of whether a taking has
occurred as ``essentially an `ad hoc, factual,' inquiry . . . [but] has
identified several factors that should be taken into account when
determining whether a governmental action has gone beyond `regulation'
and effects a `taking'.'' Ruckelshaus v. Monsanto Co., 467 U.S. 986,
1005 (1984). This examination entails inquiry into such factors as the
``character of the governmental action, its economic impact, and its
interference with reasonable investment-backed expectations.'' Id. A
taking has been held to not only include an actually physical invasion
of property but also an action the effect of which is to deprive the
owner of all or most of his or her interest in the subject matter. See
United States v. General Motors Corp., 323 U.S. 373 (1945). The claim
that a switch in regulatory status of a drug from Rx to OTC is a
``taking'' is a novel legal argument, but ultimately meritless.
B. The Comments are Mistaken in Their Belief that the Removal of the
Prescription Drug Exemption Would Constitute a ``Deprivation of
Property''
As noted above, a ``takings'' claim here would be predicated on the
belief that a change in marketing status from Rx to OTC would
constitute a ``deprivation of property.'' It may be helpful here to
note initially what changes the agency could require in order to
effectuate a change, and conversely what types of changes the agency
cannot compel under a switch.
Changes that would be required:
removal of Rx designation;
proposed labeling for OTC use
The status quo (i.e., things that would not be changed):
FDA's decision would have no effect on the validity of the
patents or any other exclusivity on the product (i.e., generic
competition would not be introduced);
FDA's decision would have no effect on the price at which the
product may be sold;
FDA's decision would not require FDA to disclose trade secret
or privileged information;
Although no court has ruled on this specific issue, an examination
of other takings clause cases that are similar demonstrates that a
takings claim in this case has no merit. In the Ruckelshaus case cited
above, the Monsanto Company objected to the Environmental Protection
Agency (``EPA'') using its safety data to evaluate another application
for registration. Ruckelshaus is easily distinguished from an Rx-to-OTC
switch because in such a switch, the agency action does not involve
using a company's ``property right'' for the benefit of another party.
It is simply a change in the marketing status of the drug to be
available without a prescription. Further still, in Ruckelshaus the
Supreme Court determined that Monsanto, while possessing a property
right in its data, did not have a takings claim where Monsanto was
``aware of the conditions under which the data are submitted, and the
conditions are rationally related to a legitimate Government interest,
a voluntary submission of data by an applicant in exchange for the
economic advantages of a registration can hardly be called a taking''
Ruckelshaus, 467 U.S. at 1007. These ``conditions'' included the fact
that the data could be used with out Monsanto's permission.
Similarly, a drug is marketed as an Rx drug only under certain
conditions. If a drug no longer meets the conditions upon which an
exemption from adequate directions for use was granted, it must be
regulated as an OTC drug. As with Monsanto, this regulatory condition
is well known by drug companies and often utilized to their benefit.
Therefore, as in Ruckelshaus, it is no ``taking'' to change the
regulatory status of a drug product, even if the drug company objects
to the switch. To further support this position, it is also clear that
the regulatory action has no effect on the companies' ability to market
or sell the product. For these reasons it is clear that neither the
character of the act, nor the economic impact, fit into the category of
actions that would constitute a regulatory taking.
v. when promulgating regulations specifically related to the requested
removal of the prescription status exemption, fda is not required to
disclose information that is subject to trade secret protection.
Comments have argued that under the APA, FDA must publicly disclose
the data upon which any proposed rule is based. However, no trade
secret data must be disclosed by FDA in order to promulgate a
regulation removing the exemption from adequate directions for use. Of
course, the general disclosure rules exempts the disclose of trade
secret information.6 It is well known that certain data and
information in an NDA is trade secret protected.7 However,
these comments fail to note that much of the information contained in
an NDA is not protected as trade secret information and in fact is
disclosable under the Freedom of Information Act. See 5 U.S.C. Sec. 552
et seq. Under 21 CFR Sec. 314.430, the following information contained
in an NDA is already made available to the public:
---------------------------------------------------------------------------
\6\ See United States v. Nova Scotia Food Products Corp. 568 F.2d
240, 251 (2d Cir. 1977) (the general rule is that an agency disclose
scientific material that is the basis of a rule making, but there is
``an exception for trade secrets or national security'').
\7\ See 21 CFR Sec. 20.61 for FDA's definition of ``trade secret''
and ``commercial or financial information which is privileged or
confidential.''
the summary basis of approval;
study protocols;
adverse event reports;
lists of inactive ingredients;
assay methods; and
correspondence and summaries of verbal communications with
FDA.
Only information that qualifies as trade secret or commercial and
financial information that is confidential is not able to be disclosed.
This information would not be relevant in an Rx to OTC switch. What is
most relevant here is primarily the adverse events reports concerning
the three products. These reports demonstrate a low incidence of
significant adverse reactions associated with the three drug products.
FDA has reviewed the data and presented a summary of the data at the
public advisory committee meeting held on May 11, 2001. This
information is not trade secret protected.
Furthermore, what is relevant in this instance has already been
narrowed by the agency. The agency has not raised any questions as to
the effectiveness of the 2nd generation antihistamines for the relief
of symptoms of allergic rhinitis. The only item at issue is whether the
products are safe for OTC use. This is a much more limited inquiry than
a full NDA approval. The issue of whether trade secret information
needs to be disclosed in order to evaluate this matter has already been
answered. The advisory committee members have fully examined the safety
information provided by the agency and voted on May 11, 2001, by a
overwhelming majority, that these products are safe for OTC use. This
determination did not require the disclosure of trade secret
information. There is no reason that FDA cannot promulgate its
rulemaking without the disclosure of protected information. summary
basis of approval;
vi. the comments' claim of a lack of due process are incorrect in that
the due process requirement is met by the citizen petition and notice
and comment procedure
A. Section 505(e) of the FDCA Requires the FDA to Provide a Formal
Hearing Only When the FDA is Seeking to Withdraw an NDA
Several of the comments to the docket claim that any
``modification'' of an NDA requires the agency to provide a formal
hearing. However, the FDCA and the FDA's implementing regulations do
not provide for a hearing for a ``modification'' of an NDA. In fact,
both the statute and regulations provide for a hearing only when the
FDA proposes to withdraw an NDA. The statute at section 505(e) states
in pertinent part:
[FDA] shall, after due notice and opportunity for hearing to
the applicant, withdraw approval of an application with respect
to any drug under this section if the Secretary finds . . .
21 U.S.C. Sec. 355 (emphasis added). The statute then enumerates five
different situations under which approval can be withdrawn. They are:
1. data shows that the drug is unsafe;
2. new evidence shows that the drug is not safe;
3. new information shows that the drug is not effective;
4. patent information was not timely filed; and,
5. the application contains an untrue statement of material fact.
Id.8 If the FDA proposes to withdraw an NDA based on one of
the above reasons, a formal evidentiary hearing is required. However,
the statute does not require a hearing for a proposal to modify an
application, i.e., a change from Rx to OTC status or for any other
change to an application other than withdrawal. As the FDA is not
proposing to withdraw approval of any of these products, section 505(e)
is inapplicable.
---------------------------------------------------------------------------
\8\ FDA's regulations at 21 CFR Sec. 314.150 provide a hearing only
for situations where the agency has proposed to withdraw an
application.
---------------------------------------------------------------------------
B. Arguments that the Administrative Procedure Act (``APA'') Requires a
Formal Hearing are Incorrect and Further, Any Due Process
Concerns Are Adequately Addressed In The Notice And Comment
Procedure Utilized In This Process
Several comments have argued that the APA, 5 U.S.C. Sec. 551 et
seq., itself provides an independent source of authority for a hearing
were the FDA to initiate a switch of a product from Rx to OTC. However,
a close examination of the provisions of the APA and relevant case law
demonstrate that this is not correct.
Assuming first that an NDA meets the requirements for a
``license,'' 9 section 558 of the APA provides that,
``except in cases of willfulness or those in which public health,
interest, or safety requires otherwise, the withdrawal, suspension,
revocation, or annulment of a license is lawful only if, before the
institution of agency proceedings therefor, the licensee has been given
notice . . . and opportunity to demonstrate or achieve compliance with
all lawful requirements.'' 5 U.S.C. Sec. 558. Again it is clear that
the switch of a product from Rx to OTC does not constitute the
``withdrawal, suspension, revocation, or annulment'' of a license.
Therefore this provision of the APA is not applicable.
---------------------------------------------------------------------------
\9\ A ``license'' is defined as ``a whole or a part of an agency
permit, certificate, approval, registration, charter, membership,
statutory exemption or other form of permission.'' 5 U.S.C.
Sec. 551(8).
---------------------------------------------------------------------------
Under the APA an agency may act through either rulemaking or
adjudicatory procedures. In adjudication, a formal hearing on the
record is required. The adjudication procedures are defined in section
554 of the APA. The adjudication provisions apply, ``in every case of
adjudication required by statute.'' See 5 U.S.C. Sec. 554(a) (emphasis
added). However, the APA in itself ``imposes no requirement of an
adversary hearing before an agency, but only specifies the procedure to
be followed when a hearing is required by some other statute.'' See
Conley Electronics Corp. v. FCC, 394 F.2d 620 (10th Cir. 1968); see
also Democratic Nat'l Committee v. FCC, 460 F.2d, 891, 912 (D.C. Cir.
1972) (``Since there is no requirement of a hearing under the
Communications Act this section of the APA is clearly inapplicable'');
Joseph E. Seagram & Sons, Inc. v. Dillion, 344 F.2d 497, 501 (D.C. Cir.
1965). Since the FDCA does not provide for a hearing in this instance,
and in fact specifies that the agency may ``by regulation,'' remove the
prescription exemption, no hearing is required in this case.
In any event, issues of due process, and notice and comment are
dubious since the Citizen Petition requesting this action has been
pending for three years and no party can claim to not have had an
opportunity for its voice to be heard. Moreover, there has been ample
opportunity to provide input and comment through the public Advisory
Committee meetings that have been held to hear discussion of the
issues. One can only surmise what type of information the drug
companies would provide at a hearing that has not already been provided
to the agency. One wonders whether it is due process at issue or due
delay. To the extent that due process is at issue, the notice and
comment procedure that FDA is required to perform is sufficient to meet
those demands.
In conclusion, under the Food, Drug, and Cosmetic Act and FDA's
implementing regulations the FDA clearly possesses the statutory
authority to initiate a switch and under FDA's regulations, the agency
is required to initiate a switch when the Rx only requirement is not
necessary for the protection of the public health. The statutory and
regulatory scheme has been in effect for a very long time and has
served to protect the health and safety of the public. The Advisory
Committees fully evaluated the scientific evidence and overwhelmingly
voted that Allegra, Claritin, and Zyrtec are safe and can be adequately
labeled for use by the lay public.
