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[Senate Hearing 114-]
[From the U.S. Government Publishing Office]

 
    PRIORITIZING PUBLIC HEALTH: THE FDA'S ROLE IN THE GENERIC DRUG 
                              MARKETPLACE

                              ----------                              

                     WEDNESDAY, SEPTEMBER 21, 2016

                               U.S. Senate,
Subcommittee on Agriculture, Rural Development,      
                                                   
         Food and Drug Administration and Related Agencies,
                                     Committee on Appropriations,  
                                                    Washington, DC.
    The subcommittee met at 3:02 p.m. in room SD-192, Dirksen 
Senate Office Building, Hon. Jerry Moran (chairman) presiding.
    Present: Senators Moran, Collins, Daines, Merkley, Tester, 
and Udall.

                OPENING STATEMENT OF SENATOR JERRY MORAN

    Senator Moran. Good afternoon, everyone. Thank you for 
joining us.
    Senator Merkley, the ranking member, is en route and his 
proxy--at least he has described himself as Senator Merkley's 
proxy--is here and we are going to begin. I will give my 
opening statement and perhaps by then Senator Merkley will be 
here, and then we will go to testimony. The Senator from 
Montana has a scheduling issue, and we will try to get to him 
very quickly.
    We are pleased to have with us today--Dr. Janet Woodcock. 
She is at the Food and Drug Administration's (FDA's) Center for 
Drug Evaluation and Research, and that agency's mission is to 
make certain that the public has access to safe and effective 
drugs.
    Earlier this summer, Kansans and American families 
discovered that--particularly those families that had 
allergies, or their children had allergies, that they were 
faced with a dramatic increase in the cost of epinephrine 
injectors, or EpiPens. And in my view, that raises issues for 
us as appropriators for the Food and Drug Administration in 
this sense.
    The Food and Drug Administration does not have jurisdiction 
over the cost or price of drugs. They are not a regulator in 
that regard, but their role is to make certain that drugs are 
effective, as well as safety. Part of that process of safety 
and efficacy is bringing generics to market, and I think it 
would be useful for our subcommittee to hear the developments 
at FDA in regard to that process.
    I think all of us have an interest in making certain that 
drugs that are effective and useful are made available to 
consumers across the country at prices that are affordable. And 
one of the ways that I think we can address that is to make 
certain that the process that FDA utilizes to bring generics to 
market is working the way it should.
    And so this hearing is designed for us to elicit 
information from FDA, from Dr. Woodcock as to that process and 
what role that we should pursue as members of the 
appropriations subcommittee responsible for the Food and Drug 
Administration.
    Congress approved the Generic Drug User Fee Act (GDUFA) in 
2012. It was designed to address the issues that I have talked 
about, speeding up the process to bring generic drugs to 
market. In the past 3 years under this act, the FDA has 
collected $1 billion from generic drug manufacturers, which has 
translated into the hiring of an additional thousand employees 
at FDA and replacing, presumably, an antiquated information 
technology system.
    Despite that, despite the thousand employees and a new 
computer system, there are more than 4,000 generic drug 
applications currently awaiting approval, and the average time 
it takes for FDA to approve a generic is now 47 months, nearly 
4 years.
    It is also my understanding that FDA is close to finalizing 
its negotiations with the industry on a new round of fee and 
regulatory requirements to address that backlog. And my guess 
is that Dr. Woodcock cannot speak about the details of those 
negotiations, but I am hoping this hearing will allow us to get 
a better understanding of how FDA plans to tackle that backlog 
and that extension of the waiting time, all in a process that 
still provides safety and efficacy.
    On a final note, doctor, I would like to take the 
opportunity to acknowledge your efforts to advance the 
accelerated approval process for patients who have no other 
treatment options. And in this regard, I want to just mention 
particularly the Duchenne muscular dystrophy issue that has 
occurred at FDA, and I want to express my support for the 
efforts that bring that drug to market in a timely way.
    [The statement follows:]
               Prepared Statement of Senator Jerry Moran
    This hearing will come to order.
    Good afternoon. Today's hearing will focus on the Food and Drug 
Administration's role in the generic drug marketplace. I would like to 
thank Dr. Janet Woodcock for being here today. I greatly appreciate 
your work at the FDA's Center for Drug Evaluation and Research (CDER) 
whose mission is to make certain that the public has access to safe and 
effective drugs.
    I would be remiss if I failed to note that, earlier this summer, 
parents of children who suffer from allergies were suddenly faced with 
dramatic increases for epinephrine injectors or Epipens. I have an 
interest in working to ensure that drugs are available to all Americans 
at affordable prices. The FDA's role in the drug approval process is 
critical to expanding the pharmaceutical market and driving down costs 
for consumers.
    While drug pricing is not the topic of this hearing, the FDA's 
responsibility to approve generic drugs in a timely fashion should be 
part of the larger discussion on pharmaceuticals. And, Dr. Woodcock, 
you wrote a piece on this topic recently and it is something my 
colleagues may be interested in reviewing.
    With regard to FDA's role in the generic drug marketplace, Congress 
approved the Generic Drug User Fee Act in 2012 to speed up efforts to 
bring generic drugs to the market. In the past 3 years under this act, 
the FDA has collected $1 billion from generic drug manufacturers, which 
has translated into hiring an additional 1,000 employees and replacing 
antiquated information technology systems. However, despite this influx 
of resources, there are more than 4,000 generic drug applications 
currently awaiting approval, and the median time it takes for the FDA 
to approve a generic is now 47 months or nearly 4 years.
    It is my understanding that the FDA is close to finalizing 
negotiations with industry on a new round of fees and regulatory 
requirements to address the backlog.
    And while Dr. Woodcock cannot speak to specifics of this 
negotiation, I am hoping that this hearing will allow us to get a 
better understanding on how the FDA plans to tackle the generic drug 
backlog and streamline the drug approval process to increase 
transparency, efficiency and predictability.
    One final note: I would like to take this opportunity to 
acknowledge Dr. Woodcock's efforts to advance the accelerated approval 
process for patients who have no other treatment options. I know this 
is an issue of critical importance to patient advocacy groups, as we 
see with the recent approval of the first therapy for Duchenne muscular 
dystrophy, and I want to express my support for your efforts on that 
front.
    I look forward to discussing these topics with our witness today. 
We have a lot to cover this afternoon, so I will now turn it over to 
Senator Merkley for any remarks he may wish to give.

    Senator Moran. I look forward to discussing these topics 
with you, and we look forward to my colleagues asking you 
questions in just a moment.
    Senator Tester, we can defer to Senator Merkley when he 
arrives. You have a scheduling issue, and I would be glad to 
yield my time to you so that you could begin the questioning.
    Senator Tester. Does the doctor have a statement?
    Senator Moran. Yes.
    Senator Tester. Perfect.
    Senator Moran. Dr. Woodcock, the floor is yours.
STATEMENT OF HON. DR. JANET WOODCOCK, M.D., DIRECTOR, 
            CENTER FOR DRUG EVALUATION AND RESEARCH, 
            FOOD AND DRUG ADMINISTRATION, DEPARTMENT OF 
            HEALTH AND HUMAN SERVICES
    Dr. Woodcock. Thank you, Mr. Chairman and members of the 
committee, for this opportunity to testify.
    As was already said, FDA has no role in setting drug 
pricing, but our actions serve to enhance competition which has 
been shown to decrease drug prices. For example, I would like 
to go through some of the actions we do take that enhance 
competition.

                        MARKETPLACE COMPETITION

    We often approve multiple drugs in a therapeutic class. 
They are separate drugs, but for example, there are a lot of 
cephalosporin antibiotics out there. And so even within a class 
or an anti-hypertensive of a certain class, there may be a lot 
of drugs that compete in the market.
    Also, we often approve different versions of a marketed 
drug once patents and exclusivity have expired that are not 
exact copies under our 505(b)(2) program, which is not a 
generic but is part of the Hatch Waxman legislation. And these 
copies also can compete with the marketed drug.
    Under the generics program, multiple exact copies of a 
branded drug can be approved once all exclusivity and patents 
have expired. And we frequently approve several copies at once. 
For example, very recently we approved eight generic Crestors 
on the same day. So there is a first generic, but there might 
be eight first generics and the introduction of multiple copies 
into the market often can really lower the pricing of the drug.
    And finally, our new biosimilars program, which was 
authorized by Congress a number of years ago, introduces 
competition for biologic drugs which, of course, generally are 
very expensive protein drugs. And we have approved so far three 
biosimilars, and we have a robust program growing in the 
biosimilar area.
    Now, I think in the generic space particularly, there have 
been a number of misconceptions circulating about the generics 
program. It is kind of easy to misunderstand the generics 
program.

                         GENERIC APPROVAL TIME

    The first one is that the program takes 47 months overall 
to approve a generic application. Senator, you said that.
    Senator Moran. Are you telling me I am under a 
misunderstanding?
    Dr. Woodcock. Well----
    Senator Moran. That is fair.
    Dr. Woodcock. For the really old products that were in the 
backlog before the new GDUFA program started, the user fee 
program started, they already are 4 years old. And so they are 
not getting any younger. And as we approve them, they are going 
to have very long times to market because they started before 
that program even was put in place.
    But starting October 1 of this year, if a company sends us 
an approvable generic drug application, we will approve it in 
10 months.
    Part of the problem is the generic industry does not have a 
high level of meeting our standards on the first try, and so 
they have to go through multiple cycles.
    After the Prescription Drug User Fee program was put into 
place--now it has been 20 years--we have an extremely high rate 
of first cycle approvals for new drugs, which are much more 
complicated. So it is possible to approve drugs very rapidly if 
in fact the application meets our standards.
    But we cannot approve substandard generic drugs because, 
first of all, those are our standards, but it would erode the 
confidence of the public in the generic drug program and really 
take us back to the time when generic drugs were not well 
accepted by the medical community.

                        GENERIC APPROVAL BACKLOG

    Another misconception is that a lot of first generic drugs 
are moldering in this backlog that has been there for so long. 
And that is really not true. There are fewer actually than 100 
applications in that backlog that manufacturers have not gotten 
feedback from FDA on their application.
    And we had a goal of reviewing and providing deficiencies 
for 90 percent of the backlog by the end of the GDUFA program. 
That is not this coming October but next October. We already 
exceeded that goal 15 months ahead of schedule. So 90 percent 
of those backlog applications have already received 
communications from FDA about what their deficiencies are. And 
there is a large number. There are 1,700 applications, most of 
them from this backlog, that are with the manufacturers 
awaiting them returning them to the FDA with improved 
information. So we have really exceeded the goal that was set 
for us under the first user fee program by 15 months of dealing 
with this backlog in its first iteration.
    And 500 of those that are sitting with the manufacturers 
have actually been there for longer than a year. And it may be 
that our huge activity in getting all these questions and 
applications back to the manufacturers for repair has somewhat 
overwhelmed their ability to get back to us promptly.
    And there is also a belief that a large number of important 
generic applications are sitting untouched at the FDA, and 
there are almost no applications that are not touched except 
maybe ones that are recently submitted to us and are going 
through the filing process.
    So it is true, however, that we are not at a steady state 
yet. We had built up a huge backlog, as I said in the 
testimony, before the Generic Drug User Fee program started, 
and we are still working our way through that in the sense that 
they will return again and again until which time they meet our 
standards and they can be approved. But this year alone, as you 
see in the slides I left at your places, we have 1,700 
applications pending industry. And this year, we approved 700. 
In the program, we have approved 2,207 approvals and tentative 
approvals since the GDUFA program started. So that is the 
number.

