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[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1346 Introduced in Senate (IS)]

107th CONGRESS
  1st Session
                                S. 1346

 To amend the Federal Food, Drug, and Cosmetic Act with regard to new 
                 animal drugs, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             August 2, 2001

 Mr. Sessions (for himself, Mr. Bingaman, Mr. Allard, and Ms. Collins) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To amend the Federal Food, Drug, and Cosmetic Act with regard to new 
                 animal drugs, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Minor Use and Minor Species Animal 
Health Act of 2001''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) There is a severe shortage of approved new animal drugs 
        for use in minor species.
            (2) There is a severe shortage of approved new animal drugs 
        for treating animal diseases and conditions that occur 
        infrequently or in limited geographic areas.
            (3) Because of the small market shares, low-profit margins 
        involved, and capital investment required, it is generally not 
        economically feasible for new animal drug sponsors to pursue 
        approvals for these species, diseases, and conditions.
            (4) Because the populations for which such new animal drugs 
        are intended may be small and conditions of animal management 
        may vary widely, it is often difficult to design and conduct 
        studies to establish drug safety and effectiveness under 
        traditional new animal drug approval processes.
            (5) It is in the public interest and in the interest of 
        animal welfare to provide for special procedures to allow the 
        lawful use and marketing of certain new animal drugs for minor 
        species and minor uses that take into account these special 
        circumstances and that ensure that such drugs do not endanger 
        animal or public health.
            (6) Exclusive marketing rights and tax credits for clinical 
        testing expenses have helped encourage the development of 
        `orphan' drugs for human use, and comparable incentives should 
        encourage the development of new animal drugs for minor species 
        and minor uses.

SEC. 3. AMENDMENTS TO THE FEDERAL FOOD, DRUG, AND COSMETIC ACT.

    (a) Definitions.--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) The term `major species' means cattle, horses, swine, 
chickens, turkeys, dogs, and cats, except that the Secretary may revise 
this definition by regulation.
    ``(ll) The term `minor species' means animals other than humans 
that are not major species.
    ``(mm) The term `minor use' means the intended use of a drug in a 
major species for an indication that occurs infrequently or in limited 
geographical areas.''.
    (b) Three-Year Exclusivity for Minor Use and Minor Species 
Approvals.--Section 512(c)(2)(F) (ii), (iii), and (v) of the Federal 
Food, Drug, and Cosmetic Act is amended by striking ``(other than 
bioequivalence or residue studies)'' and inserting ``(other than 
bioequivalence studies or final residue depletion studies, except final 
residue depletion studies for minor uses or minor species)'' every 
place it appears.
    (c) Scope of Review for Minor Use and Minor Species Applications.--
Section 512(d) of the Federal Food, Drug, and Cosmetic Act is amended 
by adding at the end the following new paragraph:
            ``(5) In reviewing an application that proposes a change to 
        add an intended use for a minor use or a minor species to an 
        approved new animal drug application, the Secretary shall 
        reevaluate only the relevant information in the approved 
        application to determine whether the application for the minor 
        use or minor species can be approved. A decision to approve the 
        application for the minor use or minor species is not, 
        implicitly or explicitly, a reaffirmation of the approval of 
        the original application.''.
    (d) Minor Use and Minor Species New Animal Drugs.--Chapter V of the 
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 351 et seq.) is amended 
by adding at the end the following:

    ``Subchapter F--New Animal Drugs For Minor Use And Minor Species

``SEC. 571. CONDITIONAL APPROVAL OF NEW ANIMAL DRUGS FOR MINOR USE AND 
              MINOR SPECIES.

