    [Senate Hearing 108-250]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 108-250

     LEGISLATIVE AND REGULATORY RESPONSES TO THE FTC STUDY ON BARRIERS TO
                    ENTRY IN THE PHARMACEUTICAL MARKETPLACE

    =======================================================================

                                    HEARING

                                   before the

                           COMMITTEE ON THE JUDICIARY
                              UNITED STATES SENATE

                          ONE HUNDRED EIGHTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JUNE 17, 2003

                                   __________

                              Serial No. J-108-16

                                   __________

             Printed for the use of the Committee on the Judiciary

                          U.S. GOVERNMENT PRINTING OFFICE
                                WASHINGTON : 2004

    91-212 DTP

    For Sale by the Superintendent of Documents, U.S. Government Printing Office
    Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800
    Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

                           COMMITTEE ON THE JUDICIARY

                         ORRIN G. HATCH, Utah, Chairman
    CHARLES E. GRASSLEY, Iowa            PATRICK J. LEAHY, Vermont
    ARLEN SPECTER, Pennsylvania          EDWARD M. KENNEDY, Massachusetts
    JON KYL, Arizona                     JOSEPH R. BIDEN, Jr., Delaware
    MIKE DeWINE, Ohio                    HERBERT KOHL, Wisconsin
    JEFF SESSIONS, Alabama               DIANNE FEINSTEIN, California
    LINDSEY O. GRAHAM, South Carolina    RUSSELL D. FEINGOLD, Wisconsin
    LARRY E. CRAIG, Idaho                CHARLES E. SCHUMER, New York
    SAXBY CHAMBLISS, Georgia             RICHARD J. DURBIN, Illinois
    JOHN CORNYN, Texas                   JOHN EDWARDS, North Carolina
                 Bruce Artim, Chief Counsel and Staff Director
          Bruce A. Cohen, Democratic Chief Counsel and Staff Director

                                C O N T E N T S

                                  ----------

                        STATEMENTS OF COMMITTEE MEMBERS

                                                                       Page

    Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah......     1
    Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa,
      prepared statement.............................................    50
    Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont,
      prepared statement.............................................    77
    Schumer, Hon. Charles E., a U.S. Senator from the State of New
      York...........................................................    17
        prepared statement...........................................    85

                                   WITNESSES

    Bradshaw, Sheldon T., Deputy Assistant Attorney General, Office
      of Legal Counsel, U.S. Department of Justice, Washington, D.C..    10
    Jaeger, Kathleen D., President and Chief Executive Officer,
      Generic Pharmaceutical Association, Washington, D.C.;
      accompanied by John Yoo, Professor of Law, University of
      California at Berkeley, Berkeley, California...................    23
    Kuhlik, Bruce N., Senior Vice President and General Counsel,
      Pharmaceutical Research and Manufacturers of America,
      Washington, D.C................................................    24
    Metzenbaum, Howard M., Former U.S. Senator, and Chairman,
      Consumer Federation of America, Washington, D.C................    20
    Muris, Timothy J., Chairman, Federal Trade Commission,
      Washington, D.C................................................     3
    Troy, Daniel E., Chief Counsel, Food and Drug Administration,
      Rockville, Maryland............................................     5

                           SUBMISSIONS FOR THE RECORD

    Federal Trade Commission, Washington, D.C., prepared statement...    27
    Jaegar, Kathleen D., R.Ph., J.D., President and CEO, Generic
      Pharmaceutical Association, Arlington, Virginia, prepared
      statement......................................................    51
    Kuhlik, Bruce N., Senior Vice President and General Counsel,
      Pharmaceutical Research and Manufacturers of America, prepared
      statement......................................................    66
    Metzenbaum, Hon. Howard M., Chairman, Consumer Federation of
      America, prepared statement....................................    79
    Troy, Daniel E., Chief Counsel, Food and Drug Administration,
      Department of Health and Human Services, Rockville, Maryland,
      prepared statement.............................................    94

     LEGISLATIVE AND REGULATORY RESPONSES TO THE FTC STUDY ON BARRIERS TO
                    ENTRY IN THE PHARMACEUTICAL MARKETPLACE

                                  ----------

                             TUESDAY, JUNE 17, 2003

                                  United States Senate,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:05 a.m., in
    room SD-226, Dirksen Senate Office Building, Hon. Orrin G.
    Hatch, Chairman of the Committee, presiding.
        Present: Senators Hatch and Schumer.

     OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM
                           THE STATE OF UTAH

        Chairman Hatch. Today, the Committee will hold a hearing in
    an area of great importance to the American public--competition
    in the pharmaceutical marketplace. This Congress has witnessed
    a growing spirit of bipartisan cooperation on pharmaceutical
    issues. After so many years of searching for consensus, we are
    all encouraged that the Finance Committee has now approved by a
    bipartisan majority the medicare reform and prescription drug
    benefit bill that we are now considering on the Senate floor.
        President Bush deserves credit for encouraging the Congress
    to act in the best interests of the public on these matters. We
    owe a debt of gratitude, as well, to Senators Grassley and
    Baucus, Chairman and Ranking Member on the Finance Committee,
    for the work that they did over the last number of years which
    culminated last week in a passage of the bill out of committee.
        I will give them my wholehearted support as the Senate
    debates the bill over the next two weeks. Having been a member
    of the so-called tripartisan group which developed and advanced
    the basic structure of this Medicare reform bill over a number
    of years, I am excited at the prospect of finally getting the
    job done for our seniors and those who are disabled in our
    society. But there is another set of issues relating to
    pharmaceuticals that promises to benefit the American public
    through increased competition in the pharmaceutical
    marketplace, and that is the subject of our hearing today.
        This Committee held a hearing in May of 2001 on the issue
    of competition in the pharmaceutical marketplace. At that time,
    we discussed the anticompetitive behaviors made possible in
    part by the sometimes complex and admittedly confusing text of
    a law I coauthored, the Drug Price Competition and Patent Term
    Restoration Act of 1984, sometimes called the Hatch-Waxman
    bill.
        Since our last hearing on this issue, much has happened.
    Indeed, the HELP Committee has recently approved S. 1225,
    legislation which builds on that Committee's earlier McCain-
    Schumer initiative to address the cost of prescription drugs.
        I must also single out both the Federal Trade Commission
    and the Food and Drug Administration for playing a constructive
    role in attempting to end several mechanisms by which some
    research-based and generic drug firms were attempting to game
    the system to avoid competition in the marketplace. Senator
    Leahy is to be commended, as well, for his legislative
    initiative, the Drug Competition Act, which I have cosponsored.
        The agency has succeeded in winning several consent decrees
    with a variety of offending firms under the existing antitrust
    statutes. In addition, the FTC conducted an exhaustive survey
    and study of how certain provisions of the 1984 Waxman-Hatch
    Act affected competition in the pharmaceutical industry.
        The FTC study contained two major recommendations, both of
    which we will examine today. The first addressed the use of the
    statutory 30-month stay granted by the 1984 law in situations
    where patents are challenged by generic competitors. The second
    responds to those situations in which R and D and generic firms
    were entering into agreements not to impede generic
    competition.
        Our hearing will also examine how well the Bush
    administration's final rule effectuates a fair and thoughtful
    one, and only one, 30-month stay policy. Since the rule was
    finalized just last Thursday, none of us can understand all of
    its nuances. However, it does appear to be a good-faith attempt
    to implement the first FTC recommendation. But in an area this
    complex, no one should be surprised if we find that the agency
    inadvertently created new loopholes or unintentionally imposed
    unfair hardships that may need to be refined.
        We will also examine today the patent provisions of the
    HELP Committee legislation, a bill I find much improved over
    last year's initiative, due in large part to the considerable
    influence of Chairman Gregg and, of course, Senator Schumer's
    work as well.
        While I do have some concerns over this legislation which
    we will pursue in some detail this morning, I need to commend
    the sponsors of S. 1812 for moving in the right direction. I
    recognize that the language is something of a moving target,
    since there is under development a package of technical
    corrections that selected governmental and industry experts
    have commented upon. We will ask our witnesses today to comment
    on the legislation and the possible need for amendment.
        It is unfortunate that the PTO was unable to present a
    witness today, albeit on short notice, and I will continue to
    press the agency for comments on how the bill and the final
    rule affect patent rights. It would have been preferable for
    the Committee to have the benefit of an agency official who
    could sit with his sister agencies and advise us on the patent
    provisions of S. 1225.
        In closing, I have said many times that I prefer a
    comprehensive approach to Hatch-Waxman reform that includes a
    discussion of augmenting the existing intellectual property
    incentives and consideration of whether and how to create a
    fast-track approval process for off-patent biologics.
    Nevertheless, I stand prepared, and the Judiciary Committee
    stands prepared to participate in any effort to revise the Drug
    Price Competition and Patent Term Restoration Act of 1984.
        So I look forward to today's hearing, and we will look
    forward to our panels of witnesses and hope we can arrive at
    some good, effective work here today. On our first panel, we
    are pleased to have a number of witnesses from the
    administration.
        First, we will hear from our friend, Tim Muris, Chairman of
    the Federal Trade Commission. The FTC allocates a significant
    share of its resources toward overseeing the health care
    sector, including the pharmaceutical industry. The July 2002
    FTC study on generic drug entry prior to patent expiration is a
    key document for policymakers.
        So we welcome you, Chairman Muris, and look forward to
    hearing your testimony here today.
        Our second witness is Dan Troy, Chief Counsel for the Food
    and Drug Administration. The FDA just issued a final rule last
    Thursday that is intended, in part, to implement one of the
    major recommendations of the FTC report. Dan will help us to
    understand what the FDA rule does and how the rule would work
    with legislation under development that appears in large part
    an attempt to codify key elements of the FDA rule. It is my
    understanding that staff from both FTC and FDA have provided a
    considerable amount of so-called technical assistance toward
    the end of protecting the language that came out of the HELP
    Committee last week.
        Our third witness on the panel, Sheldon Bradshaw, Deputy
    Assistant Attorney General, Office of Legal Counsel, will not
    submit prepared testimony. We are pleased that Mr. Bradshaw
    could appear here on relatively short notice.
        Some have raised constitutional objections on the aspects
    of S. 1225, as reported. As the Department is still reviewing
    this issue and the language may be in flux, we do not expect
    Mr. Bradshaw to give any final administration views on this
    issue. He may be able to answer questions on what type of
    interagency review process may be underway to help answer this
    question and give us an idea when the Committee can expect a
    response.
        Although I extended an invitation, absent from this panel
    is the representative from the Patent and Trademark Office.
    This is unfortunate but understandable, given that it may take
    some time for the experts at PTO to assess how the developments
    of last week, the FDA final rule, and the reporting of S. 1225
    will affect patent law and policy. Even if we can't hear from
    them today, I expect them to present their views on these
    matters in a reasonable period of time.
        Now, let's start with Chairman Muris. I would like you to
    summarize your remarks in seven minutes, if you can, and we
    will go from you to Dan Troy.