                 PRIORITIZATION OF GENERIC APPLICATIONS

    We also prioritize generic applications that may have 
public health implications. Sometimes we have those that are 
first generics that are sole source. In other words, there 
might be only one product out there and it is a generic. So we 
still prioritize the second one. And, of course, shortage of 
drugs, if there is a shortage, we will prioritize generic 
applications. We will move them to the front of the line, like 
the express line, to try to get them through.
    I would like to say I am really proud of the work our staff 
has done in setting up the new generic program and the 
biosimilar programs. They were very tough. They required 
multiple changes, a very heavy lift. And I think we are showing 
that we are getting that work done. It has really been an 
enormous effort, though, on many people's part and that 
continues.
    I am confident we will continue to improve these programs, 
and they will provide a pathway for competition in the market 
that will be very robust.
    I look forward to your questions.
    [The statement follows:]
               Prepared Statement of Janet Woodcock, M.D.
                              introduction
    Good morning Chairman Moran, Ranking Member Merkley, and members of 
the Subcommittee. I am Dr. Janet Woodcock, Director of the Center for 
Drug Evaluation and Research (CDER) at the Food and Drug Administration 
(FDA or the Agency). Thank you for the opportunity to appear today to 
discuss FDA's role in executing the nation's generic drug review 
program. I would also like to thank the Subcommittee for its past 
investments in FDA, particularly the Human Drugs program. The funding, 
most recently provided in fiscal year 2016, has helped us meet the 
demands of our increasingly complex and diverse mission at home and 
abroad.
    FDA recognizes the critical importance that generic drugs play in 
the U.S. healthcare system. At FDA, we recognize that when more than 
one version of a drug, especially when a generic version of a drug is 
approved, it can improve marketplace competition and help to provide 
additional options for consumers. Although FDA does not have a 
regulatory role in the pricing of drug products, we do play a critical 
role in ensuring patients have access to beneficial medicines. With 
this role in mind, and as I discuss more fully below, FDA is working 
hard to support the timely, scientific and efficient development of new 
generic drug products for the U.S. market.
                          the rise of generics
    Recognizing the need to increase the availability of low cost 
generic drugs, over thirty years ago, Congress enacted the Hatch-Waxman 
Amendments to the Food, Drug, and Cosmetic Act (FDCA).The Hatch-Waxman 
Amendments represent a great success in facilitating the widespread 
availability of safe, effective and high-quality generic drugs. 
According to the IMS Institute for Healthcare Informatics, generic 
drugs now account for nearly nine out of ten prescriptions dispensed in 
the United States and saved the U.S. health system $1.68 trillion from 
2005 to 2014.
                    abbreviated pathways to approval
    The Hatch-Waxman Amendments formally establish two abbreviated 
approval pathways for drug products, while at the same time provide 
incentives for the continuing development of innovative new drug 
products. One of the two abbreviated approval pathways allows for the 
approval of Abbreviated New Drug Applications or ANDAs. Drugs approved 
under this pathway are commonly referred to as generics.
    Unlike an innovator drug application, a generic drug application 
does not need to independently establish the safety or effectiveness of 
the drug. Instead, the generic drug has to show that it is the same as 
an innovator drug in several fundamental ways, such as in active 
ingredient, dosage form, route of administration, strength, and 
labeling (except for certain permissible differences in labeling); that 
the generic drug is absorbed and available at the site where it will 
act in the body at the same rate and to the same extent as the 
innovator drug (which is known as bioequivalence); and that it meets 
the same high standards for drug quality and manufacturing as an 
innovator product. If the ANDA meets these requirements, the generic 
applicant can rely on FDA's previous finding of safety and 
effectiveness of the branded innovator drug, and need not conduct its 
own clinical investigations to establish safety or effectiveness.
    FDA approval of an ANDA indicates that FDA considers the generic 
drug to be therapeutically equivalent to the innovator drug. This means 
that the Agency has concluded, among other things, that the generic and 
innovator drugs can be substituted with the full expectation that the 
generic drug will produce the same clinical effect and safety profile 
as the innovator product when administered under the conditions 
specified in the labeling. Therapeutic equivalence ratings are 
published by FDA in what is commonly known as the Orange Book. Although 
FDA does not itself determine when a pharmacy would substitute a 
generic drug in filling a prescription, state pharmacy laws and other 
regulations that determine substitutability often refer to these Orange 
Book ratings.
    The Hatch-Waxman Amendments also established a second abbreviated 
pathway for drug applications. This pathway, commonly referred to as 
the ``(b)(2) pathway,'' can be thought of as a hybrid between the 
pathway for an entirely innovative product and the ANDA pathway for a 
generic drug. Unlike generic drugs, products approved under the (b)(2) 
pathway on approval are not presumed to be therapeutically equivalent 
to the innovator drug and, if a (b)(2) applicant seeks a determination 
of therapeutic equivalence, it must demonstrate this separately.

                         keeping up with demand
    The expansion of the generic market has brought new challenges. The 
last several decades have seen substantial growth in the size of the 
generic industry, the number of ANDAs submitted to FDA for review, and 
the number of foreign facilities making generic drugs. As a result, 
FDA's generic drug program became increasingly under-resourced. Its 
staffing did not keep pace with the growth of the industry.

    Because the program could not keep up with its workload, a backlog 
of submitted ANDAs developed and grew. It overwhelmed the FDA staff and 
created unpredictability and delay for industry.
                     generic drug user fee program
    In response to this backlog issue, Congress enacted the Generic 
Drug User Fee Amendments of 2012 (GDUFA I), under which industry agreed 
to pay user fees each year of the five-year program and FDA committed 
to certain performance goals.
    A major commitment of GDUFA I was to take a ``first action'' on 90 
percent of the ``backlog'' applications, defined as pre-GDUFA 
applications pending before the Agency on October 1, 2012, by the end 
of fiscal year 2017. As of October 1, 2012, the backlog included 2,866 
ANDAs and 1,873 prior approval supplements (PASs). A ``first action'' 
on an application means granting an approval or tentative approval, or, 
if there are deficiencies that prevent approval, identifying those 
deficiencies to the applicant in a complete response letter or in a 
refusal to receive the application. As of July 1, 2016, FDA had taken 
``first actions'' on 90 percent of the backlog applications, achieving 
this performance goal 15 months ahead of schedule. In addition, FDA has 
met or exceeded all performance goals under GDUFA I with respect to 
ANDA's submitted after GDUFA had commenced.
    The cumulative result of all this effort is a huge increase in the 
productivity of the generics program. We ended last year at a new 
monthly high of 99 approvals and tentative approvals \1\ in December. 
By July, with 2 months still remaining in this fiscal year, we had 
already achieved a new record of 702 approvals and tentative approvals.
---------------------------------------------------------------------------
    \1\ Tentative approval applies if a generic drug product is 
otherwise ready for approval before the application may otherwise be 
approved because of issues related to any patents or exclusivities 
accorded to the reference listed drug product. In such instances, FDA 
issues a tentative approval letter to the applicant. FDA delays final 
approval of the generic drug product until all patent or exclusivity 
issues have been resolved. A tentative approval does not allow the 
applicant to market the generic drug product.

    Some of the backlog applications, mentioned above, had been pending 
or in review for a long time prior to GDUFA. At this point in time, as 
FDA acts on a backlogged application, the ``time to approval'' of such 
application will be recorded as, at minimum, 47 months (i.e., we are 
now 3 years and eleven months (47 months) into GDUFA implementation).
    Applications submitted in fiscal year 2016 have a GDUFA first-
action goal date of 15 months. For fiscal year 2017, which begins in 10 
days, an incoming ANDA will receive a 10 month GDUFA goal date. If the 
ANDA is for a priority product--such as a first generic--its review 
will be further expedited. This year, we have achieved a record number 
of ANDA approvals and a record number of first cycle approvals.
                   how did fda achieve these results?
Deep, foundational restructuring
    These successes were achieved by restructuring our organization for 
generic drug review, to build a modern generic drug program. This 
involved major reorganizations. We reorganized the Office of Generic 
Drugs and elevated it to a ``Super-Office'' status, on par with the 
Office of New Drugs. We established a new Office of Pharmaceutical 
Quality to integrate the quality components of the review.
    We developed an integrated informatics platform to support the 
generic drug review process. This platform is a significant improvement 
over our earlier fragmented, legacy systems, and has enhanced our 
productivity.
    We hired and trained more than 1,000 new employees, achieving our 
GDUFA hiring goals well ahead of schedule.

             fda creates a pathway for generics development
    In addition to the work that FDA does with individual companies to 
support their development of specific products, FDA also works to 
create a publicly available roadmap describing what companies need to 
do to bring various types of medical products to market.
    FDA is continuing to develop, publish, and update guidance 
documents, which are a kind of roadmap for industry sponsors, 
explaining FDA's recommendations for the kind of information that 
should be included in a marketing application. Guidance documents can 
provide vital information to drug and device developers for a class of 
products.
    FDA also recognizes that for more complex products, in addition to 
guidance, one-on-one advice may be needed so FDA can address technical 
and regulatory questions about the pathway to market. Such meetings 
occur now for both new drugs and generic drugs under development. In 
addition, FDA regularly responds to specific product-development 
questions from industry that FDA answers in writing to help companies 
develop generic drug applications through the process known as 
Controlled Correspondence. We hope to expand our ability to engage with 
generic product sponsors through a reauthorization of the Generic Drug 
User Fee Amendments (or GDUFA II), where complex product meetings have 
been described as a key provision of the proposed program.
    Further, FDA prioritizes the resources we make available to focus 
on areas of high public health needs. For example, FDA's Office of 
Generic Drugs (OGD) has a prioritization and expedited review policy 
for certain generic drug applications. The policy is set forth in a 
publicly available document called a Manual of Policy and Procedures 
\2\ (MAPP), which can be found on the FDA website. Pursuant to OGD's 
prioritization policy, ANDAs for drugs that have ``first filer'' status 
or that otherwise are eligible to be the first generic approved are 
prioritized and given expedited review.
---------------------------------------------------------------------------
    \2\ http://www.fda.gov/downloads/AboutFDA/CentersOffices/
OfficeofMedicalProductsandTobacco/CDER/ManualofPoliciesProcedures/
UCM407849.pdf
---------------------------------------------------------------------------
    Each of these, and other efforts of FDA, help clarify our 
expectations and prioritizations concerning specific products so 
industry can develop and obtain approval of generic versions of branded 
drugs more quickly.
    While FDA is working to lay out a roadmap to support efficient 
development of complex products, we cannot, and will not, allow a 
substandard product to come onto the market. In addition to working to 
assure the safety and efficacy of drugs, it is critical that they be 
manufactured to high quality standards to assure they can be used 
safely by patients when they are needed. FDA's new Office of 
Pharmaceutical Quality plays a critical role in ensuring the quality of 
both generic and new drugs.
           fda's role in the intellectual property landscape
    Although FDA can and does encourage generic drug development and 
has and continues to streamline and improve its review and approval of 
generic drug applications, the decisions of whether to seek approval 
for a proposed generic drug and whether to market an approved generic 
drug are controlled by the generic drug industry. Further, the extent 
to which the approval or marketing of generic drugs is delayed because 
of intellectual property rights or marketing exclusivities is largely 
controlled by the innovator-drug manufacturers and others that hold 
those rights.
    With respect to patents, FDA has only a ``ministerial'' role. As 
noted earlier, the Hatch-Waxman Amendments sought to balance two 
competing goals: (1) increasing the availability of generic drugs, and 
(2) increasing incentives to develop new and innovative drug products. 
In addition to creating certain marketing exclusivities, the Hatch-
Waxman Amendments established a set of procedures intended to align the 
generic drug approval process with an opportunity for the owners of 
innovator drugs to assert certain rights for patents covering the 
innovator drug before generic drug approval. While FDA plays a role in 
this process, our role is very limited.
    First, sponsors of innovator drugs must submit to FDA information 
regarding certain patents related to their products. FDA lists these 
patents in the Orange Book. In any application that seeks to rely on a 
previously approved NDA, which includes (b)(2) applications and generic 
drug applications, the applicant must describe whether it intends to 
challenge those listed patents in court. Specifically, the applicant 
may inform FDA that there are no patents listed, or that the applicant 
is not seeking approval until after a patent listed in the Orange Book 
expires. Alternatively, an applicant can also notify FDA that it 
intends to challenge a listed patent as invalid, unenforceable or not 
infringed. Where an applicant seeks to challenge a patent, the 
applicant is required to submit to FDA certain information regarding 
its patent challenge and any resulting patent litigation as part of its 
application; but, the challenge and litigation take place between the 
applicant and the patent holder(s) in the courts and outside FDA's 
regulatory authority. If an applicant is challenging a patent, the law 
describes when FDA can approve the application in a complex scheme, 
including a potential 30-month stay of an approval if the ANDA 
applicant is sued soon after making the patent challenge. In each case, 
the ANDA applicant's decision regarding whether to challenge a patent, 
and when applicable, the innovator sponsor's response, and the court's 
decision on the patent can affect when FDA may (and may not) approve 
the generic drug application.
    As drug applicants often publicly acknowledge, they routinely take 
the intellectual property rights of previously approved drugs into 
account when making determinations regarding the design and development 
of their proposed drugs. While our approval standards are the same 
whether or not an applicant designs its proposed product around a 
competitor's intellectual property rights, the proposed products that 
FDA receives for review and consideration for approval are no doubt 
impacted by patent considerations.
            overview of the epinephrine auto-injector market
    Epinephrine auto-injectors, with the most widely used and 
recognizable product being Mylan's EpiPen, are a critically important, 
and potentially life-saving, product for patients who suffer from a 
severe allergic reaction called anaphylaxis. These products are 
considered combination products since they consist of a drug component 
(epinephrine) and a device component (auto injector). When a patient 
requires the medication, seconds count, and the epinephrine auto-
injector must work every single time. To ensure this, it is critical 
that both the drug, and the device that delivers the drug, perform as 
designed.
    At FDA, we are aware of the recent spike in the price of the 
EpiPen. FDA has approved four epinephrine auto-injector products to 
treat anaphylaxis; two of which are currently on the market. While 
there are currently no FDA-approved generic epinephrine auto-injectors, 
we stand ready to quickly review additional applications that come to 
us from both generic and innovator drug companies.
    Mylan's EpiPen is the market leader for epinephrine auto-injectors 
in the United States, and Mylan has recently publicly announced they 
also will offer an authorized generic version \3\ to be available in 
the near future. Another firm, Amedra holds an approval for 
Adrenaclick, which is also an epinephrine auto-injector. Currently, 
while the Adrenaclick brand name product is not being marketed, Amedra 
is marketing its own authorized generic version of the drug. Amedra 
also previously marketed Twinject, but this product has been 
discontinued. Finally, FDA also approved Auvi-Q as an epinephrine auto-
injector, although this product was voluntarily recalled from the 
market in 2015 by Sanofi. We note that Auvi-Q was recently purchased by 
Kaleo, though this product has not yet returned to the market. In 
support of increasing the number of epinephrine auto-injector products 
on the market, FDA is committed to working with both Amedra and Kaleo 
to facilitate greater availability of their products.
---------------------------------------------------------------------------
    \3\ An ``authorized generic" is made under the brand name's 
existing new drug application using the formulation, process, and 
manufacturing facilities approved for use by the brand name 
manufacturer. The labeling is changed to remove the brand name or other 
trade dress. An authorized generic is not synonymous with an FDA-
approved generic, the latter of which requires a separate application 
and approval from that of the brand name product.
---------------------------------------------------------------------------
                               conclusion
    Thank you for your interest in the important topic. FDA takes 
seriously its role in executing the nation's generic drug program, and 
we understand the importance of generic products in the U.S. 
marketplace. We anticipate that our ongoing efforts to continue to 
improve generic drug development will provide dividends in both 
protecting the health of Americans as well as in cost savings long into 
the future. We hope that our efforts, coupled with the work of other 
groups that also have roles to play, will continue to ensure 
medications are readily available to patients. I am happy to answer any 
questions.