    ``(a)(1) Except as provided in paragraph (3) of this section, any 
person may file with the Secretary an application for conditional 
approval of a new animal drug intended for a minor use or a minor 
species. Such an application may not be a supplement to an application 
approved under section 512. Such application must comply in all 
respects with the provisions of section 512 of this Act except 
512(b)(2), 512(c)(1), 512(c)(2), 512(c)(3), 512(d)(1), 512(e), 512(h), 
and 512(n) unless otherwise stated in this section, and any additional 
provisions of this section.
    ``(2) The applicant shall submit to the Secretary as part of an 
application for the conditional approval of a new animal drug--
            ``(A) all information necessary to meet the requirements of 
        section 512(b)(1) except 512(b)(1)(A);
            ``(B) full reports of investigations which have been made 
        to show whether or not such drug is safe and there is a 
        reasonable expectation of effectiveness for use;
            ``(C) data for establishing a conditional dose;
            ``(D) projections of expected need and the justification 
        for that expectation based on the best information available;
            ``(E) information regarding the quantity of drug expected 
        to be distributed on an annual basis to meet the expected need; 
        and
            ``(F) a commitment that the applicant will conduct 
        additional investigations to meet the requirements for the full 
        demonstration of effectiveness under section 512(d)(1)(E) 
        within 5 years.
    ``(3) A person may not file an application under paragraph (1) if 
without adequate justification--
            ``(A) the person has previously filed an application for 
        conditional approval under paragraph (1) for the same drug, 
        conditions of use, and dosage form whether or not subsequently 
        conditionally approved by the Secretary under subsection (b), 
        or
            ``(B) the person obtained the application, or data or other 
        information contained therein, directly or indirectly from the 
        person who filed for conditional approval under paragraph (1) 
        for the same drug and conditions of use whether or not 
        subsequently conditionally approved by the Secretary under 
        subsection (b).
    ``(b) Within 180 days after the filing of an application pursuant 
to subsection (a), or such additional period as may be agreed upon by 
the Secretary and the applicant, the Secretary shall either--
            ``(1) issue an order, effective for one year, conditionally 
        approving the application if the Secretary finds that none of 
        the grounds for denying conditional approval, specified in 
        subsection (c) of this section applies, or
            ``(2) give the applicant notice of an opportunity for an 
        informal hearing on the question whether such application can 
        be conditionally approved.
    ``(c) If the Secretary finds, after giving the applicant notice and 
an opportunity for an informal hearing, that--
            ``(1) any of the provisions of section 512(d)(1)(A) through 
        (D) or (F) through (I) are applicable;
            ``(2) the information submitted to the Secretary as part of 
        the application and any other information before the Secretary 
        with respect to such drug, is insufficient to show that there 
        is a reasonable expectation that the drug will have the effect 
        it purports or is represented to have under the conditions of 
        use prescribed, recommended, or suggested in the proposed 
        labeling thereof; or
            ``(3) another person has received approval under section 
        512 for a drug with the same active ingredient or ingredients, 
        the same conditions of use, and the same dosage form and that 
        person is able to assure the availability of sufficient 
        quantities of the drug to meet the needs for which the drug is 
        intended;
the Secretary shall issue an order refusing to conditionally approve 
the application. If, after such notice and opportunity for an informal 
hearing, the Secretary finds that subparagraphs (1) through (3) do not 
apply, the Secretary shall issue an order conditionally approving the 
application effective for one year. Any order issued under this 
subsection refusing to conditionally approve an application shall state 
the findings upon which it is based.
    ``(d) A conditional approval under this section is effective for a 
1-year period and is thereafter renewable by the Secretary annually for 
up to 4 additional 1-year terms. A conditional approval shall be in 
effect for no more than 5 years from the date of approval under 
subsections (b)(1) or (c) of this section unless extended as provided 
for in subsection (h) of this section. The following shall also apply:
            ``(1) No later than 90 days from the end of the 1-year 
        period for which the original or renewed conditional approval 
        is effective, the applicant may submit a request to renew a 
        conditional approval for an additional 1-year term.
            ``(2) If the renewal request is submitted no later than 90-
        days from the end of the 1-year period, a conditional approval 
        shall be deemed renewed at the end of the 1-year period, or at 
        the end of an additional 90-day extension when deemed necessary 
        to complete review of an application, unless the Secretary 
        makes a written determination before the expiration of the 1-
        year period or the 90-day extension that--
                    ``(A) the request fails to contain sufficient 
                information to show that--
                            ``(i) the applicant is making sufficient 
                        progress toward meeting approval requirements 