      STATEMENT OF HON. TIMOTHY J. MURIS, CHAIRMAN, FEDERAL TRADE
                      COMMISSION, WASHINGTON, D.C.

        Mr. Muris. Well, thank you very much, Mr. Chairman. I am
    not even sure I will take seven minutes, but let me just very
    briefly address three points. First is the context of Hatch-
    Waxman, second is our enforcement agenda, and finally, briefly,
    a few evidentiary points from our study.
        In terms of the Hatch-Waxman context, as I think we all
    know, advances in pharmaceuticals bring enormous benefits to
    Americans. Because of innovation, many medical conditions often
    can now be better treated with drug therapy than with
    alternative means such as surgery. We must maintain appropriate
    incentives for the development of such drugs.
        In 1984, Congress enacted Hatch-Waxman. The amendment
    sought to balance incentives for continued innovation by
    research-based pharmaceutical companies, on the one hand, and
    opportunities for market entry by generic drugs on the other.
    Without question, Hatch-Waxman has increased generic entry. By
    purchasing generics, consumers have saved billions. Even
    greater savings are possible in the future.
        Moving to the FTC's enforcement agenda, we have challenged
    conduct by firms allegedly gaming Hatch-Waxman to deter or
    delay generic competition. Our first generation of such matters
    involved agreements through which a brand name manufacturer
    allegedly paid a generic firm not to enter and compete, and to
    use the generic's rights under Hatch-Waxman to impede entry by
    others.
        Our second generation of enforcement activities involves
    allegations that brand name manufacturers have delayed generic
    competition through a particular Hatch-Waxman provision that
    prohibits the FDA from approving a generic applicant for 30
    months.
        Brand name drug manufacturers sometimes act strategically
    to obtain more than one 30-month stay of FDA approval of a
    particular generic by listing patents in FDA's Orange Book
    after a generic company has submitted its application. The
    Commission recently obtained strong, and in some cases
    unprecedented relief against Bristol-Myers for this type of
    activity for its cancer drugs Taxol and Platinol, and its anti-
    anxiety drug BuSpar.
        Finally, let me briefly discuss our study. It examined 104
    brand name drugs between 1992 and 2000. We asked whether and
    how generic drug companies competed against brand name drug
    manufacturers before the patents expired.
        Under Hatch-Waxman, brand name companies must list patents
    that claim each brand name drug in the Orange Book. A generic
    applicant then may certify that its product does not infringe
    the relevant patents or that those patents are invalid. If the
    brand name manufacturer sues the generic applicant for patent
    infringement, then the FDA may not approve the generic's
    application until a court determination of patent invalidity or
    non-infringement, or 30 months after receipt of the
    certification.
        Our study found that 30 months has approximated the time
    necessary for FDA review and approval of a generic's
    application, as well as the time necessary for a district court
    to resolve the patent litigation. Nevertheless, for eight brand
    name drug products, the manufacturers have obtained more than
    one 30-month stay. This has caused considerable delay of FDA
    approval of the generic's application, ranging from 4 to 40
    months of additional delay.
        Our study recommends a limit of one automatic 30-month stay
    per drug product, per generic application, to resolve
    infringement disputes over patents that were listed in the
    Orange Book prior to the filing of the generic's application.
    And we are certainly pleased that the FDA has adopted
    substantially that approach and that it is also in the new bill
    that you mentioned.
        Our study also examined the Hatch-Waxman provision that
    awards 180 days of marketing exclusivity to the first generic
    to apply to enter the market before patent expiration. During
    this time, the FDA may not approve a subsequent generic. This
    provision provides an incentive for companies to challenge
    patent validity and to design around patents.
        The data in our study found that generic applicants
    prevailed in about 75 percent of the patent litigation resolved
    by a court decision. Sometimes, however, the case is not
    litigated to a decision and there is a settlement. We found 14
    settlement agreements that, when executed, had the potential to
    park the first generic applicant's 180-day exclusivity for some
    time, and thus prevent subsequent generic entry.
        Because they can raise antitrust issues, the Commission
    supports the Drug Competition Act of 2001, introduced by
    Senator Leahy and passed by the Senate during the last
    Congress, that would require the filing of these types of
    agreements with the FTC and the Department of Justice.
        Our study also made three minor recommendations to clarify
    the regulations governing the triggers for the 180-day
    marketing exclusivity. These recommendations should reduce any
    potential for the 180-day exclusivity provision to be a
    bottleneck to subsequent generic entry.
        The Commission will continue to protect consumers from
    anticompetitive practices that inflate drug prices. We will
    continue to work closely with the Committee. I want to thank
    you, Mr. Chairman, on behalf of the Commission for your support
    of our work. I welcome your questions.
        [The prepared statement of Mr. Muris appears as a
    submission for the record.]
        Chairman Hatch. Thank you, Chairman Muris. We appreciate
    it, and we have appreciated the work you have done on this and
    the FTC has done.
        We will go to Mr. Troy.

