I 
108TH CONGRESS 
1ST SESSION 
H. R. 828
To amend the Federal Food, Drug, and Cosmetic Act to allow certain appli-
cants 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 re-
ferred 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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Pharmaceutical Fiscal 
Accountability Act of 2003’’. 
SEC. 2. FINDINGS. 
The Congress finds as follows:
(1) Prescription drug costs continue to rise, af-
fecting all people in the United States. 
(2) Generic drugs are approved by the Food 
and Drug Administration and offer a safe alter-
native to brand-name drugs. 
(3) Access to generic drugs upon expiration of 
valid pharmaceutical patents can result in a cost-ef-
fective alternative to brand-name drugs. 
(4) The generic version of a drug often enters 
the market at a cost that is 25 to 35 percent less 
than the cost of the brand-name version of the drug, 
and after a few years typically sells for about 50 
percent of the cost of the brand-name version. 
(5) Enhancing competition between generic and 
brand-name drug manufacturers can reduce the cost 
of prescription drugs. 
SEC. 3. 180-DAY GENERIC DRUG EXCLUSIVITY FOR CERTAIN 
SUBSEQUENT APPLICANTS. 
Section 505(j)(5)(B) of the Federal Food, Drug, and 
Cosmetic Act (21 U.S.C. 355(j)(5)(B)) is amended—
(1) in clause (iv)—
(A) by striking ‘‘If the application’’ and in-
serting ‘‘Subject to clause (v), if the applica-
tion’’; and
(B) by striking ‘‘continuing’’ and inserting 
‘‘containing’’; and 
(2) by adding at the end the following: 
‘‘(v) If the application contains a certification 
described in subclause (IV) of paragraph (2)(A)(vii) 
for a drug, the Secretary shall treat the application 
as the first such application submitted under this 
subsection for that drug if every person that pre-
viously submitted an application containing such a 
certification for that drug—
‘‘(I) fails to market the drug within 60 
days after the Secretary approves the previously 
submitted application; 
‘‘(II) withdraws the previously submitted 
application; 
‘‘(III) changes, for any reason, the certifi-
cation in the previously submitted application to 
a certification described in subclause (III) of 
paragraph (2)(A)(vii); 
‘‘(IV) in a case in which, after the date on 
which the previous application was submitted, 
new patent information is submitted for the 
drug under subsection (c)(2) for a patent for 
which certification is required under subclause 
(IV) of paragraph (2)(A)(vii), fails to challenge
the patent that is the subject of the information 
within 60 days after the date on which the pat-
ent information is submitted; or 
‘‘(V) has engaged in conduct in violation of 
the antitrust laws (as the term ‘antitrust laws’ 
is defined in subsection (a) of the first section 
of the Clayton Act (15 U.S.C. 12(a)), except 
that such term includes section 5 of the Federal 
Trade Commission Act (15 U.S.C. 45) to the 
extent such section 5 applies to unfair methods 
of competition).’’. 
SEC. 4. NATIONAL INSTITUTES OF HEALTH; AWARDS TO 
DESIGNATED SMALL ENTITIES FOR PHASE 1 
OR 2 CLINICAL STUDIES ON DEVELOPMENT 
OF NEW DRUGS. 
Section 402 of the Public Health Service Act (42 
U.S.C. 282) is amended by adding at the end the fol-
lowing: 
‘‘(m)(1) The Director of NIH shall make awards of 
grants or contracts to designated small entities to support 
qualifying clinical research on the development of new 
drugs that, in the determination of such Director, have 
the potential to make a significant contribution to the pre-
vention, diagnosis, or treatment of a disease. 
‘‘(2) For purposes of this subsection:
‘‘(A) The term ‘designated small entity’ means 
a public or private entity (including a university or 
other educational institution) meeting the following 
conditions: 
‘‘(i) The entity has been granted an ex-
emption under section 505(i) of the Federal 
Food, Drug, and Cosmetic Act. 
