[House Report 107-277]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 107-277
======================================================================
BEST PHARMACEUTICALS FOR CHILDREN ACT
_______
November 9, 2001.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Tauzin, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 2887]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 2887) to amend the Federal Food, Drug, and
Cosmetic Act to improve the safety and efficacy of
pharmaceuticals for children, having considered the same,
report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 13
Background and Need for Legislation.............................. 13
Hearings......................................................... 15
Committee Consideration.......................................... 15
Committee Votes.................................................. 15
Committee Oversight Findings..................................... 20
Statement of General Performance Goals and Objectives............ 20
New Budget Authority, Entitlement Authority, and Tax Expenditures 20
Committee Cost Estimate.......................................... 20
Congressional Budget Office Estimate............................. 22
Federal Mandates Statement....................................... 34
Advisory Committee Statement..................................... 34
Constitutional Authority Statement............................... 34
Applicability to Legislative Branch.............................. 34
Section-by-Section Analysis of the Legislation................... 35
Changes in Existing Law Made by the Bill, as Reported............ 40
Dissenting Views................................................. 56
Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Best Pharmaceuticals for Children
Act''.
SEC. 2. PEDIATRIC STUDIES OF ALREADY-MARKETED DRUGS.
(a) In General.--Section 505A of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 355a) is amended--
(1) by striking subsection (b); and
(2) by redesignating subsections (c) through (k) as
subsections (b) through (j), respectively.
(b) Conforming Amendments.--Section 505A of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 355a) is amended in subsection (b) (as
redesignated by subsection (a)(2) of this section)--
(1) by inserting after ``the Secretary'' the following:
``determines that information relating to the use of an
approved drug in the pediatric population may produce health
benefits in that population and''; and
(2) by striking ``concerning a drug identified in the list
described in subsection (b)''.
SEC. 3. RESEARCH FUND FOR THE STUDY OF DRUGS LACKING EXCLUSIVITY.
Part B of title IV of the Public Health Service Act (42 U.S.C. 284 et
seq.) is amended--
(1) by redesignating the second section 409C (relating to
clinical research) as section 409G;
(2) by redesignating the second section 409D (relating to
enhancement awards) as section 409H; and
(3) by adding at the end the following:
``SEC. 409I. PROGRAM FOR PEDIATRIC STUDIES OF DRUGS LACKING
EXCLUSIVITY.
``(a) List of Drugs Lacking Exclusivity for Which Pediatric Studies
are Needed.--
``(1) In general.--Not later than 1 year after the date of
enactment of this section, the Secretary, acting through the
Director of the National Institutes of Health and in
consultation with the Commissioner of Food and Drugs and
experts in pediatric research, shall develop, prioritize, and
publish an annual list of approved drugs for which--
``(A)(i) there is an approved application under
section 505(j) of the Federal Food, Drug, and Cosmetic
Act;
``(ii) there is a submitted application that could be
approved under the criteria of section 505(j) of the
Federal Food, Drug, and Cosmetic Act;
``(iii) there is no patent protection or market
exclusivity protection under the Federal Food, Drug,
and Cosmetic Act; or
``(iv) there is, under section 505A(c)(4)(C) of the
Federal Food, Drug, and Cosmetic Act, a referral for
inclusion on such list; and
``(B) additional studies are needed to assess the
safety and effectiveness of the use of the drug in the
pediatric population.
``(2) Consideration of available information.--In developing
the list under paragraph (1), the Secretary shall consider, for
each drug on the list--
``(A) the availability of information concerning the
safe and effective use of the drug in the pediatric
population;
``(B) whether additional information is needed;
``(C) whether new pediatric studies concerning the
drug may produce health benefits in the pediatric
population; and
``(D) whether reformulation of the drug is necessary;
``(b) Contracts for Pediatric Studies.--The Secretary shall award
contracts to entities that have the expertise to conduct pediatric
clinical trials (including qualified universities, hospitals,
laboratories, contract research organizations, federally funded
programs such as pediatric pharmacology research units, other public or
private institutions, or individuals) to enable the entities to conduct
pediatric studies concerning one or more drugs identified in the list
described in subsection (a).
``(c) Process for Contracts and Labeling Changes.--
``(1) Written request to holders of approved applications for
drugs lacking exclusivity.--
``(A) In general.--The Commissioner of Food and
Drugs, in consultation with the Director of National
Institutes of Health, may issue a written request
(which shall include a timeframe for negotiations for
an agreement) for pediatric studies concerning a drug
identified in the list described in subsection (a) to
all holders of an approved application for the drug
under section 505 of the Federal Food, Drug, and
Cosmetic Act. Such a written request shall be made in a
manner equivalent to the manner in which a written
request is made under subsection (a) or (b) of section
505A of the Federal Food, Drug, and Cosmetic Act,
including with respect to information provided on the
pediatric studies to be conducted pursuant to the
request.
``(B) Publication of request.--If the Commissioner of
Food and Drugs does not receive a response to a written
request issued under subparagraph (A) within 30 days of
the date on which a request was issued, the Secretary,
acting through the Director of National Institutes of
Health and in consultation with the Commissioner of
Food and Drugs, shall publish a request for contract
proposals to conduct the pediatric studies described in
the written request.
``(C) Disqualification.--A holder that receives a
first right of refusal shall not be entitled to respond
to a request for contract proposals under subparagraph
(B).
``(D) Guidance.--Not later than 270 days after the
date of enactment of this section, the Commissioner of
Food and Drugs shall promulgate guidance to establish
the process for the submission of responses to written
requests under subparagraph (A).
``(2) Contracts.--A contract under this section may be
awarded only if a proposal for the contract is submitted to the
Secretary in such form and manner, and containing such
agreements, assurances, and information as the Secretary
determines to be necessary to carry out this section.
``(3) Reporting of studies.--
``(A) Upon completion of a pediatric study in
accordance with a contract awarded under this section,
a report concerning the study shall be submitted to the
Director of National Institutes of Health and the
Commissioner of Food and Drugs. The report shall
include all data generated in connection with the
study.
``(B) Availability of reports.--Each report submitted
under subparagraph (A) shall be considered to be in the
public domain, and shall be assigned a docket number by
the Commissioner of Food and Drugs. An interested
person may submit written comments concerning such
pediatric studies to the Commissioner of Food and
Drugs, and the written comments shall become part of
the docket file with respect to each of the drugs.
``(C) Action by commissioner.--The Commissioner of
Food and Drugs shall take appropriate action in
response to the reports submitted under subparagraph
(A) in accordance with paragraph (4).
``(4) Request for labeling changes.--During the 180-day
period after the date on which a report is submitted under
paragraph (3)(A), the Commissioner of Food and Drugs shall--
``(A) review the report and such other data as are
available concerning the safe and effective use in the
pediatric population of the drug studied; and
``(B) negotiate with the holders of approved
applications for the drug studied for any labeling
changes that the Commissioner of Food and Drugs
determines to be appropriate and requests the holders
to make; and
``(C)(i) place in the public docket file a copy of
the report and of any requested labeling changes; and
``(ii) publish in the Federal Register a summary of
the report and a copy of any requested labeling
changes.
``(5) Dispute resolution.--If, not later than the end of the
180-day period specified in paragraph (4), the holder of an
approved application for the drug involved does not agree to
any labeling change requested by the Commissioner of Food and
Drugs under that paragraph--
``(A) the Commissioner of Food and Drugs shall
immediately refer the request to the Pediatric Advisory
Subcommittee of the Anti-Infective Drugs Advisory
Committee; and
``(B) not later than 90 days after receiving the
referral, the Subcommittee shall--
``(i) review the available information on the
safe and effective use of the drug in the
pediatric population, including study reports
submitted under this section; and
``(ii) make a recommendation to the
Commissioner of Food and Drugs as to
appropriate labeling changes, if any.
``(6) FDA determination.--Not later than 30 days after
receiving a recommendation from the Subcommittee under
paragraph (5)(B)(ii) with respect to a drug, the Commissioner
of Food and Drugs shall consider the recommendation and, if
appropriate, make a request to the holders of approved
applications for the drug to make any labeling change that the
Commissioner of Food and Drugs determines to be appropriate.
``(7) Failure to agree.--If a holder of an approved
application for a drug, within 30 days after receiving a
request to make a labeling change under paragraph (6), does not
agree to make a requested labeling change, the Commissioner may
deem the drug to be misbranded under the Federal Food, Drug,
and Cosmetic Act.
``(8) Recommendation for formulation changes.--If a pediatric
study completed under public contract indicates that a
formulation change is necessary and the Secretary agrees, the
Secretary shall send a nonbinding letter of recommendation
regarding that change to each holder of an approved
application.
``(d) Confidential Commercial Information; Trade Secrets.--Nothing in
this section requires or authorizes the use or disclosure of
confidential commercial information or trade secrets.
``(e) Authorization of Appropriations.--
``(1) In general.--For the purpose of carrying out this
section, there are authorized to be appropriated $200,000,000
for fiscal year 2002, and such sums as may be necessary for
each of the fiscal years 2003 through 2007.
``(2) Availability.--Any amount appropriated under paragraph
(1) shall remain available to carry out this section until
expended.''.
SEC. 4. WRITTEN REQUEST TO HOLDERS OF APPROVED APPLICATIONS FOR DRUGS
THAT HAVE MARKET EXCLUSIVITY.
Section 505A of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355a) is amended in subsection (c) (as redesignated by section 2(a)(2)
of this Act) by adding at the end the following:
``(4) Written request to holders of approved applications for
drugs that have market exclusivity.--
``(A) Request and response.--If the Secretary makes a
written request for pediatric studies under subsection
(b) to the holder of an application approved under
section 505(b)(1), the holder, not later than 180 days
after receiving the written request, shall respond to
the Secretary as to the intention of the holder to act
on the request by--
``(i) indicating when the pediatric studies
will be initiated, if the holder agrees to the
request; or
``(ii) indicating that the holder does not
agree to the request.
``(B) No agreement to request.--
``(i) Referral.--If the holder does not agree
to a written request within the time period
specified in subparagraph (A), and if the
Secretary determines that there is a continuing
need for information relating to the use of the
drug in the pediatric population (including
neonates as appropriate), the Secretary shall
refer the drug to the Foundation for Pediatric
Research established under section 499A of the
Public Health Service Act (referred to in this
paragraph as the `Foundation') for
consideration for the conduct of the pediatric
studies described in the written request.
``(ii) Public notice.--The Secretary shall
give public notice of a referral under clause
(i), including notice of the name of the drug,
the name of the manufacturer, and the
indication to be studied.
``(C) Lack of funds.--If, on referral of a drug under
subparagraph (B)(i), the Foundation certifies to the
Secretary that the Foundation does not have funds
available to conduct the requested studies, the
Secretary shall refer the drug for inclusion on the
list established under section 409I of the Public
Health Service Act for the conduct of the studies.
``(D) Confidential commercial information; trade
secrets.--Nothing in this paragraph requires or
authorizes the use or disclosure of confidential
commercial information or trade secrets.
``(E) No requirement to refer.--Nothing in this
subsection shall be construed to require that every
declined written request shall be referred to the
Foundation.''.
SEC. 5. TIMELY LABELING CHANGES FOR DRUGS GRANTED EXCLUSIVITY; DRUG
FEES.
(a) Elimination of User Fee Waiver for Pediatric Supplements.--
Section 736(a)(1) of the Federal Food, Drug, and Cosmetic Act (21
U.S.C. 379h(a)(1)) is amended--
(1) by striking subparagraph (F); and
(2) by redesignating subparagraph (G) as subparagraph (F).
(b) Labeling Changes.--
(1) Definition of priority supplement.--Section 201 of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321) is amended
by adding at the end the following:
``(kk) Priority Supplement.--The term `priority supplement' means a
drug application referred to in section 101(4) of the Food and Drug
Administration Modernization Act of 1997 (111 Stat. 2298).''.
(2) Treatment as Priority Supplements.--Section 505A of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355a), as
amended by section 2(a)(2) of this Act, is amended by adding at
the end the following:
``(k) Labeling Supplements.--
``(1) Priority status for pediatric supplements.--Any
supplement to an application under section 505 proposing a
labeling change pursuant to a report on a pediatric study under
this section--
``(A) shall be considered to be a priority
supplement; and
``(B) shall be subject to the performance goals
established by the Commissioner for priority drugs.
``(2) Dispute resolution.--If the Commissioner determines
that an application with respect to which a pediatric study is
conducted under this section is approvable and that the only
open issue for final action on the application is the reaching
of an agreement between the sponsor of the application and the
Commissioner on appropriate changes to the labeling for the
drug that is the subject of the application--
``(A) not later than 180 days after the date of
submission of the application--
``(i) the Commissioner shall request that the
sponsor of the application make any labeling
change that the Commissioner determines to be
appropriate; and
``(ii) if the sponsor of the application does
not agree to make a labeling change requested
by the Commissioner by that date, the
Commissioner shall immediately refer the matter
to the Pediatric Advisory Subcommittee of the
Anti-Infective Drugs Advisory Committee;
``(B) not later than 90 days after receiving the
referral, the Pediatric Advisory Subcommittee of the
Anti-Infective Drugs Advisory Committee shall--
``(i) review the pediatric study reports; and
``(ii) make a recommendation to the
Commissioner concerning appropriate labeling
changes, if any;
``(C) the Commissioner shall consider the
recommendations of the Pediatric Advisory Subcommittee
of the Anti-Infective Drugs Advisory Committee and, if
appropriate, not later than 30 days after receiving the
recommendation, make a request to the sponsor of the
application to make any labeling change that the
Commissioner determines to be appropriate; and
``(D) if the sponsor of the application, within 30
days after receiving a request under subparagraph (C),
does not agree to make a labeling change requested by
the Commissioner, the Commissioner may deem the drug
that is the subject of the application to be
misbranded.''.
SEC. 6. OFFICE OF PEDIATRIC THERAPEUTICS.
(a) Establishment.--The Secretary of Health and Human Services shall
establish an Office of Pediatric Therapeutics within the Office of the
Commissioner of Food and Drugs.
(b) Duties.--The Office of Pediatric Therapeutics shall be
responsible for oversight and coordination of all activities of the
Food and Drug Administration that may have any effect on a pediatric
population or the practice of pediatrics or may in any other way
involve pediatric issues.
(c) Staff.--The staff of the Office of Pediatric Therapeutics shall
include--
(1) employees of the Department of Health and Human Services
who, as of the date of enactment of this Act, exercise
responsibilities relating to pediatric therapeutics;
(2) 1 or more additional individuals with expertise
concerning ethical issues presented by the conduct of clinical
research in the pediatric population; and
(3) 1 or more additional individuals with expertise in
pediatrics who shall consult and collaborate with all
components of the Food and Drug Administration concerning
activities described in subsection (b).
SEC. 7. NEONATES.
Section 505A of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355a) is amended in subsection (f) (as redesignated by section 2(a)(2)
of this Act) by inserting ``(including neonates in appropriate cases)''
after ``pediatric age groups''.
SEC. 8. SUNSET.
Section 505A of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355a) is amended by striking subsection (i) (as redesignated by section
2(a)(2) of this Act) and inserting the following:
``(i) Sunset.--A drug may not receive any 6-month period under
subsection (a) or (b) unless--
``(1) on or before October 1, 2007, the Secretary makes a
written request for pediatric studies of the drug;
``(2) on or before October 1, 2007, an approvable application
for the drug is submitted under section 505(b)(1); and
``(3) all requirements of this section are met.''.
SEC. 9. DISSEMINATION OF PEDIATRIC INFORMATION.
Section 505A of the Federal Food, Drug, and Cosmetic Act, as amended
by section 5(b)(2) of this Act, is amended by adding at the end the
following:
``(l) Dissemination of Pediatric Information.--
``(1) In general.--Not later than 180 days after the date of
submission of a report on a pediatric study under this section,
the Commissioner shall make available to the public a summary
of the medical and clinical pharmacology reviews of pediatric
studies conducted for the supplement, including by publication
in the Federal Register.
``(2) Effect of subsection.--Nothing in this subsection
alters or amends in any way section 552 of title 5 or section
1905 of title 18, United States Code.''.
SEC. 10. CLARIFICATION OF INTERACTION OF MARKET EXCLUSIVITY UNDER
SECTION 505A OF THE FEDERAL FOOD, DRUG, AND
COSMETIC ACT AND MARKET EXCLUSIVITY AWARDED TO AN
APPLICANT FOR APPROVAL OF A DRUG UNDER SECTION
505(J) OF THAT ACT.
Section 505A of the Federal Food, Drug, and Cosmetic Act, as amended
by section 9 of this Act, is amended by adding at the end the
following:
``(m) Clarification of Interaction of Market Exclusivity Under This
Section and Market Exclusivity Awarded to an Applicant for Approval of
a Drug Under Section 505(j).--
``(1) In general.--If a 180-day period under section
505(j)(5)(B)(iv) overlaps with a 6-month extension under this
section, so that the applicant for approval of a drug under
section 505(j) entitled to the 180-day period under that
section loses a portion of the 180-day period to which the
applicant is entitled for the drug, the 180-day period shall be
extended--
``(A) if the 180-day period would, but for this
subsection, expire after the 6-month extension, by the
number of days of the overlap; or
``(B) if the 180-day period would, but for this
subsection, expire during the 6-month extension, by 6
months.
