I 

108TH CONGRESS 

1ST SESSION H. R. 828

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

of protection from competition, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 13, 2003

Mrs. MCCARTHY of New York (for herself, Mr. EMANUEL, Ms. NORTON, Mr. 

OWENS, and Mr. ISRAEL) introduced the following bill; which was referred to the Committee on Energy and Commerce 

A BILL

To amend the Federal Food, Drug, and Cosmetic Act to 

allow certain applicants for approval of a generic drug 

to be eligible for a 180-day period of protection from 

competition, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Pharmaceutical Fiscal 

5 Accountability Act of 2003’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds as follows: 
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1 (1) Prescription drug costs continue to rise, af2 fecting all people in the United States. 

3 (2) Generic drugs are approved by the Food 

4 and Drug Administration and offer a safe alter5 native to brand-name drugs. 

6 (3) Access to generic drugs upon expiration of 

7 valid pharmaceutical patents can result in a cost-ef8 fective alternative to brand-name drugs. 

9 (4) The generic version of a drug often enters 

10 the market at a cost that is 25 to 35 percent less 

11 than the cost of the brand-name version of the drug, 

12 and after a few years typically sells for about 50 

13 percent of the cost of the brand-name version. 

14 (5) Enhancing competition between generic and 

15 brand-name drug manufacturers can reduce the cost 

16 of prescription drugs. 

17 SEC. 3. 180-DAY GENERIC DRUG EXCLUSIVITY FOR CERTAIN 

18 SUBSEQUENT APPLICANTS. 

19 Section 505(j)(5)(B) of the Federal Food, Drug, and 

20 Cosmetic Act (21 U.S.C. 355(j)(5)(B)) is amended—

21 (1) in clause (iv)—

22 (A) by striking ‘‘If the application’’ and in23 serting ‘‘Subject to clause (v), if the applica24 tion’’; and 
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1 (B) by striking ‘‘continuing’’ and inserting 

2 ‘‘containing’’; and 

3 (2) by adding at the end the following: 

4 ‘‘(v) If the application contains a certification 

5 described in subclause (IV) of paragraph (2)(A)(vii) 

6 for a drug, the Secretary shall treat the application 

7 as the first such application submitted under this 

8 subsection for that drug if every person that pre9 viously submitted an application containing such a 

10 certification for that drug—

11 ‘‘(I) fails to market the drug within 60 

12 days after the Secretary approves the previously 

13 submitted application; 

14 ‘‘(II) withdraws the previously submitted 

15 application; 

16 ‘‘(III) changes, for any reason, the certifi17 cation in the previously submitted application to 

18 a certification described in subclause (III) of 

19 paragraph (2)(A)(vii); 

20 ‘‘(IV) in a case in which, after the date on 

21 which the previous application was submitted, 

22 new patent information is submitted for the 

23 drug under subsection (c)(2) for a patent for 

24 which certification is required under subclause 

25 (IV) of paragraph (2)(A)(vii), fails to challenge 
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1 the patent that is the subject of the information 

2 within 60 days after the date on which the pat3 ent information is submitted; or 

4 ‘‘(V) has engaged in conduct in violation of 

5 the antitrust laws (as the term ‘antitrust laws’ 

6 is defined in subsection (a) of the first section 

7 of the Clayton Act (15 U.S.C. 12(a)), except 

8 that such term includes section 5 of the Federal 

9 Trade Commission Act (15 U.S.C. 45) to the 

10 extent such section 5 applies to unfair methods 

11 of competition).’’. 

12 SEC. 4. NATIONAL INSTITUTES OF HEALTH; AWARDS TO 

13 DESIGNATED SMALL ENTITIES FOR PHASE 1 

14 OR 2 CLINICAL STUDIES ON DEVELOPMENT 

15 OF NEW DRUGS. 

16 Section 402 of the Public Health Service Act (42 

17 U.S.C. 282) is amended by adding at the end the fol18 lowing: 

19 ‘‘(m)(1) The Director of NIH shall make awards of 

20 grants or contracts to designated small entities to support 

21 qualifying clinical research on the development of new 

22 drugs that, in the determination of such Director, have 

23 the potential to make a significant contribution to the pre24 vention, diagnosis, or treatment of a disease. 

