```

[Senate Hearing 114-730]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-730

   GENERIC DRUG USER FEE AMENDMENTS: ACCELERATING PATIENT ACCESS TO 
                             GENERIC DRUGS

=======================================================================

                                 HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                                   ON

 EXAMINING GENERIC DRUG USER FEE AMENDMENTS, FOCUSING ON ACCELERATING 
                    PATIENT ACCESS TO GENERIC DRUGS

                               __________

                            JANUARY 28, 2016

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions

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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                  LAMAR ALEXANDER, Tennessee, Chairman

MICHAEL B. ENZI, Wyoming		PATTY MURRAY, Washington		
RICHARD BURR, North Carolina		BARBARA A. MIKULSKI, Maryland
JOHNNY ISAKSON, Georgia			BERNARD SANDERS (I), Vermont
RAND PAUL, Kentucky			ROBERT P. CASEY, JR., Pennsylvania
SUSAN COLLINS, Maine			AL FRANKEN, Minnesota
LISA MURKOWSKI, Alaska			MICHAEL F. BENNET, Colorado
MARK KIRK, Illinois			SHELDON WHITEHOUSE, Rhode Island
TIM SCOTT, South Carolina		TAMMY BALDWIN, Wisconsin
ORRIN G. HATCH, Utah		        CHRISTOPHER S. MURPHY, Connecticut
PAT ROBERTS, Kansas			ELIZABETH WARREN, Massachusetts
BILL CASSIDY, M.D., Louisiana
                                   

               David P. Cleary, Republican Staff Director

         Lindsey Ward Seidman, Republican Deputy Staff Director

                  Evan Schatz, Minority Staff Director

              John Righter, Minority Deputy Staff Director

                                  (ii)

  
                            C O N T E N T S

                               __________

                               STATEMENTS

                       THURSDAY, JANUARY 28, 2016

                                                                   Page

                           Committee Members

Alexander, Hon. Lamar, Chairman, Committee on Health, Education, 
  Labor, and Pensions, opening statement.........................     1
Murray, Hon. Patty, a U.S. Senator from the State of Washington..     3
Collins, Hon. Susan, a U.S. Senator from the State of Maine......    22
Franken, Hon. Al, a U.S. Senator from the State of Minnesota.....    24
Cassidy, Hon. Bill, a U.S. Senator from the State of Louisiana...    25
Warren, Hon. Elizabeth, a U.S. Senator from the State of 
  Massachusetts..................................................    27
Roberts, Hon. Pat, a U.S. Senator from the State of Kansas.......    29
Casey, Hon. Robert P., Jr., a U.S. Senator from the State of 
  Pennsylvania...................................................    31
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah......    32
Murphy, Hon. Christopher S., a U.S. Senator from the State of 
  Connecticut....................................................    34
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode 
  Island.........................................................    36

                                Witness

Woodcock, Janet, M.D., Director, Center for Drug Evaluation and 
  Research, Food and Drug Administration, Silver Spring, MD......     5
    Prepared statement...........................................     6

 
                   GENERIC DRUG USER FEE AMENDMENTS: 
              ACCELERATING PATIENT ACCESS TO GENERIC DRUGS

                       THURSDAY, JANUARY 28, 2016

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:05 a.m. in 
room SD-430, Dirksen Senate Office Building, Hon. Lamar 
Alexander, chairman of the committee, presiding.
    Present: Senators Alexander, Murray, Collins, Hatch, 
Roberts, Cassidy, Casey, Franken, Whitehouse, Murphy, and 
Warren.

                 Opening Statement of Senator Alexander

    The Chairman. The Senate Committee on Health, Education, 
Labor, and Pensions will please come to order.
    Senator Murray and I will each have an opening statement. 
Then, we will introduce our panel. And after witness testimony, 
we will each have 5 minutes of questions.
    In December, President Obama signed into law the Every 
Student Succeeds Act, which proves our committee can work on 
difficult issues successfully. But a law that is not properly 
implemented is not worth the paper it is written on, which is 
why we are going to have strong oversight on that law and why 
we are having this hearing today, because we are here for the 
similar purpose of conducting oversight on the 2012 Generic 
Drug User Fee Amendments for the Food and Drug Administration 
Act. Specifically, those are the fees that are negotiated 
between the FDA and the generic drug makers to give the agency 
additional resources intended to speed the review of safe and 
effective generic drugs.
    This is the first oversight hearing since those amendments 
were passed in 2012. It comes at a crucial time. Since 2012, 
the FDA has received nearly $1 billion in user fees, and 
performance does not seem to be living up to Congress or the 
patient's expectations, as the number of generic drugs approved 
each year remains about the same. The user fee agreements are 
due to be reauthorized next year, and so now seems to be a good 
time to take a look at what has happened.
    The Generic Drug Program is a success story I think anyone 
would have to say. It was started 30 years ago by one of our 
committee members Senator Hatch and Representative Henry 
Waxman. It has increased competition and lowered drug prices. 
The program was created to make it easier for generic drugs to 
come in. Generic drugs, of course, are those drugs that are 
allowed to come into the market after a drug manufacturer's 
patent expires over a period of time.
    Generic drugs have to have FDA approval also, but they do 
not have to have full clinical trials, and so a lot of expense 
is avoided. As a result, more generic drugs on the market 
create competition and lower prices for consumers. Over the 
last 30 years, what we have seen is that, today, now, 88 
percent of prescription drugs purchased in the United States 
are generic drugs. Thirty years ago, that number was zero.
    However, in 2012, 26 years after the first law passed, it 
became clear the drug approval program needed an overhaul. More 
generic drugs were coming from overseas. Companies in China and 
India were inspected less frequently than American companies. 
This put patients at risk and companies at a disadvantage.
    There is a backlog of 4,700 applications waiting to be 
reviewed, and the median approval time to get review of the 
generic drug was 30 months. That far surpasses the 180-day 
timeframe for review that was laid out in the Hatch-Waxman 
amendments in 1984. And additionally, in 2012, many generic 
sterile injectable drugs were in shortage, causing doctors and 
hospitals to scramble to ensure patients were getting the best 
treatment possible.
    So Congress passed these amendments in 2012. The idea is 
based upon similar agreements with other manufacturers and the 
FDA. Congress anticipated that (1) generic drug facilities 
abroad would be brought to the same standards as facilities in 
the U.S.; and (2) that American patients would benefit from 
faster approval of generic drugs, and those two actions 
together would create more competition and lower the price for 
the drugs.
    But as I mentioned, in 2012, there was a backlog of 4,700 
pending applications, and the information we have shows that 
that has dropped to 3,500 applications. The HHS inspector 
general has reported that the FDA is improving its inspections 
abroad, but the troubling news is that it seems to take FDA 
longer to get generic drugs through the approval process. The 
median approval times have slowed from 30 to 48 months, and the 
original number hoped for was 180 days.
    As we discuss these issues today, I think it is important 
to keep in mind that drug pricing is a legitimate, real concern 
of Americans, but it is part of a larger concern of rising 
health care costs. The Congressional Budget Office announced 
this week that Federal spending for the major health programs--
Medicare, Medicaid, ET cetera--represents the largest fraction 
of the projected growth and mandatory spending in 2016.
    Two, while we are lowering prices, we want to make sure we 
continue to invest in and incentivize the development of 
lifesaving therapies. Congress has responded to that, Senator 
Murray's leadership and Senator Blunt especially, adding $2 
billion to the appropriation process for NIH. That is $32 
billion now for NIH in a year, but the pharmaceutical 
manufacturers spend $50 billion in a year coming up with new 
cures and treatments.
    And three, to try to balance restraining the growth of drug 
prices and encouraging investment and incentives for lifesaving 
therapies, we need to avoid unnecessary regulatory burdens that 
drive up costs, and we need to do our best to keep the 
marketplace competitive.
    For the last year, we have been working in a bipartisan way 
on ways to avoid unnecessary regulatory burdens. In the Aging 
Committee, Senator Collins and Senator McCaskill have been 
examining what improvements may be necessary to ensure that the 
FDA expedites applications for generic drugs to keep the 
marketplace competitive and drug prices down.
    But still, over the last 30 years, this is a success story. 
Generic drugs have gone from 0 to 88 percent of the 
marketplace. It is hard to imagine what the prescription drug 
market today would look like without them. I look forward to 
the testimony today.
    Senator Murray.

                  Opening Statement of Senator Murray

    Senator Murray. Thank you very much, Chairman Alexander, 
Director Woodcock. Thank you so much for being here, taking the 
time to be here, and for all your work on behalf of our 
families and our communities.
    I am really glad that we have the opportunity today to talk 
about the FDA's Generic Drug Program. This is a program that is 
absolutely critical to helping patients get safe, affordable, 
high-quality treatments more quickly. Generic drug user fees 
have significantly improved the FDA's ability to keep up with 
the large volume of generic drug applications, and it has 
helped build on the important work done in Hatch-Waxman to both 
incentivize innovation and expand families' access to the best 
treatments and cures available.
    There is, of course, room for improvement. While it was 
certainly a big undertaking to establish this program on an 
aggressive timeline, I hope that going forward we can encourage 
more communication and efficiency.
    It is important to remember that both Hatch-Waxman and FDA 
programs like GDUFA are the result of strong bipartisan work. 
And as we move forward, the reauthorization of the Generic Drug 
User Fee Program next year, it is critical that our committee's 
tradition of bipartisanship on these issues continue.
    I am looking forward to working with the Chairman and all 
of our colleagues to ensure the FDA has the tools and resources 
it needs to serve families and communities safely and 
effectively.
    Today's hearing is also an important opportunity to talk 
about the related larger issue of prescription drug access and 
affordability in our country. Nearly half of our country's 
population and the vast majority of our seniors take 
prescription drugs. But families across the country have made 
clear that paying for prescription drugs is an increasingly 
unsustainable burden.
    Nationwide, spending on prescription drugs was nearly $374 
billion in 2014. That is an increase of roughly 13 percent in 
just 1 year. And we expect to see continued cost growth, so we 
need to face up to some tough questions. For instance, how can 
we continue to afford to make critical new treatments widely 
accessible to patients who need them?
    Sadly, the status quo is working all too well for some bad 
actors at the very top, and they are doing everything but 
putting patients first. When someone like Martin Shkreli comes 
along to rig the system in favor of his profits above access 
without regard to research investments or patients' outcomes, 
we need to act.
    We are on the cusp of major breakthroughs in personalized 
medicine, and there is real momentum around tackling some of 
the greatest medical challenges of our time like cancer and 
Alzheimer's. And we have to ask ourselves how we are going to 
guarantee that we have the research, the market, and the access 
to make sure the benefits from that lifesaving progress are 
felt across the system as a whole.
