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(Statement of Mark Novitch, M.D. Deputy Commissioner, Food and Drug Administration, Office of Assistant Secretary for Health, Department of Health and Human Services Before the Subcomunittee on Health and the Environment of the Committee on Energy and Commerce, House of Representatives, on H.R. 3605 la 14-page bill to establish an ANDA procedure for post-1962 drugs) (July 25, 1983):)

Dr. NOVITCH. Thank you, Mr. Chairman. I appreciate the opportunity to discuss the extension of the new abbreviated new drug ap plication (ANDA) procedure to drugs first approved after 1962, post-1962 drugs.

You have proposed legislation that would authorize ANDA's for post-1962 drugs. As you know, ANDA's were first used by the Food and Drug Administration (FDA) under the Drug Efficacy Study Implementation (DEST) program for the approval of generic versions of drugs first approved only for safety between 1938 and 1962, the year in which Congress amended the Federal Food, Drug, and Cosmetic Act to require that drugs be shown to be effective as well as safe.

A similar procedure has not been established for post-1962 drugs. In recent years, however, patents have begun to expire for many post-1962 drugs. As a result, generic drug manufacturers have become increasingly interested in changing FDA's drug approval system to eliminate the current requirement for the submission of full reports of safety and effectiveness studies for duplicate versions of drugs already approved in accordance with a full new drug approval (NDA) submitted by the pioneer manufacturer.

FDA, too, is interested in streamlining its approval system for post-1962 drugs so as to reduce requirements for duplicative testing, which wastes resources and causes unnecessary human testing. For this reason, FDA is actively engaged in developing a proposal for an ANDA system for post-1962 drugs and to establish such a system through rulemaking.

A post-1962 ANDA procedure would be consistent with a number
of FDA programs that have aided the marketing of generic drugs.
In addition to the pre-1962. ANDA procedure, FDA has permitted
generic applicants for post-1962 drug products to rely on reports of
studies published in the open scientific literature. This has become
known as the paper NDA policy. It eliminates the need to duplicate
the expensive clinical and animal testing for safety and effective
nesa, but it is limited by the availability of published literature.

In addition, the agency in the mid-1970's developed a vigorous
program to review and assure the bioequivalence of generically
available drugs. In 1980, we began to publish a list of all approved
drugs with therapeutic equivalence evaluations to aid States and
purchasers of generic drugs to substitute such drugs with confi-
dence.
• The development of a post-1962 ANDA procedure raises a
number of important and difficult issues. Because we are currently
in the process internally of reaching a position on proposed rule
making that would address these issues, I am not in a position to
comment specifically either on FDA's internal working drafts or on

the specific amendment contained in your bill. I can, however, identify and discuss some of the issues that must be dealt with before a post-1962 ANDA system can be instituted.

First, should there be a minimum preeligibility period to assure maximum protection of the public health? When a new drug is first approved for marketing, that does not mean that there is nothing further to be learned about its safety or effectiveness. Approval is based on carefully evaluated evidence in numbers of pe. tients sufficient for us to conclude that the risk of unanticipated side effects is small and justified in comparison to the drug's bene fits.

What makes the initial marketing period so important is that it gives us an opportunity for the first time to look for reactions of low incidence, especially serious ones, that could not reasonably be expected to appear in clinical trials. In most cases, due to patent protection, the innovator's drug is the only one on the market for the first several years after FDA approval.

For this reason, any adverse drug effects will be used only by that manufacturer's drug and will be reported only to that manufacturer. Because the innovator manufacturer is familiar with the preapproval testing, it is in a good position to evaluate the adverse reactions.

There will, er, be drugs that have no patent protection after FDA approval, and which may therefore be immediately mar. keted by both the innovator firm and by generic manufacturers. We therefore believe that it is important to consider whether there should be a preeligibility period, on the order of a few years, during which ANDÀ's would not be permitted. One may argue that gener ic drug firms are required to report adverse drug reactions to FDA, and that FDA can therefore evaluate their significance.

But most adverse drug reaction reports are to some extent evaluated by the firm receiving them, and the quality and timeliness of that review is important to the process.

