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REP. DINGELL’s "EMERGENCY" FDA BILL WILL ESTABLISH CRIMINAL PENALTIES FOR FRAUDULENT ANDAs, REINSTITUTE HHS IG ENFORCEMENT AUTHORITY, STAFFER TELLS APhA

Executive Summary

Rep. Dingell (D-Mich.) is likely to propose legislation by early April to enhance FDA's enforcement authority and to authorize the HHS Inspector General to investigate felony violations of the FD&C Act, Energy & Commerce/Oversight subcommittee staffer David Nelson indicated March 13 at the American Pharmaceutical Association's annual meeting. Describing what he characterized as an "emergency" bill, Nelson said it would establish criminal penalties for defrauding the ANDA review system. The bill will also give FDA the authority to debar firms guilty of fraud as well as withdraw ANDAs. The subcommittee economist said he expects the legislation to "be circulated if not [introduced] within the next two or three weeks." The emergency bill will be one of two measures Dingell plans to introduce that will amend the FD&C Act to address problems that have surfaced during the subcommittee's generics investigation, Nelson said. "There is a very high probability there will be not one bill but two," Nelson told the pharmacists. He said that a more comprehensive amendment of the FD&C Act, involving less urgent changes, could be deferred until the 102nd Congress. Tentatively scheduled to end Oct. 5, the current Congress is beginning to wind down; therefore, sweeping amendments would be difficult to enact in the remaining time. However, Nelson explained, the subcommittee hopes to agree on a shorter bill that will be easier to pass quickly because "we've got to have an emergency fix of certain problems." Nelson said that one of the problems that must be addressed immediately is the dearth of criminal investigators who can be assigned to felonious violations of the FD&C Act since HHS withdrew enforcement authority for such cases from the Inspector General. "The [Inspector General] problem has to be and will be solved," he maintained. "There will be [IG criminal inspectors] investigating felony violations of the FD&C Act. That's going to happen -- unless Mr. Dingell loses," he continued. However, Nelson suggested that the chairman is not likely to lose the fight for expanded IG authority: "I suspect he will be joined by every member of the subcommittee in sponsoring the bill." HHS has acknowledged that Secretary Sullivan acted under pressure from the Justice Department in January when he rescinded a delegation to the IG of limited enforcement authority for the FD&C Act ("The Pink Sheet" March 12, p. 10 and Jan. 8, p. 12). Nelson said the subcommittee is likely to issue a separate report on HHS' rescission of the IG delegation before it reports its broader findings on the generic drug investigation. The recission "is under active investigation" by the subcommittee, Nelson noted. He predicted that there will be a "subcommittee report on that before there is a subcommittee report on the generic drug problems because we've got to deal with that issue now." The reason for the urgency, Nelson explained, is that more than 130 criminal investigations into FDA regulatory violations recently transferred from the IG to the Justice Department are "about to go right into the toilet." Nelson suggested that the HHS secretary was operating with "serious misinformation" when he justified the rescission of the IG's authority on the grounds that the generic crisis was over. The transferred cases involve drug diversion, illegal steroid distribution and counterfeit drugs, Nelson said. "Some 50 of them were in front of sitting federal grand juries at the time they were yanked," he noted. In about 16 others, "the principal evidence was the result of wiretaps the [IG] agent was wearing." There are several reasons why FD&C Act enforcement is weakened absent involvement of the IG, Nelson contended. Before FDA can refer a case to the Justice Department for prosecution, the act requires the agency to "notify [the firm] and provide an opportunity for hearing," he said. Further, if FDA wants to halt a firm's sales, seize products, or obtain a search warrant for its inspectors, the agency must first appeal to state authorities, the appropriate district courts, or wade through "layers" of bureaucratic requirements. Reliance on the Justice Department for enforcement raises questions of resources and interest, Nelson continued. "We don't have enough FBI agents to take care of most of the statutes [now] on the books," he said, suggesting that criminal investigators be assigned to FDA as an "alternative." In the precedent-setting example at the Environmental Protection Agency, Congress provided the agency with its own investigators because the FBI's interest in violations of toxic waste disposal regulations extended only as far as the involvement of organized crime. Regarding the "system of penalties" to be established by the emergency bill, Nelson said it will allow FDA to debar and retroactively withdraw ANDAs of "firms that -- in the words of" Rep. Bilirakis (R-Fla.) -- "probably should never be allowed to make medicines again." The legislation will also provide "a sunshine provision" in the ANDA process so that "people can know whether or not their applications are being held up because they're deficient, because of reviewers' incompetence, or because [the applicants] happened to