``(2) Effect of subsection.--Under no circumstances shall
application of this section result in an applicant for approval
of a drug under section 505(j) being enabled to commercially
market the drug to the exclusion of a subsequent applicant for
approval of a drug under section 505(j) for more than 180
days.''.
SEC. 11. PROMPT APPROVAL OF GENERIC DRUGS WHEN PEDIATRIC INFORMATION
ADDED TO LABELING.
(a) In General.--Section 505A of the Federal Food, Drug, and Cosmetic
Act, as amended by section 10 of this Act, is amended by adding at the
end the following subsection:
``(n) Prompt Approval of Generic Drugs When Pediatric Information
Added to Labeling.--
``(1) In general.--A drug for which an application has been
submitted or approved under section 505(j) and which otherwise
meets all other applicable requirements under that section
shall be considered eligible for approval and shall not be
considered misbranded under section 502 even when its labeling
omits a pediatric indication or other aspect of labeling
pertaining to pediatric use that is protected by patent or by
market exclusivity pursuant to clause (iii) or (iv) of section
505(j)(5)(D).
``(2) Labeling of generic drug.--Notwithstanding the
provisions of clause (iii) or (iv) of section 505(j)(5)(D), the
Secretary may require that the labeling of a drug approved
under section 505(j) that omits pediatric labeling pursuant to
paragraph (1) include--
``(A) a statement that the drug is not labeled for
the protected pediatric use; and
``(B) any warnings against unsafe pediatric use that
the Secretary considers necessary.
``(3) Rule of construction.--Paragraphs 1 and 2 of this
subsection do not affect--
``(A) the availability or scope of exclusivity under
this section;
``(B) the availability or scope of exclusivity under
section 505 for pediatric formulations; or
``(C) except as expressly provided in paragraph (1)
and (2), the operation of section 505.''.
(b) Effective Date.--The amendments made by subsection (a) take
effect on the date of the enactment of this Act, including with respect
to applications under section 505(j) of the Federal Food, Drug, and
Cosmetic Act that are approved or pending on that date.
SEC. 12. ADVERSE-EVENT REPORTING.
(a) Toll-Free Number in Labeling.--Not later than one year after the
date of the enactment of this Act, the Secretary of Health and Human
Services shall promulgate a final rule requiring that the labeling of
each drug for which an application is approved under section 505 of the
Federal Food, Drug, and Cosmetic Act (regardless of the date on which
approved) include the toll-free number maintained by the Secretary for
the purpose of receiving reports of adverse events regarding drugs.
With respect to the final rule:
(1) The rule shall provide for the implementation of such
labeling requirement in a manner that the Secretary considers
to be most likely to reach the broadest consumer audience.
(2) In promulgating the rule, the Secretary shall seek to
minimize the cost of the rule on the pharmacy profession.
(3) The rule shall take effect not later than 60 days after
the date on which the rule is promulgated.
(b) Drugs with Pediatric Market Exclusivity.--
(1) In general.--During the one-year beginning on the date on
which a drug receives a period of market exclusivity under 505A
of the Federal Food, Drug, and Cosmetic Act, any report of an
adverse event regarding the drug that the Secretary of Health
and Human Services receives shall be referred to the Office of
Pediatric Therapeutics established under section 6 of this Act.
In considering the report, the Director of such Office shall
provide for the review of the report by the Pediatric Advisory
Subcommittee of the Anti-Infective Drugs Advisory Committee,
including obtaining any recommendations of such Subcommittee
regarding whether the Secretary should take action under the
Federal Food, Drug, and Cosmetic Act in response to the report.
(2) Rule of construction.--Paragraph (1) may not be construed
as restricting the authority of the Secretary of Health and
Human Services to continue carrying out the activities
described in such paragraph regarding a drug after the one-year
period described in such paragraph regarding the drug has
expired.
SEC. 13. FOUNDATION FOR PEDIATRIC RESEARCH.
Title IV of the Public Health Service Act (42 U.S.C. 281 et seq.) is
amended by adding at the end the following part:
``PART J--FOUNDATION FOR PEDIATRIC RESEARCH
``SEC. 499A. ESTABLISHMENT AND DUTIES OF FOUNDATION.
``(a) In General.--The Secretary, acting through the Director of NIH
and in consultation with the Commissioner of Food and Drugs, shall
establish a nonprofit corporation to be known as the Foundation for
Pediatric Research (hereafter in this section referred to as the
`Foundation'). The Foundation shall not be an agency or instrumentality
of the United States Government.
``(b) Purpose of Foundation.--The purpose of the Foundation shall be
to collect funds and award grants for research on drugs listed by the
Secretary pursuant to section 409I(a)(1)(A).
``(c) Certain Activities of Foundation.--
``(1) In general.--In carrying out subsection (b), the
Foundation may solicit and accept gifts, grants, and other
donations, establish accounts, and invest and expend funds in
support of a program to encourage donations for the conduct of
studies of drugs referred to in subsection (b).
``(2) Fees.--The Foundation may assess fees for the provision
of professional, administrative and management services by the
Foundation in amounts determined reasonable and appropriate by
the Executive Director.
``(3) Authority of foundation.--The Foundation shall be the
sole entity responsible for carrying out the activities
described in this subsection.
``(d) Board of Directors.--
``(1) Composition.--
``(A) The Foundation shall have a Board of Directors
(hereafter referred to in this section as the `Board'),
which shall be composed of ex officio and appointed
members in accordance with this subsection. Appointed
members of the Board shall be the voting members.
``(B) The ex officio members of the Board shall be--
``(i) the Chairman and ranking minority
member of the Subcommittee on Health (Committee
on Energy and Commerce) or their designees, in
the case of the House of Representatives;
``(ii) the Chairman and ranking minority
member of the Committee on Health, Education,
Labor and Pensions or their designees, in the
case of the Senate;
``(iii) the Director of NIH; and
``(iv) the Commissioner of Food and Drugs.
``(C) The ex officio members of the Board under
subparagraph (B) shall appoint to the Board 11
individuals from among a list of candidates to be
provided by the National Academy of Science. Of such
appointed members--
``(i) 5 shall be representative of the
experts in pediatric medicine and research
field;
``(ii) 1 shall be a biomedical ethicist; and
``(iii) 5 shall be representatives of the
general public, which may include
representatives of affected industries.
``(D)(i) Not later than 30 days after the date of the
enactment of the Best Pharmaceuticals for Children Act,
the Director of NIH shall convene a meeting of the ex
officio members of the Board to--
``(I) incorporate the Foundation and
establish the general policies of the
Foundation for carrying out the purposes of
subsection (b), including the establishment of
the bylaws of the Foundation; and
``(II) appoint the members of the Board in
accordance with subparagraph (C).
``(ii) Upon the appointment of the members of the
Board under clause (i)(II), the terms of service of the
ex officio members of the Board as members of the Board
shall terminate.
``(E) The agreement of not less than three-fifths of
the members of the ex officio members of the Board
shall be required for the appointment of each member to
the initial Board.
``(F) No employee of the National Institutes of
Health shall be appointed as a member of the Board.
``(2) Chair.--
``(A) The ex officio members of the Board under
paragraph (1)(B) shall designate an individual to serve
as the initial Chair of the Board.
``(B) Upon the termination of the term of service of
the initial Chair of the Board, the appointed members
of the Board shall elect a member of the Board to serve
as the Chair of the Board.
``(3) Terms and vacancies.--
``(A) The term of office of each member of the Board
appointed under paragraph (1)(C) shall be 5 years,
except that the terms of offices for the initial
appointed members of the Board shall expire as
determined by the ex officio members and the Chair.
``(B) Any vacancy in the membership of the Board
shall be filled in the manner in which the original
position was made and shall not affect the power of the
remaining members to execute the duties of the Board.
``(C) If a member of the Board does not serve the
full term applicable under subparagraph (A), the
individual appointed to fill the resulting vacancy
shall be appointed for the remainder of the term of the
predecessor of the individual.
``(D) A member of the Board may continue to serve
after the expiration of the term of the member until a
successor is appointed.
``(4) Compensation.--Members of the Board may not receive
compensation for service on the Board. Such members may be
reimbursed for travel, subsistence, and other necessary
expenses incurred in carrying out the duties of the Board, as
set forth in the bylaws issued by the Board.
``(5) Meetings and quorum.--A majority of the members of the
Board shall constitute a quorum for purposes of conducting the
business of the Board.
``(6) Certain bylaws.--
``(A) In establishing bylaws under this subsection,
the Board shall ensure that the following are provided
for:
``(i) Policies for the selection of the
officers, employees, and agents of the
Foundation.
``(ii) Policies, including ethical standards,
for the acceptance, solicitation, and
disposition of donations and grants to the
Foundation and for the disposition of the
assets of the Foundation. Policies with respect
to ethical standards shall ensure that
officers, employees and agents of the
Foundation (including members of the Board)
avoid encumbrances that would result in a
conflict of interest, including a financial
conflict of interest or a divided allegiance.
Such policies shall include requirements for
the provision of information concerning any
ownership or controlling interest in entities
related to the activities of the Foundation by
such officers, employees and agents and their
spouses and relatives.
``(iii) Policies for the conduct of the
general operations of the Foundation.
``(B) In establishing bylaws under this subsection,
the Board shall ensure that such bylaws (and activities
carried out under the bylaws) do not--
``(i) reflect unfavorably upon the ability of
the Foundation to carry out its
responsibilities or official duties in a fair
and objective manner; or
``(ii) compromise, or appear to compromise,
the integrity of any governmental agency or
program, or any officer or employee involved in
such program.
``(e) Incorporation.--The initial members of the Board shall serve as
incorporators and shall take whatever actions necessary to incorporate
the Foundation.
``(f) Nonprofit Status.--The Foundation shall be considered to be a
corporation under section 501(c) of the Internal Revenue Code of 1986,
and shall be subject to the provisions of such section.
``(g) Executive Director.--
``(1) In general.--The Foundation shall have an Executive
Director who shall be appointed by the Board and shall serve at
the pleasure of the Board. The Executive Director shall be
responsible for the day-to-day operations of the Foundation and
shall have such specific duties and responsibilities as the
Board shall prescribe.
``(2) Compensation.--The rate of compensation of the
Executive Director shall be fixed by the Board.
``(h) Powers.--In carrying out subsection (b), the Foundation shall
operate under the direction of its Board, and may--
``(1) adopt, alter, and use a corporate seal, which shall be
judicially noticed;
``(2) provide for 1 or more officers, employees, and agents,
as may be necessary, define their duties, and require surety
bonds or make other provisions against losses occasioned by
acts of such persons;
``(3) hire, promote, compensate, and discharge officers and
employees of the Foundation, and define the duties of the
officers and employees;
``(4) with the consent of any executive department or
independent agency, use the information, services, staff, and
facilities of such in carrying out this section;
``(5) sue and be sued in its corporate name, and complain and
defend in courts of competent jurisdiction;
``(6) modify or consent to the modification of any contract
or agreement to which it is a party or in which it has an
interest under this part;
``(7) establish a process for the selection of candidates for
positions under subsection (c);
``(8) solicit, accept, hold, administer, invest, and spend
any gift, devise, or bequest of real or personal property made
to the Foundation;
``(9) enter into such other contracts, leases, cooperative
agreements, and other transactions as the Executive Director
considers appropriate to conduct the activities of the
Foundation; and
``(10) exercise other powers as set forth in this section,
and such other incidental powers as are necessary to carry out
its powers, duties, and functions in accordance with this part.
``(i) Administrative Control.--No participant in the program
established under this part shall exercise any administrative control
over any Federal employee, nor shall the Foundation attempt to
influence an executive branch agency or employee.
``(j) General Provisions.--
``(1) Foundation integrity.--The members of the Board shall
be accountable for the integrity of the operations of the
Foundation and shall ensure such integrity through the
development and enforcement of criteria and procedures relating
to standards of conduct (including those developed under
subsection (d)(6)(A)(ii), financial disclosure statements,
conflict of interest rules, recusal and waiver rules, audits
and other matter determined appropriate by the Board.
``(2) Financial conflicts of interest.--Any individual who is
an officer, employee, or member of the Board of the Foundation
may not (in accordance with policies and requirements developed
under subsection (d)(6)(A)(ii) personally or substantially
participate in the consideration or determination by the
Foundation of any matter that would directly or predictably
affect any financial interest of the individual or a relative
(as such term is defined in section 109(16) of the Ethics in
Government Act of 1978) of the individual, of any business
organization or other entity, or of which the individual is an
officer or employee, or is negotiating for employment, or in
which the individual has any other financial interest.
``(3) Audits; availability of records.--The Foundation
shall--
``(A) provide for annual audits of the financial
condition of the Foundation; and
``(B) make such audits, and all other records,
documents, and other papers of the Foundation,
available to the Secretary and the Comptroller General
of the United States for examination or audit.
``(4) Reports.--
``(A) Not later than 5 months following the end of
each fiscal year, the Foundation shall publish a report
describing the activities of the Foundation during the
preceding fiscal year. Each such report shall include
for the fiscal year involved a comprehensive statement
of the operations, activities, financial condition, and
accomplishments of the Foundation.
``(B) With respect to the financial condition of the
Foundation, each report under subparagraph (A) shall
include the source, and a description of, all gifts or
grants to the Foundation of real or personal property,
and the source and amount of all gifts or grants to the
Foundation of money. Each such report shall include a
specification of any restrictions on the purposes for
which gifts or grants to the Foundation may be used.
``(C) The Foundation shall make copies of each report
submitted under subparagraph (A) available for public
inspection, and shall upon request provide a copy of
the report to any individual for a charge not exceeding
the cost of providing the copy.
``(D) The Board shall annually hold a public meeting
to summarize the activities of the Foundation and
distribute written reports concerning such activities
and the scientific results derived from such
activities.
``(5) Service of federal employees.--Federal employees may
serve on committees advisory to the Foundation and otherwise
cooperate with and assist the Foundation in carrying out its
function, so long as the employees do not direct or control
Foundation activities.
``(6) Relationship with existing entities.--The Foundation
may, pursuant to appropriate agreements, acquire the resources
of existing nonprofit private corporations with missions
similar to the purposes of the Foundation.
``(7) Intellectual property rights.--The Board may adopt
written standards with respect to the ownership of any
intellectual property rights derived from the collaborative
efforts of the Foundation prior to the commencement of such
efforts.
``(8) National institutes of health amendments of 1990.--The
activities conducted in support of the National Institutes of
Health Amendments of 1990 (Public Law 101-613), and the
amendments made by such Act, shall not be nullified by the
enactment of this section.
``(9) Limitation of activities.--The Foundation shall exist
solely as an entity to collect funds and award grants for
research on drugs listed by the Secretary pursuant to section
409I(a)(1)(A).
``(10) Transfer of funds.--The Foundation may transfer funds
to the National Institutes of Health. Any funds transferred
under this paragraph shall be subject to all Federal
limitations relating to federally-funded research.
``(k) Duties of the Director.--
``(1) Applicability of certain standards to non-federal
employees.--In the case of any individual who is not an
employee of the Federal Government and who serves in
association with the National Institutes of Health, with
respect to financial assistance received from the Foundation,
the Foundation may not provide the assistance of, or otherwise
permit the work at the National Institutes of Health to begin
until a memorandum of understanding between the individual and
the Director of NIH, or the designee of such Director, has been
executed specifying that the individual shall be subject to
such ethical and procedural standards of conduct relating to
duties performed at the National Institutes of Health, as the
Director of NIH determines is appropriate.
``(2) Support services.--The Director of NIH shall provide
facilities, utilities and support services to the Foundation.
``(l) Reports of Studies; Labeling Changes.--
``(1) In general.--Upon completion of a pediatric study
conducted pursuant to this section, a report concerning the
study shall be submitted to the Director of National Institutes
of Health and the Commissioner of Food and Drugs. The report
shall include all data generated in connection with the study.
``(2) Availability of reports; action by food and drug
administration; labeling changes.--With respect to a report
submitted under paragraph (1), the provisions of paragraphs
(3)(B) through (8) of section 409I(c) apply to such report to
the same extent and in the same manner as such provision apply
to a report submitted under section 409I(c)(3)(A).
``(m) Funding.--
``(1) Authorization of appropriations.--For the purpose of
carrying out this part, there are authorized to be appropriated
such sums as may be necessary for fiscal year 2002 and each
subsequent fiscal year.
``(2) Limitation regarding other funds.--Amounts appropriated
under any provision of law other than paragraph (1) may not be
expended to establish or operate the Foundation.''.
SEC. 14. STUDY CONCERNING RESEARCH INVOLVING CHILDREN.
(a) Contract with Institute of Medicine.--The Secretary of Health and
Human Services shall enter into a contract with the Institute of
Medicine for--
(1) the conduct, in accordance with subsection (b), of a
review of--
(A) Federal regulations in effect on the date of the
enactment of this Act relating to research involving
children;
(B) federally-prepared or supported reports relating
to research involving children; and
(C) federally-supported evidence-based research
involving children; and
(2) the submission to the appropriate committees of Congress,
by not later than 2 years after the date of enactment of this
Act, of a report concerning the review conducted under
paragraph (1) that includes recommendations on best practices
relating to research involving children.