    Senator Moran. Doctor, thank you very much.
    Let me now turn to the ranking member, Senator Merkley, for 
any opening statement you would like to make.

                   STATEMENT OF SENATOR JEFF MERKLEY

    Senator Merkley. Thank you very much, Chairman Moran.
    I think there is a lot of interest in this hearing and the 
role of generic drugs and the role that they can play in 
diminishing drug prices in America, which are a significant 
factor in the overall costs of our health care system and 
certainly a significant factor for families that have 
deductibles, as so many working families do have.
    We have had a series of cases where a drug company controls 
a single product in a particular segment of the medical market, 
a single drug or has a large share of the market, putting them 
up for sale at vastly increased prices, very sudden, very 
dramatic price increases. It seems like about every month there 
is some prominent story that catches the attention of America. 
The most recent of those is the EpiPen and the Mylan company, 
the dramatic increase from roughly $100 to $600 for a pack of 
two, despite the fact that the drug within them, I understand, 
costs very little in terms of what is inside those injectors.
    So as we ponder all of these cases, we are very interested 
in the approval process. There are other dimensions of this as 
well. Such as a challenge when companies buy up generics in 
order to keep them off the market or use patent changes to try 
to keep them off the market or pay generic companies to keep 
them off the market, market manipulations of this kind. These 
may not be things that you are able to be part of in your role 
of looking at the effectiveness and reliability of drugs, but 
they are part of the broader picture that is of great concern 
to Americans.
    So I look forward to hearing my colleagues and hearing from 
you and exploring this because there is a lot of room for 
improvement. Thank you.
    Senator Moran. Senator Merkley, thank you very much.
    I would yield my time to the Senator from Montana.

                      GENERIC DRUG PRICE INCREASES

    Senator Tester. You are very kind, Mr. Chairman. I thank 
you for the courtesy.
    And you are right. This is a very, important issue. As I go 
home, I hear from not only patients and friends and family, but 
I hear from doctors about what is going on with 
pharmaceuticals. Even though my questions do ultimately end up 
applying to money, it deals really with your job, and the 
ranking member talked about this briefly.
    But can you tell me how a company can take a generic and 
change it very, very slightly and end up to be able to go take 
it back on the market and jack the price up when it is 
basically the same generic it was before they modified it very, 
very modestly? Talk to me about how that process works.
    Dr. Woodcock. Certainly. The generics have to be copies of 
a reference listed drug, in other words, a brand drug 
originally.
    Senator Tester. Yes.
    Dr. Woodcock. And so they have to stay being copies. So 
they cannot substantively modify the generic. They may make it 
look different or something like that, but in our experience, 
the price rises for generics or innovative products, as you 
were referring to, have to do with no competition in the 
market, where they may be the only game in town. Overall, 
generic drug prices are going down, and have been going down. 
But in these cases that you are referring to where, for some 
reason, there is no competition, there may be other approved 
generics, but as Senator Merkley said, their market share may 
be so small or for other reasons that there is not effective 
competition.
    Senator Tester. Well, I will tell you I appreciate that. 
And I do not have any problem with a pharmaceutical company 
getting their research and development money back. I also think 
that if we are funding part of that R&D, we ought to get a 
break on some of that R&D money. But that aside, I think it is 
important they are able to do their research.
    But I have heard from many docs--not just one or two, many 
docs--that say that if a patient is using a generic, the 
company will pull that back, somebody pulls it back, changes it 
not significantly at all, and then puts is back on the market 
for 5 or 10 times the money or more.
    Dr. Woodcock. What you may be referring to is the ownership 
changes. So one generic company may own a product. It is then 
sold so that it looks different. It has a different 
manufacturer.
    Senator Tester. But it is the same stuff basically.
    Dr. Woodcock. It has to be under the generic laws.
    Senator Tester. Is there anything we can do about that, or 
is that just the way it is?
    Dr. Woodcock. FDA, as I said earlier, does not regulate the 
prices of drugs. We have nothing to do about that.
    Senator Tester. Okay.
    Dr. Woodcock. What our actions do is we try to, if there is 
a sole source, we try to get more copies into the market.

                              BIOSIMILARS

    Senator Tester. I have got a friend who was diagnosed with 
child diabetes at the age of 13. He is the same age I am. He is 
60. So this is 1970 when he first became a diabetic. And I 
cannot remember the number because it has been over a month 
ago, and my memory does not last that long. But he had told me 
that insulin back in 1970 was less than $10, and now it is 
significantly much, much higher than that. Has insulin changed 
over the last 40 years, or is insulin insulin?
    Dr. Woodcock. There are many new forms of insulin that have 
been introduced, and modern diabetic care usually includes a 
long-acting insulin and some short-acting insulins. There are 
insulin pens that people can auto-inject so it is less painful. 
So there have been different changes in technology, but some of 
the basic insulins have not changed.
    Senator Tester. I mean, is it just pure greed that they 
would increase the prices like that?
    Dr. Woodcock. Well, I cannot comment on the motives, but I 
can say that Congress passed a number of years ago legislation 
for biosimilars so that the biologic products--would have 
additional competition.
    Senator Tester. Yes.
    Dr. Woodcock. Now, insulin right now is regulated as a 
drug. This is complicated. But it will be regulated as a 
biologic. Under the biosimilars act, it will transition over. 
And therefore, the insulins will be subject to the biosimilars 
copies.
    Senator Tester. Well, I appreciate your testimony today. I 
am going to have to get the companies in and visit with them to 
find out what is going on. Like I say, I get it. You got to 
recoup your cost of research and development, but man, oh, man, 
I am just hearing so many stories on the street where there are 
minor modifications on a drug that is really the same drug that 
has been around for 45 or 50 years and is getting priced out of 
the marketplace, and we are driving people into poverty in the 
process. And quite frankly, that concerns me.
    Thank you very much, and thank you for your courtesy, Mr. 
Chairman.
    Senator Moran. Thank you, Senator Tester.

                       EPINEPHRINE AUTO INJECTORS

    There is no doubt but what the cost and price of drugs is 
an important public policy issue. It has significant 
consequences to Kansas families. It has significant 
consequences to taxpayers as we look at Medicare costs. And I 
hope our focus in this hearing will continue to be how do we 
make certain that FDA is doing its job well to create 
competition and opportunities for families to make other 
choices and to hold down the cost, those prices of those drugs 
as a result.
    Let me ask a couple of questions. First of all, EpiPen in 
particular is a combo. It is a combination between a device and 
a drug. Are there unique circumstances that make the generic to 
be more difficult in that circumstance because of the 
combination?
    Dr. Woodcock. Yes. The firm that markets EpiPen has patents 
on the device component that go through 2025. So any firm 
wishing to make a generic would have to be able to get around 
those patents somehow and not infringe upon those patents or 
challenge them successfully to market a copy.
    Senator Moran. I think your column talks about generics for 
the drug, but they are not widely used.
    Dr. Woodcock. This is confusing too. There is another brand 
of epinephrine auto-injector that FDA has approved. We have 
approved a number of them, but they are in the first category I 
talked about. They are all standalone new drug applications. So 
they are not generic copies. They are each one separate. Each 
of them does the same thing. It treats anaphylaxis, though.
    There is something that people call an authorized generic. 
It is very confusing because it is not a generic. It is when a 
brand name company decides to market their product, usually 
along with marketing their brand product, they take the brand 
name off of the label and they make it look like a generic and 
then they market that, usually at a lower price. And so some 
people have the brand loyalty who stay with the brand, but then 
they can also compete in the generic market with the authorized 
genric version. It is the same product. They make it in the 
same plants usually and everything. It just has a different 
label on it.
    And so the other manufacturer of the current epinephrine 
auto-injector, which is not called ``EpiPen,'' it is 
Adrenaclick--that one has an authorized generic, and that is 
what is currently being marketed.
    Senator Moran. Thank you, I think, for that clarification.
    [Laughter.]
    Dr. Woodcock. Sorry.

