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REP. DINGELL’s "EMERGENCY" GENERIC DRUG BILL FINAL DRAFT EXPECTED DURING FIRST WEEK OF MAY; HHS SENDS FDA-WIDE DEBARMENT BILL TO CONGRESS ON APRIL 23

Executive Summary

Rep. Dingell (D-Mich.) is getting ready to circulate a final draft of his emergency generic drug bill among members of his House Energy & Commerce Committee during the first week of May. Introduction of a formal bill will follow within a week or two, once the number of cosponsors can be assessed. The Michigan Democrat's legislation differs in scope from an HHS proposal sent to Congress on April 23. Whereas Dingell's bill focuses on solutions to specific problems uncovered by the generic drug investigations, the department's legislation includes sweeping changes of FDA's regulation and enforcement of all industries with products reviewed and approved by FDA. The Dingell bill is expected to strengthen penalties for firms that offer illegal gratuities to FDA employees or submit fraudulent information to the agency in connection with ANDA submissions. However, authority to debar firms or to suspend their approvals will be limited to its effect on the pursuit of generic drug marketing, and not full NDAs. The congressman reportedly feels that although it would be appropriate to block misbehaving firms from developing and marketing generic products, it would not be in the public interest to stop development or marketing of innovative and potentially life-saving single-source products. In addition, Dingell's measure will authorize the HHS Inspector General to investigate and enforce felony violations of the FD&C Act. The bill also is expected to provide that information from generic marketing applications be open to the public so that competitors will be able to determine whether their applications are receiving equitable treatment from FDA reviewers. Because both bills are health related, there is a good chance they will first go to Rep. Waxman's (D-Calif.) Energy & Commerce/Health subcommittee for review and mark-up. Waxman's Health Subcommittee staff is already working with the Oversight Subcommittee staff on the content of the Dingell bill. Moving the legislation into Waxman's subcommittee will mean that the California congressman will finally have to confront the generic scandal and its aftershocks, which are threatening the generic approval process he helped establish in the 1984 Waxman/Hatch act. Waxman has steadfastly remained on the sidelines throughout Dingell's investigation, which has uncovered widespread abuses of the ANDA approval process by a surprising number of generic manufacturers that paid illegal gratuities to FDA employees for favoritism and exploited the "honor" system set up by Waxman/Hatch. Waxman's partner in enacting the ANDA approval process, Sen. Hatch (R-Utah), reportedly will be a sponsor of the Administration's bill to grant HHS punitive powers in dealing with abuses of the FD&C Act. Called the Food Drug and Device Fraud and Abuse Prevention Act, the Administration proposal calls for coordination with the Justice Department in levying fines against individuals and companies that have falsified information, attempted to bribe HHS officials, or otherwise violated the FDA approval process. The proposal stipulates that HHS will not initiate civil money penalties until "a) the Attorney General authorizes the Secretary [of HHS] to initiate the action, or b) 60 days have elapsed without a decision by the Attorney General," the legislation states. Proposed fines for illegal activities are "not more than$100,000, in the case of an individual, and $5 mil., in the case of any other person, for each such act." The provision for coordination with Justice is one of the few changes to a draft version of the bill that was floated earlier this year ("The Pink Sheet" April 9, p. 3). Like the draft, the final proposal would authorize the following penalties: "Mandatory debarment" from the FDA approval process for at least three years for any person convicted of a criminal offense relating to the drug development/approval process. "Permissive debarment" (providing that HHS may debar) for at least three years any person that is convicted for an activity regulated by FDA or a comparable state agency; convicted for bribery, fraud, a similar activity, or obstruction of justice; that HHS determines has bribed, coerced or attempted to bribe or coerce an HHS official; that knowingly made false statements to FDA or HHS; that knowingly failed to disclose a material fact; or that endangered the public health or safety by knowing violation of an FDA statute or regulation. Two-year suspension, beginning at the time of conviction, of all approvals obtained during the period of illegal activity. In the case of an entity, the timeframe is the date of the first transaction or occurrence named in the indictment or information that was the basis for conviction and the date of conviction. In the case of an employee, consultant or agent of a company, the time period ends when the individual is no longer an employee/agent of the company. Imposition of civil monetary penalties for any person that knowingly makes a false statement or representation related to an approval; bribes, coerces or attempts to bribe or coerce an HHS official in any matter related to FDA regulation; destroys, alters, removes or secretes evidence held by HHS; knowingly fails to disclose a material fact; knowingly obstructs an HHS investigation related to FDA; fails to report certain required information; uses or employs an individual that the person knows or should know is debarred; is debarred and provides their services to another person that could then be subject to sanction; or has endangered the public health through knowing violation of an FDA statute or regulation. The Pharmaceutical Manufacturers Association will oppose the legislation if it is introduced. PMA has no formal position on the Dingell draft bill; however, it is said to have concerns over the measure's debarment and suspension provisions, despite their applicability only to generic drug applications. Under the HHS proposal, fines may not be levied any later than six years from the date the act took place or three years after known to HHS (but no later than 10 years after the act.) The final proposal also modifies the provisions for debarment to require a 60-day notification period prior to debarring a person. The draft required that a person be notified of the reasons for, effective date, and minimum period of debarment, and opportunity for a hearing, but did not specify a timeframe for notification. Although the notification must be sent to a person at least 60 days prior to debarment, the proposed legislation notes that HHS "may suspend the person from involvement in the process for approval...effective immediately upon issuance of notice thereof by the Secretary to the person and shall remain in effect pending final resolution of the proposed debarment."
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