    STATEMENT OF DANIEL E. TROY, CHIEF COUNSEL, U.S. FOOD AND DRUG
                  ADMINISTRATION, ROCKVILLE, MARYLAND

        Mr. Troy. Thank you, Mr. Chairman. It is characteristic of
    your modesty that you referred to the law we are discussing
    today as Waxman-Hatch. Let me assure you, though, that everyone
    at the FDA talks about it as Hatch-Waxman.
        Chairman Hatch. I am sure that is going to make Henry
    really happy, I will tell you.
        Mr. Troy. That is not my goal.
        I also want to say what an honor it is to sit next to
    Chairman Muris, whose leadership in this area has really been
    very useful for the FDA. We have tried to work closely together
    with the FTC, and I think it is fair to say that at least from
    where we sit the relationship between the FDA and the FTC on a
    wide variety of counts has never been stronger.
        I want to begin by stressing that Dr. McClellan's main goal
    for the FDA in this area is to promote innovation, while also
    promoting rapid access to low-cost, safe and effective generic
    drugs. Our recent improvements to the implementation of Hatch-
    Waxman are really just part of a set of FDA initiatives that
    will reduce drug costs, while again encouraging innovation by
    speeding up the drug development and approval process without
    compromising FDA's high standards for safety and effectiveness.
        We are taking a lot of steps to reduce the time and cost of
    new drugs so people have wider access to safe and effective new
    drugs. You need the new drugs in order to ultimately have the
    generic drugs. And with respect to generics, we believe our
    recent rule changes will help. But far more important, other
    reforms in the generic approval process that were announced at
    the same time will shave months off the time to availability of
    generic drugs across the board.
        Similarly, under Dr. McClellan's leadership, we have
    charted new pathways for improving inhaled and topical drugs
    that will potentially affect many products. These broad
    improvements in drug availability, both new drugs and generic
    drugs, will have a major impact on all patients, not just those
    affected by imperfections in the current law. With all due
    respect, we truly believe that the additional $13 million to
    the Office of Generic Drugs will make the biggest difference in
    the area of generic drug reform.
        That said, since its enactment in 1984, Hatch-Waxman has
    become an extremely valuable tool in making medications more
    affordable to American citizens. Of course, you know this, Mr.
    Chairman. To date, FDA has approved more than 10,000 generic
    drug products, providing high-quality, lower-cost prescription
    drugs to millions of consumers.
        Of course, there are two provisions that have been
    associated with some anticompetitive behavior--the submission
    of brand name drug patents for listing by FDA, and the role of
    those patents in generating 30-month stays in the approval of
    generic drugs while patent infringement issues are litigated.
        I am not going to go over what Chairman Muris said, but
    essentially the way I conceptualize Hatch-Waxman is as a
    complex signaling mechanism between generics and innovators,
    where the innovators declare their set of relevant patents. And
    the generics, when they submit their abbreviated new drug
    applications, have to declare the status of their product vis-
    a-vis those patents. And then, of course, there is the 45-day
    provision and 30-month stay to allow time for the patent issues
    to be worked out.
        Some have suggested that FDA should take a much more active
    role in policing the patents that go into the Orange Book. I
    want to make clear that we do not undertake an independent
    review of the patents submitted by the NDA sponsor. We have
    tried in our new rule to make it clear which patents must and
    must not be listed, and to have a beefed-up declaration.
        But as we understand the statute, it requires us to publish
    patent information on approval of the NDA, thus making the
    agency's role ministerial, and courts have so held. I think
    that one of the signal features of Hatch-Waxman is that generic
    and innovator firms are supposed to resolve their disputes
    about patent listings and about patents in general in private
    litigation in the courts, where the expertise really resides
    with respect to patent questions.
        We therefore strongly believe that FDA should not be asked
    to, or expected to review drug patents because we do not have
    the expertise to make these assessments. And we believe, for
    reasons that my written testimony goes into greater detail,
    that it would actually fail to speed the availability of
    generic drugs. We would end up in litigation, rather than
    litigation being worked out between the generics and the
    innovators.
        As I mentioned, we really commend the FTC for their
    comprehensive study on these issues. It has been enormously
    useful to us. The factual information in the report was very
    valuable in our own discussions on the generic drug approval
    process.
        Of course, the FTC recommended only one 30-month stay be
    allowed for infringement disputes over patents listed in the
    Orange Book before the filing of the ANDA. We agree that there
    should be one 30-month stay. We recognize, as our new rule
    says, that recently more ANDAs have been the subject of 30-
    month stays than in years past, and that more patents on
    average are now being litigated per generic drug application
    than in the past.
        But we would note that the FTC report, number one, did not
    say how the single 30-month stay should be implemented. We
    tried to do it through dealing with the statute as it currently
    is, and we think we did so successfully, but we are happy to
    talk about that. We note that the FTC report recognized that we
    do not have the capacity to review the appropriateness of
    patent listings.
        As you know and as you said, on June 12 we announced our
    final regulations that will streamline the process for making
    safe, effective generic drugs available to consumers. We expect
    that rule to save patients over $35 billion in drug costs over
    10 years. We also think it will avoid unnecessary litigation
    and protect the process of developing new breakthrough drugs.
        Brand name drug manufacturers will be limited, as you have
    said, to only one 30-month stay to resolve allegations that a
    generic drug maker is infringing a listed drug patent. Multiple
    30-month stays will not be permitted. As I mentioned, we have
    tightened the requirements and increased the information
    required for drug patent submission and listings, and brand
    name drug manufacturers will not be allowed to delay access to
    generic drugs by submitting additional patents for listing in
    the Orange Book for drug packaging or other minor matters not
    really related to effectiveness.
        The required submissions include patent information on
    active ingredients, drug formulations and composition, and
    approved uses of the drug. There is a much more detailed signed
    attestation accompanying the patent submission that is
    required, and we say on the declaration that false statements
    in the attestation can lead to criminal charges. We think these
    actions will significantly reduce opportunities to list
    inappropriate patents just to prevent access to low-cost
    generic alternatives.
        We are pleased to note again, as you mentioned, that last
    week the Senate Committee on Health, Education, Labor, and
    Pensions unanimously reported legislation on accelerating
    access to generic drugs. We recognize and appreciate Chairman
    Gregg's leadership in achieving the bipartisan agreement with
    the original sponsors of the bill.
        We are pleased that this proposed legislation has key ideas
    embodies in FDA's regulation to improve access to generic
    drugs, and that it doesn't include some of the most problematic
    provisions of S. 812, which passed the Senate last year.
        Not surprisingly, in this complex, very technical area of
    the law, we have concerns with the workability of that draft
    that we believe must be resolved for the legislation to achieve
    its intended effect. I know of no more of the law in which the
    law of unintended consequences operates with more force than
    this one.
        We are working with the sponsors and other members to
    address various technical and policy issues. We are actively
    addressing the issues that have been raised by brand name and
    generic companies about the operation of the statute. We
    continue to work very, very hard to implement the Hatch-Waxman
    amendments as best we can, given the statutory text, the
    history of the legislation, as well as the numerous court
    challenges.
        You know, it is sometimes liberating to know that no matter
    what you do, you are going to get sued. It frees you to try and
    do the right thing. In doing so, FDA has tried to maintain a
    balance between protecting innovation in drug development and
    in expediting the approval of lower-cost generic drugs.
        I appreciate the opportunity to discuss these issues with
    you and I am happy to answer your questions.
        [The prepared statement of Mr. Troy appears as a submission
    for the record.]
        Chairman Hatch. Well, thank you.
        Let me begin with Chairman Muris. It has been my experience
    that Government reports usually just simply gather dust. So let
    me start by congratulating you and your agency for producing a
    report that appears to be gaining more and more traction with
    policymakers.
        In addition to the two major recommendations we have
    already talked about, your report also contains three minor
    recommendations. Could you please briefly describe for the
    Committee or provide for the record, if you wish, what these
    three minor recommendations are, what their status is with
    respect to acceptance within the administration and
    implementation, and how our Committee might best assist you
    with them if we decide they have merit?
        Mr. Muris. Yes, and thank you again, Mr. Chairman, for your
    kind words about the FTC. We made three minor recommendations
    about the 180-day exclusivity triggers. The first one was that
    commercial marketing, which is one of the triggers, includes
    generic marketing of a branded product. That is in the Gregg-
    Schumer bill.
        The second is that the court decision trigger be a decision
    of the district court, which is the current rule. That is not
    in the Gregg-Schumer bill; it identifies they have the circuit
    court. Although there are clearly countervailing arguments on
    both sides of that issue, we think from the standpoint of
    consumers the district court rule is better. It provides the
    appropriate incentives, although we recognize that in some
    cases it could work a hardship on generics. It is a question of
    looking across the total of the circumstances and balancing
    what we think is in consumers' best interest, which is the
    fundamental lodestone of FTC action.
        Finally, the study's third recommendation was that
    dismissal of a declaratory judgment action be a decision of the
    court to trigger the 180 days. The D.C. Circuit in Teva held
    that a dismissal for lack of case or controversy would trigger
    the generic's exclusivity period. That is not in Gregg-Schumer.
    We would recommend that this provision be added to Gregg-
    Schumer.
        Chairman Hatch. Okay, thank you.
        Mr. Troy, what is your opinion of whether we should view
    the 30-month stay provisions of S. 1225, if enacted, as
    superseding, complementing, or having some other relationship
    with the recently finalized FDA rule?
        Mr. Troy. Well, we believe that our rule has addressed the
    issue of single 30-month stays. Our rule does not address at
    all some of the other things that are addressed in S. 1225, in
    particular the 180-day exclusivity. I think a lot of the fixes
    that are talked about with respect to S. 1225 with respect to
    the 180 days are things that we might not--we haven't taken a
    hard look at this, but we might not be able to do by rule, as
    we felt we were able to change the prior interpretation because
    we thought the language was ambiguous and change the prior
    interpretation from multiple 30-month stays to single 30-month
    stays.
        That said, again, without conceding that legislation is
    necessary because we don't believe legislation is necessary, if
    Congress were to codify a workable single 30-month stay
    provision, it is obviously easier to defend legislation than it
    is to defend a change in interpretation in the rule. But it has
    got to be workable, and our main concern--and we have been
    making very good progress working on a bipartisan basis with
    the staff--our main concern is to make sure that it is workable
    because this is a very complex area of law. It is very
    technical.
        Again, I will go back a number of times to the law of
    unintended consequences. In part, because of our experience in
    trying to administer Hatch-Waxman, we see things that others
    might not because of our immense experience with--and it is not
    mine; it is the people on my staff, many of whom you know.
    There is no end to the originality of the arguments that are
    made in this area. The dollars are very large, the issues are
    extremely well-lawyered.
        So we see pitfalls and traps in many different places, and
    so we have been trying to work with the staff, again we think
    in a way that has been making progress, to try and address
    those concerns.
        Chairman Hatch. You may have referred to this briefly, but
    what, if any, of the patent listing and the 30-month stay
    provisions of the rule would need to be revisited if
    legislation is patterned after the outlines of S. 1225?
        I will give you an example. For example, does the final
    rule limit the 30-month stay to those patents listed prior to
    the submission of the abbreviated new drug application, the
    ANDA?
        Mr. Troy. Not in all cases, no. What the rule says is that
    there is one 30-month stay per ANDA. But if there is no
    paragraph IV certification with respect to the initial NDA, if
    you will, when the ANDA is filed, if there is a later listed
    patent and it is the first four, then you could have a 30-month
    stay. Let me suggest that that is likely to be a relatively--in
    fact, extremely infrequent occurrence.
        But let me say that the other two parts of our rule,
    tightening up on the patent declaration and making clear which
    patents must and must not be listed in the Orange Book, we
    think have already, to be immodest, made the world better by
    addressing the concerns that the FTC has raised and by
    providing clarity in this area and by limiting the
    opportunities for gaming.
        If S. 1225 were to pass in this or any of the forms that
    are being discussed, those two parts of the rule would continue
    to operate, and again would continue to make the world better.
    Legislation codifying a single 30-month stay would clearly
    supersede, if you will, that part of the rule that says single
    30-month stay because Congress will have directly spoken to the
    precise question at issue. Again, that aspect of the rule would
    presumably be, if the legislation were passed, superseded.
        Chairman Hatch. Mr. Bradshaw, I have some questions and
    comments for you on one of the important matters in this.
        Of course, Chairman Muris and Mr. Troy, you can comment, if
    you wish, on any of these questions.
        As you know, some, including Boyden Gray, former White
    House Counsel under Bush I, have questioned the
    constitutionality of proposed Section 271(e)(5) of Title 35 as
    created by S. 1225. This section provides that the failure to
    bring a patent infringement action establishes a case or
    controversy sufficient to confer subject matter jurisdiction
    for a declaratory judgment action in Federal court. I
    understand that equally respected attorneys take a different
    view than Mr. Gray, and I know that the Department has not
    completed its analysis of this language.
        Now, given that the so-called technical amendments package
    may affect this provision, it is possible that we may have to
    ask you to review different language at some point. I wonder if
    your research to date has turned up any other similar provision
    in the U.S. Code.

      STATEMENT OF SHELDON T. BRADSHAW, DEPUTY ASSISTANT ATTORNEY
       GENERAL, OFFICE OF LEGAL COUNSEL, DEPARTMENT OF JUSTICE,
                            WASHINGTON, D.C.