    We also have to make sure that insurers are covering their 
fair share. We made important progress capping out-of-pocket 
spending as part of the Affordable Care Act, but there is more 
work to do to ensure that patients are not being saddled with 
too heavy a cost burden. And I am especially concerned that we 
must prevent carriers from discriminating against patients with 
the most expensive illnesses.
    In addition, if our goal is to make sure patients have 
access to and can afford the best, safest, most effective cures 
and treatments, we have to consider the resources we are 
putting into this effort because the truth is we simply cannot 
realize the goal of access, quality, and affordability without 
the FDA and the NIH at full throttle.
    If you want the FDA to be able to approve drugs more 
quickly without rolling back the gold standard of consumer 
safety and protection, then the FDA is going to need more 
support to do its job. And if you want the NIH to be able to 
drive innovation that delivers on so many patients' and 
families' hopes, that is also going to require sustained 
investment.
    I was pleased that Democrats and Republicans were able to 
come together to boost support for the NIH through the spending 
bill last year, but I see no reason to stop there. In fact, as 
I have made clear, I believe as part of our committee's effort 
to advance medical innovation for families, it is critical that 
we increase mandatory funding for the FDA and for NIH. And I 
hope that is something we can continue to work on together.
    As we look for ways to improve health care for families, 
making sure that prescription drugs are accessible and 
affordable has to be a top priority. Finding solutions will not 
be easy. These are challenges that cannot be ignored. And I am 
confident if we all come to the table ready to join together 
toward the common goal of ensuring our health care system works 
for families and puts their needs first, we can make real 
progress and deliver results that so many families and 
communities are waiting for.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Murray.
    I am pleased to welcome Dr. Janet Woodcock as our witness 
for today's hearing. Thanks, Dr. Woodcock, for being here. We 
know you are very busy running that important center at the 
FDA. Dr. Woodcock has been director of the Center for Drug 
Evaluation and Research at FDA, which performs the critical 
task of ensuring safe and effective drugs are available to 
improve the health of Americans.
    She has been at the FDA about as long as we have known 
generic drug approval, about 30 years, and she has led many of 
the FDA drug initiatives, including the Critical Path 
Initiative. She has been the Center's director since Congress 
passed the Generic Drug User Fee Amendments in 2012, so she is 
the leading expert on this program.
    Dr. Woodcock, we thank you for coming and look forward to 
your testimony. If you can summarize it in about 5 minutes, you 
have several Senators here who would like to have a 
conversation with you about your testimony.

 STATEMENT OF JANET WOODCOCK, M.D., DIRECTOR, CENTER FOR DRUG 
 EVALUATION AND RESEARCH, FOOD AND DRUG ADMINISTRATION, SILVER 
                           SPRING, MD

    Dr. Woodcock. Thank you, Mr. Chairman, Ranking Member, 
members of the committee. I am very pleased to be here to talk 
about this important issue.
    The Hatch-Waxman legislation that established a Generic 
Drug Program has been extraordinarily successful for the 
public. As Chairman Alexander said, about 88 percent of 
dispensed prescriptions right now are generic. It is estimated 
it has saved the public $1.7 trillion.
    In the last decade, the generic drug industry, being very 
successful, grew very rapidly, and it also globalizes 
manufacturing, making drugs all around the world. FDA's Generic 
Drug Review Program, in contrast, did not grow significantly, 
and we fell behind in both review and inspection capacity, and 
a backlog accrued and began to buildup of pending applications.
    In response to this, in 2012, Congress enacted GDUFA 
reflecting a negotiated agreement between the industry and the 
FDA to address this and modernize the program. GDUFA is a 5-
year program during which industry would pay $300 million a 
year in fees for service, and FDA would attempt to meet a 
progressively more difficult series of performance measures 
that have to do with the review, but many other activities as 
well that are summarized in my testimony.
    In the 3 years since this was enacted, FDA has met and in 
many cases exceeded all the GDUFA performance goals that have 
been established. This has been a formidable task. In these 3 
years, we have been managing over 6,000 generic drug 
applications, about 2,500 that were piled up at the start of 
the program that we had not gotten to and then almost 3,000 
that were submitted since that time, far exceeding expectations 
for the number of applications that would be submitted each 
year.
    Over 90 percent of all these applications have received 
some review by the FDA at this point, 90 percent of the 6,000. 
They have received some kind of communication also, and over 
1,700 have been approved or tentatively approved. We 
tentatively approve when we cannot approve yet because patent 
is still blocking a full approval.
    Last month alone, we approved or tentatively approved 99 
generic drug applications. How this was accomplished is 
detailed in my written testimony. It is a very complicated 
picture. It required us to rebuild the entire program from the 
ground up. But none of this could have been done without the 
incredible dedication and passion of a lot of people at the 
FDA. I will tell you, Mr. Chairman and Ranking Member, that the 
people at FDA share your passion for ensuring that the families 
and communities in this country have access to affordable drugs 
where at all possible.
    I would really like to publicly thank all the people who 
worked so hard and so long over the past 3 years to make this 
program work. It has been an incredible effort. The staff in 
the Office of Generic Drugs, who have worked extensively long 
hours over time, continued, got the job done; the staff in the 
newly formed Office of Pharmaceutical Quality that has totally 
revamped how we do the quality review; the staff in the Office 
of Regulatory Affairs, which is our field organization that not 
only has ramped up and hired and done more inspections but 
actually volunteered and helped do some of the review work so 
we could get these applications reviewed; and all the other 
people who pitched in. And we had people in our laboratories 
and ORA laboratories who put aside their experiments, who put 
their experiments on hold so they could review parts of generic 
drug applications that were qualified to review.
    The heroic staff, who really launched our new informatics 
platform, we all know the story about government IT, huge IT 
implementation. It is never pretty. And we had multiple legacy 
systems. All the data had to be transformed and cleaned up and 
put into a single system. And we were in the depths of despair 
a few times, but we have gotten through that. We are running 
off a new IT system. It has already proven its worth, and I 
thank them because they really went through a lot.
    The financial staff, who had to set up a fee collection 
system from scratch and collect all these fees and allocate 
them appropriately; and our HR and admin staff, who helped us 
hire over 1,000 people, more people to get this job done, we 
would not have done it without all of them. And I think we owe 
them a great deal of thanks for making this program work.
    Now, discussions about the backlog and so forth I would 
like to have in our back-and-forth conversation because this is 
a complicated issue, but I think the news is good news. It is 
not bad news. And I recognize that there remain a number of 
challenges that we all need to address collectively, but I am 
really sure because we have gotten through the worst of this 
that we can deal with the challenges we have ahead.
    I really look forward to your questions. Thank you.
    [The prepared statement of Dr. Woodcock follows:]
               Prepared Statement of Janet Woodcock, M.D.
                              introduction
    Chairman Alexander, Ranking Member Murray and members of the 
committee, 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), which is part of the Department of Health and Human 
Services (HHS). Thank you for the opportunity to be here today to 
discuss FDA's implementation of the Generic Drug User Fee Amendments of 
2012 (GDUFA).

    Historically, the generic drug program has been a great success.

    The generic drug industry has grown from modest beginnings into a 
major force in health care. According to the IMS Institute for 
Healthcare Informatics, generic drugs now account for 88 percent of 
prescriptions dispensed in the United States, and saved the U.S. health 
system $1.68 trillion from 2005 to 2014.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    This success brought new challenges.

    Over the last several decades, the generic industry, the number of 
generic drug applications (known as ``Abbreviated New Drug 
Applications'' or ``ANDAs'') submitted to FDA for review, and the 
number of foreign facilities making generic drugs grew substantially. 
As a result, FDA's generic drug program became increasingly under-
resourced. Its staffing did not keep pace with the growth of the 
industry.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    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.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                            solution: gdufa
    After multiple attempts, FDA and the generic industry developed a 
proposal for a generic drug user fee program and submitted it to 
Congress. Congress enacted it as part of the Food and Drug 
Administration Safety and Innovation Act of 2012.
    Under GDUFA, industry agreed to pay approximately $300 million in 
fees each year of the 5 year program. In exchange, FDA committed to 
performance goals, the specifics of which are contained in the Generic 
Drug User Fee Act Program Performance Goals and Procedures agreement 
that was negotiated with industry (``GDUFA Commitment Letter'') \1\. 
Because of the amount of hiring, restructuring, and catch-up needed, 
performance goals were set to commence in the later years of the 
program. The GDUFA performance goals with respect to ANDAs, amendments 
to ANDAs, and prior approval supplements (PAS) \2\ are timeframes by 
which FDA is to take a ``first action'' on an application, by either 
granting an approval or tentative approval,\3\ 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 
\4\ the application. When deficiencies are identified, industry usually 
responds by correcting them and resubmitting the application.
---------------------------------------------------------------------------
    \1\  http://www.fda.gov/downloads/ForIndustry/UserFees/
GenericDrugUserFees/UCM282505.pdf.
    \2\ A prior approval supplement is a post approval change requiring 
supplemental submission and approval prior to distribution of the 
product made using the change.
    \3\ Tentative approval applies if a generic drug product is 
otherwise ready for approval before the expiration of 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.
    \4\ A ``refuse-to-receive'' decision indicates that FDA determined 
that an ANDA is not sufficiently complete to permit a substantive 
review.

                                    Chart 4. Major GDUFA Performance Goals**
----------------------------------------------------------------------------------------------------------------
                Goals                      Fiscal year 2015         Fiscal year 2016         Fiscal year 2017
----------------------------------------------------------------------------------------------------------------
Original ANDA........................  60 percent in 15 months  75 percent in 15 months  90 percent in 10
                                                                                          months.
Tier 1 first major amendment.........  60 percent in 10 months  75 percent in 10 months  190 percent in 10
                                                                                          months.
Tier 1 minor amendments (1st-3d).....  60 percent in 3 months*  75 percent in 3 months*  190 percent in 3
                                                                                          months*.
Tier 1 minor amendments (4th-5th)....  60 percent in 6 months*  75 percent in 6 months*  90 percent in 6
                                                                                          months*.
Tier 2 amendment.....................  60 percent in 12 months  75 percent in 12 months  90 percent in 12
                                                                                          months.
Prior approval supplements...........  60 percent in 6 months*  75 percent in 6 months*  90 percent in 6
                                                                                          months*.
ANDA teleconference requests.........  Close-out 200..........  Close-out 250..........  Close-out 300.
Controlled correspondences...........  60 percent in 4 months*  70 percent in 2 months*  90 percent in 2 months.
ANDA, amendment and PAS in backlog on                Act on 90 percent by end of fiscal year 2017.
 Oct 1, 2012.
----------------------------------------------------------------------------------------------------------------
*10 months if inspection required.
**Performance goals in the chart means FDA should take an action on a certain percent of applications, etc.
  within the timeframes listed; it does not mean FDA should approve applications, etc. within such timeframes.