                     GENERIC DRUG APPROVAL BACKLOG

    Senator Moran. First of all, let me ask this question. I 
indicated in my opening statement about a backlog. You did a 
pretty persuasive set of statements that indicate that there 
really is not a backlog. And so if we were asking you what are 
you going to do to solve the backlog problem, you would tell us 
that the FDA is on path in the way that it should be. Is that 
fair?
    Dr. Woodcock. At the very back of the papers I passed out, 
there is this chart, and what it shows is right now there are 
2,300 abbreviated new drug applications (ANDAs), which is the 
generic drug applications, in the process of FDA reviewing 
them. The pre-GDUFA ones are here at the top. They were the 
backlog. Now they have come back in. We are reviewing them 
again, not all of them. And then each year, the goals become 
shorter for us to do the first review. And as I said, next 
year, 2017, it is going to be 10 months.
    So to be honest and completely straightforward about this, 
these are more applications than we would like to have in 
process. It would be better if we had fewer applications in 
process.

    Dr. Woodcock. I have given authorization to our 
manufacturing reviewers to hire 50 more people, temporary 
people, who are going to work on trying to get this down. But 
mainly this is going to be up to the manufacturers to submit to 
us approvable applications, and then we will be able in a cycle 
to approve them. If they still have deficiencies, then they 
have to go back and it takes longer.
    Senator Moran. The way, Doctor, that I understood your 
testimony is that what I described as a backlog really is 
applications that are pending that have been reviewed to some 
extent but not yet approved, sent back to the drug manufacturer 
for further actions on their part.
    Dr. Woodcock. That is correct. There are about 1,700 with 
the manufacturers.
    Senator Moran. And are those problems with the 
application--are they process in the proverbial sense? They did 
not cross the T and dot the I? Or these are substantive issues, 
did not provide the necessary justification for an FDA 
decision?
    Dr. Woodcock. We have tried to make these all substantive. 
Part of the changes we made for GDUFA was that we are calling 
the people all the time while reviewing their application--we 
call that information requests--so that these minor issues do 
not delay a decision on an application. And so we are back and 
forth. We send out thousands of these information requests and 
try to get the application fixed up as much as possible. But 
then when we send it out as a complete response, then the 
manufacturer has substantive work to do.
    Senator Moran. I have a series of other questions, but let 
me turn now to Senator Merkley.

                   EPINEPHRINE AUTO-INJECTOR PATENTS

    Senator Merkley. Well, thank you very much, Mr. Chair.
    You mentioned, Dr. Woodcock, that there is a competitor. I 
believe the name is Adrenaclick.
    Dr. Woodcock. Yes.
    Senator Merkley. So that competitor also has an injectable 
device.
    Dr. Woodcock. Yes.
    Senator Merkley. But you also mentioned that anyone who 
wishes to compete has to get around the patents that EpiPen or 
Mylan has. What is the difference in these two products, and 
how much of a barrier are those patents? And does Adrenaclick 
also have its own set of patents so the world of figuring out 
how to easily inject something is now wrapped up by these two 
companies?
    Dr. Woodcock. Well, we actually have approved over the 
years five different epinephrine auto-injectors. Three of them 
are not on the market right now. I do not know what 
Adrenaclick's patents might look like. We can get back to you 
on that. We do not know.
    [The information follows:]

    Adrenaclick was approved on November 25, 2009 as a supplement to 
the Twinject NDA. The manufacturer of Adrenaclick has chosen to market 
Adrenaclick without a trade name, i.e., as an `authorized generic' for 
Adrenaclick. An ``authorized generic'' is made under the brand name's 
existing NDA using the formulation, process, and manufacturing 
facilities approved for use by the brand name manufacturer. The 
labeling is changed to remove the brand name or other trade dress.
    The Orange Book does not currently list any patents for 
Adrenaclick.

    Dr. Woodcock. But that does not mean copies cannot be made. 
It simply means that because of the intellectual property 
rights, that they would either have to be challenged or an 
auto-injector would have to be made that performed similarly 
but did not use the technology.
    Senator Merkley. Precisely. But it sounds like you are 
saying there have been five different approaches that have all 
been approved at different points in time.
    Dr. Woodcock. None of them generics. Correct.
    Senator Merkley. So Adrenaclick has one of the authorized 
generics that you referred to, a version of itself, I gather. 
And EpiPen is planning to do so.

                        EPINEPHRINE DRUG PRICING

    What is the cost of the actual amount of epinephrine that 
is in one of these pens?
    Dr. Woodcock. The cost of the epinephrine is probably 
insignificant. There is a cost, obviously. It is a chemical. 
But it has been around for 100 years.
    Senator Merkley. So I have been told it is probably about 
$1. Does that sound feasible?
    Dr. Woodcock. That would be probably a generous estimate.
    Senator Merkley. So if I am somebody at risk for this 
challenge of my throat closing down and I am unable to breathe, 
then I would suffocate, can I legally acquire a little amount 
of the drug and put it into a syringe and inject myself?
    Dr. Woodcock. Yes. A doctor can write a prescription for 
you to have that available for you. I myself personally have 
treated patients because I ran an allergy clinic for a while, 
and I did not have an auto-injector. I injected them with 
epinephrine. The problem is if you are suffering an acute 
reaction and you are sick----
    Senator Merkley. You want to move fast.
    Dr. Woodcock. [continuing]. You got to move fast. And if 
you do not do this all the time, it is not something that is 
intuitive. So it is not as good as using an auto-injector.

                  EPINEPHRINE MARKETPLACE COMPETITION

    Senator Merkley. So I am challenged to understand why 
competition does not kick in more quickly. If someone out in 
our audience today said, there are three other companies that 
have approved auto-injectors, I will go to one of them, I will 
rent their technology, I will get a pen up on the market that 
will cost--instead of $600 for two pens, I will sell it for 
$200. I will make a ton of money. Why does that not happen? Is 
your agency so difficult to deal with that it is just a huge 
inhibiting factor to people who would ordinarily see an 
opportunity?
    Dr. Woodcock. Well, according to my staff here, we have 
approved four auto-injectors. So we cannot be too difficult. 
Not five but four. We cannot be too difficult to deal with.
    It is harder, though, to get a generic copy approved 
because of the patents that have to be----
    Senator Merkley. Right, but you said these others are no 
longer on the market. So somebody could conceivably make a 
purchase, license, rent the patent, pay a payment for the 
patent. And it is not happening. And yet, there is this vast 
amount of money being made.
    What is the barrier for entrepreneurs stepping into this 
gap? It just seems like it is a dysfunctional market. Let us 
say someone here wanted to do this. Would they have to go 
through an approval process through you from scratch even 
though the pen has already been approved?
    Dr. Woodcock. No. Companies frequently, as we were 
discussing earlier sell their rights to something to someone 
else, including the new drug application can be sold, and then 
picked up by someone else. They can reintroduce the product. 
They have to show us their manufacturing and so forth then, but 
they do not have to go through again showing safety and 
effectiveness.
    Senator Merkley. So when you ask yourself the question why 
has somebody not jumped into this gap, is it because in getting 
their manufacturing approved that that is so difficult that 
although there are bazillions of dollars to be made, they just 
think it is an unworkable process? What is this huge barrier to 
market entry when there are available patents out there that 
are not being utilized for an auto-injector?
    Dr. Woodcock. I do not know. We have approved--as I said, 
since GDUFA started, we have approved 2,207 approvals or 
tentative approvals for generics. So clearly, the barrier is 
not insuperable for many companies to get generics onto the 
market.
    Senator Merkley. I am hoping somebody with an 
entrepreneurial spirit will jump in here tomorrow and figure 
out how to create some competition here. We would like to see a 
generic certainly, but as you pointed out, these are pathways 
given other auto-injectors have been approved.
    My time is up. I am going to defer to my colleagues. But 
something is fundamentally difficult that is preventing 
ordinary investments and market entry from occurring, and I 
think we have to understand that better.
    Senator Moran. The Senator from Maine, Senator Collins.

                          AUTHORIZED GENERICS

    Senator Collins. Thank you, Mr. Chairman.
    Good to see you, Dr. Woodcock.
    I know that you are very familiar with the investigation 
that the Aging Committee under my leadership and Senator 
McCaskill's leadership has conducted into the pricing of 
certain prescription drugs.
    I want to follow up on your comments about Mylan's decision 
to introduce what is called an authorized generic of the 
EpiPen. I have to say that strikes me as gaming the system. 
Essentially what Mylan is doing, as you confirmed, is just 
changing the label on its product and then selling it for a 
lower price. But does that not have the effect of reducing the 
incentive for a true first generic to come onto the market?
    I know that you have approved others and that some have 
been recalled due to problems.
    But in general, the idea of a brand name company simply 
swapping the label on its product and then issuing it as a 
generic strikes me as greatly reducing the incentive for a true 
first generic to come on the market. Could you comment?
    Dr. Woodcock. I am no economist, but I would say that would 
depend on how much a generic company felt they could make in 
the market based on what they could price their generic at.
    In the Food and Drug Administration Safety and Innovation 
Act (FDASIA), I believe Congress asked us to require companies 
to tell us if they are making an authorized generic in their 
annual report and for us to post that information. And so far, 
we have noted 980 authorized generics that we have been 
notified about of different drugs. So it appears to be a 
relatively common practice in the industry.
    Senator Collins. And I think it is one, personally, that 
does need more examination as far as its impact on discouraging 
a true first generic or second generic to come onto the market.
    Let me switch to a different issue that came up in the 
course of our investigation, and that is, we found that certain 
drug companies were putting their brand name drugs into 
restricted distribution systems. And that made it difficult, 
according to our investigation, for generic companies to get a 
sufficient amount of the drug in order to conduct the 
bioequivalence studies that FDA requires.
    What can be done about that?
    Dr. Woodcock. Well, we agree. We have received over 100 
inquiries from generic companies about problems they have been 
having in getting enough of the reference listed drug. In some 
cases, this relates to REMS that we have, a restricted program 
for safety. However, we have tried to remedy that by writing a 
letter to the reference company saying use of the product for 
this purpose is acceptable and it does not violate the REMS. 
Nevertheless, companies even have their own restricted 
distributions outside of REMS, as well as the REMS, and clearly 
this is impeding the ability to obtain enough drug to compare.
    With respect to what could be done about it by Congress, we 
remain concerned that many of these drugs are so valuable that 
companies will do a great deal to delay generic competition. It 
is worthwhile. So any type of legislation that would have a lot 
of extra steps and so each one of those would be an opportunity 
to sue us or send us a citizen petition or say we did not do 
the process right or whatever and get into court and delay 
introduction of the generic or delay availability of that 
product. So I think in considering what you might do about 
this, you have to consider--fines and everything might simply 
be considered a cost of doing business because there is so much 
at stake in delaying generic competition.
    Senator Collins. I think this is another real problem 
because the system is not supposed to work that way. The REMS 
system is, as you said, safety-oriented. It is not intended to 
restrict distribution in a way that prevents the generic 
company from gaining access to a sufficient quantity of the 
drug so that they can do the bioequivalence studies.
    So I hope you will work with us to try to come up with 
something that does not have the kinds of unintended 
consequences that you said and yet prevents companies--and we 
found all sorts of examples of this and other means that 
companies were using to try to block or delay the introduction 
of generics.
    Thank you.
    Senator Moran. Senator Collins, thank you very much. And I 
know that your committee with your leadership has a significant 
interest in this topic, and I appreciate your presence today.
    The Senator from New Mexico, Senator Udall.

