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REP. DINGELL’s LEGISLATIVE SCHEDULE FOR FDA EMERGENCY BILL CALLS FOR ENERGY & COMMERCE COMMITTEE ACTION IN JULY; WAXMAN OPPOSES FOCUS ON GENERICS

Executive Summary

Rep. Dingell (D-Mich.) plans to move his FDA "emergency" generic drug legislation through the House Energy & Commerce Committee in July. The bill, HR 4810, was the subject of a legislative hearing in the Energy & Commerce/Health Subcommittee June 28. According to Dingell's schedule, the Health Subcommittee will mark up the bill next month and a full committee markup would follow shortly thereafter. The bill has the support of the majority of the full committee, with the notable exception of Health Subcommittee Chairman Waxman (D-Calif.). HR 4810 would provide FDA with new authority to impose sanctions for illegal activities in the generic drug industry. Waxman emphasized his objections to the limited scope of Dingell's bill at the June 28 hearing. "I am concerned about the narrow scope of HR 4810," Waxman said in opening remarks. "As members of this subcommittee well known, there are many examples of wrongdoing by brandname drug companies and medical device companies, resulting in severe injury and death," he said. As examples, Waxman mentioned Lilly's drug Oraflex and Pfizer's Bjork-Shiley heart valve. Waxman acknowledged "the practical considerations" of targeting a single industry to "speed up" the process of getting legislation passed. However, he added, "that is not the basic principle for which we prosecute the motives." The "purpose of sanctions," Waxman continued, "is to punish wrongdoers for what they have done and to deter others from doing those things in the future. And I think it's important to have those sanctions available for the purposes of detering any wrongdoing by anybody who has business with the FDA. I think we ought to able to apply all the sanctions that would be necessary to bring about justice." By contrast, Dingell contends that the generic drug situation requires "unique" and immediate remedies. "The generic drug industry calls for unique remedies by the breadth of the scandal," he said in a written statement released at the hearing. "This, coupled with a necessarily streamlined process for generic drug approvals, makes the case for special treatment." The Michigan Democrat also pointed out that extending the bill's scope to address enforcement problems in all FDA-regulated industries would "require far more than a simplistic extension of the provisions of HR 4810. And broadening the legislation would cause delay until 1991, which only helps those in the industry who resist a thorough cleanup." Dingell also argued that severe penalties will benefit the generic drug industry by taking away a public relations weapon from critics of the industry. He maintained that legislative delay helps "those in the brandname industry who, for their own greedy ends, wish to prolong the pain for the generic industry." Waxman also opposes a pet Dingell project: the empowerment of the HHS Inspector General to take over many FDA investigations. Waxman said he is "concerned" that the IG provision "deprives the agency of control over these investigations. The bill's failure to provide the FDA the ability to coordinate any work conducted by the IG with the work that is being conducted by its own investigators is, in my view, a major omission." The adequacy of FDA's self-monitoring was discussed in an exchange between Rep. Wyden (D-Ore.) and FDA Acting Commissioner Benson. Wyden noted that Barr Labs, in prepared testimony for the hearing, supported the IG provision on the grounds that the agency cannot police itself. Barr said it had lodged formal complaints with FDA officials about suspected wrongdoing but that "FDA ignored the allegations and refused to investigate." Wyden invited Benson to respond to Barr's charges. "I'd be delighted to respond to any charges that Barr or anybody else had," Benson said, but "I'm not prepared to do that here." He said he would supply the information for the record. The acting commissioner questioned the nature of some of Barr's accusations against the agency. "I've been very involved over the past year, year and a half, in some of the letters that we've gotten from Barr," Benson said, "and frankly, they set forth a series of very confused allegations that we've tried our best to respond to...We take them seriously. But you reach a point where, if you don't understand what the charges are, you can't do much about it." The Bush Administration's response to the generic scandals, the broader debarment bill, was the subject of Benson's testimony. The administration bill does not include a provision to expand inspector general authority as does the Dingell bill. The administration measure further differs from HR 4810 by extending FDA's sanction authority to all regulated industries. Sens. Hatch (R-Utah) and Thurmond (R-S.C.) have recently introduced the Administration's bill in the Senate; no House sponsor has yet emerged. Dingell criticized the administration's position toward the generic drug industry as too permissive and suggested that "I find it curious that the Administration comes forward with such a soft and solicitous attitude for scoundrels, knaves and rascals who have not only defied the government but who have actually sought actively to subvert it," Dingell said. "The questions which have been raised by these people with regard to the behavior and attitude and interest of the FDA," Dingell declared, "are reinforced by the testimony of the Administration today. I find myself thoroughly displeased. I wish my friends in the FDA to know that this will pique my further interest in the performance of the agency." Dingell expressed skepticism of the efforts of the National Association of Pharmaceutical Manufacturers to rehabilitate itself and the generic drug industry in a letter sent to FDA June 21. Dingell suggested FDA exhibited "naivete" when it reported to the subcommittee in a June 6 letter that the agency believes "on the whole" NAPM has taken "an earnest, good faith effort toward rehabilitation." The congressman asked FDA to supply the subcommittee "with the basis" for its assessment of NAPM's actions, "including the names of the persons at the FDA and the NAPM responsible for these conclusions." Dingell also requested "all documents relating to NAPM-FDA contacts regarding the ethical standards of NAPM members" and a description of FDA's plan for monitoring NAPM. Dingell also wrote to NAPM June 21, asking the association to provide by July 2 records addressing "the legality or propriety of payments" of expenses for federal officials attending association activities, NAPM ethical requirements, and disciplinary actions against members. The Michigan Democrat further requested lists for each year since 1984 of members, total dues, other income, legal and professional fees paid, and payments made to the New York law firm Bass & Ullman. He additionally asked NAPM to identify "companies for which NAPM or its counsel has information regarding the diversion of