complain too loudly to their local subcommittee." Introduction of a second, more sweeping bill could be deferred until next year, the subcommittee investigator said. Dingell told his staff "to take a de novo look at the whole regulation of foods, drugs and cosmetic," and that "probably will not be accomplished in terms of a bill much before the end of this Congress," Nelson noted. However, he maintained, "I think it's safe to say that members on both sides of the aisle [agree]...that the overall FD&C Act is not working the way Congress intended." One likely provision of the broader legislation would address the 1984 ANDA amendments by requiring tighter bioequivalence standards for certain products. Nelson suggested that FDA should establish "definitions of bioequivalence that meaningfully distinguish between therapeutic ranges of drugs." The bill may also include a provision to establish FDA as an independent agency. In a March 6 letter to Sullivan, Dingell suggested that the rescission of IG enforcement authority could lead Congress to reconsider "FDA's placement within HHS" ("The Pink Sheet" March 12, p. 11). In addition, to deal with the near shutdown in the ANDA review process, Nelson said FDA must establish a new system that is both efficient and "designed to detect a pattern" of misbehavior. Nelson said the subcommittee has "a lot of specific concerns...about the [ANDA] bottleneck [and] about the lack of the agency's ability to come to grips with the narrow therapeutic range drugs" as a distinct category of drugs. Nelson also told the annual pharmacists meeting that the generic crisis is worse than has been publicly acknowledged by HHS and industry. However, Nelson noted that the Generic Drugs Division -- excluding the Bioequivalence Division and the antibiotic monographs branch -- comprised only 30 full-time equivalents. "Four people out of the 30 have pled guilty to taking money," he pointed out, and "the U.S. attorney said it ain't over." Regarding the extent of industry culpability, Nelson maintained that about one-half of the 20 leading firms that control the vast majority of the generic drug market either "are under investigation for fraud" or "have already pled guilty" to paying illegal gratuities. Those guilty and suspected firms "produce between one-third and one-half of the production of this industry," he contended. Although the generic drug manufacturers represent a $7 bil. industry, "if you knock out the pre-1978 antibiotics" for which approvals are based on monograph compliance rather than ANDA submissions, "20 firms control 90% of this market," he declared. Nelson criticized the removal of former Commissioner Young from FDA. Both Democrat and Republican members of the subcommittee "were incensed" by Young's ouster "because that decision virtually guaranteed that the agency would be without political leadership over at least a nine-month period," the subcommittee staffer said. Naming Benson, who is "qualified" and has "integrity," as Young's replacement was wise, he continued; however, "he doesn't have the political strength -- no acting commissioner has the political strength -- to compel the changes that have to be made in that agency." FDA Center for Drug Evaluation and Research Director Carl Peck, MD, told the APhA session that the generic investigations have uncovered no evidence of safety problems with ANDAs that were submitted by implicated firms or handled by former FDAers who accepted illegal gratuities. FDA has "re-reviewed a substantial number" of those ANDAs "in an entirely independent way" and determined that they are "scientifically sound" and "approvable," Peck said. * Peck also explained that FDA in its re-review process is relying on dissolution methods, rather than in vivo protocols, for retesting generic products. "We have not had the opportunity, the resources or the capacity to retest...any of the drugs in humans," he said. "The biopharmaceutical research community over the last two decades has developed a set of dissolution tests which is aimed at being able to detect significant deviations in product dissolution. Where that impacts upon the rate and extent of bioavailability, that can serve as the important quality control signal or measure for detecting or anticipating in vivo performance." After the session, Nelson took issue with FDA's reliance on re-reviews of suspect ANDAs. Maintaining that the efficacy of suspect generic products can be demonstrated only by new bioequivalence studies, Nelson said re-reviews "don't catch clever fraud; they only catch shoddy fraud." Nelson also credited former Generic Drug Division Director Marvin Seife, MD, for providing the subcommittee "with the first roadmap of problems in the industry." "Up until Seife began to talk to us" in a May 3 closed session testimony ("The Pink Sheet" May 5, p. 8 and May 12, p. 12), "we saw this as largely an FDA problem, not an industry problem," he said. Seife's testimony made it "clear that the problem was two-fold and the problem with the industry might go far larger and far deeper than the problem with the agency." In addition, he praised APhA Scientific Affairs Director Arthur Kibbe, PhD, for providing the subcommittee "unbiased scientific expertise" during the investigation. He noted that it was difficult to find experts not connected with the brandname or generic industry or with FDA.

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