    To date, FDA has met or exceeded all performance goals outlined in 
the GDUFA Commitment Letter.
            actions on pre-gdufa (``backlog'') applications
    A major commitment of GDUFA 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 PASs. As Chart 5 indicates, to date, FDA has completed 
first actions on 84 percent of ANDAs and 88 percent of PASs. And so, 
FDA is well ahead of schedule in achieving the GDUFA goal to 
significantly reduce the backlog, and our ultimate goal of eliminating 
it.

      Chart 5. Percentage of Backlog Applications with First Action
                  First Actions 10/1/2012 to 12/31/2015
------------------------------------------------------------------------
             Actions                     ANDAs                PAS
------------------------------------------------------------------------
Number with First Action**......              2,414               1,666
    Percentage Complete.........         84 percent          88 percent
Approval........................                609                 959
Tentative Approval..............                151                   4
Complete Response with                        1,384                 465
 Inspection*....................
Refuse to Receive...............                 69                   2
Withdrawn Applications..........                201                 236
------------------------------------------------------------------------
*Complete Response with an Inspection is a written FDA communication to
  an applicant usually describing all of the deficiencies that the
  agency has identified in an application that must be satisfactorily
  addressed before it can be approved.
**Numbers are based on current data and will be further scrubbed for
  formal reporting purposes.

    Some of these backlog applications had been pending or in review 
for a long time prior to GDUFA. At this point in time, as FDA acts on 
one of the outstanding backlog applications, the ``time to approval'' 
of such application will be recorded as, at minimum, 40 months (i.e., 
we now are 3 years and 4 months (40 months) into GDUFA implementation). 
This helps to explain the often-quoted 42 month approval time, which 
does not apply to post-GDUFA applications as explained below.
    Moreover, the filing backlog for ANDAs has been eliminated. 
``Filing'' is where we evaluate if a drug sponsor's submitted 
application is sufficiently complete to permit FDA's substantive 
review. In August 2014, we had a filing backlog of over 1,100 
applications. Now that backlog is gone.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

            actions on post-gdufa original applications \5\
---------------------------------------------------------------------------
    \5\ In this context, ``Original Applications'' refer to the first 
ANDA submitted, as opposed to a subsequent amendment or supplement to 
the ANDA.
---------------------------------------------------------------------------
    In addition to the pre-GDUFA backlog applications, nearly 2,500 
applications were submitted in fiscal year 2013 and fiscal year 2014 
after GDUFA had commenced. Per the GDUFA Commitment Letter, these 
fiscal year 2013 and fiscal year 2014 applications have no GDUFA goal 
dates. Notwithstanding this, FDA assigned internal goals, called 
``Target Action Dates'' (TADs), to both the pre-GDUFA backlog 
applications and to the fiscal year 2013 and fiscal year 2014 
applications and has been aggressively reviewing them.
    Under the GDUFA Commitment Letter, applications submitted in fiscal 
year 2015 have a 15 month ``first-action'' goal date. Goal dates 
represent a paradigm shift. They substantially improve the speed and 
predictability of review. So, any concerns about delayed competition in 
the generic space pertain to prior years, when our backlog was 
accumulating, and not to applications with GDUFA goal dates.
    Importantly, if the ANDA submission is a potential ``first 
generic'' or could mitigate a drug shortage, its review is expedited. 
The performance goals for those generic applications submitted in the 
first few months of fiscal year 2015 are just coming due. We are on 
track to meet or exceed our obligations under the GDUFA Commitment 
Letter relative to these applications and already have approved or 
otherwise acted on some applications submitted in fiscal year 2015.
    Applications submitted in fiscal year 2016 also have a first-action 
goal date of 15 months, with the Agency committed to reviewing a 
greater percentage of generic applications within the timeframe 
specified.
    The cumulative result of all this effort is a huge increase in the 
productivity of the generics program. As Chart 7 indicates, we ended 
last year at a new monthly high of 99 approvals and tentative approvals 
in December.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Of course, a major goal of GDUFA is timely approval of affordable, 
high-quality generic drugs. FDA's success in implementing the 
Prescription Drug User Fee Amendments (PDUFA) program--the user fee 
program for new drugs begun in 1992--provided the Agency with valuable 
experience that enabled us to rapidly build a modern generic drug 
review process once sufficient resources were made available through 
user fees. FDA is now on track to achieve the throughput needed, with 
sustained levels of record or near-record approvals in the third and 
fourth quarter of 2015.
             prioritization of first generics applications
    We recognize that certain types of applications merit priority 
attention based on their public health significance.
    For example, we consider ``first generics'' to be public health 
priorities, as they can lead to increased patient access. First 
generics are just what they sound like--the first generic versions of a 
drug to enter the market. Under GDUFA, beginning in fiscal year 2015, 
each of these first generic submissions automatically receives a 15 
month goal date. FDA has worked hard to provide an even faster review 
for potential first generics. Because they are public health 
priorities, we expedite their review, like an express lane at the 
supermarket.
    Thanks to GDUFA, we made substantial first generic program 
improvements. We opened a docket to solicit technical input; issued a 
public-facing, transparent prioritization policy; \6\ formed a team to 
expedite the review of first generics; trained review staff; and 
enhanced our computer systems to streamline the process.
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    \6\  http://www.fda.gov/downloads/AboutFDA/CentersOffices/
OfficeofMedicalProductsandTobacco/CDER/ManualofPoliciesProcedures/
UCM407849.pdf.
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    Potential first generics are approximately 15 percent of our 
overall workload. All of these have been going in the ``express lane.'' 
Over the past 3 years we have approved hundreds of first generics for 
over 200 new drug products. Significant first generic approvals for 
2015, and the indications (abbreviated) for which these products were 
approved, are listed on the next page.

              Significant First Generic Approvals for 2015
------------------------------------------------------------------------
           Brand (generic name)               Indications (abbreviated)
------------------------------------------------------------------------
Abilify (aripiprazole)...................  Schizophrenia, Bipolar
                                             Disorder.
Fusilev (levoleucovorin).................  Supports cancer treatment.
Enablex (darifenacin)....................  Overactive bladder.
Lotronex (alosetron).....................  Irritable bowel syndrome.
Zyvox (linezolid)........................  Pneumonia, serious
                                             infections.
Tygacil (tigecycline)....................  Pneumonia, serious
                                             infections.
Vagifem (estradiol)......................  Menopause.
Integrelin (eptifibatide)................  Heart attack.
Xenazine (tetrabenazine).................  Huntington's Disease.
------------------------------------------------------------------------

              progress on additional important gdufa goals
    In addition to reducing the backlog, acting on post-GDUFA 
applications, and approving first generics, FDA is also achieving other 
important GDUFA goals.
    One goal addressed risk-based inspection parity for foreign and 
domestic facilities. Before 2012, the law required us to inspect 
domestic facilities at a 2-year interval, but was silent on frequency 
for foreign establishments, regardless of their relative risk. GDUFA 
directs us to target inspections globally on the basis of risk. We are 
on track to achieve the goal of risk-based inspection parity between 
foreign and domestic facilities by the end of fiscal year 2017.
    GDUFA also established goals for our review of PASs. PASs are 
important because they enable flexibility and improvements for generic 
drug manufacturing. To date, we have substantially exceeded GDUFA PAS 
goal of 60 percent reviewed within 6 months if an inspection is not 
required and 10 months if an inspection is required.

    There are also GDUFA goals for responding to controlled 
correspondence. Controlled correspondences are product development 
questions that FDA answers to help companies develop applications. The 
GDUFA goal for fiscal year 2015 was to respond to 70 percent within 4 
months of submission. As noted in Chart 9, we substantially exceeded 
our commitments in this area.

    We also had a significant backlog of controlled correspondence from 
before goal dates started. We have eliminated that backlog.

                   how did fda achieve these results?
Deep, foundational restructuring.
    We achieved these results by building a modern generic drug 
program.
    This involved major reorganizations. We reorganized the Office of 
Generic Drugs and elevated it to ``Super-Office'' status, on par with 
the Office of New Drugs. We established a new Office of Pharmaceutical 
Quality \7\ to integrate the quality components of the review.
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    \7\ http://www.fda.gov/AboutFDA/CentersOffices/
OfficeofMedicalProductsandTobacco/CDER/ucm418347.htm.
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    We developed an integrated informatics platform to support the 
generic drug review process. It is a significant improvement over our 
fragmented, legacy systems, and has enhanced our productivity.
    We hired and trained over 1,000 new employees, achieving our GDUFA 
hiring goals well ahead of schedule.

Flexible Approach: Communications and Transparency
    We also took a flexible approach to managing the program in ways 
that benefit generic drug sponsors and, ultimately, patients.
    One example of fine-tuning the process to speed approvals is the 
``Information Request'' process. As originally agreed during the GDUFA 
negotiations, FDA was to package all deficiencies found in the review 
of an application and provide them to the applicant in a complete 
response letter. But that turned out not to be a helpful approach and 
industry asked us to send them information concerning individual 
deficiencies on a rolling basis, instead of consolidating them all into 
one package. This would help industry correct deficiencies in ``real 
time.'' We agreed. In fiscal year 2015, we issued over 4,700 
Information Requests.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    At industry's request, we communicated ``Target Action Dates'' 
(TADs). As previously described, TADs are our internal deadlines for 
action on all applications without goal dates. Although GDUFA did not 
require the Agency to develop TADs or communicate them to industry, we 
understand that they help companies plan product launches, spurring 
timely access to generics.
    We also reacted to much larger than expected ANDA submission 
volume. As the GDUFA Commitment Letter stated, GDUFA review goals and 
planning were based on the assumption that the Agency would receive 
approximately 750 ANDAs per year. We budgeted and planned with this 
projection in mind. However, in fiscal years 2012, 2013 and 2014, we 
received over 1,000, nearly 1,000, and nearly 1,500 applications, 
respectively. We had to modify our planning and execution accordingly.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    In addition, we increased our output of product-specific guidances. 
These guidances clarify our expectations concerning specific products 
so industry can develop and obtain approval of generic versions of 
branded drugs more quickly.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                           ongoing challenges
    We do have some ongoing challenges. The first relates to submission 
quality. Historically, it has taken on average about 4 review cycles to 
approve an ANDA as a result of deficiencies by generic drug sponsors in 
submitting complete and quality applications (see Chart 15). This has 
resulted in the submission of numerous amendments to correct 
deficiencies in the original ANDAs and comprises a huge amount of re-
work for FDA and industry alike. Currently, for example, nearly 900 
applications are back with industry awaiting resubmission to correct 
deficiencies in the original applications. New filing policies will 
help, but more work by both the Agency and industry will be necessary 
to have the filings be ``right the first time.''
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    As noted in the public minutes \8\ published as part of the GDUFA 
II negotiations now underway, FDA and industry are discussing a pre-
ANDA process by which FDA and industry would address approval 
challenges for particular drugs prior to ANDA submissions, which could 
make a big difference in the completeness and quality of applications.