                        under section 512(d)(1)(E), and is likely to be 
                        able to fulfill those requirements and obtain 
                        an approval under section 512 before the 
                        expiration of the 5-year maximum term of the 
                        conditional approval;
                            ``(ii) the quantity of the drug that has 
                        been distributed is consistent with the 
                        intended use, unless there is adequate 
                        explanation that ensures that the drug is only 
                        used for its intended purpose; or
                            ``(iii) no other drug with the same active 
                        ingredient or ingredients, for the same 
                        conditions of use, and dosage form has received 
                        approval under section 512, or if such a drug 
                        has been approved, that the holder of the 
                        approved application is unable to assure the 
                        availability of sufficient quantities of the 
                        drug to meet the needs for which the drug is 
                        intended; or
                    ``(B) 1 or more of the conditions of subsection 
                512(e)(1)(A) through (B) and (D) through (F) are met.
            ``(3) If the Secretary makes a timely written determination 
        that a conditional approval should not be renewed, or the 
        applicant fails to submit a timely renewal request, the 
        Secretary shall issue an order refusing to renew the 
        conditional approval, and such conditional approval shall be 
        deemed withdrawn and no longer in effect. The Secretary shall 
        thereafter provide an opportunity for an informal hearing to 
        the applicant on the issue whether the conditional approval 
        shall be reinstated.
    ``(e)(1) The Secretary shall issue an order withdrawing conditional 
approval of an application filed pursuant to subsection (a) if the 
Secretary finds that another person has received approval under section 
512 for a drug with the same active ingredient or ingredients, the same 
conditions of use, and dosage form, and that person is able to assure 
the availability of sufficient quantities of the drug to meet the needs 
for which the drug is intended.
    ``(2) The Secretary shall, after due notice and opportunity for an 
informal hearing to the applicant, issue an order withdrawing 
conditional approval of an application filed pursuant to subsection (a) 
if the Secretary finds that--
            ``(A) any of the provisions of section 512(e)(1)(A) through 
        (B) or (D) through (F) are applicable; or
            ``(B) on the basis of new information before the Secretary 
        with respect to such drug, evaluated together with the evidence 
        available to the Secretary when the application was 
        conditionally approved, that there is not a reasonable 
        expectation that such drug will have the effect it purports or 
        is represented to have under the conditions of use prescribed, 
        recommended, or suggested in the labeling thereof;
    ``(3) The Secretary may also, after due notice and opportunity for 
an informal hearing to the applicant, issue an order withdrawing 
conditional approval of an application filed pursuant to subsection (a) 
if the Secretary finds that any of the provisions of section 512(e)(2) 
are applicable.
    ``(f)(1) The label and labeling of a new animal drug with a 
conditional approval under this section shall--
            ``(A) bear the statement, ``conditionally approved by FDA 
        pending a full demonstration of effectiveness under application 
        number''; and
            ``(B) contain such other information as prescribed by the 
        Secretary.
    ``(2) An intended use that is the subject of a conditional approval 
under this section shall not be included in the same product label with 
any intended use approved under section 512.
    ``(g) A conditionally-approved new animal drug application may not 
be amended or supplemented to add indications for use.
    ``(h) 180 days prior to the termination date established under 
subsection (d)(1) of this section, a sponsor shall have submitted all 
the information necessary to support a complete new animal drug 
application in accordance with section 512(b)(1) or the conditional 
approval issued under this section is no longer in effect. Upon receipt 
of this information, the Secretary shall either--
            ``(1) issue an order approving the application if the 
        Secretary finds that none of the grounds for denying approval 
        specified in 512(d)(1) applies, or
            ``(2) give the sponsor an opportunity for a hearing before 
        the Secretary under 512(d) on the question whether such 
        application can be approved. Upon issuance of an order 
        approving the application, product labeling and administrative 
        records of approval shall be modified accordingly. If the 
        Secretary has not issued an order under section 512(c) 
        approving such application prior to the termination date 
        established under subsection (d)(1) of this section, the 
        conditional approval issued under this section is no longer in 
        effect unless the Secretary grants an extension of an 
        additional 180-day period so that the Secretary can complete 
        review of the application. The decision to grant an extension 
        is committed to Agency discretion and not subject to judicial 
        review.
    ``(i) The decision of the Secretary under subsections (c), (d), or 
(e) of this section, refusing or withdrawing conditional approval of an 
application shall constitute final agency action subject to judicial 
review.