‘‘(ii) Qualifying clinical research is being or 
will be conducted pursuant to such exemption. 
‘‘(iii) The Director of NIH determines that 
the entity may lack the financial resources to 
complete the qualifying clinical research in-
volved unless an award under paragraph (1) is 
made to the entity. 
‘‘(B) The term ‘qualifying clinical research’, 
with respect to a new drug, means the conduct of 
Phase 1 or Phase 2 studies within the meaning of 
section 312.21 of title 21, Code of Federal Regula-
tions (or successor regulations). 
‘‘(3) In supporting qualifying clinical research under 
paragraph (1) for a fiscal year, the Director of NIH shall 
give priority to the development of any new drug described 
in such paragraph that is being developed for a disease 
for which the amount of funds for clinical research obli-
gated by the National Institutes of Health for the pre-
ceding fiscal year is significantly less than amounts obli-
gated by such Institutes for such fiscal year for clinical 
research on other diseases. 
‘‘(4) For the purpose of carrying out this subsection, 
there are authorized to be appropriated $750,000,000 for 
fiscal year 2004, and such sums as may be necessary for 
each subsequent fiscal year.’’. 
SEC. 5. CONTINGENT PAYMENT FOR NATIONAL INSTITUTES 
OF HEALTH SUPPORT FOR DEVELOPMENT OF 
NEW DRUGS. 
Section 402 of the Public Health Service Act (42 
U.S.C. 282) (as amended by section 4) is further amended 
by adding at the end the following: 
‘‘(n)(1) The Director of NIH may not award a grant 
or contract to an entity to support the development of a 
new drug, including any research related to such develop-
ment, unless the entity involved agrees that, if the new 
drug with respect to which the award is made is approved 
under section 351 or under section 505 of the Federal 
Food, Drug, and Cosmetic Act, the entity will, for the ef-
fective patent period for which the new drug is in commer-
cial distribution, pay to the Director of NIH an amount 
equal to 5 percent of the profits derived from sales of the 
new drug during such period. After consultation with such 
entity, the Director of NIH may establish a schedule of
periodic payments to meet the obligation of the entity 
under the preceding sentence. 
‘‘(2) Payments under paragraph (1) may be made di-
rectly by the entity involved or by an entity that has pur-
chased the rights to the new drug involved or has received 
a license regarding the sale of the new drug. 
‘‘(3) Subject to the availability of appropriations, 
amounts paid to the Director of NIH under this sub-
section are available to the Director to award grants and 
contracts for the development of new drugs, and such 
amounts may remain available until expended.’’. 
SEC. 6. STUDY ON EFFECTS OF FEDERAL SUPPORT FOR RE-
SEARCH AND DEVELOPMENT OF PRESCRIP-
TION DRUGS. 
(a) STUDY.—The Comptroller General of the United 
States shall conduct a study and make findings and rec-
ommendations with respect to the effects of Federal fund-
ing used by Federal agencies to conduct or support re-
search and development of prescription drugs, on the fol-
lowing: 
(1) The overall cost of such research and devel-
opment. 
(2) The pricing of prescription drugs. 
(b) REPORT.—Not later than 1 year after the date 
of the enactment of this Act, the Comptroller General of
the United States shall submit to the Congress a report 
on the study, findings, and recommendations required by 
subsection (a). 
SEC. 7. STUDY ON PHARMACEUTICAL PATENT EXTENSIONS 
AND MARKET EXCLUSIVITY PERIODS. 
(a) STUDY.—The Comptroller General of the United 
States shall conduct a study and make findings and rec-
ommendations on pharmaceutical patent extensions and 
market exclusivity periods under Federal law, including 
the effect of such extensions and periods on possible delays 
in the introduction of generic versions of prescription 
drugs. 
(b) REPORT.—Not later than 1 year after the date 
of the enactment of this Act, the Comptroller General of 
the United States shall submit to the Congress a report 
on the study, findings, and recommendations required by 
subsection (a).
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