        Mr. Bradshaw. Thank you, Mr. Chairman. I am pleased to be
    with you today to discuss constitutional concerns surrounding
    S. 1225, the Greater Access to Affordable Pharmaceuticals Act.
        On the specific language regarding the declaratory
    judgments in Section 271, we do not yet have a definitive
    position on whether cases brought pursuant to it would satisfy
    the Article III case or controversy requirement. I do have
    several general observations that I would make.
        The requirement of an actual case or controversy, as set
    forth in the Declaratory Judgment Act, is constitutionally
    compelled rather than statutorily required. As such, like other
    Article III requirements--for example, standing--it cannot
    simply be granted by Congress, but must be satisfied by the
    plaintiffs.
        I have not had an opportunity to fully examine this
    legislation or compare it with existing legislation. More
    importantly, we would like to see the package that contains the
    technical fixes which we have not yet seen before we opined on
    that subject. But I would lead with those general observations
    that the actual case or controversy requirement is
    constitutionally compelled rather than statutorily required.
    And as a result, Congress can't simply create a case or
    controversy by statute, but the plaintiffs must establish the
    constitutional requirements for bringing the case.
        Chairman Hatch. I would also note that the FDA final rule
    contains an informative discussion of how adoption of the one,
    and only one 30-month stay policy might affect declaratory
    judgment actions. If I read this discussion correctly, I think
    the FDA concluded that it was not a barrier even without the
    case or controversy provision contained in S. 1225.
        Am I correct on that, Mr. Troy?
        Mr. Troy. I am not an expert in this area, in part because
    it really has more to do with patent law. But we believe that
    in most cases--I think in virtually every case, a declaratory
    judgment suit for invalidity would lie. Whether a suit for
    infringement, or declaratory judgment with respect to
    infringement would lie if the innovator hasn't taken any action
    is an issue.
        The courts haven't articulated a standard with respect to
    that. I am certainly not going to opine. I haven't really
    thought seriously about the constitutional issue. I would defer
    to the Justice Department on that. But what we have tried to
    say is that we believe that there can be mechanisms for the
    generic to get the kind of certainty that it may want before it
    goes to market.
        Let's be clear that in many areas of industry people go to
    market and they run the risk of a lawsuit for patent
    infringement. That happens all the time. I could go into the
    pen-making business and if I am infringing on somebody's
    patent, I could be sued for patent infringement.
        Generics, for good reasons, want more certainty than that
    before they launch, and so the question is can they get it. And
    we believe that, again, so long as they make sure that they do
    not run afoul of the FTC's concerns about competition, there
    may well be ways that we again articulated in the final rule
    for the generic to write to the innovator and say--this is
    outside the context of a 30-month stay where the notice is not
    a requirement--to write to the innovator and say, here is what
    we are doing, we invite you to sue us.
        So the point is there may be ways for the generic to induce
    the kind of lawsuit and the kind of certainty. If the innovator
    is written and takes no action, then query whether or not there
    is a reasonable apprehension of suit.
        Chairman Hatch. I would highlight, Mr. Bradshaw, the fact
    that the FDA pointed out in the 1999 Teva case that the D.C.
    Circuit found that no case or controversy existed when a
    patent-holder drug company disavowed an intent to sue. Now,
    absent this intent, the court could not find the requisite
    reasonable apprehension of suit.
        I wonder if you have any preliminary thoughts on the case
    or controversy language of S. 1225, including what factors you
    need to analyze, and so forth. I also hope that the Department
    might be able to suggest ways to avoid any constitutional
    problematical language as work on the legislation continues.
        Mr. Bradshaw. Sure, and I understand again that one of the
    technical fixes under consideration may, I have been told, do
    that, in fact. But you are right in citing the D.C. Circuit
    case that the general test that courts have emphasized is
    whether there is a reasonable apprehension of an infringement
    suit as sort of the touchstone of justiciability in a case
    under the Declaratory Judgment Act.
        As a result, the applicant in this case would need to have
    a reasonable apprehension that the patent-holder might bring an
    infringement suit in order to have an actual case or
    controversy for purposes of the declaratory judgment action.
    And if there was a case like the facts in the D.C. Circuit
    where the patent-holder expressly stated that, in fact, they
    would not bring an infringement action, it may be difficult for
    an applicant under those facts to establish an actual case or
    controversy.
        Chairman Hatch. I hope you will get us your opinion as soon
    as possible.
        Mr. Bradshaw. We are in the process of working with the
    administration in formulating the administration's views on the
    constitutional questions, and just as soon as we receive a copy
    of the different technical fixes, we will go about reviewing
    them.
        Chairman Hatch. Now, as the Department looks more closely
    at how S. 1225 reforms civil justice proceedings, you may very
    well have further comments on the bill. And if that is the
    case, I would like you to communicate your concerns to the
    Committee as soon as possible, okay?
        Mr. Bradshaw. Yes.
        Chairman Hatch. Let me just ask you, is the Department
    currently looking at any other aspects of S. 1225, and if so,
    what are you examining?
        Mr. Bradshaw. Well, as you are aware, Mr. Chairman, the
    Office of Legal Counsel advises the administration on the
    constitutionality of all legislation that is introduced in
    Congress. So as a matter of course, our office is reviewing S.
    1225 for constitutionality and we are in the process of
    advising the administration on our views.
        Without going into any details on what we have advised
    people within the administration, because that process is still
    ongoing, I would note that others have raised questions related
    to whether or not portions of the bill are impermissibly
    retroactive. Again, like the Article III question, we have not
    yet taken a definitive position on that.
        Chairman Hatch. All right.
        For Mr. Muris and Mr. Troy, in its statement of
    administration policy opposing the McCain-Schumer bill of last
    year, the White House cited its fear that S. 812 might
    encourage excessive litigation. I am concerned that the unique
    and, in my view, not fully justified advantage granted to first
    filers with respect to the 180-day marketing exclusivity
    incentive may already be encouraging earlier lawsuits of
    dubious merit.
        FDA''s shared exclusivity policy also, it seems to me,
    plays a role in this dynamic. I have seen the June 2 issue of
    the Pink Sheet that came out which contains an article
    detailing that the incredible pressure to be the first to file
    a paragraph IV challenge might result in a marked increase in
    willful infringement cases. The article described a case in
    which a Federal court ruled against a generic firm which filed
    an ANDA application before obtaining outside counsel opinion on
    either non-infringement or invalidity.
        To me, one of the most perplexing features of both S. 812
    from last year and the new bill, S. 1225, is the almost
    unbelievable advantage given first filers of generic drug
    applications. As you know, prior to the D.C. Circuit's Mova
    decision in 1997, FDA had required a generic challenger to
    successfully defend against the patent claim of an innovator
    company.
        Now, from a policy perspective, why should a mere first
    filer be treated better than a party who actually wins a
    lawsuit? And if we are to legislate in this area, why don't we
    consider overriding Mova and reinstate the old successful
    defense requirement?
        We will start with you, Mr. Muris, or either one.
        Mr. Muris. The Commission in its report doesn't view the
    180 days as a reward for successfully defending a patent suit.
    We view it as an incentive to file the ANDA in the first
    instance.
        Now, I know there are some proposals to actually avoid the
    shanty town problem of people in line to file, and I am sure
    Mr. Troy will address those. But we think that it does create
    an incentive to go ahead and be clever and innovative. And if
    you are so clever and innovative that the branded decides it
    can't even sue you, then we think so much the better.
        In fact, of the 104 brand-name drugs that we looked at, in
    75 the brand did go ahead and sue the generic for infringement,
    but in 29 it didn't. From the standpoint of an incentive, we
    believe the generic, which develops a product and avoids
    litigation, such as in those 29 cases, should benefit from the
    exclusivity.
        Mr. Troy. We certainly agree with you about S. 812 and we
    thought that it would unduly induce too much litigation, and
    the administration opposed S. 812.
        With respect to the 180-day exclusivity, what Chairman
    Muris was referring to is right now there are sometimes
    limousines, sometimes vans, sometimes cars, sometimes tents in
    the Metro North parking lots that come days, weeks, and in some
    cases even months in advance of a particular date. Why we
    should reward someone because they camp out longer in the
    parking lot is a good question as a matter of policy. It is a
    good question.
        That said, we are working, we think, very productively with
    the staff on S. 1225 to embody more of a, shall we say, use it
    or lose it approach so that someone can't park their
    exclusivity. The FTC has done a great job in ensuring that
    people can't park their exclusivity.
        We don't have an official administration policy or position