``SEC. 572. INDEX OF LEGALLY-MARKETED UNAPPROVED NEW ANIMAL DRUGS FOR 
              MINOR SPECIES.

    ``(a) The Secretary shall establish an index of unapproved minor 
species new animal drugs that may be lawfully marketed for use in minor 
species. The index shall be limited to--
            ``(1) new animal drugs intended for use in a minor species 
        for which there is a reasonable certainty that the animal or 
        edible products from the animal will not be consumed by humans, 
        and
            ``(2) new animal drugs intended for use in an early life 
        stage of a food-producing minor species where human food safety 
        can be demonstrated in accordance with the standard of section 
        512(d) by showing that--
                    ``(A) there is no significant likelihood that 
                harmful residues will be present in the animal 
                presented as food for humans as a result of treatment 
                at the early life stage;
                    ``(B) there is no significant likelihood that 
                harmful residues will be present in the animal 
                presented as food for food-producing animals as a 
                result of treatment at the early life stage; and
                    ``(C) there are no concerns about the use of the 
                drug at later life stages because a tolerance and 
                regulatory method to test for the drug at later life 
                stages are available or there is no practical use for 
                the drug in later life stages.
    ``(b) Any person intending to file a request under this section 
shall be entitled to one or more conferences to discuss the 
requirements for indexing a new animal drug.
    ``(c)(1) Any person may submit a request to the Secretary for a 
determination whether a new animal drug may be eligible for inclusion 
in the index. Such a request shall include--
            ``(A) information regarding the need for the new animal 
        drug, the species for which the new animal drug is intended, 
        the proposed intended use and conditions of use, and 
        anticipated annual distribution;
            ``(B) information to support the conclusion that the 
        proposed use meets the conditions of subsections (a)(1) or 
        (a)(2) of this section;
            ``(C) information regarding the components and composition 
        of the new animal drug;
            ``(D) a description of the methods used in, and the 
        facilities and controls used for, the manufacture, processing, 
        and packing of such new animal drug;
            ``(E) an environmental assessment or information to support 
        a categorical exclusion from the requirement to prepare an 
        environmental assessment;
            ``(F) information sufficient to support the conclusion that 
        the proposed use of the new animal drug does not present a 
        threat to the safety of individuals exposed to the new animal 
        drug through its manufacture or use; and
            ``(G) such other information as the Secretary may deem 
        necessary to make this eligibility determination.
    ``(2) Within 90 days after the submission of a request for a 
determination of eligibility for indexing based on paragraph (a)(1) of 
this section, or 180 days for a request submitted based on paragraph 
(a)(2) of this section, the Secretary shall grant or deny the request, 
and notify the person who requested such determination of the 
Secretary's decision. The Secretary shall grant the request if the 
Secretary finds that--
            ``(A) no new animal drug, including the same active 
        ingredient or any salt or ester thereof is approved or 
        conditionally approved in the same dosage form for the same 
        intended use;
            ``(B) the proposed use does not raise concerns related to 
        safety; and
            ``(C) the person requesting the determination has 
        established appropriate specifications for the manufacture and 
        control of the new animal drug and has demonstrated an 
        understanding of the requirements of current good manufacturing 
        practices.
If the Secretary denies the request, the Secretary shall thereafter 
provide due notice and an opportunity for an informal conference. The 
decision of the Secretary following an informal conference shall 
constitute final agency action subject to judicial review.
    ``(d)(1) With respect to a new animal drug for which the Secretary 
has made a determination of eligibility under subsection (b), the 
person who made such a request may ask that the Secretary add the new 
animal drug to the index established under subsection (a). The request 
for addition to the index shall include--
            ``(A) a copy of the Secretary's determination of 
        eligibility issued under subsection (b);
            ``(B) a written report that meets the requirements in 
        subparagraph (d)(2) of this section;
            ``(C) a proposed index entry;
            ``(D) facsimile labeling;
            ``(E) anticipated annual distribution of the new animal 
        drug;
            ``(F) a written commitment to manufacture the new animal 
        drug according to current good manufacturing practices;
            ``(G) a written commitment to label, distribute, and 
        promote the new animal drug only in accordance with the index 
        entry;
            ``(H) upon specific request of the Secretary, information 
        submitted to the expert panel described in subparagraph (3); 
        and
            ``(I) any additional requirements that the Secretary may 
        prescribe by general regulation or specific order.
    ``(2) The report required in subparagraph (1) shall:
            ``(A) be authored by a qualified expert panel;
            ``(B) include an evaluation of all available target animal 
        safety and effectiveness information, including anecdotal 
        information;
            ``(C) State the expert panel's opinion regarding whether 
        the benefits of using the new animal drug for the proposed use 
        in a minor species outweigh its risks, taking into account the 
        harm being caused by the absence of an approved or 
        conditionally-approved new animal drug for the minor species in 
        question;
            ``(D) include information upon which labeling can be 
        written; and
            ``(E) include a recommendation regarding whether the new 
        animal drug should be limited to use under the professional 
        supervision of a licensed veterinarian.
    ``(3) A qualified expert panel, as used in this section, is a panel 
that--
            ``(A) is composed of experts qualified by scientific 
        training and experience to evaluate the target animal safety 
        and effectiveness of the new animal drug under consideration;
            ``(B) operates external to FDA; and
            ``(C) is not subject to the Federal Advisory Committee Act, 
        5 U.S.C. App. 2.
The Secretary shall define the criteria for selection of a qualified 
expert panel and the procedures for the operation of the panel by 
regulation.
    ``(4) Within 180 days after the receipt of a request for listing a 
new animal drug in the index, the Secretary shall grant or deny the 
request. The Secretary shall grant the request if the request for 
indexing continues to meet the eligibility criteria in subsection (a) 
and the Secretary finds, on the basis of the report of the qualified 
expert panel and other information available to the Secretary, that the 
benefits of using the new animal drug for the proposed use in a minor 