INSERT OFFSET FOLIOS 1 TO 31 HERE
Mr. Bilirakis. I am told that Mr. Kingham is the next
witness.
I do want to apologize to all of you for not being here,
but I really couldn't help it.
Please proceed, sir.
STATEMENT OF RICHARD F. KINGHAM
Mr. Kingham. Mr. Chairman and members of the subcommittee,
my name is Richard Kingham, I'm a partner in the law firm of
Covington & Burling in Washington, D.C. specializing in matters
of food and drug regulatory law. I've been practicing in that
field for nearly 30 years and have served in committees of the
National Academy of Sciences, the National Institutes of
Health, the World Health Organization and taught food and drug
law in universities in the United States and the United
Kingdom. And perhaps most relevant, I was counsel to one of the
parties in what I believe remains the only judicial challenge
to an Rx OTC switch in at least my memory.
I appear today on my own behalf, but I do of course
represent pharmaceutical manufacturers in my day-to-day
practice.
I thank you for the opportunity to appear and request that
my written statement be entered into the record.
I start with the premise that as a matter of public health
policy consumers should have access to safe and effective
medicines that can be appropriately used and labeled for self-
care. At the same time, it is absolutely critical that any
switch of a product from prescription to OTC status be
supported by adequate data demonstrating that the products can
be used safely and effectively by consumers without a
physician's supervision.
The manufacturer of the drug is in the best position to
provide this data and the manufacturer's active involvement in
a switch is crucial. Recent proposals to impose a switch
without the manufacturer's support reflect, in my view, poor
public policy and raise serious legal issues. I oppose those
proposals which I believe would depart from 50 years of
precedent concerning OTC switches since the enactment of the
Durham-Humphrey Amendments in 1951.
First, I believe that collaboration between the drug
manufacturer and the FDA is key to any switch. In evaluating a
switch candidate, the FDA requires evidence to show that the
drug is intended to treat a condition that can be self-
diagnosed and self treated, that the drug will be safe and
effective as used in an OTC setting, and that there is a safety
margin based on prior prescription marketing experience. It is
also critical to show that OTC labeling will be understood by
consumers and provide adequate warnings and instructions so
that consumers will not diagnose and self-medicate if they
experience symptoms that should be evaluated by a physician.
A manufacturer's knowledge of all facets of a drug is
indispensable to assessment of whether a drug meets the
standards for a switch. The manufacturer has undertaken and
maintains the full clinical development data concerning the
drug and the manufacturer's in the best position to perform the
new studies that are ordinarily required to support switch from
prescription to nonprescription status. There are significant
issues that can arise when drugs are switched and testing is
ordinarily required to look into those issues. The manufacturer
is the one that carries out those studies.
Simple comparisons of a switch candidate to existing OTC
drugs cannot substitute for genuine study of the drug's safety
and effectiveness under OTC conditions of use and they don't
meet the legal standards for a switch. Current law clearly
provides that drugs must be evaluated on their individual
merits and does not permit comparative assessments of safety or
effectiveness. This makes good sense because attempts to rely
on comparative evaluation of different compounds are prone to
error.
Next, switching a drug over the manufacturer's suggestions
would in my view implicate the manufacturer's established legal
rights under the Federal Food, Drug and Cosmetic Act, under
mantel precepts of administrative law and the United States
Constitution.
A forced OTC switch would fundamentally change the terms of
the manufacturer's approved license for the prescription drug
and upset the settled expectations that the manufacturer had
when it invested in development of the drug. Any compelled
switch would also necessarily rely without the manufacturer's
consent on proprietary data developed by the manufacturer.
These actions would trigger core due process and property
rights issues for the manufacturer and would, at a minimum,
require that the manufacturer be afforded a hearing and
potentially just compensation.
Finally, mandated switches would constitute unprecedented
governmental interference in the drug development and marketing
decisions of private firms. Since the passage of the Durham-
Humphrey Amendments in 1951 FDA has never switched a
prescription product to over-the-counter status over the active
objection of the manufacturer. In the one prominent instance in
which the FDA effectuated a switch without fully consulting all
interested parties including the manufacturer and gaining the
support of the manufacturers, the agency ultimately had to
rescind that decision and the Commissioner of Food and Drug had
to appear in a subcommittee of this committee to explain the
action that the agency had taken.
Departure from the agency's otherwise settled precedent
could seriously disrupt the drug development process. Firms
carefully establish research plans and development strategies
for a product's life cycle. These plans would be jeopardized by
unanticipated switches triggered by a third party. To allow
such a practice would create uncertainty and unnecessarily
complicate the already highly risky business of drug
development. New research and development could be chilled as a
result.
I'll be happy to answer any questions.
[The prepared statement of Richard F. Kingham follows:]
Prepared Statement of Richard F. Kingham, Covington & Burling
Mr. Chairman and Members of the Subcommittee:
My name is Richard F. Kingham. I am a partner at the law firm of
Covington & Burling in Washington, D.C., specializing in matters of
food and drug law and regulation. I have been practicing in the field
for nearly 30 years, and have served on committees of the National
Institutes of Health, the Institute of Medicine of the National Academy
of Sciences, and the World Health Organization. I have lectured on
pharmaceutical regulation at universities in the United States and the
United Kingdom. Although I represent both prescription and
nonprescription drug researchers and manufacturers, I appear today on
my own behalf. I thank the Subcommittee for the opportunity to present
my views on the switching of drugs from prescription to over-the-
counter status.
I start with the premise that, as a matter of basic public health
policy, consumers should have access to safe and effective medicines
that can be appropriately used and labeled for self-care. At the same
time, it is absolutely critical that any switch of a product from
prescription to OTC status be supported by adequate data demonstrating
that the products can be used safely and effectively by consumers
without a physician's supervision. The manufacturer of a drug is in the
best position to provide those data, and the manufacturer's active
involvement in a switch is crucial. Recent proposals to impose a switch
without the manufacturer's support reflect poor public health policy
and raise serious legal issues. I therefore strongly oppose these
proposals, which would depart from the 50 years of precedent governing
OTC switches since enactment of the 1951 Durham-Humphrey Amendments to
the Federal Food, Drug, and Cosmetic Act.
Historical Development of FDA's Approach to Rx-OTC Switches
Historically, FDA has used three mechanisms for switching drugs.
First, following enactment of the Durhman-Humphrey Amendments in 1951,
FDA switched a number of drugs to OTC status using a rulemaking
approach referred to as the ``switch regulation,'' which was authorized
under section 503(b)(3) of the Federal Food, Drug, and Cosmetic Act.
This rulemaking process made sense in the 1950s and 1960s as a way for
the agency to gain control over a variety of drugs that were marketed
by different companies under different conditions, some Rx and some
OTC, some with new drug applications (NDAs) and others without. The
very same drug, with identical dosage and indications, might have been
sold Rx by one company and OTC by another. Of course, that situation
does not exist today, and FDA has not used this process to switch a
drug for some 30 years (the last time being in 1971).
Second, beginning in the early 1970s, FDA relied on the ``OTC Drug
Review'' as the principal vehicle for switching drugs to OTC status.
This, too, made a great deal of sense for its time, since it was part
of the agency's comprehensive review of the safety, effectiveness, and
labeling of OTC drugs following the landmark 1962 amendments to the
Federal Food, Drug, and Cosmetic Act. FDA switched approximately 32
drugs through the OTC Drug Review in the 1970s and 1980s. However, the
OTC Drug Review has largely run its course, and it is not the focus of
switch activity today.
FDA entered the third, and current, switch era in the mid-1980s
when it began switching drugs through the NDA process. With very few
exceptions, every switch today is accomplished through approval of an
NDA or NDA supplement. This is suited to today's environment. FDA
comprehensively regulates new drugs, both Rx and OTC, through the NDA
process. The NDA process gives the agency the maximum degree of
authority over all aspects of a drug, and provides the means by which
manufacturers may invest in the development of proprietary data for
submission to FDA in support of approval.
Collaboration Between the Drug Manufacturer and the Food and Drug
Administration is Key to a Switch.
In evaluating a switch candidate, FDA requires evidence to show
that the drug is intended to treat a condition that can be self-
diagnosed and self-treated, that the drug will be safe and effective as
used in an OTC setting, and that there is a safety margin based on
prior prescription marketing experience. It is also critical to show
that OTC labeling will be understood by consumers and provide adequate
warnings and safety information, so that consumers do not self-diagnose
and self-medicate if they experience symptoms that should be evaluated
by a physician. These standards are vital to the continued integrity of
the nonprescription market.
For the past decade, the switch of a prescription product to OTC
status has in nearly all cases been initiated by the holder of an
approved NDA, or with its approval, through the submission of a new
application or a supplement with extensive data to support safe and
effective OTC use and appropriate OTC labeling for the specific drug.
This makes public health sense. The company that developed the drug in
the first place and obtained the approval for the prescription drug
knows the most about the drug.
Evaluation of a switch is necessarily conducted product by product,
based on the specific data and merits of each product. Extensive
prescription use is essential to the full characterization of a drug's
clinical profile, and is thus is a prerequisite for OTC consideration.
New information is often learned through commercial use that cannot be
identified based on the limited number of patients involved in the
clinical trials conducted for initial product approval. Sponsors
seeking OTC switches are routinely required to provide a large body of
safety experience reflecting both clinical trial and actual use, as
well as updated scientific information developed since the time of
initial NDA approval providing an enhanced understanding of the
underlying disease, current medical practice, and the pharmacology of
the drug.
A manufacturer's knowledge of all facets of a drug is indispensable
to assessment of whether a drug meets the standards for a switch. The
manufacturer has undertaken and maintains the full clinical development
of the prescription drug, and is in the best position to understand the
existing clinical and post-marketing surveillance data, evaluate a
drug's current safety profile, and determine if an appropriate safety
margin would support use without a physician's care.
The manufacturer is also in the best position to perform the new
studies that are typically essential to ensuring that a drug will be
safe as used in an OTC setting, and that labeling can effectively
communicate information to consumers about warnings and precautions.
Significant issues can arise under OTC use that do not exist, or are of
considerably less concern, when a drug is used in accordance with a
physician's prescription and supervision. For example, use of a drug
may cause interactions with other drugs that a physician could identify
and manage, if closely monitoring a patient. These risks need to be
carefully scrutinized, and data collected to ensure that consumers will
properly comprehend product labeling and will not self-diagnose and
self-medicate if they experience symptoms that should trigger a
physician consultation. Actual use and labeling comprehension studies
can address these questions. A switch should generally not be permitted
unless considerable data are developed in addition to the data already
present in the NDA for prescription use. The drug manufacturer is best
situated to design, fund, perform, analyze, and submit the needed
studies.
