[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


     EXAMINING FDA'S GENERIC DRUG AND BIOSIMILAR USER FEE PROGRAMS

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 2, 2017

                               __________

                           Serial No. 115-10
                           
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]                           
                           


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov
                        
                        
                                 __________
                               

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                    COMMITTEE ON ENERGY AND COMMERCE

                          GREG WALDEN, Oregon
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
TIM MURPHY, Pennsylvania             ELIOT L. ENGEL, New York
MICHAEL C. BURGESS, Texas            GENE GREEN, Texas
MARSHA BLACKBURN, Tennessee          DIANA DeGETTE, Colorado
STEVE SCALISE, Louisiana             MICHAEL F. DOYLE, Pennsylvania
ROBERT E. LATTA, Ohio                JANICE D. SCHAKOWSKY, Illinois
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas                    JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia     PETER WELCH, Vermont
ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
GUS M. BILIRAKIS, Florida            YVETTE D. CLARKE, New York
BILL JOHNSON, Ohio                   DAVID LOEBSACK, Iowa
BILLY LONG, Missouri                 KURT SCHRADER, Oregon
LARRY BUCSHON, Indiana               JOSEPH P. KENNEDY, III, 
BILL FLORES, Texas                       Massachusetts
SUSAN W. BROOKS, Indiana             TONY CARDENAS, California
MARKWAYNE MULLIN, Oklahoma           RAUL RUIZ, California
RICHARD HUDSON, North Carolina       SCOTT H. PETERS, California
CHRIS COLLINS, New York              DEBBIE DINGELL, Michigan
KEVIN CRAMER, North Dakota
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
                         Subcommittee on Health


                       MICHAEL C. BURGESS, Texas
                                 Chairman
BRETT GUTHRIE, Kentucky              GENE GREEN, Texas
  Vice Chairman                        Ranking Member
JOE BARTON, Texas                    ELIOT L. ENGEL, New York
FRED UPTON, Michigan                 JANICE D. SCHAKOWSKY, Illinois
JOHN SHIMKUS, Illinois               G.K. BUTTERFIELD, North Carolina
TIM MURPHY, Pennsylvania             DORIS O. MATSUI, California
MARSHA BLACKBURN, Tennessee          KATHY CASTOR, Florida
CATHY McMORRIS RODGERS, Washington   JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey            BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         KURT SCHRADER, Oregon
GUS M. BILIRAKIS, Florida            JOSEPH P. KENNEDY, III, 
BILLY LONG, Missouri                     Massachusetts
LARRY BUCSHON, Indiana               TONY CARDENAS, California
SUSAN W. BROOKS, Indiana             ANNA G. ESHOO, California
MARKWAYNE MULLIN, Oklahoma           DIANA DeGETTE, Colorado
RICHARD HUDSON, North Carolina       FRANK PALLONE, Jr., New Jersey (ex 
CHRIS COLLINS, New York                  officio)
EARL L. ``BUDDY'' CARTER, Georgia
GREG WALDEN, Oregon (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................     1
    Prepared statement...........................................     3
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................     3
Hon. Gus M. Bilirakis, a Representative in Congress from the 
  State of Florida, opening statement............................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     6
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     8
    Prepared statement...........................................     8

                               Witnesses

Janet Woodcock, M.D., Director, Center for Drug Evaluation and 
  Research, Food and Drug Administration.........................     9
    Prepared statement...........................................    11
    Answers to submitted questions \1\...........................   117
Allan Coukell, Senior Director of Health Programs, The Pew 
  Charitable Trusts..............................................    53
    Prepared statement...........................................    55
    Answers to submitted questions...............................   123
David R. Gaugh, R.Ph., Senior Vice President for Sciences and 
  Regulatory Affairs, Association for Accessible Medicines.......    61
    Prepared statement...........................................    64
    Answers to submitted questions \2\...........................   128
Juliana Reed, Vice President of Government Affairs, Coherus 
  Biosciences, Immediate Past President of the Biosimilars Forum.    72
    Prepared statement...........................................    74
    Answers to submitted questions \3\...........................   131
Bruce A. Leicher, Senior Vice President and General Counsel, 
  Momenta Pharmaceuticals and Chair of Biosimilars Council, 
  Association for Accessible Medicines...........................    77
    Prepared statement...........................................    79
    Answers to submitted questions \4\...........................   133
Kay Holcombe, Senior Vice President, Science Policy, 
  Biotechnology Innovation Organization..........................    85
    Prepared statement...........................................    87
    Answers to submitted questions \5\...........................   135

                           Submitted Material

Statement of the Federal Trade Commission........................   107

----------
\1\ The committee did not receive a response from Dr. Woodcock by 
  the time of printing.
\2\ The committee did not receive a response from Mr. Gaugh by 
  the time of printing.
\3\ The committee did not receive a response from Ms. Reed by the 
  time of printing.
\4\ The committee did not receive a response from Mr. Leicher by 
  the time of printing.
\5\ The committee did not receive a response from Ms. Holcombe by 
  the time of printing.

 
     EXAMINING FDA'S GENERIC DRUG AND BIOSIMILAR USER FEE PROGRAMS

                              ----------                              


                        THURSDAY, MARCH 2, 2017

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2123 Rayburn House Office Building, Hon. Michael Burgess 
(chairman of the subcommittee) presiding.
    Present: Representatives Burgess, Guthrie, Lance, Griffith, 
Bilirakis, Long, Bucshon, Mullin, Collins, Carter, Walden (ex 
officio), Green, Engel, Schakowsky, Butterfield, Matsui, 
Castor, Sarbanes, Schrader, Kennedy, Cardenas, Eshoo, DeGette, 
and Pallone (ex officio).
    Also present: Representative Welch.
    Staff present: Mike Bloomquist, Deputy Staff Director; 
Karen Christian, General Counsel; Jordan Davis, Director of 
Policy and External Affairs; Paige Decker, Executive Assistant 
and Committee Clerk; Paul Edattel, Chief Counsel, Health; Blair 
Ellis, Digital Coordinator/Press Secretary; Adam Fromm, 
Director of Outreach and Coalitions; Jay Gulshen, Legislative 
Clerk, Health; Zach Hunter, Director of Communications; Katie 
McKeough, Press Assistant; Carly McWilliams, Professional Staff 
Member, Health; Alex Miller, Video Production Aide and Press 
Assistant; Dan Schneider, Press Secretary; Danielle Steele, 
Policy Coordinator, Health; John Stone, Senior Counsel, Health; 
Josh Trent, Deputy Chief Health Counsel, Health; Hamlin Wade, 
Special Advisor, External Affairs; Luke Wallwork, Staff 
Assistant; Jeff Carroll, Minority Staff Director; Tiffany 
Guarascio, Minority Deputy Staff Director and Chief Health 
Advisor; Dan Miller, Minority Staff Assistant; Olivia Pham, 
Minority Health Fellow; Samantha Satchell, Minority Policy 
Analyst; Andrew Souvall, Minority Director of Communications, 
Outreach and Member Services; Kimberlee Trzeciak, Minority 
Health Policy Advisor; and C. J. Young, Minority Press 
Secretary.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. I want to welcome everyone to the subcommittee 
hearing, and I ask that all guests take their seats and the 
subcommittee will now come to order. The chair recognizes 
himself for 5 minutes for the purpose of an opening statement.
    Today's hearing marks the Health Committee's first public 
discussion on the reauthorization of several key user fee 
programs at the United States Food and Drug Administration. 
This hearing will focus on the generic drug and biosimilar user 
fee programs, and we will turn our attention to the 
reauthorization of the Prescription Drug User Fee Act and the 
Medical Device User Fee Amendments later this month. All four 
of these programs will expire in September, and thus must be 
reauthorized for fiscal years 2018 through 2022. Chairman 
Walden and I are committed to moving the user fee legislation 
through committee following regular order, with time to spare.
    I want to welcome Dr. Woodcock back to the subcommittee. I 
would also like to commend the Food and Drug Administration and 
industry for the various briefings that they have provided 
members and members' staffs throughout the negotiation process 
and for transmitting the proposed agreements to Congress in a 
timely manner pursuant to the process laid out in statute.
    Committee staff has been working on a bipartisan basis with 
the Senate Health Committee to review the agreements in detail 
and to develop the necessary authorizing language for 
consideration. I appreciate the technical assistance that the 
Food and Drug Administration has provided, not to mention the 
expertise of our legislative counsels. It is because of these 
efforts that we are well on track for a timely reauthorization.
    Since 1992, with the initial authorization of the 
Prescription Drug User Fee Act, revenues generated from 
regulated industry fees have supplemented congressional 
appropriations and significantly enhanced the Food and Drug 
Administration's ability to review product applications and a 
more predictable manner.
    Based in large part on the success of the Prescription Drug 
User Fee Act, medical device user fees were authorized in 2002, 
followed by Generic Drug User Fee Amendments of 2012, and the 
Biosimilar User Fee Act of 2012, both of which are the focus of 
today's hearing. I look forward to learning more about their 
implementation to date, and ways to improve these important 
programs going forward.
    Approval of additional biosimilars will undoubtedly 
increase competition in a complex and often costly biologic 
drug market. Small-molecule generics already account for 
billions of dollars in savings each year. Nonetheless, for a 
variety of reasons, generic competition is lacking for certain 
products despite the absence of patent protection. We will hear 
from the Food and Drug Administration and from industry about 
how improving and reauthorizing the Generic Drug User Fee 
Amendments will help to close those gaps.
    We will also hear from our colleagues, Kurt Schrader from 
Oregon and Gus Bilirakis from Florida, about H.R. 749, the 
Lower Drug Costs through Competition Act, a bill that they 
recently introduced along with a bipartisan number of 
cosponsors. H.R. 749 aims to encourage market entry by generic 
manufacturers in situations where it may not otherwise make 
sense from a business perspective.
    I understand that introduction of this bill has led to a 
robust discussion about additional and alternative ways to spur 
such competition. That is a good thing. I appreciate the 
sponsors' willingness to hear from a variety of stakeholders 
and to work with bipartisan committee staff to improve the bill 
prior to proceeding to markup.
    Again I want to welcome all of our witnesses here today. I 
apologize for the late start. Thank you for being with us, and 
look forward to your testimony. The chair now recognizes the 
ranking member of the subcommittee, Mr. Green from Texas, 5 
minutes for an opening statement, please.
    [The prepared statement of Mr. Burgess follows:]

             Prepared statement of Hon. Michael C. Burgess

    The Subcommittee will come to order.
    The Chair will recognize himself for an opening statement.
    Today's hearing marks the Health Subcommittee's first 
public discussion on the reauthorization of several key user 
fee programs at the U.S. Food and Drug Administration (FDA). 
This hearing will focus on the generic drug and biosimilar user 
fee programs and we will turn our attention to reauthorization 
of the Prescription Drug User Fee Act (PDUFA) and the Medical 
Device User Fee Amendments (MDUFA) later this month. All four 
of these programs expire in September and must be reauthorized 
for Fiscal Years 2018-2022. Chairman Walden and I are committed 
to moving the user fee legislation through Committee, following 
regular order, with ample time to spare.
    I want to welcome Dr. Woodcock back to this Subcommittee. I 
would also like to commend the FDA and industry for the various 
briefings they provided our members' staffs throughout the 
negotiation process, and for transmitting the proposed 
agreements to Congress in a timely manner pursuant to the 
process laid out in statute. Committee staff has been working 
on a bipartisan basis with the Senate HELP Committee to review 
the agreements in detail, and develop the necessary authorizing 
language for our consideration. I appreciate the technical 
assistance FDA has provided, not to mention the expertise of 
our legislative counsels. It because of these efforts that we 
are well on track for a timely reauthorization.
    Since 1992, with the initial authorization of PDUFA, 
revenues generated from regulated industry fees have 
supplemented Congressional appropriations and significantly 
enhanced FDA's ability to review product applications in a more 
efficient and predictable manner. Based in large part on the 
success of PDUFA, medical device user fees were authorized in 
2002, followed by the Generic Drug User Fee Amendments of 2012 
(GDUFA), and the Biosimilar User Fee Act of 2012 (BsUFA)-both 
of which are the focus of today's hearing. I look forward to 
learning more about their implementation to date and ways to 
improve these important programs going forward.
    Approval of additional biosimilars will undoubtedly 
increase competition in the complex and often costly biological 
drug market. Small molecule generics already account for 
billions of dollars in savings each year. Nonetheless, for a 
variety of reasons, generic competition is lacking for certain 
drug products, despite the absence of patent protection. We 
will hear from FDA and industry about how improving and 
reauthorizing GDUFA will help close these gaps.
    We will also hear from our colleagues Kurt Schrader (D-OR) 
and Gus Bilirakis (R-FL) about H.R. 749, the Lower Costs 
Through Competition Act-a bill they recently introduced along 
with a bipartisan roster of co-sponsors. H.R. 749 aims to 
encourage market entry by generic manufacturers in situations 
where it may not otherwise make sense from a business 
perspective. I understand that introduction of this bill has 
led to a robust discussion about additional and alternative 
ways to spur such competition. That is a good thing. I 
appreciate the sponsors' willingness to hear from a variety of 
stakeholders and work with bipartisan Committee staff to 
improve the bill before proceeding to markup.
    I want to welcome all of our witnesses and thank you for 
being here. I look forward to your testimony.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman, and thank Dr. Woodcock 
for being back with us and our distinguished panelists for the 
hearing this morning.
    Today is the first hearing of the user fee agreement 
reauthorization cycle. We have learned a great deal since the 
first prescription drug user fee agreement authorization, and 
every 5 years have amended and expanded the user fee programs 
to build on past successes and further support timely review 
and approval of safe and effective medical products.
    The affordability of therapies is an issue of great growing 
concern. Robust competition in the prescription drug market 
between innovative drugs and generic drugs and innovator 
biologics and biosimilars is crucial to providing patients with 
greater access to affordable therapies. Generic drugs are 
proven to be a safe and affordable alternative to brand name 
drugs.
    It is estimated that generic drugs account for 89 percent 
of prescriptions dispensed in the U.S., but only 27 percent of 
the total drug cost. In 2015 alone, generic drugs saved 
American families $227 billion. Similar to generics, 
biosimilars hold great promise to make complex products 
available at lower cost to patients.
    Due to growing concerns about the time it is taking FDA to 
review generic drug applications and the backlog of such 
applications, Congress passed the generic drug user fee 
amendments in 2012. Interest in participation in the program 
has exceeded initial predictions, and the agency has struggled 
to get the new program off the ground and keep up with the 
oversize workload and undersized resources.
    GDUFA II, like subsequent reauthorizations of the 
prescription drug and medical device user fee programs provides 
an opportunity to address lessons learned from the past 4 years 
and improve the program so that we have a strong market of safe 
and effective generic drugs. Following the enactment of the 
Biologics Price Competition and Innovation Act, the biosimilar 
act, BP act, BsUFA, was established. Welcome to the FDA 
acronyms.
    BsUFA II provides an opportunity to build on progress made 
and enhance the program. Stakeholders and the FDA have agreed 
to review timelines, meeting structures, and new programs to 
increase the number of first-cycle approvals which will save 
resources for sponsors and the agency and, more importantly, 
make safe and effective therapies available to patients and 
introduce additional competition in the market.
    I look forward to hearing more about the agreements between 
the stakeholders and the FDA on GDUFA II and BsUFA II. It is 
crucial that Congress authorize these programs in a timely 
manner to ensure the agency has the resources and tools needed 
to support generic and biosimilar competition.
    And I want to mention my concern about the impact of the 
administration's across-the-board hiring freeze with the FDA. 
FDA must have an adept and capable and sufficiently sized 
workforce to make timely scientific decisions in the interest 
of patients and the public health. Currently, FDA has 1,000 
vacancies at the agency and the majority of which are in the 
Center for Drug Evaluation and Research.
    We worked to help the agency attract and hire highly 
qualified professionals at the 21st Century Act. The hiring 
freeze threatens the laudable work that could have a 
detrimental impact on the hiring goals all ready to negotiated 
performance goals of the user fee agreements. I hope the 
administration takes this into account when implementing this 
deeply flawed policy.
    We are also here today on H.R. 749, Lower Drug Costs 
through Competition Act. Over the past few months we have had 
productive and bipartisan conversations about the proposal and 
ways to achieve the shared goal of enhanced generic 
competition. I have concerns as the legislation is written, 
however, including a concept of how a priority review voucher 
for generic drug manufacturers will impact with existing and 
newly negotiated provisions of GDUFA II.
    I would like to continue to work with my colleagues to 
improve the legislation. There is a growing bipartisan support 
for the government to take action and lower prescription drug 
costs. Rising drug costs is not a simple problem and with a 
simple solution. While more competition for generics and 
biosimilars is an important way to make medicines more 
affordable, it alone is not sufficient to address the problem 
of affordabilities.
    Mr. Chairman, I would like before I yield the remainder of 
time to my colleague from Colorado, Congresswoman DeGette, just 
for the public do you have any knowledge that we are going to 
have a hearing next week on the markup of the Affordable Care 
Act?
    Mr. Burgess. It is my understanding that the markup has not 
been noticed and it will be noticed in a timely fashion if it 
occurs.
    Mr. Green. Well, thank you for that little bit of 
information. I will yield my time to my colleague.
    Ms. DeGette. Thank you. Well, just in the few seconds left 
I want to echo Mr. Green's concerns about this hiring freeze, 
particularly with the implementation of 21st Century Cures, but 
also with reauthorization of the UFAs, because I don't see how 
we can improve access if we have a hiring freeze.
    The other executive order that we are deeply concerned 
about on both sides of the aisle is this order that you have to 
repeal two regulations before you can enact a new regulation, 
because as we are trying to implement the UFAs and also 21st 
Century Cures I don't see how we are going to be able to use 
those draconian, I think it is just draconian in this 
standpoint.
    Mr. Chairman, I am going to have a series of questions that 
I am going to submit to Dr. Woodcock and our other witnesses 
about this, but I think this is something, a concern that we 
share on both sides of the aisle. And I appreciate your comity, 
and I yield back.
    Mr. Burgess. The chair thanks the gentlelady. Does the 
gentleman from Texas yield back? Apparently so. The chair then 
recognizes the gentleman from Florida, Mr. Bilirakis, 5 minutes 
for an opening statement, please.