(b) Areas of Review.--In conducting the review under subsection
(a)(1), the Institute of Medicine shall consider the following:
(1) The written and oral process of obtaining and defining
``assent'', ``permission'' and ``informed consent'' with
respect to child clinical research participants and the
parents, guardians, and the individuals who may serve as the
legally authorized representatives of such children (as defined
in subpart A of part 46 of title 45, Code of Federal
Regulations).
(2) The expectations and comprehension of child research
participants and the parents, guardians, or legally authorized
representatives of such children, for the direct benefits and
risks of the child's research involvement, particularly in
terms of research versus therapeutic treatment.
(3) The definition of ``minimal risk'' with respect to a
healthy child or a child with an illness.
(4) The appropriateness of the regulations applicable to
children of differing ages and maturity levels, including
regulations relating to legal status.
(5) Whether payment (financial or otherwise) may be provided
to a child or his or her parent, guardian, or legally
authorized representative for the participation of the child in
research, and if so, the amount and type of payment that may be
made.
(6) Compliance with the regulations referred to in subsection
(a)(1)(A), the monitoring of such compliance (including the
role of institutional review boards), and the enforcement
actions taken for violations of such regulations.
(7) The unique roles and responsibilities of institutional
review boards in reviewing research involving children,
including composition of membership on institutional review
boards.
(c) Requirements of Expertise.--The Institute of Medicine shall
conduct the review under subsection (a)(1) and make recommendations
under subsection (a)(2) in conjunction with experts in pediatric
medicine, pediatric research, and the ethical conduct of research
involving children.
SEC. 15. STUDY ON EFFECTS OF THIS ACT.
Not later than October 1, 2006, the Comptroller General of the United
States shall submit to the Congress and the Secretary of Health and
Human Services a report that describes the following:
(1) The effectiveness of the amendments made by this Act in
ensuring that all drugs used by children are tested and
properly labeled, including--
(A) the number and importance for children of drugs
that are being tested as a result of such amendments,
and the importance for children, health care providers,
parents, and others of labeling changes made as a
result of such testing;
(B) the number and importance for children of drugs
that are not being tested for their use notwithstanding
the amendments, and possible reason for this; and
(C) the number of drugs for which pediatric testing
has been done, for which a period of market exclusivity
has been granted, and for which labeling changes
required the use of the dispute resolution process
established pursuant to the amendments, together with a
description of the outcomes of such process, including
a description of the disputes and the recommendations
of the advisory committee.
(2) The economic impact of the amendments made by this Act,
including an estimate of--
(A) costs to taxpayers in the form of higher
expenditures by Medicaid and other government programs;
(B) costs to consumers as a result of any delay in
the availability of lower cost generic equivalents of
drugs tested and granted exclusivity pursuant to such
amendments, and loss of revenue by the generic drug
industry and any other affected industry as a result of
any such delay; and
(C) benefits to the government, to private insurers,
and to consumers resulting from decreased health care
costs, including--
(i) decreased hospitalizations, due to more
appropriate and more effective use of
medications in children as a result of testing
and re-labeling because of such amendments;
(ii) direct and indirect benefits associated
with fewer physician visits not related to
hospitalization;
(iii) benefits to children from missing less
time at school and being less affected by
chronic illnesses, thereby allowing a better
quality of life;
(iv) benefits to consumers from lower health
insurance premiums due to lower treatment costs
and hospitalization rates; and
(v) benefits to employers from reduced need
for employees to care for family members.
(3) The nature and types of studies in children of drugs
granted a period of market exclusivity pursuant to the
amendments made by this Act, including a description of the
complexity of such studies, the number of study sites necessary
to obtain appropriate data, and the numbers of children
involved in any clinical studies, and the cost of such studies
for each type of study identified.
(4) The increased pediatric research capability, both private
and government-funded, associated with the amendments made by
this Act.
SEC. 16. MINORITY CHILDREN AND PEDIATRIC-EXCLUSIVITY PROGRAM.
(a) Protocols for Pediatric Studies.--Section 505A of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 355a) is amended in subsection
(c)(2) (as redesignated by section 2(a)(2) of this Act) by inserting
after the first sentence the following: ``In reaching an agreement
regarding written protocols, the Secretary shall take into account
adequate representation of children of ethnic and racial minorities.''.
(b) Study by General Accounting Office.--
(1) In general.--The Comptroller General of the United States
shall conduct a study for the purpose of determining the
following:
(A) The extent to which children of ethnic and racial
minorities are adequately represented in studies under
section 505A of the Federal Food, Drug, and Cosmetic
Act; and to the extent ethnic and racial minorities are
not adequately represented, the reasons for such under
representation and recommendations to increase such
representation.
(B) Whether the Food and Drug Administration has
appropriate management systems to monitor the
representation of the children of ethnic and racial
minorities in such studies.
(C) Whether drugs used to address diseases that
disproportionately affect racial and ethnic minorities
are being studied for their safety and effectiveness
under section 505A of the Federal Food, Drug, and
Cosmetic Act.
(2) Date certain for completing study.--Not later than
January 10, 2003, the Comptroller General shall complete the
study required in paragraph (1) and submit to the Congress a
report describing the findings of the study.
SEC. 17. TECHNICAL AND CONFORMING AMENDMENTS.
Section 505A of the Federal Food, Drug, and Cosmetic Act (21 U.S.C.
355a) is amended--
(1)(A) by striking ``(j)(4)(D)(ii)'' each place such term
appears and inserting ``(j)(5)(D)(ii)''; and
(B) by striking ``(j)(4)(D)'' each place such term appears
and inserting ``(j)(5)(D)''; and
(2)(A) in subsection (c) (as redesignated by section 2(a)(2)
of this Act), in each of paragraphs (1) through (3), by
striking ``subsection (a) or (c)'' and inserting ``subsection
(a) or (b)''; and
(B) in subsection (d) (as so redesignated), in the last
sentence, by striking ``subsection (a) or (c)'' and inserting
``subsection (a) or (b)''.
Purpose and Summary
The purpose of H.R. 2887, the Best Pharmaceuticals for
Children Act, is to ensure that the pediatric exclusivity
provision from the Food and Drug Administration Modernization
Act, which will expire at the end of this calendar year, is
reauthorized. This legislation reauthorizes the provision
through FY 2007.
Further, the legislation creates a research fund within the
NIH for drugs that are off-patent or lacking in remaining
exclusivity and for certain on-patent drugs for which the
application holder does not study under pediatric exclusivity.
Through this fund the NIH, with consultation from the FDA,
shall contract with researchers to study these drugs in
children. As part of this effort the NIH, in consultation with
the FDA and experts in pediatric research, shall publish an
annual list of these drugs that merit the highest priority for
study.
Because there is concern that pediatric exclusivity as
presently constituted does not lead to quick changes in drug
labels, H.R. 2887 ensures that pediatric supplemental NDAs will
be given priority status, and subjected to a user fee (under
current law, pediatric applications are not subject to the
PDUFA application user fee). Further, the legislation provides
for a dispute resolution mechanism for labeling changes that
have not been resolved within 180 days of supplement
submission. At the end of this process, should the manufacturer
not agree to comply with the Secretary's proposed label, the
Secretary is given the authority to ``deem'' the drug
misbranded.
Background and Need for Legislation
Children suffer many of the same diseases as adults, but
according to the American Academy of Pediatrics, only a small
fraction (roughly 25%) of all drugs have been studied in
pediatric patients. While most drugs have not been studied for
use in children, many of these drugs are nonetheless prescribed
for the benefit of children. Generally, the dosage for the
child is determined by a physician based upon the child's age,
height and weight. The lack of pediatric testing and labeling
can place children at risk of under- and overdosing, and the
lack of age appropriate formulations (i.e., liquids or chewable
tablets) may result in the improper administration of drugs.
To encourage the study of drugs in children and the
development of pediatric labeling information, the Food and
Drug Administration Modernization Act of 1997 contained a
provision which provides six months of drug marketing
exclusivity to be attached to existing patent protections or
other exclusivity in exchange for conducting pediatric studies,
at the request of the FDA. This provision, known as pediatric
exclusivity, expires at the end of this calendar year.
To qualify for the six months of exclusivity, the FDA must
first issue a Written Request to a manufacturer to conduct
pediatric studies. If the FDA does not request that a drug be
studied, there is no way for that drug to have its exclusivity
extended under this provision. If the manufacturer does all of
the studies required by the FDA in the Written Request, the
manufacturer will then submit the results of those studies, as
well as proposed label changes, in the form of a NDA or
supplemental NDA. The FDA then has 90 days to determine whether
the studiesconducted by the manufacturer comport with the
Written Request. If the studies do comply with the Written Request, the
manufacturer is entitled to an additional six months of exclusivity for
all drug products containing the active moiety which was studied.
In its January 2001 Report to Congress, the FDA found that
``the pediatric exclusivity provision has done more to generate
clinical studies and useful prescribing information for the
pediatric population than any other regulatory or legislative
process to date.'' While in the six years prior to the
enactment of the pediatric exclusivity provision only six
studies were conducted on the pediatric population at the
request of the FDA, in the four years since enactment there
have been 197 Written Requests issued to conduct 400+ studies
on the pediatric population.
While the incentive has worked to increase the number of
drugs being studied in the pediatric population, the FDA found
that the incentive is not adequate for certain drugs. For
example, drugs with no patent protection or marketing
exclusivity remaining are not eligible for any exclusivity.
Further there is little or no economic incentive to study on-
patent drugs with very little patent protection remaining, or
with low sales volumes. Also, the incentive is frequently
ineffectual in producing studies in the neonatal population,
because drugs must first be studied in older age cohorts in
order to develop the body of evidence required to test the
drugs in neonates.
Also, while the FDA found that pediatric exclusivity has
resulted in pediatric studies being conducted at a high volume,
they also found that the provision will increase certain health
care expenditures, and decrease others. For example, due to the
delay in generic competition resulting from an additional six
months of brand exclusivity, the FDA estimates a yearly cost of
$695 million to the nation's pharmaceutical consumers. This
amounts to an additional cost of one half of one percent to the
nation's pharmaceutical bill. As far as savings are concerned,
the FDA calculated that eliminating just 25% of the difference
in hospitalization rates between children and middle-aged
adults for five diseases would save $228 million annually.
Also, a Tufts Center for the Study of Drug Development report
estimates that the pediatric exclusivity provision saves up to
$7 billion per year by making treatments more effective for
pediatric patients (``If even one-hundredth of the annual
economic impact from these leading causes of death and
disability was reduced by providing more effective treatments
to children, making for healthier adults in the process, the $7
billion saved each year would be 10 times more than the nearly
$700 million that FDA has estimated as the yearly cost to
society from the pediatric exclusivity awards.'')
Hearings
The Subcommittee on Health held a hearing on Evaluating the
Effectiveness of the Food and Drug Administration Act on
Thursday, May 3, 2001. The Subcommittee received testimony
from: Ms. Linda Suydam, D.P.A., Senior Food Commissioner, Food
and Drug Administration; Dr. Gregory L. Kearns, Professor and
Chief, Division of Clinical Pharmacology and Medical
Toxicology, Children's Mercy Hospital and Clinics; Ms. Carole
Ben-Maimon, President and C.E.O., Barr Laboratories, on behalf
of The General Pharmaceutical Association; Dr. Richard Gorman,
M.D., Incoming Chair, Committee on Drugs, American Academy of
Pediatrics; Ms. Abbey Meyers, President, National Organization
for Rare Disorders; Mr. Travis Plunket, Legislative Director,
Consumer Federation of America, on behalf of Patient and
Consumer Coalition; and Dr. Timothy R, Franson, M.D., Vice
President, Clinical Research and Regulatory Affairs, U.S.,
Lilly Research Laboratories.
Committee Consideration
On Thursday, October 4, 2001, the Subcommittee on Health
met in open markup session and approved H.R. 2887, the Best
Pharmaceuticals for Children Act, for Full Committee
consideration, as amended, by a record vote of 24 yeas and 5
nays. On Thursday, October 11, 2001, the Committee on Energy
and Commerce met in open markup session and favorably ordered
reported H.R. 2887, as amended, by a record vote of 41 yeas and
6 nays.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
following record votes were taken in connection with ordering
H.R. 2887 reported.A motion by Mr. Tauzin to order H.R. 2887
reported to the House, as amended, was agreed to by a record vote of 41
yeas to 6 nays.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held an oversight
hearing.
Statement of General Performance Goals and Objectives
The objective of H.R. 2887 is to ensure that drugs used in
children are properly studied and labeled for pediatric use.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
2887, the Best Pharmaceuticals for Children Act, would result
in no new or increased budget authority, entitlement authority,
or tax expenditures or revenues.
Committee Cost Estimate
While the Committee adopts the Congressional Budget Office
(``CBO'') estimate submitted pursuant to section 402 of the
Congressional Budget Act with regard to changes in direct
spending and revenues, the Committee believes that certain
aspects of CBO's estimate with respect to spending subject to
appropriation is significantly overstated. For this reason, the
Committee adopts its own estimate with regard to spending
subject to appropriation.
Basis of Estimate
In its revised Cost Estimate issued on November 6, 2001,
CBO estimates that H.R. 2887 would increase federal outlays for
discretionary programs by $11 million in 2002, and by $698
million over the 2002-2006 period. Additionally, CBO estimates
the bill would lower direct spending by about $7 million over
the 2002-2006 period, and increase federal revenues by $6
million in 2002, and by $33 million over the 2002-2006 period.
Of the $698 million increase in federal outlays for
discretionary programs over the 2002-2006 period, the CBO
estimates that $660 million of this increase is needed to pay
for Section 3 of H.R. 2887, Research Fund for the Study of
Drugs Lacking Exclusivity. To arrive at this figure, the CBO
assumes that 150 drugs lacking market exclusivity or patent
protection, and certain biologics, would be studied under this
new provision. CBO also assumes that 15 drugs with remaining
patent protection or market exclusivity would be studied under
this section after referral from the Foundation for Pediatric
Research, also created by H.R. 2887. The CBO estimates that the
average cost of conducting the studies requested by the Food
and Drug Administration would be about $4 million per drug.
Multiplying the 165 drugs and biologics identified by CBO as
eligible for study by the $4 million average cost per study,
the CBO estimates that this provision would result in a $660
million increase in federal outlays for discretionary programs
over the 2002-2006 period.
The Committee believes that nothing in this legislation
would allow for the study of biologics under the Research Fund
for the Study of Drugs Lacking Exclusivity. The legislation
requires the Director of the National Institutes of Health, in
consultation with the Commissioner of the Food and Drug
Administration and experts in pediatric research, to ``develop,
prioritize, and publish an annual list of approved drugs''
(emphasis added). Only the ``drugs (emphasis added) identified
in the list'' would be eligible to be studied under this
program. Clearly, the study of biologics under this new fund is
not contemplated or allowed.
The Committee adopts CBO's estimate that 15 drugs referred
to the Research Fund for the Study of Drugs Lacking Exclusivity
by the Foundation for Pediatric Research would be studied with
public funds. However, the Committee strongly disagrees with
CBO that 150 drugs might qualify for study under the new fund.
The American Academy of Pediatrics, perhaps the foremost
authority on the subject, estimates that between 30-50 drugs
will need study under the fund.
The goal of this section of the legislation is to establish
a list of drugs commonly used in pediatric populations and for
which information is inadequate either with respect to
formulation, dose, effectiveness, or safety. In developing the
list of drugs eligible for study under the new fund, the
Secretary is required to take into account the following
factors: (a) the availability of information concerning the
safe and effective use of the drug in the pediatric population;
(b) whether additional information is needed; (c) whether new
pediatric studies concerning the drug may produce health
benefits in the pediatric population; and (d) whether
reformulation of the drug is necessary. It is not enough that
the drug either be lacking market exclusivity or patent
protection; rather, there must be a real need for study.
While many drugs lacking market exclusivity or patent
protection are used to treat children, published studies,
pediatric handbooks, and wide clinical experience provide
adequate data for their use. Such drugs would therefore not
qualify for study. However, in such situations where
information (such as formulation development, dose, special
effectiveness or safety information) is needed for the safe use
of the medicine in children, then these drugs would qualify for
study under the fund. In addition, careful attention should be
given to utilization patterns, since older drugs are frequently
replaced by newer drugs.
Further, even if 150 drugs lacking market exclusivity or
patent protection do indeed qualify for study under the new
fund, investigative capacity for pediatric medicine studies is
limited, as are pediatric patients required for studies. There
are only 13 Pediatric Pharmacology Research Units in this
country, and there are limited numbers of pediatric
subspecialists. To be sure, the numbers of researchers and
research units are growing due to the great success of the
pediatric exclusivity provision, however the capacity does not
exist to conduct the numbers of studies identified by CBO.
As noted above, the American Academy of Pediatrics
estimates that between 30-50 drugs would need to be studied by
the new fund created by section 3. Adopting the $4 million per
study estimate identified by CBO, and multiplying this by the
midpoint estimate (40 drugs) identified by the American Academy
of Pediatrics, $160 million would be needed to study such
drugs. Adding to this the cost of studying the 15 drugs which
would be referred to the new fund by the Foundation for
Pediatric Research ($60 million), $220 million of spending
subject to appropriation for the 2002-2006 period is necessary,
not the $660 million identified by CBO. Subtracting the $440
million difference between these two figures from the $698
million CBO estimate, $258 million of spending subject to
appropriation for the 2002-2006 period would be required.