Simple Comparisons of a Switch Candidate to Existing OTC Drugs Cannot
Substitute for Genuine Study of the Drug's Safety and
Effectiveness Under OTC Conditions, and Do Not Meet the Legal
Standards for a Switch.
Current law clearly provides that drugs must be evaluated on their
individual merits, and does not permit comparative assessments of
safety or effectiveness. This makes good sense, as attempts to rely on
a comparative evaluation of different compounds are prone to error.
Either data exist to support OTC use of a drug or they do not, and
considerations of relative safety or effectiveness are not germane.
No more permissive standard may be applied to allow third parties
without adequate data to initiate a switch based on purported product
comparisons. To do so could put the public at risk. It would also
constitute arbitrary and capricious action for the FDA to apply one
standard to a manufacturer-initiated switch and another to a third-
party switch. See, e.g., Independent Petroleum Ass'n v. Babbitt, 92
F.3d 1248, 1258 (D.C. Cir. 1996); Airmark Corp. v. FAA, 758 F.2d 685,
691-92 (D.C. Cir. 1985); United States v. Diapulse Corp., 748 F.2d 56
(2d Cir. 1984).
Switching a Drug Over the Manufacturer's Objections Would Implicate the
Manufacturer's Established Legal Rights under the Federal Food,
Drug, and Cosmetic Act, Fundamental Precepts of Administrative
Law, and the United States Constitution.
A forced OTC switch would fundamentally change the terms of the
manufacturer's approved license for the prescription drug, and upset
the settled expectations that the manufacturer had when it invested in
development of the drug. Any compelled switch would also necessarily
rely without the manufacturer's consent on proprietary data developed
the manufacturer. These actions would trigger core due process and
property rights of the manufacturer, and would, at a minimum, require
that the manufacturer be afforded a hearing and potentially just
compensation.
Section 505(e) of the Federal Food, Drug, and Cosmetic Act
specifically requires that FDA provide notice and a hearing in order to
seek basic changes to an approved application. Section 505(e) provides
important due process protections for the holders of approved NDAs, and
is a central part of the current regulatory scheme.
These statutory protections are directly reinforced by the due
process clause of the Constitution and longstanding principles of
administrative law, which hold that an administrative agency must
provide an individualized hearing before taking specific action to
modify or withdraw an approved license. The due process rights of
license-holders are recognized in a long line of judicial decisions
tracing back to the seminal Supreme Court case of Bi-Metallic Inv. Co.
v. State Bd. of Education, 239 U.S. 441 (1915), and its progeny. These
due process protections are a fundamental safeguard against arbitrary
and unreasonable agency action, and must be preserved.
In addition to raising due process concerns, almost any switch
would also have to rely in part on data contained in the original NDA
for the prescription drug to support OTC use. The company has
proprietary rights in its NDA data, which could not be used without its
consent, regardless of the regulatory procedures followed. Companies
make substantial investments to generate the data that are contained in
an NDA, and such non-public commercial information is protected from
disclosure by federal statutes such as the Freedom of Information Act
and the Trade Secrets Act. The unauthorized appropriation of
proprietary data would also implicate the Takings Clause of the
Constitution. This is particularly true because a company would be
deprived of the benefits of a prior investment of millions of dollars
in the research and development of a new drug with no prior notice that
it might be compelled to convert the product from prescription to
nonprescription use.
Mandated Switches Would Constitute Unprecedented Governmental
Interference in the Drug Development and Marketing Decisions of
Private Firms.
Since the passage of the Durham-Humphrey Amendments in 1951, FDA
has never switched a prescription product to over-the-counter status
over the active objection of a manufacturer. In one prominent instance
in which FDA effectuated a switch without the manufacturer's support
(involving the bronchodilator metaproterenol), the agency had to
rescind its decision. 1 This episode provides a cautionary
tale for subsequent switches.
---------------------------------------------------------------------------
\1\ See 48 Fed. Reg. 24926 (June 3, 1983).
---------------------------------------------------------------------------
Further departures from the agency's settled precedent could
seriously disrupt the drug development process. As indicated above,
firms carefully establish research plans and development strategies for
a product's life cycle. These plans would be jeopardized by
unanticipated switches triggered by a third party. To allow such a
practice would create uncertainty and unnecessarily complicate the
already highly risky business of drug development. As it is, the
Pharmaceutical Research and Manufacturers of America reports that only
one in 5,000-10,000 compounds synthesized in the laboratory ever makes
it to market, over 12-15 years at an average cost of $500 million.
Adding greater uncertainty to the drug development process could chill
new research and investment.
Once the Door is Open for Insurers and Other Third Parties to Initiate
Switches, it Will be Difficult to Establish Appropriate Limits.
Insurers have significant incentives to compel OTC switches,
because a switch effectively shifts drug costs from the health plan to
consumers. If current law and
practice are changed to permit insurers and other third parties to
seek switches, there could be an outpouring of requests. It would then
be difficult, if not impossible, for FDA to control the process and
decide who should and should not be permitted to seek a switch. I
strongly caution against any changes in law or policy that would
produce such a result.
This concludes my written testimony. I would be pleased to answer
any questions or to supply any additional materials requested by
Members or Subcommittee staff on these or any other issues.
Mr. Bilirakis. Thank you very much, Mr. Kingham.
I think it's of note that Dr. Woodcock has chosen to remain
in the hearing room to listen to all of this testimony. That is
a very positive thing, and I want you to know, Doctor, that we
appreciate it.
Mr. Brown. Mr. Chairman, Dr. Woodcock, the chairman has
asked people to do this for 5 years and finally someone did it.
So, thank you. You made him so happy when you walked back into
the room.
Mr. Bilirakis. Ordinarily I have to sort of recommend that
they do it. Thank you very much, Doctor.
The Chair recognizes Mr. Greenwood for him to inquire.
Mr. Greenwood. Probably Ms. Woodcock was going to sit here
for another 5 or 10 minutes, and now she's stuck for the rest
of the afternoon.
Mr. Downey, I believe you said that your company filed two
patent challenges to Prozac, is that your testimony?
Mr. Downey. It was a single patent challenge, but it
challenged two different patents.
Mr. Greenwood. Could you specify--and you lost the first
one and won the second one, is that correct?
Mr. Downey. Correct.
Mr. Greenwood. Could you specify exactly what was at issue
in this cases?
Mr. Downey. Yes. In the patent that expired in 2001, in
February of this past year, the principle issue is whether the
best mode for making the product and practicing invention was
disclosed in the patent, which is one of the legal obligations
of the patent applicant. The courts ultimately concluded that
the best mode was disclosed or the disclosure was adequate and
the patent was sustained.
The second patent was the one that expired, and it would
expire in 2003, and we challenged that patent on the grounds
that it was not sufficiently different from this patent
expiring in 2001 to be independently patentable. And that,
generally, was the idea of one invention/one patent. If you get
a second invention--a second patent for the same invention,
that runs afoul of the rule of double patenting--against double
patenting. And that was the grounds in which the Court of
Appeals for the Federal Circuit in an en banc decision--well,
in a panel decision directed by the en banc panel struck down
that patent just a week or so ago.
Mr. Greenwood. Now, in your testimony you also said that
you thought that at the time when a patent is asserted, you
noted that there was not an adversarial situation, that there
was no one to argue at that time against the patent. Are you
actually arguing that there ought to be and that that would be
the case for all patents?
Mr. Downey. No. I'm suggesting that that is--I'm not making
that suggestion. What I'm saying is the system we have is the
product of that process, and that process had led in my
judgment to a number of unpatentable ideas obtaining patents
which once they're obtained, are entitled to presumption of
validity. That is the basic problem we confront in getting our
products to market.
I'm not suggesting that it's a--that the solution to that
is to create the patent application as an adversarial process--
--
Mr. Greenwood. Well, are you suggesting that there is a
solution to that?
Mr. Downey. I think the best solution is one that's in the
current law and one that's carried over into the Brown-Emerson
Bill, and that is to ensure that there's incentive once the
patent has been granted to challenge that patent if it's weak
or challengeable. In the case of the Waxman-Hatch Act and the
Brown-Emerson legislation that incentive is the 180 days of
exclusivity for the successful patent challenger.
I also think the Brown-Emerson Bill improves current law by
providing that if the first challenger settles the case,
subsequently the exclusivity for a successful challenger then
rotates to the second in the line. So, I think that's a
significant improvement. I also think that's an improvement
that will eliminate the 30 month stay, which is another
problem.
In the normal patent case if it's a chemical compound or
electronics patent and you're challenging the patent, normally
you'd be going to market and the patent holder would have to
obtain an injunction to stop you from marketing. If they get
that injunction, they have to post a bond. And if the patent
challenger ultimately wins the case, they recover their lost
profits.
In the case of the automatic 30 month stay, there is no
bond. In essence, that gives the patent holder and the
pharmaceutical industry a free preliminary injunction with no
downside risk. And I think that's an area where the current law
also needs to be changed so if there is a challenge during the
case of Prozac and we're kept off the market by a patent
ultimately declared invalid, we would recover our loss profits
for that period that we're kept off the market. I think that's
an improvement that needs to be made in the current
legislation. But those are some of the problems that I see.
Mr. Greenwood. Does the generic industry support user fees
to help speed products to market the way----
Mr. Downey. As an industry we do not, and I think I can add
why. In the case of the Office of Generic Drugs has
approximately 125 people. I think with as few 150 or 175 you
could have products actually approved in the 6 months. And I
personally believe, and I think our industry believes, that a
user fee program for 50 full time equivalents is not--is the
wrong response to a fairly small problem. I think that simply a
line item appropriation that would maintain the Office of
Generic Drugs in an appropriate level to process the
applications in a timely basis is the right approach. And I
would say in response to some Dr. Woodcock's testimony, many
firms have a much shorter than 18 month approval cycle. I know
that in our case it's more like 12 or 15 months. I know your
constituent Teva would also have something in the neighborhood
of 12 or 15 months. And usually the period over a year has to
do with characteristics of the product.
For example, the United States Pharmacopeia establishes
standards for most products. And if a product is in the
Pharmacopeia, you get a much shorter approval time. But I can
tell you if it's not and we submit an application, we get
extensive chemistry comments because those specifications
haven't been worked out in advance. So there's some other
factors that figure into the approval process and really a
small increment--the Office of Generic Drugs I believe could
really bring the process down to 6 months.
Mr. Greenwood. Thank you.
Mr. Bilirakis. Mr. Brown to inquire.
Mr. Brown. Thank you, Mr. Chairman.
I don't know where to start. Dr. G;over on behalf of PhRMA
says we shouldn't attempt to improve upon Waxman-Hatch Act
because any changes would jeopardize research and development.