OPENING STATEMENT OF HON. GUS M. BILIRAKIS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Bilirakis. Thank you. Thank you, Mr. Chairman. Again 
thank you for including the Lower Drug Costs Through 
Competition Act as part of this hearing. I am proud to join my 
colleague, Congressman Kurt Schrader, to responsibly use the 
power of the free market to bring lower prices and more drug 
choices to the market.
    This legislation would directly address some of the 
problems we have seen with bad actors in the drug space such as 
Turing Pharmaceuticals and Valeant Pharmaceuticals. Too often 
we have seen the price of lifesaving medications skyrocket due 
to bad actors taking advantage of monopolies in the market. We 
cannot allow this to continue. Our bill would incentivize drug 
companies to enter into these markets where no generic 
currently exists. My constituents in Florida and folks 
nationwide need relief. I hope that this committee will move 
this bill this month, and I yield back. Thank you, Mr. 
Chairman.
    Mr. Barton. Would the gentleman yield some of this time to 
me, Mr. Chairman?
    Mr. Burgess. The gentleman from Texas is recognized if the 
gentleman from Florida yields back.
    Mr. Bilirakis. Yes, I yield back.
    Mr. Barton. I won't take any more than 3 minutes and 47 
seconds. I want to thank you, Mr. Chairman, and I want to thank 
the ranking member, Mr. Green, for hosting this hearing today 
on the Biosimilar User Fee Act. Not everything in the 
Affordable Care Act was bad. I know that is a shock for my 
friends on the minority side to hear a Republican say that. But 
Congresswoman Anna Eshoo and myself put in a strong biosimilar 
section in this committee, in the Affordable Care Act markup 
when the Energy and Commerce Committee did that.
    It was one of the few bipartisan provisions, it created a 
new and distinct biosimilar industry sector. Success of that 
regulatory provision can only be measured now by how it is 
implemented. We have thousands of patients, Mr. Chairman, that 
are facing cancer, inflammatory disease, kidney disease, and 
other serious disorders. We expect that they will benefit from 
biosimilars over the next decade. Although this is a new 
industry, I do believe that Congress and the administration 
have an important role to play in the development and success 
of the biosimilar marketplace.
    So while this is not the focus of the hearing today, I 
would ask that we take a look at this CMS finalized payment 
methodology that they just finalized and, in my opinion, if 
that stands it will dramatically reduce the investment and 
availability of biosimilars.
    So Mr. Chairman, thank you for the hearing. I look forward 
to hearing the witness. We are glad to have you again, you have 
been here before. And with that I yield back.
    Mr. Burgess. The chair thanks the gentleman. The chair 
recognizes the gentleman from New Jersey, Mr. Pallone, the 
ranking member of the full committee, 5 minutes for an opening 
statement, please.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman. Mr. Chairman, I must 
follow up on the little dialogue that you had with Ranking 
Member Green at the end of his statement with regard to the ACA 
bill. It seems like everyone knows that there is going to be a 
markup in full committee next Wednesday of the Affordable Care 
Act except for the Democrats who haven't been told anything. 
And I know you have long been an advocate for regular order, I 
just want to read this statement from the Speaker.
    The Speaker on the Today Show on February 28th, he said 
that the majority's proposed ACA replacement legislation will 
be carefully considered and completed through the committee 
process with public engagement and transparency. We are going 
through the committee process step-by-step. We are having 
public hearings. We are having committees work on legislation. 
We are not hatching some bill in a back room and plopping it up 
on the American people's front door.
    Well, I have been told, not by the Republicans, not by The 
Chairman, not by you, but by, you know, K Street and everyone 
else around here that you guys can go down to H-157 right now 
as we speak and go in there to the basement, the secret 
basement that, you know, that the Speaker says would never 
happen, and look at the bill that is going to be marked up next 
Wednesday. But I can't go down there. You know, maybe the 
lobbyists know where it is, they know what is in it. You know, 
I don't know what the media knows, but they certainly know 
there is a markup. Maybe the Russian ambassador is down there 
and he can tell us what is in the bill. Maybe they will let him 
in, but they won't let me in.
    And I want to commend you again, Mr. Burgess, Chairman, you 
were on MSNBC's Chris Hayes last night and you said that you 
don't agree with the decision to keep the House's GOP bill 
secret, warning that it could backfire. You suggested 
Republicans owed it to the public to share their plan. It is 
time. Put your pencils down and turn your papers in, he told 
MSNBC's Chris Hayes.
    So you seem to be an advocate for letting everyone see 
this. I mean, I would just remind you, I know you always talk 
about transparency with the ACA, but when the Democrats 
considered the ACA, the House conducted 79 committee hearings 
and markups over a 2-year period. The House posted the original 
language of the bill online for 30 days, engaging in public 
deliberation before the first committee held the markup.
    Now from what I can see, what is going to happen is you may 
put out a notice Monday of a markup in full committee 
Wednesday, we come back Tuesday night and we won't even have 12 
hours before the markup would happen. Now I don't know that 
that is for sure, but that is what everybody is hearing. So let 
me just ask you, can I go down right now myself, Mr. Green, Ms. 
Eshoo, can we go down to H-157 and see this bill? Would you 
just ask, I would like to know whether I can go down there and 
look at this bill.
    Mr. Burgess. Were you asking Mr. Green or myself?
    Mr. Pallone. No, I am asking you, Mr. Chairman. I mean, I 
like what you said on MSNBC, but can I go down and look at the 
bill?
    Mr. Burgess. The chair does not have that information 
available, but I will find out for you and relay it to you as 
soon as it becomes available.
    Mr. Pallone. Well, I would appreciate it because I really 
think that Democrats should be looking at the bill in addition 
to K Street, in addition to the media, and God knows what goes 
on with the Russian ambassador. But I want to yield the balance 
of my time to Mr. Schrader.
    Mr. Schrader. Thank you. I want to thank the ranking member 
and thank you, Mr. Chairman, for having the hearing.
    On a more bipartisan note, I think it is pretty evident 
American patients, states, and taxpayers, we are paying 
exorbitant prices for many prescription drugs, and it is really 
time for Congress to act. Every few months we are seeing 
headlines about exorbitant price hikes from unscrupulous bad 
actors like my good friend Gus Bilirakis talked about.
    Buying the rights to produce drugs that have been on the 
market for decades usually where there are no competitors, 
seemingly overnight these prices go through the roof. In the 
case of Daraprim, a drug used by some transplant patients, 
people living with AIDS, Turing Pharmaceuticals raised the 
price from $13.50 per pill to $750--come on, man. Last year, 
Valeant, another pharmaceutical company raised the price of 
their drug to treat lead poisoning, been around forever, by 
more than 2,700 percent. That is criminal.
    For both these drugs and many others, the drugs have been 
off patent for years and ages. There is no generic competitor 
on the market. Unfortunately, generic manufacturers who want to 
bring a competitor face this long approval process we are going 
to be talking about. I think GDUFA I is going to help a bunch. 
But our bill, lowering drug costs through competition, makes a 
huge difference in getting these drugs to market that much 
faster. It also looks at the risk mitigation strategies, 
potential abuse.
    We have solicited feedback on our bill, look to learn more 
from stakeholders. This hearing hopefully provides another 
opportunity. It is important. I am glad we are able to come 
together in a bipartisan fashion to make this happen.
    And I yield back, Mr. Chairman.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman. We now conclude with member opening statements. 
The chair would like to remind members that pursuant to 
committee rules, all members' opening statements will be made 
part of the record.
    For what purpose does the gentleman from Oregon seek 
recognition?

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. Just to make a brief opening statement, Mr. 
Chairman. And I want to commend my colleague from Oregon and my 
colleague from Florida for bringing this legislative concept 
forward. It is one we have talked about. I think it makes a lot 
of sense. It is a piece of the puzzle, it is not the whole 
puzzle. It doesn't solve all the problems, but that is how we 
are going to look at this, a piece at a time trying to get it 
right.
    And so I commend Mr. Schrader. I commend Mr. Bilirakis and 
others, and I want to thank our witnesses for their 
participation today. And we look forward to bipartisan 
legislation when it comes to this and other issues before the 
committee. With that I yield back.
    [The prepared statement of Mr. Walden follows:]

                 Prepared statement of Hon. Greg Walden

    Thank you Chairman Burgess.
    I can say without a doubt that this critically important 
FDA user fee reauthorization process is in good hands with you 
at the helm. I remember you leading the charge during the last 
reauthorization cycle in 2012 to push for a number of key 
process improvements at the agency that have directly benefited 
patients. This subcommittee hearing, and those that will follow 
starting later this month, are great opportunities to learn how 
we can build upon those efforts, as well as on the many game-
changing provisions in the 21st Century Cures Act, which I am 
committed to ensuring is fully funded and implemented. A point 
I made clear to the President last month.
    And, Chairman Burgess, you are exactly right that we are 
both committed to a timely user fee reauthorization and it is 
my goal, in working with the Senate, to move legislation 
through Congress and on to the President's desk well in advance 
of the August recess. Committee staff has already hit the 
ground running and has been meeting frequently on a bipartisan 
basis with FDA and the industry negotiators to review the 
agreements and iron out technical issues with the legislative 
language.
    Reauthorizing improved generic and biosimilar user fee 
programs will lead to timelier approvals and lower drug costs. 
It's that simple.
    I also want to take a minute to applaud my friend from 
Oregon, Rep. Schrader, and Rep. Bilirakis, for working together 
on pursuing additional ways to promote more generic 
competition, particularly in therapeutic areas where it is 
sorely lacking.
    Thank you to Dr. Woodcock and her team at FDA, as well to 
the industry negotiators here today. I look forward to working 
with all of you in my capacity as Chairman going forward.
    I yield back the balance of my time.

    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman. And again we want to thank all of our witnesses 
for being here today, for taking time to testify before the 
subcommittee. Each witness will have the opportunity to give an 
opening statement followed by questions from members.
    We have two panels of witnesses today, and we will begin 
with Dr. Janet Woodcock, the director, Center for Drug 
Evaluation and Research at the Food and Drug Administration. We 
appreciate you being here this morning, Dr. Woodcock. You are 
recognized for 5 minutes for an opening statement, please.

