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Executive Summary

The "due process procedures, targeted remedies, and rehabilitation incentives" of the compromise generic debarment bill (HR 2454) make it "a better bill than the previous versions," the Generic Pharmaceutical Industry Association testified at a June 26 hearing of the House Energy & Commerce/Health Subcommittee. GPIA President Dee Fensterer praised the changes to the proposed legislation added by subcommittee Chairman Waxman (D- Calif.) in recent negotiations with Energy & Commerce Chairman Dingell (D-Mich.). With the changes, GPIA supports the bill. The National Association of Pharmaceutical Manufacturers similarly testified June 26 that they now support the debarment bill. Both associations representing generic manufacturers would prefer to see the debarment bill broadened to include other FDA- regulated industries or to see the bill's mandatory debarment provisions further watered down. Fensterer, for example, expressed concern that "corporate mandatory debarment for a minimum period will, in some instances, serve only a punitive purpose after the rehabilitative goals of the legislation have already been achieved." NAPM President Robert Milanese pointed out that the bill "does not apply to all wrongdoers, but is limited to the generic industry. Of course, that disturbs us." He added that "the decision on scope was a political one; and we understand that legislation is the art of political compromise." Although the compromise resulted in a generic-only scope, Milanese said, "we hope that the political process in the Senate has a different result." Fensterer proposed that amending the debarment bill to cover all FDA-regulated industries would put an end to "the double- standard" that FDA applies in regulating generic drugs versus brandname products. Waxman defended his support for the amended debarment legislation by arguing that similar penalties could be expanded to other industries in the future. "By acting on the Generic Drug Enforcement Act of 1991, we are not precluding future action on a debarment bill applicable to other FDA-regulated products," Waxman stated. "As I indicated at the hearing on the predecessor to this bill almost a year ago, I believe that the FDA should also have these authorities available to it in connection with its regulation of drugs not covered by the shortened generic drug procedures, as well as for medical devices and the other products it regulates," Waxman added. Originally, Waxman was an opponent of the debarment bill because of its exclusive focus on the generic drug industry. Waxman later endorsed the bill after working out a compromise measure with Dingell. The House bill and a companion measure in the Senate (S 1164) were introduced on May 23 ("The Pink Sheet" May 27, p. 3). Acknowledging Dingell's involvement with the debarment bill, Waxman said: "I want to commend you for your leadership on the issue." In addition, Waxman characterized HR 2454 as "a well- crafted bill" and "an innovative piece of legislation." Waxman also called the bill "a major step forward in the regulation of the generic drug industry." GPIA sent a letter on May 31 to FDA Commissioner Kessler to argue its position that FDA has adopted different rules for the regulation of generics and brandname products. A "serious double- standard . . . exists in enforcement standards and practices" at the agency, Fensterer charged. GPIA maintained that comments submitted by "PMA and several of its member companies" suggest "that manufacturing and product changes are being implemented by NDA holders during process validation, without the submission of amendments or supplements for approval by the agency." Fensterer testified that "unapproved product or manufacturing changes are not tolerated for a minute by the Office of Generic Drugs. Even the most minor changes by ANDA holders are deemed to be serious violations, and in some instances to be fraud, by the FDA's Office of Compliance." She added: "It thus seems apparent that while NDA holders are allowed to alter their products without prior approval, ANDA holders are being subjected to FDA's full armamentarium of enforcement tools, including criminal prosecution." Attorneys for Barr Labs and Mylan expressed the general support of those two firms for the debarment bill. However, the attorneys noted weaknesses in the bill that they believe need to be corrected. Barr Washington counsel H. Lawrence Fox (Winston and Strawn) stated that the one-year minimum debarment period for firms convicted of a federal felony in connection with the generic drug approval process "may not be enough of a penalty." He noted that the three-year minimum debarment period that was in last year's bill, HR 4810, "is preferable" and a longer debarment period "should motivate companies not to engage in illegal activities." Waxman had objected to the three-year minimum because he was concerned that it would be too severe a penalty for firms that are implicated in wrongdoing due to an employee's criminal actions of which management was unaware. The current one-year minimum period was one of the compromises worked out between Waxman and Dingell. Mylan's Washington counsel Michael Forscey (Wunder, Ryan, Cannon and Thelen) said "this year's bill not only reduces the mandatory debarment period from three years to one, but it also appears to impose so many limitations on its application that we seriously question whether it can be called mandatory at all." Fox noted that the special early termination provisions of the bill give convicted firms the right to an ex parte informal hearing, which could result in companies avoiding "any period of debarment." He added: "We think that that early termination provision should be removed, [and] alternatively the informal hearing should be replaced with an administrative procedure hearing." Forscey said Mylan sees "no reason" for the special early termination provision which "establishes a new standard of corporate responsibility far less stringent than required for criminal conviction." He added that "we are not persuaded that it makes sense to let the guilty party decide the manner and timing of his own punishment as the bill appears to do." The Mylan attorney noted that the changes made over last year's bill were positive in terms of reducing FDA's discretion in sanctioning wrongdoers. "Discretion is a two-edged sword," Forscey said. "On one hand, it gives the agency the power to punish those out of favor with the bureaucracy; at the same time, it provides ample room to avoid sanctioning the guilty." "In general, we prefer that Congress clearly delineate the grounds and standards for each situation, requiring the Secretary to perform the essentially ministerial function of deciding who meets the test for punishment and limiting, insofar as possible and where appropriate, his discretion to the length of the penalty imposed," Forscey said. When Oversight Subcommittee ranking Republican Bliley (Va.) asked Fox how the generic drug review process should be changed, the attorney noted that Barr had met with then-acting Commissioner Benson "and Dr. Peck and a few of the other henchmen at the FDA, and they wouldn't discuss the specific reforms" but requested that recommendations be submitted in writing. The recommendations were filed in June 1990, but "we have yet to receive an acknowledgement or receipt from the agency," he noted. "So . . . if you're going to talk about reform," Fox declared, "you're going to have to get rid of the current leaders."

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