species outweigh its risks, taking into account the harm caused by the 
absence of an approved or conditionally-approved new animal drug for 
the minor species in question. If the Secretary denies the request, the 
Secretary shall thereafter provide due notice and the opportunity for 
an informal conference. The decision of the Secretary following an 
informal conference shall constitute final agency action subject to 
judicial review.
    ``(e)(1) The index established under subsection (a) shall include 
the following information for each listed drug--
            ``(A) the name and address of the person who holds the 
        index listing;
            ``(B) the name of the drug and the intended use and 
        conditions of use for which it is being indexed;
            ``(C) product labeling; and
            ``(D) conditions and any limitations that the Secretary 
        deems necessary regarding use of the drug.
    ``(2) The Secretary shall publish the index, and revise it 
periodically.
    ``(3) The Secretary may establish by regulation a process for 
reporting changes in the conditions of manufacturing or labeling of 
indexed products.
    ``(f)(1) If the Secretary finds, after due notice to the person who 
requested the index listing and an opportunity for an informal 
conference, that--
            ``(A) the expert panel failed to meet the requirements as 
        set forth by the Secretary by regulation;
            ``(B) on the basis of new information before the Secretary, 
        evaluated together with the evidence  available to the 
Secretary when the new animal drug was listed in the index, the 
benefits of using the new animal drug for the indexed use do not 
outweigh its risks;
            ``(C) the conditions of subsection (c)(2) of this section 
        are no longer satisfied;
            ``(D) the manufacture of the new animal drug is not in 
        accordance with current good manufacturing practices;
            ``(E) the labeling, distribution, or promotion of the new 
        animal drug is not in accordance with the index entry;
            ``(F) the conditions and limitations of use associated with 
        the index listing have not been followed; or
            ``(G) the request for indexing contains any untrue 
        statement of material fact;
the Secretary shall remove the new animal drug from the index. The 
decision of the Secretary following an informal conference shall 
constitute final agency action subject to judicial review.
    ``(2) If the Secretary finds that there is a reasonable probability 
that the use of the drug would adversely affect the health of humans or 
other animals, the Secretary may:
            ``(A) suspend the listing of such drug immediately;
            ``(B) give the person listed in the index prompt notice of 
        the Secretary's action; and
            ``(C) afford that person the opportunity for an informal 
        conference.
The decision of the Secretary following an informal conference shall 
constitute final agency action subject to judicial review.
    ``(g) For purposes of indexing new animal drugs under this section, 
to the extent consistent with the public health, the Secretary shall 
promulgate regulations for exempting from the operation of section 512 
minor species new animal drugs and animal feeds bearing or containing 
new animal drugs intended solely for investigational use by experts 
qualified by scientific training and experience to investigate the 
safety and effectiveness of minor species animal drugs. Such 
regulations may, at the discretion of the Secretary, among other 
conditions relating to the protection of the public health, provide for 
conditioning such exemption upon the establishment and maintenance of 
such records, and the making of such reports to the Secretary, by the 
manufacturer or the sponsor of the investigation of such article, of 
data (including but not limited to analytical reports by investigators) 
obtained as a result of such investigational use of such article, as 
the Secretary finds will enable the Secretary to evaluate the safety 
and effectiveness of such article in the event of the filing of a 
request for an index listing pursuant to this section.
    ``(h) The labeling of a new animal drug that is the subject of an 
index listing shall state, prominently and conspicuously--
            ``(1) Not approved by FDA.--Legally marketed as an FDA 
        indexed product. Extra-label use is prohibited.'';
            ``(2) except in the case of new animal drugs indexed for 
        use in an early life stage of a food producing animal, ``This 
        product is not to be used in animals intended for use as food 
        for humans or other animals.''; and
            ``(3) such other information as may be prescribed by the 
        Secretary in the index listing.
    ``(i)(1) In the case of any new animal drug for which an index 
listing pursuant to subsection (a) is in effect, the person who has an 
index listing shall establish and maintain such records, and make such 
reports to the Secretary, of data relating to experience, and other 
data or information, received or otherwise obtained by such person with 
respect to such drug, or with respect to animal feeds bearing or 
containing such drug, as the Secretary may by general regulation, or by 
order with respect to such listing, prescribe on the basis of a finding 
that such records and reports are necessary in order to enable the 
Secretary to determine, or facilitate a determination, whether there is 
or may be ground for invoking subsection (f). Such regulation or order 
shall provide, where the Secretary deems it to be appropriate, for the 
examination, upon request, by the persons to whom such regulation or 
order is applicable, of similar information received or otherwise 
obtained by the Secretary.
    ``(2) Every person required under this subsection to maintain 
records, and every person in charge or custody thereof, shall, upon 
request of an officer or employee designated by the Secretary, permit 
such officer or employee at all reasonable times to have access to and 
copy and verify such records.
    ``(j)(1) Safety and effectiveness data and information which has 
been submitted in support of a request for a new animal drug to be 
indexed under this section and which has not been previously disclosed 
to the public shall be made available to the public, upon request, 
unless extraordinary circumstances are shown--
            ``(A) if no work is being or will be undertaken to have the 
        drug indexed in accordance with the request,
            ``(B) if the Secretary has determined that such drug cannot 
        be indexed and all legal appeals have been exhausted,
            ``(C) if the indexing of such drug is terminated and all 
        legal appeals have been exhausted, or
            ``(D) if the Secretary has determined that such drug is not 
        a new animal drug.
    ``(2) Any request for data and information pursuant to paragraph 
(1) shall include a verified statement by the person making the request 
that any data or information received under such paragraph shall not be 
disclosed by such person to any other person--
            ``(A) for the purpose of, or as part of a plan, scheme, or 
        device for, obtaining the right to make, use, or market, or 
        making, using, or marketing, outside the United States, the 
        drug identified in the request for indexing; and
            ``(B) without obtaining from any person to whom the data 
        and information are disclosed an identical verified statement, 
        a copy of which is to be provided by such person to the 
        Secretary, which meets the requirements of this paragraph.