prescription drugs, improprieties in the generic drug approval process or other violations of federal or state law." Waxman's concern over the focus of the bill on the generic industry alone was echoed at the hearing by NAPM and the Generic Pharmaceutical Industry Association. The American Pharmaceutical Association supported the bill. GPIA President Dee Fensterer testified that the association believes "the general provisions of HR 4810 -- debarment, civil money penalties, and suspension and withdrawal of approved applications -- are appropriate sanctions for illegal acts." However, she added, "we do not...agree with the view that 'political realities' preclude enactment of a bill which applies these sanctions to all FDA-regulated industries. We think there is strong public support, and a well-documented case, for a bill of broad scope, which prohibits illegal acts without distinction as to who committed them." NAPM President Robert Milanese stated that his association "opposes...legislation that singles out the generic segment of the pharmaceutical industry or that denies persons due process." There are "many small law-abiding companies in our industry," Milanese continued, "nevertheless, these companies are suffering because of the public perception that generic drugs are not safe...Part of that misconception is nurtured and fostered by HR 4810, which, despite its good intentions, is giving the wrong message to the public." Dingell questioned GPIA and NAPM on the bill's debarment provision. GPIA's Fensterer explained that the association "did not think from a public policy perspective that it was appropriate for the actions of one individual to close the doors of a company and [effect] the employees of that company, who have nothing to do with the wrongdoing." Fensterer also pointed out that other statutes do not mandate a minimum or maximum period for debarment. The Dingell bill authorizes FDA to suspend a firm or individual for a minimum of three years for fraud or other illegal acts. NAPM's Milanese said his association believes that debarment is "appropriate" but that it "should be applied equally across the pharmaceutical industry or wherever there are problems." Dingell also sought comments on the bill's "sunshine" provision. Under the provision, information contained in ANDAs would be open to scrutiny both by congressional oversight staffs and by sponsors of competing ANDAs that wish to monitor whether parallel applications are being treated in an equitable manner by the agency. Both GPIA and NAPM opposed that provision. Milanese pointed out: "I think it just reveals strategy of firms which are obviously competitors and trying to make internal confidential decisions." However, Dingell asked, "these are not new drugs...what trade secrets would be involved?" In response, Fensterer pointed out: "There have been some successful patent challenges where a company has challenged the validity of a patent...Everybody in the world would know that that patent might be one to look at." Maintaining that proprietary information is already circulated among some industry members, Dingell cited as an example a Nov. 5, 1986 memorandum from Danbury Vice Chairman William Haddad to company execs discussing, among other things, the fact that only one ANDA for generic Dyazide was pending at FDA but that it was moving slowly. Dingell released the memo at the hearing. That memo predates FDA action on ANDAs for generic versions of Dyazide by about a year-and-a-half. Rep. Wyden (D-Ore.) repeatedly asked the generic association witnesses for "hard proof" of widespread illegal activities in regulated industry outside the generics area. When they said they were not prepared to provide it, Wyden said that while he had thought opponents of the bill's scope could "argue a pretty good case" for broadening the bill, he noted that "you haven't provided any evidence." Testifying in a separate panel, Mylan and Barr Labs continued their crusade to cleanse the generic drug by proclaiming their support for Dingell's legislation. Mylan Executive VP Dana Barnett said the bill will "forestall any further erosion of the generic drug industry's position and arm Mylan and other honest companies with the necessary tools to effectively combat the inevitable campaign of innuendo that lies ahead," Barnett said. Barr official Kip Schwartz maintained that the legislation is needed to reverse "the steady decline" of the generic drug industry. Schwartz testified that despite Barr's "unblemished record," the company's "customers are reporting that retail pharmacists have been avoiding the generic drugs stocked by their corporate warehouses in order to obtain brandname drugs from local distributors, all in response to consumers' concerns." By their unqualified support for the Dingell bill, Barr and Mylan have isolated themselves from the rest of the generic drug industry. Schwartz reported that Barr has separated from the two major generic trade associations in frustration over their inability to act decisively to correct the industry's image. Barr resigned from both GPIA and NAPM "some time ago," he said. "Even at this time of crisis, the best these trade associations can do is generate some lukewarm support, if you can call it that, for a piece of legislation that is absolutely critical to our continued survival," he added. In a direct plea to Waxman, Schwartz said: "You and your committee have played a pivotal role in creating our industry" through the 1984 Waxman/Hatch law. "Now the industry needs your help to survive." Two other firms represented at the hearing, Vitarine and Par, expressed their concerns about HR 4810. Vitarine President Roger Jordan testified that the bill's provision for a mandatory three-year debarment of companies convicted of felony violations would constitute a "death sentence" if imposed against Vitarine. "Vitarine debarred itself in 1989" when it recalled and suspended distribution of all products potentially tainted by improprieties of "just one individual and one or two of his subordinates," Jordan said. The company is seeking an amendment to HR 4810 to allow FDA "to take into account the full record of a company's actions," he added. Par President Kenneth Sawyer contended that enforcement tools such as debarment should not only "punish and discourage improper or illegal conduct" but also "encourage legal, ethical and responsible behavior." Actions, such as Par's move to fire executives responsible for the firm's past violations, "should be encouraged," Sawyer said. "If companies know there will be no recognition of responsible rehabilitative management and behavior, there will be no incentive to undertake it. The incentive will be to ignore or cover up." Sawyer suggested an amendment to force a company's "wrongdoer to surrender stock or other beneficial ownership or interest in a company at which he engaged in that wrongdoing." Punishment should "more appropriately target the wrongdoing and the wrongdoer, not destroy a company taking the necessary steps toward rehabilitation," he said.
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