 STATEMENT OF JANET WOODCOCK, M.D., DIRECTOR, CENTER FOR DRUG 
     EVALUATION AND RESEARCH, FOOD AND DRUG ADMINISTRATION

    Dr. Woodcock. Thank you. We are here today to discuss the 
proposed reauthorization of two user fee programs known by the 
acronyms of GDUFA and BsUFA that support review of generic 
drugs and biosimilar drugs, respectively. FDA approval of 
generic or biosimilar versions of brand drugs after patent and 
exclusivity protections have expired, introduces competition 
into the marketplace and results in more affordable medicines.
    Indeed, generic drugs are estimated to have saved the 
American public $1.5 trillion over the last 10 years. Almost 90 
percent now of all prescription drugs dispensed in the U.S. are 
generics. Before GDUFA I was enacted, Congress, the industry, 
and FDA all recognized that the program was a victim of its own 
success and it was not able to keep up with the flood of 
applications that were coming in.
    Congress authorized GDUFA I, and I am happy to report it 
has been a success. FDA has met all the program goals of GDUFA 
I. In addition, virtually all of the piled up applications have 
been reviewed and either approved, they have been sent to the 
manufacturer for the deficiencies, or they are in a new review 
cycle. So they are all in process of the review process.
    FDA approved or tentatively approved 835 generic drugs in 
fiscal year 2016, which is a new record, and over the 4 years 
of this program so far we have approved 56 new generics, first 
generic drugs. Similarly, the biosimilar user fee program is on 
track to provide affordable alternatives to biologicals. So 
far, four biosimilars have been approved and we are working on 
64 development programs with developers that would provide 
competition for 23 biologics. We have also issued six final and 
four draft guidances.
    But these user fee programs are version 1.0. We and 
industry have learned a lot in the course of operating these 
over the last 4-plus years. So over the past year, we worked 
hard with industry to envision ways to improve the program that 
meets the industry's need for timeliness, transparency, 
predictability, but also meets the public's need for a steady 
flow of high quality affordable medicines.
    We think the proposals for GDUFA and BsUFA II meet these 
twin objectives from both the public good and working well for 
industry and the agency. Additionally, across multiple drug 
user fee programs that are up for reauthorization, we have 
added new financial management provisions and modified fee 
structures in a way that will simplify and improve the 
infrastructure of all these user fee programs, so that is a 
part of these two new programs.
    As in your work with 21st Century Cures, which we were 
happy to work with you on, these user fee programs are intended 
to improve U.S. citizens' access to safe and effective 
medicines, and it is really important that they be reauthorized 
because they are providing that function now.
    I will be happy to answer any questions.
    [The prepared statement of Janet Woodcock, M.D. follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Burgess. The chair thanks Dr. Woodcock. Thank you for 
your testimony. We will move on to the question and answer 
portion of the hearing. I begin the questioning by recognizing 
myself for 5 minutes.
    Dr. Woodcock, the FDA, Food and Drug Administration, often 
reviews and makes decisions on complex, novel drug applications 
for serious conditions within 6 months. Decisions on whether to 
approve such new drug applications are almost always made in 
the first review cycle. On the other hand, the median review 
times for generic drug applications have actually increased 
since the Generic Drug User Fee Amendments was authorized, and 
in 2015 reached 48 months with only nine percent of generic 
applications approved in the first review cycle.
    So this doesn't seem like the right direction. In 5 years 
from now, what percentage of first-cycle approvals would you 
consider a success?
    Dr. Woodcock. Well, I would consider a success to be a 
considerable increase over the rate we are seeing now. I think 
we are up about 10 percent maybe. It is hard to say with the 
recent submissions, but we can look at the class of 2014-2015 
and see how many of those have gotten a first-cycle approval. 
And it is still I think under 10 percent.
    So if we could get up to 20, 25 percent it would be 
excellent, and then keep building that over time. Because right 
now, if, next year if a company were to send in, if you were a 
company you would send in a generic drug and, say, it would be 
a first generic and it were a good application, it was 
complete, you could be on the market in 8 months.
    Mr. Burgess. I beg your pardon?
    Dr. Woodcock. You could be on the market in 8 months.
    Mr. Burgess. 8 months. So I guess the issue is here is 
really how do we move the needle so that the overwhelming 
majority of generic applications are actually approved on the 
first cycle?
    Dr. Woodcock. That is one of the goals of GDUFA II. So for 
complex generics we have put in and proposed a program where we 
would work with the companies before the application was 
submitted and work out a lot of the complex issues. These might 
be applications where there is an injector or other device used 
with them, or where there are very complicated molecules.
    But also we plan to provide more training and interaction 
with industry up front in general so that they can get to a 
point where their applications can be approved on the first 
cycle.
    Mr. Burgess. Under anyone's definition that would be moving 
the needle. For priority submissions of noncomplex products, 
which according to the Food and Drug Administration itself 
constitute a relatively small portion of their overall workload 
but are especially important to public health, should the 
agency have a similar program to ensure quality applications 
are submitted at the outset, reduce the opportunity for 
failure?
    Dr. Woodcock. Well, we are proposing that at least for 
complex drugs that there be a very intensive program to make 
sure that they get it right the first time.
    Mr. Burgess. Are there additional tools or authority that 
the Food and Drug Administration would need particularly in the 
space that deals with the development of complex generics under 
the 505(j) pathway?
    Dr. Woodcock. What we are proposing in GDUFA II would give 
us new tools. We would actually meet with the companies in 
advance. There would be submissions during and interactions 
during the review process. This is actually somewhat similar to 
what we do for the new drugs that you mentioned earlier.
    And I will point out that the PDUFA program over the 20 
years of operating has brought the first-cycle drug approval up 
to what, well over 80 percent of drugs that are approved on the 
first cycle now in the new drug side. But it wasn't that way at 
the beginning.
    Mr. Burgess. Dr. Woodcock, do you think the FDA needs 
additional authority in order to approve drugs faster on this 
pathway?
    Dr. Woodcock. No. I think that we need more, the resources 
that we have negotiated under GDUFA II or other types of 
resources provided, because this is a labor-intensive activity, 
all these additional interactions with the industry that help 
them get their submission in shape the first time.
    Mr. Burgess. Well, I certainly thank you for being here 
today. Again, as I mentioned to you before we started, it 
doesn't seem possible that this is the third reauthorization 
that I have lived through. I really do appreciate your 
testimony. I appreciate putting together the list of 
medications that actually have been approved that may not be 
generally known, so I appreciate you making that as part of the 
packet today of information that you shared with the 
subcommittee.
    And I will yield back my time and recognize Mr. Green for 5 
minutes for questions, please.
    Mr. Green. Thank you, Mr. Chairman. Dr. Woodcock again, 
welcome. The review model instituted by PDUFA is a result of 
lessons learned over the years and a commitment from both the 
FDA and industry to work towards a first-cycle approval. PDUFA 
now enjoys an average 80 percent first-cycle approval. One 
common criticism we have heard of the FDA is the need to 
improve the quality of applications under GDUFA so it moves 
more toward approving the applications in the first cycle. In 
fact, you note in your testimony that prior GDUFA generic 
applications were approved in one review cycle less than one 
percent of the time. That rate has increased to nine percent 
under GDUFA I. Following the chairman's question, follow up, 
can you elaborate more on how GDUFA II will improve that first-
cycle approval?
    Dr. Woodcock. Yes. Well, first of all, we are getting 
industry focused on the fact that the benefits of a first-cycle 
approval. In the past it was about a median of four cycles, and 
sometimes we would go up to 11 cycles, industry would go 
through in getting their application, and sometimes they had 
time because they were waiting for patents to expire or what 
have you.
    So we are going to focus on that and then for the very 
complex ones we are going to put in place, we are proposing to 
put in place a special program where we work with the industry 
before they submit their application. So that is off the clock, 
all right. And we help them get it, meet with them and help 
them get it into place and we issue certain guidances early, 
and then we meet with them during the program to make sure the 
review is on track and that they have answered all the 
questions.
    Mr. Green. OK. Much attention has been given to the backlog 
of the generic applications. Can you help this committee 
understand the nature of these pending applications and what 
the agency has done to address them? I think you may have 
answered that, that you are actually working with them before 
filing, so I appreciate that.
    On the BsUFA meeting, Dr. Woodcock, when you were here last 
February to testify about the implementation of BsUFA you 
discussed the increasing number of meeting requests that the 
agency was receiving from sponsors. We have heard from industry 
that these meetings are valuable and providing clarity about 
the data and the information the agency will need for approval 
and to address any outstanding questions FDA will have early in 
the process. What improvements of these meetings with sponsors 
will be made under BsUFA II?
    Dr. Woodcock. Yes. Well, those meetings are very valuable. 
We are all feeling our way in biosimilarity. It is a new 
concept. It is not safety and effectiveness, it is 
biosimilarity that provides the entry to the market, and how to 
prove that is a new concept. So we had not been meeting all of 
our meeting goals under BsUFA I because the industry appetite 
for them was very large and we were not able to meet with all 
the industry that wanted to meet with us.
    So under BsUFA II we have changed some of the timelines. We 
are increasing the staffing so that we will be able to meet 
these meeting goals and meet with industry that needs to talk 
with us about how to craft their biosimilar program. Much of 
this is analytical work, in vitro work, sometimes though there 
would even be a clinical trial that would be done.
    Mr. Green. In the short time I have left, let me just ask 
too about some of the concerns about the, as I said in my 
opening statement about the number of vacancies at the FDA and 
also a freeze on hiring. Obviously that would hurt the process 
right now, and is there anything the FDA can do now with staff?
    Dr. Woodcock. Well, as you know, our hiring problems have 
been persistent for the last 5 or 6 years and we have run 
deficits. We are working with the new administration and we 
hope that we will be able to address these issues, continue to 
address them as we have been trying to address them.
    Mr. Green. Thank you, Mr. Chairman. I have one other 
question. Can you explain different considerations given under 
GDUFA II for small businesses, because that is one of the 
issues we have heard.
    Dr. Woodcock. Yes, there is a different fee structure for a 
small business exemption so that that will help, and there are 
different levels of the program that--small business exemption, 
yes. It is complicated how we are doing it so we can get back 
to you, but we have taken the issue of small business more into 
account in the fee structure in GDUFA II.
    Mr. Green. Thank you, Mr. Chairman. I yield back.
    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back. The chair recognizes the gentleman from Kentucky, 
Mr. Guthrie, vice chairman of the committee, 5 minutes for your 
questions, please.
    Mr. Guthrie. Thank you, Mr. Chairman. Thank you, Dr. 
Woodcock, for being here. We appreciate it very much. Do you 
know the percentages of generic drug applications that go 
through more than three review cycles, or how about five review 
cycles?
    Dr. Woodcock. Well, it depends on when you are talking 
about because that is in flux right now. Historically, the 
median was four, so about half were less than four or less, and 
obviously about half were more than four, OK.
    Mr. Guthrie. Yes.
    Dr. Woodcock. OK, so now that is shifting a little bit. 
That curve is shifting to the left and we hope to see fewer and 
fewer total review cycles. The reason that is happening right 
now is because we are doing a lot of information requests and 
we are going back and forth with the company during the review 
cycle to try and get as much of this fixed as possible. And we 
hope that the vast majority of ones, all these ones that we 
have been reviewing, will be approved on the second or third 
cycle.
    Mr. Guthrie. OK.
    Dr. Woodcock. But the older ones may still need 
considerable fixing up before they can get approved.
    Mr. Guthrie. You almost got to my next question, but so how 
many total years in like the back, when you talk about back and 
forth between FDA and the company, if you are in three cycles, 
I mean, how many years is that typically? Or maybe even 5 
years.
    Dr. Woodcock. Historically that is very difficult to say, 
all right. Right now the first cycle is going to be 10 months, 
right. And then you send it back to the company, say, if it 
doesn't get approved, and then it depends on when they send it 
back to us. Right now the industry due to our vigor in getting 
through all these, industry has 1,800 applications with them 
that they are trying to respond to and send back in. Well, that 
is a lot of applications and they aren't going to be able to 
send them all back in a month.
    So what we think is over the next few years, if GDUFA II is 
reauthorized we will get into a steady state. And you put an 
application in and you have a predictable path, you know when 
you are going to get it back. If it isn't approved, you will 
have time you can rapidly work on it, send it back in a couple 
months and it will be fixed. Now if, and if I may go on.
    Mr. Guthrie. Go ahead, yes.
    Dr. Woodcock. What if they have a plant somewhere that has 
been found to have problems, now that may take longer to 
remediate especially if very serious deficiencies were 
identified. So there are going to be some outliers where they 
can't really send it in again until the issues with their 
manufacturing or some other serious issue is remediated.
    Mr. Guthrie. Are the multiple review applications, are they 
typically from smaller companies or newer companies or with 
less experience, or does experience and company size not 
matter?
    Dr. Woodcock. We have found them from everybody.
    Mr. Guthrie. OK.
    Dr. Woodcock. So there is a lot of educational work to be 
done.
    Mr. Guthrie. Are there any particular characteristics of 
applications that come through on the first cycle that you say, 
well, these are characteristics that could be expanded 
throughout the rest of the, people having issues with that?
    Dr. Woodcock. Yes, and we are making a great effort to try 
and identify that and have standardized tables and more 
standardized submissions and so forth so that industry knows, 
have we filled everything out, is everything complete, is it 
all in here? We are doing more on the refusal to file so they 
get it back quickly, and it isn't filed so they can make sure 
it is complete before they get in the process and have to wait 
8 months. So we agree with you. If we could identify those 
characteristics, we could help the applications be more 
complete.
    Mr. Guthrie. Yes. Well, I wanted to help you and help 
everybody work better. That is why we are here. So does FDA 
currently expedite resolution of an inspection related issue 
when it is the only obstacle for generic approval particularly 
if the case is priority submission? So do you expedite 
inspection related issue?
    Dr. Woodcock. We may expedite ones that are straightforward 
but, you know, we are dealing with fraud sometimes, we are 
dealing with very serious deficiencies, say, with sterility of 
drugs and so forth, and those have to be remediated by the 
sponsor before we could responsibly approve the drug.
    Mr. Guthrie. Absolutely. We don't disagree with that. Well, 
thank you, you answered my questions. I yield back almost a 
minute of my time.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman. The chair recognizes the gentleman from New 
Jersey, Mr. Pallone, the ranking member of the full committee, 
5 minutes for your questions, please.
    Mr. Pallone. Thank you, Mr. Chairman.
    Dr. Woodcock, I wanted to ask you about the abuse of REMS. 
I believe with many of my colleagues on the committee that we 
should encourage and support robust generic competition in the 
marketplace, however, if we are to achieve this goal we must 
ensure that we are limiting barriers to generic entry wherever 
possible. Unfortunately, there is evidence that some brand drug 
manufacturers are using REMS programs to delay competition by 
preventing generic and biosimilar manufacturers access to 
samples of branded drug products and these samples are needed 
by generic and biosimilar manufacturers to conduct the 
bioequivalence studies needed for FDA approval.
    So my question is, you note this problem of certain brand 
companies delaying or denying generic companies access to 
reference products in your testimony, can you discuss further 
how REMS programs are being inappropriately used to delay 
generics' entries to the market and what steps the agency is 
taking to curb those abuses?
    Dr. Woodcock. Well, the REMS programs and other restricted 
distribution programs restrict general access to the drugs in 
some cases. And so a generics company would have to get the 
drug in order to compare it in a bioequivalence study and also 
compare back, reverse engineer the product so they are making a 
copy. And in many cases they have been denied access to the 
drug and so they are not able to do those things.
    The steps we have taken, we are willing to review the 
protocol of the generic and send a letter to the brand saying, 