    on whether or not you should or shouldn't have 180 days of
    exclusivity. We certainly think that the question of whether or
    not you should get this reward for being the first and simply
    the one to stand on line the longest is a worthy policy
    question and is worth talking about and thinking about.
        But as I understand all of the discussions that have been
    going on, I think that there is a recognition that that is an
    issue, and there have been some very good solutions that have
    been talked about and thought about in order to try and solve
    that problem.
        Chairman Hatch. With respect to completing the rulemaking
    in less than 1 year from proposed to final rule, it is quite an
    accomplishment, and you and your staff, I think, need to be
    commended for that.
        Mr. Troy. Thank you, Mr. Chairman.
        Chairman Hatch. That is great. Frankly, I am somewhat
    envious, to be honest with you, because it has been almost 10
    years since the Dietary Supplement Health and Education Act
    passed Congress and there are still no final rules specifying
    good manufacturing practices for those products.
        Mr. Troy. We got out the proposal.
        Chairman Hatch. I don't want any excuses. That is fine.
        I am pleased that you adopted a one, and only one 30-month
    stay principle, but I wonder how you respond to those in the R
    and D industry, whose shenanigans with multiple stays started
    the trouble in the first place, who say the way you drafted the
    final rule allows the system to be gamed by ANDA applicants.
        Here is the type of example some have raised with me with
    respect to the new FDA rule. Suppose there were two patents
    prior to the filing of an ANDA, one compound patent and one
    formulation patent. A generic applicant may intend to challenge
    both, but initially files a paragraph III certification on the
    compound patent and a paragraph IV certification on the
    formulation patent.
        Determining that the generic firm has invented around the
    formulation patent, the generic decides not to pursue the
    paragraph IV litigation. Instead, the ANDA applicant decides to
    allege invalidity and converts the paragraph III certification
    on the compound to a full-blown paragraph IV challenge.
        The question is this: Under the rule, is the 30-month stay
    already used up, and if so, doesn't this open the door to such
    tactics?
        Mr. Troy. I think, in part, it depends on whether or not it
    is within the first 45 days and whether litigation was
    commenced. But let me say that there is no way, through
    rulemaking or through legislation, to avoid all opportunities
    for gaming. We tried within the limits of the law to plug as
    many of the loopholes as we could.
        I have never participated in a process like this, but we
    would have 10 or 15 staffers in a room with the text of the
    rule up on a screen and we would go through it, all of us, word
    by word in order to look for opportunities that might be seized
    upon to be gamed in an effort to try and say this argument
    might be made here, this argument might be made here.
        We tried as best we could to cut down on all opportunities
    for gaming. We did not succeed in cutting down all
    opportunities for gaming because no legislation is so good, no
    rule could be so good as to cut down all opportunities for
    gaming because there are unforeseen circumstances and
    unintended consequences.
        We think we have addressed 80, 85, maybe 90 percent of the
    loopholes that are obvious and that we have seen in the past
    within the limits of the law. This hypothetical that you have
    mentioned was raised to us. We again tried to address it within
    the context of what happens in the first 45 days. If there is
    all sorts of switching, FDA, like all administrative agencies,
    retains authority with respect to shams. If people are really
    playing games, we think we have authority to deal with that.
        But I am not smart enough, and the 20 people sitting around
    the room aren't smart enough and far-sighted enough, despite
    all of our expertise and experience, to see every single
    situation that could be gamed. And that said, there were
    obviously limits to what we could do because we are an
    administrative agency trying to implement the statute.
        But, again, we are having much the same discussions and the
    same experience with respect to the legislation because either
    way you tilt it, you can't write it so clearly that there are
    no opportunities for gaming. And there is going to be tilting
    one way or the other, and some of the issues that come up are
    on which side of the table do you want to run the risk of
    gaming.
        I think the best way to approach this, frankly, is to say,
    well, on this side with respect to this issue, we are going to
    run a little more risk of gaming on this side, and on this side
    for this issue we are going to run a little bit more risk of
    gaming on this side. Hopefully, you end up with something that
    has some degree of balance.
        Chairman Hatch. Mr. Muris, let me ask you one last
    question. Section III-C of your testimony discusses some of
    your enforcement activities with respect to settlements between
    generic manufacturers.
        Do you think it is advisable to work with Senator Leahy to
    consider amending the text of the Drug Competition Act to
    require the reporting to FTC and DOJ of certain potentially
    troublesome generic-generic or brand name-to-brand name
    agreements, in addition to the generic-brand name agreements
    that the bill currently addresses?
        Mr. Muris. We had 20 brand-generic agreements. We only had
    six generic-generic agreements, but some of those did raise
    potential anticompetitive problems. In fact, we did bring one
    case involving that. It is certainly not something to which I
    would object. Based on the evidence, it was not as big a
    problem as the brand-generic.
        Chairman Hatch. For the two of you, I have one last
    question that has come up, and that is I want to bring out in
    this question some of the complex policy tradeoffs at play in
    this area.
        First, would one of you be so kind as to give the Committee
    a short explanation of what a polymorph is? And please make it
    a discussion at the level of polymorphs for dummies, okay?
        Mr. Troy. The most simple example of what a polymorph is is
    water, ice, and steam; same molecule, different form. It is all
    H20.
        Chairman Hatch. Second, I note from comments that the FTC
    submitted to FDA in December that the FTC's view of the proper
    treatment of polymorph patents is somewhat different from the
    FDA's.
        Could each of you briefly describe your agency's views on
    the legal and policy arguments regarding the appropriateness of
    listing polymorph patents in the FDA Orange Book?
        Mr. Muris. Let me put this in context. With the single 30-
    month stay, if it is upheld by courts or put in the
    legislation, this problem becomes much less important. The
    problem with these later listed patents, however would be
    eliminated by a single 30-month stay. We found questionable
    patenting practices in six of the eight later listed patents in
    which there is a court decision or FTC action. Those listings
    have been found to be questionable.
        Second, the FDA did address to some extent our concern--and
    we appreciate that--in changes they made from the proposed rule
    to the final rule, and I am sure Mr. Troy will explain those,
    and I will defer to him on the empirical evidence. But I think
    they believe it would have taken care of most of the problems
    that we saw.
        There was a difference of opinion in how to read the
    statute and that was the source of our disagreement. Obviously,
    under our system and under the Chevron decision, they have the
    final say in reading their statute, subject to court review,
    and that court review gives fairly significant deference.
        Chairman Hatch. Thank you.
        Mr. Troy?
        Mr. Troy. I just want to reiterate what Chairman Muris
    said. We think that the single 30-month stay and the tightened-
    up patent declaration and making clear which patents must and
    must not be listed will substantially alleviate this issue
    because the incentive to come in with later listed patents, if
    you have a single 30-month stay, largely falls away. So that is
    the first point.
        This was, at least for me, the most vexing issue as a
    policy matter and as a legal matter in the rule because, on the
    one hand, the FTC articulated an interpretation that said the
    inquiry for listing is different than the inquiry for
    bioequivalence. The other argument was made, well, that is
    trying to have it both ways. You can't say it is not the same
    when it comes to listing, but it is the same when it comes to
    approval. You are trying to have it both ways. There is a bias
    here.
        And so we really struggled with the issue and ultimately we
    felt that because the courts have, in fact, given us so much
    flexibility with respect to interpreting what is the same, we
    thought that we diminished our legal risk by going in that
    direction. I am not going to suggest that it was an easy
    decision. It was probably the most hotly debated issue
    internally with respect to the rule.
        But we think that particularly with the change from the
    proposal to the final which says that--it sort of squares the
    circle, if you will, and says if you are maintaining that it is
    the same, innovator, then you have to have done the work
    internally to prove that it is indeed the same; i.e., to have
    satisfied at least yourself and to be willing to certify that
    there is a degree of bioequivalence there.
        We think that that is going to dramatically limit any
    opportunity for the indiscriminate listing of polymorph patents
    and gaming of the system even on its own, separate and apart
    from the fact that the single 30-month stay is going to reduce
    the incentives for the gaming with these later listed patents.
        So it is a hard issue. I am not pretending it is not a
    difficult issue. We found the input of the FTC very helpful and
    very useful and we think we have come up with a solution that
    works.
        Chairman Hatch. Well, thank you.
        We will turn to Senator Schumer.