FDA regulations require that only unexpected adverse reactions or clinical failures be reported by the firm to FDA within 15 working days. The others are submitted quarterly during the first year. If adverse reaction reports were received by firms unfamiliar with the clinical trials, and, because of the nature of their business, lacking ties with the research community, we are concerned about the adequacy of the reports we would receive. The holder of the pioneer NDA is frequently of considerable help to FDA in identifying adverse reaction trends and other drug effects bearing on the safe and effective use of a newly developed drug therapy.

Second, should there be a lengthier preeligibility period before ANDA's are permitted to avoid disincentives to drug innovation? This is a controversial issue on which many people have expressed strong views, and we believe it is a legitimate subject for debate. Those who oppose establishing a preeligibility period to preserve incentives for drug innovation argue that Congress has established a patent system for the specific purpose of encouraging invention and that FDA should not impose requirements designed to achieve the same objective.

Others argue that, as a public health agency, FDA cannot ignore the effects of changes in the drug approval system on the incentive to develop new drug therapies. That will improve the health of the American people. They also note that some drugs cannot be patented, and that others have little patent life remaining after FDA ap proval.

If one assumes that there should be a preeligibility period to pre serve incentives for innovation, at least for some drugs, one must then address the question of how long such a period should be. Should it track the patent period, on the assumption that it is in. tended primarily for drugs for which patents are unavailable; or should it be some shorter period that is still regarded as adequate to encourage innovation but that would allow competitive products to enter the market sooner?

The third issue is, what kind of transitional provisions should be included in any post-1962 ANDA system to assure that FDA's ad. ministrative capacity is not overwhelmed by an early flood of ANDA's and that the agency can concentrate its resources on those drugs most likely to be marketable without patent restrictions as suming that ANDA is approved? We believe that a phased imple mentation period is essential to avoid being inundated by more ap plications than we can reasonably handle.

Although these are not the only issues that must be considered in determining what kind of post-1962 ANDA system best serves the public interest, I think they illustrate that we are not dealing with a simple subject that lends itself to an easy solution. Although we believe that we have the legal authority to implement a post1962 ANDA system and that we should continue to pursue our efforts to establish such a system through rulemaking, we stand ready to work with the committee on the problems associated with developing appropriate procedures for the approval of generic ver. sions of drugs first approved after 1962.

At this point, Mr. Chairman, I would like to express our views on H.R. 1554, a bill to eliminate the statutory prohibition in section 301(1) of the Federal Food, Drug, and Cosmetic Act which prevents a drug manufacturer from making representations regarding FDA approval in labeling or advertising of any drug. .

Mr. Chairman, that concludes my formal statement. We will be happy to attempt to address any questions you or other members of the committee may have.

APPENDIX 2

SATURDAY, MAY 23, 1981

The New York Times

Founded in 1851

ADOLPH S. OCHS. Ablisher 1996 1995
ARTHUR HAYS SULZBERGER Ablisher 1985-1981

ORVIL E DRYF108. Publisher 1981-198

The Half-Life Patents

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For reasons long since forgotten, Congress a cen- This discrimination is clearly accidental. Perhaps tury ago chose to set 17 years as the appropriate period the best of several remedies is embodied in legisladon for patent protection. To encourage bright minds and just approved by the Senate Judiciary Committee and Investors, any invention was promised exclusivity in awaiting bearings in the House. It would simply extend the market for that length of ame. But in recent years, the patent term for each product to compensate for without anyone intending 11, Federal health and safety dime lost in clearing regulatory burdles, up to a mado regulations have eroded the effective life of many pat- mum of seven years. ents. For some products, the exclusive marketing Some argue the change would stimulate more na period has shrunk to less than 10 years. The system dis- search, lower costs, assist small business, help univercriminates unfairly against some of the most impor. sites and promote exports. Others fear higher product tant research-oriented industries.

prices in the protected industries without any signifiConsider the case of new drugs. When a pharma. cant benefit. ceutical company mcovers a promising compound, it But that debate seems beside the point. The central generally tiles for a pateat immediately and usually issue is fairness and uniformity. If 17 years is to be the gets it within two years. But before the compound can appropriate life for a pateat, then a patent should be be marketed, it must pass stringent tests of safety and meaningful for 17 years. And if there is reason to distin effectiveness. The regulatory review, required to pra guish between one industry and another, that should be tect the public, can itself take seven or more of those done directly, not by inadvertence. It would seem to patented years. So the average effective patent life for make no sense to protect a toy for 17 years but an im drugs dropped from 17 years in 1969 to 9.5 years in 1979. portant drug or agricultural chemical for only half that The meaningful patent llfe for pesticides is now down time. What Government grants at the pateat ottice to 12 years.

should not be taken away by its regulatory asras.