For the aforementioned reasons, the Committee believes that
its estimate more accurately reflects the costs associated with
the enactment of H.R. 2887 than the CBO estimate reprinted
below.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of Rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, November 6, 2001.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed revised cost estimate for H.R. 2887, the
Best Pharmaceuticals for Children Act. On November 2, 2001, CBO
prepared an estimate for H.R. 2887 that did not treat spending
of revenue collected by the Foundation for Pediatric Research
as direct spending. This estimate corrects that error.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Julia
Christensen.
Sincerely,
Steven Lieberman
(For Dan L. Crippen, Director).
Enclosure.
Summary: H.R. 2887 would extend expiring pediatric
exclusivity provisions of the Food and Drug Administration
(FDA) Modernization Act of 1997. Pediatric exclusivity refers
to a six-month period during which the FDA will not permit
another manufacturer to market a generic version of a drug.
Such exclusivity is granted in exchange for the manufacturer
conducting studies, requested by the FDA, of the effect of
drugs when taken by children.
The bill would create a new research fund within the
National Institutes of Health (NIH) to test the use for
children of drugs that lack patent or other market exclusivity
protections. It would also create a non-profit foundation to
collect funds and awards grants for research on pediatric uses
of qualifying drugs. The bill would modify the review and
labeling processes associated with pediatric supplements and
would promote the reporting and collecting of information on
adverse reactions to drugs.
H.R. 2887 would clarify the interaction of market
exclusivity awarded to certain generic manufacturers and
pediatric exclusivity awarded to innovator drug companies when
the two periods of market exclusivity overlap. It would also
amend the approval process for generic drugs when pediatric
information is added to the labeling. In addition, the bill
would establish an Office of Pediatric Therapeutics within the
FDA and would authorize several studies related to the
pediatric exclusivity program and pediatric research.
Assuming the appropriation of the necessary funds, CBO
estimates that H.R. 2887 would increase federal outlays for
discretionary programs by $11 million in 2002 and by $698
million over the 2002-2006 period. Those costs consist of
amounts required to implement and administer the activities
authorized under the bill and the effect of H.R. 2887 on the
costs of certain discretionary programs that purchase drugs or
contribute toward the pharmacy costs of beneficiaries.
The bill would result in higher prices for certain drugs
that would be granted an extended period of market exclusivity,
but would also accelerate the entry of generic versions of some
drugs, which would lead to lower prices. CBO estimates that the
net effect of the bill would be to reduce the average price of
prescription drugs slightly through 2007 and to increase prices
in subsequent years.
In the near term, lower drug prices would reduce the costs
of federal programs that purchase prescription drugs or provide
health insurance that covers prescription drugs. CBO estimates
that savings to programs subject to appropriation--such as
health insurance provided to active workers through the Federal
Employees Health Benefits (FEHB) program, the Coast Guard, the
Public Health Service (PHS), and health programs of the
Departments of Veterans Affairs (VA) and Defense (DoD)--would
total $3 million in 2002 and $33 million over the 2002-2006
period.
Lower prices would also reduce direct spending--for
Medicaid and for health insurance provided to annuitants by
FEHB, DoD, and the Coast Guard--by $2 million in 2002 and by
$32 million over the 2002-2006 period. However, H.R. 2887 would
increase federal direct spending on those programs by $160
million over the 2002-2011 period, reflecting higher average
drug prices, on balance, in later years.
Grants made by the newly created foundation would be direct
spending, because they would not be subject to the availability
of appropriations. CBO expects expenditures by the foundation
for grants would begin in 2003; therefore, there would be no
direct spending in 2002. CBO estimates that awards made by the
foundation would increase direct spending by $25 million over
the 2002-2006 period and by $59 million over the 2002-2011
period.
The bill would also affect revenues in two ways. First,
donations and gifts received by the foundation would increase
federal revenues. Secondly, CBO assumes that part of the
savings or costs from changes in health insurance costs would
be passed on to workers as increases or decreases,
respectively, in taxable compensation. Lower prices for
prescription drugs under the bill would initially reduce
premiums for private health insurance (compared with premiums
under current law). Higher drug prices would subsequently push
premiums higher. CBO estimates the bill would increase federal
revenues by $6 million in 2002, by $33 million over the 2002-
2006 period, and by $15 million over the 2002-2011 period.
Because enacting H.R. 2887 would affect direct spending and
revenues, pay-as-you-go procedures would apply.
H.R. 2887 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act (UMRA). State, local and
tribal governments, as administrators of the Medicaid program
and as providers of health care coverage for their employees,
may realize both costs and savings as a result of provisions in
the bill. Provisions affecting market and pediatric exclusivity
would result in added costs, and requirements for prompt
approval of some generic drugs would result in savings.
The bill would impose several requirements on pharmacists
and on manufacturers of both generic and brand-name drugs that
would be considered private-sector mandates under UMRA. CBO
estimates that the direct cost of the mandates would not exceed
the threshold specified in UMRA ($113 million 2001, adjusted
annually for inflation) in any of the first five years during
which the mandates would be effective.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 2887 is shown in Table 1. The costs of
this legislation would fall within budget functions 050
(national defense), 550 (health), and 700 (veterans' benefits
and services.)
Basis of estimate: For this estimate, CBO assumes that the
bill will be enacted in the fall of 2001 and that outlays will
follow historical spending rates for the authorized activities.
Where H.R. 2887 specifies the amounts authorized to be
appropriated, CBO assumes that such appropriations will be
made. Where appropriations of such sums as necessary are
authorized, CBO assumes that the estimated amounts will be
provided for each fiscal year.
Spending subject to appropriations
Assuming appropriation of the necessary amounts, CBO
estimates that enacting H.R. 2887 would result in higher
outlays for discretionary federal programs of $11 million in
2002 and $698 million over the 2002-2006 period. The NIH and
the FDA are the agencies responsible for carrying out most of
the provisions in H.R. 2887. CBO estimates that implementing
the bill would cost FDA $11 million in 2002 and $154 million
over the 2002-2006 period (net of collections of user fees),
assuming the appropriation of the necessary amounts. Costs to
NIH would increase by $1 million in 2002 and by $571 million
over the 2002-2006 period. Table 2 shows the estimated
authorization levels and outlays under H.R. 2887 for fiscal
years 2002 through 2006.
TABLE 1.--ESTIMATED BUDGETARY IMPACT OF H.R. 2887
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------
2001 2002 2003 2004 2005 2006
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Spending Under Current Law:
Estimated Budget Authority \1\........................ 21,482 22,024 22,504 22,987 23,468 23,974
Estimated Outlays..................................... 18,341 20,322 21,537 22,362 23,093 23,152
Proposed Changes:
Estimated Authorization Level \2\..................... 0 217 94 246 161 109
Estimated Outlays..................................... 0 11 94 216 213 165
Spending Under H.R. 2887:
Estimated Authorization Level......................... 21,482 22,241 22,598 23,233 23,629 24,083
Estimated Outlays..................................... 18,341 20,333 21,631 22,578 23,306 23,317
CHANGES IN DIRECT SPENDING
Estimated Revenues........................................ 0 4 3 0 -2 -6
Estimated Outlays......................................... 0 -2 1 2 -1 -6
CHANGES IN REVENUES
Estimated Revenues........................................ 0 6 6 6 6 9
----------------------------------------------------------------------------------------------------------------
\1\ The 2001 level is the amount appropriated for that year for the National Institutes of Health (NIH) and the
Food and Drug Administration (FDA). The NIH and the FDA are the agencies responsible for implementing and
administering the activities authorized in the bill. Current-law amounts for those programs during the 2002-
2006 period assume appropriations remain at 2001 levels, with adjustments for inflation.
\2\ The estimated amounts reflect the costs to the NIH and the FDA for implementing and administering activities
authorized under H.R. 2887 and the effects of the bill on pharmacy costs of other federal discretionary
programs.
Research Fund for the Study of Drugs Lacking Exclusivity.
Section 3 of H.R. 2887 would create a research fund to pay for
pediatric studies of certain drugs lacking market exclusivity.
Market exclusivity refers to the exclusive rights conveyed to
manufacturers on their drugs. Those rights may stem either from
patent protection or through the marketing approval process
governed by the FDA.
Under certain circumstances, if manufacturers fail to
pursue pediatric testing requested in writing by the FDA, the
fund could award contracts to pay for studies on drugs with
market exclusivity remaining. The fund would be administered by
the NIH.
H.R. 2887 would authorize the appropriation of $200 million
for the fund in 2002, and such sums as necessary each year
until 2007. CBO estimates that the combined outlays for FDA and
NIH activities to set up the fund, make awards from the fund,
and process the pediatric supplements under new program
requirements would be about $1 million in 2002 and $639 million
during the 2002-2006 period, assuming appropriation of the
necessary funds. (Pediatric supplements are the applications
filed by manufacturers to amend the information provided to the
FDA for its use in approving the use of the product by
children.)
TABLE 2.--ESTIMATED AUTHORIZATIONS AND OUTLAYS UNDER H.R. 2887
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------
2001 2002 2003 2004 2005 2006
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
National Institutes of Health (NIH):
Estimated Authorization Level......................... 0 200 43 204 133 91
Estimated Outlays..................................... 0 1 73 182 178 137
Food and Drug Administration (FDA):
Estimated Authorization Level......................... 0 16 53 48 35 30
Estimated Outlays..................................... 0 11 23 38 42 39
Other Programs:
Veterans' Administration (VA) Health Program:
Estimated Authorization Level..................... 0 -1 -1 -3 -4 -6
Estimated Outlays................................. 0 -1 -1 -3 -4 -6
Department of Defense (DoD) Health Program:
Estimated Authorization Level..................... 0 -1 -1 -2 -3 -4
Estimated Outlays................................. 0 -1 -1 -2 -3 -4
Federal Employees Health Benefits (FEHB) Program:
Estimated Authorization Level..................... 0 (\1\) (\1\) -1 -1 -1
Estimated Outlays................................. 0 (\1\) (\1\) -1 -1 -1
Public Health Service and Other Programs, Excluding
NIH and FDA:
Estimated Authorization Level..................... 0 3 (\1\) (\1\) (\1\) -1
Estimated Outlays................................. 0 1 1 (\1\) 1 (\1\)
Total Changes:
Estimated Authorization Level......................... 0 217 94 246 161 109
Estimated Outlays..................................... 0 11 94 216 213 165
----------------------------------------------------------------------------------------------------------------
\1\ Less than $500,000 in costs or savings.
Under the bill, the NIH, in consultation with the FDA,
would establish a priority list of drugs without market
exclusively that warrant additional testing for children.
Certain drugs with market exclusivity could also be referred to
that list by the Secretary of Health and Human Services (HHS)
for study financed by the fund. Except in those special
referral cases, the bill would set up a contracting process
that allows the holders of the approved application for the
drug the right of first refusal to receive payment from the
fund to conduct the requested studies. If no response is
received to FDA's request within 30 days, a competitive
contracting process outlined by the bill would be set in
motion. H.R. 2887 would specify the reporting procedures for
data resulting from the studies and the process for
incorporating any necessary new information on drug labels.
CBO expects that roughly 150 non-referral drugs ultimately
might qualify for study financed by the new fund. That estimate
is based on data showing that 170 drugs on the FDA's May 2000
List of Approved Drugs for Which Additional Pediatric
Information May Produce Health Benefits in the Pediatric
Population currently lack patent or other market exclusivity
protections. Additional candidates for study under the fund
would include drugs coming off patent or otherwise losing
market exclusivity in the next few years. Moreover, one
interpretation of the provision may allow a broader group of
biologicals to qualify for study financed by the fund. CBO
assumes that given the rapid advancement in therapies, some
products potentially qualifying for study ultimately would not
be studied. CBO also estimates that up to 15 drugs that retain
market exclusivity protections would likely be studied over the
2002-2006 period because of referral by the Secretary of HHS.
CBO estimates that the average cost of conducting the studies
requested by the FDA would be about $4 million per drug. In
total, CBO estimates that about $660 million in contracts to
study drugs would be awarded from the fund over the 2002-2006
period.
Changes to Written Request and Response Procedure for Drugs
that Have Market Exclusivity. Section 4 of H.R. 2887 would
change the written request procedure for drugs that have market
exclusivity by requiring a response by the manufacturer to the
FDA request within 180 days of receiving the request. If the
Secretary of HHS determined there is a continuing need for
information on a drug for which the manufacturer did not agree
to conduct the requested studies, the Secretary would have to
refer the drug to the newly created Foundation for Pediatric
Research for consideration. If the foundation certified to the
Secretary of HHS that insufficient funds are available to
conduct the requested studies, the Secretary would be required
to refer the drug for inclusion on the priority list associated
with the fund established under section 3. CBO expects that the
FDA would process fewer than 10 pediatric supplements over the
2002-2006 period as a result of referred studies funded by
foundation grants.
CBO estimates that referral and coordination activities
plus costs associated with processing supplements associated
with foundation-sponsored studies would increase the
administrative costs of the FDA and NIH by less than $500,000
in 2002 and by $4 million during the 2002-2006 period.
Modifications to the Existing Pediatric Exclusivity
Program. It is unclear how the sunset provisions of the
pediatric exclusivity program authorized under the FDA
Modernization Act of 1997 will apply after January 1, 2002. For
the purposes of this estimate, CBO assumes that the authority
to grant pediatric exclusivity to certain targeted drugs will
continue under current law. For any drug (active moiety) for
which both a new drug application is submitted and a written
request received by January 1, 2002, CBO assumes that FDA will
have the authority under current law to grant pediatric
exclusivity if the standard requirements set forth by the
existing program are met.
Furthermore, CBO assumes that FDA will retain authority
under current law to issue written requests and grant pediatric
market exclusivity beyond January 1, 2002, to certain drugs if
FDA perceives a continuing need for information relating to the
drug. To qualify, the drug must meet the following criteria:
The drug must have been in commercial
distribution as of November 21, 1997;
The drug must appear on the FDA's January 1,
2002, ``List''; and
The drug must meet the standard requirements
set forth by the program.
Section 5 of the bill would affect the review and labeling
processes associated with pediatric supplements. Such
modifications include eliminating the waiver of user fees for
pediatric supplements, identifying all pediatric supplements as
priority supplements, and defining a process for timely
pediatric labeling changes. Taken together, these provisions
would increase FDA's costs for administering the existing
program and processing supplements anticipated under current
law. CBO estimates that fulfilling these new requirements for
current law supplements would increase FDA's costs, on net, by
$2 million in 2002 and by $34 million during the 2002-2006
period, assuming appropriation of the necessary funds.
CBO's estimate reflects collections from user fees only in
fiscal year 2002 because the authority to collect fees under
the Prescription Drug User Fee Act (PDUFA) of 1992, as amended
by the FDA Modernization Act of 1997, will expire at the end of
fiscal year 2002. CBO also assumes that manufacturers
submitting supplements for studies conducted under both the new
research fund and the foundation would not be required to pay
any user fees because the supplements would refer to that
clinical data ``by reference.''
Office of Pediatric Therapeutics. H.R. 2887 would establish
an Office of Pediatric Therapeutics within the FDA. The office
would be responsible for oversight and coordination of FDA's
activities involving pediatric issues. CBO estimates that the
officewould consist of five full-time employees. We estimate
that the new office would cost less than $500,000 in 2002 and $2
million over the 2002-2006 period, assuming appropriation of the
necessary amounts.
Reauthorization of the Pediatric Exclusivity Program. The
bill would grant an additional six months of market exclusivity
to pharmaceutical manufacturers that conduct pediatric studies
on certain drugs. In total, CBO estimates that the reauthorized
program would cost $6 million in 2002 and $63 million over the
2002-2006 period, subject to the appropriation of the necessary
funds. (This reauthorization would also cause an increase of
$28 million in direct spending over the 2002-2006 period. That
effect is discussed later.)
The reauthorized program would grant a six-month extension
for a drug provided that: (1) FDA has issued a written request
for pediatric studies on the drug on or before October 1, 2007;
(2) an approvable new drug application for the drug has been
submitted on or before October 1, 2007; and (3) the
requirements of the program have been met. The benefit under
reauthorization generally would accrue to approved drugs
introduced since November 22, 1997, that have not yet received
a written request from the FDA for pediatric studies, and to
new drugs pending marketing approval.
CBO expects that manufacturers would conduct pediatric
trials and receive pediatric exclusivity on upwards of 100
drugs under the reauthorized program. Assuming appropriation of
the necessary funds, CBO estimates that FDA's cost to
administer the reauthorized program under the new requirements
outlined in section 5 of the bill would be $5 million in 2002
and $34 million over the 2002-2006 period.
Extending market exclusivity under the reauthorized program
would increase costs for discretionary federal programs by less
than $500,000 in 2002 and $29 million over the 2002-2006
period, assuming appropriation of the necessary funds. Programs
of the PHS and the VA would be affected, as would pharmacy
costs incurred by FEHB, DoD, and the Coast Guard for active
workers.
