I
107TH CONGRESS
2D SESSION
H. R. 4998
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
JUNE 21, 2002
Mrs. MCCARTHY of New York 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.
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 2002’’.
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 2003, 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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