Footnote. 1

THE NEW YORK TIMES, SATURDAY, AUGUST 7, 1982

The New York Times

ARTHUR OCHS SULZBERGER Publisher

... .
A M ROSENTHAL, Executive Editor
SEYMOUR TOPPING. Managing Editor

ARTHUR GELD, Deputy Managing Editor
JAMESL GREENFIELD, Assistant Managing Editor.
LOUIS SILVERSTEIN, Assistant Managing Editor

MAX FRANXEL Editorial Page Editor JACK ROSENTHAL, Deput, Editorial Page Editor

CHARLOTTE CURTIS, Associate Editor

TOM WICXER, Avociate Editor
JOHN D. POMFRET, Esre. VP, General Manager
DONALD A NIZEN, S. VP, Conswner Marketing

LANCER PRIMIS, Sr.VP, Aduertising

J.A NICOS R. S.VP, Operations
SOHV MOBRIN, VP, Conbollar

ELISE J. ROSS. VP, Systems

Founded in 1891
ADOLPH S. OCHS. Publisher 1896 1935
ARTHUR HAYS SULZBERGER Publisher 1935-1961

ARVU. L DRYFOOS. Publisher 1961-1960

An Unwarranted Patent Stretch

The pharmaceutical industry is about to receive ing the identical chemical under different names. an extraordinary favor from Congress: the right to The industry contends that effective patent life. extend the patent protection of new drugs up to time has been dropping, from 14 years for pre-1965 seven years beyond the conventional period of 17. (patents to 10 years or less for those now being issued. Congress has let itself be persuaded, after a hastý But the law did not intend to guarantee every invenreview, that the extension is fair and will foster inná tor a clear 17 years of market monopoly. Many in vation. But the drug industry's case is dubious. ventions, not just drugs, enjoy less patent profection

Its chief premise is that extension will restore because of obstacles on the path to market. The drug the time unfairly lost from patent life by having to companies complain that Government delays hold prove to the Government that new drugs are safe. them back. But the bills that have passed both Sen and effective. But the testing of drugs in animal and ate and House committees grant an extension that clinical trials is something that any responsible goes far beyond any delay attributable to Govercompany would wish to do anyway.

ment review, 3. Besides, the complaints gloss over the common practice of "evergreening" filing a patent appli- The companies also contend that reduced patent cation early, so as to beat any rival, but then filing life has discouraged Investment in research and . new applications that modify

or extend the original development. But figures from the technology asto postpone the time at which patent life actually sessment office show that the industry's investment starts.

in R&D has increased every year from 1965 to 1978, For example, the original patent for the tran and has remained a strikingly constant percentage quilizer Valium was first filed in 1959 and gained the of sales. There is no prool that the windfall profits Food and Drug Administration's market approval in from a påtent extension would in fact be plowed 1963. But because of a series of renewed applica." back into research. Even if research were in decline, tions, as well as a rival claim; 'the patent was not Congress has many other means, like lax incentives, issued until 1968. When it expires in 1985, the drug to reverse it. will have enjoyed 22 years of protection. 1.

The pharmaceutical industry is efficient,

profitThe eight best-selling drugs in the United Siales able and healthy. It has no demonstrable need for 'in 1980 enjoyed an exceedingly healthy average par- any, special break. The patent system as a whole ent life of 15.1 years, according to statistics kept at may need reform, but that is a different issue. Mo the Office of Technology, Assessment. Even when a nopoly righis should not be doled out to anyone with brand-name drug comes off patent,. companies can a hard-luck story, as Congress seems to believe.

The still protect its markei share, by advertising; one proposed extension is unjustified, unsuited to the study of off-patent drugs showed that hall retained stated purpose of increasing research and offensive a 97 percent market share against companies sell- to the basic principle of a free economy.

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