this is an appropriate use for the drug and it is under, you 
know we have looked at it, so that there isn't a reason that 
says, well, we are worried these people are irresponsible and 
they are going to take our drug and do something.
    We have made it clear that drugs even under REMS can be 
used for bioequivalence studies and so forth, but we can't 
compel companies to give their drug away to a competitor, to a 
generic competitor. We have also talked to the FTC about this 
general issue and, you know, had shared conversations with 
them.
    Mr. Pallone. Well, are there other tools or authorities 
that you need or you suggest to address the abuse? You said 
that you can't compel, but should we be legislating something?
    Dr. Woodcock. I don't know the answer to that. But I know 
it is a problem that we struggle with a lot and that the 
companies struggle with and it has delayed availability of 
generics.
    Mr. Pallone. And I was going to ask you this, but I think 
you answered the question. But let me just say that you seem to 
think that there is, the argument is made that REMS drugs have 
high risk profiles that make it unsafe for generic companies to 
be able to access them for purpose of development, but I think 
your answer to that is not really.
    Dr. Woodcock. Yes. And we are willing to look at the 
protocols under which they are going to be tested and tell the 
brand company that we find these acceptable uses.
    Mr. Pallone. OK. All right, let me move to the priority 
review. Prescription drug costs in this country continue to 
soar, and the examples of Sovaldi, Daraprim, and EpiPen have 
all highlighted the very real problems. I believe that we would 
all agree that expediting access of generic drugs is one way we 
can help to address high drug costs. On average the cost of a 
generic drug is 80 to 85 percent lower than the brand name.
    So my question is prioritizing the review of first generics 
and sole-source generics is one way the agency can help ensure 
there is competition, can you please discuss how the agency 
currently prioritizes the review of generic drugs and how the 
timeline for review of an application that is prioritized 
differs from a standard generic drug application?
    Dr. Woodcock. We prioritize first generics, shortage drugs, 
drugs under PEPFAR, and certain other categories where, say, 
there is a sole-source drug, and we shorten the time that we 
expect to get done to 8 months. So we move them through more 
quickly kind of like the express lane at the supermarket, OK, 
so we do prioritize those.
    Now it is quite possible that it might be difficult to 
shorten those timelines more, and the reason for that is the 
inspections that have to be done. We have to do inspections, 
and in fact the generics typically have many more 
establishments in their application than a brand application 
has and they might be all over the world. And if we haven't 
been there in a certain amount of time based on a risk based 
assessment we need to go do an inspection.
    Mr. Pallone. And is this why under GDUFA II the FDA and 
industry have agreed on this 8-month priority review for 
certain applications? I mean, how do you get that 8-month 
review timeline?
    Dr. Woodcock. Well, it is gotten by we need to have enough 
time in which to do inspections in different countries, if 
necessary. And why is that? Why would we want to make sure we 
had done inspections? Well, recently, for example, we have had 
cases where testing labs actually switched the samples like 
this so that the results would come out similar, because you 
are supposed to be similar and it wasn't going to be similar. 
So they switched samples so that they would get the right 
results.
    We have had other cases where people are going to release 
their drug based on their own specifications and they found it 
wasn't going to meet the specifications so they made up new 
test results. So our obligation is to if we approve a generic 
drug in the United States, the public needs to know it is going 
to work the same as the brand drug it replaces, and that is why 
we have to go and do inspections sometimes. Now if we have been 
in the facility recently then we might not have to do that. And 
so we only do it on a risk base, based on whether we have been 
in there and other considerations.
    Mr. Pallone. All right, thank you. Thank you, Mr. Chairman.
    Mr. Burgess. The chair thanks the gentleman and the 
gentleman yields back. The chair recognizes the gentleman from 
Florida, Mr. Bilirakis, 5 minutes for your questions, please.
    Mr. Bilirakis. Thank you, Mr. Chairman. And I thank you, 
Dr. Woodcock, for being here, appreciate it so much.
    A couple of years ago Turing Pharmaceuticals took an off-
patent drug that treats HIV patients, Daraprim, and raised it 
by a price of 5000 percent. Unfortunately, this was not a 
standalone situation. Since then we have seen other drug 
companies, Valeant and Mylan, take old drugs and raise the 
price because of a lack of competition in the marketplace.
    I have heard there were about 150 off-patent drugs that 
exist where we could have a generic, but no generic company has 
chosen to enter those markets. Is 150 an accurate number? What 
are some of the reasons for that kind of situation?
    Dr. Woodcock. Our understanding right now is there are 182 
drugs that are off-patent and have no generics competition and 
there may well be other generics that are sole-source where the 
innovator has withdrawn, because right now there are 546 drugs 
where the brand name has withdrawn from the market and some of 
those may only have one generic.
    So if you lump them all together we call them sole-source 
products, they only have one source. And the reasons for that 
we believe are mainly market reasons that companies don't think 
it is worth their return on investment, they don't think if 
they enter that market they would make money compared to other 
opportunities they might have to make money. And so many of 
them have small markets and so forth. For example, we recently, 
there were recently drugs that have, you can file a generic 
now, and we had nine generics file for one and we had 16 file 
for another.
    So where there is a big market there is a great interest, 
right, in getting a generic, but these small market drugs maybe 
that are seen as, not a good income stream or maybe they will 
be overtaken in a number of years, there isn't as much in 
trust.
    Mr. Bilirakis. Thank you for that. Do you know the size of 
the generic filing backlog and how old are some of the filings?
    Dr. Woodcock. There is no backlog in the filing.
    Mr. Bilirakis. No backlog?
    Dr. Woodcock. Correct. Yes, there hasn't been for some 
time, that is right. So they are filed within, we are given a 
certain time period to do the filing review and we have no 
backlog within that. Yes, there was at the beginning of GDUFA 
that we eliminated.
    Mr. Bilirakis. OK, thank you very much. In your testimony 
you talk about the approval process. You have 8 or 10 months to 
review an application and if they are deficient you issue a 
complete response letter. How long does it take for a company 
to respond?
    Dr. Woodcock. That is highly variable. And right now, as I 
said earlier, I believe it is longer than it will be in the 
future because we did have that backlog of applications. We got 
a lot of them through our system. We sent them back to the 
companies. Right now there are 1,800 applications at the 
companies and, you know, that is a surge of responses. They are 
going to have to prioritize those and get the ones they deem 
most important back to us first. So we don't control the time 
where they are back with the companies.
    Mr. Bilirakis. But on the average how long would you say?
    Dr. Woodcock. Well, because it is a moving target, it was 
different before GDUFA and it has changed during, I think it is 
really hard to say. Ideally, it would only be a few months 
unless there are facility problems where a facility must be 
remediated, or we have seen some major problem, say, with the 
data where they have to go back and reverify it or redo it and 
those would be much longer.
    Mr. Bilirakis. A company that is into its fifth review 
cycle, how many years old could that application be assuming 
everyone used their full time allotted in each section what 
would you say?
    Dr. Woodcock. It is really hard to say, but----
    Mr. Bilirakis. Can you give me any specific examples?
    Dr. Woodcock. Well, it might be 5 years, say, it could be 5 
or 6 years----
    Mr. Bilirakis. Five or six years.
    Dr. Woodcock. Under review, yes.
    Mr. Bilirakis. Thank you very much. Well, you know what, I 
will probably yield back, Mr. Chairman, because my next 
question is very long. Appreciate it. We will submit it for the 
record, I appreciate it. I yield back.
    Mr. Burgess. The chair thanks the gentleman and appreciates 
his consideration. The chair recognizes the gentleman from 
Oregon, Mr. Schrader, 5 minutes for questions, please.
    Mr. Schrader. Thank you, Mr. Chairman, and I appreciate Dr. 
Woodcock being here, and thank you for FDA's attention on this 
and working with the committee. Nice to see a process in 
general working very well and everyone willing to make it work 
hopefully even better and I appreciate your participation.
    Pretty impressive with the backlog being reduced 90 percent 
in a 5-year time span. Wish we could do that in a lot of other 
areas in government these days. But I am curious about, the 
terminology acted on, in terms of reducing that backlog. What 
percentage of that backlog constitutes new applications, maybe 
reapplications, people that didn't even have a good application 
to begin with, that you couldn't even begin to make substantive 
comments on, do you have that breakdown for the committee?
    Dr. Woodcock. Yes, it is a pretty substantial percentage. 
Keith, do you know the number? OK, we can get back to you on 
that but there is a pretty substantial percentage of that, 
quote, backlog that couldn't be approved or tentatively 
approved the first time and required going back to the company 
and then resubmission.
    Mr. Schrader. So most of it is just normal, what you would 
call perhaps normal, didn't quite get it all right, please fill 
in the blank?
    Dr. Woodcock. Correct. That is correct.
    Mr. Schrader. All right. So what about just, have you given 
any thought--you have done a lot of good work with 
preapplication processes and all that. How about just an 
education session, I mean, particularly for the small outfits 
that just don't have the team of lawyers or whatever to work 
through or read all these Web sites? They are just trying to do 
the Lord's work. Is there an opportunity for folks to tune in 
to an education session once or twice a year about here is what 
you need to do and here is some of the common problems we see?
    Dr. Woodcock. Yes, and we do that routinely and a 
tremendous amount. And also we issue guidances on most new 
reference drugs that come out, the brand drugs, and so we will 
issue guidance well in advance on how to develop a generic for 
that.
    Mr. Schrader. Well, I am not talking just guidance, I am 
talking about a real person, sitting down.
    Dr. Woodcock. Oh, we do. So we have webinars. We go to the 
technical meetings of the associations. We do gather up common 
deficiencies and we post lists of these and we are really 
trying. But we think it will take, we are seeing improvement. 
We are up to nine percent, right, of first-cycle approvals with 
the new ones, but we think it will take time. We don't like 
cycles either because it increases our work. It slows time to 
access and it just clogs up the system. But we will, I agree, 
education is the key to get--and also our refusal to file, we 
list all the reasons.
    Mr. Schrader. So with all that again each of my colleague 
Congressman Bilirakis' point, if you are doing all this or 
there seems to be, I think, a number of cycles that we should 
allow the reapplication for and then maybe cut it off.
    At some point, if you are doing all the up-front work and 
everyone agrees you are doing the education, plus the guidance, 
plus the review, at some point so the backlog, you know, out of 
the 1,800 or whatever it is that are still in the backlog, how 
many have been, it would be interesting for us to know how many 
have been through one cycle, two cycles, three cycles to get to 
the average or whatever, because there is some due diligence on 
a company's part, to not waste your time or the taxpayers' 
dollars.
    Dr. Woodcock. Yes. Well, we could certainly provide you 
with what statistics we had. As part of getting this whole 
program up and running we have put in a new IT system that 
tracks the process from soup to nuts so to speak. And we can 
get reports out of that and I am trying to get these reports by 
cohort, like the class of '13, the class of '14, the class of 
'15, what happened to them, how many cycles.
    Mr. Schrader. That would be really helpful.
    Dr. Woodcock. Yes. So we are very interested in that too 
and we can provide you with what information we have on that.
    Mr. Schrader. I guess then the last comment I make, Mr. 
Chairman, is that, our bill, we are really trying to target 
those lifesaving medications. These are medications that aren't 
just a public health priority which you already prioritize, but 
these are, immediate either acute or chronic health care 
lifesaving medications we are trying to accelerate to market.
    And generally the ones we are talking about aren't very 
complex, wouldn't take hopefully FDA's resources to an extreme, 
and many can be manufactured right here in the United States to 
decrease that global footprint you talk about that would really 
require a lot of time. And I think that is the rationale 
between our bill trying to make sure that that is the top 
priority because it is lifesaving and has to be done almost 
immediate.
    And I appreciate your efforts on our behalf, and I yield 
back, Mr. Chairman.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman, and the chair recognizes the gentleman from 
Missouri, Mr. Long, 5 minutes for questions, please.
    Mr. Long. Mr. Chairman, today we are discussing issues of 
competition and ways we can improve drug development to lower 
cost in the private drug market. On that theme and before I 
forget, I would like to ask unanimous consent to enter into the 
record a letter from the FTC to CMS outlining ways in which we 
can best maintain a system of competition and transparency 
between providers and payers in this market.
    Dr. Woodcock, to promote the goal of achieving first-cycle 
approvals and approvals on the earliest legally eligible date, 
the industry has placed a focus on increasing transparency and 
communication during the review process. Under the current 
agreement, how often and at what stages of the review and 
approval process does FDA communicate with the applicant?
    Dr. Woodcock. Well, we usually don't communicate with a 
technical matter with the--well, let me start again. There is a 
process called controlled correspondence. That was part of 
GDUFA I agreements and we had a backlog of that. OK, we are 
totally caught up with that and we answer all these. These are 
inquiries from sponsors that are written that we can answer 
about their application and we send those back. And we get 
hundreds of those every year, so we are in written 
communication.
    But right now we do not really have meetings and those type 
of communications with applicants prior to----
    Mr. Long. So you are not getting any type of feedback or 
anything from the applicants?
    Dr. Woodcock. Not currently. That is not how the process 
was set up.
    Mr. Long. OK.
    Dr. Woodcock. However, the proposed GDUFA II for the 
complex generics will set up more processes that we can talk to 
the applicants beforehand. For the more simple generics, which 
are many of them, the guidance that we put out before they 
start making their product should provide all the information 
they need on submitting an application and what they need to 
do. It is basically a cookbook.
    Mr. Long. OK. With that I yield back, Mr. Chairman, thank 
you.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman. The chair recognizes the gentlelady from 
California, Ms. Eshoo, 5 minutes for questions, please.
    Ms. Eshoo. Thank you, Mr. Chairman. And Dr. Woodcock, it is 
nice to see you again. Even though he left awhile ago, I want 
to publicly acknowledge the kind and generous remarks of 
Congressman Joe Barton relative to the biosimilars legislation 
that became part of the ACA. It was a big vote in the full 
committee here, 47 to 11. It was Senator Kennedy's legislation 
in the Senate and his Republican sponsor was Senator Orrin 
Hatch.
    So when I hear the steps being taken to fulfill what we set 
out to do, it was to bring biosimilars forward essentially in 
the form to create a generic biosimilar. And so that was a 
while ago. We passed the ACA several years ago, so the 
implementation is slow but each step is very important.
    Dr. Woodcock, I read all 24 pages of your written statement 
last evening, and I think that what I drew from it is the 
following that progress is being made on several fronts. I 
think that when we talk about hiring freezes and words that are 
very familiar around the Congress, they start losing their 
meaning. They start losing their meaning, because if in fact, 
which you have the agreements that you have entered into with 
industry partners on user fees for both of these 
reauthorizations, if you don't have the staff, forget the 
timing of these applications or the timeliness of when these 
applications can really get to market.
    So I don't know if, well, I hope that there will be 
advocates from the majority that will point this out to the 
administration, because I think every question and comment 
today with the exception of what Mr. Pallone said in the 
beginning about will there/won't there be a hearing next week, 
or a markup next week, they have all been tied to timeliness. 
And so I just want to underscore that.
    I also want to add something else to this, and that is that 
these user fees are private sector dollars. And all of this 
business with sequester, I did legislation on it so that the 
FDA would be able to have access to those dollars and it made 
it all the way up to the conference committee and someone 
pulled it out.
    But I still think that it is very important, it is 
something that is very important to appreciate. And so those 
private sector dollars should not be treated the way the public 
sector dollars are treated, and I think FDA is more than 
entitled to use those dollars as a result of the user fees in 
order to accomplish all the things that you wrote about in your 
24-page written statement.
    I want to turn to something that I have been pursuing, 
well, now it is more than a couple of years. We all know that 
the FDA plays a critical role in protecting the health of all 
Americans, but all the members of this committee may not be 
aware that there is an FDA Office of Women's Health. And it was 