``SEC. 573. DESIGNATED NEW ANIMAL DRUGS FOR MINOR USE OR MINOR SPECIES.

    ``(a) Designation.--
            ``(1) The manufacturer or the sponsor of a new animal drug 
        for a minor use or use in a minor species may request that the 
        Secretary declare that drug a `designated new animal drug'. A 
        request for designation of a new animal drug shall be made 
        before the submission of an application under section 512(b) or 
        section 571 for the new animal drug.
            ``(2) The Secretary may declare a new animal drug a 
        `designated new animal drug' for an intended use if--
                    ``(A) it is intended for a minor use or use in a 
                minor species; and
                    ``(B) a new animal drug containing the same active 
                ingredient, including any salt or ester of the active 
                ingredient, for the same intended use, in the same 
                species, and in the same dosage form is not approved 
                under section 512 or section 571 or designated for the 
                intended use at the time the request is made.
            ``(3) Regarding the termination of a designation--
                    ``(A) the sponsor of a new animal drug shall notify 
                the Secretary of any decision to discontinue active 
                pursuit of approval under sections 512 or 571 of an 
                application for a designated new animal drug. The 
                Secretary shall terminate the designation upon such 
                notification;
                    ``(B) the Secretary may also terminate designation 
                if the Secretary independently determines that the 
                sponsor is not actively pursuing approval under 
                sections 512 or 571 with due diligence;
                    ``(C) the sponsor of an approved designated new 
                animal drug shall notify the Secretary of any 
                discontinuance of the manufacture of such new animal 
                drug at least one year before discontinuance. The 
                Secretary shall terminate the designation upon such 
                notification; and
                    ``(D) the designation shall terminate upon the 
                expiration of any applicable exclusivity period under 
                subsection (c).
            ``(4) Notice respecting the designation or termination of 
        designation of a new animal drug shall be made available to the 
        public.
    ``(b) Grants and Contracts for Development of Designated New Animal 
Drugs.--
            ``(1) The Secretary may make grants to and enter into 
        contracts with public and private entities and individuals to 
        assist in defraying the costs of qualified safety and 
        effectiveness testing expenses and manufacturing expenses 
        incurred in connection with the development of designated new 
        animal drugs.
            ``(2) For purposes of subsection (1) of this section--
                    ``(A) The term ``qualified safety and effectiveness 
                testing'' means testing--
                            ``(i) which occurs after the date such new 
                        animal drug is designated under this section 
                        and before the date on which an application 
                        with respect to such drug is submitted under 
                        section 512 or 571; and
                            ``(ii) which is carried out under an 
                        investigational exemption under section 512(j).
                    ``(B) The term ``manufacturing expenses'' means 
                expenses incurred in developing processes and 
                procedures associated with manufacture of the 
                designated new animal drug which occur after the new 
                animal drug is designated under this section and before 
                the date on which an application with respect to such 
                new animal drug is submitted under section 512 or 
                section 571.
            ``(3) There is authorized to be appropriated to carry out 
        this subsection $1,000,000 for the fiscal year following 
        publication of final implementing regulations, $2,000,000 for 
        the subsequent fiscal year and such sums as may be necessary 
        for each fiscal year thereafter.
    ``(c) Exclusivity for Designated New Animal Drugs.--
            ``(1) Except as provided in subsection (c)(2), if the 
        Secretary--
                    ``(A) approves or conditionally approves an 
                application for a designated new animal drug, and no 
                active ingredient (including any salt or ester of the 
                active ingredient) of that designated new animal drug 
                has been approved or conditionally approved previously, 
                the Secretary may not approve or conditionally approve 
                another application submitted for a new animal drug 
                with the same active ingredient and intended use as the 
                designated new animal drug for another applicant before 
                the expiration of ten years from the date of the 
                approval or conditional approval of the application.
                    ``(B) approves or conditionally approves an 
                application for a designated new animal drug, and an 
                active ingredient (including an ester or salt of the 
                active ingredient) of that designated new animal drug 
                has been approved or conditionally approved previously, 
                the Secretary may not approve or conditionally approve 
                another application submitted for a new animal drug 
                with the same active ingredient and intended use as the 
                designated new animal drug for another applicant before 
                the expiration of seven years from the date of approval 
                or conditional approval of the application.
            ``(2) If an application filed pursuant to section 512 or 
        section 571 is approved for a designated new animal drug, the 
        Secretary may, during the 10-year or 7-year exclusivity period 
        beginning on the date of the application approval or 
        conditional approval, approve or conditionally approve another 
        application under section 512 or section 571 for such drug for 
        such minor use or minor species for another applicant if--
                    ``(A) the Secretary finds, after providing the 
                holder of such an approved application notice and 
                opportunity for the submission of  views, that in the 
granted exclusivity period the holder of the approved application 
cannot assure the availability of sufficient quantities of the drug to 
meet the needs for which the drug was designated; or
                    ``(B) such holder provides written consent to the 
                Secretary for the approval or conditional approval of 
                other applications before the expiration of such 
                exclusivity period.''.
    (e) Conforming Amendments.--
            (1) Section 201(u) of the Federal Food, Drug, and Cosmetic 
        Act is amended by striking ``512'' and inserting ``512, 571''.
            (2) Section 201(v) of the Federal Food, Drug, and Cosmetic 
        Act is amended by inserting the following after paragraph (2): 
        ``Provided that any drug intended for minor use or use in a 
        minor species that is not the subject of a final regulation 
        published by the Secretary through notice and comment 
        rulemaking finding that the criteria of paragraphs (1) and (2) 
        or of section 108 of Public Law 90-399 have been met is a new 
        animal drug.''
            (3) Section 301(e) of the Federal Food, Drug, and Cosmetic 