To estimate the costs associated with higher drug prices
paid by federal purchasers, CBO identified a set of about 30
approved drugs that would qualify for pediatric exclusivity
under the reauthorized program. Using 2000 sales data and the
date of market approval for those products, CBO projected sales
for each drug based on an average drug sales curve calculated
by FDA for its January 2001 Status Report to the Congress on
the Pediatric Exclusivity Provision. CBO identified sales in
the year of anticipated expiration of market exclusivity and
estimated the reduction in pharmaceutical costs to federal
programs that would accrue to government purchasers at generic
entry under current law. The amount of such savings lost to the
federal government would be the cost of extending pediatric
exclusivity to each drug. CBO's methodology incorporated recent
market trends that suggest a more rapid loss of market share to
generics in the first months after generic entry than
previously estimated by the CBO. Pending further study of these
market dynamics, CBO assumes that generic products, on average,
account for roughly 30 percent of total market volume and cost
about 70 percent of the brand price after three months on the
market. After six months, CBO assumes that generic drugs would
account for roughly 40 percent of total market volume and cost
about 60 percent of the brand price.
To estimate the cost of new drugs obtaining pediatric
extensions under the reauthorized program, CBO assumed that 30
new drugs would be introduced each year and one-half of them
would qualify for pediatric exclusivity. CBO estimated the
average first full-year sales by inflating FDA's estimate of
$125 million per drug in 1999. (CBO assumed an average annual
rate of increase in launch price of about 10 percent since
1999.) Using data from several industry sources. CBO assumed
that roughly one out of five new drugs getting pediatric
exclusivity extensions under the reauthorized program would
lose market exclusivity between 2002 and 2011. After
identifying sales in the year of anticipated expiration of
market exclusivity protections, CBO estimated the cost
associated with new drugs receiving an additional six months of
exclusivity in the same manner as outlined above for existing
drugs.
Dissemination of Pediatric Information. H.R. 2887 would
require the FDA to make available to the public a summary of
the medical and clinical pharmacological reviews of pediatric
studies conducted under the program. CBO estimates that this
provision would cost the FDA an additional $1 million in 2002
and $7 million during the 2002-2006 period.
Clarification of the Interaction between Certain Market
Exclusivity Periods. H.R. 2887 would clarify Congressional
intent regarding the interaction between 180-day generic
exclusivity and pediatric exclusivity when the two periods of
market exclusivity overlap. CBO estimates that this provision
would increase the costs of certain federal discretionary
programs by $1 million in 2002 and by $5 million over the 2002-
2006 period. CBO estimates that the FDA would need to spend
less than $500,000 over the 2002-2006 period to implement the
provision.
Under certain conditions, the first generic manufacturer
that files a substantially complete abbreviated new drug
application (ANDA) challenging an innovator's patent claim
under a ``paragraph IV'' filing may be awarded 180 days of
generic market exclusivity. During the 180-day generic
exclusivity period, the FDA cannot approve a subsequently filed
ANDA for a generic version of that specific drug product. This
provision of law may provide the first generic ``paragraph IV''
filer an opportunity to recoup some of the risk litigation
costs by providing that manufacturer with market exclusivity
for its version during the first 180 days of generic marketing.
The 180-day generic exclusivity period begins after a court
decision finding the challenged patent invalid, unenforceable,
or not infringed, or the date of first commercial marking of
the ANDA product, whichever is earlier. In the event that the
180-day generic exclusivity period overlaps with the pediatric
exclusivity period, the bill would specify the amount of time
that is restored to the generic manufacturer's 180-day
exclusivity period.
Under the bill, if the 180-day generic exclusivity period
expires at some point after the pediatric exclusivity period,
the 180-day period would be extended by the number of days of
the overlap. Alternatively, if the 180-day generic period
expires during the pediatric exclusivity period, the 180-day
generic exclusivity would be extended by six months. CBO
assumes that any portion of overlap between the 180-day generic
exclusivity and a valid patent that remains in force would not
be restored to the generic manufacturer under the bill.
Restoring a portion of the effective 180-day generic
exclusivity would allow the first generic ``paragraph IV''
filer to charge higher prices during that period because of the
lack of pricing competition from other generic companies. CBO
assumes that the generic manufacturer enjoying market
exclusivity would charge, on average, 10 percent more for the
generic version during the effective period of market
exclusivity. As a result, the costs to public and private
purchasers of drugs would be slightly higher during the
restored period because of this provision.
However, CBO assumes that a significant overlap in the
periods of market exclusivity would occur relatively
infrequently. The most likely scenario would occur when a first
generic ``paragraph IV'' challenger wins a court case on one
patent--and that patent is declared invalid, unenforceable, or
not infringed--while at least one other patent on the drug
product remains in force after the decision. To date, only one
similar situation has been identified surrounding a drug patent
case argued before the courts in 2000.
CBO anticipates that the recent case may be an indicator of
the potential for overlaps of 180-day generic and pediatric
periods of market exclusivity in the future. We assumed that
there was a 50 percent probability that the same percent of
sales for brand drugs losing market exclusivity in future years
(as seen in 2001 associated with the recent case) may be
subject to an overlap scenario. CBO further assumed that an
average of three effective months of the 180-day generic
exclusivity for the generic ``paragraph IV'' challenger would
be restored under the provision. (Under the bill, CBO assumes
that there would be no guarantee in any particular case that a
generic manufacturer would be able to commercially market with
effective market exclusivity if overlap remains between
pediatric exclusivity and existing patent or other market
exclusivity protection.) For this estimate, CBO assumed
generics generally would gain about 30 percent of market share
after three months and be priced at roughly 70 percent of the
brand version.
Amendments to the Generic Drug Approval Process. H.R. 2887
would amend the approval process for generic drugs when
pediatric information is added to the labeling. The bill would
require prompt approval of a generic drug that otherwise meets
all other applicable requirements even when its labeling omits
pediatric information that is protected by patent or other
market exclusivity protections. The bill would allow the
Secretary of HHS to require certain statements and warnings on
the affected generic labels. That provision would take effect
immediately upon enactment with respect to all new applications
and to those that are approved or pending. CBO estimates that
implementing these provisions would cost the FDA less than
$500,000 over the 2002-2006 period.
In directing the FDA to approve generic applications
lacking pediatric labeling under certain circumstances, these
provisions would accelerate entry of lower-cost generic
products onto the market. Under current law, CBO assumes an
average delay of three years for the generic products that
might face a moratorium on their marketing approval because of
pediatric labeling exclusivity. To estimate the savings
associated with this provision, CBO assumed that at the end of
the three years, generics would constitute roughly 70 percent
of market volume and cost about 50 percent of the brand
product's price. CBO estimates that eliminating the delay in
the entry of lower-priced generics would result in savings to
federal discretionary health programs of about $4 million in
2002 and $67 million over 2002-2006 period.
Adverse Event Reporting. H.R. 2887 would require
manufacturers to label all drugs with the toll-free number
maintained by HHS for the reporting of adverse drug events. In
addition, the bill would require that all manufacturers
receiving pediatric exclusivity report any adverse event to the
FDA during the one-year period following the granting of such
exclusivity. Those reports would have to be reviewed by the
Office of Pediatric Therapeutics and reported to the Pediatric
Advisory Subcommittee of the Anti-infective Drugs Advisory
Committee. CBO estimates that implementing this provision would
cost the FDA less than $500,000 in 2002 and $1 million over the
2002-2006 period.
Foundation for Pediatric Research. The bill would create a
non-profit corporation called the ``Foundation for Pediatric
Research'' to collect funds and award grants for pediatric
research on drugs that are on the priority list established
under section 3. It would require that all reporting, labeling,
and other requirements specified under section 3 be applicable
to drugs studied with foundation grants. The bill would
authorize the appropriation of such sums as necessary for 2002
and subsequent years to carry out the activities associated
with the foundation.
CBO expects that donations and gifts collected by the
foundation would be considered revenues to the federal
government. Grants made by the foundation would be direct
spending, because they would not be subject to the availability
of appropriations. We expectthat, on average, the foundation
would collect amounts sufficient to sponsor the study of one to two
drugs annually.
The bill also would direct the NIH to provide support
services to the foundation. H.R. 2887 would require annual
reports on the activities of the foundation and would allow the
foundation to assess fees for the provision of specific types
of services in amounts determined reasonable. CBO estimates
that establishing and administering the foundation would cost
almost $1 million in 2002 and $3 million over the 2002-2006
period, assuming appropriation of the necessary funds. NIH's
costs associated with the foundation would be less than
$500,000 in 2002 and $1 million over the 2002-2006 period.
Studies on Pediatric Exclusivity Program and Pediatric
Research. H.R. 2887 would require the Secretary of HHS to
contract with the Institute of Medicine to conduct a study on
federal regulations and issues surrounding pediatric research.
CBO estimates the cost of implementing this provision would
total about $1.5 million from 2002 through 2003. In addition,
the bill would require the General Accounting Office to conduct
two studies--one evaluating the effectiveness and economic
impact of amendments to the pediatric exclusivity program made
by H.R. 2887 and one evaluating the representation of ethnic
and racial minorities in pediatric studies under the program.
CBO estimates that those studies would cost almost $1 million
in 2002 and $3 million over the 2002-2006 period.
Effect on direct spending: H.R. 2887 would increase federal
direct spending over the 2002-2011 period by $219 million, CBO
estimates, but direct spending would be lower in 2002 (by about
$2 million) and over the 2002-2006 period (by about $7
million). The three provisions of the bill that would affect
the price of drugs for discretionary health programs discussed
earlier would also affect direct spending by federal health
programs characterized as mandatory (that is, not requiring
appropriation action). Reauthorizing the pediatric exclusivity
program would increase direct spending (for Medicaid and for
annuitants covered by health insurance offered through FEHB,
DoD, and the Coast Guard) by less than $500,000 in 2002, $28
million over the 2002-2006 period, and $320 million over the
2002-2011 period. Clarifying the interaction between the 180-
day generic market exclusivity and pediatric exclusivity
periods when they overlap would increase federal direct
spending for health programs by about $1 million in 2002, $5
million over the 2002-2006 period, and $10 million over the
2002-2011 period. However, CBO estimates that significant
savings would be generated by requiring prompt approval of
generic applications under certain circumstances. That
provision would save those federal health programs about $4
million in 2002, $65 million over the 2002-2006 period, and
about $170 million over the 2002-2011 period.
Grants made by the newly created Foundation for Pediatric
Research would be direct spending, because they would not be
subject to the availability of appropriations. CBO expects that
expenditures by the foundation for grants would begin in 2003;
therefore, there would be no direct spending in 2002. CBO
estimates that awards made by the foundation would increase
direct spending by $25 million over the 2002-2006 period and by
$59 million over the 2002-2011 period.
Effect on revenue: CBO estimates that H.R. 2887 would
increase federal revenues by $6 million in 2002, by $33 million
over the 2002-2006 period, and by $15 million over the 2002-
2011 period.
The bill would affect federal revenues in two ways. First,
donations and gifts collected by the foundation, averaging an
estimated $6 million to $7 million a year, would be considered
revenues to the federal government.
Secondly, CBO assumes that changes in drug prices would
affect the costs of private health insurance premiums, and a
portion of those amounts would be returned to workers through
changes in taxable compensation. H.R. 2887 would increase costs
for employer-sponsored health plans because of the changes in
the costs of pharmacy benefits resulting from the extension of
pediatric exclusivity to some drugs and from clarifying the
interaction of any overlap between 180-day generic market
exclusivity and pediatric exclusivity. However, the savings
generated by promoting prompt approval of generics would lead
to overall lower costs in certain years, mostly during the
earlier part of the 2002-2011 period. After 2007, however,
pharmacy costs, on net, would be higher as a result of H.R.
2887. Higher net pharmacy costs translate into higher premium
payments for employer-sponsored plans during those years, and
thus lower taxable compensation for employees.
CBO assumes that 60 percent of the change in the cost of
health premiums would be offset by changes in profits and by
behavioral responses of employers and employees. The remaining
40 percent would be passed through to workers as changes in
taxable compensation and would lead to changes in federal tax
revenues.
From 2002 through 2007, federal tax revenues would increase
slightly under the bill. However, CBO estimates that federal
tax revenues would begin to fall starting in 2009 when the
effect of declining revenues from lower taxable income
overwhelms the effect of higher revenues from incoming
donations and gifts to the foundation.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending and receipts. The
following table displays CBO's estimate of the effects of H.R.
2887 on direct spending and receipts. For the purposes of
enforcing pay-as-you-go procedures, only the effects in the
budget year and the succeeding four years are counted.
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
----------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
Change in Outlays........................ -2 1 2 -1 -6 -3 20 49 70 89
Change in Revenues....................... 6 6 6 6 9 7 3 -3 -9 -16
----------------------------------------------------------------------------------------------------------------
Estimated impact on state, local, and tribal governments:
H.R. 2887 contains no intergovernmental mandates as defined in
UMRA. Because the bill would delay the entry into the
marketplace of some generic drugs, CBO estimates that costs
would increase for the Medicaid programs and for health care
for state, local, and tribal employees. However, the bill also
would require prompt approval of generics in certain cases.
Those provisions would result in savings for the same programs.
CBO estimates that state spending for Medicaid would decrease
by a net of about $18 million over the 2002-2006 period, but
that over the 2002-2011 period, states would incur net costs
for Medicaid of about $95 million. CBO has not completed
estimates of the effect of the provisions on health care
programs offered to employees of state, local, and tribal
governments. However, those programs would similarly realize
net savings over the 2002-2006 period and incur net costs over
the 2002-2011 period.
Estimated impact on the private sector: The bill contains a
number of private-sector mandates on manufacturers of both
generic and brand-name drugs and on pharmacists. First, it
would prohibit generic drug manufacturers, under certain
conditions, from producing generic versions of drugs for a
period of six months. Based on expected patent expirations and
current rates of new drug development, CBO estimates that the
number of drugs receiving new pediatric exclusivity under the
provision would be relatively small in any of the first five
years the mandate would be effective. The forgone profits from
sales of generic drugs over the six-month period also would be
small in each of those years.
Second, the bill would remove a provision enacted under
PDUFA that waives user fees for all applications for pediatric
supplements, thereby imposing a new private-sector mandate on
sponsors of those applications. PDUFA will expire at the end of
fiscal year 2002, so the mandate would have no effect after
that date. CBO estimates that total costs in fiscal year 2002
for all such supplements would be less than $10 million.
Third, brand-name drug companies that receive pediatric
exclusivity would effectively be required to comply with any
changes in labeling requested by the Food and Drug
Administration. Failure to comply could cause the drug to be
deemed as mislabeled and removed from the market. The cost of
this requirement to affected companies would be minimal.
Finally, the bill would require all drug manufacturers to
include on all labels the toll-free telephone number maintained
by HHS for reporting adverse drug events. That requirement
would necessitate a one-time change in labels and could also
require pharmacists to include the phone number with all
prescriptions. Those required changes constitute private-sector
mandates, but the added costs would be small.
CBO estimates that the direct cost of the mandates
contained in the bill--on both generic and brand-name drug
manufacturers--would not exceed the annual threshold specified
in UMRA ($113 million in 2001, adjusted annually for inflation)
in any of the first five years the mandates would be effective.
Comparison with previous estimates: On November 2, 2001,
CBO prepared an estimate for H.R. 2887 that did not treat
spending of revenue collected by the Foundation for Pediatric
Research as direct spending. This estimate corrects that error.
Estimate prepared by: Federal Costs: Julia Christensen.
Impact on State, Local, and Tribal Governments: Leo Lex. Impact
on the Private Sector: Judith Wagner.
Estimate approved by: Robert A. Sunshine, Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional authority for this legislation is provided in
Article I, section 8, clause 3, which grants Congress the power
to regulate commerce with foreign nations, among the several
States, and with the Indian tribes.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 provides the short title of the legislation, the
Best Pharmaceuticals for Children Act.
Section 2. Pediatric studies of already-marketed drugs
In its January 2001 Status Report to Congress, the FDA
noted that it ``believes that there is no longer a benefit in
maintaining a prioritized list of drugs, as currently required
under section 505A(b).'' This section follows this
recommendation by eliminating the requirement for the pediatric
list.
Section 3. Research fund for the study of drugs lacking exclusivity
As noted previously, while the pediatric exclusivity
program has been highly successful in ensuring that drugs with
patent life or market exclusivity remaining are studied, it has
provided no incentive for the study of drugs which are already
subject to generic competition, and for certain on-patent
drugs.
This section addresses this gap in the statute through the
creation of a ``Program for Pediatric Studies of Drugs Lacking
Exclusivity'' within the Public Health Service. Under this
program, not later than one year after the date of enactment,
the Director of the National Institutes of Health, in
consultation with the Commissioner of Food and Drugs and
experts in pediatric research will develop and prioritize a
list of drugs with no patent protection or market exclusivity
remaining for which additional studies are needed to assess the
safety and effectiveness of the use of the drug in pediatric
populations. Also, certain on-patent drugs, or drugs with
remaining exclusivity, which are not studied by theFoundation
for Pediatric Research will be referred to this public program for
inclusion on the list.