established by an act of Congress in 1994, and I think it 
demonstrates the impact, the importance that the FDA and 
Congress placed on ensuring that the FDA adequately considers 
the impact of its decisions on women, which leads me to sodium 
oxybate.
    This is an important drug but it is also a dangerous drug. 
It is also a dangerous drug if it gets into the wrong hands. 
Well, I think that we all feel that we read too many stories 
today about sexual violence against women and there are, it is 
just the list goes on and on. But what I want to pursue with 
you--and I have a stack of letters. It is like we are pen pals. 
I am not satisfied on the following front and that is that as 
the drug moves to a generic version that the word safety with a 
big red stamp can honestly be placed on the generic. And you 
know that I have had misgivings about it.
    What I would like to ask you today, because there is not a 
lot of time--I have a minute and, oh, I think I have gone 
over--is to ask you to make a commitment today to me to meet 
with me and the women advocates that care so much about this. 
Would you be willing to do that?
    Dr. Woodcock. I am happy to do that.
    Ms. Eshoo. All right, that would be great.
    Thank you, Mr. Chairman, for your indulgence.
    Mr. Burgess. The gentlelady yields back. The chair thanks 
the gentlelady and recognizes the gentleman from North 
Carolina, Mr. Butterfield, 5 minutes for questions, please.
    Mr. Butterfield. Thank you very much, Chairman Burgess. 
Thank you for holding this very important hearing today. These 
agreements that we are talking about, Mr. Chairman, are so 
important to improving public health and they represent good 
faith negotiations between the prior administration and 
industry. They show the way that the FDA should work and it is 
my hope that the current administration does not stand in the 
way of progress.
    The advances in biologics and generics have been quite 
significant and generics have saved our healthcare system 
nearly $1.5 trillion over the last 10 years. Biologics have 
helped develop treatments for serious diseases like rheumatoid 
arthritis. It is important that we continue to build on this 
progress by supporting the FDA's agreement with industry.
    However, it is highly concerning that this administration 
seems to not understand the challenges facing FDA in ensuring 
safety while working with industry to approve treatments. The 
administration believes that the process at the FDA is, quote, 
slow and burdensome, end of quote, despite a record year of 
generic drug approvals or tentative approvals in 2016. It is 
critical therefore that the administration respect these 
agreements and ensure that the FDA has all of the resources 
that it needs to review these important treatments.
    If the administration truly wants FDA to protect public 
health and fulfill its mission, it should not implement a 
hiring freeze that could prevent the replacement of key 
personnel. Now is the time to staff up at the FDA and other 
agencies as well whose mission it is to work for the betterment 
of public health. It should also follow through on Congress' 
promise to provide additional resources to the FDA as this 
committee did through the 21st Century Cures Act. Lastly, the 
administration should nominate an FDA administrator committed 
to the agreements reached with industry and not someone who 
wants to simply accelerate drug approval without concern for 
safety and efficacy.
    Dr. Woodcock, thank you for your testimony. Thank you for 
the FDA's efforts to reach these agreements with industry, and 
I appreciate your explanation of how additional resources were 
important in implementing the first act. Do you agree or 
disagree that the additional 1,000 new employees hired during 
the first agreement helped increase the FDA's responsiveness to 
these applications?
    Dr. Woodcock. Absolutely, they were essential. And that is 
part of, first, our agreement and then our track record that we 
have succeeded with this program.
    Mr. Butterfield. At the end of January, Democratic leaders 
on this committee sent a letter to the administration asking 
for clarification about the January 23rd executive order 
implementing the freeze. In that letter they asked whether 
federal hiring for programs supported by user fees at the FDA 
would be subject to the freeze or if those programs might be 
eligible for an exemption from the executive order. I am 
concerned that this executive order could in fact make it more 
difficult to implement these agreements and respond to the 
applications.
    Can you please describe the potential impact of the 
executive order on the generic and biosimilar user fee 
agreements?
    Dr. Woodcock. Well, as I said earlier, we are working with 
the administration and we hope we can move forward on all these 
programs. But we are working closely with the administration 
now.
    Mr. Butterfield. All right. Well, I wish you the best of 
luck on that. Dr. Woodcock, you described significant 
challenges in hiring staff who can address the complexity of 
biologics. How can the additional hiring authority in the 21st 
Century Cures Act help with that? Does the executive order 
compromise any of those hiring authorities?
    Dr. Woodcock. Well, I want to thank the committee for their 
work on 21st Century Cures. I think it is a good step forward. 
We are working on planning the implementation of the various 
provisions within 21st Century Cures and we hope to continue to 
move ahead on that.
    Mr. Butterfield. All right. All right, like Mr. Bilirakis 
said a few minutes ago, my last question would consume the time 
and so I am going to yield back. All right, thank you, Mr. 
Chairman.
    Mr. Burgess. The chair thanks the gentleman. The chair 
recognizes the gentleman from Oklahoma, Mr. Markwayne Mullin, 5 
minutes for your questions, please.
    Mr. Mullin. Thank you, Mr. Chairman. And Dr. Woodcock, 
thank you so much for being here. I know you are doing the best 
you can underneath the circumstances and I really appreciate 
your focus on industry. I mean that is where it starts.
    A big focus I have is obviously watching over small 
businesses too, and one of the concerns I have, or the primary 
concerns, really, I have is over the GDUFA--am I pronouncing 
that right, by the way? These acronyms we have up here 
sometimes might be easier to explain them rather than to say 
them--was it didn't provide any relief for small businesses. Do 
we believe on the second GDUFA it is being addressed?
    Dr. Woodcock. It is being addressed in two ways. One, for 
the first filing people will not have to pay fees if they are 
not on the market for their manufacturing facility. Those were 
the people who were the hardest hit, those who hadn't a 
contract for manufacturing. And then the fees are going to be 
tiered. There is a different fee depending on the volume in the 
various company programs, so there is various tiers.
    So we were very conscious of the small business and also 
the different size of the businesses. And we tried to craft 
with industry the fee structure in a way it would be fair to 
everyone.
    Mr. Mullin. Thank you. And another concern we have been 
hearing is the inconsistency on the FDA inspections. Some 
businesses we have heard have been put on hold. Are we 
addressing that?
    Dr. Woodcock. The FDA is going through a huge 
reorganization of our field force, which is not the Center for 
Drugs, it is the Office of Regulatory Affairs which houses all 
our inspectors or our field inspectors, and they expect in May 
to go into a reorganization at which time they will have a 
pharmaceutical inspectorate. In other words, a group of 
individuals who will solely inspect drug manufacturing 
facilities instead of, you know, inspecting foods maybe and the 
devices and so forth.
    And so we hope to have a very close relationship with them. 
We have worked out a new process by which these facility 
evaluations will be done between us and we hope that one of the 
big payoffs is going to be a great deal more consistency in how 
we approach these facilities.
    Mr. Mullin. With these field inspectors do they have SOPs, 
standard operating procedures?
    Dr. Woodcock. They do. They have compliance policy guides 
they call them which guide how you do an inspection and so 
forth, but we are also working on what we call the new 
inspection protocol which will be much more of a checklist type 
of thing. We are piloting that now.
    Mr. Mullin. One of the most frustrating things and the 
reason why I am really focused on this, especially with those 
businesses that have been put on clinical holds, as a small 
business owner myself it is imperative that I deliver the same 
product over and over and over again. And I am in the service 
industry and we have well over 150 individuals that work with 
us and we are constantly trying to improve our operating 
procedures.
    But when you have people that had the authority that the 
inspectors do and they are inconsistent in delivering that, 
just standard operating procedures seems like that that would 
clarify so much that we have in bringing clarity to and surety 
to those that they are going in and inspecting. And I get that 
you have a new field staff, but surely there is ways that we 
can help, we can work together with bringing consistency to the 
industry, because the last thing we need is inconsistency on 
something that is so important with the Food and Drug 
Administration.
    Dr. Woodcock. Well, I agree with you. And actually 
yesterday marked a landmark where we signed a mutual reliance 
agreement with Europe over working to rely upon their 
inspections in Europe and they would rely on ours in the U.S. 
And to do this internationally, which will really help on speed 
that we have been talking about today and help leverage other 
inspectorates, we need to move toward common procedures so 
that----
    Mr. Mullin. Agreed.
    Dr. Woodcock [continuing]. We can understand what each 
other has done and feel comfortable relying on it. So we are 
working in that international area too. But I completely agree 
with you, and we are actually working on, underneath our 
concept of operations we have put forward for the new structure 
we are working on SOPs. That is the next step.
    Mr. Mullin. Thank you. And if I can be of any assistance to 
you in it, please let me know.
    Mr. Chairman, I yield back.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman and the chair recognizes the gentleman from 
Georgia for 5 minutes for questions, please.
    Mr. Carter. Thank you, Mr. Chairman. Dr. Woodcock, good to 
see you. Thank you for being here. We appreciate your 
participation in this. As I understand it, the generic drug 
user fee act was designed to speed up access and that you were 
going to get help from the companies, from the manufacturers, 
the generic manufacturers in order to speed up that process and 
it was somewhat of a trade-off. And I think the original idea 
was good and certainly to a certain extent it has worked.
    But let me ask you, of the 6,000 outstanding abbreviated 
new drug applications what percentage of those would you say 
have begun the process of being reviewed by the FDA?
    Dr. Woodcock. All.
    Mr. Carter. All of them have begun?
    Dr. Woodcock. Right. Well, first of all, I am not sure 
where the 6,000 comes from. There was 2,800 and some right 
before the program started and then we have gotten a certain 
number each year, up to a thousand each year since the program 
started. But meanwhile we are approving some, you know, all 
during that period as well.
    Mr. Carter. OK. What can we do to help you? What can 
Congress do? Tell me what we can do in----
    Dr. Woodcock. You can probably pass GDUFA II, OK.
    Mr. Carter. OK.
    Dr. Woodcock. Because what you are maybe hearing, all 
right, is that the old applications, the ones that were sitting 
there well before this program started, when they come out they 
are going to be 5 years old because they were sitting around 
all that time.
    Mr. Carter. Sure.
    Dr. Woodcock. But the ones, say, next October, if you pass 
this legislation or something near it, the agreement is in 10 
months, you send in a good application, in 10 months you are on 
the market. And we hope as many as possible will get that 
first-cycle approval, either tentative approval or full 
approval, depending on the patent status so that they are off 
our plate, OK, they are done. And we hope to continuously 
improve that over the next 5 years so that by the end of that 
time most of the applications would go through and be out on 
the market.
    Mr. Carter. OK. I trust you and I hope you are right and I 
hope that is the scenario that plays out.
    Hang with me for just a second. As you know, I am the only 
pharmacist currently serving in Congress and I am under a lot 
of pressure trying to answer what is going on with prescription 
drug pricing, why are these drugs going up? We have had 
instances over the past 2 years that I have been a member of 
this August body where we have had bad actors in the 
marketplace, where we had Turing Pharmaceuticals, where we had 
Valeant, where we had Mylan.
    And now we have, just recently we had this drug come out, 
deflazacort, that is going to be marketed as Emflaza by 
Marathon Pharmaceuticals. Interestingly enough, I just recently 
found out that that CEO was also involved in the Valeant case. 
So, this is not something new with him.
    My question is this. I have had compounding pharmacies come 
into my office and tell me we could have helped in that 
situation particularly with the situation with the Daraprim in 
Turing, that they could have marketed that but they needed FDA 
to give them that authority to do that and they couldn't get 
it. FDA can help us in these situations where these rogue 
companies, if you will, have us by the short hairs and we 
cannot do anything about it. We have the ability out there.
    And I know the safety part of it is extremely important. I 
respect that and I am very sensitive to it, but at the same 
time, I think it is irresponsible of us--and I say us being 
government and the FDA. I put us in the same bucket there. I 
think it is irresponsible of us not to at least attempt to do 
something about that.
    Dr. Woodcock. Well, we are happy to work with Congress. 
There is a range of options that people brought up and we are 
willing to work with Congress.
    Mr. Carter. OK. Well, see, that is what I am telling you. 
That is what the people coming in my office are telling me is 
that they had an alternative to the Daraprim, but they couldn't 
get it approved through you to get it marketed.
    Dr. Woodcock. Well, yes, we don't approve compounded drugs. 
That is mainly under state as you know, but there are a number 
issues probably too complicated for a 5-minute conversation.
    Mr. Carter. Exactly.
    Dr. Woodcock. But we are certainly, the issue sole-source 
or only a few source drugs where then they are vulnerable to 
market, you can rise up the prices easily----
    Mr. Carter. Exactly.
    Dr. Woodcock [continuing]. Is a problem that many people 
are trying to address. As I said there are 182 drugs that we 
know of that are off-patent and have no generic competition 
right now.
    Mr. Carter. And let me, we need to address that because 
that is not the way the system was set up and that is not the 
way the free market ought to be working. Those drugs ought to 
have generics as soon as they come--what is causing that, do 
you know?
    Dr. Woodcock. We believe that there are market forces. It 
is not attractive enough to be a competitor. It is a small 
market or has some other characteristics where the generics are 
not interested. This has been going on for years, so the people 
had plenty of opportunity to submit generic applications but 
they haven't.
    Mr. Carter. And that seems to be what we are headed toward 
that what the Emflaza is doing, I mean, this is for Duchenne 
muscular dystrophy. I mean, you know, they have a limited 
market that they are catering to and we need to make sure those 
patients, and they need it now. They can't wait.
    Dr. Woodcock. Well, that drug is newly approved in the 
United States so it is protected by various exclusivities.
    Mr. Carter. But that drug has been being used in Europe for 
years.
    Dr. Woodcock. I know.
    Mr. Carter. And it is just much, much less than what they 
are going to be charging for it in America. Now that is 
outrageous. I don't like the federal government being involved 
in anything, but we need to step in there. That is wrong.
    Dr. Woodcock. So that is the situation. So there are some 
brand drugs that have pricing issues in people's minds and then 
there are generic drugs or brand drugs that actually could have 
generic competition that don't have them.
    Mr. Carter. I can accept it to a certain extent if it is 
innovative, but that is not innovation. That is just bringing 
something over here and playing the market.
    Dr. Woodcock. Sure.
    Mr. Carter. Mr. Chairman, I apologize. I know I went over 
my time and I yield back.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman.
    Dr. Woodcock. Mr. Chairman.
    Mr. Burgess. Yes.
    Dr. Woodcock. I misspoke earlier in my oral. Could I just 
give you a very brief correction?
    Mr. Burgess. Great, sure.
    Dr. Woodcock. Thank you. I said we have approved 56 first 
generics. What I meant is in the backlog cohort only there were 
56 that we have approved, all right. We have approved 405 first 
generics overall during GDUFA I. So it is in my testimony but I 
just wanted to correct the record here. Thank you.
    Mr. Burgess. Very well, and we appreciate you being here 
with us, Dr. Woodcock. We are not going to recess, but 
immediately transition into our second panel of witnesses who 
we thank for being here today and taking the time to testify 
before the subcommittee. Again Dr. Woodcock, thank you for your 
testimony. As a reminder, each witness will have the 
opportunity to give an opening statement followed by questions 
from members.
    So the committee will come back to order. Again I want to 
thank our second panel of witnesses for being with us today and 
appreciate their indulgence.
    Our second panel of witnesses today includes Mr. Allan 
Coukell, Senior Director of the Health Programs at Pew 
Charitable Trusts; Mr. David Gaugh, Senior Vice President of 
Science and Regulatory Affairs, Association for Accessible 
Medicines; Mr. Bruce Leicher, Senior Vice President and General 
Counsel of Momenta Pharmaceuticals and Chair of the Biosimilars 
Council for the division of the Association of Accessible 
Medicines; Ms. Juliana Reed, vice president of Government 
Affairs, Coherus Biosciences, and immediate past president of 
the Biosimilars Forum; and Ms. Kay Holcombe, senior vice 
president of Science Policy, Biotechnology Innovation 
Organization. We appreciate all of you being with us today. We 
will begin our panel with you, Mr. Coukell, and you are now 
recognized for 5 minutes for an opening statement. Thank you.