        Act is amended by striking ``512(a)(4)(C), 512(j), (l) or (m)'' 
        and inserting ``512(a)(4)(C), 512(j), (l) or (m), 572(i).''
            (4) Section 301(j) of the Federal Food, Drug, and Cosmetic 
        Act is amended by deleting ``520'' and inserting ``520, 571, 
        572, 573.''
            (5) Section 502 of the Federal Food, Drug, and Cosmetic Act 
        is amended by adding at the end the following new subsection:
    ``(u) If it is a new animal drug--
            ``(1) that is conditionally approved under section 571 and 
        its labeling does not conform with the approved application or 
        section 571(f), or that is not conditionally approved under 
        section 571 and its label bears the statement set forth in 
        section 571(f)(1)(A); or
            ``(2) that is indexed under section 572 and its labeling 
        does not conform with the index listing under section 572(e) or 
        572(h), or that has not been indexed under section 572 and its 
        label bears the statement set forth in section 572(h).''.
            (6) Section 503(f) of the Federal Food, Drug, and Cosmetic 
        Act is amended by--
                    (A) in paragraph (1)(A)(ii) by striking ``512'' and 
                inserting ``512, a conditionally-approved application 
                under section 571, or an index listing under section 
                572''; and
                    (B) in paragraph (3) by striking ``section 512'' 
                and inserting ``sections 512, 571, or 572''.
            (7) Section 504(a)(1) of the Federal Food, Drug, and 
        Cosmetic Act is amended by striking ``512(b)'' and inserting 
        ``512(b), a conditionally-approved application filed pursuant 
        to section 571, or an index listing pursuant to section 572''.
            (8) Sections 504(a)(2)(B) and 504(b) of the Federal Food, 
        Drug, and Cosmetic Act are amended by striking ``512(i)'' each 
        place it appears and inserting ``512(i), or the index listing 
        pursuant to section 572(e)''.
            (9) Section 512(a) of the Federal Food, Drug, and Cosmetic 
        Act is amended by striking paragraphs (1) and (2) and inserting 
        the following:
    ``(1) A new animal drug shall, with respect to any particular use 
or intended use of such drug, be deemed unsafe for purposes of section 
501(a)(5) and section 402(a)(2)(C)(ii) unless--
            ``(A) there is in effect an approval of an application 
        filed pursuant to subsection (b) with respect to such use or 
        intended use of such drug, and such drug, its labeling, and 
        such use conform to such approved application;
            ``(B) there is in effect a conditional approval of an 
        application filed pursuant to section 571 with respect to such 
        use or intended use of such drug, and such drug, its labeling, 
        and such use conform to such conditionally-approved 
        application; or
            ``(C) there is in effect an index listing pursuant to 
        section 572 with respect to such use or intended use of such 
        drug in a minor species, and such drug, its labeling, and such 
        use conform to such index listing.''
A new animal drug shall also be deemed unsafe for such purposes in the 
event of removal from the establishment of a manufacturer, packer, or 
distributor of such drug for use in the manufacture of animal feed in 
any State unless at the time of such removal such manufacturer, packer, 
or distributor has an unrevoked written statement from the consignee of 
such drug, or notice from the Secretary, to the effect that, with 
respect to the use of such drug in animal feed, such consignee (i) 
holds a license issued under subsection (m) and has in its possession 
current approved labeling for such drug in animal feed; or (ii) will, 
if the consignee is not a user of the drug, ship such drug only to a 
holder of a license issued under subsection (m).
    ``(2) An animal feed bearing or containing a new animal drug shall, 
with respect to any particular use or intended use of such animal feed 
be deemed unsafe for purposes of section 501(a)(6) unless--
            ``(A) there is in effect--
                    ``(i) an approval of an application filed pursuant 
                to subsection (b) with respect to such drug, as used in 
                such animal feed, and such animal feed and its 
                labeling, distribution, holding, and use conform to 
                such approved application;
                    ``(ii) a conditional approval of an application 
                filed pursuant to section 571 with respect to such 
                drug, as used in such animal feed, and such animal feed 
                and its labeling, distribution, holding, and use 
                conform to such conditionally-approved application; or
                    ``(iii) an index listing pursuant to section 572 
                with respect to such drug, as used in such animal feed, 
                and such animal feed and its labeling, distribution, 
                holding, and use conform to such index listing; and
            ``(B) such animal feed is manufactured at a site for which 
        there is in effect a license issued pursuant  to subsection 
(m)(1) to manufacture such animal feed.''.
            (10) Section 512(b)(3) of the Federal Food, Drug, and 
        Cosmetic Act is amended by striking ``under paragraph (1) or a 
        request for an investigational exemption under subsection (j)'' 
        and inserting ``under paragraph (1), section 571, or a request 
        for an investigational exemption under subsection (j)''.
            (11) Section 512(d)(4) of the Federal Food, Drug, and 
        Cosmetic Act is amended by striking ``have previously been 
        separately approved'' and inserting ``have previously been 
        separately approved pursuant to an application submitted under 
        section 512(b)(1)''.
            (12) Section 512(f) of the Federal Food, Drug, and Cosmetic 
        Act is amended by striking ``subsection (d), (e), or (m)'' and 
        inserting ``subsection (d), (e), or (m), or section 571(c), 
        (d), or (e)''.
            (13) Section 512(g) of the Federal Food, Drug, and Cosmetic 
        Act is amended by striking ``this section'' and inserting 
        ``this section, or section 571''.
            (14) Section 512(i) of the Federal Food, Drug, and Cosmetic 
        Act is amended by striking ``subsection (b)'' and inserting 
        ``subsection (b) or section 571'' and by inserting ``or upon 
        failure to renew a conditional approval under section 571'' 
        after ``or upon its suspension''.
            (15) Section 512(l)(1) of the Federal Food, Drug, and 
        Cosmetic Act is amended by striking ``subsection (b)'' and 
        inserting ``subsection (b) or section 571''.
            (16) Section 512(m)(1)(C) of the Federal Food, Drug, and 
        Cosmetic Act is amended by striking ``applicable regulations 
        published pursuant to subsection (i)'' and inserting 
        ``applicable regulations published pursuant to subsection (i) 
        or for indexed new animal drugs in accordance with the index 
        listing published pursuant to section 572(e)(2) and the 
        labeling requirements set forth in section 572(h)''.
            (17) Section 512(m)(3) of the Federal Food, Drug, and 
        Cosmetic Act is amended by inserting ``or an index listing 
        pursuant to section 572(e)'' after ``subsection (i)''.
            (18) Section 512(p)(1) of the Federal Food, Drug, and 
        Cosmetic Act is amended by striking ``subsection (b)(1)'' and 
        inserting ``subsection (b)(1) or section 571(a)''.
            (19) Section 512(p)(2) of the Federal Food, Drug, and 
        Cosmetic Act is amended by striking ``subsection (b)(1)'' and 
        inserting ``subsection (b)(1) or section 571(a)''.