                           RISING DRUG PRICES

    Senator Udall. Thank you, Chairman Moran and Ranking Member 
Merkley.
    Dr. Woodcock, it seems like every few months, we hear about 
another pharmaceutical company raising the cost of a certain 
drug or device to a new astronomical price. The EpiPen auto-
injector is the most recent to draw national attention. The 
EpiPen has become so expensive that families in my home State 
of New Mexico and across the country are struggling to afford 
it, even though their doctors say they must carry it in the 
event of an allergic reaction. But Mylan, the manufacturer, has 
increased the price of the EpiPens in the United States by over 
480 percent since 2009.
    And I have received messages from many of my constituents 
in New Mexico who are directly impacted. I have heard from 
worried parents across the State, one of them like a woman name 
Paige Vest from Truth or Consequences, New Mexico. Her daughter 
suffers from a severe peanut and tree nut allergy. She needs to 
carry an EpiPen with her at all times to prevent a possible 
life-threatening reaction. Paige wrote to me about her family's 
struggles to pay for the medication. She even had to change 
jobs in order to get insurance that would help cover the cost, 
you know, change jobs in order to get the medication for her 
child.
    And I am also worried about the impact these price 
increases will have on families who can no longer afford the 
EpiPen. Linda Thompson from El Prado, New Mexico, wrote to me 
that because of rising costs in recent years, she has stopped 
buying and carrying an EpiPen. She is forced to go against the 
advice of her doctor who prescribed the EpiPen after a severe 
reaction to a bee sting. So no one should have to go without a 
medically necessary product because of how much it costs.
    And that is why I wrote to Commissioner Califf last week, 
along with members of the New Mexico congressional delegation, 
requesting that the FDA utilize all available resources to 
build a robust pipeline of EpiPen alternatives.
    You know, listening to those constituents, I would like you 
to answer for them because I think the real question they have 
of you and the FDA is how did we get to this point. What 
happened to create this situation, how we got into a monopoly 
situation that we are talking about? And could you just 
describe that as simply as possible how you think we got here? 
And is it not terribly troubling that this company now is 
further trying to encroach into the market because they are 
apparently going to put out a generic. So they are trying to 
keep the market to themselves. They have their own EpiPen that 
is brand named, but then they are going to put a generic out on 
the market. So could you try to answer that as simply as 
possible? How did we get here?
    Dr. Woodcock. Well, for most drugs, once they lose their 
patent protection and so they can have generics, most drugs do 
get generics. But some drugs do not. Either they have patents 
that--in this one, the EpiPen has patents that go through 2025. 
And so it is not easy to make a generic that does not infringe 
upon those patents and still works.
    In other cases, it might be a small market--I am talking 
about for other patients in New Mexico who have seen price 
rises--or a single source drug. In other words, only one 
company sells it.
    And so in all these cases, they do not have competition. 
And in the United States, that is what keeps prices down, is 
competition. So for many of these situations, when we have 
looked, there is some reason that competitors have not 
effectively entered the market and brought the prices down.

                     EPIPEN MARKETPLACE COMPETITION

    Senator Udall. And what is causing that? Because you said 
you have approved four of these, and yet, as Senator Merkley 
asked, why is somebody not stepping up and saying, you know, 
there is a lot of money to be made here? Who do you point to to 
say what has caused this monopoly situation that has these 
astronomical prices?
    Dr. Woodcock. Well, there is one other competitor to the 
EpiPen on the market.
    Senator Udall. Yes, this Adrenaclick.
    Dr. Woodcock. Yes. Several others were pulled off. One was 
pulled off for performance problems. For a drug like this in a 
situation like this, you want it to work. So you do not want to 
say, well, FDA should rush something through even though it 
might not work all the time because if that were your life that 
were at stake, you would want it to work every time. So we have 
to make sure that if there is competition here that it still 
works as an epinephrine auto-injector, and it is going to 
deliver the lifesaving medication when we have a life-
threatening anaphylaxis happening.
    Senator Udall. Mr. Chairman, just to wrap up, you mentioned 
the patents over and over again that seem to be part of this. 
And I know it is not in the jurisdiction of this committee, but 
I think that is something we really should be looking at, is 
what the patents are doing to create monopoly situations.
    But we appreciate your service and thank you very much for 
being here today with us.
    Senator Moran. I thank the Senator from New Mexico.
    I now recognize the Senator from Montana.

                          DRUG PRICE INCREASES

    Senator Daines. Thank you, Mr. Chairman, Ranking Member 
Merkley.
    Dr. Woodcock, thank you for coming here today.
    And we are here today because of huge spikes in the prices 
of some specific prescription medications. And I share Senator 
Udall's concerns, what he is seeing in New Mexico where we have 
seen a 400-percent increase in the price of that EpiPen. That 
has kind of been the poster child of late here as it relates to 
what is going on in pricing. It is a lifesaving drug. It is a 
delivery system that not only people in New Mexico rely on, 
people in Montana and all across the Nation.
    Without the competition, of course, on the market, these 
spikes will go unchecked. I am greatly concerned about the 
impact on Montanans, some of whom have to choose between buying 
their prescription drugs and buying food. We need to increase 
competition, as you have already mentioned, creating market 
checks on the price of drugs and decreasing costs for those who 
need them.

                   ENHANCING GENERIC DRUG COMPETITION

    In your testimony, you highlight the savings that generic 
drugs afford, saving some $1.68 trillion over the past 10 
years. In Montana, that has translated to $682 million saved in 
2014. For example, according to the Generic Pharmaceutical 
Association's forthcoming generic drug savings in the United 
States report, Lipitor, a common cholesterol drug--it was $3.29 
a pill before the generic was introduced in 2011. That generic 
now sells for 14 cents a pill, a 96-percent savings.
    So my question is, what are the FDA and the Office of 
Generic Drugs doing to incentivize the production of more 
generics, particularly when there is little or no competition 
while maintaining, of course, drug quality and drug safety?
    Dr. Woodcock. Well, what we do is, number one, we expedite 
applications where there is no competition. So if it is a first 
generic, if there is just a brand, we expedite that 
competition. And as I said, often nowadays with the modern 
program we have, we will approve multiple copies at once 
because that often will drive the price down more than a single 
copy. If there is just one generic, and the reference drug has 
been withdrawn, so we have a sole source situation, then we 
will expedite that as well--that application or multiple 
applications because we do not know which one is going to 
actually get approved.
    Senator Daines. So kind of going along that line of 
thinking, reducing the barriers to generics entering the market 
would clearly help create other examples like Lipitor by 
reducing the turbulence we see in the market and decreasing 
costs. The FDA has proposed a rule to modify labeling 
requirements for generics, but there are significant concerns 
that this would prevent some generics from actually getting to 
market. Since you have delayed the publication of the final 
rule now until next year, what revisions are you considering to 
help bring generics to the market?
    Dr. Woodcock. Well, this rule is not about helping to bring 
generics to the market. We got a lot of comments on the rule. 
We had a public meeting after the proposed rule was published, 
and we have received a large number of comments from the 
stakeholders and we are still evaluating those comments.

                 GENERIC DRUG USE FEE PERFORMANCE GOALS

    Senator Daines. In looking at what do you mean by 
turbulence in terms of a concrete example, it was brought to my 
attention that there are certain applications now being 
assigned what they call target goal dates instead of target 
action dates. As you know, a goal date is not binding, giving 
little clarity to the applicant. What are you doing to address 
those concerns?
    Dr. Woodcock. Well, under the agreement we made under the 
Generic Drug User Fee Act, we agreed to have goals for 2014, 
2015, and 2016. And so in 2016, there will be a goal of 10 
months, and if someone sends in October 1 of this year, if they 
send in an approvable application, it can be reviewed and 
responded to and on the market in 10 months.
    Senator Daines. But a goal date is not binding.
    Dr. Woodcock. Well, sometimes there are other factors that 
come in. We have goals. Our goal is we would do 90 percent of 
them within the 10 months. That is how our PDUFA program works 
too, Prescription Drug User Fee program.
    Senator Daines. So do you think by shifting more to these 
goal dates versus action dates, it would actually speed up the 
process and create more certainty?
    Dr. Woodcock. The earlier dates, the target action dates, 
were for the backlog that did not have any goals associated 
with it. Our agreement under that was we would take an action 
on 90 percent of those by the end of the 5 years, and we 
already did that. So we exceeded that by 15 months. We have 
acted on almost all of those.
    Senator Daines. My time is up, Dr. Woodcock.
    Just to conclude, I understand there is currently more than 
14,000 approved generics, and I believe that incentivizing new, 
safe, and effective generics and promoting competition is very 
important for Montanans and all Americans.
    So thank you for your thoughtful comments. I encourage you 
to facilitate this by reducing these barriers to entry and by 
providing stability for manufacturers to be able to plan 
effectively and to continue to bring safe and quality generic 
drugs to market. Clearly, we have seen a lot of great successes 
there.
    Thanks, Dr. Woodcock.

                     GENERIC DRUG APPROVAL PROCESS

    Senator Moran. Thank you, Senator.
    Doctor, you indicated earlier that you have the ability to 
prioritize within the backlog, and you listed a few criteria by 
which you might prioritize. You indicated in your comments to 
my colleague, the ranking member, you used the word ``only game 
in town.'' What you mean is little or no competition. Is that a 
criteria by which you can prioritize from that backlog?
    Dr. Woodcock. Yes.
    Senator Moran. And you do that?
    Dr. Woodcock. Yes, and it is not just the backlog because 
there really are not so many in there. Even an application we 
would get today or tomorrow or October 1, we would still try to 
prioritize that if it were a single source, like if there was 
only one drug on the market.
    Senator Moran. Okay.
    And you indicated in your testimony and in part in response 
to my questions that often substance within the application 
process, substance within that application is insufficient for 
an approval, and therefore that application is still pending 
and would be considered in my words part of the backlog. But it 
is really waiting on then the applicant to do something more to 
make that application more viable and potentially approvable. 
Is that a summary of what we are talking about?
    Dr. Woodcock. Yes.
    Senator Moran. And you indicated to me, which I was pleased 
to hear, that this is not about crossing the T's and dotting 
the I's. This is substantive issues as far as whether the drug 
application should be approved. And then again, you indicated 
that you let the drug companies know throughout the process 
where there might be problems. They have the opportunity then 
to correct those issues as the application is going through the 
process.
    Dr. Woodcock. That is correct.
    Senator Moran. Is that still true?
    Dr. Woodcock. That is correct.
    Senator Moran. And so it is not like starting over at the 
end. So you do not deny an application and say to the drug 
company, I am sorry you do not qualify, you do not get our 
approval, go fix something, and come back and apply again.
    Dr. Woodcock. No. What we do is send what is called a 
complete response. We do not send out denials. We send out a 
complete response. It says these are the things you must do 
before your application can be considered approvable. And that 
has to include the facilities. And often an application may 
have, say, 14 facilities around the world that they are relying 
upon, say, for testing this part of the manufacturing, this 
part of the packaging. We have to make sure all those 
facilities are in good standing. And so perhaps they may have 
to work on improving a facility--it might be in another 
country--or switching to a different facility. And these are 
the kind of problems they face sometimes.
    Senator Moran. Does that approval process involve 
inspection of a facility?
    Dr. Woodcock. Yes.
    Senator Moran. Or this is a paper process?
    Dr. Woodcock. There are a large number of facilities around 
the world that make drugs, generic drugs, for the United States 
or test the drugs or do the bioequivalence testing. So we try 
to have a schedule for inspecting those and inspecting them 
every several years on a regular basis. But sometimes there 
will be new facilities that will come in with the application 
or they will be doing something they never did before, like 
they will be making a sterile product, which is very different 
than making a tablet. And so we would go and inspect them as 
well. So sometimes if they have had a fairly recent inspection 
and are in good standing, we will not inspect them again.
    Senator Moran. Is there a common denominator for drug 
companies who are required to submit additional information 
during the approval process? Those that are in a, quote, 
backlog--is that a smaller company as compared to a larger 
company, someone who is new to the market, a new entrant to the 
pharmaceutical business?
    Dr. Woodcock. We wish. I mean, we have tried to discern 
this and what is causing this problem because before the 
Generic Drug User Fee program, almost no generic drugs were 
approved on the first cycle. They were all deficient. And often 
they went through four cycles. I think that was the median. So 
there was a tremendous amount of work and kind re-picking it up 
and looking at the application again, and it was a long period 
of time. Of course, many of them could submit before the 
patents expired, so they had some time to work on their 
application.
    So we are trying to do a lot of analysis to answer your 
question because we want to know that too. How can we remedy 
this situation?
    In PDUFA, the new drug side, the prescription Drug User Fee 
Act, we are way up to 85-90 percent first cycle approvals. So 
over the 20 years of that program, we have taught the industry 
what they need to do to send in an approvable application. And 
we meet with them before and so forth so that we can get 
through the application efficiently.
    Senator Moran. I will follow up on that as soon as I turn 
to Senator Merkley and he has concluded his questioning.

