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Executive Summary

FDA would like retroactive legislation providing authority to revoke ANDA approvals from sponsors that engaged in fraudulent behavior, Commissioner Young and Chief Counsel Margaret Porter testified at the House Commerce/Oversight Subcommittee's Nov. 17 hearing on the generic drug investigations. The agency officials testified that FDA needs additional statutory authority to take the punitive steps requested by the generic manufacturer Barr Labs in a petition. Barr has asked FDA to withdraw ANDA approvals obtained during periods when illegal payments to FDA were confirmed ("The Pink Sheet" June 19, p. 6). The petition alleged that Par, Quad, Pharmaceutical Basics and American Therapeutics realized unfair competitive advantage through illegal gratuities paid to FDAers. Porter indicated that FDA could successfully defend an inevitable court challenge of authority granted retroactively through legislation. On Nov. 16, Porter forwarded to Young an opinion that further legislation is necessary. Young said the opinion asserts that "where there is a one-for-one identification of fraud or major GMP problems or substitution, we will be able to remove those ANDAs through a notice of opportunity for hearing." However, he noted, "we are not able to reach a large number of ANDAs cited within the Barr petition unless we receive new legislation to strengthen" FDA's authority. Porter noted that the legal opinion fully discusses Barr's recommendations "and the extent to which we believe FDA has current authority to grant the petition or the extent to which legislation would be required." A formal response to the Barr petition is also being prepared, she added. Rep. Oxley (R-Ohio) asked whether the legislation should be retroactive. "Yes," Young replied. Porter said: "In my opinion, absolutely." If made retroactive, statutory authority "will, of course, be challenged." However, she continued, "it is our judgment that we could bring a good defense to such a challenge and would certainly be prepared to do so." Responding to a question by Oxley, Young agreed that further legislation for enhancing FDA enforcement is needed before the end of 1990. "I do know for a fact that the legislative package dealing with the enhancement of the authority of the FDA has not [yet] been sent forward to" the Office of Management and Budget, Young said. It will be forwarded by the end of the year, "and I hope it will happen by the end of the month," he added. Young said that before he leaves the agency he will forward to HHS a proposal to require that contract laboratories retain test samples. FDA was able to analyze bioequivalence test samples as part of its investigations only because three contract laboratories voluntarily kept them. Asked when FDA will require retention of samples by contract labs, Young replied that a proposed regulation has been cleared by FDA lawyers and awaits his signature. "It will be done before Dec. 17 and it will be sent up the line," he said. In his prepared testimony, Young explained that retention of samples will allow FDA "to perform random spot checks to ensure that test samples are what they are purported to be." The commissioner pointed out that FDA's enforcement capabilities also include product withdrawal and recall authority; state cooperation, by which states can suspend licenses of firms within their jurisdictions based on FDA investigative reports; and federal procurement restrictions, whereby the federal agencies such as Defense Department, the Veterans Affairs Department and the Agency for International Development will not purchase drugs from manufacturers whose products FDA judges unsuitable. Young noted FDA has recommended that nine firms are not acceptable for awards of future government procurement contracts, and 10 have been recommended for placement on "hold" status until relevant investigations have been completed. Par and Quad "have already been formally suspended from federal procurement due to criminal charges involving fraud," the commissioner testified. "Such action precedes and has a similar effect as full debarment, which occurs following court conviction and sentencings, and can normally last up to three years," he added.

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