Yet, PhRMA member companies enjoy--PhRMA member companies,
first of all, charge U.S. consumer often times two and three
and four times what consumer and other wealthy developed
industrial democracies are charged. PhRMA companies have been
the most profitable businesses industry in the U.S. for 20
years running, whether it's return on investment, return on
equity, return on sales. PhRMA companies have enjoyed the
lowest tax rate of any industry in America because of the
research they do, something I in fact support. PhRMA companies
have spent more money in marketing than they have research and
development. And also government and foundations taxpayers
through NIH foundations, other government agencies spend half--
do half of the research and development in dollar terms have of
the research and development in this country on prescription
drugs.
And then PhRMA tells Congress, Dr. Glover has told Congress
and told the American people in very expensive ad campaigns
that anything Congress does that might effect prices will
curtail research and development.
Now, Dr. Glover in his testimony said ``There's no need to
amend Waxman-Hatch Act to deal with this issue, and settling
cases, and he is encouraged by the courts it avoids the
expenses of litigation and it can create results that
accommodate the interests of both parties.'' While the
corporate special interest flavor of this Congress and this
Administration might suggest otherwise, our job in this
institution is in fact to protect the public interest. You're a
lawyer, you do a good job I'm sure for your client, that's why
you're here. You're impressive. You've lad out a good case
today. But how does it serve the public interest when, you
know, one party, the generic is happy. The PhRMA company is
happy. Yet prices don't come down when generics in the
marketplace would in fact bring prices down. How does that
compromise under Waxman-Hatch Act the way it works now, how
does that serve the public interest?
Mr. Glover. In the pharmaceutical industry there are two
ways in which the public interest can be served. The first is
that we make sure that we have a system in place that will
allow for innovation for the current population as well as
innovation that will prevent future generations from suffering
from the same diseases that we currently suffer from.
The other, which we tend to focus on in these debates, is
that the generic industry by virtue of providing drugs at lower
costs is another way to provide protection to the public
health.
Now, in a circumstance where there is a patent settlement,
in some cases it will result in the innovator's patent being
protected. That, by itself, does not mean that the public
interest is not being served. It is in our interest and the
interest of the system that we've designed that the patents are
sometimes protected. In other cases, as Mr. Downey described in
his testimony, the generic interest gets to the market prior to
the expiration of the patent that would have otherwise kept it
off the market. And in one of the cases that he described, the
subsequent challenges to the patent did not get on the market
because they lost their patent infringement cases. So in those
circumstances, both of them are circumstances in which the
public was better off by having the parties settle the case
than it would have been to expend further sums and more time in
litigation to the end.
Mr. Brown. But in case after case this settlement between
two parties, both of whom can profit immensely from those
settlements, keeps a less expensive identical drug from going
to the market giving consumers choice and giving consumer lower
prices?
Mr. Glover. It is not true that simply by having lower cost
you give consumers choice. You give consumers choice today, you
take away choice tomorrow.
And with respect to this being case after case, please bear
in mind that there are only three cases in which there have
been supposedly any complaints by the FTC regarding settlements
between pioneers and generics. It is simply not the case that
this is a common place occurrence that the FTC has deemed to be
anti-competitive.
Mr. Brown. Well, if it's three cases, then it's cases where
as we see this happening more and more, and it's obviously
going to happen more tomorrow than it did yesterday, that's
clearly the trend----
Mr. Glover. I actually think that's unlikely given that we
now see the FTC's interest in these matters and we now have
some clarification with respect to the way the courts are going
to interpret the 180 day exclusivity, I think it is unlikely
that you're going to see more and more of the settlements
between pioneers and generics. In fact, that is a downside of
the ambiguity of the scrutiny that is coming out of the FTC is
that it will make the system substantially less efficient
because you cannot have efficient settlements where they're
appropriate.
Mr. Brown. Well, I would argue it won't be less likely or
PhRMA wouldn't be putting the kind of resources into opposition
of this bill.
But let me make one other point with Dr. Delgado. It's not
really--it's a simple question. My understanding there are 11
members of the National Alliance for Hispanic Health and the
corporate advisory council, six of those, if I could name them
quickly, Karen Katen whose with Pfizer, Karen Dawes whose with
Bayer, David Anstice is with Merek, Aldrage Cooper is with
Johnson & Johnson, Gino Santine with Eli Lilly, Kevin Reilly
with Wyeth. Is that correct what I just said, those 6 out of
the 11 and those people are actually under----
Ms. Delgado. Yes, they are on our corporate council. They
contribute less than .25 percent of our budget, and we are a
health organization that does not accept money from tobacco or
alcohol companies. We work with people who try to save lives,
yes.
Mr. Brown. Thank you.
Mr. Bilirakis. I thank the gentleman.
Mr. Bryant to inquire.
Mr. Bryant. I thank you, Dr. Delgado. Let me just ask you
one question I had intended to----
Mr. Bilirakis. You might lift that mike up closer to you.
Mr. Bryant. Oh, okay. Let me slide closer here.
Based on your testimony and the statistics that I think
have been recited several times today by panelists, would you
care to characterize the direct to consumer advertising that is
being done in this area as successful in terms of reaching
people who would otherwise be untreated?
Ms. Delgado. Yes. I think it gets people to think about
their illness. And not just in the sense of having them go in
for care, but also thinking about maybe I should take my
medicines or things like that.
Mr. Bryant. Let's see, I wanted to ask Dr. Glover a
question also. I have a short period of time here, and I don't
find it right now.
But in essence my understand is that on average the drug
companies spend something like $500 million in developing a
drug. I don't know if that's--is that ball park?
Mr. Glover. That's correct. That's an estimate, yes.
Mr. Bryant. And do you know, and I know Mr. Downey next to
you may well know this perhaps better than you, what the cost
would be that would be associated with bringing a generic to
market on average? A generic drug?
Mr. Glover. I will pass to Bruce, but our expectation is
that it is a fraction less than 1 percent of the cost to bring
the pioneer to market.
Mr. Bryant. And what is your source representing the
pharmacy side of recovering those R&D costs?
Mr. Glover. We need to recover the R&D costs by virtue of
marketing our drug and the income that we receive from
marketing our drugs. And as the economics will show that of the
drugs that are approved by FDA only a small fraction of those
drugs generate enough income to cover the average $500 million
cost for those drugs. And as a result, just virtue of the
economics, it is necessary that a certain percentage of all
drugs approved must be drugs that far exceed the $500 million
cost in order to make up for the cost of the other drugs.
The additional thing that we have to keep in mind that
we're doing with the income from the drugs that are being sold,
is that we're not merely recovering the R&D for drugs that have
already been developed, but we're also trying to have enough
money to fund the R&D for the next generation of cures which
are likely to be more complex, more expensive and take a longer
time to get to approval.
Mr. Bryant. In your R&D do you have drugs that strike out,
that fail, that don't work?
Mr. Glover. Absolutely. In the drug development process,
failure occurs everywhere in the process. It occurs starting
with animal studies, starting with first generation, second
generation animal studies, first trials into humans. You may
find toxicity in certain populations that you didn't find in
other populations.
Mr. Bryant. Let me ask you this, and again I want to jump
down to Mr. Kingham and then go back and let Mr. Downey talk.
To your knowledge do the generics have strike outs and
failures? They have a better batting average than you do, don't
they?
Mr. Glover. They have a substantially better batting
average in the sense that they are relying on us having found
the magic bullet amongst many that are not magic bullets. So
they are simply faced with the task of making a copy of what we
have determined to be the effective drug.
Mr. Bryant. Okay. Mr. Kingham, let me ask you very quickly,
in terms of section 503(b)(3) of the FDA are you aware of any
instance of this Act, are you aware of any instance where the
FDA itself moved a prescription drug, converted it over to a
OTC drug over the objection of the manufacturer of that drug?
Mr. Kingham. No, I'm not. I'd also point out that that
provision has not been used for 30 years. The last time it was
invoked was in 1971 for a drug called Tolnaftade. It's
essentially been superseded by other legislation.
Mr. Bryant. Well, would forcing a switch to this former Rx
over to an over-the-counter drug over the objection of a
manufacturer, would it result in the consumers being forced to
pay more out of pocket expenses for the drugs that they use? In
my case, I use one of those, would I have to start paying for
it myself if my insurance company didn't pay for it?
Mr. Kingham. I would assume that for those people who have
drug benefits under their insurance policies that don't cover
OTCs, that would presumably be the result.
Mr. Bryant. And to be sold OTC a drug must be safe, a
consumer must be able to self-diagnose what the problem is and
the label itself on the container must be comprehensible to the
consumers. If the FDA is allowed to do these switches over the
objection of manufacturers, who would perform these label
comprehensive studies?
Mr. Kingham. Well, I don't know of anybody but the
manufacturers who do them, and usually in addition to label
comprehension studies, some actual clinical trials are required
as well. And the only people who do those in our system are the
manufacturers.
Mr. Bryant. Do you think this forced switch might impact on
the ability of pharmaceutical companies to innovate?
Mr. Kingham. It could affect, it's one of a number of
factors that effect investment decisions that companies make,
yes.
Mr. Bryant. All right.
Mr. Chairman, if I might ask for a unanimous consent to
have perhaps an additional minute?
Mr. Bilirakis. Without objection. I hear no objection.
Mr. Bryant. Mr. Downey, if we could go back to you now, I
wanted you to get the last word in in terms of responding to
Dr. Glover on those numbers and statistics I mentioned.
Mr. Downey. Well, it's highly variable the amount of
investment required to bring a generic product to market. In
the least expensive case, $1 million, $2 million for a very
simple product. In other case we've spent at Barr $30 to $40
million to attempt to bring a generic Premarin to market, and
we still haven't done it. And that's for a variety of reasons,
mostly regulatory. So there's no set answer to that question.
I will point out, and I'd be happy to document this in
supplementing my testimony, R&D is a percentage of gross
profit. Our company spends more than Merck or Johnson & Johnson
or I believe any of the innovative companies. They always say
the percentage of investment in R&D versus sales, well their
margins are almost 95 percent, so sales and gross profit are
the same. In our case gross margins are much lower percentage
basis.
So if you look at the gross profit as disposable income for
a company, Barr and many of our competitors in our generic
industry spends a higher percentage of our gross profit on R&D
than the innovator company. So I think we really are a
research-based firm, and frankly we spend a much lower
percentage of our gross profit on sales and marketing costs.
Much, much lower.
Mr. Bryant. Thank you.
Mr. Bilirakis. Mr. Pallone to inquire.
Mr. Pallone. Thank you, Mr. Chairman.
I wanted to ask Mr. Downey a couple of questions.