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    \8\  http://www.fda.gov/ForIndustry/UserFees/GenericDrugUserFees/
ucm256662.htm.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Improvement may take some time. As Chart 16 shows, in the first few 
years of the PDUFA program, the first cycle approval rate dropped as 
low as 23 percent. Now it is 95 percent. Achieving this was the result 
of many years of work on standards and expectations.
    Second, there is a need for more research in the generics space. 
Some drugs lack generic competition because there is no convincing 
bioequivalence test method available. In these instances, a more 
extensive clinical study is needed to show equivalence of a generic to 
a brand name drug. Similarly, methods for showing chemical sameness for 
certain complex drugs are not available. GDUFA provided funding for 
research efforts to work out these problems. So far, GDUFA has funded 
$34.9 million in research programs that will open up previously blocked 
pathways. However, scientific research takes time, and results will 
need to be translated into guidance for industry.
    Third, shared system Risk Evaluation and Mitigation Strategies--or 
REMS--pose challenges. REMS are used to ensure that the benefits of 
drugs outweigh their risks. The statutory requirement that REMS 
programs that include elements to assure safe use (ETASU) be 
implemented through a ``single shared system'' relies on brand and 
generic companies to agree on such a system before generic drugs may 
come to market. This is challenging to implement and frequently results 
in blocking generic competition. We would welcome the opportunity to 
discuss possible solutions to this problem with you.
    Fourth, to better assure quality in an increasingly globalized 
industry, FDA is undertaking major changes in quality regulation. 
CDER's Office of Pharmaceutical Quality, FDA's Program Alignment Group 
\9\ and the International Council for Harmonisation \10\ are all 
driving major changes, and FDA is pursuing mutual reliance discussions 
with the European Union. As a result of this work and collaborative 
effort, the public can be assured that FDA will hold generic products 
to the same quality standards as brand drugs, no matter where they are 
manufactured or tested.
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    \9\ http://www.fda.gov/AboutFDA/CentersOffices/ucm392733.htm.
    \10\ http://www.ich.org/home.html.
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                               conclusion
    I am extremely proud of what the FDA staff has accomplished in 
implementing GDUFA. Getting to where we are today has taken an enormous 
amount of work and above-and-beyond dedication by many people over the 
past 3 years. I have no doubt that we will exceed the goals initially 
established for this program.
    GDUFA II discussions between the Agency and Industry are underway 
and constructive. We are excited and positive about the opportunity to 
make significant program improvements.
    Thank you for the opportunity to describe what we've accomplished 
over the past 3 years. I look forward to your questions.

    The Chairman. Thank you, Dr. Woodcock. We will now begin a 
series of a round of 5-minute questions.
    Dr. Woodcock, I think all of us on the panel, maybe every 
Senator interested in drug prices that are as low as is 
reasonable, the statutory mission of the FDA is safe and 
effective drugs; it is not to set drug prices. Am I correct?
    Dr. Woodcock. You are correct.
    The Chairman. Is it also correct, though, that one of the 
effects of--and that you just said in your testimony, over the 
last 30 years with the Hatch-Waxman amendments and the generic 
movement that has gone from 0 to 88 percent has been a massive 
reduction or avoidance of higher drug prices.
    Dr. Woodcock. That is correct.
    The Chairman. And did you say $1.7 trillion in savings?
    Dr. Woodcock. That has been estimated. I am sorry. One 
point seven trillion has been estimated.
    The Chairman. One point seven trillion dollars. And it 
would make sense, then, that we should focus our attention on 
ways to continue to make generic drugs available to as many 
people as possible. Two ways we have sought to do that in the 
committee are to avoid unnecessary regulatory burdens and to 
make sure we have a competitive marketplace where prices are 
low.
    I want to ask you, and you invited this really, about the 
backlog. Thirty years ago, the hope was that generic approvals 
could be 180 days. There was a backlog of 4,700 applications 
waiting to be reviewed, I guess, in 2012 if I am not mistaken. 
Then there have been a lot more applications since then. You 
described those. The median approval for a time to get review 
of a generic drug was 30 months 4 years ago. Today, the 
approval time seems to be higher, 48 months, and you are 
approving about the same number of new drugs. Yet over that 
period of time you have collected $1 billion and hired 1,000 
new people. What can we do about the backlog and the approval 
time? Help us understand what the facts are.
    Dr. Woodcock. Well, let me walk you through this. It is a 
little complicated. The backlog applications that were sitting 
there in 2012 when we put the program in place, have been there 
for 40 months. We have approved a lot of them. We have taken 
action on 82 percent of these, all right, some type of action. 
We have gone back to the manufacturer, they have withdrawn 
some, and so forth, right? But they have been there since 2012, 
so even if we approved all of them tomorrow, their approval 
time would be 40 months because that was 40 months ago. And the 
longer it takes, just like the rest of us, they are not getting 
any younger. So those applications that were sitting there in 
2012 are going to, at minimum, have total time to approval of 
40 months because they started 40 months ago.
    The ones that we are getting in now have a due date for a 
complete response of 15 months. We have already approved some 
in the previous cohort last year that had 15-month timeframe. 
We approved a drug in 9 months on the first----
    The Chairman. So you are saying the new applications have a 
different median time?
    Dr. Woodcock. They do. They were the first ones that had 
goals. None of these others, the 2012 pending and then the 
first 2 years of the program had no goals assigned to them.
    The Chairman. What about the number of approvals today as 
compared with a few years ago?
    Dr. Woodcock. If you look at the chart in my testimony, you 
will see that in the first 2 years of GDUFA we did not jump up 
approvals. It was pretty much up and down. In April of last 
year, approvals went up, and they have stayed up. And as I 
said, last month, we approved or TA'ed 99 generic drugs.
    So we are on a path to get these efficiently out the door 
now. We had to build the program. We had to get this IT system. 
We had to hire and train these people.
    The Chairman. If I may have one more question, and I do not 
want to go over my time, I want to make sure that you are 
making the distinction between what a guidance requires and a 
regulation requires. I know the Office of Management and Budget 
is interested in that. And I have heard some concerns about one 
proposed guidance on quality for generic manufacturers that 
would impose new obligations to submit reports. Are you making 
a distinction between guidances which do not have the rule of 
law and regulations which may have the rule of law but do 
require a certain amount of public comment?
    Dr. Woodcock. We certainly do. As part of implementing this 
program, we have put a policy office in the Office of Generic 
Drugs and established a new policy office in the Office of 
Pharmaceutical Quality, which does the quality regulation. And 
both of those offices, part of their function, their staff, 
partly by lawyers, is to make sure we follow good guidance 
practices and follow the appropriate practices for regulations.
    The Chairman. Thank you very much, Dr. Woodcock.
    Senator Murray.
    Senator Murray. Dr. Woodcock, as I mentioned in my opening 
statement, Hatch-Waxman has been an incredible success and has 
provided patients and families with access to high-quality, 
lower-cost drugs. And building on that success, this 
committee's bipartisan work to pass the Generic Drug User Fee 
Amendments provided FDA with the resources to tackle existing 
backlog.
    Some are now saying that the backlog of generic 
applications remaining at FDA is part of the reason patients 
and families are experiencing high drug costs. How do you 
respond to those claims?
    Dr. Woodcock. The high drug costs are driven by multiple 
factors, but one might be lack of competition. So is there a 
generic competitor for the innovator product? And those we call 
the first generic, the first generic to get on the market, 
which begins to lower the price. We have looked at all these 
backlogs, and there is nothing in that backlog that would be a 
first generic potentially. Even if it is one or two 
applications, either of those could be the first generic that 
we have not looked at.
    We cannot approve applications even as a first generic if 
they do not meet our standards, if they are substandard in some 
way or if they are incomplete. So we may not always approve 
every application that comes before us that is a first generic, 
but we expedite those products.
    Senator Murray. The first generic?
    Dr. Woodcock. We absolutely do. And they get a fast track 
through the process, and we make sure we pay attention to 
those. I can assure you that in that backlog that was sitting 
there in 2012 and that we are working on now that we have 
largely worked on, that there is nothing that has not been 
looked at and given attention and certainly that would provide 
a first generic.
    Senator Murray. When FDA does approve those potential first 
generic applications, do companies usually market those generic 
drugs right away?
    Dr. Woodcock. No, we do not understand the behavior of 
companies and of course sometimes it's difficult to ascertain 
what they are doing in the market, as Senator Collins' hearing 
with the Aging Committee demonstrated. But we have noticed 
that, often, companies will not market a product sometimes for 
a significant amount of time after they have received an 
approval for first generic.
    Senator Murray. OK. Yesterday, the HHS assistant secretary 
for planning and evaluation came out with the report about the 
generic drug market, concluding that generic drug prices are 
not the primary driver of the high drug cost facing many 
patients and families across the country. The report found that 
the generic drug market as a whole is quite competitive, 
although some segments have experienced large price increases. 
What type of competition exists for innovator drugs currently 
on the market? What does that mean for patients?
    Dr. Woodcock. With your permission, I would like to bring 
up a slide if I could. This one I think would be good.
    [Slide.]
    It is just a simple bar chart. It shows the 99 on the left 
is the number of innovator drugs that only have one generic 
competitor. There are 66 that have two generic competitors, and 
all the rest have 3 to 10 generic competitors, which has been 
shown to really bring the price down when there is that much 
competition in the market.
    In addition--could I have the pie chart?
    [Slide.]
    If you look at this pie chart, it is a picture of all the 
drugs that would be out there. If you look at the silver slice, 
that is innovator drugs that could have a generic competitor 
but do not. And many of those are orphans or very small market 
drugs.
    Senator Murray. OK.
    Dr. Woodcock. There is a remaining group of products. It is 
small, but that is where we see a lot of the action as far as 
price changes when generic competition is possible.
    Senator Murray. OK. I am told that it typically takes three 
approved generics before we see real pricing competition kick 
in and prices go down. How many innovator drugs have reached 
the level of having three generic competitors? Is that your 
number there----
    Dr. Woodcock. Yes.
    Senator Murray [continuing]. The six----
    Dr. Woodcock. You can see, the vast majority have large 
enough sales, I imagine, that multiple competitors get in the 
market.
    Senator Murray. And that is what drives the price?
    Dr. Woodcock. Yes.
    Senator Murray. OK. You mentioned how the FDA generics 
program is on its way to being a real success story because of 
the resources Congress provided. I wanted to just ask you, can 
you describe the current status of FDA's generics workload?
    Dr. Woodcock. Yes. Could I have another chart?
    [Slide.]
    This chart shows the entire workload at almost the current 
time. At the top, the number--this is too complicated, I am 
afraid, but at the top, the 6,218 is all the applications we 
have had to deal with since the program started. The bottom 
number, 600, those are the ones that have not entered review 
yet. So that is only 10 percent that have not entered review. 
And some of those were submitted very recently.
    Twenty-four hundred were in the stage of back and forth 
with companies. So we are going back and forth. We are trying 
not to have these multiple cycles like we had in the past but 
get the issues resolved during the review process and try to 
get to a first-cycle approval.
