To amend the Federal Food, Drug, and Cosmetic Act to allow certain applicants for approval of a generic drug to be eligible for a 180-day period of protection from competition, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pharmaceutical Fiscal Accountability 
Act of 2002''.

SEC. 2. FINDINGS.

    The Congress finds as follows:
            (1) Prescription drug costs continue to rise, affecting all 
        people in the United States.
            (2) Generic drugs are approved by the Food and Drug 
        Administration and offer a safe alternative to brand-name 
        drugs.
            (3) Access to generic drugs upon expiration of valid 
        pharmaceutical patents can result in a cost-effective 
        alternative to brand-name drugs.
            (4) The generic version of a drug often enters the market 
        at a cost that is 25 to 35 percent less than the cost of the 
        brand-name version of the drug, and after a few years typically 
        sells for about 50 percent of the cost of the brand-name 
        version.
            (5) Enhancing competition between generic and brand-name 
        drug manufacturers can reduce the cost of prescription drugs.

SEC. 3. 180-DAY GENERIC DRUG EXCLUSIVITY FOR CERTAIN SUBSEQUENT 
              APPLICANTS.

    Section 505(j)(5)(B) of the Federal Food, Drug, and Cosmetic Act 
(21 U.S.C. 355(j)(5)(B)) is amended--
            (1) in clause (iv)--
                    (A) by striking ``If the application'' and 
                inserting ``Subject to clause (v), if the 
                application''; and
                    (B) by striking ``continuing'' and inserting 
                ``containing''; and
            (2) by adding at the end the following:
            ``(v) If the application contains a certification described 
        in subclause (IV) of paragraph (2)(A)(vii) for a drug, the 
        Secretary shall treat the application as the first such 
        application submitted under this subsection for that drug if 
        every person that previously submitted an application 
        containing such a certification for that drug--
                    ``(I) fails to market the drug within 60 days after 
                the Secretary approves the previously submitted 
                application;
                    ``(II) withdraws the previously submitted 
                application;
                    ``(III) changes, for any reason, the certification 
                in the previously submitted application to a 
                certification described in subclause (III) of paragraph 
                (2)(A)(vii);
                    ``(IV) in a case in which, after the date on which 
                the previous application was submitted, new patent 
                information is submitted for the drug under subsection 
                (c)(2) for a patent for which certification is required 
                under subclause (IV) of paragraph (2)(A)(vii), fails to 
                challenge the patent that is the subject of the 
                information within 60 days after the date on which the 
                patent information is submitted; or
                    ``(V) has engaged in conduct in violation of the 
                antitrust laws (as the term `antitrust laws' is defined 
                in subsection (a) of the first section of the Clayton 
                Act (15 U.S.C. 12(a)), except that such term includes 
                section 5 of the Federal Trade Commission Act (15 
                U.S.C. 45) to the extent such section 5 applies to 
                unfair methods of competition).''.

SEC. 4. NATIONAL INSTITUTES OF HEALTH; AWARDS TO DESIGNATED SMALL 
              ENTITIES FOR PHASE 1 OR 2 CLINICAL STUDIES ON DEVELOPMENT 
              OF NEW DRUGS.

    Section 402 of the Public Health Service Act (42 U.S.C. 282) is 
amended by adding at the end the following:
    ``(m)(1) The Director of NIH shall make awards of grants or 
contracts to designated small entities to support qualifying clinical 
research on the development of new drugs that, in the determination of 
such Director, have the potential to make a significant contribution to 
the prevention, diagnosis, or treatment of a disease.
    ``(2) For purposes of this subsection:
            ``(A) The term `designated small entity' means a public or 
        private entity (including a university or other educational 
        institution) meeting the following conditions:
                    ``(i) The entity has been granted an exemption 
                under section 505(i) of the Federal Food, Drug, and 
                Cosmetic Act.
                    ``(ii) Qualifying clinical research is being or 
                will be conducted pursuant to such exemption.
                    ``(iii) The Director of NIH determines that the 
                entity may lack the financial resources to complete the 
                qualifying clinical research involved unless an award 
                under paragraph (1) is made to the entity.
            ``(B) The term `qualifying clinical research', with respect 
        to a new drug, means the conduct of Phase 1 or Phase 2 studies 
        within the meaning of section 312.21 of title 21, Code of 
        Federal Regulations (or successor regulations).
    ``(3) In supporting qualifying clinical research under paragraph 
(1) for a fiscal year, the Director of NIH shall give priority to the 
development of any new drug described in such paragraph that is being 
developed for a disease for which the amount of funds for clinical 
research obligated by the National Institutes of Health for the 
preceding fiscal year is significantly less than amounts obligated by 
such Institutes for such fiscal year for clinical research on other 
diseases.
    ``(4) For the purpose of carrying out this subsection, there are 
authorized to be appropriated $750,000,000 for fiscal year 2003, and 
such sums as may be necessary for each subsequent fiscal year.''.