     STATEMENT OF HON. CHARLES E. SCHUMER, A U.S. SENATOR FROM THE
                           STATE OF NEW YORK

        Senator Schumer. Well, thank you, Mr. Chairman, and I first
    want to thank you not only for holding this hearing, but for
    your leadership on this issue. I said this a while back that I
    think Hatch-Waxman was one of the great pro-consumer pieces of
    legislation of the last 25 years. Your authorship of it is a
    very important feather in your cap that I hope you wear
    proudly, and I am glad to see that you are still involved and
    interested in this issue, which I know you are from the last
    few years that we have been involved.
        Chairman Hatch. Thank you so much. I appreciate that.
        Senator Schumer. I also want to thank Senator Leahy, who
    has been involved, and together with you, Mr. Chairman, worked
    on the Drug Competition Act which the Senate passed last year.
        Senator Leahy wanted to be here today, but couldn't, and I
    would just ask unanimous consent that his opening statement be
    put in the record.
        Chairman Hatch. Without objection, and we will put any
    statements in the record.
        Senator Schumer. Thank you, Mr. Chairman.
        I would also like to thank Senator Gregg for his leadership
    in approaching me and bringing together Senators McCain and
    Kennedy, with whom I have worked on this issue in the past few
    years. Together, Judd and I, along with the others, have
    crafted a strong bipartisan bill which is now poised to pass
    the Senate, and I think has a real chance of making it through
    the House as well.
        The bill which passed out of Committee unanimously last
    week achieves the goals of the original Schumer-McCain bill of
    closing loopholes in the law which I know we are hearing about
    from our witnesses today. But it does so my modifying certain
    provisions to address the concerns that kept its critics from
    supporting it last year, including my friend Senator Hatch, who
    is always giving me some good advice on how to deal with these
    kinds of issues.
        Before I get into the discussion of the bill, I would like
    to talk about the issue and how far we have come in bringing
    these abuses to light over the last few years. Two years ago,
    Chairman Hatch called a hearing on this very same issue. At the
    time, we heard from the FDA, the FTC, and witnesses
    representing consumers and States who all shared their concern
    about ways in which the pharmaceutical industry was taking
    advantage of one of the most pro-consumer laws passed in
    decades, Hatch-Waxman.
        The compromise that Senator Hatch and Congressman Waxman
    crafted was carefully done, intended to strike a balance and
    help save consumers billions of dollars, while rewarding brand
    name companies for their innovations. For years, the law worked
    to do exactly that, but as the profits became higher, and
    frankly it seemed to me as the pharmaceutical industry, the
    brand name industry, had a large number of blockbuster drugs
    that were about to expire, and with their worry that they
    couldn't replace them with other drugs that were just as
    profitable, they began to find ways around this law, instead of
    innovating new drugs, innovating new patents.
        This is how America works; find a good lawyer and they will
    find a good loophole, and that is what happened. Companies
    began to do that, and even, to boot, some of the generic
    companies were hardly blameless. They would make deals with the
    brand name company and say, give us some money and we will keep
    this drug off the market.
        Congress began to look at all of these abuses 2 years ago
    with Chairman's Hatch. What has happened since then? First, the
    evidence mounted. In three additional hearings last year,
    Congress--this Committee, the Commerce Committee, the HELP
    Committee, the House Energy and Commerce Committee--heard how
    double-digit growth in drug costs and anticompetitive activity
    in the pharmaceutical industry has thrown not only citizens,
    but corporations, State Medicaid programs, and insurers into a
    tailspin as they struggle to pay for the drugs.
        Then the FTC issued a report which documented abuse of
    several key loopholes in the law, creating barriers to generic
    entry. Most significantly, the report identified eight
    blockbuster drugs, representing billions of dollars in sales
    for which the brand companies listed patents late in the
    process and triggered the successive 30-month stays of generic
    competition.
        The pharmaceutical companies have argued before Congress
    that these patents and the delays have been legitimate. Well,
    we have heard from the courts on five of these products, and so
    far in every single instance the courts have decided that these
    patents have been invalid or not infringed by the generic
    challenger. That doesn't sound too legitimate to me; zero for
    five is not a great batting record.
        Let me illustrate with an example. The example is Paxil.
    This is a $2.1 billion drug used to treat obsessive-compulsive
    disorder. It has been in litigation since 1998. After the
    lawsuit began and the first 30-month stay was triggered, the
    brand company, Glaxo SmithKline, listed nine additional patents
    on the drug, which ended up triggering five additional 30-month
    stays.
        Well, over the last year there have been court decisions on
    four of those patents. The patent which began this litigation
    was not found to be infringed upon by the generic, and the
    other three were found to be flat-out invalid. But the 30-month
    stays are still preventing the competition, costing consumers
    $3 billion.
        So this is a problem; it is a real problem. We have now the
    State attorneys general banding together to bring multiple
    suits against pharmaceutical companies. They have secured
    hundreds of millions of dollars in damages. The administration,
    under the FDA, has issued new regulations.
        Before I get into the substance of what we are talking
    about here--and I appreciate the opportunity to speak at some
    length, Mr. Chairman--I would make a plea to the pharmaceutical
    industry. You make a great product, you save people's lives.
    This is a good thing. You deserve a rate of return that is a
    fine rate of return. I don't dispute that. There are some who
    do. I don't. But the bottom line is, by overdoing it on these
    patents, you are ruining your goodwill.
        This is not an area where we are talking about price
    controls. It is not even an area we are talking about where
    American consumers pay for the research for the whole world.
    You have gotten what you are supposed to get on these patents,
    a large amount of profitability. God bless you. You have come
    out with a good product.
        But then to come up with some of these changes and say they
    are perfectly legitimate and say you are really just searching
    for better ways to serve the consumer--everyone in America
    knows that is bunk. This is one area where the pharmaceutical
    industry should say, hey, we want to work with you to keep a
    legitimate rate of return for wonderful drugs that save
    people's lives, but not abuse it, and because we have made so
    much money and we have to make more money. That is truly a
    heartfelt plea.
        We have some good companies in New York that employ
    thousands of people and they do good things. But the bottom
    line is don't kill the goose that laid the golden egg, because
    that is what happening here. Instead of the pharmaceutical
    industry being held in high esteem, which it was a decade ago,
    you are beginning to lose it, and some of it is just because
    the prices are high and people don't like that. But some of it
    is because you are abusing certain privileges, and you are not
    doing it in any area more so than generic drugs. So join with
    us. Don't fight us.
        I do want to say, Mr. Chairman, I think the proposal that
    Senator Gregg and I have put together is fair and balanced, and
    again saying to the pharmaceutical industry, I know you are not
    fighting us head-on, but I am going to fight weakening this
    bill. I am not going to allow loopholes, not going to allow
    lack of enforcement. I am not going to let someone say, because
    you can pluck out some lawyer somewhere who says something
    might be unconstitutional, leave this bill denuded. I feel very
    strongly about this.
        So where are we now? The proposal we have put together
    makes it easier for less expensive generic drugs to be sold in
    pharmacies. It will significantly reduce overall drug spending
    in the U.S. by billions. And yet, as Senator Gregg is always
    mindful, it will continue to allow innovation. It will continue
    to say to the industry, create something good and new and you
    are going to get an excellent rate of return on it.
        I think you have gone over what the bill does, but
    basically the bottom line--I used to call it Mitch Daniels'
    dream. Now, maybe we will have to call it Josh Bolton's dream.
    It is free-market, it is pro-consumer, and it doesn't cost the
    Government a penny. In fact, it will save the Government money.
        The bill provides a critical complement to the work the FDA
    has done in clarifying its regulations on patent listing, but
    it goes much further. The FDA, to its credit, has said we can't
    do it all; lots of this needs statute, when they came out with
    their proposed regulations which are now in effect, I guess.
        Chairman Hatch. Senator, your time is up. My problem is I
    have to be out of here at twenty-five after eleven.
        Senator Schumer. Let me just say quickly, on this chart,
    the FDA regulations get you up to here. We take you all the way
    through, and there are many other things that need to be done
    and the FDA regulations are not sufficient.
        I am going to ask that the rest of my statement be placed
    in the record, Mr. Chairman, because I know you are busy.
        Chairman Hatch. Without objection.
        [The prepared statement of Senator Schumer appears as a
    submission for the record.]
        Senator Schumer. I have a question or two, but I will
    defer.
        Chairman Hatch. We will keep the record open for written
    questions for any Senator on the Committee, and I will have
    some, I think.
        Senator Schumer. I will submit written questions to speed
    this along, Mr. Chairman.
        Chairman Hatch. Would you do that, because I am pressured
    and I have to be out of here?
        Senator Schumer. Yes, no problem.
        Chairman Hatch. I want to thank the three of you for being
    here. I think this has been an excellent time, and I want to
    personally tell all three of you how much I respect you and the
    work that you do. I think you are just terrific and you are
    doing great work.
        Mr. Troy, you have brought a breath of fresh air out there
    at FDA, in my opinion, and I just want to compliment you for
    it.
        You know how highly I think of you, Mr. Muris.
        Justice Department, get us that information as soon as you
    can, will you?
        Mr. Bradshaw. Yes.
        Chairman Hatch. Well, thank you so much. We appreciate you
    being here.
        Mr. Muris. Thank you very much, Mr. Chairman.
        Mr. Troy. Thank you.
        Chairman Hatch. Now, we will go to our next panel. Our
    first witness on the second panel is my friend, Howard
    Metzenbaum, former Senator from Ohio, representing the Consumer
    Federation of America.
        We welcome you back, Howard. You used to be a member of
    this Committee and we look forward to hearing your testimony.
        The second panelist will be Ms. Kathleen Jaeger, President
    of the Generic Pharmaceutical Association. We are very happy to
    have you here, Ms. Jaeger.
        Finally, we will hear from Bruce Kuhlik, General Counsel to
    the Pharmaceutical Research and Manufacturers of America.
        It is possible that these three witnesses might not see eye
    to eye on all of these issues, so it will be interesting to
    hear what you have to say. We will put your full statements in
    the record. If you can summarize very quickly, I would
    appreciate it, in 5 minutes, because I have to leave here in
    about ten minutes. So if you can, I would appreciate it.
        Senator Metzenbaum, we will turn to you first.

        STATEMENT OF HOWARD M. METZENBAUM, FORMER UNITED STATES
        SENATOR, AND CHAIRMAN, CONSUMER FEDERATION OF AMERICA,
                            WASHINGTON, D.C.