                       ANTICOMPETITIVE PRACTICES

    Senator Merkley. So the competitor that was taken off the 
market--I believe it was Auvi-Q--came off at their own 
decision--they were not forced off--roughly a year ago. Do we 
know if Mylan is paying them to keep that product off the 
market?
    Dr. Woodcock. I do not know anything about those business 
arrangements.
    Senator Merkley. Would that be legally allowed under the 
law?
    Dr. Woodcock. You know, what we do is refer these type of 
things to the Federal Trade Commission. You know, we get 
different inquiries and we find different things----
    Senator Merkley. I know you are not a decider on that type 
of issue, but I am sure you are familiar with the general law. 
Is that allowed under the law for one company to pay another to 
keep a device off the market?
    Dr. Woodcock. I do not know actually.
    Senator Merkley. You do not know?
    Dr. Woodcock. I am not a lawyer. I am a doctor.
    Senator Merkley. It certainly is the type of issue that has 
been widely discussed in the public sector of companies paying 
other companies to keep their products off the market.
    Dr. Woodcock. Okay.
    Senator Merkley. And also buying up other companies to keep 
their products off the market.
    So in your interest in seeing--you mentioned--and I do not 
want to put words in your mouth, but that essentially you 
referred to generics having a potentially powerful, positive 
effect on lowering the cost of drugs.
    Dr. Woodcock. Right.
    Senator Merkley. So in the interest, should Congress be 
looking at making sure that there are not strategies in which 
name brand drug companies keep generics off the market?
    Dr. Woodcock. Yes. We believe that we are subject to some 
of these, as Senator Collins was talking about with the 
problems getting the reference listed drug, the brand drug, to 
do the bioequivalence studies, sometimes using the REMS, our 
restricted program for safety, as a reason not to give the 
product out.
    Senator Merkley. Indeed, I was appalled to hear that, that 
somehow a name brand company can prevent their competitor from 
getting enough of the drug to do the very studies that you are 
requiring. And should that not be grounds for them being 
penalized in some way for essentially--that is another strategy 
to prevent a competitor legally entering the marketplace.
    Dr. Woodcock. Yes. Well, we have certainly been talking to 
members of Congress about these problems. We have a long 
history of citizen petitions, which Congress had taken some 
actions on before, filing of citizen petitions to prevent the 
availability of generics based on various scientific issues 
that are raised.
    Senator Merkley. Is Auvi-Q currently trying to get approval 
for a modified product to address the dosing issues that it 
had?

                                 AUVI-Q

    Dr. Woodcock. I am not allowed to discuss anything like 
that.
    Senator Merkley. So if they were attempting to do so, would 
you be prioritizing their application?
    Dr. Woodcock. If we were doing that, if another new drug 
application came in, because that is not a generic, those have 
a very rapid time frame already for review and approval.
    Senator Merkley. So we are talking about a combination 
product. The drug is already approved. So it is really just the 
device. You are saying it would be fast-tracked if they were to 
reapply with a modified device to address the dosage issue that 
they had previously.
    Dr. Woodcock. I am saying that it would be under the new 
drug review process, which is governed by the prescription drug 
user fee timelines, which is very speedy.

                  PRIORITIZATION OF DRUG APPLICATIONS

    Senator Merkley. You have authority in cases where there is 
market dysfunction to prioritize applications. Is that correct?
    Dr. Woodcock. Market dysfunction I do not think enters into 
our statutory language. What we have done under our procedures 
for generics is we prioritize for public health----
    Senator Merkley. Let me put it differently. When there is a 
single product in a marketplace and the costs are so high 
people cannot afford it, do you have the ability to help 
address that by prioritizing an application whether it is a 
competitor or a generic--a competitor name brand or a generic, 
put that at the top of the list to try to address a big problem 
faced by millions of Americans who cannot afford the drug and 
whose lives are at risk as a consequence? Do you have the 
ability to prioritize that?
    Dr. Woodcock. We do prioritize that for generics where 
there is a single source, whether it is----
    Senator Merkley. How about for a competitor?
    Dr. Woodcock. We do not have a procedure to do that.

             EPINEPHRINE AUTO-INJECTOR MARKETPLACE RE-ENTRY

    Senator Merkley. So we have heard some real horror stories 
about devices getting approved. So if a company comes back and 
they say, hey, we had a slight manufacturing defect that caused 
us to have a dosage problem, we have fixed it, here is our new 
version, are you going to send them out for clinical trials 
that cost $10 billion--I am exaggerating--and 10 years, or are 
they going to be able to get that modification approved and 
back on the market?
    Dr. Woodcock. If you are talking about an epinephrine auto-
injector, they really do not need clinical trials. This is 
not--you need to show that you are injecting the epinephrine 
where it is supposed to go and that you can do that reliably 
every time under emergency circumstances.
    Senator Merkley. Right. I am trying to get some sense of 
how much money, how much time for a slight modification of an 
injector, because their injector had a problem. Is that a big 
obstacle for them reentering the market?
    Dr. Woodcock. I do not know about a big obstacle. They may 
have to do----
    Senator Merkley. How much time? How much money in general 
terms? The public would like to understand how big the obstacle 
is posed by the FDA to enable the market to function. I 
understand it is very important that things work. It is also 
very important that there be a functioning system to allow 
products to get back on the market. How much time? How much 
money would it take?
    Dr. Woodcock. I would say the time might it take them, if 
they were able to solve--this theoretical company--a 
manufacturing problem, and they had to change things, depending 
on how they change their auto-injector, then they might have to 
do a human factor study again to make sure that people could 
use it properly. Or they might not. If the change was just 
inside, they might not have to do that. But if the change was 
how you actually went about injecting yourself, they might have 
to test that again on people to make sure that it would work 
for them.
    Senator Merkley. I am just hoping there is some common 
sense. We are talking essentially about a pre-loaded syringe 
that costs $600 and people cannot afford it. It should not be 
impossible to enter the market. I encourage you--I am just 
wrapping up, so I will turn this back to you--to ponder from 
that direction of whether there are unreasonably difficult, 
expensive procedures that make it very hard for competitors to 
enter the market because clearly, if it was easier, there would 
be people entering the market and we would not have this 
problem.
    And then we have all these tricks of the system in which 
the name brand is seeking to prevent those competitors. And if 
you essentially have procedures that are complicit in that, 
that is a problem. We really need to examine that very, very 
carefully because it is not this one drug. This is a whole 
systemic problem in our drug approval process, and the price of 
drugs are making health care the most expensive in the world 
here in the United States, out of reach to millions of 
Americans. They bypass their drugs because they cannot afford 
to buy them under their deductible. It is a very big deal.
    Thank you.

                     GENERIC DRUG APPROVAL WORKLOAD

    Senator Moran. Doctor, I think we are about to wrap up our 
hearing, assuming I do not talk so long that other members and 
other Senators arrive.
    Just a couple of follow-ups. I indicated in my opening 
statement that at least the understanding is that the FDA is 
close to finalizing negotiations with the industry on a new 
round of fees and regulatory requirements. You indicated in 
your response to my question that--again, it goes back to the 
definition of a backlog. This is a process by which it takes a 
number of steps.
    Dr. Woodcock. That is right.
    Senator Moran. Are you able to tell me? Is that part of the 
negotiations with the industry? From their perspective, I do 
not know one way or another whether they would say the same 
thing that you indicated. Were there issues that could be 
negotiated with the companies in this process that reduce the 
number of times it is necessary to have the application 
reconsidered?
    Dr. Woodcock. Well, I think that is definitely on their 
mind and our minds. To Senator Merkley's questions, one of the 
things that we need to do is get a process for generics where 
we give advice to complicated generics before they come in and 
send in an application. That is what we negotiated under the 
Prescription Drug User Fee Act for the new drugs, and that is 
something that there is great interest in, in having a program 
so that for these complicated things--it is not just a pill--we 
can interact with companies and give them advice and tell them 
what to do.
    So both this workload--let us not call it a backlog, but 
our large workload we have now, part of which is inherited from 
the things that are cycling multiple times, is on everyone's 
mind, and it is definitely part of our discussions, how to deal 
with that.
    Senator Moran. Can you report anything about the status of 
those negotiations, or is that beyond your----
    Dr. Woodcock. I could say with the industry, they have 
concluded. Obviously, there are many other steps. We would have 
to have a public meeting as described in the statute, and then, 
of course, we will hope to provide the consequences to 
Congress.
    Senator Moran. Is there a timeframe in which you would 
expect that consequences to Congress to occur?
    Dr. Woodcock. I think that was written in the statute. If 
you will excuse me, I will ask my colleague here.
    Sorry. I wanted to give you accurate information.
    We hope to post those notices soon, and then we would 
transmit to Congress by January.
    Senator Moran. And that is your expectation?
    Dr. Woodcock. I would certainly hope so, yes.