    Senator Murray. So when people say backlog, it is not like 
the drug is sitting there and nothing is happening to it. It is 
part of the backlog even if it has been withdrawn by the 
company or you are going back and forth with the company?
    Dr. Woodcock. Well, this is simply the overall workload----
    Senator Murray. Yes.
    Dr. Woodcock [continuing]. And the backlog was something 
that existed----
    Senator Murray. Prior?
    Dr. Woodcock [continuing]. In 2012, right. In the future, 
we are not going to have any backlogs. We are going to have--if 
we get 1,000 drugs submitted a year, applications, we are going 
to have a bunch in process. They will not be in backlog because 
they will have goal dates. They will simply be moving down the 
process.
    But because we have a lot of them that do not have goal 
dates now, although we have assigned them action dates, this is 
a better description of----
    Senator Murray. Got you.
    Dr. Woodcock [continuing]. Where they all are, I think, 
even though it is overly complicated. So you see that almost 
600 have been withdrawn by the firms, and we have approved 
1,500, tentatively approved 268. And we are working on these 
2,400 so that is 4,000 that have either been approved, 
tentatively approved, or we are talking to the companies.
    Senator Murray. All right. OK. Thank you very much.
    Dr. Woodcock. Thank you.
    The Chairman. Thank you, Senator Murray.
    Next, Senator Collins and Casey, then Cassidy, then 
Franken.
    Senator Collins.

                      Statement of Senator Collins

    Senator Collins. Thank you, Mr. Chairman.
    Dr. Woodcock, first, let me thank you for your many years 
of public service and all that you are doing to expedite 
generic drug applications in order to make prescription drugs 
more affordable for consumers.
    I know that you are familiar with the investigation the 
Aging Committee is doing into the sudden very aggressive price 
spikes that some companies have implemented on drugs that have 
been on the market for literally decades. One, Daraprim, is 63 
years old, and yet there has been a 5,000 percent increase in 
its price by a company that invested not one dime into the 
research and development that led to this drug.
    So I am concerned that our current regulatory structure 
does not take into account situations where there is 
essentially a market failure. Because the population of 
patients may be small, there is not generic application, 
whether it is pending or not. It just has not happened.
    I know that the FDA currently provides an express lane 
review for certain generic drug applications, including first 
generics and those that would help solve medical drug 
shortages. Could you give us some idea of what the timeline is 
for the expedited review for drugs for the first generics or 
those that are in the medical shortages category?
    Dr. Woodcock. They get to the front of the queue. And of 
course with so many applications coming through, we can 
expedite different things. We have to treat them fairly. All 
would get expedited in the same way. So they get extra 
attention. They get moved to the review queue front, so they 
get reviewed first, and people shepherd them through. But if 
they are substandard in any way, under our new process, of 
course, we will call the manufacturer and try to get that 
application repaired. But say we go inspect the facility and it 
is substandard, we are still not going to approve that drug. 
But we do move them along as fast as possible.
    For the cohort that comes in after September of this year, 
there is going to be a 10-month review clock. That is the goal. 
That is for all generic drugs. So somebody who submits a 
generic drug October 1 of this year can expect a 10-month 
review. And if we are successful, they will get an approval at 
the end, not a lot of questions about their application.
    That is pretty expedited as it is, especially since they 
have facilities often in China and India and different places 
around the country may have to check.
    Senator Collins. Let me ask you about a situation with two 
of the drugs that we are looking at at the Aging Committee's 
investigation: Isuprel and Nitropress. And these two drugs once 
had FDA-approved generic competitors, but over time, those 
competitors left the market and now there is only one 
manufacturer left. So if a new manufacturer were to come in 
now, would that application be expedited?
    Dr. Woodcock. That is a good question and we will take it 
back and try to figure out what our policy should be on that 
because it would be akin to a first generic, although 
technically not a first generic.
    Senator Collins. That is why I ask it.
    Dr. Woodcock. Part of our problem is knowing who has 
marketed when. These people sort of come in and out of the 
market. If they do not withdraw their applications, it is hard 
for us to say whether they are marketing unless we get notified 
of a shortage, in which case, it becomes clear.
    Senator Collins. The other related issue that I would ask 
you to work with us on as we try to come up with solutions to 
these market failures is figuring out what the length of time 
for an expedited approval should be that would discourage the 
company from buying up a decades-old drug and increasing the 
cost of it? If it is a short enough time, it is not going to be 
worth the amount of money that the manufacturer--well, they are 
not manufacturers; they are more like what I would call hedge 
fund pharmaceutical companies--would pay to get the rights to 
that drug.
    So one of the ideas that I would like to work with you on 
is whether there is a way to take away the incentive by having 
this expedited approval that would encourage a generic to come 
in and discourage the company from buying up the decades-old 
drug thinking it is going to have a monopoly long enough to 
make a great deal of money.
    Dr. Woodcock. We would be happy to work with you. We also 
have to consider there is development work that a company has 
to do. They cannot just turn a switch and start manufacturing a 
drug tomorrow. So there is that time that has to go in as well.
    Senator Collins. What we are finding is that a lot of these 
companies are not doing the manufacturing, and so it is a very 
new and interesting business model, and I am convinced that it 
is one that is really negative for patients, providers, 
hospitals, and for Federal and State health care programs.
    Dr. Woodcock. Mr. Chairman, may I just make an editorial 
comment?
    The Chairman. Yes.
    Dr. Woodcock. Thank you. We have talked to some Members in 
the House and some of you all about advanced manufacturing and 
our efforts on this. Why we like advanced manufacturing, we are 
trying to push it with the industry is that allows them really 
to turn very quickly and really ramp up very fast----
    The Chairman. Do you want to define advanced manufacturing, 
what you mean by that?
    Dr. Woodcock. Certainly. Potato chips and M&Ms and all 
sorts of foods in this country and fine chemicals are made in 
continuous manufacturing lines that are computer-controlled, 
automobiles, even with robots. Pharmaceuticals are not made 
that way. They are made almost like cooking would be familiar 
or pharmacy compounding, steps. And we are really trying to 
push to move to modernized computer-controlled continuous 
manufacturing. It is much more efficient and effective, but of 
course there----
    The Chairman. Are you talking like 3-D printing?
    Dr. Woodcock. This year, we approved a 3-D printed product, 
the first one this year. So also that is one of the aspects 
that enables doing things like that, yes. That is an aspect I 
think that we really should explore to provide agility into the 
system.
    Thank you.
    Senator Collins. Thank you, Mr. Chairman. I apologize for 
going over my time.
    The Chairman. No, no, thank you and thank you, Dr. 
Woodcock, for that.
    Senator Collins, we know that in the Committee on Aging, 
you and Senator McCaskill have done a lot of work on this 
subject. We know also you do not have legislative authority, so 
we welcome the work product from your committee over here as we 
work on our legislation.
    Senator Collins. Thank you.
    The Chairman. Senator Casey.
    Senator Franken.

                      Statement of Senator Franken

    Senator Franken. Thank you. I appreciate Senator Collins' 
questions.
    And part of your answer, it seemed to suggest that the data 
that you have on the market is not totally complete.
    Dr. Woodcock. That is correct.
    Senator Franken. And is there anything you can do--is that 
an aspiration of yours to make that data more complete?
    Dr. Woodcock. It is very difficult to figure these things 
out because as----
    Senator Franken. Who would do that, do you think?
    Dr. Woodcock. I believe in Senator Collins' hearing they 
talked about the contracts and the rebates and all the 
different things in the U.S. distribution chain that nobody 
really knows the answer to. And the insurers, I think, would 
really like to know how these drugs are moving and what is 
actually being paid for them at different steps. But they do 
not know, and that is what I took from the testimony.
    Senator Franken. OK.
    Dr. Woodcock. We can find out sort of ex post facto by 
looking at what has been dispensed at the end of the day and 
putting the picture together, but it is very difficult to say 
who is--because they shift----
    Senator Franken. To try and figure that out would inform 
what you are taking up to approve because you want to make the 
market more efficient.
    I want to ask you about an article in the Wall Street 
Journal this week, and I am sure you have read it. It was by 
the CEO of a drug compounding company, and he suggested that 
basically he pointed to a drug that his company did. And we 
took up compounding in this committee, and a number of us, 
including the Chairman and Senator Roberts. But he was 
basically saying that he did successfully compound a drug, a 
generic that had been one of these drugs that they exploded the 
price on, and he got to market by compounding this.
    We saw the risks associated with compounding, but then we 
also gave the FDA authority to regulate compounding. You read 
this piece. Do you think that there are risks to this? What is 
the upside and what are the risks?
    Dr. Woodcock. I believe there are very great risks. The 
Congress established outsourcing facilities as part of the 
reestablishment of compounding several years ago, but those are 
for sterile injectables. The tablets could be compounded by any 
compounding facility under what was being proposed. And in the 
last 2 months, we have dealt with two outbreaks. One was 
vitamins where they compounded vitamins, and way excessive 
vitamins were put into the tablet. People were hospitalized 
with kidney failure.
    The second one----
    Senator Franken. Are vitamins considered supplements which 
you do not----
    Dr. Woodcock. No, we regulated those and we intervened. We 
were able to track the people down. The second one was a 
hormone. It was 1,000 times more potent than it was supposed to 
be.
    Senator Franken. A thousand times? OK.
    Dr. Woodcock. People ended up in the hospital very sick. 
And these were small outbreaks, so the pharmacy and us together 
were able to track these people down, the people who were still 
not in the hospital, and the drug was recalled. But a mass 
production of drugs such as to substitute for a generic or an 
innovator drug that is out there under non-controlled 
conditions--I know everybody talks about regulatory burdens, 
but what we ask them to do is make sure they do the right thing 
each time.
    And this is what happened. They put in too much. They used 
the wrong source. They used an ultra-concentrated source, and 
they put people in the hospital. And if they had been making 
thousands of these tablets, they could have put thousands of 
people in the hospital. So that is what we face if alternative 
sources that do not have good manufacturing practices are going 
to go into mass production.
    Senator Franken. I am out of time but--so--yes, I am out of 
time. I am out of time.
    [Laughter.]
    The Chairman. But that is a very helpful question about two 
important pieces of legislation before this committee. That is 
a very, very interesting discussion.
    Senator Franken. Thank you.
    The Chairman. Senator Cassidy.

                      Statement of Senator Cassidy

    Senator Cassidy. Thank you, Dr. Woodcock. I echo Senator 
Collins' kind of compliments of your work, and also I always 
appreciate your straightforwardness.
    A couple things, first--someone asked regarding backlog 
applications. You said at least 85 percent of those who are pre 
this legislation have had some action. That means 15 percent 
have not. I can imagine if you are one of that 15 percent you 
are just like, oh, my gosh.
    Second, 85 percent have had some action. That action might 
have been to kick them back. So any comments on why is that 15 
percent still kind of in purgatory and the 85 percent, ET 
cetera?