        Mr. Metzenbaum. As one who participated in so many
    filibusters with you, it would be difficult for me to summarize
    that briefly, but I will do the best I can, Mr. Chairman.
        Chairman Hatch. Listen, I recognize that well.
        [Laughter.]
        Mr. Metzenbaum. Mr. Chairman and Senator Schumer, it is
    good to be back at the Judiciary Committee. My name is Howard
    Metzenbaum. I serve as Chairman of the Consumer Federation of
    America. I appreciate your invitation to offer my comments,
    which I am presenting on behalf of the Consumer Federation and
    Consumers Union, which publishes Consumer Reports magazine.
        The FTC report detailed the many specious tactics used by
    drug companies to stall or thwart public access to less
    expensive generic drugs. It is actually outrageous that the
    same companies that charge Americans the highest drug prices in
    the industrialized world would use secret payoffs, flimsy legal
    maneuvers, and back-room deals to eliminate generic
    competition, line their pockets, and harm consumers.
        Every time a drug company blocks a safe generic drug from
    getting into the hands of the American people, they are not
    only placing a tax on the uninsured, the sick and the elderly,
    but are doing untold harm to millions of Americans. These
    outrageous attempts to keep drug prices high are particularly
    disgraceful because they undermine the effectiveness of one of
    your major achievements, Mr. Chairman, the Hatch-Waxman Act.
    You and Congressman Waxman provided great and wise leadership
    in drafting a law that carefully balances the need for drug
    innovation and affordability.
        Hatch-Waxman dramatically increased access to generic
    drugs, saved consumers billions of dollars, and ensured that
    the drug manufacturers have adequate patent protection to
    justify substantial investment in research and development.
    However, in recent years, as a number of top-selling
    blockbuster drugs were due to come off patent, brand drug
    manufacturers have used their political muscle and legal
    resources to block generic drugs from coming to market.
        When crass legislative efforts to pass unjustified patent
    extensions failed in Congress in the late 1990's, the drug
    industry turned to their platoon of legal talent for help. They
    filed late patent claims just before a drug was to come off
    patent. Sometimes, those claims had nothing to do with the
    therapeutic equivalent of a generic drug, such as the shape or
    color of a pill.
        They filed numerous nuisance lawsuits on the same drugs for
    violation of those late patents. This triggered Hatch-Waxman's
    30-month stay on the approval of a generic drug, and they made
    secret payments to some generic companies to keep generic
    alternatives off the market. To the drug industry, I say you
    should be ashamed of your conduct. You have abused the free
    market system.
        I will not discuss the additional $13 million that has been
    appropriated to the FDA for speedy approval of generic drugs.
    Let me assure you, however, that we strongly support that
    appropriation if it helps reduce the 20 months, on average,
    that it takes now for approval of a generic drug.
        I would like to comment briefly on two of the major
    responses to the FTC's report that we have seen--the Senate
    bipartisan legislation that was reported out of the HELP
    Committee last week and the FDA's new generic rule. These two
    responses are somewhat complementary, but the Senate
    legislation will be far more effective in protecting the public
    from the range of abuses I have detailed.
        First, it would limit the ability of brand name drug
    manufacturers to block generics through multiple 30-month
    stays. The bill would generally allow a drug company to receive
    only one stay per drug. The FDA rules on restrictions on
    multiple stays, by contrast, are far weaker and would allow
    brand drug companies to continue to game the system.
        Second, generic drug companies would have the right to
    assure that their drugs are not in violation of any patents
    before going to market by seeking a declaratory judgment.
        Third, the bill would take some moderate steps to reduce
    nuisance patent lawsuits. Unfortunately, however, this is one
    area where the bipartisan compromise will not be as effective
    as legislation passed overwhelmingly by the Senate last year.
        Unlike last year's bill, the compromise does not provide as
    many disincentives to stop brand drug companies from filing
    unjustified late patents. I will give you an example. Last
    year's bill gave generic companies a private right of action to
    de-list improper patents, and it didn't allow the brand drug
    companies to file an infringement lawsuit unless the patent in
    question was listed at the time the drug was approved.
        Regarding the FDA's generic rule which took effect last
    week, it has some strengths. For instance, it requires brand
    drug companies to provide more information about the patents
    they are listing. Overall, however, it is a disappointment. It
    is unlikely to reduce the many anticompetitive tactics that
    have been cited today. Even worse, it requires the listing of
    some new categories of patents. This may actually encourage
    brand drug companies to play patent hanky-panky once again.
        In closing, let me reiterate, Mr. Chairman and Senator
    Schumer, that the pharmaceutical industry has repeated used
    improper delaying tactics to thwart access to generic drugs.
    Their activities have been and continue to be shameful. This is
    not only a threat to the pocketbooks of many Americans, but to
    their health, and it is blight upon the free enterprise system.
    When faced with high drug costs, many people will go without
    needed medication or reduce the consumption of these drugs
    below the prescribed label.
        Senator Hatch and Senator Schumer, I urge you and members
    of the Committee to support actively the bipartisan compromise
    legislation that will soon reach the floor. Although the bill
    is not as strong as legislation that passed the Senate last
    year, I applaud the efforts of Senators Kennedy, Schumer,
    McCain, and Gregg to find a compromise that will decrease drug
    costs and increase the flow of cheaper generic drugs to
    Americans in need.
        I am very grateful to you, Mr. Chairman, for the
    opportunity to appear before your Committee. I think that we
    need action promptly and I am hopeful that we will see such
    action provided by your leadership, Senator Schumer, and other
    members of this Committee.
        [The prepared statement of Mr. Metzenbaum appears as a
    submission for the record.]
        Chairman Hatch. Thank you, Senator Metzenbaum.
        We will turn to you, Ms. Jaeger, and take your testimony at
    this time.

    STATEMENT OF KATHLEEN D. JAEGER, PRESIDENT AND CHIEF EXECUTIVE
    OFFICER, GENERIC PHARMACEUTICAL ASSOCIATION, WASHINGTON, D.C.;
       ACCOMPANIED BY JOHN YOO, PROFESSOR OF LAW, UNIVERSITY OF
              CALIFORNIA AT BERKELEY, BERKELEY, CALIFORNIA

        Ms. Jaeger. Thank you, Mr. Chairman, distinguished members
    of the Committee. My name is Kathleen Jaeger. I am the
    President and CEO of the Generic Pharmaceutical Association. On
    behalf of GPhA and its members, I especially want to thank you,
    Mr. Chairman, for your leadership on this issue as the original
    author of the landmark Hatch-Waxman Act, and for convening this
    hearing today.
        We applaud the Senate and the administration for their
    commitment to a package of administrative and legislative
    measures that, if taken together and not weakened, will make
    American health care more affordable.
        As you know, Senate bill 1225, the Greater Access to
    Affordable Pharmaceuticals Act, sponsored by Senators Gregg,
    Schumer, McCain, and Kennedy, was unanimously passed out of the
    Senate HELP Committee last week. We echo the President's
    intention to work with both the House and the Senate on this
    legislation to make certain that prescription drugs are more
    affordable to the American public.
        We believe that Senate bill 1225 will remove some of the
    most serious market barriers to generic competition. We also
    believe that the administration's regulatory initiatives,
    coupled with the compromise bill, will make American health
    care more affordable and provide consumers with timely access.
        But given that, instead of actually discussing the actual
    compromise that is on the table, you have raised some very
    important issues with respect to constitutionality with respect
    to the declaratory judgment provision, and out of respect for
    your time, Mr. Chairman, I ask that Mr. John Yoo, who is here
    today, actually speak to that issue. Mr. Yoo served as General
    Counsel to this Committee under your chairmanship from 1995 to
    1996. In addition, Mr. Yoo has clerked for Supreme Court
    Justice Clarence Thomas, and currently is a visiting fellow at
    the American Enterprise Institute and a professor of law at
    Berkeley.
        With your permission, may I turn over the floor to Mr. John
    Yoo, please.
        Chairman Hatch. Sure.
        John, welcome back to the Committee. You are an old friend
    and a terrific law professor.
        Mr. Yoo. Thank you, Mr. Chairman, and I will just very
    quickly provide some advice to the Committee.
        Chairman Hatch. Real quickly, though.
        Mr. Yoo. I hope that unlike past time when I worked for
    you, you actually listen to my advice a little bit this time.
        [Laughter.]
        Chairman Hatch. Well, I think we have heard enough from
    you.
        [Laughter.]
        Chairman Hatch. Go ahead.
        Mr. Yoo. Just on the two points of the Declaratory Judgment
    Act and the 30-month stay provision, it is my view that both
    provisions are constitutional. The Declaratory Judgment Act is
    a more difficult issue than the 30-month stay provision, but
    this is exactly the kind of circumstance that the Declaratory
    Judgment Act was passed to address, cases where potential
    patent infringers need to bring a suit to get some kind of
    declaration about their rights because the patent-holder might
    not bring suit.
        In fact, when Congress passed the bill in 1934, it
    specifically discussed this exact situation, and the Supreme
    Court, as you know, 3 years later in the Aetna case upheld the
    Declaratory Judgment Act.
        The only potential issue is whether the case law of the
    Federal Circuit and this reasonable apprehension test raises
    any doubt about the constitutionality of this legislation.
    There are a number of reasons why I don't think it does. One is
    that the reasonable apprehension test itself may not be an
    interpretation of the Article III case or controversy
    requirement, but might be an exercise of the Federal Circuit's
    prudential discretion not to hear certain kinds of suits.
        Second, I think it is perfectly appropriate for Congress to
    articulate a standard that might be odds with a lower Federal
    court if it wants the Supreme Court to determine finally
    whether this is a proper interpretation of the Article III case
    or controversy requirement.
        On the 30-month stay, just very quickly, a 30-month stay
    provision is just a change in the procedures that are used to
    enforce a Federal property right. It doesn't actually affect
    the Federal property right itself. As the Supreme Court has
    said most recently in the Plout case, Congress has full
    authority to make changes in cases that have not been finally
    decided by the Article III courts, and the procedures and even
    the substantive rights at issue, so long as, again, there has
    been no final determination of those rights and a final
    judgment by the Article III courts.
        Thank you, Mr. Chairman.
        Chairman Hatch. We would appreciate any further scholarship
    you can give us on this in writing. It would be helpful to us
    because it is a matter of concern.
        Ms. Jaeger. We would be happy to.
        Chairman Hatch. Thank you both for being here.
        [The prepared statement of Ms. Jaeger appears as a
    submission for the record.]
        Chairman Hatch. Mr. Kuhlik, you are the last one and if you
    could keep your remarks--I am in trouble here, but if you can
    keep your remarks within 5 minutes, I would appreciate it.

    STATEMENT OF BRUCE N. KUHLIK, SENIOR VICE PRESIDENT AND GENERAL
    COUNSEL, PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMERICA,
                            WASHINGTON, D.C.