25 ‘‘(2) For purposes of this subsection:
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1 ‘‘(A) The term ‘designated small entity’ means 

2 a public or private entity (including a university or 

3 other educational institution) meeting the following 

4 conditions: 

5 ‘‘(i) The entity has been granted an ex6 emption under section 505(i) of the Federal 

7 Food, Drug, and Cosmetic Act. 

8 ‘‘(ii) Qualifying clinical research is being or 

9 will be conducted pursuant to such exemption. 

10 ‘‘(iii) The Director of NIH determines that 

11 the entity may lack the financial resources to 

12 complete the qualifying clinical research in13 volved unless an award under paragraph (1) is 

14 made to the entity. 

15 ‘‘(B) The term ‘qualifying clinical research’, 

16 with respect to a new drug, means the conduct of 

17 Phase 1 or Phase 2 studies within the meaning of 

18 section 312.21 of title 21, Code of Federal Regula19 tions (or successor regulations). 

20 ‘‘(3) In supporting qualifying clinical research under 

21 paragraph (1) for a fiscal year, the Director of NIH shall 

22 give priority to the development of any new drug described 

23 in such paragraph that is being developed for a disease 

24 for which the amount of funds for clinical research obli25 gated by the National Institutes of Health for the pre-
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1 ceding fiscal year is significantly less than amounts obli2 gated by such Institutes for such fiscal year for clinical 

3 research on other diseases. 

4 ‘‘(4) For the purpose of carrying out this subsection, 

5 there are authorized to be appropriated $750,000,000 for 

6 fiscal year 2004, and such sums as may be necessary for 

7 each subsequent fiscal year.’’. 

8 SEC. 5. CONTINGENT PAYMENT FOR NATIONAL INSTITUTES 

9 OF HEALTH SUPPORT FOR DEVELOPMENT OF 

10 NEW DRUGS. 

11 Section 402 of the Public Health Service Act (42 

12 U.S.C. 282) (as amended by section 4) is further amended 

13 by adding at the end the following: 

14 ‘‘(n)(1) The Director of NIH may not award a grant 

15 or contract to an entity to support the development of a 

16 new drug, including any research related to such develop17 ment, unless the entity involved agrees that, if the new 

18 drug with respect to which the award is made is approved 

19 under section 351 or under section 505 of the Federal 

20 Food, Drug, and Cosmetic Act, the entity will, for the ef21 fective patent period for which the new drug is in commer22 cial distribution, pay to the Director of NIH an amount 

23 equal to 5 percent of the profits derived from sales of the 

24 new drug during such period. After consultation with such 

25 entity, the Director of NIH may establish a schedule of 
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1 periodic payments to meet the obligation of the entity 

2 under the preceding sentence. 

3 ‘‘(2) Payments under paragraph (1) may be made di4 rectly by the entity involved or by an entity that has pur5 chased the rights to the new drug involved or has received 

6 a license regarding the sale of the new drug. 

7 ‘‘(3) Subject to the availability of appropriations, 

8 amounts paid to the Director of NIH under this sub9 section are available to the Director to award grants and 

10 contracts for the development of new drugs, and such 

11 amounts may remain available until expended.’’. 

12 SEC. 6. STUDY ON EFFECTS OF FEDERAL SUPPORT FOR RE13 SEARCH AND DEVELOPMENT OF PRESCRIP14 TION DRUGS. 

15 (a) STUDY.—The Comptroller General of the United 

16 States shall conduct a study and make findings and rec17 ommendations with respect to the effects of Federal fund18 ing used by Federal agencies to conduct or support re19 search and development of prescription drugs, on the fol20 lowing: 

21 (1) The overall cost of such research and devel22 opment. 

23 (2) The pricing of prescription drugs. 

24 (b) REPORT.—Not later than 1 year after the date 

25 of the enactment of this Act, the Comptroller General of 
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1 the United States shall submit to the Congress a report 

2 on the study, findings, and recommendations required by 

3 subsection (a). 

4 SEC. 7. STUDY ON PHARMACEUTICAL PATENT EXTENSIONS 

5 AND MARKET EXCLUSIVITY PERIODS. 

6 (a) STUDY.—The Comptroller General of the United 

7 States shall conduct a study and make findings and rec8 ommendations on pharmaceutical patent extensions and 

9 market exclusivity periods under Federal law, including 

10 the effect of such extensions and periods on possible delays 

11 in the introduction of generic versions of prescription 

12 drugs. 

13 (b) REPORT.—Not later than 1 year after the date 

14 of the enactment of this Act, the Comptroller General of 

15 the United States shall submit to the Congress a report 

16 on the study, findings, and recommendations required by 

17 subsection (a).

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