    Dr. Woodcock. When we negotiated this agreement with 
industry, they were realistic that we were not going to be able 
to review 6,000 applications in 3 years and hire 1,000 people 
and rebuild our entire generic drug system and totally 
reorganize, all of which we have done.
    So the goal was that we clear out 90 percent of the backlog 
applications by the end of the program, 5 years. That was the 
agreed-upon goal with industry, with no other intermediate 
goals. What we have done, we have already gotten back to them 
or worked on 82 percent of them.
    Senator Cassidy. Got you. I do not mean to interrupt; I 
just have a short time and I have so many questions.
    Dr. Woodcock. OK.
    Senator Cassidy. Now, I am also told by industry--and I 
have learned to say ``what I have been told'' not ``what I 
know''--that when you mentioned the incomplete or low-quality 
applications, sometimes they are low quality because in the 
interval between when it is submitted and when it is reviewed, 
the standards have changed. So it is now low quality not 
because it was low quality at the time of submission but 
because it is low quality at time of review. Are those 
applicants notified when standards change and the implications 
of that change in standard upon the quality of their initial 
application?
    Dr. Woodcock. Absolutely, we try to do that. Our policy 
offices were issuing many more guidances. Those often are 
product-specific guidances. They are like a cookbook or 
recipe----
    Senator Cassidy. Then the followup question therefore 
implied is that you--because they tell me that this is not the 
case--that it has been made public, the guidance as to what is 
a good quality application?
    Dr. Woodcock. We try. There are things such as we have 
received applications where they have cut-and-pasted portions 
from another application, totally the wrong application in 
there. It is hard to think of every single thing that people 
can do that is not right. But we do try to give guidance, and 
having our policy offices, we definitely aspire to putting out 
much more guidance and training on what is acceptable.
    I have a slide in the----
    Senator Cassidy. Can I just move to something else?
    Dr. Woodcock. Yes.
    Senator Cassidy. Because I will accept your explanation. 
And believe me, I will hear from them.
    Next, following up on what Senator Collins has said, but 
also relating back to testimony you gave to the Energy and 
Commerce Committee a couple years ago when I was on that 
committee, one of the reasons for drug shortages is that there 
has been a concentration of drug manufacturers.
    Dr. Woodcock. That is right.
    Senator Cassidy. If there is a quality problem with that 
one concentrated facility, then it ripples through. What I am 
told is that GDUFA actually has a facility fee, and therefore, 
if you only have one facility or if you contract out to a CMO, 
a contract manufacturing organization, that somehow you lower 
the facility fee. It would require us to change that. But 
because of this, we have had a concentration of manufacturing 
units. Is that a fair assessment?
    Dr. Woodcock. I do not know whether that is a driven 
concentration or not. I think there are many factors, but that 
could have been one. We are certainly considering that in the 
discussions for the next GDUFA program.
    Senator Cassidy. Then we should consider that because it 
would require, say, a substitution of a product fee as opposed 
to a facility fee. Fair statement?
    Dr. Woodcock. There are many different ways this could be. 
We are trying to make the fee structure as fair as possible and 
that the burden is shared appropriately among the people who 
benefit from the program.
    Senator Cassidy. Do you have a list of how many 
manufacturing units, if you will, there were or how many CMOs 
were active before GDUFA and what are the number of 
manufacturer facilities now post-GDUFA?
    Dr. Woodcock. One of the innovations of GDUFA was self-
identification. We have one 2012 where everybody had to put up 
their hand and say we are making a generic drug or we are 
making any active pharmaceutical ingredient. So we have it for 
those probably 3 years but not before. That was one of the 
defects in the past.
    Senator Cassidy. But still, if you had it when it started 
and you have it now, how many in 2012 and now, do you have that 
number?
    Dr. Woodcock. We can get back to you on that. I do not have 
that.
    Senator Cassidy. And could you require the drug 
manufacturers to publish or say we are making these drugs and 
we are contracting out the CMOs for this, and have that as a 
real-time database? Because we need to know if we are 
concentrating manufacturers.
    Dr. Woodcock. Right.
    Senator Cassidy. And if so--because you have told us that 
that is a major cause of drug shortages, and some of them are 
bad actors because you also told us that. Some have a lot of 
problems, some not. If that were made public, we would know how 
many there were and if they were good or bad actors. Is that 
possible for you to make that public or at least available to 
us?
    Dr. Woodcock. I think that we could give you the overall 
numbers. We could try. But I think making the actual people 
public would probably require either regulation change or 
something Congress----
    Senator Cassidy. A statute for us to do?
    Dr. Woodcock. Yes. There is registration and listing that 
is done now, but we have different problems with that, which we 
could get back to you on.
    Senator Cassidy. Thank you. I yield back. Thank you.
    The Chairman. Thank you, Senator Cassidy.
    Senator Warren.

                      Statement of Senator Warren

    Senator Warren. Thank you, Mr. Chairman.
    Everyone is here looking for ways to bring down the cost of 
drugs, both brand name and generic drugs, but we cannot do that 
if we do not correctly identify why the prices are so high. 
Some people want to blame the FDA for high prices saying that 
if the agency would approve generic drugs faster, then the drug 
pricing problem would go away.
    So I just want to dig into that claim a little bit. Let us 
begin with generics competing with brand name drugs. According 
to an analysis by Harvard researchers, it takes an average of 
12\1/2\ years for a brand name drug to face competition by 
generics. And no doubt if those brand name drugs had to compete 
with a generic drug, they would be cheaper. But the law is 
clear. The FDA cannot bring a generic drug to market while the 
brand name drug is still protected by any form of exclusivity 
or patents.
    Dr. Woodcock. Patents.
    Senator Warren. Is that right?
    Dr. Woodcock. That is correct.
    Senator Warren. OK. Then let us look at the time after 
generics are legally allowed on the market. How long does it 
take the FDA to approve a new application for a generic drug?
    Dr. Woodcock. That is something that is in flux, but this 
year, it will take us 15 months on average to get back to the 
firm. If they have sent in a complete application, we can 
probably approve it.
    Senator Warren. That is for new applications?
    Dr. Woodcock. Yes, the ones that are submitted this year.
    Senator Warren. And what commitment time are you looking at 
going forward?
    Dr. Woodcock. In October of this year if you would submit a 
generic drug application, you could expect to get an answer 
back in 10 months.
    Senator Warren. In 10 months?
    Dr. Woodcock. Correct.
    Senator Warren. So you are going from 15 months to 10 
months. And you feel like you are on target at least getting 
the pieces in place that that looks like it is going to work?
    Dr. Woodcock. That is doable, correct.
    Senator Warren. OK. Then I just want to measure that 
against the claim that the average time for FDA approval has 
increased. You talked about the backlog and the difficulty of 
dealing with applications that date back years, but the average 
time for new applications, is it going up or is it going down?
    Dr. Woodcock. The new applications have not reached their 
sort of time to get approved yet, so we cannot really say. The 
goal has only kicked in last year, and that was a 15-month 
goal. But as I said, we already approved one at 9 months. We 
have approved a number of them that has been shorter than the 
15-month goal.
    Senator Warren. That is right. And you are committing to a 
shorter time period?
    Dr. Woodcock. We are committed to meeting the GDUFA goals 
for each cohort, that is correct.
    Senator Warren. All right. Then let me ask you one other 
question about this. When a company suddenly raises the price 
of a generic drug, obviously approval of a competing generic 
drug would probably bring the price back down. Dr. Woodcock, 
does the FDA expedite applications in situations when there has 
been a price spike?
    Dr. Woodcock. No.
    Senator Warren. Why not?
    Dr. Woodcock. We do not really know. We have to be fair. 
There are a lot of lawsuits around generic drugs and so forth. 
We have to be fair to all--we do not know what a price spike 
is. Does a pill cost 10 cents and now it costs 30 cents? Does 
it cost 10 cents and now it costs $875?
    Senator Warren. That one kind of sounds spiky to me.
    [Laughter.]
    Dr. Woodcock. Right. And we also do not, I think, have the 
expertise to determine. We are not economists or finance 
people. We are doctors and lawyers and scientists. So what we 
could----
    Senator Warren. Is it legally clear that you could do that? 
Could you use that as a criteria for deciding to expedite on a 
particular drug or is there some legal ambiguity about that?
    Dr. Woodcock. There might be ambiguity, but certainly, if 
Congress directed us to prioritize certain drugs----
    Senator Warren. No, I am just asking about where you are 
right now.
    Dr. Woodcock. OK. I do not know the answer to that 
specifically, but I imagine it might be possible if there were 
some bulletproof definition of what a price--what if you 
doubled your price from a dime to 20 cents?
    Senator Warren. This may be something we want to look at. I 
think that is helpful. But we will look at the proposals that 
are on the table today. Yes, Congress could make sure that the 
FDA has the funding and the personnel it needs. Yes, there is 
some room to improve generic drug approval processes as the new 
user fee program is fully implemented. Yes, there could be 
limited situations where the FDA might be able to expedite 
review of a generic drug to help lower prices. We are already 
heading toward 10-month approvals so that should help.
    But let us not kid ourselves. Making those tweaks will not 
solve the drug pricing problem. The market for prescription 
drugs has little transparency, it has broken price elasticity, 
and it has very long legal monopolies. And, sure, we can make 
some changes, small changes to how the FDA approves generics, 
but real change will require us to face the fact that the 
market for prescription drugs is not working and rethink the 
overall structure of drug pricing.
    Thank you, Dr. Woodcock. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Warren.
    I have Senator Roberts, Senator Casey, Senator Burr, and 
Senator Murphy.
    Senator Roberts.

                      Statement of Senator Roberts

    Senator Roberts. Mr. Chairman, thank you. And thanks also 
to the Ranking Member for holding this hearing.
    Everybody knows about the cost of prescription drugs. They 
continue to make headlines. And I truly appreciate Dr. 
Woodcock. You are an excellent witness, and thank you for your 
clarity and your comments.
    In addition to new user fees in 2012, as has been said, the 
FDA has proposed a regulation in 2013 regarding generic 
labeling that according to one estimate could increase spending 
on generic drugs by billions of dollars.
    In 2015, a proposed equality metrics program through draft 
guidance, draft guidance that would require manufacturers to 
collect new information and also to collect and report 
information from the CMOs, the generic drug manufacturers have 
raised significant concerns, I think to everybody here, 
regarding reporting complexity, the confidentiality of data, 
increased information technology spending, all of which would 
increase the burdens on the manufacturers and require 
significant efforts to resolve.
    If these quality reports are to be required and obviously 
are necessary to ensure high-quality generic drugs, should this 
not be done through rulemaking? I would pause here and say this 
is the first time in my House or Senate career that I have ever 
proposed more rulemaking.
    [Laughter.]
    But rulemaking rather than a guidance----
    Dr. Woodcock. Right.
    Senator Roberts [continuing]. Where there is no 
responsibility to look at the impact on small business, and 
those who are involved cannot respond to comments, which to me 
seems to be very important.