SEC. 4. INTERNAL REVENUE CODE AMENDMENTS.

    (a) The Internal Revenue Code of 1986 is amended by adding the 
following new section after section 45C:

``SEC. 45D. SAFETY AND EFFECTIVENESS TESTING EXPENSES FOR DESIGNATED 
              NEW ANIMAL DRUGS FOR MINOR USES AND MINOR SPECIES.

    ``(a) For purposes of section 38, the credit determined under this 
section for the taxable year is an amount equal to 50 percent of the 
qualified safety and effectiveness testing expenses for the designated 
new animal drug for the taxable year.
    ``(b) For purposes of this section--
            ``(1) Qualified safety and effectiveness testing expenses--
                    ``(A) Except as otherwise provided in this 
                paragraph, the term `qualified safety and effectiveness 
                testing expenses' means the amounts which are paid or 
                incurred by the taxpayer during the taxable year which 
                would be described in subsection (b) of section 41 if 
                such subsection were applied with the modifications set 
                forth in subparagraph (B).
                    ``(B) For purposes of subparagraph (A), subsection 
                (b) of section 41 shall be applied--
                            ``(i) by substituting `safety and 
                        effectiveness testing' for `qualified research' 
                        each place it appears in paragraphs (2) and (3) 
                        of such subsection; and
                            ``(ii) by substituting `100 percent' for 
                        `65 percent' in paragraph (3)(A) of such 
                        subsection.
                    ``(C) The term `qualified safety and effectiveness 
                testing expenses' shall not include any amount to the 
                extent such amount is funded by any grant, contract, or 
                otherwise by another person (or any governmental 
                entity).
                    ``(D) For purposes of this paragraph--
                            ``(i) section 41 shall be deemed to remain 
                        in effect for periods after June 30, 2001; and
                            ``(ii) the `trade or business of the 
                        taxpayer' requirement of section 41(b)(1) shall 
                        be deemed to be satisfied in the case of a 
                        taxpayer that owns animals that are the subject 
                        of safety and effectiveness testing.
            ``(2)(A) The term `safety and effectiveness testing' means 
        any safety and effectiveness testing--
                    ``(i) which is carried out under an exemption for a 
                new animal drug being tested for minor use or a minor 
                species under section 512(j) of the Federal Food, Drug, 
                and Cosmetic Act (or regulations issued under such 
                section);
                    ``(ii) which occurs--
                            ``(I) after the date such new animal drug 
                        request is filed for designation under section 
                        573 of such Act, and
                            ``(II) before the date on which an 
                        application with respect to such drug is 
                        approved under section 512(c) of such Act; and
                    ``(iii) which is conducted by or on behalf of--
                            ``(I) the taxpayer who applied for the 
                        designation under section 573; or
                            ``(II) the owner of the animals that are 
                        the subject of safety and effectiveness 
                        testing.
            ``(B) Safety and effectiveness testing shall be taken into 
        account under subparagraph (A) only to  the extent such testing 
is related to the use of a new animal drug for the minor use or minor 
species for which it was designated under section 573 of the Federal 
Food, Drug, and Cosmetic Act.
    ``(c)(1) Except as provided in paragraph (2), any qualified safety 
and effectiveness testing expenses for a taxable year to which an 
election under this section applies shall not be taken into account for 
purposes of determining the credit allowable under section 41 for such 
taxable year.
    ``(2) Any qualified safety and effectiveness testing expenses for 
any taxable year which are qualified research expenses (within the 
meaning of section 41(b)) shall be taken into account in determining 
base period research expenses for purposes of applying section 41 to 
subsequent taxable years.
    ``(d)(1) For purposes of this section, the term `minor use' is 
defined in section 201(mm) of the Federal Food, Drug, and Cosmetic Act 
and `minor species' is defined in section 201(ll). Determinations under 
the preceding sentence with respect to any new animal drug shall be 
made on the basis of the facts and circumstances as of the date such 
new animal drug is designated under section 573 of the Federal Food, 
Drug, and Cosmetic Act.
    ``(2) No credit shall be allowed under this section with respect to 
any safety and effectiveness testing conducted by a corporation to 
which an election under section 936 applies.
    ``(3) Rules similar to the rules of paragraphs (1) and (2) of 
section 41(f) shall apply for purposes of this section.
    ``(4) This section shall apply to any taxpayer for any taxable year 
only if such taxpayer elects (at such time and in such manner as the 
Secretary may by regulations prescribe) to have this section apply for 
such taxable year.''.
    (b) Conforming Amendments.--
            (1) Section 38(b) of the Internal Revenue Code is amended--
                    (A) By deleting ``plus'' at end of paragraph (11);
                    (B) By deleting the period at the end of paragraph 
                (12) and replacing it with the following: ``, plus''; 
                and
                    (C) By adding the following new paragraph at the 
                end: ``the minor use and minor species new animal drug 
                credit determined under section 45D(a)''.
            (2) Section 280C(b) of the Internal Revenue Code is 
        amended--
                    (A) in paragraph (1), by deleting ``section 
                45C(b)'' and substituting the following: ``section 
                45C(b) or 45D(b)''; and
                    (B) in paragraphs (1) and (2), by deleting 
                ``section 45C'' wherever it appears and substituting 
                the following: ``section 45C or 45D''.
    (c) Regulations.--The Secretary of the Treasury shall publish 
proposed regulations to implement amendments to the Internal Revenue 
Code made by this Act within 6 months of the date of enactment, and 
final regulations within 24 months of the date of enactment.

SEC. 5. REGULATIONS.

    Not later than 18 months after the date of enactment of this Act, 
the Secretary of Health and Human Services shall issue proposed 
regulations to implement section 572 of the Federal Food, Drug, and 
Cosmetic Act (as added by this Act), and not later than 36 months after 
the date of enactment of this Act, the Secretary shall issue final 
regulations implementing such amendments. Not later than 12 months 
after the date of enactment of this Act, the Secretary of Health and 
Human Services shall issue proposed regulations to implement section 
573 of the Federal Food, Drug, and Cosmetic Act (as added by this Act), 
and not later than 24 months after the date of enactment of this Act, 
the Secretary shall issue final regulations implementing such 
amendments; provided that these timeframes shall be extended by 12 
months for each fiscal year in which the funds authorized to be 
appropriated by this Act are not in fact appropriated. The Secretary 
shall implement section 571 of the Federal Food, Drug, and Cosmetic Act 
(as added by this Act) on the date of enactment of this Act and 
subsequently publish any needed implementing regulations.

SEC. 6. OFFICE OF MINOR USE AND MINOR SPECIES ANIMAL DRUG DEVELOPMENT.

    The Secretary of Health and Human Services shall establish within 
the Center of Veterinary Medicine (of the Food and Drug 
Administration), an Office of Minor Use and Minor Species Animal Drug 
Development that reports directly to the Director of the Center for 
Veterinary Medicine. This office shall be responsible for overseeing 
the development and legal marketing of new animal drugs for minor uses 
and minor species. There is authorized to be appropriated to carry out 
this subsection $1,200,000 for fiscal year 2002 and such sums as may be 
necessary for each fiscal year thereafter.
                                 <all>
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