    STATEMENTS OF ALLAN COUKELL, SENIOR DIRECTOR OF HEALTH 
  PROGRAMS, THE PEW CHARITABLE TRUSTS; DAVID R. GAUGH, R.PH., 
  SENIOR VICE PRESIDENT FOR SCIENCES AND REGULATORY AFFAIRS, 
   ASSOCIATION FOR ACCESSIBLE MEDICINES; JULIANA REED, VICE 
PRESIDENT OF GOVERNMENT AFFAIRS, COHERUS BIOSCIENCES, IMMEDIATE 
  PAST PRESIDENT OF THE BIOSIMILARS FORUM; BRUCE A. LEICHER, 
      SENIOR VICE PRESIDENT AND GENERAL COUNSEL, MOMENTA 
 PHARMACEUTICALS AND CHAIR OF BIOSIMILARS COUNCIL, ASSOCIATION 
    FOR ACCESSIBLE MEDICINES; AND KAY HOLCOMBE, SENIOR VICE 
      PRESIDENT, SCIENCE POLICY, BIOTECHNOLOGY INNOVATION 
                          ORGANIZATION

                   STATEMENT OF ALLAN COUKELL

    Mr. Coukell. Thank you, Mr. Chairman, Ranking Member Green, 
and members of the subcommittee. I appreciate the opportunity 
to present testimony. Pew is a nonprofit, nonpartisan research 
and policy organization with programs that touch on many areas 
of American life. I was asked today to focus on the challenge 
of rising pharmaceutical costs within the user fee context and 
beyond it.
    As you know, drug spending in the United States topped $300 
billion in 2015. That is up nine percent just in that year 
alone. That is faster growth than the rest of health care and 
it is a trend that strains budgets and helps drive up insurance 
premiums and the cost of Medicare and other taxpayer-funded 
programs. It also hits consumers in the pocketbook, and three-
quarters of Americans say that prices are unreasonable.
    The evidence suggests this is not a short-term fluctuation 
but a long-term trend, a trend that is driven largely by the 
rising cost of new medicines especially high cost specialty 
drugs that are used by only one or two percent of the 
population but account for about a third of drug spending. Some 
of these products are exciting therapeutic advances, true 
breakthroughs, some are not, but they are reaching market at 
ever higher launch prices, and year-on-year increases in price 
after launch are another major contributor to rising drug 
spending. A number of generic drugs have also undergone steep 
price hikes, but in general generic prices as a category remain 
flat or falling.
    So what can be done in response? Well, changes to FDA's 
approval process may offer some potential to address drug 
spending, many key opportunities lie elsewhere. Generic 
competition has long been the main tool to manage drug prices 
in the United States, and the first GDUFA agreement has helped 
to reduce the backlog of pending applications.
    Other potential areas for efficiency include policies to 
ensure that generic companies have access to brand name 
products for bioequivalence testing, policies to limit so-
called pay-for-delay settlements that in some cases cause 
anticompetitive delays in market entry. The Lower Drug Costs 
Through Competition Act would award a generic priority review 
voucher to manufacturers who bring drugs to market in cases of 
limited competition or a drug shortage and would establish a 6-
month timeline for FDA review of priority applications compared 
with the 8-month priority review goal in GDUFA II.
    It is important to note that FDA does already prioritize 
generic applications when there is only one competing product, 
so the net benefits and practical feasibility of a 6-month 
review are a little bit unclear. Perhaps more important than 
shortening the duration of review is reducing the number of 
review cycles. And I commend the FDA and the industry for their 
shared commitment in GDUFA II to improving first-cycle success 
rates.
    When focusing on measures to increase competition, we 
should note that the biologic drugs which are a big driver of 
increased spending won't be affected by changes in the generic 
approval process. However, anything that hastens biosimilar 
development including better aligning the exclusivity for 
biologics and small molecules would help to reduce spending. 
There are also potential ways to increase competition among 
drugs that are already on the market.
    There are well established tools in the commercial 
insurance market, tools like formulary placement and prior 
authorization that are absent or limited in parts of the 
Medicare program and consideration could be given to policies 
that would increase competition within Medicare Part D and Part 
B and potentially shift some drugs from one program to the 
other. More broadly, factoring value into coverage decisions 
including the choice not to cover a drug whose cost isn't 
justified will help reduce overpayment for marginal clinical 
gains, and Congress could take steps to help advance this 
alignment.
    Finally, there are opportunities to improve transparency in 
purchasing. Pharmacy benefits managers negotiate deep discounts 
from drug companies on behalf of their employer and insurance 
clients, but these contracts can be extremely complex making it 
difficult for even the sophisticated clients to determine 
whether they have achieved an optimal share of savings. 
Congress could consider requiring greater transparency of 
contract terminology and definitions between payers and PBMs as 
well as mandating the ability to audit these arrangements.
    The balance between access to innovative medicines and 
constraining cost growth is a long-term challenge with no 
single solution. In striking the right balance, Congress should 
look both within and beyond the user fee agreements. I thank 
you for holding this hearing and welcome your questions.
    [The prepared statement of Mr. Coukell follows:]
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    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman. At this point the chair would like to recognize 
the chairman of the full committee.
    Mr. Walden. I thank the subcommittee chairman. I appreciate 
the indulgence of the committee and our witnesses. We need to 
deal with a slightly different matter that involves us all and 
I just want to clarify, because I know there have been 
questions that have been raised.
    Reports that the Energy and Commerce Committee is doing 
anything other than a regular process of keeping its members up 
to speed on the latest developments in its jurisdiction are 
false. We are continuing to work on drafting and refining 
legislative language to provide relief from a failing law, and 
by that I mean Obamacare. Part of that process is giving 
committee members and staff the opportunity to work closely 
together to draft a bill that reflects the concerns of our 
constituents and reflects our mandate from voters to repeal and 
replace Obamacare. Simply put, Energy and Commerce majority 
members and staff are continuing to discuss and refine draft 
legislative language on issues under our committee's 
jurisdiction.
    And with that I yield back to the chairman.
    Mr. Burgess. The chair thanks the gentleman.
    Mr. Gaugh, you are recognized for 5 minutes for your 
opening statement, please.

               STATEMENT OF DAVID R. GAUGH, R.PH.

    Mr. Gaugh. Thank you, Chairman Burgess, Ranking Member 
Green, and members of the Subcommittee on Health. And first, 
let me thank you for asking me to participate in this very 
important and timely hearing. I am David Gaugh, senior vice 
president for Sciences and Regulatory Affairs at the 
Association for Accessible Medicines, AAM, formerly GPHA, and I 
am a licensed pharmacist.
    AAM represents key stakeholders to the generic industry and 
generics represent 89 percent of all prescriptions dispensed in 
the U.S., but only 27 percent of the expenditures on 
prescription drugs. As such, generic drugs play an ever-
important role in bringing down artificially high prices of 
drugs, thereby keeping medicines within the reach of the 
American public.
    I would like to begin today by commending the committee for 
your continued focus on these important issues as we examine 
them here today. The generic industry's remarkable growth plays 
a vital role in the lives of Americans every day. This growth 
in the generic industry has also served to underscore the 
critically important role of the FDA and, as I will highlight, 
the level of cooperation between industry and the FDA has never 
been greater. However, the agency remains underfunded and the 
responsibility of ensuring access to safe, effective, and 
affordable medicines is a shared one and that is why the 
generic industry has agreed to provide FDA with additional 
resources to address these ongoing challenges.
    I am here to discuss AAM's conviction that the best way of 
achieving the goal of providing patients access to generic 
alternatives is through the development of policies that 
promote robust, competitive markets. Generic manufacturers make 
complex analyses when selecting which products to pursue. This 
analysis can include assessing the complexity in reverse 
engineering, the state of intellectual property of the product, 
the size of the market, the likely number of competitors, the 
product development and manufacturing capabilities, and all 
cost associated. Because of these complexities, AAM believes 
that the best way to control drug costs generally is through 
the policies that incentivize competition, and GDUFA II does 
just that.
    The priority of the generic industry in GDUFA II was to 
achieve a more effective and transparent generic review 
program. We believe that accomplishing this will improve the 
rate of first-cycle approvals on the earliest legally eligible 
date through greater transparency and communications between 
the agency and the industry. Thus, both FDA and the generic 
industry benefit by sharing knowledge and experiences 
throughout the review process. Our goal is not merely a faster 
review timeline, but a more effective review process. The fewer 
review cycles required to get to approval, the sooner patients 
and payers can experience the benefits of generic competition. 
We strongly believe that GDUFA II is well positioned to achieve 
this goal.
    A few of the key areas to focus on: Application Metrics. So 
the FDA will act on 90 percent of all ANDAs within 10 months 
for standard application and all those indicated as priority 
within 8 months and this includes the inspection component of 
the review process.
    Bridging, or we called it no ANDA left behind--prior to the 
completion of GDUFA I, all applications and supplements that 
did not have an official GDUFA I goal date and were 
subsequently given target action dates will be assigned a GDUFA 
II goal date on or near October 1 of 2017.
    GDUFA II creates a pre-ANDA submission communication 
pathway for complex products. This early engagement between 
industry and the FDA will significantly contribute to the 
applicant's ability to improve the overall submission quality 
of ANDA's which in turn will contribute to first-cycle 
approvals.
    This agreement includes transparency and communications 
between FDA and the ANDA applicant through the liberal use of 
information requests, division review letters, and the complete 
response letter. These enhancements are intended to decrease 
the number of review cycles and move them for first-cycle 
approval.
    Reporting and accountability is also included with several 
new performance and financial reporting requirements to enhance 
transparency and efficiently maintain them. These new reporting 
requirements will allow Congress, industry, and FDA to better 
assess FDA's resource management, planning, and processes.
    Small business consideration--the proposal supports small 
businesses by exempting them from a facility fee until the 
first ANDA is approved in that facility, and the proposal also 
provides for the tiering of the annual ANDA program fee based 
on small, medium, and large companies and this tiering is based 
on the number of approved ANDAs those companies hold.
    In conclusion, Mr. Chairman, the GDUFA II user fee proposal 
is culmination of months of negotiations between FDA and 
industry, and the final product as transmitted to Congress 
represents a careful balance among all stakeholders involved. 
We respectfully urge the committee to approve GDUFA II as 
negotiated and agreed to by the FDA and industry without 
changes to this agreement. Thank you.
    [The prepared statement of Mr. Gaugh follows:]
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    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman. Ms. Reed, you are recognized for 5 minutes for 
an opening statement, please.

                   STATEMENT OF JULIANA REED

    Ms. Reed. Thank you, Mr. Chairman and members of the 
committee for the opportunity to be here today. I am Juliana 
Reed, vice president of Government Affairs for Coherus 
BioSciences and the immediate past president of the Biosimilars 
Forum. I was a member of the Forum's biosimilars user fee 
negotiating team last year.
    The Biosimilars Forum appreciates the opportunity to 
testify today regarding its participation in the negotiations 
for the BsUFA program for fiscal years 2018 to 2022, or BsUFA 
II, and to provide our perspective on the reauthorization of 
the user fee legislation. We urge Congress to support the 
outcome of BsUFA II and to reauthorize the program prior to 
September 30th, 2017.
    The Biosimilars Forum is a nonprofit trade association 
representing biosimilars manufacturers who are dedicated to the 
development of a new and sustainable biosimilars market in the 
U.S. with the goal of expanding access to these important 
medicines while lowering costs for patients and the overall 
U.S. healthcare system. The members of the Biosimilars Forum 
represent the majority of the U.S. biosimilars program and 
development at the FDA and are subject to the user fees we are 
discussing today.
    The Biosimilars Forum is solely focused on biosimilars and 
the associated policies necessary to foster a vibrant U.S. 
biosimilars market that delivers high quality, safe, and 
effective biosimilar medicines over the long term. This 
singular focus on biosimilars is important. It is a recognition 
that biosimilars are unique, they are not generic drugs, and 
they are not branded biologics.
    Biosimilars are a new and distinctive industry sector, 
created by Congress via the Biologics Price Competition and 
Innovation Act, or BPCIA, and governed by new and 
individualized policies and regulations solely devoted to this 
sector of the biosimilar pharmaceutical industry. In fact, 
FDA's regulatory treatment of biosimilars reinforces the 
uniqueness of each product through the agency's approval 
pathway, naming policy, and pharmacovigilance efforts. This 
distinction is important to the members of the Forum and 
something on which we continuously work to educate our 
partners.
    As we work together to build this new industry, we all need 
to look at biosimilars with a different lens that acknowledges 
this distinction. The Biosimilars Forum is proud to have 
participated in industry negotiations with the FDA regarding 
the reauthorization of BsUFA and greatly appreciates the 
cooperation of the agency and the other industry groups 
represented during the negotiations.
    The Forum entered into BsUFA II negotiation process with 
four primary goals: ensuring solid financial support for the 
program; improving communication between the FDA and 
biosimilars products sponsors; increasing transparency during 
the approval process and regarding the spending of user fees; 
and preventing the expenditure of BsUFA funds on extraneous 
policy issues or activities that are not exclusive to 
biosimilars.
    Within BsUFA II there are significant enhancements to the 
biosimilar user fee program that support the review and 
approval of biosimilar medicines in the U.S. These agreed-to 
enhancements include a revised review process meant to increase 
the transparency and communication that will facilitate an 
increase in the likelihood of first-cycle approval; agency 
commitments to complete and publish several draft and final 
guidance documents that will provide industry with additional 
clarity and certainty regarding the biosimilar development and 
review process; agency commitments to augment and strengthen 
staffing of the biosimilars program including hiring product 
reviewers; and enhancements to the user fee structure and 
management that will allow greater transparency, 
predictability, and long-term stability of the program in the 
U.S. Again, we encourage Congress to support the BsUFA 
reauthorization and provide the FDA with the necessary 
resources it needs to continue to build its program.
    Mr. Chairman, reauthorization of the BsUFA is key to 
successful implementation of the BPCIA. But I would be remiss 
if I didn't also mention that it is critical for all federal 
agencies to be consistent in their treatment and support of 
biosimilars and to recognize that this new industry has 
additional needs in order to further ensure that biosimilars 
will increase access and lower costs for patients who need 
these medicines.
    As noted, FDA has a responsibility for making clinical 
distinctions among products and the agency's policies support 
the notion that each biosimilar is unique. Unfortunately, CMS 
did not share this view. Congress should require CMS to review 
its current reimbursement policy for biosimilars and make it 
consistent with FDA biosimilar policies. Specifically, FDA 
policy on biosimilars acknowledges the unique nature of each 
biosimilar and CMS should align its policy by assigning unique, 
individualized billing codes to each biosimilar.
    FDA guidance to industry makes it clear that each 
biosimilar is approved in a distinct fashion with variances in 
approved clinical indications and interchangeability, if 
possible. FDA's guidance for industry on nonproprietary naming 
of biologic products further distinguishes individual 
biosimilars and brand biologics by setting out a naming system 
whereby different suffixes will be assigned to the name of the 
biosimilar and its reference products. CMS policy should 
likewise recognize this distinction for payment and 
reimbursement purposes.
    In addition, as the Biosimilars Forum works closely with 
patients and the providers who will prescribe biosimilars it is 
critical that they understand the science behind biosimilars 
and the FDA's rigorous review process so they have confidence 
when using and prescribing them. We call on all stakeholders 
including Congress to support collaboration and education 
efforts to advance biosimilars.
    Thank you for the opportunity to be here. I apologize I 
went over my time, and I am happy to answer any questions.
    [The prepared statement of Ms. Reed follows:]
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    Mr. Burgess. The chair thanks the gentlelady.
    Mr. Leicher, you are recognized for 5 minutes for an 
opening statement, please.