                      DUCHENNE MUSCULAR DYSTROPHY

    Senator Moran. I also mentioned that you were able--I know 
this is not a generic drug, but we were talking about Duchenne 
and the muscular dystrophy drug. It is not a generic, but at 
least the reports are that you found a way to accelerate the 
process. Is that an accurate analysis or statement or 
description of what occurred?
    Dr. Woodcock. The description of what occurred is that the 
product was approved under something called accelerated 
approval. That may be a little bit of a misnomer, but that is 
what it is called. What it means is you do not have clinical 
trials that showed the produce gave benefit to patients. You 
approve it on a surrogate endpoint that we feel is reasonably 
likely to predict clinical benefit. That is how we approved a 
lot of HIV drugs over the years, and cancer drugs and many 
other drugs have been approved under accelerated approval. Then 
the company has to prove with later studies that the product 
really does have the predicted benefit.
    Senator Moran. Is there anything to learn from that process 
that would apply to generics?
    Dr. Woodcock. I do not think so because that has to do with 
showing effectiveness, and generics get their effectiveness by 
showing they are the same as the reference drug.
    Senator Moran. So a different standard.
    Dr. Woodcock. Yes.
    Senator Moran. And the generic ought to be more easily met?
    Dr. Woodcock. Yes. The generic does not have to do clinical 
studies. In fact, they are not allowed to do clinical studies 
of efficacy or else they cannot be a generic.
    Senator Moran. Doctor, do you have anything you would like 
to tell us that we have not gotten from you from our 
questioning?
    Dr. Woodcock. Well, I do think that we are very focused on 
making sure that any drugs that can be approved and are safe 
and effective can get on the market, that the pathways are 
clear, that there are not unnecessary barriers to getting on 
the market. However, I would say that our standards have to do 
with making sure those drugs work for patients and that they 
are reasonably safe and that they are of adequate quality so 
that the drug supply in the United States is a very reliable, 
high quality drug supply. And we do try to expedite where we 
can to improve availability. We are sensitive to that.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Moran. Dr. Woodcock, thank you very much for your 
testimony today. In my view, this hearing was what a 
congressional hearing in most instances should be, an 
opportunity to be educated and to learn. And you have certainly 
helped me in that process.
    For members of the subcommittee, any questions that you 
would like to submit for the hearing record should be turned 
into the subcommittee staff within 1 week, which is Wednesday, 
September the 28th.
    And we would appreciate it, Doctor, if FDA could respond 
within 4 weeks thereafter.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
               Questions Submitted by Senator Jerry Moran
   safety protocols for products with risk evaluation and mitigation 
                           strategies (rems)
    Question. Who has the most appropriate expertise to determine the 
safety protocols necessary for safe bioequivalencey testing? For 
example, if a product has a REMS with elements to assure safe use, and 
the FDA has made a determination that those elements are necessary to 
ensure the benefits of the drug outweigh the risks (taking into account 
that the absence of those elements to assure safe use the agency would 
be unable to approve the product). Do these determinations fall under 
the control of the FDA, or can/should these issues be decided through 
the judicial process--ie with courts and juries?
    Answer. FDA determines what safety measures are necessary for 
approval of a drug product, including whether a risk evaluation and 
mitigation strategy (REMS) should be required for any particular 
product. A REMS will only be imposed if FDA--based on its assessment of 
the relative risks and benefits of the drug--determines that a REMS is 
necessary to ensure that the benefits of the drug outweigh its risks. 
If FDA makes a determination that a REMS is necessary for approval of a 
particular product, FDA also determines each of the specific elements 
that the REMS must contain in order to address the safety issues 
associated with the product.
    Given that FDA determines whether a REMS is necessary and what 
specific safety protections the REMS must contain, FDA has the most 
appropriate expertise to determine whether the protocols submitted by a 
generic company for bioequivalence testing contain safety protections 
comparable to those in the REMS.
                         cost of doing business
    Question. During questioning by Senator Collins about restricted 
distribution systems preventing access to samples by generic drug 
manufacturers, Dr. Woodcock indicated that a solution to this problem 
which included providing FDA with the authority to penalize brand drug 
manufacturers for denying access to samples with fines might not be 
effective, as brand drug companies might not alter their behavior and 
view the fines as ``a cost of doing business.'' It is my understanding 
that the FDA has the authority to penalize conduct beyond mere fines, 
including the levying of civil monetary penalties (CMPs).
    Are you aware of instances where brand drug manufacturers decided 
to pay civil monetary penalties to FDA and not correct their behavior 
and come into compliance with the FFDCA? In other words, are you aware 
of any instances where brand drug manufacturers decided purposefully to 
violate the act after the imposition of CMPs, and consider the CMPs as 
``a cost of doing business?''
    Answer. To date, FDA has not assessed penalties for brand drug 
manufacturers under the FFDCA, so we do not have specific examples of 
the type requested.
  risks of counterfeit and unauthorized drugs coming in from overseas
    Question. I understand that the FDA's Office of Criminal 
Investigations includes in its mission protecting American citizens 
from the risks of counterfeit and unauthorized drugs coming in from 
overseas. For example, in one case the FDA helped prosecute in 2013, 
the defendant smuggled more than $12.4 million in non-FDA approved 
chemotherapy drugs and injectable cosmetic drugs and devices. Many of 
these drugs were subject to strict temperature controls to protect drug 
potency, but the defendant shipped them without the dry ice used by 
legitimate distributors and one shipment took more than two weeks to 
arrive in Virginia from overseas during a heat wave in 2012. While not 
all of the investigations result in criminal convictions such as this 
one, they do all help impede this dangerous, illicit flow of drugs. Dr. 
Woodcock, I would appreciate your assurance that the FDA will continue 
to make it a priority to protect Americans in this manner. I would also 
appreciate periodic updates from the FDA on its enforcement activities 
in this area.
    Answer. FDA is committed to protecting U.S. consumers against 
unsafe and ineffective drugs, including those that come in from 
overseas. We recognize that the importation of unapproved drug 
products, some of which might be counterfeit or substandard, poses a 
risk to Americans' health. We are also aware that adverse events 
flowing from the importation of such unapproved products could lead to 
diminished confidence in FDA-approved products. The Agency is taking 
steps to bolster the security of the drug distribution system through 
its implementation of Title VII of the Food and Drug Administration 
Safety and Innovation Act and the Drug Supply Chain Security Act. 
Information about our implementation of these statutes is available on 
the Agency's Web site at http://www.fda.gov/AboutFDA/Transparency/
track/ucm328907.htm and http://www.fda.gov/Drugs/DrugSafety/
DrugIntegrityandSupplyChainSecurity/DrugSupplyChainSecurityAct/
ucm388726.htm, respectively. For information about our enforcement 
activities involving unapproved drug products from overseas, please 
visit the Web page for FDA's Office of Criminal Investigations: http://
www.fda.gov/ICECI/CriminalInvestigations/default.htm.
                                 ______
                                 
               Questions Submitted by Senator Jon Tester
    Question. What challenges does the FDA face when trying to improve 
the efficiency of the generic drug application review process?
    Answer. By far the biggest challenge FDA faces when trying to 
improve the efficiency of the generic drug application review process 
is multiple review cycles. Historically, it takes on average 3.8 review 
cycles to approve an abbreviated new drug application (ANDA). A review 
cycle begins each time an applicant submits an ANDA for FDA review. If 
the ANDA does not meet FDA's standards, then FDA will not approve it, 
but instead will communicate deficiencies to the applicant. The 
applicant then addresses the deficiencies and re-submits the ANDA in 
the form of an ANDA amendment to FDA. The back and forth continues 
until the ANDA is approved (or withdrawn).
    One reason for this, is known as the ``file first, fix later'' 
approach. The applicant does not know what FDA is looking for, submits 
an incomplete application, and relies on FDA as a consultant, 
iteratively, to improve the submission until it becomes approvable. The 
proposed GDUFA II agreement targets this problem. Among other things, 
the agreement would enhance the pre-ANDA program for complex products 
to clarify regulatory expectations earlier in product development and 
help applicants develop more ANDAs that are ``right the first time.''
    The other main reason for multiple review cycles is that the ANDA 
review process until recently was under-developed. FDA and Industry 
spent a great deal of time working together to improve it over the past 
several years. The proposed GDUFA II agreement is much more 
prescriptive about how each stage of the ANDA review process would 
work, from start to finish. Roles and responsibilities, sequencing, and 
timelines are clearly delineated. Enhanced communications would give 
applicants many more opportunities to address deficiencies within a 
review cycle, instead of deferring the work until a later review cycle.
    Question. Would increased funding help the FDA review generic drug 
applications more quickly, or does it need additional authorities from 
Congress? If lack of funding is an issue, to which specific programs or 
initiatives should the Appropriations Committee consider directing 
increased resources? If lack of authority is an issue, what legislative 
fixes should Congress consider?
    With respect to funding, FDA and industry recently negotiated a 
proposed GDUFA II agreement, pursuant to which industry would pay FDA 
approximately $493.8 million per year, adjusted for inflation, each 
year for the next 5 years. In exchange, FDA commits to achieve agreed-
upon metric goals for the review of generic drug submissions and make 
numerous other significant program enhancements.
    Additional funding directed to the generic drugs program would 
enhance FDA's capacity to support the review of generic drug 
submissions.
    With respect to new or modified authorities, FDA is currently 
evaluating the extent and nature of industry conduct intended to 
frustrate and delay generic competition.
    Question. What impact has the backlog of generic drug applications 
had on the prices of prescription drugs? How much of the rising costs 
of drugs is attributable to the backlog?
    Answer. First and most importantly, the generic drug program 
decreases, not increases, drug costs. According to the IMS Institute 
for Healthcare Informatics, generics saved the U.S. healthcare system 
$1,680,000,000,000 from 2005-2014. The generic drug program has been an 
extraordinary success at expanding access to affordable medicines.
    FDA does not agree that there is currently a backlog of generic 
drug submissions pending at FDA. There was a backlog of generic drug 
applications in fiscal year 12, prior to the start of the GDUFA 
program. At the beginning of fiscal year 12, about 2,800 submissions 
were pending at FDA and about 100 were pending with Industry. Pursuant 
to GDUFA, the Agency committed to take action on 90 percent of these 
pre-GDUFA backlog submissions by the end of fiscal year 17. FDA 
achieved that goal 15 months ahead of schedule.
    At present, there are about 2,200 applications pending at FDA. 
Virtually all applications submitted before fiscal year 16 are under 
active review, meaning FDA has communicated at least one deficiency to 
the applicant. FDA is currently achieving record levels of output, and 
these increases are expected to continue. While there are more 
applications than FDA would like to have in process, it is important to 
note, the generic pipeline needs to contain a certain volume of 
submissions. Zero submissions would indicate that no one is developing 
new generic products.
    There are also currently about 1,700 applications pending with 
Industry. FDA can't act on these submissions until applicants correct 
deficiencies and re-submit them to us. Forty percent of these 
applications have been pending with Industry for more than 8 months, 
and 27 percent of them have been pending with Industry for more than a 
year.
    Considering pending abreviated new drug applications (ANDA) is only 
part of the big picture.
  --65 percent of innovator drugs have some form of FDA-approved 
        competition.
  --For 24 percent of innovator drugs, FDA has not yet approved a 
        generic, because by law the innovator is still protected by 
        patents or exclusivity.
  --For 10 percent of innovator drugs, FDA has not approved a generic 
        because FDA has not received a generic application. These are 
        generally small markets with low reimbursement where companies 
        do not perceive an opportunity to make money.
  --For 2 percent of innovator drugs, there is a pending, unapproved 
        ANDA.
    Even after FDA approves a submission, a company may not market it. 
Generic companies frequently defer marketing pursuant to patent 
settlement (so-called ``pay to delay'') agreements. In addition, while 
marketing typically reduces price, it does not always.
    Question. For what commonly-used prescription drugs do patients not 
have access to an effective and interchangeable generic alternative? 
What steps can the FDA take to address this lack of generic 
alternatives?
    Answer. There are many commonly-used prescription drugs where FDA 
can lawfully approve a generic (because patent/exclusivity bars to 
approval have expired), and FDA has received an ANDA that is not yet 
approved.
    To increase the number of ANDA approvals, FDA proposes to 
reauthorize the generic drug user fee program. FDA also has funded 
regulatory science projects to help develop the science needed for 
generic drug development. In addition, the Agency is currently 
evaluating industry practices that delay access to generics.
    In many cases when there is no approved generic product, it is 
either because patent and exclusivity have not expired for the 
innovator product and FDA can't lawfully approve a generic or because 
FDA has not received a generic drug application in the first place. 
That is, the obstacles are often legal and economic, not regulatory or 
scientific. As for FDA, the Agency determines whether it can approve a 
generic but companies decide whether to market them or to defer 
marketing, sometimes pursuant to a settlement agreement with the brand 
drug company.
                                 ______
                                 