Under this program, for drugs on the list with no remaining
patent life or market exclusivity, the Secretary shall first
issue ``written requests'' to all holders of approved
applications. These written requests will detail the studies
which need to be conducted in order to develop information
about use of the drug in pediatric populations. Should the
holders of approved applications decide not to study these
drugs, the Secretary will then publish a request for contract
proposals to conduct the pediatric studies detailed in the
written requests. Entities such as universities, teaching
hospitals, hospitals, laboratories, contract research
organizations, Pediatric Pharmacology Research Units, among
others, will be eligible to bid for these contracts. In
contracting for the study of drugs on the priority list, the
Secretary shall ensure that there is no duplication of effort
or other wasting of public funds. Further, drugs referred to
the public program by the Foundation for Pediatric Research
will be eligible for study under this public program.
Once the studies are completed, a report will be provided
to the Director of the NIH and the Commissioner of the FDA, and
such reports shall be considered to be in the public domain.
The Commissioner of the FDA shall then consider the reports,
and negotiate with all application holders for labeling changes
deemed necessary. Should the holders of the applications not
agree to the labeling changes proposed, then the Commissioner
will refer his recommendation to the Pediatric Advisory
Subcommittee of the Anti-Infective Drugs Advisory Committee,
which will review this recommendation and forward back to the
Commissioner its recommendation as to appropriate labeling
changes, if any. Upon reviewing the recommendation, the
Commissioner shall forward to application holders his final
request for labeling changes. The application holders will then
have 30 days to make all requested changes, and should they
decide not to make the changes, the Commissioner will have the
authority to deem the drug misbranded. Nothing in this section
authorizes any use or disclosure of confidential commercial
information or trade secrets.
This public program is authorized at $200,000,000 in FY
2002, and such sums as may be necessary through FY 2007.
Section 4. Written request to holders of approved applications for
drugs that have market exclusivity
If a written request for studies is issued to the holder of
an application with remaining patent life or market
exclusivity, the holder will have 180 days to decide whether or
not to study the drugs pursuant to the written request. Should
the sponsor decide not to study the drug under the pediatric
exclusivity program, the drug may then be referred to the
Foundation for Pediatric Research for study. Should the
Foundation for Pediatric Research certify that it does not have
funds available to conduct the requested studies, the drug will
then be referred to the Program for Pediatric Studies of Drugs
Lacking Exclusivity for prioritization and study.
Section 5. Timely labeling changes for drugs granted exclusivity; drug
fees
First, this section eliminates the automatic user fee
waiver for pediatric supplements, and ensures that pediatric
supplements proposing labeling changes shall be considered
priority supplements, subject to the performance goals
established for priority drugs.
If the Commissioner believes that a pediatric supplement
which has been submitted subsequent to studies being conducted
under section 505A is approvable, but the only open issue for
final action is reaching agreement on labeling changes, the
Commissioner shall negotiate labeling changes with the
application holder. Should the holder of the application not
agree to the labeling changes proposed, then the Commissioner
will refer his recommendation to the Pediatric Advisory
Subcommittee of the Anti-Infective Drugs Advisory Committee,
which will review this recommendation and forward back to the
Commissioner its recommendation as to appropriate labeling
changes, if any. Upon reviewing the recommendation, the
Commissioner shall forward to the application holder his final
request for labeling changes. The application holder will then
have 30 days to make all requested changes, and should the
holder decide not to make the changes, the Commissioner will
have the authority to deem the drug misbranded. It is important
to note that nothing in this section authorizes any use or
disclosure of confidential commercial information or trade
secrets.
Section 6. Office of Pediatric Therapeutics
Section 6 creates an Office of Pediatric Therapeutics
within the Commissioner's Office at the FDA. Such Office will
be responsible for oversight and coordination of all activities
of the FDA that may have any effect on a pediatric population
or the practice of pediatrics or involve pediatric issues.
Section 7. Neonates
The FDA noted in its Status Report to Congress the need to
ensure that the neonatal pediatric population be studied.
Though other provisions in H.R. 2887 will help to ensure that
this population is studied, this provision reaffirms the
importance of studying the neonatal population by inserting the
word ``neonates'' in the ``Definitions'' paragraph in section
505A.
Section 8. Sunset
This section specifies that this reauthorization expires at
the end of FY 2007.
Section 9. Dissemination of pediatric information
For studies conducted pursuant to section 505A, the
Commissioner shall make available in the public a summary of
the medical and clinical pharmacology reviews of pediatric
studies conducted.
Section 10. Clarification of interaction of market exclusivity under
section 505a of the Federal Food, Drug, and Cosmetic Act and
market exclusivity awarded to an applicant for approval of a
drug under section 505(j) of that act
This section ensures that any generic manufacturer which is
entitled to the 180 day generic exclusivity under section
505(j)(5)(B)(iv) for successfully challenging a patent will not
see that period of exclusivity nullified or abrogated by the
six month grant of exclusivity pursuant to section 505A.
This section is necessary because earlier this year
litigation resulted in a situation wherein the generic and
pediatric exclusivities could have overlapped. This section
ensures what many have expressed in writing to either the
Secretary or the Acting Commissioner of the FDA: the clear
intent of the Congress is to have the exclusivities run
consecutively, not concurrently. That is, in situations where
the exclusivities could overlap, the Pediatric Exclusivity six
month period is to run first, and then the 180 day generic
exclusivity is to run upon the expiration of the six month
period. It is the Committee's belief that any manufacturer
entitled to the 180 day generic exclusivity should not see any
of that period eviscerated by Pediatric Exclusivity.
Section 11. Prompt approval of generic drugs when pediatric information
added to labeling
This section ensures that any drug which has been submitted
or approved under section 505(j) shall not be considered
ineligible for approval or misbranded when its labeling omits a
pediatric indication or other aspect of pediatric labeling
pertaining to a pediatric use when such indication or aspect of
pediatric labeling pertaining to a pediatric use is protected
by exclusivity under sections 505(j)(5)(D)(iii) or (iv).
Pursuant to a written request, the FDA can ask that
manufacturers conduct pediatric studies which could give rise
not only to the six months of exclusivity provided for in
section 505A, but also three years of exclusivity pursuant to
the Hatch-Waxman Act. This Section does not prevent any
manufacturer from earning six months of exclusivity and then
claiming three years of supplemental exclusivity pursuant to
section 505(j). However, it does make clear that if a
manufacturer does claim supplemental exclusivity under section
505(j), the terms of that exclusivity will not prevent generic
competition for the indications or aspects of labeling which
are not protected. This provision allows the Secretary to
require that drugs approved under section 505(j) and that omit
protected pediatric labeling include a statement that the drug
is not labeled for the protected pediatric use and any warnings
against unsafe pediatric use.
Section 12. Adverse-event reporting
This section allows the Secretary one year to promulgate a
final rule which will require the drug labeling for each drug
approved under section 505(b) to include the toll-free number
maintained by the Secretary for the purpose of receiving
adverse event reports regarding drugs.
The language in this provision expressly requires the
Secretary to adopt a rule which ensures that the toll-free
number reach the ``broadest consumer audience.'' The Committee
believes that the best way to reach the ``broadest consumer
audience'' is to include the toll-free number on the
prescription bottle, vial, etc., perhaps in the form of
auxiliary labels. In addition, the Secretary through rulemaking
can decide whether to require the toll-free to be included by
manufacturers on unit-of-use packaging, such as ointments,
creams, opthalmic or otic products, or any other items for
which pharmacists can dispense the product without repackaging.
The language directs the Secretary to promulgate the rule
in a way which minimizes the cost of the rule on the pharmacy
profession. It is very important to the Committee that
pharmacists, who are already overburdened, do not have their
workload increased by the rule the Secretary will promulgate.
Therefore, the Secretary is free to consider all creative
alternatives which will result in the 1-800 number reaching the
hands of the ultimate consumers, without increasing burdens on
pharmacists.
Also, for each drug which receives exclusivity under
section 505A, during the one year period following the grant of
exclusivity all adverse event reports shall be forwarded to the
Office of Pediatric Therapeutics. The Office of Pediatric
Therapeutics shall review and forward the reports to the Anti-
Infective Drugs Advisory Subcommittee, which shall hold a
yearly public hearing to consider whether to forward
recommendations to the Secretary about the drugs which have
been granted exclusivity during the preceding year.
Section 13. Foundation for Pediatric Research
This section creates a private, nongovernmental Foundation
which will collect funds and award grants for research on drugs
listed by the Secretary pursuant to section 409I of the Public
Health Service Act. The Foundation will have the right of first
refusal for studying drugs with patent life or existing market
exclusivity remaining but for which written requests did not
result in the sponsors conducting studies.
This private Foundation is intended to supplement the work
which will be done by the public fund within the NIH. While the
Committee will stridently work to ensure that enough public
funds are available to study the drugs which need to be
studied, the Committee recognizes that during tight budgetary
times it is essential to create a private source of funding for
the drugs which are used in children yet nonetheless have not
been studied for pediatric use.
Like the public fund, all studies conducted pursuant to
grants by the private Foundation will be forwarded to the
Director of the NIH and the Commissioner of Food and Drugs.
Also like the public fund, the same mechanisms will be in place
to ensure that the drugs studied are ultimately labeled for use
in pediatric populations.
Section 14. Study concerning research involving children
This section requires the Secretary to enter into a
contract with the Institute of Medicine for the conduct of a
study of the Federal regulations in effect relating to research
involving children, paying particular attention to the process
of obtaining informed consent, the expectations and
comprehension of child research participants and their parents,
and the definition of ``minimal risk,'' among other things.
Section 15. Study of effects of this act
This section requires a comprehensive cost-benefit study to
be conducted by the Comptroller General. In conducting this
study, the Secretary is to take into consideration the costs of
section 505A to consumers and the government, as well as the
effectiveness of the amendments made to the Act in ensuring
that all drugs used by children are tested and properly
labeled. Also, the study is to consider the benefits to
consumers, the government, and private insurers resulting from
decreased health care costs through lower hospitalization
rates, fewer physician visits, and lower insurance rates. In
its January Status Report to Congress, the FDA quantified
savings from reducing the difference in hospitalization rates
between adults and pediatric patients for five diseases alone.
The Secretary quantified these savings as more than $200
million per year. A Tufts University study, on the other hand,
did a much more comprehensive study and estimated that section
505A may save up to $7 billion per year. The study to be
conducted by the GAO is to consider the costs and the benefits
of the provision in considerable depth.
Section 16. Minority Children and Pediatric-Exclusivity Program
This provision amends Section 505A to have the Secretary
take into consideration in reaching agreement on pediatric
protocols the ``adequate representation in of children of
ethnic and racial minorities.''
Further, the Section requires the Comptroller General to
conduct a study which will consider the extent to which
children of racial and ethnic minorities are included in
studies pursuant to section 505A. If such pediatric patients
are not included in studies pursuant to section 505A, the GAO
shall make recommendations to increase such representation,
among other things.
Section 17. Technical and conforming amendments
This section makes certain technical changes to existing
law.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
FEDERAL FOOD, DRUG, AND COSMETIC ACT
* * * * * * *
CHAPTER II--DEFINITIONS
* * * * * * *
Sec. 201. For the purposes of this Act--
(a) * * *
* * * * * * *
(kk) Priority Supplement.--The term ``priority supplement''
means a drug application referred to in section 101(4) of the
Food and Drug Administration Modernization Act of 1997 (111
Stat. 2298).
* * * * * * *
CHAPTER V--DRUGS AND DEVICES
Subchapter A--Drugs and Devices
* * * * * * *
SEC. 505A. PEDIATRIC STUDIES OF DRUGS.
(a) Market Exclusivity for New Drugs.--If, prior to approval
of an application that is submitted under section 505(b)(1),
the Secretary determines that information relating to the use
of a new drug in the pediatric population may produce health
benefits in that population, the Secretary makes a written
request for pediatric studies (which shall include a timeframe
for completing such studies), and such studies are completed
within any such timeframe and the reports thereof submitted in
accordance with subsection (d)(2) or accepted in accordance
with subsection (d)(3)--
(1)(A)(i) the period referred to in subsection
(c)(3)(D)(ii) of section 505, and in subsection
[(j)(4)(D)(ii)] (j)(5)(D)(ii) of such section, is
deemed to be five years and six months rather than five
years, and the references in subsections (c)(3)(D)(ii)
and [(j)(4)(D)(ii)] (j)(5)(D)(ii) of such section to
four years, to forty-eight months, and to seven and
one-half years are deemed to be four and one-half
years, fifty-four months, and eight years,
respectively; or
(ii) the period referred to in clauses (iii) and (iv)
of subsection (c)(3)(D) of such section, and in clauses
(iii) and (iv) of subsection [(j)(4)(D)] (j)(5)(D) of
such section, is deemed to be three years and six
months rather than three years; and
* * * * * * *
[(b) Secretary To Develop List of Drugs for Which Additional
Pediatric Information May Be Beneficial.--Not later than 180
days after the date of enactment of the Food and Drug
Administration Modernization Act of 1997, the Secretary, after
consultation with experts in pediatric research shall develop,
prioritize, and publish an initial list of approved drugs for
which additional pediatric information may produce health
benefits in the pediatric population. The Secretary shall
annually update the list.]
[(c)] (b) Market Exclusivity for Already-Marketed Drugs.--If
the Secretary determines that information relating to the use
of an approved drug in the pediatric population may produce
health benefits in that population and makes a written request
to the holder of an approved application under section
505(b)(1) for pediatric studies (which shall include a
timeframe for completing such studies) [concerning a drug
identified in the list described in subsection (b)], the holder
agrees to the request, the studies are completed within any
such timeframe, and the reports thereof are submitted in
accordance with subsection (d)(2) or accepted in accordance
with subsection (d)(3)--
(1)(A)(i) the period referred to in subsection
(c)(3)(D)(ii) of section 505, and in subsection
[(j)(4)(D)(ii)] (j)(5)(D)(ii) of such section, is
deemed to be five years and six months rather than five
years, and the references in subsections (c)(3)(D)(ii)
and [(j)(4)(D)(ii)] (j)(5)(D)(ii) of such section to
four years, to forty-eight months, and to seven and
one-half years are deemed to be four and one-half
years, fifty-four months, and eight years,
respectively; or
(ii) the period referred to in clauses (iii) and (iv)
of subsection (c)(3)(D) of such section, and in clauses
(iii) and (iv) of subsection [(j)(4)(D)] (j)(5)(D) of
such section, is deemed to be three years and six
months rather than three years; and
* * * * * * *
[(d)] (c) Conduct of Pediatric Studies.--
(1) Agreement for studies.--The Secretary may,
pursuant to a written request from the Secretary under
subsection (a) or [(c)] (b), after consultation with--
(A) * * *
* * * * * * *
(2) Written protocols to meet the studies
requirement.--If the sponsor or holder and the
Secretary agree upon written protocols for the studies,
the studies requirement of subsection (a) or [(c)] (b)
is satisfied upon the completion of the studies and
submission of the reports thereof in accordance with
the original written request and the written agreement
referred to in paragraph (1). In reaching an agreement
regarding written protocols, the Secretary shall take
into account adequate representation of children of
ethnic and racial minorities. Not later than 60 days
after the submission of the report of the studies, the
Secretary shall determine if such studies were or were
not conducted in accordance with the original written
request and the written agreement and reported in
accordance with the requirements of the Secretary for
filing and so notify the sponsor or holder.
(3) Other methods to meet the studies requirement.--
If the sponsor or holder and the Secretary have not
agreed in writing on the protocols for the studies, the
studies requirement of subsection (a) or [(c)] (b) is
satisfied when such studies have been completed and the
reports accepted by the Secretary. Not later than 90
days after the submission of the reports of the
studies, the Secretary shall accept or reject such
reports and so notify the sponsor or holder. The
Secretary's only responsibility in accepting or
rejecting the reports shall be to determine, within the
90 days, whether the studies fairly respond to the
written request, have been conducted in accordance with
commonly accepted scientific principles and protocols,
and have been reported in accordance with the
requirements of the Secretary for filing.
(4) Written request to holders of approved
applications for drugs that have market exclusivity.--
(A) Request and response.--If the Secretary
makes a written request for pediatric studies
under subsection (b) to the holder of an
application approved under section 505(b)(1),
the holder, not later than 180 days after
receiving the written request, shall respond to
the Secretary as to the intention of the holder
to act on the request by--
(i) indicating when the pediatric
studies will be initiated, if the
holder agrees to the request; or
(ii) indicating that the holder does
not agree to the request.
(B) No agreement to request.--
(i) Referral.--If the holder does not
agree to a written request within the
time period specified in subparagraph
(A), and if the Secretary determines
that there is a continuing need for
information relating to the use of the
drug in the pediatric population
(including neonates as appropriate),
the Secretary shall refer the drug to
the Foundation for Pediatric Research
established under section 499A of the
Public Health Service Act (referred to
in this paragraph as the
``Foundation'') for consideration for
the conduct of the pediatric studies
described in the written request.
(ii) Public notice.--The Secretary
shall give public notice of a referral
under clause (i), including notice of
the name of the drug, the name of the
manufacturer, and the indication to be
studied.
(C) Lack of funds.--If, on referral of a drug
under subparagraph (B)(i), the Foundation
certifies to the Secretary that the Foundation
does not have funds available to conduct the
requested studies, the Secretary shall refer
the drug for inclusion on the list established
under section 409I of the Public Health Service
Act for the conduct of the studies.