    Dr. Woodcock. Both of those, the regulation you mentioned 
first and then the draft guidance that we have issued some time 
ago on quality metrics, request for comments, a draft guidance 
is not actionable. It is simply a request for comments. So we 
did receive a great deal of comments on both of these, and we 
are in the time of digesting these comments. And we will take 
appropriate steps after we have gotten feedback.
    But we have gotten a great deal of feedback on the quality 
metrics draft proposal both from the innovator industry and the 
generic industry, and actually, it is one of the few times 
where they appear to be united in their opinions. So we 
certainly are taking that into consideration in what we do 
next.
    Senator Roberts. I appreciate that. I think most of the 
questions that I have here have already been asked by Members. 
The definition question that was raised I think by Senator 
Murray, in your testimony you highlighted the ongoing challenge 
of submission quality, and the question was have you made 
public, in guidance or otherwise, what the standard for good 
quality submissions is? When was that released, or have you 
released that?
    Dr. Woodcock. It is a whole series of different guidances. 
For example, we issue product-specific guidance that tells you 
if you are going to copy this innovator product, here is how 
you should do your bioequivalence studies and so forth. And we 
have really ramped up our issuance of those because they are 
extremely helpful to industry.
    Senator Roberts. How many folks do you have doing this?
    Dr. Woodcock. The guidance development?
    Senator Roberts. We are interested in 2015 and everybody 
left behind and those in the future. How many people do you 
have--about 1,000 people doing this? What is the answer?
    Dr. Woodcock. There are approximately 1,000 people in the 
Office of Generic Drugs.
    Senator Roberts. Right.
    Dr. Woodcock. There are maybe 800, 900 people working on 
this in the Office of Pharmaceutical Quality that are 
inspectors. We added 70 new inspectors to do some of these 
foreign inspections. So the program is probably perhaps 3,000 
people overall.
    Senator Roberts. Three thousand people?
    Dr. Woodcock. Yes.
    Senator Roberts. I appreciate that. I have 30 seconds left, 
which I will yield back to Senator Franken, who needed more 
time.
    Senator Franken. It is going to take me about 25 seconds to 
recall----
    [Laughter.]
    Senator Franken [continuing]. What it was, so I will yield 
my time.
    The Chairman. Thank you for this outburst of 
bipartisanship.
    Senator Casey.

                       Statement of Senator Casey

    Senator Casey. Mr. Chairman, thank you very much.
    Doctor, great to have you here, and thank you for your 
testimony and your service.
    I wanted to focus on an area that I know you have spoken 
to, but I am not sure this specific question was asked about 
the so-called--we have to be careful with acronyms here--REMS, 
the risk evaluation mitigation strategy; and then the other 
acronym, the elements to assure safe use. The basic question I 
had was when you testified about some of the challenges that 
you have in implementing shared risk evaluation system, can you 
outline for us the challenges you face, and then if any--and I 
am assuming there are--what you propose as solutions?
    Dr. Woodcock. When Congress, in the FDA Amendments Act, put 
in place the REMS, when they had to contemplate--and REMS is a 
risk evaluation and mitigation system for particularly risky 
drugs that is supposed to mitigate some of the risks. And we 
approve drugs with REMS if they are particularly risky.
    When they go generic, the generics also need to have this 
risk system around them. And Congress, in order to decrease the 
burden on health care, said that if at all possible there be a 
single shared REMS amongst the innovator and the competitors.
    To get competitors to work together so that the competitors 
can get a market share from the innovator has proven very 
challenging for the FDA to get that done, and that has delayed 
access.
    In addition, the REMS program may restrict who gets the 
drug and that has been used as an excuse to not give the drug 
to the generics so they can compare it to their drug. All of 
these issues have caused barriers and delays in getting 
generics on the market.
    More broadly, though, the companies on their own behalf 
have restricted programs that we do not really understand, but 
they are not related to REMS. We have had over 100 inquiries 
from generic companies who cannot get a hold of the innovator 
drug to compare their drug to. We have done everything we can 
to--we have written a letter saying that REMS does not require 
this, you can give it out for this purpose, and so forth, and 
we also refer these to FTC. But we still continue to get 
complaints from generic companies that they cannot get a hold 
of the drug to make the comparison they need to do.
    Senator Casey. I want to make sure I understand the problem 
you face. Why has it not worked in your judgment?
    Dr. Woodcock. I think the innovator companies feel it is 
their duty to their stockholders to delay competition as long 
as possible. That is kind of--the citizen petitions we get and 
all sorts of things that attempt to delay generic competition. 
And this is yet another opportunity.
    Senator Casey. What would you hope that we would do, if 
anything?
    Dr. Woodcock. The part of the REMS provision that requires 
a single shared system, as a practical matter, we have to try 
and try and try and try, and then finally, we declare defeat 
and we go ahead and let the generics have their own system that 
is separate but equal. If that provision were removed from a 
statute, then potentially, we could just go to that and it 
would not have a delay involved.
    However, that will not fix the instance where the innovator 
company actually is not providing outside of REMS, so just have 
a way of not providing the drug to the generic company, and I 
think that would require discussions.
    Senator Casey. Thanks very much.
    The Chairman. Thank you, Senator Casey.
    Senator Hatch is next, but I think nobody will mind me 
saying it is not often that a U.S. Senator has a chance to 
introduce a significant piece of legislation and then 30 years 
later see it be as successful as this has been, taking the 
number of generic drugs prescribed from 0 to 88 percent of all 
the prescription drugs. So we welcome you to a hearing on your 
bill.

                       Statement of Senator Hatch

    Senator Hatch. Thank you, Mr. Chairman. I am happy to do 
that. It was a real battle in my office between the generic 
industry and the pharmaceutical industry, the pharma companies. 
And at one point they both jumped up, all three of them, and 
decided to bolt out of the office. And two of them, they got to 
the door and two of them got at the same time and got stuck in 
the door.
    [Laughter.]
    We all started to laugh so I said come on back, and they 
came back, but there was one point when I said I am going to 
kill both of you.
    [Laughter.]
    There were three, but two of them were particularly bad, 
and I really got really irritated. I had a bad tooth at the 
time, and that aggravated it as well.
    [Laughter.]
    But to make a long story short, we have been very pleased 
with the efficacy of Hatch-Waxman, and Henry deserves a lot of 
credit at that time for cooperating on this.
    At the inception of the Generic Drug Users Fee Program in 
October 2012, there were approximately 2,800 generic 
applications awaiting approval, and the average approval time 
for an application was, if I got it right, 30 months. Going 
into its 4th year and the $1.2 billion later, the backlog has 
increased to 4,000 plus applications, and the average approval 
time for an application has steadily risen from 30 months in 
fiscal year 2011, 43 months in fiscal year 2014, to 48 months 
in fiscal year 2015. This is eight times longer than the 
statutory 6-month review time called for by the Hatch-Waxman 
Act, of which it is one of the bills that I feel very pleased 
about.
    Further, since 2013, the number of approvals show a 
declining trend in overall approvals, both tentative and final. 
FDA approved 619 generics in 2012, 535 in 2013, 500 in 2014, 
and 346 in fiscal year 2015. A critical subset of approvals are 
first generics. First generics offer the first opportunity for 
consumers to benefit from the savings provided by generic drugs 
over brand drugs but only if they are approved on the first 
earliest day. As I understand it, it is staggering to think of 
the savings that were lost in the U.S. health care system in 
2015 alone due to first generic approval delays.
    Having said all that, I want to personally thank you for 
the work that you do. You do a terrific job, and I recognize 
it. But would you agree that this backlog keeps safe, low-cost 
generic drugs off the market and reduces competition? Just yes 
or no.
    Dr. Woodcock. Yes.
    Senator Hatch. Yes, I thought you would. Let me go a little 
bit farther. Will the backlog be eliminated before the start of 
GDUFA II?
    Dr. Woodcock. Absolutely.
    Senator Hatch. You think it will be?
    Dr. Woodcock. We have already acted on 82 percent of--at 
least communicated with the company on 82 percent of those.
    Senator Hatch. OK. How many applications of first generic 
products has the agency received since GDUFA was implemented?
    Dr. Woodcock. That I do not know.
    Senator Hatch. That is OK. Would you provide that to us?
    Dr. Woodcock. Yes. We can get back to you. It is about 15 
percent of the workload, and we expedite all those.
    Senator Hatch. I appreciate that. How many first generic 
applications have missed approval on the earliest possible date 
over the last, say, 3 years if you have that knowledge?
    Dr. Woodcock. I will have to get back to you on that, too.
    Senator Hatch. You will get back to us?
    Dr. Woodcock. It is a small number, though.
    Senator Hatch. OK. Will you submit for the record the 
target action dates for the first generics pending before the 
agency without naming the applicant and the associated 
reference products? That would help us up here.
    Dr. Woodcock. Yes. We can do that.
    Senator Hatch. OK. How does FDA track prioritization of 
generic applications such as those associated with public 
health needs, drug shortages, or first generics? And what is 
the average approval time for these critical applications?
    Dr. Woodcock. We track them through our new IT system 
where--and we have project management over all these 
applications now. We have a project manager aware of each one 
of them and making sure it moves properly through the system.
    Senator Hatch. OK.
    Dr. Woodcock. And we can get you the numbers.
    Senator Hatch. Thank you. My time is expired.
    Mr. Chairman, may I make kind of a statement here at the 
end?
    The Chairman. Yes.
    Senator Hatch. The reason Hatch-Waxman was so essential is 
because there were only about 16 to 18 percent of generics on 
the marketplace back when we did that. Today, it is approaching 
90 percent. And that has been a very, very good thing. However, 
some people have played the market, too, and have distorted it 
even with regard to generics. So we want to get to the bottom 
of this.
    I personally want to thank the Chairman and Ranking Member 
of this committee for getting into this, and I intend to help 
them every step of the way.
    I also want to personally thank the people at FDA. It is a 
hard job. You have all kinds of pressure on you. There are all 
kinds of irritations and comments and screaming and shouting 
about these things, and we do not give you enough help to do 
it.
    I also was the author of the FDA Revitalization Act and 
getting you the huge facility that you have out there where 
there have been 30 plus offices all over this area. All I can 
say is that I hope you will keep going because the generics are 
absolutely critical to this country and absolutely critical to 
our Federal budget and absolutely critical to the successful 
quotient and reputation of the FDA. Hopefully, if you see any 
changes in Hatch-Waxman or other bills that you are subject to 
that you think would help, we would sure like to hear from you.
    Dr. Woodcock. Absolutely.
    Senator Hatch. OK. Thank you, Mr. Chairman.
    The Chairman. Thanks, Senator Hatch.
    And before we go to Senator Murphy, I may have made a 
misstatement earlier, Dr. Woodcock. I said that there were no 
generic drugs 30 years ago. There were some----
    Dr. Woodcock. Right.