If I listen Mr. Glover's testimony where he talks about how
there are few patent disputes. You know, he says despite the
generic industry's arguments to the contrary, data show generic
applications have not raised or encountered any patent issues
that have delayed their approval, and he gave us some facts in
that regard. But then Mr. Downey, you go on to talk about the
stagnation of the growth of generic substitution. Nearly two
decades after Waxman-Hatch Act, generic substitution rates,
however, in the low 40's area. You talk about how this National
Institute for Health Care Management foundation study showed
that they through legislation and exploitation of legal and
regulatory loopholes, the brand names have extended the
anticipated market exclusivity from 12 to 18 years. An
accumulative effect has resulted in extending product
monopolies by almost 50 percent.
I mean, I know you're mainly talking about price and you
know to the extent that price is an issue here. But how do you
explain the two? I mean, it's almost like opposites?
Mr. Downey. Well, I think in my testimony I indicated
BusPar. BusPar is a product recently where generics were kept
off the market by a late listed patent.
I think a recent example of Nicorette gun which was kept
off the market by--sort of a nightmarish system of regulatory
questions about the labeling and the patient materials. I think
there are a number of instances where products have been kept
off the market, either through regulatory manipulation or
through patent manipulation. And I think both are important and
I think Congressman Brown's bill addresses both. You have
questions about bio-equivalence, which would be modified in the
new legislation. You'd have questions about citizen's petitions
tightened up in the new legislation. You would eliminate the 30
month stay so if people really did want to market at risk that
had the ability to do it. So, I think there are a number of
things that can be done and are in the Brown-Emerson Bill that
would clear these pathways to bring our products to market.
But I think the fundamental thing, the biggest single
incentive to work to bring these products to market is the 180
days of exclusivity to challenge patents. And without that,
you're going to have a long, long delay in market entry.
Mr. Pallone. We didn't have much mention today about the
citizen petition process.
Mr. Downey. Yes.
Mr. Pallone. You just mentioned that. Do you want to tell
us a little bit about that, because again that's addressed in
the Brown bill, you know, the effort to--I guess under the GAAP
you have to require to certify that petitions are factually
based, that they can't be used for any competitive purposes,
otherwise they'd be investigated by the FTC. I mean, tell us
how this process is used and how we can improve it?
Mr. Downey. I'll give you a real life example. Our company
brought to market a generic version of Coumadin, warfarin
sodium, been off patent for 40 years. As our application neared
approval and was within, in my judgment, 30 days of approval
the innovator firm filed a citizen's petition in which they
recited almost comically in the first page that they learned
the previous day that a generic product was about to be
approved and they were filing this 50 page petition saying why
approval of that product would be imprudent. So if you read it
literally, they prepared this document within--this 50 page
document overnight to file with the FDA.
I believe that petition--as a practical matter, I believe
the FDA chooses for reasons they think are sufficient to not
approve the products until they can resolve the citizen's
petition issues. And if you time your citizen's petition
correctly, as in the case that I just described, working
through the petition, preparing a response takes months and
results in months of delay.
Mr. Pallone. But how do we improve on that? I see what
we're proposing in the Brown bill. How would it improve on it?
Mr. Downey. Well, I think the Brown bill would have
attached some consequences if you filed a petition that was
ultimately denied. I think, frankly, it's a very difficult
problem because people do have First Amendment rights and you
don't want to stop people from making legitimate safety
petitions to the FDA.
I personally believe the best way to do it is decouple the
two processes. And that is if you have a product in the market
and you have established approval processes for the generic
product, let it go forward. And then if there's a problem, that
will manifest it later.
If you as an innovator think there's a problem with a
generic product being approved, you have years in advance of
the application to make that known to the FDA. Only in an
emergency, an unusual situation would something come up at the
last minute that should delay the approval.
So, it's a difficult problem but I think the Brown-Emerson
Bill addresses it in a sensible way.
Mr. Pallone. Thank you.
Thank you, Mr. Chairman.
Mr. Bilirakis. I thank the gentleman.
Ms. Delgado, I know your role here is to sort of support,
if you will, the direct-to-consumer TV advertising, is that
correct?
Ms. Delgado. Well, my role here is to represent our
membership, which are Hispanic consumers.
Mr. Bilirakis. I'm glad you said that. That being the case,
let me shift over to you. You've sat in the audience, and I'm
not sure whether you know if it's unfair of me to bring it up,
please let me know, the OTC situation where the prescription
drug might be shifted over to the over-the-counter.
Ms. Delgado. I'm very familiar with that, yes.
Mr. Bilirakis. You are familiar with it. What is your
organization's, on behalf of your people, what is your opinion
on that?
Ms. Delgado. I think that the FDA has a very important role
that should not be pushed by people who are more concerned
about the cost to themselves rather than consumers. I am
concerned that the decision is driving more by pushing the
costs off to consumers.
For example, we know some of the managed care companies
encourage their members to take part in alternative health
because they don't have to cover those costs. And I think that
when you have an OTC, your consumer already has limited funds
will cover more of those costs. So we're concerned about that.
We would like the FDA to proceed as they always did on good
science and not to feel pushed in way or another.
Mr. Bilirakis. Well, I'm not sure how to interpret all
that.
Ms. Delgado. That means that when the big boys fight, that
science should be the one who rules the day. And what's good
for consumers, that--I mean medications need to be out for a
while before we know that they're really as good, as effective
as they are supposed to be. We in the United States are very
different than in other countries, and I'm very concerned when
they compare us to other place and say ``Well, there we can get
a drug out quicker and it's over-the-counter and you can get
it.''
Mr. Bilirakis. You heard me say, and nobody's disputed it,
the insurance companies that cover drugs will cover
prescription drugs.
Ms. Delgado. Right.
Mr. Bilirakis. So if drugs shift to over-the-counter, I
guess conceivably it probably would be less expensive to the
consumer. But I'd say, whether it is or whether it isn't, the
point of the matter is that it will probably not be covered by
the insurance policy. Is that right?
Ms. Delgado. Exactly. Exactly. And that we don't see as
good.
Mr. Bilirakis. All right. That being the case, how do you
feel about that?
Ms. Delgado. Let me back up. I think one of the problems is
when we look at health coverage in America from that hospital-
based position system to more in-home and patient-driven, which
means that in fact somehow the patient's going to have more
medical home care costs. And our system doesn't do that. So we
do this patchwork approach of solving it.
I don't think it's good to just making OTC and then make
the consumer pay for it. Because even though the costs are low,
those costs may still be higher than their co-pay, or whatever
they may have to pay for that medicine. It's a very complicated
issue and it's unfair that whenever the price of drugs go up,
we oh, or there's more expenses on it. Because I'm happy people
are spending less time in hospitals.
We work very much on HIV/AIDS. We're happy to see less time
in hospitals, more part with medicine.
Mr. Bilirakis. Let me ask you then about the direct-to-
consumer TV advertising. I don't know whether it was mentioned
while I was gone, and Mr. Downey may have been alluding to it
earlier, but in one of our prior hearings just a few days ago,
we had a witness who put up a chart that indicated that direct-
to-consumer TV advertising--at least that's the way I
interrupted it and I've checked with some staff here and I
think they kind of agree would amount to about $300 billion
over 10 years. I know it seems out of the ordinary. And I am
relating it to the $300 billion that's been allocated in the
budget to prescription drug coverage for seniors.
So, regardless of whether this $300 billion is a correct
figure or something considerably less than that, still we're
talking about an awful lot of money.
Ms. Delgado. But the other side is what's the cost of not
getting care.
Mr. Bilirakis. Yes. But whether it be $300 billion or
whether it be $2.5 billion times 10 years, or whatever the
figure might be, that's going to be a part of the price that
your consumers will pay, will it not?
Ms. Delgado. Yes.
Mr. Bilirakis. All right. And you still feel that the
advantages of that advertising outweigh the advantages or the
disadvantage of additional costs?
Ms. Delgado. The advantages of advertising is having people
going for care, and I want healthy people not people who are
working that are ill or not able to work. So I think with----
Mr. Bilirakis. Are those same people paying more for their
drugs because of that advertising?
Ms. Delgado. I would assume that they probably are paying
more, but they're also going in for care.
Mr. Bilirakis. Yes.
Ms. Delgado. So I think it's a tradeoff. I mean, it's very
difficult but people need to go in for care. And if it gets
them in, that's the first step.
Mr. Bilirakis. Yes.
Mr. Geiser. Mr. Chairman?
Mr. Bilirakis. Yes, sir.
Mr. Geiser. We request permission to present two charts
that have a bearing on this discussion.
Mr. Bilirakis. You want to put them into the record, is
that what you're saying, sir?
Mr. Geiser. Yes. And to have Dr. Seidman speak to them for
a moment?
Mr. Bilirakis. I don't know about that. But we are very
glad to consider anything that you have to present for a matter
of the record.
Mr. Geiser. Well, the two charts demonstrate and speak to
the issue that was just discussed and present our best guess on
what the impact of the OTC switch would be and compare what we
project the price to be to----
Mr. Bilirakis. Mr. Geiser, your time was up, obviously, but
if there's no objection and if there is objection--actually, at
this point in time I'm going to have to call on Mr. Burr to
inquire, because you haven't had your opportunity to inquire
Mr. Burr. The Chair is correct.
Mr. Bilirakis. All right. We'll do that.
After Mr. Burr testifies if you make that request, and if
there's no objection, I will allow the charts. But I think I
will just allow you to explain them if you wanted to very, very
briefly.
Mr. Geiser. Thank you.
Mr. Bilirakis. All right, Mr. Burr, please.
Mr. Burr. I thank the Chair and let me take this
opportunity, Mr. Chairman, to point out to those that are left,
even though I've been absent, Dr. Woodcock has stayed. This is
probably one of the first times, whether it's the FDA or any
other agency, that I've seen somebody who testified actually
take the time to stay and listen to the other panels. And I
want to commend her for it, because----
Mr. Bilirakis. I've already done that, Richard. I
appreciate you concerning that.
Mr. Burr. I felt if I didn't do it, she would think that I
had slacked off a little bit.
Let me also say to Dr. Delgado, it's refreshing to find
somebody with the focus in the right place. Your answers are
genuine and for the right reason; it's because your focus is on
what's best for patients. And I think, hopefully, most would
agree with you that the better educated consumers are in the
market place, the easiest that we can make it for patients to
access care, care a big umbrella. Hopefully the sooner they do
it, the healthier they are. And I think we've lost focus up
here of the fact that one of the impacts that we can have from
a legislative standpoint is actually to prevent people from
visiting the hospital for extended periods of time. Some of
that is the pharmaceutical regiment, some of it's the
technology that's in devices that we can now do in doctor's
offices versus a hospital stay. And I think we lost track of
that when we had a debate not long ago as it relates to severe
cuts in home care, which was originally designed to keep people
out of the hospital. And we're trying to make up for the
mistakes that we make.
Let me ask each one of you: Is there anybody that disagrees
that the FDA currently has the authority to make a
determination that switches a drug from prescription to over-
the-counter? Is there anybody that feels the authority does not
exist at FDA today to make that determination?