        Mr. Kuhlik. I have been crossing out as you go along. Thank
    you, Mr. Chairman.
        I am Bruce Kuhlik, Senior Vice President and General
    Counsel of the Pharmaceutical Research and Manufacturers of
    America. We are pleased to have the opportunity to testify this
    morning.
        Landmark legislation passed by Congress in 1984, commonly
    known as the Hatch-Waxman Act, has fulfilled its twin goals of
    expediting generic drug entry and encouraging pharmaceutical
    innovation. By any measure, the law has been an enormous boon
    to the generic industry, as Chairman Muris explained this
    morning.
        For 3 years, though, we have had a debate over the need for
    new legislation. Until the FTC issued its report last year,
    however, the debate lacked any shared understanding of the
    facts. We were therefore pleased when the FTC issued its report
    last July. The report confirmed that the Hatch-Waxman Act
    works. Out of approximately 6,000 generic drugs approved since
    1984, the FTC identified only 8 instances in which innovator
    companies had received so-called multiple 30-month stays. Even
    accepting the view that there is something wrong with these
    stays, a law that works 5,992 times out of 6,000 is a law that
    works and, in our view, works well.
        The FTC called for two principal changes in the law: first,
    a limitation on 30-month stays to patents listed with FDA in
    the Orange Book before an ANDA is filed, and, second, a
    requirement that certain agreements between innovator and
    generic companies be reported to the FTC.
        A number of legislative and regulatory proposals have
    emerged since last July, none limited to the comparatively
    modest suggestions made by the FTC. First, the Senate passed a
    bill last year, Senate bill 812, that would have created a new
    cause of action for patent de-listing, cut off the right to a
    30-month stay for a broad universe of patents, subjected
    innovator companies to a 45-day statute of limitations, and
    forfeited patent enforcement rights altogether in certain
    cases.
        Mr. Chairman, you testified last year that this bill,
    quote, ``goes too far without a compelling demonstration of
    systemic abuse, and it upsets the carefully crafted balance,''
    unquote, in the law.
        Next, FDA proposed new Hatch-Waxman regulations last
    October which were issued in final form last week. The FDA rule
    attempts to address the multiple 30-month stay question within
    the confines of the current law, but we believe that it raises
    significant technical concerns regarding generics' ability to
    avoid any 30-month stay. In this regard, the agency said in the
    preamble, and Mr. Troy indicated as well this morning that it
    cannot completely prevent manipulation of the rule.
        Also, last week the HELP Committee marked up a bill, S.
    1225, that attempts to address the 30-month stay issue
    precisely as the FTC suggested. This bill, we believe, is a
    significant improvement over previous legislative proposals and
    is close, Mr. Chairman, I think, to what you have suggested as
    appropriate.
        Senator Schumer, we congratulate you, Senator Gregg, and
    the other sponsors of this bill for your leadership in
    developing it.
        In its present form, however, as marked up by the
    committee, the bill does present significant technical and
    workability concerns regarding operation of the 30-month stay.
    Mr. Troy discussed some of those earlier this morning. It also
    goes beyond the FTC report by addressing other issues in a
    problematic fashion. We have heard discussion this morning of
    the constitutional issues raised by the declaratory judgment
    provision.
        As Mr. Boyden Gray said, former White House Counsel, quote,
    ``The bill takes the absence of a live case or controversy and
    defines it as a live case or controversy,'' unquote. We look
    forward to hearing what the Justice Department has to say about
    that constitutionality provision.
        The bill would also limit the availability of treble
    damages in certain cases involving willful infringement by
    generics. At a time when generic abuses of the statute are
    growing, it would make little sense to discriminate against
    pharmaceutical patent-holders by curtailing the remedies for
    this sort of behavior.
        Where does this leave us? We believe that the FTC report
    vindicates our longstanding view that legislation to amend the
    Act in a manner adverse to research and innovation is
    unnecessary. At the same time, the technical concerns presented
    by both the FDA rule and S. 1225 as marked up counsel in favor
    of addressing the complex 30-month stay issue correctly. We
    would be pleased to work on a bipartisan basis toward this
    goal, with the priority of seeing such a bill passed and signed
    into law as quickly as possible.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Kuhlik appears as a
    submission for the record.]
        Chairman Hatch. Thank you so much.
        I am going to turn to Senator Schumer for just a very short
    statement.
        Senator Schumer. I will submit written questions.
        Chairman Hatch. We will all submit written questions, and
    we have got a lot of questions.
        Senator Schumer. Thank you, Mr. Chairman. I just wanted to
    say Senator Gregg and I spent a lot of time working on this
    compromise and we consulted numerous constitutional experts on
    the declaratory judgment provision in the bill. They were
    virtually unanimous that there was no constitutional problem,
    so I am not worried about it.
        That is what I wanted to say for the record, Mr. Chairman.
        Chairman Hatch. Well, thank you.
        I want to thank each of you for being here. Mr. Yoo, please
    submit any scholarship you can on this, and I know you will,
    knowing you, and you also, Mr. Kuhlik. These are important
    issues. I think you, Ms. Jaeger, have represented the generic
    industry well.
        Senator Metzenbaum, the consumers of America are well
    represented by you. There is no question about that. I still
    remember you rushing onto the floor at the last minute trying
    to stop this effort, talking to Ralph Nader and trying to stop
    Hatch-Waxman. But I had slipped it through on you before you
    got in there, and you just immediately went back to work to
    stop some other things you thought were wrong.
        But I will tell you it is a privilege to have you here in
    the Judiciary Committee room again, and it is a privilege to
    have your testimony. So we appreciate you taking the time to do
    it.
        Thank you all for being here.
        With that, we will recess and I will get to my next
    meeting.
        [Whereupon, at 11:34 a.m., the Committee was adjourned.]
        [Submissions for the record follow.]

        [GRAPHIC] [TIFF OMITTED] T1212.001

        [GRAPHIC] [TIFF OMITTED] T1212.002

        [GRAPHIC] [TIFF OMITTED] T1212.003

        [GRAPHIC] [TIFF OMITTED] T1212.004

        [GRAPHIC] [TIFF OMITTED] T1212.005

        [GRAPHIC] [TIFF OMITTED] T1212.006

        [GRAPHIC] [TIFF OMITTED] T1212.007

        [GRAPHIC] [TIFF OMITTED] T1212.008

        [GRAPHIC] [TIFF OMITTED] T1212.009

        [GRAPHIC] [TIFF OMITTED] T1212.010

        [GRAPHIC] [TIFF OMITTED] T1212.011

        [GRAPHIC] [TIFF OMITTED] T1212.012

        [GRAPHIC] [TIFF OMITTED] T1212.013

        [GRAPHIC] [TIFF OMITTED] T1212.014

        [GRAPHIC] [TIFF OMITTED] T1212.015

        [GRAPHIC] [TIFF OMITTED] T1212.016

        [GRAPHIC] [TIFF OMITTED] T1212.017

        [GRAPHIC] [TIFF OMITTED] T1212.018

        [GRAPHIC] [TIFF OMITTED] T1212.019

        [GRAPHIC] [TIFF OMITTED] T1212.020

        [GRAPHIC] [TIFF OMITTED] T1212.021

        [GRAPHIC] [TIFF OMITTED] T1212.022

        [GRAPHIC] [TIFF OMITTED] T1212.023

        [GRAPHIC] [TIFF OMITTED] T1212.024

        [GRAPHIC] [TIFF OMITTED] T1212.025

        [GRAPHIC] [TIFF OMITTED] T1212.026

        [GRAPHIC] [TIFF OMITTED] T1212.027

        [GRAPHIC] [TIFF OMITTED] T1212.028

        [GRAPHIC] [TIFF OMITTED] T1212.029

        [GRAPHIC] [TIFF OMITTED] T1212.030

        [GRAPHIC] [TIFF OMITTED] T1212.031

        [GRAPHIC] [TIFF OMITTED] T1212.032

        [GRAPHIC] [TIFF OMITTED] T1212.033

        [GRAPHIC] [TIFF OMITTED] T1212.034

        [GRAPHIC] [TIFF OMITTED] T1212.035

        [GRAPHIC] [TIFF OMITTED] T1212.036

        [GRAPHIC] [TIFF OMITTED] T1212.037

        [GRAPHIC] [TIFF OMITTED] T1212.038

        [GRAPHIC] [TIFF OMITTED] T1212.039

        [GRAPHIC] [TIFF OMITTED] T1212.040

        [GRAPHIC] [TIFF OMITTED] T1212.041

        [GRAPHIC] [TIFF OMITTED] T1212.042

        [GRAPHIC] [TIFF OMITTED] T1212.043

        [GRAPHIC] [TIFF OMITTED] T1212.044

        [GRAPHIC] [TIFF OMITTED] T1212.045

        [GRAPHIC] [TIFF OMITTED] T1212.046

        [GRAPHIC] [TIFF OMITTED] T1212.047

        [GRAPHIC] [TIFF OMITTED] T1212.048

        [GRAPHIC] [TIFF OMITTED] T1212.049

        [GRAPHIC] [TIFF OMITTED] T1212.050

        [GRAPHIC] [TIFF OMITTED] T1212.051

        [GRAPHIC] [TIFF OMITTED] T1212.052

        [GRAPHIC] [TIFF OMITTED] T1212.053

        [GRAPHIC] [TIFF OMITTED] T1212.054

        [GRAPHIC] [TIFF OMITTED] T1212.055

        [GRAPHIC] [TIFF OMITTED] T1212.056

        [GRAPHIC] [TIFF OMITTED] T1212.057

        [GRAPHIC] [TIFF OMITTED] T1212.058

        [GRAPHIC] [TIFF OMITTED] T1212.059

        [GRAPHIC] [TIFF OMITTED] T1212.060

        [GRAPHIC] [TIFF OMITTED] T1212.061

        [GRAPHIC] [TIFF OMITTED] T1212.062

        [GRAPHIC] [TIFF OMITTED] T1212.063

        [GRAPHIC] [TIFF OMITTED] T1212.064

        [GRAPHIC] [TIFF OMITTED] T1212.065

        [GRAPHIC] [TIFF OMITTED] T1212.066

        [GRAPHIC] [TIFF OMITTED] T1212.067

        [GRAPHIC] [TIFF OMITTED] T1212.068

        [GRAPHIC] [TIFF OMITTED] T1212.069

        [GRAPHIC] [TIFF OMITTED] T1212.070

        [GRAPHIC] [TIFF OMITTED] T1212.071

        [GRAPHIC] [TIFF OMITTED] T1212.072

        [GRAPHIC] [TIFF OMITTED] T1212.073

        [GRAPHIC] [TIFF OMITTED] T1212.074

        [GRAPHIC] [TIFF OMITTED] T1212.075

        [GRAPHIC] [TIFF OMITTED] T1212.076

        [GRAPHIC] [TIFF OMITTED] T1212.077

        [GRAPHIC] [TIFF OMITTED] T1212.078

        [GRAPHIC] [TIFF OMITTED] T1212.079

        [GRAPHIC] [TIFF OMITTED] T1212.080

        [GRAPHIC] [TIFF OMITTED] T1212.081

        [GRAPHIC] [TIFF OMITTED] T1212.082

        [GRAPHIC] [TIFF OMITTED] T1212.083

        [GRAPHIC] [TIFF OMITTED] T1212.084

        [GRAPHIC] [TIFF OMITTED] T1212.085

        [GRAPHIC] [TIFF OMITTED] T1212.086

        [GRAPHIC] [TIFF OMITTED] T1212.087

        [GRAPHIC] [TIFF OMITTED] T1212.088

        [GRAPHIC] [TIFF OMITTED] T1212.089

        [GRAPHIC] [TIFF OMITTED] T1212.090