                 STATEMENT OF BRUCE A. LEICHER

    Mr. Leicher. Good morning, Chairman Burgess, Ranking Member 
Green, and members of the Subcommittee on Health. Thank you for 
the opportunity to participate in this important hearing. I am 
Bruce Leicher, Senior Vice President and General Counsel of 
Momenta Pharmaceuticals and the Chair of the Biosimilars 
Council Board. I had the opportunity to participate in the 
BsUFA I as well as the BsUFA II negotiations in those 
capacities.
     The Biosimilars Council is a division of Association for 
Accessible Medicines. It works to ensure a positive regulatory 
and policy environment for biosimilar products and educates the 
public and patients about the safety and effectiveness of 
biosimilars. We are deeply committed to accessible, affordable, 
and high quality medicine, and we strongly support the BsUFA 
III package.
    I would like to start with a personal story as someone who 
has worked in the biotechnology industry for over 25 years and 
in the biosimilars industry since its inception. About 8 years 
ago I appeared before the House Judiciary Subcommittee on 
Courts and Competition Policy to support the BPCIA. Many of the 
witnesses testified about their fears of biosimilars, how 
biosimilars were more complicated than generics, and how we 
should be very careful about proceeding with biosimilars 
legislation. I testified about how significant scientific 
innovation would address these concerns and make biosimilar 
competition possible. I emphasized that American ingenuity 
would make us global leaders by enacting legislation that did 
not put a ceiling on biosimilar innovation.
    Congress listened and acted with courage. It passed the 
BPCIA. American innovation was unleashed. Many prior opponents 
of biosimilar competition entered the business and today we 
have a growing and thriving biosimilars industry creating good 
jobs and leading the world with our innovative science, 
particularly in the science of more fully understanding our 
biologic products.
    Today, Dr. Woodcock reported that over 64 biosimilar 
programs were under review of development of 23 different 
biologic products. Momenta alone has seven biosimilar 
development programs. This was made possible by the BPCIA and 
by BsUFA I user fee funding. We learned in BsUFA I, however, 
that the innovation involved in biosimilar development, that 
is, the science of understanding what is in a biologic for 
comparison purposes, is complicated and involves many new 
skills that the industry and the FDA need to understand. This 
requires new staff and training to assure high quality and 
efficient review. Historic FDA staffing cannot meet these 
needs, reviews which depend far less on clinical data and far 
more on new, innovative scientific techniques that demonstrate 
that a biosimilar is highly similar to the reference product 
and has no clinically meaningful differences.
    In addition, even more innovation is underway to allow for 
approval of interchangeable biologics which can be shown to 
perform the same in any given patient, and, when approved, 
substituted at the pharmacy like generic drugs. This innovation 
is what makes biosimilars competitive, affordable, safe, and 
effective for patients, but these innovations squarely depend 
on having the critical additional FDA resources to be funded by 
BsUFA II.
    Innovation was used to craft the BsUFA II commitment 
letter. We took a hard look at the first 5 years. Not only are 
new FDA resources needed, more efficient regulatory approaches 
that use funding more wisely are necessary to accelerate FDA 
review. Together we included innovations from BsUFA I and PDUFA 
to enhance the review process and to ensure regulatory clarity. 
The BsUFA II user fees are now tied to the level of resources 
needed and adjust with resource demand. It is also important to 
emphasize that the funding provided by user fees is in addition 
to, not a substitute for, congressional appropriations, and 
expenditure is contingent as in the past on an appropriate 
spending trigger.
    Specific improvements include enhanced communication and 
meeting opportunities that eliminate unnecessary delays; using 
resource capacity planning to set budgets, staffing levels, and 
fees; adopting the highly effective program review model to 
increase first-cycle application approvals; commitments to 
dedicate staffing and to issue regulatory guidance to promote 
best practices and predictability; and expanding biosimilar 
education activities. Each improvement accelerates high quality 
development and review to help assure that patients have more 
timely access to lifesaving, affordable, safe, and effective 
biosimilars.
    So in conclusion, BsUFA II is the culmination of months of 
hard work and negotiations between the FDA and industry. It 
represents a careful balance among the stakeholders. We 
respectfully urge the committee to approve a clean draft of 
BsUFA II without changes to the underlying agreement. Timely 
passage is important to ensure patients have access to 
lifesaving biosimilar medications that they require. This 
historic agreement provides a critical step toward 
accomplishing this goal.
    Thank you, and I would be happy to answer any questions.
    [The prepared statement of Mr. Leicher follows:]
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    Mr. Burgess. The chair thanks the gentleman. Ms. Holcombe, 
you are recognized 5 minutes for an opening statement, please.