    Senator Hatch. There were some.
    The Chairman [continuing]. Right, but they had to go 
through the whole process. What would be the accurate way to 
describe the percent of generic drugs 30 years ago?
    Dr. Woodcock. I believe there were some. They were not well 
uptaken because they had quality problems as well. So the 
program that was put into place improved the quality and 
acceptability of them as well, but there were some generic 
drugs out there at that time.
    The Chairman. OK.
    Senator Murphy.

                      Statement of Senator Murphy

    Senator Murphy. Thank you very much, Mr. Chairman. Welcome, 
Dr. Woodcock.
    Dr. Woodcock. Thank you.
    Senator Murphy. Thank you for your service.
    A comment and one question: The comment is just an 
extension on the point that Senator Warren was making. I am 
hopeful that we are going to spend some serious time and 
attention to this question of spiraling drug costs important 
for consumers. It is certainly important for the Federal 
budget.
    But I would agree with Senator Warren that I also hope that 
we will not place too great a share of the blame on the 
regulatory process. There are certainly efficiencies that we 
can gain, but I agree with her, and I think it is worth 
restating that what is exceptional about the United States is 
the way in which we have structured our market for drugs, the 
way in which prices are set. We are virtually the only country 
in the world that does not have a process for capping and 
controlling drug costs. The result of that is that American 
consumers and the U.S. Government bear the lion's share of R&D 
costs for the entire industry globally, and the rest of the 
world's consumers are free riders.
    Second, and more difficult to talk about, is the fact that 
if you take a look at the 16 publicly traded companies that 
sell the best-selling drugs in this country, half of them are 
taking in a greater profit at the end of the year than they are 
spending on research and development. And that is 2014 numbers. 
We certainly have discovered and dispensed life-changing drugs 
because of the profit motive built into our system, but those 
are pretty stunning numbers.
    My question is a very specific one. You, I think, ended 
your testimony with a set of challenges and barriers, and one 
of those that you outlined was this problem in which we do not 
have a convincing bioequivalence test method available. And I 
think that is worth just exploring a little bit. You have money 
to try to develop those pathways, and so you also caution us 
that it takes time. So can you tell us a little bit more about 
the timing of that research, how we should judge its 
effectiveness?
    And then to the extent that we have been successful in 
getting another $2 billion over in NIH, what is the degree of 
cooperation with NIH? What more can they be doing to try to 
solve this problem?
    Dr. Woodcock. Thank you. NIH does not typically do this 
type of research. This is very applied research. And what we 
are talking about here is that drugs that are not systemically 
absorbed and go through the blood are hard to determine whether 
they are bioequivalent to the innovator drug. So that would be 
all the creams and lotions and different topical agents, as 
well as inhalation drugs. And then we have a new category of 
very complicated drugs out there that also are going to pose 
problems in characterizing them and making sure they are the 
same as the innovator, kind of similar to the biosimilars 
problem.
    The research we are doing, I think you can judge if it is 
going to bear fruit because we would issue draft guidance, and 
the draft guidance would have a new bioequivalence test in it. 
And we might do workshops before that and other things to get 
the scientific community on board. But we would say instead of 
having to do a clinical trial and all that entails, a 
comparative clinical trial, you can use this bioequivalence 
test. And you put the cream on these people and you put the 
cream on maybe their other arm or whatever and then you measure 
something or whatever you do, whatever we say, and then that 
would stand in for the bioequivalence results. And that would 
really improve uptake and generic competition in these areas 
where they are not systemically absorbed drugs.
    Senator Murphy. And just forgive my ignorance, but these 
guidances would be for classes of drugs, types of treatments, 
or for specific drugs or treatments?
    Dr. Woodcock. It would probably be for drug classes 
sometimes and for specific drugs other times.
    Senator Murphy. Do you have enough funding to get to where 
you think we should be 5 years from now or 10 years from now in 
terms of the amount of guidance necessary to keep up with the 
pace of technological change on these drugs?
    Dr. Woodcock. I would have to get back to you on that. We 
have invested a substantial amount, although compared to NIH or 
something, we have invested about $24 million. We are having a 
lot of research done, but it takes time, as I said in my 
testimony, to get that research finished to understand the 
implications, translate it into policy and guidance, and then 
educate the world on how to do these studies.
    But this is the key to some of that silver gap there of 
drugs that do not have generic competition at all----
    Senator Murphy. Right.
    Dr. Woodcock [continuing]. Because it is too expensive or 
almost impossible or infeasible for them to figure out how to 
show they are the same.
    Senator Murphy. Great. Thank you very much, Mr. Chairman. 
Thank you, Dr. Woodcock.
    The Chairman. Senator Whitehouse.

                    Statement of Senator Whitehouse

    Senator Whitehouse. Thank you, Chairman. Thank you, Dr. 
Woodcock, for being here. I will continue on this same theme.
    I am not an advocate for government price controls, but it 
does seem to me that there are circumstances in which very 
clever people have either observed or created a monopoly for 
themselves and then used that monopoly power to extort prices 
that the market would not support if it were actually operating 
correctly.
    And it seems to me that there are some pretty obvious 
signals of when that might be taking place. To me, it is not a 
determinative factor, but it is a red flag factor. If the 
people involved are not in the business of creating 
pharmaceuticals but they are in the business of speculation, 
that ought to put up a red flag to me. If the price hike is 
beyond a certain amount, let us say 1,000 percent, again, not 
fully determinative but that maybe should send up a little red 
flag. If there are no alternatives to which a certain set of 
customers or patients can readily turn----
    Dr. Woodcock. Right.
    Senator Whitehouse [continuing]. That would seem to be part 
of the monopoly posture. And I am wondering if your 
organization is looking in any way at trying to define where 
the market failure is taking place and saying, OK, these are 
red flags or if you see that as somebody else's job?
    Dr. Woodcock. The report issued yesterday by HHS on some of 
the pricing issues around pharmaceuticals gets to some of those 
issues. And for the economic ones, I believe that they are 
better suited than the FDA because, as I said, we are doctors, 
not----
    Senator Whitehouse. So the FDA is not looking at that?
    Dr. Woodcock. We look at sole source because that is a red 
flag that there could be a shortage because there is only one 
manufacturer and if something goes wrong, that is a big 
problem.
    Senator Whitehouse. You are looking at it from a shortage 
point of view as opposed to a price manipulation point of view?
    Dr. Woodcock. That is right.
    Senator Whitehouse. OK.
    Dr. Woodcock. If you could show the bar chart. Yes.
    [Slide.]
    We look at those that have few competitors so some of the 
ones in that chart where they only have one generic, that might 
be the only drug on the market actually. The innovator may be 
off or there are only two or there are two. Those are areas 
where there is not a lot of competition and where there could 
be a shortage or a loss of product.
    Senator Whitehouse. It just strikes me that if we can 
correctly define the characteristics of the bad behavior that 
everybody on this committee sees and acknowledges exists, then 
going the long way around to trying to figure out how your drug 
approval process can resolve that problem is a very inefficient 
way to do it. You should go right at where the problem is, 
which I think is speculators buy drugs that do not have 
competition and who create massive price increases. And if you 
simply said we are not going to allow that any longer, then 
people go away and they go find more productive things to do 
with their time.
    Let me ask you a different question entirely. We have had 
conversations about the device-regulating side of the FDA and 
about the drug-regulating side of the FDA and about the need 
for there to be a new track in the FDA for drug device 
combinations. And this committee is obviously looking at that. 
What can you tell me about where the FDA is in terms of making 
a recommendation to us on what the drug-device combination 
would look like? What is your recommendation to us for that?
    Dr. Woodcock. I believe that the FDA is ready to work with 
the committee on this, and we are very interested in looking at 
some solutions to this problem.
    Senator Whitehouse. Have you proposed any?
    Dr. Woodcock. I do not know that we have proposed specific 
legislation, and I do not know where the administration is on 
that. However, I would say from my own technical point of view 
that it is a problem. We need more clarity and we need a 
different path that----
    Senator Whitehouse. Both you in charge of the drug side and 
the device side have said the same thing to me, which is you 
cannot do drug-device combinations using our process. There has 
got be a new process that emerges. So do you think it would be 
wise for you and the device side to sit down and spend a little 
time making a recommendation to us as to how you think those 
drug-device combinations might be best regulated?
    Dr. Woodcock. Certainly. We have had numerous conversations 
about this with our colleagues at devices and the Office of 
Combination Products and gone through multiple scenarios. I 
think we would be very eager to discuss it with the committee.
    Senator Whitehouse. A proposal from the agency that would 
actually be obliged to implement it, I think, would be helpful 
to the committee.
    Thank you, Chairman.
    The Chairman. Thank you, Senator Whitehouse.
    Senator Murray, do you have any further comment?
    Senator Murray. I do not have any further questions. I just 
want to thank Dr. Woodcock for her really important expertise 
in your answer to your questions. I think this has been an 
excellent hearing. We have a lot of work ahead of us, and I 
look forward to working with you on a bipartisan fashion to 
move forward. Thank you.
    The Chairman. Thank you, Senator Murray.
    And let me add my thanks to you, Dr. Woodcock. You have 
been there 30 years in one position or another, but it is hard 
to imagine there would be a more exciting time than right now, 
given the rate of innovation.
    We have the logical tension that exists between prices, 
safety, effectiveness, and then incentivizing and encouraging a 
supply of new treatments and cures and devices that will save 
lives. We are talking about the next generation of cancer 
treatments and innovative therapies for ALS and Alzheimer's, 
infectious diseases. We have seen what has happened with 
hepatitis C. We have seen what has happened with cystic 
fibrosis. You have had a role in all of that. We are told that 
in Alzheimer's that if we simply delayed onset for 5 years, 
that could save our health care system $367 billion by 2015, 
and the grief and the anguish is incalculable. And there have 
been 123 unsuccessful attempts at developing drugs for 
Alzheimer's, I am told, while only four are successful.
    So my hope at least is that while we are working on safe 
and effective and keeping the market competitive so prices are 
as low as possible, that we do not do anything to discourage or 
dis-incent the development of these new lifesaving treatments.
    The hearing record will remain open for 10 days. Members 
may submit additional information if they would like.
    The next session in our committee will be an executive 
session on February 9 to begin the step-by-step process to 
produce legislation. There will be several bills considered 
with amendments. These are all bipartisan bills in that sense 
that they have been sponsored by members of our committee on 
both sides of the aisle. And perhaps they can grow into 
companion legislation to the work that 21st Century Cures 
package that the House has already passed.
    The President is vitally interested in what we are doing 
with precision medicine and also now with his cancer 
initiatives. We welcome the Administration's input on that.
    We look forward to February 9, and we thank you, Dr. 
Woodcock, for coming today. The committee will stand adjourned.

    [Editor's Note: Response to questions submitted by the 
committee were not available at time of print.]

    [Whereupon, at 11:31 a.m., the hearing was adjourned.]

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