Mr. Kingham. Representative Burr, if you mean over the
objection of the manufacturer through the procedure that has
been suggested that's I think one of the instigation for this
issue to be discussed here today, yes, I think there are a
couple of very serious problems that are presented by that.
Mr. Burr. I understand that in your testimony, I'm sorry I
missed it but I have familiarized myself with it, that you
don't feel that there should be a decision to move over-the-
counter based upon the pharmaceutical company's objection. My
question is technical though. Does the FDA have the authority
to make that determination in your opinion?
Mr. Kingham. I think that in the procedure that is under
discussion some very serious legal questions are raised by the
proposed procedure that's intended to be used. The first has to
do with whether due process would be accorded through the
rulemaking procedure that is proposed in the context of the
recent request. I don't think that it would be, and I don't
think that provisions of the statute requiring a hearing would
be satisfied as well.
Perhaps even more important because it's fundamental to the
outcome is that the court decisions relating to FDA rulemakings
have held that the agency when it engages in a rulemaking
process that is based on science, must disclose the scientific
basis, the full scientific basis for the decisions that it's
making, otherwise its rulemaking can be set aside.
The problem here is that the key data or certainly some of
the key data relating to a switch are proprietary data that are
trade secret or confidential. They either belong to a drug
manufacturer and cannot be disclosed on the record without a
violation of the Trade Secrets Act, the Federal Food, Drug and
Cosmetic Act and the agency's own regulation.
So it's a very difficult question in the situation that has
been represented here. It's never arisen before. We've never
had to deal with it because there's always been a collaborative
process with the manufacturers and the FDA.
Mr. Burr. I certainly raised that question earlier with Dr.
Woodcock, and I think she, with the advise of others from the
FDA felt that there was a protection that they had to adhere to
on trade secrets. I take from yours the protection of those
trade secrets would preclude them from living up to all of the
hurdles that they had to overcome?
Mr. Kingham. I believe that's right.
Mr. Burr. I'm sure that we'll get some additional legal
interpretation from the FDA on their views, but I appreciate
your personal views.
Yes, sir?
Mr. Golenski. Mr. Burr, if you meant asking all of us the
question, RxHealthValue gave a statement to the FDA expert
panel regarding the safety issue of OTC transfer of the
antihistamines on behalf of WellPoint, and we did that for two
reasons. One was we felt that the only way these kinds of
questions that you're essentially raising are going to be asked
given the unprecedented nature of the request would be to
actually do it. And we supported WellPoint's right, and in fact
supported them aggressively to bring the question.
And second, a content issue and I think it's a question
that your colleague Mr. Bryant asked earlier in the morning of
Dr. Woodcock but I don't think was specifically addressed, and
that is we were concerned that much of the safety data that you
would need to have for an OTC switch in fact exhibits in the
world and that unfortunately is not within the boundaries of
the United States, but these medications specifically have been
over-the-counter for years in Europe and we felt that the
quality of the scientific work that was done in that part of
the world was adequate and we felt it should be used, and we
said that in our statement to the FDA panel.
Mr. Bilirakis. Would the gentleman yield briefly?
Mr. Burr. Be happy to yield.
Mr. Bilirakis. Even though his time has expired.
Mr. Burr. I don't think the Chair has started the clock.
Mr. Bilirakis. Mr. Kingham, what's the remedy? I asked this
question of Dr. Woodcock. What is the remedy for the
manufacturer in the case where a unilateral decision has been
made to go OTC without the approval of the manufacturer?
Mr. Kingham. Well, it's very unclear because the system,
despite what's been said, is not really set up with that in
mind and it hasn't happened, so it isn't clear what would play
out if in fact the FDA went forward and tried to compel a
switch. It would be an unprecedented act.
There are a variety of possible ways in which the issue
could be raised. It could be raised in the context that the
change could not be made, except through a full evidentiary
hearing process under section 505 of the Federal Food, Drug and
Cosmetic Act. Another possibility is that a suit could be
brought to challenge the regulation itself, either----
Mr. Bilirakis. Well, the suit is always available.
Mr. Kingham. That's right.
Mr. Bilirakis. I mean within the FDA itself.
Mr. Kingham. Within the FDA, of course, there's an
administrative review process. There's an appellate process
within the Center for Drugs which Dr. Woodcock mentioned in her
testimony earlier, and one can go above that up to the
Commissioner and that sort of thing.
But one question here is if there were simple notice and
comment rulemaking of the type that some people are advocating,
there wouldn't be a hearing in the usual sense of the word.
There would be an exchange of paper, but no hearing in which
people would be given an opportunity to confront the other
side's evidence of witnesses in the way that we ordinarily
understand.
Mr. Bilirakis. All right. I'm just going to take the
purgative if I may. I'm sure Mr. Brown won't mind.
Dr. Glover, you're an M.D. You're also an attorney. J.D.
and M.D.
Mr. Glover. Yes.
Mr. Bilirakis. You have heard the testimony of Dr. Woodcock
earlier on the direct substitution the bio-equivalency,
etcetera, of generic drugs. Do you agree?
Mr. Glover. There are----
Mr. Bilirakis. And I might add, Dr. Delgado made the
comment before I came in, but as I understand it for certain
ethnic groups they may not work. Maybe she was speculating? I
don't know whether there's any----
Ms. Delgado. No, I'm not speculating.
Mr. Bilirakis. No speculation. It's based on facts?
Ms. Delgado. Yes.
Mr. Bilirakis. All right. Go ahead.
Mr. Glover. Mr. Chairman, I think that therefore there are
two issues here. The difference in ethnic groups is something
that we've known about for many, many years. We know, for
example, that certain populations have a different degree of
activity, the enzymes in their liver where many drugs are
cleared, certain populations are more susceptible to the
effects of certain drugs that act on certain receptors or vice
versa and things of that nature. And as a result for certain
drugs you will want to test that drug, whether it's pioneer or
generic, in a particular population where it might be used and
to make sure that it is effective or not toxic in each of those
various populations. And we also see this played out on the
international scene where in certain foreign countries,
particularly Japan comes to mind, where many drugs that might
be on the market here need to be separately tested on the
Japanese population to make sure that there are no unusual
metabolic properties of the Japanese population that may have a
difference in the drug.
You then take that to the next issue, which is what is the
impact of that or anything else on bio-equivalence for
pharmaceutical products.
With respect to generics, Dr. Woodcock focused on the idea
that generics were to be directly substitutable. We started, I
believe her first comment was that they were identical and then
got to a position with some questioning that there was indeed
some variation that would exist between the generic and the
pioneer. And indeed as she testified, between pioneer products
from batch-to-batch.
We believe, however, that the variation that FDA allows is
substantially wide. That is, FDA permits a variation of as much
as plus or minus 20 percent of the bio availability of the
pioneer drugs----
Mr. Bilirakis. Is that enough of a safety factor to cover
their concerns?
Mr. Glover. The plus or minus 20 percent is a very large
factor in the view of the pioneer companies. Moreover, even to
the extent that we could get comfortable with a 20 percent
variation with respect to a generic, with respect to the
pioneer, that then allows for a possible 40 percent
differentiation between one generic versus another generic.
As you very well know if you have any experience in getting
generic drug products filled at the pharmacy, you can go in 1
week and get generic drug A and the next week generic drug B by
a different manufacturer, both generic to the same pioneer
product. But with respect to each other they could be on either
side of the variation. And so it's that degree of variability I
believe is substantially troublesome and there are particular
products in the marketplace where that kind of variation may
very well cause a difference in a toxicity or certainly a
difference in efficacy in the population.
Mr. Bilirakis. I didn't expect all of that.
Mr. Brown. Mr. Chairman, since we begun a new debate here,
I think it's only fair that's Mr. Downey----
Mr. Bilirakis. You're reading my mind. I had planned to do
that, yes.
Mr. Brown. Mr. Chairman, I've been----
Mr. Bilirakis. We don't always agree----
Mr. Brown. I've sat next to you so long I can read your
mind.
Mr. Bilirakis. I guess that's the case.
Mr. Brown. I was just saving you the effort. Thank you.
Mr. Downey. Well, we do agree with Dr. Woodcock and I would
strongly disagree with Dr. Glover on this point. The whole
structure of the FDA approval process is to have pioneer
products proven safe and efficacious. And then the generic
product to be proved same as the brand.
In the case of the approval process we have all sorts of
requirements. We have to do the same chemical warranty, the
same mode of administration, we have to prove that the active
ingredients absorb the same rate and at the same extent as the
brand product. And we do that in this context of the same
standards that the brand products use to take the products they
use in their clinical studies to the marketplace. They also do
bio-equivalence studies to show what they're actually going to
market is bio-equivalent to what they actually use in their
chemical studies. So it's the same set of standards applying
both to the brand industry providing that their products are
the same as it is to us proving we're the same as the brand.
So, we agree 100 percent with Dr. Woodcock. And, in fact, I
think her testimony forms the basis that we ought to mandate
generic substitution in Federal programs and ought to support
Congressman Pallone's bill to preempt all the State
requirements that don't recognize these very rigorous standards
imposed by the FDA.
Mr. Bilirakis. I had hoped that this hearing would be sort
of the unanimity in terms of the efficacy of generics.
I'm going to have to cut it off somewhere. Mr. Geiser has a
couple of charts he's requesting we show.
Dr. Delgado very briefly and Mr. Golenski very briefly.
Mr. Golenski. Okay.
Ms. Delgado. All right. I'm a clinical psychologist also in
private practice licensed in the District. I work with an
internist. My specialty is patients who have depression. And I
can tell you that when people talk about therapeutic
substitution there's a wide range. And that those decisions
need to be made.
I don't make them. I work with someone who prescribes and
sees patients and does that. And he works with the patient to
do that. And I'm very concerned about creating a system where
everyone says cheaper is better. Cheaper is not better. Cheaper
may be better, but let that be based on the individual patient
and their provider.
And as for cost, just like we like to have seat belts and
that was an added cost for the consumer, it did save lives. I
think we have to be very careful about just focusing on cost.
Mr. Bilirakis. If the provider were to prescribe a generic,
that's the provider doing it, right?
Ms. Delgado. But it didn't work. Then they should have the
ability to give the patient something else. What happens is
when Congress says this is how we're going to do and this is
what we're going to pay, all those other drugs get taken off
the list and you can't give them to patients. And I can tell
you, I treat people with depression. Some of them do well with
one, some with another and you have to change until you find
the right medicine for the person.
And it's just inconceivable to me to put that decision away
from the specific patient and provider. That's not the way--and
formularies. I mean----
Mr. Bilirakis. So what you're saying is when we do the
prescription drug for seniors among the Medicare Act, that we
should take all that into consideration?
