```

[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.

                                

```