SEC. 5. CONTINGENT PAYMENT FOR NATIONAL INSTITUTES OF HEALTH SUPPORT 
              FOR DEVELOPMENT OF NEW DRUGS.

    Section 402 of the Public Health Service Act (42 U.S.C. 282) (as 
amended by section 4) is further amended by adding at the end the 
following:
    ``(n)(1) The Director of NIH may not award a grant or contract to 
an entity to support the development of a new drug, including any 
research related to such development, unless the entity involved agrees 
that, if the new drug with respect to which the award is made is 
approved under section 351 or under section 505 of the Federal Food, 
Drug, and Cosmetic Act, the entity will, for the effective patent 
period for which the new drug is in commercial distribution, pay to the 
Director of NIH an amount equal to 5 percent of the profits derived 
from sales of the new drug during such period. After consultation with 
such entity, the Director of NIH may establish a schedule of periodic 
payments to meet the obligation of the entity under the preceding 
sentence.
    ``(2) Payments under paragraph (1) may be made directly by the 
entity involved or by an entity that has purchased the rights to the 
new drug involved or has received a license regarding the sale of the 
new drug.
    ``(3) Subject to the availability of appropriations, amounts paid 
to the Director of NIH under this subsection are available to the 
Director to award grants and contracts for the development of new 
drugs, and such amounts may remain available until expended.''.

SEC. 6. STUDY ON EFFECTS OF FEDERAL SUPPORT FOR RESEARCH AND 
              DEVELOPMENT OF PRESCRIPTION DRUGS.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study and make findings and recommendations with respect to 
the effects of Federal funding used by Federal agencies to conduct or 
support research and development of prescription drugs, on the 
following:
            (1) The overall cost of such research and development.
            (2) The pricing of prescription drugs.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Comptroller General of the United States shall submit 
to the Congress a report on the study, findings, and recommendations 
required by subsection (a).

SEC. 7. STUDY ON PHARMACEUTICAL PATENT EXTENSIONS AND MARKET 
              EXCLUSIVITY PERIODS.

    (a) Study.--The Comptroller General of the United States shall 
conduct a study and make findings and recommendations on pharmaceutical 
patent extensions and market exclusivity periods under Federal law, 
including the effect of such extensions and periods on possible delays 
in the introduction of generic versions of prescription drugs.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Comptroller General of the United States shall submit 
to the Congress a report on the study, findings, and recommendations 
required by subsection (a).

Summary: Pharmaceutical Fiscal Accountability Act of 2002 - Amends the Federal Food, Drug, and Cosmetic Act to treat certain subsequent certified abbreviated new drug applications as if they were the first such application and therefore entitled to a period of 180 day generic drug exclusivity. (Abbreviated new drug applications are filed where the new drugs uses or active ingredientAmends the Public Health Service Act to require the Director of the National Institutes of Health to support qualifying clinical research on the development of new drugs at designated small public or private entities. Emphasizes drug research which has the potential to make a significant contribution for the prevention, diagnosis, or treatment of a disease which has not received significant Federal funding. Entitles the Director to five percent of the profits from sales during the patent period. Requires the Comptroller General to study and report to Congress on the effects of: (1) Federal funding on the costs of research and the pricing of prescription drugs. And (2) pharmaceutical patent extensions and market exclusivity periods on delays in introducing generic versions.