Ms. Delgado. Especially since we know since it was only 2
years ago that FDA said companies had to start keeping records
on people over 75 when they were doing their drug trials. Since
most people--the fastest growing segment of the population is
people over 80 we need to know.
Mr. Bilirakis. Isn't what you're saying and what Dr. Glover
said also applicable to brand name drugs?
Ms. Delgado. Sure.
Mr. Bilirakis. So it's not just generics, is it?
Ms. Delgado. No, my thing is----
Mr. Bilirakis. It might react----
Ms. Delgado. My thing is the decision is between the
patient and provider based on effectiveness. If you'll notice
in the language when we talked about generics is we want the
outcome to the patient to be the same. Not that it's the same
absorption rate, that's good. That's not enough. If it's
absorbed the same, but the reaction to the patient is not the
same, that's what I'm concerned about.
Mr. Bilirakis. Mr. Golenski, very briefly do you have
anything you wanted to add?
Mr. Golenski. Yes, quite specifically to that, Mr.
Chairman. RxHealthValue strongly endorsed the Schumer-McCain
and Brown-Emerson Bills. And the reason we did that is because
we believe that cheaper is not better; cheaper is the same. And
we realized that therapeutic and bio-equivalence is determined
by the FDA. In addition to that, we have memberships
representing 75 health plans in the United States. Some of them
are nonprofit health plans. We have two large pharmacy benefit
management organizations. And they all have generic
substitution programs aggressively in place. We have no
evidence of negative outcomes to the patients in generic
substitution.
Mr. Burr. Mr. Chairman----
Mr. Golenski. But the reason we endorsed those bills is
because we believe cheaper isn't----
Mr. Bilirakis. But if there were evidence, you would like
to know that a substitute would be available?
Mr. Golenski. Well, we also aggressively support, of
course, in all of these organizations that the physician and
the patient are the people who make the determination of which
medication the patient should be taking. But we'd like to have
the generic available to the patient.
Mr. Bilirakis. Mr. Burr?
Mr. Burr. Mr. Chairman, I want to break the tie that you
Mr. Brown had. Everybody here is right, but the reality is that
we asked the FDA to be the gold standard for the approval
process of pharmaceuticals, generics, medical devices in this
country. And what we have done is we have created an atmosphere
where it's tough for them to do their job because there's all
sorts of legal attacks on different pieces. And it causes an
agency like the FDA to sit back and look for an arbitrator or
for the courts to make determinations. Unfortunately, the
patient's the one that loses. Even though we're hearing
different slices about where they can benefit and where they
lose, and the reality is that if you want to maintain a gold
standard--and I don't think that there's anybody here that's
saying let's lower the bar. That's one of the reasons we can't
harmonize our standards with the European Union. We can't do it
around the world. Because we won't accept what they're willing
to accept. We won't.
Mr. Golenski, we've been trying to do it for 6 years now.
And the reality is that there's not too many people in America
that want to adopt the standards that the Italians use, which
is they use model because all members.
If we're going to maintain this gold standard, then the
question is how do we make this system function? We were
briefly on Waxman-Hatch Act. From a policy standpoint it is not
perfect. It was not a policy document. It was political
document. It's where different components of the industry gave
in the waning hours up something, one got something, somebody
gave up something, and it was their recommendation stay away
from this.
It works pretty good right now. But when you look at it
from a policy standpoint, it's certainly not perfect.
And I would only suggest to all of us that where we've got
something to contribute that we think maintains the gold
standard and presents a better option for patients across the
country, present it. If it doesn't, then understand that we're
not necessarily here to change the functions of the FDA. We had
that opportunity in 1997. It was the FDA Modernization Act. We
choose to maintain the standard, and I don't think there's
willingness on the part of members to go back through and to
change that standard.
I thank the chairman for the opportunity to editorialize.
Let's see whether we can get a second set of questions.
Mr. Bilirakis. Mr. Geiser, I want to be fair. You can
devote an all day hearing to each one of these subjects. We've
crammed three in here. And we've got to try to limit,
obviously, the gist of the issues. What we wanted to do in the
case of the OTC was to try to determine whether in fact, as you
heard, whether FDA has the authority and if they do have the
authority, should they retain the authority to do it on a
unilateral basis.
If you have charts toward that end, we would be glad to
receive them. I would hope that it doesn't take much of an
explanation. Are they so difficult to be able to understand
that you'd have to explain them, because I don't want to delay
this hearing much longer.
Mr. Geiser. I think it can be explained in very, very short
order, Mr. Chairman.
Mr. Bilirakis. Short order means what?
Mr. Geiser. In 1 minute.
Mr. Bilirakis. One minute. And you would explain those?
Mr. Geiser. Yes, I will do that.
Mr. Bilirakis. If there's no objection, let's do that.
Mr. Geiser. The two charts speak to this question of access
to care and to make it clear as the committee is considering
this topic to inform the committee's consideration as to what
we believe the outcome of the OTC switch would be.
This chart demonstrates, basically, the monthly cost of OTC
products. Claritin OTC in the UK and Canada, and the current
monthly cost on a prescription basis here in the United States.
The second chart demonstrates that we believe, and we
cannot be certain of this, but if the OTC switch is granted and
the drugs are marketed over-the-counter that these second-
generation antihistamines will be offered at substantially
monthly cost than is currently the case, that in fact that cost
in addition to benefiting the uninsured and seniors or the
people that are not covered, will in fact result in lower out-
of-pocket cost for the insured.
We've shown here that our blended brand drug co-pay is
about $17, this is just a blended average of our health plans
everywhere. And for a physician office visit about $17 if you
need a physician office visit to secure the prescription. So
we're looking at even an insured member incurring substantially
more out-of-pocket cost in comparison to what we anticipate a
post-OTC switch price of these drugs will be.
Mr. Bilirakis. Do you have those charts in the form that we
can put them into the record?
Mr. Geiser. They are attached to my statement.
Mr. Bilirakis. They are attached. Without objection, it
will be made a part of the record Mr. Brown.
Mr. Brown. Well, without prolonging the debate, I will
speak even shorter than Mr. Geiser. And I just wanted to
comment on something Dr. Delgado said. She over and over from
her written testimony through several questions talked about
quality and not worrying so much about price. And I agree with
that. I think we all do. But, you know, this is a Congress
unwilling to spend money on prescription benefit. It's a
Congress unwilling to spend money on universal coverage. It
may, I hope not, but be a Congress unwilling to spend money on
the speeding up the approval process for ANDA. But a Congress
that gives tax cuts to the richest people in the country----
Mr. Burr. I take back those nice things I said about your
earlier.
Mr. Brown. But, you know, the fact is that overshadows,
that's an umbrella on everything we do here; on universal
coverage, on prescription drug prices. on prescription drug
coverage. And I would hope that you would use the National
Alliance for Hispanic Health to push for that, because we can't
have the quality of healthcare that you keep talking about if
we're unwilling to pay for it.
Ms. Delgado. I agree, but part of it is when you talk about
costs you have to talk about the cost saving of keeping
somebody out of the hospital.
Mr. Brown. Of course you do.
Ms. Delgado. That's also the other side of it.
Mr. Brown. We don't think in those terms----
Ms. Delgado. I'm with you. I'm here. Don't worry.
Mr. Bilirakis. Dr. Delgado, all legislation we have up here
is costed by the Congressional Budget Office.
Ms. Delgado. I understand.
Mr. Bilirakis. And you know what? They do not give us ever
any credit for preventative healthcare or the keeping them out
of the hospital unfortunately.
Ms. Delgado. Right.
Mr. Bilirakis. And that makes our job so much more
difficult.
Ms. Delgado. But we're with you.
Mr. Brown. Wrap it up, Mr. Chairman.
Mr. Bilirakis. Yes. We customarily ask if you would be
receptive to, I haven't heard anybody ever say no. If you said
no, I'm not sure what we could do about it. But we would like
to furnish you with written questions and ask you for your
written response within a matter of just a few days or so. We
appreciate it.
Thanks so much for your patience. Thanks for sitting here
through a couple of votes. You've been an awful lot of help.
[Whereupon, at 2:15 p.m. the hearing was adjourned.]
[Additional material submitted for the record follows:]
Prepared Statement of Allergy & Asthma Network Mothers of Asthmatics
As a patient advocate and the founding president of Allergy &
Asthma Network Mothers of Asthmatics (AANMA), I am writing to oppose
OTC status of nonsedating antihistamines due to lack of tangible
evidence that patients can use these medications safely without
physician diagnosis or guidance. In the absence of such compelling
data, the FDA should not grant OTC status for nonsedating
antihistamines.
For the last four years and with support from more than 100 members
of Congress, AANMA has conducted an annual Asthma Awareness Day on
Capitol Hill. We've worked to make members of Congress aware of the
issues that affect patient lives and to promote patient access to
improved medications, specialty care, school nurses, and medications
while on school property.
Allergies and asthma are increasing at epidemic rates in our
country and no one knows why. While NIH, EPA, HHS, CDC, AANMA, and
others work tirelessly to reach underserved populations suffering with
these conditions, health insurers (companies we pay to insure our
health) lobby Congress and the FDA to transfer their financial burden
for these medications to the backs of patients and families.
If health insurers want to save money, place patient outcomes
first. Don't whittle away at our benefits. We want to be well at home,
work, school, and play.
Take the case of the harried father at CVS whose tiny, glassy-eyed,
frail daughter coughed relentlessly at his side while he struggled to
read the packaging of a combination cough and antihistamine medication.
He looked at me and said, ``You are a mom. What do you give a little
girl who can't stop coughing?'' I said, ``A trip to the doctor's
office.''
The father snapped back, ``I'm not going to give one more dollar to
those money-grubbing b----,'' then took four different cough
preparations to the checkout counter.
Is this father safely using OTC medications? No. Will more choices
lining the store shelves help? No.
If nonsedating antihistamines cannot be safely and strategically
introduced in today's market so that all people can make informed
purchases, then patients and parents of children with allergies and
asthma are not ready for OTC nonsedating antihistamines.
OTC medications have their place on store shelves across America,
but not without the evidence that patients can safely use them. Drug
safety and patient use safety are one and the same on the OTC market.
______
Prepared Statement of the National Association of Chain Drug Stores
The National Association of Chain Drug Stores (NACDS) appreciates
the opportunity to submit a statement for the record on Federal and
state policies affecting the availability of generic pharmaceuticals.
NACDS membership consists of nearly 180 retail chain community pharmacy
companies that operate over 33,000 retail community pharmacies with
annual sales totaling over $400 billion. Chain operated community
retail pharmacies fill over 60 percent of the 3 billion prescriptions
dispensed annually in the United States.
generic drugs save patients money
Generic pharmaceuticals are a cost-effective way of providing
prescription drug therapy. Pharmacists in community-based practice
settings work with patients and physicians to maximize the use of
lower-cost generics when they are available on the market. The savings
from using generics are unmistakable. If a generic substitute is not
available, a pharmacist works with the physician to determine if the
patient can take a generic version of another drug.