(D) Confidential commercial information;
trade secrets.--Nothing in this paragraph
requires or authorizes the use or disclosure of
confidential commercial information or trade
secrets.
(E) No requirement to refer.--Nothing in this
subsection shall be construed to require that
every declined written request shall be
referred to the Foundation.
[(e)] (d) Delay of Effective Date for Certain Application.--
If the Secretary determines that the acceptance or approval of
an application under section 505(b)(2) or 505(j) for a new drug
may occur after submission of reports of pediatric studies
under this section, which were submitted prior to the
expiration of the patent (including any patent extension) or
the applicable period under clauses (ii) through (iv) of
section 505(c)(3)(D) or clauses (ii) through (iv) of section
505[(j)(4)(D)] (j)(5)(D), but before the Secretary has
determined whether the requirements of subsection (d) have been
satisfied, the Secretary shall delay the acceptance or approval
under section 505(b)(2) or 505(j) until the determination under
subsection (d) is made, but any such delay shall not exceed 90
days. In the event that requirements of this section are
satisfied, the applicable six-month period under subsection (a)
or [(c)] (b) shall be deemed to have been running during the
period of delay.
[(f)] (e) Notice of Determinations on Studies Requirement.--
The Secretary shall publish a notice of any determination that
the requirements of subsection (d) have been met and that
submissions and approvals under subsection (b)(2) or (j) of
section 505 for a drug will be subject to the provisions of
this section.
[(g)] (f) Definitions.--As used in this section, the term
``pediatric studies'' or ``studies'' means at least one
clinical investigation (that, at the Secretary's discretion,
may include pharmacokinetic studies) in pediatric age groups
(including neonates in appropriate cases) in which a drug is
anticipated to be used.
[(h)] (g) Limitations.--A drug to which the six-month period
under subsection (a) or (b) has already been applied--
(1) * * *
* * * * * * *
[(i)] (h) Relationship to Regulations.--Notwithstanding any
other provision of law, if any pediatric study is required
pursuant to regulations promulgated by the Secretary and such
study meets the completeness, timeliness, and other
requirements of this section, such study shall be deemed to
satisfy the requirement for market exclusivity pursuant to this
section.
[(j) Sunset.--A drug may not receive any six-month period
under subsection (a) or (c) unless the application for the drug
under section 505(b)(1) is submitted on or before January 1,
2002. After January 1, 2002, a drug shall receive a six-month
period under subsection (c) if--
[(1) the drug was in commercial distribution as of
the date of enactment of the Food and Drug
Administration Modernization Act of 1997;
[(2) the drug was included by the Secretary on the
list under subsection (b) as of January 1, 2002;
[(3) the Secretary determines that there is a
continuing need for information relating to the use of
the drug in the pediatric population and that the drug
may provide health benefits in that population; and
[(4) all requirements of this section are met.]
(i) Sunset.--A drug may not receive any 6-month period under
subsection (a) or (b) unless--
(1) on or before October 1, 2007, the Secretary makes
a written request for pediatric studies of the drug;
(2) on or before October 1, 2007, an approvable
application for the drug is submitted under section
505(b)(1); and
(3) all requirements of this section are met.
[(k)] (j) Report.--The Secretary shall conduct a study and
report to Congress not later than January 1, 2001, based on the
experience under the program established under this section.
The study and report shall examine all relevant issues,
including--
(1) * * *
* * * * * * *
(k) Labeling Supplements.--
(1) Priority status for pediatric supplements.--Any
supplement to an application under section 505
proposing a labeling change pursuant to a report on a
pediatric study under this section--
(A) shall be considered to be a priority
supplement; and
(B) shall be subject to the performance goals
established by the Commissioner for priority
drugs.
(2) Dispute resolution.--If the Commissioner
determines that an application with respect to which a
pediatric study is conducted under this section is
approvable and that the only open issue for final
action on the application is the reaching of an
agreement between the sponsor of the application and
the Commissioner on appropriate changes to the labeling
for the drug that is the subject of the application--
(A) not later than 180 days after the date of
submission of the application--
(i) the Commissioner shall request
that the sponsor of the application
make any labeling change that the
Commissioner determines to be
appropriate; and
(ii) if the sponsor of the
application does not agree to make a
labeling change requested by the
Commissioner by that date, the
Commissioner shall immediately refer
the matter to the Pediatric Advisory
Subcommittee of the Anti-Infective
Drugs Advisory Committee;
(B) not later than 90 days after receiving
the referral, the Pediatric Advisory
Subcommittee of the Anti-Infective Drugs
Advisory Committee shall--
(i) review the pediatric study
reports; and
(ii) make a recommendation to the
Commissioner concerning appropriate
labeling changes, if any;
(C) the Commissioner shall consider the
recommendations of the Pediatric Advisory
Subcommittee of the Anti-Infective Drugs
Advisory Committee and, if appropriate, not
later than 30 days after receiving the
recommendation, make a request to the sponsor
of the application to make any labeling change
that the Commissioner determines to be
appropriate; and
(D) if the sponsor of the application, within
30 days after receiving a request under
subparagraph (C), does not agree to make a
labeling change requested by the Commissioner,
the Commissioner may deem the drug that is the
subject of the application to be misbranded.
(l) Dissemination of Pediatric Information.--
(1) In general.--Not later than 180 days after the
date of submission of a report on a pediatric study
under this section, the Commissioner shall make
available to the public a summary of the medical and
clinical pharmacology reviews of pediatric studies
conducted for the supplement, including by publication
in the Federal Register.
(2) Effect of subsection.--Nothing in this subsection
alters or amends in any way section 552 of title 5 or
section 1905 of title 18, United States Code.
(m) Clarification of Interaction of Market Exclusivity Under
This Section and Market Exclusivity Awarded to an Applicant for
Approval of a Drug Under Section 505(j).--
(1) In general.--If a 180-day period under section
505(j)(5)(B)(iv) overlaps with a 6-month extension
under this section, so that the applicant for approval
of a drug under section 505(j) entitled to the 180-day
period under that section loses a portion of the 180-
day period to which the applicant is entitled for the
drug, the 180-day period shall be extended--
(A) if the 180-day period would, but for this
subsection, expire after the 6-month extension,
by the number of days of the overlap; or
(B) if the 180-day period would, but for this
subsection, expire during the 6-month
extension, by 6 months.
(2) Effect of subsection.--Under no circumstances
shall application of this section result in an
applicant for approval of a drug under section 505(j)
being enabled to commercially market the drug to the
exclusion of a subsequent applicant for approval of a
drug under section 505(j) for more than 180 days.
(n) Prompt Approval of Generic Drugs When Pediatric
Information Added to Labeling.--
(1) In general.--A drug for which an application has
been submitted or approved under section 505(j) and
which otherwise meets all other applicable requirements
under that section shall be considered eligible for
approval and shall not be considered misbranded under
section 502 even when its labeling omits a pediatric
indication or other aspect of labeling pertaining to
pediatric use that is protected by patent or by market
exclusivity pursuant to clause (iii) or (iv) of section
505(j)(5)(D).
(2) Labeling of generic drug.--Notwithstanding the
provisions of clause (iii) or (iv) of section
505(j)(5)(D), the Secretary may require that the
labeling of a drug approved under section 505(j) that
omits pediatric labeling pursuant to paragraph (1)
include--
(A) a statement that the drug is not labeled
for the protected pediatric use; and
(B) any warnings against unsafe pediatric use
that the Secretary considers necessary.
(3) Rule of construction.--Paragraphs 1 and 2 of this
subsection do not affect--
(A) the availability or scope of exclusivity
under this section;
(B) the availability or scope of exclusivity
under section 505 for pediatric formulations;
or
(C) except as expressly provided in paragraph
(1) and (2), the operation of section 505.
* * * * * * *
CHAPTER VII--GENERAL AUTHORITY
* * * * * * *
Subchapter C--Fees
* * * * * * *
PART 2--FEES RELATING TO DRUGS
* * * * * * *
SEC. 736. AUTHORITY TO ASSESS AND USE DRUG FEES.
(a) Types of Fees.--Beginning in fiscal year 1998, the
Secretary shall assess and collect fees in accordance with this
section as follows:
(1) Human drug application and supplement fee.--
(A) * * *
* * * * * * *
[(F) Exception for supplements for pediatric
indications.--A supplement to a human drug
application proposing to include a new
indication for use in pediatric populations
shall not be assessed a fee under subparagraph
(A).]
[(G)] (F) Refund of fee if application
withdrawn.--If an application or supplement is
withdrawn after the application or supplement
was filed, the Secretary may refund the fee or
a portion of the fee if no substantial work was
performed on the application or supplement
after the application or supplement was filed.
The Secretary shall have the sole discretion to
refund a fee or a portion of the fee under this
subparagraph. A determination by the Secretary
concerning a refund under this paragraph shall
not be reviewable.
* * * * * * *
----------
PUBLIC HEALTH SERVICE ACT
* * * * * * *
TITLE IV--NATIONAL RESEARCH INSTITUTES
* * * * * * *
Part B--General Provisions Respecting National Research Institutes
* * * * * * *
SEC. [409C.] 409G. CLINICAL RESEARCH.
(a) In General.--The Director of National Institutes of
Health shall undertake activities to support and expand the
involvement of the National Institutes of Health in clinical
research.
* * * * * * *
SEC. [409D.] 409H. ENHANCEMENT AWARDS.
(a) Mentored Patient-Oriented Research Career Development
Awards.--
(1) * * *
* * * * * * *
SEC. 409I. PROGRAM FOR PEDIATRIC STUDIES OF DRUGS LACKING EXCLUSIVITY.
(a) List of Drugs Lacking Exclusivity for Which Pediatric
Studies are Needed.--
(1) In general.--Not later than 1 year after the date
of enactment of this section, the Secretary, acting
through the Director of the National Institutes of
Health and in consultation with the Commissioner of
Food and Drugs and experts in pediatric research, shall
develop, prioritize, and publish an annual list of
approved drugs for which--
(A)(i) there is an approved application under
section 505(j) of the Federal Food, Drug, and
Cosmetic Act;
(ii) there is a submitted application that
could be approved under the criteria of section
505(j) of the Federal Food, Drug, and Cosmetic
Act;
(iii) there is no patent protection or market
exclusivity protection under the Federal Food,
Drug, and Cosmetic Act; or
(iv) there is, under section 505A(c)(4)(C) of
the Federal Food, Drug, and Cosmetic Act, a
referral for inclusion on such list; and
(B) additional studies are needed to assess
the safety and effectiveness of the use of the
drug in the pediatric population.
(2) Consideration of available information.--In
developing the list under paragraph (1), the Secretary
shall consider, for each drug on the list--
(A) the availability of information
concerning the safe and effective use of the
drug in the pediatric population;
(B) whether additional information is needed;
(C) whether new pediatric studies concerning
the drug may produce health benefits in the
pediatric population; and
(D) whether reformulation of the drug is
necessary;
(b) Contracts for Pediatric Studies.--The Secretary shall
award contracts to entities that have the expertise to conduct
pediatric clinical trials (including qualified universities,
hospitals, laboratories, contract research organizations,
federally funded programs such as pediatric pharmacology
research units, other public or private institutions, or
individuals) to enable the entities to conduct pediatric
studies concerning one or more drugs identified in the list
described in subsection (a).
(c) Process for Contracts and Labeling Changes.--
(1) Written request to holders of approved
applications for drugs lacking exclusivity.--
(A) In general.--The Commissioner of Food and
Drugs, in consultation with the Director of
National Institutes of Health, may issue a
written request (which shall include a
timeframe for negotiations for an agreement)
for pediatric studies concerning a drug
identified in the list described in subsection
(a) to all holders of an approved application
for the drug under section 505 of the Federal
Food, Drug, and Cosmetic Act. Such a written
request shall be made in a manner equivalent to
the manner in which a written request is made
under subsection (a) or (b) of section 505A of
the Federal Food, Drug, and Cosmetic Act,
including with respect to information provided
on the pediatric studies to be conducted
pursuant to the request.
(B) Publication of request.--If the
Commissioner of Food and Drugs does not receive
a response to a written request issued under
subparagraph (A) within 30 days of the date on
which a request was issued, the Secretary,
acting through the Director of National
Institutes of Health and in consultation with
the Commissioner of Food and Drugs, shall
publish a request for contract proposals to
conduct the pediatric studies described in the
written request.
(C) Disqualification.--A holder that receives
a first right of refusal shall not be entitled
to respond to a request for contract proposals
under subparagraph (B).
(D) Guidance.--Not later than 270 days after
the date of enactment of this section, the
Commissioner of Food and Drugs shall promulgate
guidance to establish the process for the
submission of responses to written requests
under subparagraph (A).
(2) Contracts.--A contract under this section may be
awarded only if a proposal for the contract is
submitted to the Secretary in such form and manner, and
containing such agreements, assurances, and information
as the Secretary determines to be necessary to carry
out this section.
(3) Reporting of studies.--
(A) Upon completion of a pediatric study in
accordance with a contract awarded under this
section, a report concerning the study shall be
submitted to the Director of National
Institutes of Health and the Commissioner of
Food and Drugs. The report shall include all
data generated in connection with the study.
(B) Availability of reports.--Each report
submitted under subparagraph (A) shall be
considered to be in the public domain, and
shall be assigned a docket number by the
Commissioner of Food and Drugs. An interested
person may submit written comments concerning
such pediatric studies to the Commissioner of
Food and Drugs, and thewritten comments shall
become part of the docket file with respect to each of the drugs.
(C) Action by commissioner.--The Commissioner
of Food and Drugs shall take appropriate action
in response to the reports submitted under
subparagraph (A) in accordance with paragraph
(4).
(4) Request for labeling changes.--During the 180-day
period after the date on which a report is submitted
under paragraph (3)(A), the Commissioner of Food and
Drugs shall--
(A) review the report and such other data as
are available concerning the safe and effective
use in the pediatric population of the drug
studied; and
(B) negotiate with the holders of approved
applications for the drug studied for any
labeling changes that the Commissioner of Food
and Drugs determines to be appropriate and
requests the holders to make; and
(C)(i) place in the public docket file a copy
of the report and of any requested labeling
changes; and
(ii) publish in the Federal Register a
summary of the report and a copy of any
requested labeling changes.
(5) Dispute resolution.--If, not later than the end
of the 180-day period specified in paragraph (4), the
holder of an approved application for the drug involved
does not agree to any labeling change requested by the
Commissioner of Food and Drugs under that paragraph--
(A) the Commissioner of Food and Drugs shall
immediately refer the request to the Pediatric
Advisory Subcommittee of the Anti-Infective
Drugs Advisory Committee; and
(B) not later than 90 days after receiving
the referral, the Subcommittee shall--
(i) review the available information
on the safe and effective use of the
drug in the pediatric population,
including study reports submitted under
this section; and
(ii) make a recommendation to the
Commissioner of Food and Drugs as to
appropriate labeling changes, if any.
(6) FDA determination.--Not later than 30 days after
receiving a recommendation from the Subcommittee under
paragraph (5)(B)(ii) with respect to a drug, the
Commissioner of Food and Drugs shall consider the
recommendation and, if appropriate, make a request to
the holders of approved applications for the drug to
make any labeling change that the Commissioner of Food
and Drugs determines to be appropriate.
(7) Failure to agree.--If a holder of an approved
application for a drug, within 30 days after receiving
a request to make a labeling change under paragraph
(6), does not agree to make a requested labeling
change, the Commissioner may deem the drug to be
misbranded under the Federal Food, Drug, and Cosmetic
Act.
(8) Recommendation for formulation changes.--If a
pediatric study completed under public contract
indicates that a formulation change is necessary and
the Secretary agrees, the Secretary shall send a
nonbinding letter of recommendation regarding that
change to each holder of an approved application.
(d) Confidential Commercial Information; Trade Secrets.--
Nothing in this section requires or authorizes the use or
disclosure of confidential commercial information or trade
secrets.
(e) Authorization of Appropriations.--
(1) In general.--For the purpose of carrying out this
section, there are authorized to be appropriated
$200,000,000 for fiscal year 2002, and such sums as may
be necessary for each of the fiscal years 2003 through
2007.
(2) Availability.--Any amount appropriated under
paragraph (1) shall remain available to carry out this
section until expended.
* * * * * * *
PART J--FOUNDATION FOR PEDIATRIC RESEARCH
SEC. 499A. ESTABLISHMENT AND DUTIES OF FOUNDATION.
(a) In General.--The Secretary, acting through the Director
of NIH and in consultation with the Commissioner of Food and
Drugs, shall establish a nonprofit corporation to be known as
the Foundation for Pediatric Research (hereafter in this
section referred to as the ``Foundation''). The Foundation
shall not be an agency or instrumentality of the United States
Government.
(b) Purpose of Foundation.--The purpose of the Foundation
shall be to collect funds and award grants for research on
drugs listed by the Secretary pursuant to section
409I(a)(1)(A).
(c) Certain Activities of Foundation.--
(1) In general.--In carrying out subsection (b), the
Foundation may solicit and accept gifts, grants, and
other donations, establish accounts, and invest and
expend funds in support of a program to encourage
donations for the conduct of studies of drugs referred
to in subsection (b).