            Questions Submitted by Senator Patrick J. Leahy
    Question. One reason consumers face high drug prices is that some 
brand name pharmaceutical companies have used inappropriate delay 
tactics to limit the ability of generic competitors to enter the 
market. For example, some brands refuse to provide samples needed for 
testing by generic manufacturers. You discussed this issue briefly 
during the hearing and expressed concern about the incentives brands 
may have to use tactics such as these to delay market entry.
    Can you explain what role access to these samples plays with 
respect to market competition and lower cost drugs?
    Answer. Generic competition can significantly lower the price of a 
drug product. To obtain approval for a generic drug, however, the 
generic company must show, among other things, that its version of the 
drug product is bioequivalent to the brand drug (also called the 
``reference listed drug,'' or ``RLD''). This usually requires the 
generic company to do bioequivalence studies comparing their product to 
the RLD. To do these studies and submit a generic application, they 
need to get access to samples of the RLD.
    Typically, generic companies are able to get samples of the RLD 
through normal distribution channels (i.e., via wholesalers). But 
sometimes they cannot because limitations on the distribution of the 
drug are in place. RLDs may be unavailable through normal distribution 
channels because the brand company limits the distribution of the 
product on its own initiative. In other cases, a risk evaluation and 
mitigation strategy (REMS) with elements to assure safe use (ETASU) 
(such as a pharmacy certification requirement) might impact the way the 
product is distributed.
    Question. What is the magnitude of this problem?
    Answer. FDA has received more than a hundred inquiries from generic 
companies that want to develop generic drugs but tell us they are 
unable to do so because they cannot get supplies of the RLD to do 
testing. Many of these brand drug products are quite expensive. A 
significant majority are listed online at a retail price of over $600 
per patient per month, and many are in the range of thousands of 
dollars per patient per month. These inquiries have involved both REMS 
and non-REMS products.
    Question. What is the most effective way to assure that generic 
companies can obtain the samples necessary for bioequivalence testing? 
Is a legislative solution required?
    Answer. Legislation that creates a clearly defined pathway and 
legal obligation for RLD access, coupled with a strong remedy to deter 
brand companies from blocking access to samples of the RLD could help 
significantly to facilitate and expedite generic development.
    Question. What role should the FDA play in the process of obtaining 
samples by generic companies?
    Answer. FDA has issued draft guidance describing the Agency's 
current views on its role in facilitating the provision of RLD samples 
for bioequivalence testing (see draft guidance for industry on How to 
Obtain a Letter from FDA Stating that Bioequivalence Study Protocols 
Contain Safety Protections Comparable to Applicable REMS for RLD 
(Protocols Guidance), available at http://www.fda.gov/downloads/Drugs/
GuidanceComplianceRegulatoryInformation/Guidances/UCM425662.pdf).
    As described in the Protocols Guidance, in cases where limitations 
on the distribution of a drug product occur in connection with a REMS, 
FDA (upon request) reviews the bioequivalence study protocols, informed 
consent documents, and informational materials submitted by the generic 
company to ensure that they have safety protections comparable to those 
in the applicable brand REMS. Once we've determined that they do, we 
send the brand company a letter ensuring them that selling the RLD to 
the generic company for testing and development will not be considered 
a violation of the REMS.
    We also encourage companies to contact the Federal Trade Commission 
if they believe a company's refusal to sell samples to them constitutes 
anticompetitive behavior. This is a recommendation that we also make to 
companies that inquire about products for which the distribution 
limitations are voluntarily imposed by the brand company with no REMS 
in place (for which we do not conduct a protocol review).
    Question. Some have suggested that providing access to samples of 
prescription drugs with known safety risks to generic companies for 
bioequivalence testing endangers patients. Are these concerns well 
founded? Are additional protections, such as increased regulatory 
requirements, necessary to ensure patient safety?
    Answer. FDA does not believe that the concerns about bioequivalence 
testing are well-founded, nor does FDA believe that protections beyond 
those described in the Protocols Guidance are necessary to ensure 
patient safety. FDA notes that bioequivalence testing typically 
involves a relatively small number of human subjects and a small number 
of doses (often only one dose) and, therefore, a lower level of risk. 
The regulatory regime applicable to bioequivalence testing--including 
the exemption of most bioequivalence testing from the IND 
requirements--reflects the generally lower level of risk associated 
with bioequivalence testing when compared with other kinds of clinical 
testing that occur during the drug development process. Additionally, 
the protections in the REMS are designed to mitigate risks that occur 
during real world, every day use by patients, and safety concerns are 
likely to be lower in the more tightly-controlled context and limited 
scope of bioequivalence testing.
    Further, FDA regulations (at 21 CFR Part 56) require that before 
bioequivalence testing can begin, it must be reviewed and approved by 
an Institutional Review Board (IRB) to ensure that risks are minimized. 
The steps outlined in FDA's Protocols Guidance provide additional 
confirmation that the bioequivalence study protocols contain safety 
protections comparable to those in the REMS for the brand product. We 
do not believe that additional steps are necessary at this time.
    Question. Recent headlines have highlighted pharmaceutical company 
Mylan's dramatic price increase of the EpiPen auto-injector. With a 
more than 480 percent price increase on a two-pack of EpiPens since 
2009, consumers--including parents, first responders, and school 
leaders--have faced financial difficulty in obtaining this lifesaving 
and necessary drug. There are currently no approved generics on the 
market in the United States, but Mylan claims it will soon launch a 
generic EpiPen at a reduced price.
    Can you provide the Committee with an estimate for how many generic 
alternatives to the EpiPen are being reviewed by the agency and at what 
stage of review each product currently stands?
    Answer. To date, FDA has approved four epinephrine auto-injectors: 
EpiPen, Twinject, Adrenaclick, and Auvi-Q. Twinject is no longer 
marketed. Auvi-Q was voluntarily recalled by the manufacturer in 
October 2015. EpiPen is being marketed and has the large majority of 
market share at this time. The application holder for Adrenaclick has 
chosen to market Adrenaclick without a trade name, i.e., as an 
`authorized generic' to Adrenaclick. There are currently no approved 
generics for epinephrine auto-injectors.
    FDA is restricted from disclosing to the public confidential 
information about applications pending before the Agency. Although FDA 
may not disclose this information, a sponsor is able to disclose 
information about its products, and can share any communication 
received from FDA concerning any of its products. Teva and Sandoz have 
publicly acknowledged that they have submitted abbreviated new drug 
applications (ANDAs) listing EpiPen (epinephrine injection) as the 
reference listed drug (RLD). However, consistent with longstanding 
Agency practice, we do not discuss the substance of matters pending 
before the Agency. Such a practice helps to ensure the integrity of the 
review process.
    As a general matter, we note that FDA's Office of Generic Drugs has 
a prioritization and expedited review policy for certain generic drug 
applications, including potential first generics. This policy is set 
forth in the Center for Drug Evaluation and Research's Manual of Policy 
and Procedures (MAPP) 5240.3, Revision 2, ``Prioritization of the 
Review of Original ANDAs, Amendments and Supplements.''\1\ Pursuant to 
our prioritization policy, ANDAs for drugs from generic applicants that 
have ``first filer'' status or that are otherwise eligible to be the 
first generic approved are often prioritized and given expedited 
review.
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    \1\ For more information, please see http://www.fda.gov/downloads/
AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/CDER/
ManualofPoliciesProcedures/UCM407849.pdf.
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    Question. EpiPen is a drug/device combination product that 
incorporates a drug that is no longer under patent into a device for 
which Mylan still has patent protection. What is the process the agency 
uses to approve generic applications for drug/device combination 
products? What criteria are considered to determine equivalence? Are 
there any generic drug/device combination products on the market, 
including but not limited to epinephrine auto-injectors?
    Answer. In determining whether to approve an ANDA referencing a 
drug-device combination product such as EpiPen, FDA considers the same 
factors as are required for all ANDAs.\2\ More specifically, a generic 
drug applicant seeking approval of a drug-device combination product, 
such as an epinephrine auto-injector, will need to demonstrate that its 
proposed generic product is bioequivalent to the RLD. In addition, a 
proposed generic product must generally contain the same active 
ingredient, same route of administration, same dosage form, same 
strength, and (with certain permissible differences) same labeling as 
the RLD. An ANDA is generally not required to be the same as the RLD in 
certain other respects (e.g., it can differ in inactive ingredients or 
container closure system). However, where differences in these aspects 
of the products are significant enough that they require clinical 
studies to demonstrate safety or effectiveness of the proposed generic 
drug, or necessitate such significant labeling differences that the 
generic drug labeling is no longer ``the same'' as the RLD's, FDA will 
deny approval of the proposed generic product.
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    \2\ EpiPen is categorized as a drug-device combination product, 
with a drug primary mode of action. As a result, the Center for Drug 
Evaluation and Research (CDER) would be the lead FDA center from a 
review and jurisdiction perspective, while the Center for Devices and 
Radiological Health (CDRH) would be consulted for review of the device 
component of the product.
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    FDA's assessment of a device constituent part of a proposed generic 
product is made on an application-by-application and product-by-product 
basis in the context of the review of a specific generic drug 
application. FDA will evaluate the significance of any design 
differences between the innovator product (RLD) and a proposed generic 
product in light, among other things, of the intended users and uses of 
the product, including the environment in which such product is used 
and in light of the requirements for an ANDA to have, among other 
things, the same labeling as the RLD.
    As noted above, there are currently no approved generics for 
epinephrine auto-injectors. Although Mylan has announced publicly its 
intention to market an ``authorized generic'' of EpiPen,\3\ it is 
important to clarify that these statements have not indicated that 
Mylan is intending to market a generic version of EpiPen under an ANDA 
submitted under section 505(j) of the Federal Food, Drug, and Cosmetic 
Act (FD&C Act), which requires the submission of an abbreviated new 
drugapplication and FDA's approval of such application prior to the 
marketing of such generic product. Rather, Mylan intends to market an 
``authorized generic'' of EpiPen. An authorized generic is made under 
the brand name's existing new drug application using the formulation, 
process, and manufacturing facilities approved for use by the brand 
name manufacturer. The labeling of the brand name product is changed to 
remove the brand name or other trade dress. An authorized generic is 
not synonymous with an FDA-approved generic, the latter of which 
requires a separate application and approval from that of the brand 
name product.
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    \3\ See Mylan Press Release (Aug. 29, 2016), http://
newsroom.mylan.com/2016-08-29-Mylan-to-Launch-First-Generic-to-EpiPen-
Auto-Injector-at-a-List-Price-of-300-per-Two-Pack-Carton-a-More-than-
50-Discount-to-the-Brand-Product.
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    FDA has approved ANDAs for several different drug-device 
combination products. These include ANDAs for sumatriptan injection 
(RLD: Imitrex STATdose Injection), mometasone furoate nasal spray (RLD: 
Nasonex Nasal Spray), sumatriptan nasal spray (RLD: Imitrex Nasal 
Spray), triamcinolone acetonide nasal spray (RLD: Nasacort AZ Nasal 
Spray), fluticasone nasal spray (RLD: Flonase Allergy Relief Nasal 
Spray), and norelgestromin and ethinyl estradiol transdermal system 
(RLD: Ortho Evra Transdermal System).
    Question. In addition to expanding the availability of generic 
alternatives on the market in order to reduce out-of-pocket costs for 
consumers, it is critical that generic manufacturers take the necessary 
steps to ensure the safety of their products. In 2013, Congress urged 
the FDA to revise its rules to require generic drug manufacturers to 
promptly update their labeling to include new safety information. In 
response to the Supreme Court ruling in PLIVA v. Mensing, which held 
that generic drug companies could not be sued under state law over a 
failure to provide adequate labeling about potential drug side effects, 
consumers have had no remedy in the event they are injured as a result 
of outdated generic labeling.
    In November 2013, the FDA released a proposed rule which recognized 
the importance of generic manufacturers being held accountable for 
outdated and incorrect labeling. Unfortunately, the agency has yet to 
finalize this critically important Proposed Rule.
    Can you provide the Committee with an update on the agency's 
finalization of its Proposed Rule on generic labeling?
    Answer. The proposed rule is intended to improve the communication 
of important drug safety information to healthcare professionals and 
patients. FDA has received a great deal of public input from 
stakeholders during the comment period on the proposed rule regarding 
the best way to accomplish this important public health objective.
    FDA is carefully considering comments submitted to the public 
docket established for the proposed rule from a diverse group of 
stakeholders including: consumers and consumer groups, academia 
(including economists), healthcare associations, drug and pharmacy 
associations, brand and generic drug companies, law firms, state 
governments, and Congress, including comments proposing alternative 
approaches to communicating newly acquired safety-related information 
in a multi-source environment (see Docket No. FDA-2013-N-0500). These 
comments include a summary of FDA's meeting with the Generic 
Pharmaceutical Association (GPhA) on September 8, 2014, to listen to 
their comments and views regarding the proposed rule. In addition, FDA 
held a public meeting at which any stakeholder had the opportunity to 
present or comment on the proposed rule, or on any alternative 
proposals intended to improve communication of important, newly 
acquired drug safety information to healthcare professionals and the 
public. In the February 18, 2015 notice announcing the public meeting, 
FDA reopened the docket for the proposed rule until April 27, 2015, to 
allow the submissions of written comments concerning proposals advanced 
during the public meeting. FDA will determine next steps based on our 
analysis of comments on the proposed rule and additional information 
submitted as part of the public meeting.

                         CONCLUSION OF HEARING

    Senator Moran. Again, I thank everyone for their attendance 
today, and I will conclude this hearing. The meeting is 
adjourned.
    [Whereupon, at 4:12 p.m., Wednesday, September 21, the 
hearing was concluded, and the subcommittee was recessed, to 
reconvene subject to the call of the Chair.]
```