With billions of dollars in brand name drugs coming off patent over
the next few years, we believe that it is critical that any new
Medicare drug benefit have both patient and pharmacy incentives to
encourage greater generic use. We are concerned, however, about some of
the tactics being used by brand name companies that may delay the
availability of many of these lower cost generics, and thus raise costs
for all prescription drug users.
According to IMS Health, the average brand-name prescription drug
price was about $65.29 in 2000, while the average generic prescription
drug price was about $19.33, less than a third of the brand
price.1 Because the average cost of a brand name
prescription has escalated so rapidly over the last 10 years, the gap
between the average brand name and generic prescription price has
significantly widened. In 1990, the average gap was about $16.87. In
2000, that gap had almost tripled, increasing to about $46.
---------------------------------------------------------------------------
\1\ Data presentation given by IMS in April 2001.
---------------------------------------------------------------------------
Although more generic drugs are on the market today, the percent of
all prescriptions being dispensed with low-cost generic drugs has
remained relatively flat over the last few years, about 42 percent of
all prescriptions. However, despite this relatively stable trend in the
dispensing of generic drugs, the share of all generic prescription
dollars as a percent of total prescription dollars has decreased
significantly. For example, in 1995, generic drugs accounted for 12.2
percent of all prescription sales; today, they represent only 7.1
percent.
generic drugs are safe and effective
In almost all states, a pharmacist can dispense a generic drug,
unless the physician has specifically stated in his or her own
handwriting that the brand name pharmaceutical is ``medically
necessary.'' We encourage and support laws that leave the substitution
of generic drugs to the professional discretion of the pharmacist.
However, in some states, generic substitution is prohibited for
certain drugs, unless the pharmacist expressly obtains the permission
of the physician, regardless of what the prescription states. Some
states have passed these laws in response to misrepresentations by
brand name drug companies regarding the safety of generic versions of
their drugs. These are so-called ``narrow therapeutic index'' drugs,
such as Coumadin or Theophylline, where the brand name manufacturer
argues that the potential for problems for the patient from switching
from the brand to a generic are so great that only a physician should
authorize the switch. This obviously reduces the generic substitution
rate of the drug.
Policymakers should be aware, however, that the Food and Drug
Administration (FDA) has compiled a list of every prescription drug
produced by every manufacturer including all information about safety
and effectiveness for patients. The FDA exhaustively compared all
generics to all brands and developed a directory, commonly called the
``Orange Book,'' available to every pharmacy that lists which drug
products are truly equivalent. In fact, the FDA Commissioner has said,
``. . . be assured that if the FDA declares a generic drug to be
therapeutically equivalent to an innovator drug, the two products will
provide the same intended clinical effect''.
The importance of assuring maximum access to generic drugs is
important for a very simple reason. Savings from generic substitution
should significantly increase when several high-volume brand name drugs
come off patent in the next twelve months. According to IMS America,
brand-name drugs with $8 billion in sales are scheduled to come off
patent next year, and drugs with about $25 billion in retail sales are
scheduled to come off patent between the years 2002-2005. Importantly,
some brand name drugs within the anti-depressant and cholesterol-
lowering therapeutic classes come off patent in the next year.
The potential for savings from the use of generics in these
categories is significant, since public and private payors spent
billions of dollars on anti-depressants and on cholesterol-lowering
drugs last year.
community pharmacies dispense more generics than pbms, mail order
The use of generic drugs varies significantly by the source of
prescription coverage. For example, generic drugs are used in about 55
percent of all prescriptions provided by community pharmacies to cash-
paying customers. However, the percentage of generic pharmaceuticals
used in private third-party plans and PBM coverage programs is much
lower. In fact, the generic substitution rate for all mail order
prescriptions is only 32.5 percent, while it is only 44 percent for all
prescriptions paid by PBM or third-party prescription coverage
plans.2 Both patients and providers should be given
incentives to use and dispense generic drugs in any new senior Medicare
pharmacy benefit. These would include lower generic copays, as well as
reimbursement incentives to the pharmacy to dispense generic drugs.
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\2\ NACDS Analysis of 1996, 1997 MEDS data and NAMCS data. In
addition, according to Brenda Motheral, Senior Director of Research for
Express Scripts, generic fill rates are noticeably higher for retail
than mail, as reported in ``Pharmacy Benefit Design: What We Have
Learned,'' April 6, 2000.
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There are many factors that affect the ability of pharmacists to
dispense generic drugs. These include state pharmacy practice laws;
incentives used by third party plans to encourage generic use, such as
lower copays and pharmacy generic dispensing fees; and the rebates paid
by brand name manufacturers to third party payors, including mail
order, to dispense brand name drugs rather than lower-cost generics.
Unfortunately, brand name manufacturer rebates have created
perverse incentives for third party payors to switch from one expensive
brand name drug, for which the plan does not receive a rebate, to a
brand name drug for which they receive a rebate. The plan should be
switching to a lower-cost generic. However, because generic
manufacturers do not pay rebates and these payors make much of their
money from these rebates, there is significant over-utilization of
brand name drugs and under-utilization of generic drugs.
brand name manufacturers' tactics limit generic drug availability
Ultimately, a generic cannot be used unless it is available on the
market. We are very concerned that some brand name manufacturers are
employing multiple schemes to delay the availability of generic
versions of their drugs, contributing unnecessarily to health care
costs, increased spending for Medicaid, private prescription drug
programs, and millions of seniors and uninsured individuals.
NACDS believes that brand name manufacturers should have
appropriate incentives to research and develop new pharmaceuticals, and
have sufficient marketing exclusivity time to allow them to recoup
their investment with an appropriate profit. We do not believe,
however, that many of these schemes are defensible, and we believe
appropriate action should be taken by policymakers to correct these
abuses.
For example, we are concerned with the abuses that have developed
surrounding the awarding of the 180-day exclusivity provision for the
generic company that successfully challenges a brand name patent; the
practice of some brand name companies to ``late list'' patents in the
Orange Book, resulting in a 30-month stay of the generic drug approval;
and the filing of frivolous ``citizens petitions'' with the FDA, which
slows down generic drug approval. These citizen petitions can delay
generic availability for six to eight months, and the overwhelming
majority of them are rejected by the FDA.3
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\3\ Wall Street Journal, November 1998.
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For these reasons, we support H.R. 1862, and its companion bill
S.812, the ``Greater Access to Affordable Pharmaceuticals Act,'' also
known as the Emerson/Brown and McCain/Schumer bills. We look forward to
working toward its enactment.
We also support the FTC's investigation into the extent to which
brand manufacturers have paid generic manufacturers not to market
competing generic drug products. The FTC also plans to investigate
brand manufacturers' abusive patent listings and patent litigation,
which stall generic competition, whether or not the listed patents are
valid.
After the FTC completes its study, we recommend implementation of a
four-stage strategy with the goal of preventing such anticompetitive
practices in the future.
First, the FTC should immediately halt all anticompetitive
practices it discovers.
Second, the FTC should issue new rules or guidances preventing
such anticompetitive arrangements in the future.
Third, the FTC should work closely with the Food and Drug
Administration to revise the FDA's policies regarding citizens'
petitions, the 180-day exclusivity rule and the 30-month stay
rule.
Fourth, the FTC should recommend revisions to the relevant
provisions of the Hatch-Waxman Act to permanently eliminate the
ability of brand and generic drug manufacturers to conspire to
restrain competition.
We are also concerned with certain brand-name manufacturer
``evergreening'' strategies, which, when combined with the explosion in
direct-to-consumer (DTC) advertising, are further minimizing the cost
savings impact of generics, even if they are successful at reaching the
marketplace.
For example, before a patent expires on a brand name drug, a
manufacturer will seek to switch the patient to a slightly-different
``next generation'' of the brand name drug, or seek to move the patient
over to a long-acting or single-day dosage of the drug, making it
difficult for the generic to penetrate the market. This process has
been made easier by DTC advertising, which encourages patients to ask
their physicians about new drug therapies. While we believe that some
patients would logically benefit from the new generation drug, or the
new daily dosage form, it is highly likely that the patient could use
the generic version of the brand name drug and experience the same
medical results at a much lower cost.
We are also concerned about a new ``evergreening'' tactic in which
a brand name company seeks a different ``use patent'' for a drug whose
original patent is about to expire, and sells the drug under a
different name and for a different indication. Even though the original
product may be off patent, the pharmacist cannot substitute the generic
version of the off patent brand for the identical new patented drug
because of the new use patent that the manufacturer was successful in
obtaining. Take, for example, Sarafem, which contains the same active
ingredient as the popular anti-depressant Prozac, but which was
approved for the new use indication of premenstrual dysphoric disorder
(PMDD).
Finally, we understand that the Congress will be reauthorizing the
pediatric exclusivity provisions of the FDAMA this year. NACDS fully
supports the testing of drugs in children, and believes that it is
important that many older, off patent drugs, which are commonly used in
children today, should be among those tested.
However, we question whether the six-month additional exclusivity
afforded to some block buster drugs is an appropriate public policy
incentive to encourage brand name companies to do these studies.
Pharmaceutical companies should be rewarded for doing these studies,
but it may be the case that the hundreds of millions of dollars in
additional revenue generated for these manufacturers in brand name drug
sales are skewed in favor of drug manufacturers rather than consumers.
The value of this exclusivity should be directly tied to the value and
usefulness of the pediatric studies. Moreover, this additional six
months gives manufacturers additional time to execute their various
``evergreening'' strategies, which further delays generic entry and
erodes generic penetration.
conclusion
NACDS strongly urges Congress to examine current laws and
regulations that determine the market availability of generic
pharmaceuticals. It is critical for life and health that brand name
manufacturers are given appropriate incentives to research and develop
new drugs and to study the effects of drugs in children. On the other
hand, it is also necessary to assure that generic pharmaceuticals know
the ``rules of the road'' without being hit with every detour and delay
that a brand name manufacturer can use to limit the availability of
generic drugs. We think that the current market is out of balance, and
generic availability and the savings to consumers is the primary
casualty of this brand name drug bias.
We believe that Congress should act soon to rectify this situation.
Undoubtedly, increasing the availability of generic drugs will help
make a new Medicare senior pharmacy benefit more affordable, as well as
help struggling state Medicaid programs control their drug spending. We
also believe that this will help uninsured Americans better obtain
their medications and slow the rate of growth in private sector drug
programs, which have also been experiencing double-digit rates of
growth in their pharmaceutical budgets. We appreciate the opportunity
to submit this statement for the record. Thank you.
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