(2) Fees.--The Foundation may assess fees for the
provision of professional, administrative and
management services by the Foundation in amounts
determined reasonable and appropriate by the Executive
Director.
(3) Authority of foundation.--The Foundation shall be
the sole entity responsible for carrying out the
activities described in this subsection.
(d) Board of Directors.--
(1) Composition.--
(A) The Foundation shall have a Board of
Directors (hereafter referred to in this
section as the Board''), which shall be
composed of ex officio and appointed members in
accordance with this subsection. Appointed
members of the Board shall be the voting
members.
(B) The ex officio members of the Board shall
be--
(i) the Chairman and ranking minority
member of the Subcommittee on Health
(Committee on Energy and Commerce) or
their designees, in the case of the
House of Representatives;
(ii) the Chairman and ranking
minority member of the Committee on
Health, Education, Labor and Pensions
or their designees, in the case of the
Senate;
(iii) the Director of NIH; and
(iv) the Commissioner of Food and
Drugs.
(C) The ex officio members of the Board under
subparagraph (B) shall appoint to the Board 11
individuals from among a list of candidates to
be provided by the National Academy of Science.
Of such appointed members--
(i) 5 shall be representative of the
experts in pediatric medicine and
research field;
(ii) 1 shall be a biomedical
ethicist; and
(iii) 5 shall be representatives of
the general public, which may include
representatives of affected industries.
(D)(i) Not later than 30 days after the date
of the enactment of the Best Pharmaceuticals
for Children Act, the Director of NIH shall
convene a meeting of the ex officio members of
the Board to--
(I) incorporate the Foundation and
establish the general policies of the
Foundation for carrying out the
purposes of subsection (b), including
the establishment of the bylaws of the
Foundation; and
(II) appoint the members of the Board
in accordance with subparagraph (C).
(ii) Upon the appointment of the members of
the Board under clause (i)(II), the terms of
service of the ex officio members of the Board
as members of the Board shall terminate.
(E) The agreement of not less than three-
fifths of the members of the ex officio members
of the Board shall be required for the
appointment of each member to the initial
Board.
(F) No employee of the National Institutes of
Health shall be appointed as a member of the
Board.
(2) Chair.--
(A) The ex officio members of the Board under
paragraph (1)(B) shall designate an individual
to serve as the initial Chair of the Board.
(B) Upon the termination of the term of
service of the initial Chair of the Board, the
appointed members of the Board shall elect a
member of the Board to serve as the Chair of
the Board.
(3) Terms and vacancies.--
(A) The term of office of each member of the
Board appointed under paragraph (1)(C) shall be
5 years, except that the terms of offices for
the initial appointed members of the Board
shall expire as determined by the ex officio
members and the Chair.
(B) Any vacancy in the membership of the
Board shall be filled in the manner in which
the original position was made and shall not
affect the power of the remaining members to
execute the duties of the Board.
(C) If a member of the Board does not serve
the full term applicable under subparagraph
(A), the individual appointed to fill the
resulting vacancy shall be appointed for the
remainder of the term of the predecessor of the
individual.
(D) A member of the Board may continue to
serve after the expiration of the term of the
member until a successor is appointed.
(4) Compensation.--Members of the Board may not
receive compensation for service on the Board. Such
members may be reimbursed for travel, subsistence, and
other necessary expenses incurred in carrying out the
duties of the Board, as set forth in the bylaws issued
by the Board.
(5) Meetings and quorum.--A majority of the members
of the Board shall constitute a quorum for purposes of
conducting the business of the Board.
(6) Certain bylaws.--
(A) In establishing bylaws under this
subsection, the Board shall ensure that the
following are provided for:
(i) Policies for the selection of the
officers, employees, and agents of the
Foundation.
(ii) Policies, including ethical
standards, for the acceptance,
solicitation, and disposition of
donations and grants to the Foundation
and for the disposition of the assets
of the Foundation. Policies with
respect to ethical standards shall
ensure that officers, employees and
agents of the Foundation (including
members of the Board) avoid
encumbrances that would result in a
conflict of interest, including a
financial conflict of interest or a
divided allegiance. Such policies shall
include requirements for the provision
of information concerning any ownership
or controlling interest in entities
related to the activities of the
Foundation by such officers, employees
and agents and their spouses and
relatives.
(iii) Policies for the conduct of the
general operations of the Foundation.
(B) In establishing bylaws under this
subsection, the Board shall ensure that such
bylaws (and activities carried out under the
bylaws) do not--
(i) reflect unfavorably upon the
ability of the Foundation to carry out
its responsibilities or official duties
in a fair and objective manner; or
(ii) compromise, or appear to
compromise, the integrity of any
governmental agency or program, or any
officer or employee involved in such
program.
(e) Incorporation.--The initial members of the Board shall
serve as incorporators and shall take whatever actions
necessary to incorporate the Foundation.
(f) Nonprofit Status.--The Foundation shall be considered to
be a corporation under section 501(c) of the Internal Revenue
Code of 1986, and shall be subject to the provisions of such
section.
(g) Executive Director.--
(1) In general.--The Foundation shall have an
Executive Director who shall be appointed by the Board
and shall serve at the pleasure of the Board. The
Executive Director shall be responsible for the day-to-
day operations of the Foundation and shall have such
specific duties and responsibilities as the Board shall
prescribe.
(2) Compensation.--The rate of compensation of the
Executive Director shall be fixed by the Board.
(h) Powers.--In carrying out subsection (b), the Foundation
shall operate under the direction of its Board, and may--
(1) adopt, alter, and use a corporate seal, which
shall be judicially noticed;
(2) provide for 1 or more officers, employees, and
agents, as may be necessary, define their duties, and
require surety bonds or make other provisions against
losses occasioned by acts of such persons;
(3) hire, promote, compensate, and discharge officers
and employees of the Foundation, and define the duties
of the officers and employees;
(4) with the consent of any executive department or
independent agency, use the information, services,
staff, and facilities of such in carrying out this
section;
(5) sue and be sued in its corporate name, and
complain and defend in courts of competent
jurisdiction;
(6) modify or consent to the modification of any
contract or agreement to which it is a party or in
which it has an interest under this part;
(7) establish a process for the selection of
candidates for positions under subsection (c);
(8) solicit, accept, hold, administer, invest, and
spend any gift, devise, or bequest of real or personal
property made to the Foundation;
(9) enter into such other contracts, leases,
cooperative agreements, and other transactions as the
Executive Director considers appropriate to conduct the
activities of the Foundation; and
(10) exercise other powers as set forth in this
section, and such other incidental powers as are
necessary to carry out its powers, duties, and
functions in accordance with this part.
(i) Administrative Control.--No participant in the program
established under this part shall exercise any administrative
control over any Federal employee, nor shall the Foundation
attempt to influence an executive branch agency or employee.
(j) General Provisions.--
(1) Foundation integrity.--The members of the Board
shall be accountable for the integrity of the
operations of the Foundation and shall ensure such
integrity through the development and enforcement of
criteria and procedures relating to standards of
conduct (including those developed under subsection
(d)(6)(A)(ii), financial disclosure statements,
conflict of interest rules, recusal and waiver rules,
audits and other matter determined appropriate by the
Board.
(2) Financial conflicts of interest.--Any individual
who is an officer, employee, or member of the Board of
the Foundation may not (in accordance with policies and
requirements developed under subsection (d)(6)(A)(ii)
personally or substantially participate in the
consideration or determination by the Foundation of any
matter that would directly or predictably affect any
financial interest of the individual or a relative (as
such term is defined in section 109(16) of the Ethics
in Government Act of 1978) of the individual, of any
business organization or other entity, or of which the
individual is an officer or employee, or is negotiating
for employment, or in which the individual has any
other financial interest.
(3) Audits; availability of records.--The Foundation
shall--
(A) provide for annual audits of the
financial condition of the Foundation; and
(B) make such audits, and all other records,
documents, and other papers of the Foundation,
available to the Secretary and the Comptroller
General of the United States for examination or
audit.
(4) Reports.--
(A) Not later than 5 months following the end
of each fiscal year, the Foundation shall
publish a report describing the activities of
the Foundation during the preceding fiscal
year. Each such report shall include for the
fiscal year involved a comprehensive statement
of the operations, activities, financial
condition, and accomplishments of the
Foundation.
(B) With respect to the financial condition
of the Foundation, each report under
subparagraph (A) shall include the source, and
a description of, all gifts or grants to the
Foundation of real or personal property, and
the source and amount of all gifts or grants to
the Foundation of money. Each such report shall
include a specification of any restrictions on
the purposes for which gifts or grants to the
Foundation may be used.
(C) The Foundation shall make copies of each
report submitted under subparagraph (A)
available for public inspection, and shall upon
request provide a copy of the report to any
individual for a charge not exceeding the cost
of providing the copy.
(D) The Board shall annually hold a public
meeting to summarize the activities of the
Foundation and distribute written reports
concerning such activities and the scientific
results derived from such activities.
(5) Service of federal employees.--Federal employees
may serve on committees advisory to the Foundation and
otherwise cooperate with and assist the Foundation in
carrying out its function, so long as the employees do
not direct or control Foundation activities.
(6) Relationship with existing entities.--The
Foundation may, pursuant to appropriate agreements,
acquire the resources of existing nonprofit private
corporations with missions similar to the purposes of
the Foundation.
(7) Intellectual property rights.--The Board may
adopt written standards with respect to the ownership
of any intellectual property rights derived from the
collaborative efforts of the Foundation prior to the
commencement of such efforts.
(8) National institutes of health amendments of
1990.--The activities conducted in support of the
National Institutes of Health Amendments of 1990
(Public Law 101-613), and the amendments made by such
Act, shall not be nullified by the enactment of this
section.
(9) Limitation of activities.--The Foundation shall
exist solely as an entity to collect funds and award
grants for research on drugs listed by the Secretary
pursuant to section 409I(a)(1)(A).
(10) Transfer of funds.--The Foundation may transfer
funds to the National Institutes of Health. Any funds
transferred under this paragraph shall be subject to
all Federal limitations relating to federally-funded
research.
(k) Duties of the Director.--
(1) Applicability of certain standards to non-federal
employees.--In the case of any individual who is not an
employee of the Federal Government and who serves in
association with the National Institutes of Health,
with respect to financial assistance received from the
Foundation, the Foundation may not provide the
assistance of, or otherwise permit the work at the
National Institutes of Health to begin until a
memorandum of understanding between the individual and
the Director of NIH, or the designee of such Director,
has been executed specifying that the individual shall
be subject to such ethical and procedural standards of
conduct relating to duties performed at the National
Institutes of Health, as the Director of NIH determines
is appropriate.
(2) Support services.--The Director of NIH shall
provide facilities, utilities and support services to
the Foundation.
(l) Reports of Studies; Labeling Changes.--
(1) In general.--Upon completion of a pediatric study
conducted pursuant to this section, a report concerning
the study shall be submitted to the Director of
National Institutes of Health and the Commissioner of
Food and Drugs. The report shall include all data
generated in connection with the study.
(2) Availability of reports; action by food and drug
administration; labeling changes.--With respect to a
report submitted under paragraph (1), the provisions of
paragraphs (3)(B) through (8) of section 409I(c) apply
to such report to the same extent and in the same
manner as such provision apply to a report submitted
under section 409I(c)(3)(A).
(m) Funding.--
(1) Authorization of appropriations.--For the purpose
of carrying out this part, there are authorized to be
appropriated such sums as may be necessary for fiscal
year 2002 and each subsequent fiscal year.
(2) Limitation regarding other funds.--Amounts
appropriated under any provision of law other than
paragraph (1) may not be expended to establish or
operate the Foundation.
* * * * * * *
DISSENTING VIEWS
We agree with the American Academy of Pediatrics, the Food
and Drug Administration (FDA), and the sponsors of H.R. 2887
that proper testing and labeling of drugs for children is an
important health matter. For example, we believe that pediatric
testing should simply be required in appropriate cases. The
Federal Food, Drug, and Cosmetic Act (the Act) requires that
drugs be safe and effective for their intended use. The Act
does not say safe and effective, except for children.
But, we oppose H.R. 2887 because it imposes unnecessary
costs on the consuming and taxpaying public. Even the American
Academy of Pediatrics recognizes that the exclusivity incentive
``may be providing a monetary windfall for a limited number of
drugs,'' and ``believes it is important to determine whether
some monetary limits are needed for certain drugs . . . .''
All programs should be evaluated for their cost
effectiveness, including this one. In comments submitted with
respect to the Department of Health and Human Services' (HHS)
January 2001 report, ``The Pediatric Exclusivity Provision''
(the Report), the American Academy of Pediatrics ``urged the
development of different incentive levels depending on the need
for information on specific drugs, to mitigate the tendency to
conduct studies on those drugs with the greatest profits rather
than those with the greatest need.'' It should be noted that
many well known consumer advocacy organizations oppose H.R.
2887 because of the unnecessary costs of the exclusivity
incentive.
In the four years of this program's existence, it has
already cost consumers and taxpayers billions of dollars while
producing only 19 new drug labels. One drug netted its owner,
Astra Zeneca, a windfall of $1.4 billion, or approximately 350
times the cost of an average pediatric study. Eli Lilly gained
a $900 million windfall during the extra six-months monopoly
pricing on Prozac. In neither case has the American public, who
has paid these higher prices, received any additional
information of the pediatric uses of the drugs. If H.R. 2887
becomes law, these and virtually all other brand name drug
companies with ``blockbuster drugs'' will continue to extract
billions of excess profits in return for studies that cost, on
average, less than $4 million to conduct.
The Committee rejected cost-effective alternative
incentives such as the Waxman/Brown Substitute, that would have
replaced the six-month exclusivity incentive with direct
reimbursement of the costs of the studies, plus a 100 percent
profit.
According to the Report, ``the impact of the lack of lower
cost generic drugs on some patients, especially those without
health insurance and the elderly, may be significant.'' The
Report also concluded that ``[t]he greatest burden will fall on
consumers with no private or public insurance support, which
may disproportionately affect lower income purchasers'' and
that ``the pediatric exclusivity provision . . . imposes
substantial costs on consumers and taxpayers.''
A survey of twenty-five drugs that may be eligible for
pediatric exclusivity during the five-year authorization period
of H.R. 2887 indicates that the sponsors of these products will
receive additional sales revenues of more than $11 billion. The
profit margins on these revenues are quite high since the drugs
have already been in existence for many years having already
recovered development costs many fold. Without the pediatric
exclusivity, these drugs would face price competition and all
would benefit.
Moreover, the exclusivity program does not always yield the
labeling for which consumers have paid. The FDA has identified
approximately 400 drugs for which pediatric testing and
labeling is needed. Five years later, 38 drugs have received
exclusivity and only half of these products have labeling that
reflects the results of those tests.
When the systematic exclusion and underrepresentation of
women in drug testing was brought to light years ago, none
suggested that the situation could only be addressed with an
economic incentive to industry. Nor are we aware of anyone ever
suggesting that the only way to address racial and ethnic
disparities in drug product research was through an economic
incentive for product sponsors. The same should be the case for
our children. In fact, FDA's new drug approval regulations, 21
CFR Part 314, specifically require that both effectiveness and
safety data be presented by gender, age, and racial subgroups
and effectiveness data shall identify any modifications of dose
or dose interval needed for specific subgroups.
It was a mistake to ever allow drug product sponsors to
systematically exclude children from the protection of the
Act's safety and efficacy standard. This mistake was compounded
in 1997 by the creation of pediatric exclusivity, a program
that says that proper testing and labeling of drugs used by
children will depend upon a product sponsor's evaluation of the
adequacy of a financial incentive. The Report stated that the
incentive ``has naturally tended to produce pediatric studies
on those products where the exclusivity has the greatest value.
This has left some drugs of importance to children, but for
which the incentive has little or no value, unstudied.''
According to the FDA, ``the absence of pediatric labeling
information poses significant risks for children.'' For
example, the FDA has noted that inadequate dosing information
exposes pediatric patients to the risk of adverse reactions
that could be avoided. FDA has noted reports of injuries and
deaths in children resulting from use of drugs that were not
adequately tested in the pediatric population. Furthermore, as
FDA has noted, lack of pediatric testing can expose patients to
ineffective treatment or deny them the benefits of therapeutic
advances.
Aside from H.R. 2887's reliance on the six-month
exclusivity incentive, the bill fails to condition that
incentive on actual labeling that reflects the results of
studies. Prescribing physicians, parents, and older children do
not read studies, they read product labels. There should be no
exclusivity unless and until the product is labeled. Our
colleague, Representative Bart Stupak, offered an amendment
that would have closed this dangerous loophole in the law.
Unfortunately, this amendment was rejected.
Giving credit where credit is due, it should be noted that
some improvements have been made in the bill. These include
suggestions and amendments offered by our colleagues
Representatives Stupak, Pallone, and DeGett. These views
reflect our concern with the bill's core provision, namely the
provision that conditions proper testing and labeling of
products for children on a product sponsor's evaluation of the
adequacy of a financial incentive. Public health decisions
should not depend on such hit-or-miss inducements whose cost is
often borne by those least able to pay.
John D. Dingell.
Sherrod Brown.
Henry A. Waxman.
Peter Deutsch.
Frank Pallone, Jr.
Tom Barrett.
Bart Stupak.