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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 Subcommittee on Health and the Environment of the Committee on Energy and Commerce, House of Representatives, on H.R. 3605 (a 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 application [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 [DESI) 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 effectiveness, 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 confidence.

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 rulemaking 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 patients 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, however, be drugs that have no patent protection after FDA approval, and which may therefore be immediately marketed 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 ANDA's would not be permitted. One may argue that generic 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 approval.

If one assumes that there should be a preeligibility period to preserve 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 intended 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 administrative 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 assuming that ANDA is approved? We believe that a phased implementation period is essential to avoid being inundated by more applications 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 versions 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. Publisher 1896-1935
ARTHUR HAYS SULZBERGER, Publisher 1935-1961
ORVILE DRYFOOS. Publisher 1961-1963

The Half-Life Patents

For reasons long since forgotten, Congress a century ago chose to set 17 years as the appropriate period for patent protection. To encourage bright minds and investors, any invention was promised exclusivity in the market for that length of time. But in recent years, without anyone intending it, Federal health and safety regulations have eroded the effective life of many patents. For some products, the exclusive marketing period has shrunk to less than 10 years. The system discriminates unfairly against some of the most important research-oriented industries.

Consider the case of new drugs. When a pharmaceutical company uncovers a promising compound, it generally files for a patent immediately and usually gets it within two years. But before the compound can be marketed, it must pass stringent tests of safety and effectiveness. The regulatory review, required to protect the public, can itself take seven or more of those patented years. So the average effective patent life for drugs dropped from 17 years in 1959 to 9.5 years in 1979. The meaningful patent life for pesticides is now down to 12 years.

This discrimination is clearly accidental. Perhaps the best of several remedies is embodied in legislation just approved by the Senate Judiciary Committee and awaiting hearings in the House. It would simply extend the patent term for each product to compensate for time lost in clearing regulatory hurdles, up to a maximum of seven years.

Some argue the change would stimulate more research, lower costs, assist small business, help universities and promote exports. Others fear higher product prices in the protected industries without any significant benefit.

But that debate seems beside the point. The central issue is fairness and uniformity. If 17 years is to be the appropriate life for a patent, then a patent should be meaningful for 17 years. And if there is reason to distinguish between one industry and another, that should be done directly, not by inadvertence. It would seem to make no sense to protect a toy for 17 years but an important drug or agricultural chemical for only half that time. What Government grants at the patent office should not be taken away by its regulatory arms.

Footnote (1).

THE NEW YORK TIMES, SATURDAY, AUGUST 7, 1982

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An Unwarranted Patent Stretch

The pharmaceutical industry is about to receive an extraordinary favor from Congress: the right to extend the patent protection of new drugs up to seven years beyond the conventional period of 17. Congress has let itself be persuaded, after a hasty review, that the extension is fair and will foster innovation. But the drug industry's case is dubious.

Its chief premise is that extension will restore the time unfairly lost from patent life by having to prove to the Government that new drugs are safe and effective. But the testing of drugs in animal and clinical trials is something that any responsible company would wish to do anyway.

Besides, the complaints gloss over the common practice of "evergreening” filing a patent application early, so as to beat any rival, but then filing. new applications that modify or extend the original to postpone the time at which patent life actually starts.

For example, the original patent for, the tranquilizer Valium was first filed in 1959 and gained the Food and Drug Administration's market approval in 1963. But because of a series of renewed applications, as well as a rival claim, the patent was not issued until 1968. When it expires in 1985, the drug will have enjoyed 22 years of protection.

ing the identical chemical under different names.

The industry contends that effective patent lifetime has been dropping, from 14 years for pre-1965 patents to 10 years or less for those now being issued. But the law did not intend to guarantee every inventor a clear 17 years of market monopoly. Many inventions, not just drugs, enjoy less patent protection because of obstacles on the path to market. The drug companies complain that Government delays hold them back. But the bills that have passed both Senate and House committees grant an extension that goes far beyond any delay attributable to Government review. K

The companies also contend that reduced patent life has discouraged investment in research and. development. But figures from the technology as sessment office show that the industry's investment in R & D has increased every year from 1965 to 1978, and has remained a strikingly constant percentage of sales. There is no proof that the windfall profits from a patent extension would in fact be plowed back into research. Even if research were in decline, Congress has many other means, like tax incentives, to reverse it.

The pharmaceutical industry is efficient, profitThe eight best-selling drugs in the United States able and healthy. It has no demonstrable need for in 1980 enjoyed an exceedingly healthy average pat-any, special break. The patent system as a whole

ent life of 15.1 years, according to statistics kept at the Office of Technology Assessment. Even when a brand-name drug comes off patent, companies can still protect its market share by advertising; one study of off-patent drugs showed that half retained a 97 percent market share against companies sell

may need reform, but that is a different issue. Monopoly rights should not be doled out to anyone with a hard-luck story, as Congress seems to believe. The proposed extension is unjustified, unsuited to the stated purpose of increasing research and offensive to the basic principle of a free economy.

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