HHS GENERICS "ACTION PLAN" PROPOSES NEW LEGISLATION TO INCREASE FDA STATUTORY AUTHORITY TO TAKE PUNITIVE ACTIONS: FD&C ACT EQUIVALENT OF RICO

HHS plans to seek legislation that "will provide flexible means by which the Secretary and FDA can protect the public health, punish wrongdoers, and assure continuing public confidence in the country's supply of drugs," HHS Secretary Sullivan announced Aug. 18. In a release outlining proposed steps to deal with abuses of the generic drug approval process, Sullivan said he would submit a legislative proposal "to strengthen and broaden the Department's authority to act promptly against any improper activity in connection with the applications for approval of drugs." The legislative package is clearly an FDA rescue plan to restore public confidence and appease congressional critics of slow action against the fraud and false test results in the agency generic drug review procedures. Administrative solutions without an accompanying legislative package is not likely to satisfy congressional investigators. A key question to watch as legislation unfolds from the generics investigation is the extent of discretion given to FDA to react against firms that have violated the FD&C Act. The shorthand term emerging from the generics scandal to describe the authority FDA would like to have is the right to "debar" a violative firm and take away its right to market any products. While that penalty may seem justified in the heat of the generics fight, Congress and HHS ought to be careful to put some limitations on FDA's retaliatory authority in the future without limitations. Without limitations, FDA "debarment" authority could turn into something like SEC's use of RICO. Commissioner Young promised that "FDA will work to fully support the Secretary's efforts to submit a legislative proposal and promptly develop regulations to implement an approved legislative proposal." HHS officials describe the crux of the legislative package in three types of added authority: * the ability of FDA to debar companies whose officials have been implicated in wrongdoing, * the right to withdraw or suspend tainted ANDAs, and * the discretion to impose monetary penalties for regulatory infractions. According to FDA, a sponsor has not yet been found to introduce such a bill. However, the most likely candidates to take the legislation through Congress would be the original sponsors of the Act that expanded use of ANDAs, Rep. Waxman (D-Calif.) or Sen. Hatch (R-Utah). It was primarily Waxman's efforts behind the 1984 ANDA legislation and followup oversight that have led to the rapid development of the generics business and assured fast FDA approvals of generic applications. However, Waxman has surprisingly remained on the sidelines as Congress has pursued the problems with approvals. He has a major piece of medical device legislation in the works again this year. It is possible that he could put together a generic drug legislative package with that device bill. Administratively, FDA intends to go ahead with the creation of an Office of Generic Drugs along side the two other drug review offices in the Center for Drug Evaluation & Research. The establishment of the new office calls for an almost three-fold increase in generics staff manpower. The increase in staffing will focus on field inspectors. "Efforts are presently under way to recruit and install, as rapidly as possible, a permanent management team," the plan notes. "In addition to the review of applications, this new team will be charged to ensure through research that the highest level of quality control is implemented and the most effective and fair-minded procedures are employed to evaluate generic drug products." A "technical scientific advisory committee" similar to new drug advisory panels is also being planned by FDA. The committee will "provide the new office with expert counsel on problematic or complex scientific matters associated with generic drug reviews," the plan states. To get its additional resources, the agency is likely to turn back to its user-fee fallback. Instead of congressional appropriations, the plan suggests the euphemistic "alternative methods of financing to supplement the corrective actions taken thus far as well as actions outlined in the Secretary's statement today." Increases in the number of field inspectors, alone, will cost the agency about $ 18 mil., according to a figure floated by HHS officials. In the meantime, Sullivan said, "if a company is found to have submitted false data, FDA will seek to remove all drug products that have been implicated." Furthermore, FDA will aggressively try to enforce its GMP regs as it does in major regulatory tussles with companies. "If evidence points to widespread manufacturing deficiencies," the plan notes, "FDA will move to block the marketing of all drugs produced in the manufacturing facility until the deficiencies have been fully corrected." In addition, "vigorous enforcement actions, including withdrawal of application approvals, will be taken as appropriate." FDA has already begun to take action against companies that have falsified data and whose officials have been charged with giving illegal gratuities, such as Par, American Therapeutics and Vitarine ("The Pink Sheet" Aug. 7, p. 3). In addition, the agency has begun a large-scale review of the 30 most prescribed generic drugs, which will involve products from virtually every generic manufacturer in the U.S. (see related item). FDA's generics plan also includes increased surveillance of the entire ANDA process. Under the plan, FDA will analyze "premarket product samples to determine whether generic drug companies have submitted valid samples in their marketing applications." While inspecting manufacturing facilities, FDA inspectors will perform "audits of products at both the development and production phase," the plan states. Contract labs will also undergo FDA inspections, according to the plan, "to affirm that product approvals by FDA are based on valid data." The plan continues that "additional samples of premarket batches may be collected and analyzed to confirm bioequivalence." Contract labs came into the spotlight when it was found that Vitarine's contract lab Pharmakinetics was unable to detect the difference in a switch between Vitarine's generic Dyazide and SmithKline's innovator product. Addressing industry's concerns about potential bias in the drug review process, the agency plans the creation of "an independent ombudsman reporting directly to the commissioner to ensure fairness in the decision-making affecting market approval for products." FDA also pledges that it will work for "closer and more effective coordination between the FDA and the Department's Office of Inspector General in the area of criminal investigations." The Office of the Inspector General, which has been conducting an audit of the Generic Drug Division since April, is expected to issue its report by mid-September.