                   STATEMENT OF KAY HOLCOMBE

    Ms. Holcombe. Mr. Chairman, what an honor it is to speak 
with you today. In 1992, this committee planted the seed that 
has grown into user fee programs that provide FDA with a 
significant portion of the resources it needs to ensure that 
patients have timely access to safe and effective medicines. 
This committee also successfully produced with an overwhelming 
bipartisan House vote, the BPCIA, legislation that established 
an FDA pathway for the approval of biosimilars.
    BIO was an early and strong supporter of this legislation 
to create a balanced pathway for greater competition in the 
biologics marketplace and of the user fees to make that work. 
BIO is the world's largest trade association representing 
biotechnology companies, academic institutions, state 
biotechnology centers, and related organizations across the 
United States and in more than 30 other nations. Our membership 
includes most of the large biopharmaceutical companies, but the 
vast majority of our members are small biotechnology companies 
working on the most cutting-edge R&D. BIO is proud of the 
innovative spirit and dedication of these small companies.
    I want to focus my comments today principally on the 
reauthorization of the biosimilars user fee program. We believe 
the BsUFA reauthorization proposal you are considering meets 
all of our overarching goals and supports and enhances the 
biosimilars user fee program. We strongly support timely 
reauthorization of BsUFA.
    During the course of BsUFA I, FDA issued guidance documents 
to assist sponsors and other stakeholders to understand the 
agency's expectations and how this new process would work. They 
also issued final guidance on naming for biosimilar and 
innovative biological products to establish a way to provide 
clarity for prescribers and patients and to assist 
pharmacovigilance. In addition, FDA issued five guidance 
documents that remain in draft, including the most recent draft 
guidance on the agency's views on determining 
interchangeability.
    BIO continues to urge that the agency finalize this draft 
guidance as quickly as possible as interchangeability is an 
important component of promoting the biosimilars marketplace. 
Because of both the complexity of the products and the novelty 
of this category of highly similar or interchangeable products, 
we recognize that these early years necessarily have been a 
time of learning and building. And although four new 
biosimilars products approved since enactment of BPCIA and 
initiation of BsUFA may seem like a small number, we are 
confident that the program and the availability of biosimilars 
to patients will grow as the agency builds expertise and 
capacity.
    With this as background, BIO worked with FDA, other 
industry organizations, and other stakeholders to develop 
proposals for continued progress and enhancements during BsUFA 
II. Some of the key commitments have already been mentioned 
here and I am not going to mention them again. The hope is that 
these new programs under BsUFA II will enhance the ability of 
sponsors and patients to work together to get biosimilars to 
the marketplace.
    I want to mention in particular the BsUFA commitments that 
relate to financial enhancements of the program to provide 
sustainability for the BsUFA program and to provide commitments 
to hiring goals and moving forward with FDA's hiring of the 
skilled staff that it needs to do its job. BIO has longstanding 
views about the negative potential consequences of the 
sequester of user funds or hiring freezes that can result in 
FDA's inability to fill vacancies and make the new hires that 
are necessary for meeting its commitments under these user fee 
programs.
    User fees support a significant number of FDA personnel 
including those needed to carry out the BsUFA commitments. If 
FDA is unable to make these hires, user fees cannot be spent. 
This is a situation that is unacceptable to fee payers and is 
not good for FDA or for the patients who are waiting for the 
approval of biosimilar therapies.
    Finally, Mr. Chairman, I want to address very briefly your 
request to comment on the Lower Cost Drugs Through Competition 
Act. BIO supports competition in the prescription drug 
marketplace. We believe a robust, competitive market exists 
today, but we also recognize that there can be more done to 
promote generic entry particularly where an older, off-patent 
drug has lost regulatory exclusivity yet lacks meaningful 
generic competition.
    We all want to see FDA approve generic drugs as efficiently 
as possible. Competition and greater choice are good for 
patients, and whatever reasonable steps can be taken to help 
FDA enhance its generic drug processes should be considered 
seriously. On behalf of BIO, I want to thank you for the 
opportunity to present our views today, and I am happy to take 
any questions you may have.
    [The prepared statement of Ms. Holcombe follows:]
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    Mr. Burgess. The chair thanks you. That concludes our 
witness testimony. We will move into the question portion of 
the hearing for our second panel. I recognize myself 5 minutes 
for questions.
    Mr. Gaugh, if I could start and ask you, you were here, I 
think, when Dr. Woodcock gave her testimony. And I think, if I 
understood her correctly, she said that there is no backlog in 
the approval of generic drugs, and I would just ask you if you 
agree with that statement.
    Mr. Gaugh. So there is a bit of a discrepancy between the 
industry and the FDA on that statement, whether or not there is 
a backlog, but it doesn't really matter what word you use. I do 
agree with Dr. Woodcock that all applications are currently 
under review. But if you look back at the original statutory 
backlog of GDUFA I, there were 2,866 products in that category. 
There are now 1,500 in that category that are still not 
approved. So they are going back and forth under active review 
between the FDA and industry, but those are still sitting there 
so they have been there for 4 years or longer. Add in year 1 
and year 2 applications and there is another 2,000, roughly, 
and those have been under review for at least 2 years.
    Mr. Burgess. Mr. Gaugh, staying with you, I guess the 
question is has the FDA met all of its goals under the first 
generic drug user fee agreement?
    Mr. Gaugh. Yes, they have.
    Mr. Burgess. But then we continue to hear significant 
concern about review times and the number of cycles it takes to 
approve applications, the lack of communication between review 
division staff and applicants, so are you confident that the 
new agreements will address those concerns?
    Mr. Gaugh. Yes. So in the first agreement, in GDUFA I, 
there were no solid metrics--I will use that phraseology--for 
the pre-GDUFA and years 1 and years 2. In years 3, 4, and 5 
there were solid metrics. So we have seen some significant 
advances in those years and that is why we are asking the FDA 
to divide out the metrics, or the report-out metrics if you 
would that they are giving us, in cohort years, so we can know 
how things are happening per year.
    When we look at a first-cycle review of only nine percent 
that is looking over the entire cohort. We would like to see 
what that looks like per cohort.
    Mr. Burgess. I guess what I would like to get from you is a 
sense as what the FDA can do to substantially improve the 
review process and what steps can industry then take to improve 
the quality of submissions on a more consistent basis?
    Mr. Gaugh. So the steps we have taken in GDUFA II are a 
couple. One, Dr. Woodcock talked about the complex products, 
and so we have preapplication meetings that help us understand 
that. That happens with every one of the products under the 
ANDA, understanding there is only about 150 to 175 products 
there, but they have that opportunity to have those 
conversations before the application is even submitted, so both 
industry and the FDA knows what is coming in the door.
    Under GDUFA II we have done that in the complex products 
and so we think that will take large steps in getting to that 
first-cycle review for complex. It doesn't fall for the 
noncomplex products. But remember, there is over a thousand 
applications that are entered into the FDA every year for 
review and approval. That would be a huge resource drain to try 
to have those pre-meetings. We are working in that direction, 
but again this is GDUFA II, not GDUFA VI.
    Mr. Burgess. And thank you. I thank you for your responses.
    Ms. Holcombe, if I could ask you, you referenced in your 
testimony the learning and building that has been going on 
during the Biosimilar User Fee Agreement course. If I 
understand correctly there have been four approvals with 
biosimilars; is that accurate?
    Ms. Holcombe. Yes, that is accurate.
    Mr. Burgess. It seems like a low number.
    Ms. Holcombe. It does.
    Mr. Burgess. So would you care to expound upon that?
    Ms. Holcombe. We have hope.
    Mr. Burgess. We all have hope.
    Ms. Holcombe. I know hope is not a strategy.
    Mr. Burgess. This is a very hopeful subcommittee.
    Ms. Holcombe. As Dr. Woodcock mentioned, FDA is working 
with sponsors, biosimilar sponsors, now through the course of 
the biosimilar product development meetings on 64 development 
programs to 23 reference biological products. So we can't 
obviously predict that all 64 of these are going to turn out to 
have marketed products, but certainly some high percentage of 
them will. So we could move over the next few years, certainly 
over the next 5 years, from 4 products to 56, let's say, or 
even 46, which would be terrific.
    Mr. Burgess. Agreed. That would be terrific.
    I yield back my time and recognize Mr. Green for 5 minutes 
for questions, please.
    Mr. Green. Thank you, Mr. Chairman.
    And Mr. Leicher, in the first panel Dr. Woodcock discussed 
the increasing number of meeting requests that the agency 
received from sponsors. You mentioned in your testimony that 
one of the improvements under BsUFA II is enhanced 
communication and meeting opportunities that are hopefully help 
to eliminating delays in development and review of biosimilars.
    My first question, what improvements to these meetings with 
sponsors would be made under BsUFA II and why are these 
improvements helpful from your perspective?
    Mr. Leicher. So yes, there are several improvements that 
have been made. One was a discussion that we had with the 
agency about including specific reference to biosimilars in the 
preapplication IND best practice guidance document as well as 
in the meeting guidance documents which provide for specific 
responses, commitments to time frames for responses, and that 
can really enhance sort of correcting things in advance before 
an application is filed.
    The other piece is the adoption of the program review model 
which was developed in PDUFA, so that when an application is 
filed there are specific goals set within the agency for 
timelines. There is a preapplication meeting with the sponsor 
to work out complicated issues and make sure that what is filed 
is approvable. And there is a series of communications and 
responses to the applicants so that you can actually strive for 
a first-cycle review the first time and do it right the first 
time.
    Mr. Green. BsUFA II also moves from a 10-month timeline for 
review to a 12-month. Can you explain why this change was made 
and how will this impact the biosimilars?
    Mr. Leicher. The ultimate goal of the change was to get to 
first-cycle approvals. What we believe was learned in PDUFA was 
that additional time was important to enable the communication 
that I was just discussing to occur so that we can actually 
respond to information requests and to communications in that 
time frame and actually finish it the first time, rather than 
have it coming back and then waiting another 6 months beyond 
the 10-month period.
    Mr. Green. And our goal again is to move with the process 
to make sure they do their job but also move it quickly. Mr. 
Coukell, the FDA approval process ensures drugs are safe and 
effective. Some have proposed policies to address pricing that 
circumvents that process. Do you have a position on whether we 
should look for solutions to pricing concerns that go outside 
the FDA approval process?
    Mr. Coukell. Thank you for that question. Dr. Woodcock in 
her testimony talked about the FDA's process for going out to a 
manufacturing facility and being on the floor and really seeing 
what happens there, and then talked about looking at data on 
bioequivalence to make sure that the copy of the innovative 
product performs in exactly the same way. If we are getting 
drugs that haven't gone through that process we don't have 
those same guarantees.
    Mr. Green. Thank you. This is a question for both of you 
and Mr. Gaugh. I think we all agree that generic drugs are 
saving money and making medicines more affordable to patients. 
In fact, the Association for Accessible Medicines estimates 
that the generics are saving American families over $4 billion 
a week. And while generics account for 89 percent of the 
prescriptions expenses in America, it is only 27 percent of the 
total drug cost. That is why I think it is important to do what 
we can to reduce the barriers to the generic competition and 
lower the often burdensome cost of prescription drugs.
    Mr. Schrader and Mr. Bilirakis have proposed one way to 
address this important issue, and I am interested to hear what 
else could be done to increase generic competition in the 
market. Mr. Gaugh, what other policy proposal do you believe 
should increase generic competition and access to generic 
drugs, and also to Mr. Coukell and Mr. Gaugh.
    Mr. Gaugh. Thank you. Dr. Woodcock also spoke earlier today 
about the REMS situation that we have. And so I know that in 
that bill that Representative Bilirakis and Schrader put 
forward that was to have a study on REMS, but we don't need 
another study on REMS. We have been looking at REMS since I was 
at the GDUFA table in 2012 and working on solutions for that. 
And we have had solutions that have been presented even in the 
last 6 months that never quite make it into the bill.
    So REMS is one of the main indicators that prevents generic 
products from coming to market because we can't get the product 
to be able to develop it and develop the generic of the 
innovator.
    Mr. Green. Mr. Coukell, do you want to use my last 19 
seconds?
    Mr. Coukell. Well, there aren't that many drugs with that 
type of REMS, but there are some big drugs in there. One of 
them in that category is the seventh-most costly drug in the 
Medicare program. It is $2 billion a year. So making sure that 
there is a pathway to market for generic versions of those 
drugs and non-REMS drugs that have restricted distribution 
could be meaningful.
    Mr. Green. OK. Thank you, Mr. Chairman. I yield back.
    Mr. Lance [presiding]. Thank you very much. The chair 
recognizes Dr. Carter of Georgia.
    Mr. Carter. Thank you, Mr. Chairman, and thank all of you 
for being here. Mr. Coukell, Mr. Gaugh, I understand both of 
you are pharmacists; is that correct?
    Mr. Coukell. Yes, sir.
    Mr. Gaugh. Yes, sir.
    Mr. Carter. Good, good. I want to talk about something. I 
want to talk about PBMs, pharmacy benefit managers, OK, one of 
my favorite topics. Mr. Coukell, you say in your written 
testimony here, pharmacy benefit managers, the middlemen, that 
insurers and employers pay to both administer prescription drug 
benefits and negotiate discounts from drug companies play a 
crucial role, using their large sales volumes and their ability 
to create formularies to force drug companies to offer deep 
price concessions. However, a share of the savings accrues to 
the pharmacy benefit managers themselves, and their contracts 
can be extremely complex, making it difficult even for 
sophisticated benefits administrators to determine whether they 
have achieved optimal savings.
    Let me ask you, when you have three companies that control 
almost 80 percent of the market, as we have here in this 
country where we have three PBMs that control 80 percent of the 
market, wouldn't you agree that that is not much competition 
there? If you look at the pharmacy benefit managers and you 
look at their profits over the years, you see that they have 
exploded, that they have profits that have increased over 600 
percent. Obviously they are not doing what they were supposed 
to have done.
    Now you go on to say that Congress could consider requiring 
greater transparency of contract terms and definitions between 
payers and pharmacy benefit managers. Such a bill has been 
introduced by Representative Doug Collins of Georgia, the MAC 
Transparency bill that will call for more sunlight to be shed, 
for more transparency in our drug pricing system. I would like 
to just get your comments on that if you would about how that 
could help us in bringing down drug prices.
    Mr. Coukell. Thank you for that question. PBMs with their 
negotiating power play an important role in bringing down drug 
prices, and then the important question is, is the ultimate 
payer, the self-insured employer or the insurance plan, getting 
adequate benefit? And of course the PBMs have to make some 
money in that deal too. That is their business model.
    In my testimony in calling for transparency that was not 
calling for public transparency on the price, but because these 
contracts are so complex and they have so many fees, the 
question is are there standards around contract definitions as 
well as audit mechanisms and standards around lack of conflict 
of interest in the people who advise on PBM contracts that 
could be beneficial to the ultimate payer.
    Mr. Carter. And listen, I don't have any trouble with 
anybody making money, more power to them, and that is not what 
I am getting at. But what I am getting at is that this is a 
shell game. They are ripping off the public, I am telling you, 
and that is what is happening with the PBMs. They are not 
achieving what they set out to achieve and what we think they 
are achieving by bringing down drug prices, because they are 
not passing them on.
    Yet they avoid transparency, and this is what this 
legislation is trying to do. There has to be transparency 
within the marketplace. I will give you an example. We had the 
problem as you are well aware of, of the EpiPen that went up to 
like $600 for a two-pack. And when I was on the Oversight 
Committee we had the CEO of EpiPen of Mylan Pharmaceuticals, 
the manufacturer of that product, testify before us and she is 
at the beginning, I as a pharmacist, I was at the end.
    So she says, OK, when it leaves us this is what the price 
is--and I am going to just make up a number, $150--when it gets 
to me it is $600. What happens in between? That is what we are 
trying to figure out. In between is that man behind the 
curtain. In between is the PBM. They are the ones who are 
marking that drug up and not passing it on. This is causing a 
problem in the market, in the generic drug market. This is one 
of the reasons why prescription drug prices are so high.
    And this is why Representative Collins' bill, I think, is 
so essential and that we should pass it here in Congress, the 
MAC Transparency bill. Again I am not opposed to anybody making 
money, but I am opposed when they are causing the public the 
distress that they are causing them by increasing drug prices 
the way that they are.
    Now there are others who need to be held responsible, 
including pharmacists, including pharmaceutical manufacturers, 
all of us have a part in this. But the transparency needs to 
happen. It needs to happen not only so we can bring down drug 
prices, but the things that is going to bring down healthcare 
costs all together in our healthcare market is going to be more 
competition. That is why this hearing is so important.
    How can we bring about more competition within the generic 
drug market within health care itself? That is what we are 
working on right now in Congress when we are talking about 
health care and we are talking about all the things that we are 
talking about here. How do we increase competition so that we 
can bring down costs? One way we do that is through encouraging 
more competition within the generic drug marketplace. That is 
what we have got to do. That is going to bring the prices down.
    Just one quick example of how it does that in my own life. 
When I was still practicing I had this little company down the 
road who decided they wanted to get involved and wanted to 
become a player in the pharmacy market. I think the name of the 
company was Walmart. They came up with this. We are going to 
give you a 30-day prescription, a 30-day supply of generics for 
$4. I thought they were crazy. I said man, there is no way. I 
can't even buy it that cheap. I bowed my back and I said there 
is no way I am going to do that.
    Well, guess what. A week later I was doing it. A week later 
I called my suppliers and I said you have got to do something. 
I have people walking down to that store and I am not going to 
have that. That is the way you drive down drug prices, through 
more competition, through more manufacturers, generic drug 
manufacturers on the market. That is the answer.
    Thank you. I am sorry, I didn't mean to go on, but thank 
you very much.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman and recognizes the gentleman from Oregon, Dr. 
Schrader, 5 minutes for your questions, please.
    Mr. Schrader. Thank you very much, Mr. Chairman. Dr. Gaugh, 
just to confirm, in the previous session, previous panel, Dr. 
Woodcock indicated there might be in the neighborhood of 183 
sole-source drugs where there is no generic competition. Would 
you agree with that number, roughly?
    Mr. Gaugh. Roughly, yes.
    Mr. Schrader. All right. Could you talk briefly about the 
pre-ANDA meetings and the increased communication and GDUFA and 
how you see this new process working out to make it even 
better?
    Mr. Gaugh. Yes, in the pre-ANDA meetings it gives the 
industry the opportunity to meet with the FDA prior to actually 
filing the application with the FDA. It could be one or more 
meetings. Those meetings allow that conversation back and forth 
between the agency and the industry so that they can determine 
if they are taking the right path, or maybe they need to make a 
slight move in that path forward so when they do file their 
application the application is usually substantially complete 
and we would anticipate a first-cycle review of that.
    Mr. Schrader. Good, very good.
    Ms. Holcombe, one portion of our bill, Lower Drug Costs 
Through Competition Act, trying to close a loophole in the 
tropical disease priority review process. Some bad actors have 
announced plans to access brand name priority review vouchers 
by buying the rights to manufacture a drug from overseas and 
then bring it back to the U.S. for approval without having to 
do any additional research or development.
    Would you agree that this program was intended to act as an 
incentive for new research, new drugs in the U.S. market, not 
just merely to adopt something from overseas?
    Ms. Holcombe. I would agree that this program was intended 
to ensure that U.S. patients affected by these tropical 
diseases would be able to access safe and effective drugs to 
treat them. Our concern about the provision as it currently is 
written is worrying about taking away from FDA the ability to 
decide on an application-by-application basis what data are 
needed to provide an approval for a drug.
    So there may be cases where a company has perfectly 
legitimately marketed a drug and had it approved first in a 
country where these diseases are endemic, and then brings this 
application to the U.S. because U.S. patients are now being 
affected from, because they travel out of the country, for 
example.
    But if there have been legitimate, good, solid clinical 
studies that already have been done that are applicable to the 
U.S. patients who are affected by this condition, FDA will 
decide that maybe we don't need additional studies. If FDA has 
a different view, then of course they should be able to say to 
the company you need to do new studies. And sometimes that is 
going to happen for various reasons.
    Mr. Schrader. And that is what our bill, I think, is trying 
to get at, give FDA the final say----
    Ms. Holcombe. Yes.
    Mr. Schrader [continuing]. Using whatever appropriate 
studies are out there. Dr. Gaugh, a question on the risk 
management strategies and studies that we are trying to put in 
our legislation. Do you have any idea about the number of 
companies that may be restricted from accessing the market 
because of the REMS current provisions?
    Mr. Gaugh. There is somewhere in the realm of 80 to 95 
companies that have the restricted REMS.
    Mr. Schrader. Oh, so a substantial number.
    Mr. Gaugh. And then there is another probably 40 to 45 
companies that have a restricted distribution set up, but it is 
not part of the REMS system.
    Mr. Schrader. Very good. And with that I yield back, Mr. 
Chair, thank you. Thank you, all.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman. The chair recognizes the gentleman from New 
Jersey, Mr. Lance, 5 minutes for questions, please.
    Mr. Lance. Thank you, Mr. Chairman. Good afternoon to the 
panel. Mr. Gaugh, following up on the chairman's questioning, 
do you believe it will be helpful for the FDA to have more 
presubmission meetings for noncomplex priority submissions?
    Mr. Gaugh. I think the answer to that is it would always be 
more helpful, yes. I think it is a more complex process than 
that. As we talked earlier, there is around a thousand 
applications that are filed every year, and with a thousand 
applications and having one or two or three meetings with the 
FDA on a thousand different products, probably so resource 
restrictive it couldn't happen.
    So in GDUFA II we agreed to start this process in complex 
products, explore it and then we will move forward from there.
    Mr. Lance. Thank you. Is there anyone else on the panel who 
would care to comment? Thank you. Again Mr. Gaugh, in your 
opening statement you mentioned a more effective generic drug 
review program as a goal of your organization. Touching on 
GDUFA II pre-ANDA submission communications pathway and 
information requests and division review letters, do you think 
these initiatives will reduce review cycles and what are the 
additional ways your organization believes the FDA sponsored 
dialogue could be enhanced?
    Mr. Gaugh. So the potential does exist for that increased 
review and decreased cycle review time. In GDUFA I those 
information requests and division review letters were not part 
of the process, but we did negotiate with the FDA early on in 
GDUFA I to have them begin doing that which they did. So we 
have now codified that in GDUFA II, so that does give us the 
opportunity during a review cycle, whether it is chemistry, 
microbio equivalence, for the reviewer to give an information 
request, for example, to a company who would then have roughly 
15 days to respond and that could then move it right on in that 
still first-cycle review process.
    Mr. Lance. Thank you.
    Ms. Holcombe, good afternoon. It is always a pleasure to be 
with you. In your testimony you note that BsUFA II addresses 
the hiring issue which should result in improved processes and 
faster review times. Given that the reviewers are the same as 
PDUFA reviewers, do you believe the goals set out need to have 
any potential bandwidth issues for reviewers, or can we work 
together in that regard?
    Ms. Holcombe. So BsUFA will benefit from the hiring goals 
that are included in the PDUFA agreement that this committee is 
going to consider at a subsequent hearing because of the fact 
that the reviewers are the same.
    Mr. Schrader. Are the same, yes.
    Ms. Holcombe. One of the issues with getting biosimilar 
products has been that these, when FDA was not sufficiently 
staffed in CDER and CBER in general, these reviewers who were 
reviewing two categories of products now just were simply 
overwhelmed. So we need to have changes in the hiring 
processes, we need to have some of the changes in 21st Century 
Cures, and we need to be sure that FDA is going to be able to 
meet those annual commitments for hiring.
    Mr. Schrader. Thank you. And I am so pleased that we don't 
have acronyms here in this----
    Ms. Holcombe. We don't use acronyms.
    Mr. Schrader. Acronyms, no. Thank you very much, Mr. 
Chairman, and I yield back the balance of my time.
    Mr. Burgess. The chair thanks the gentleman. The gentleman 
yields back. The chair recognizes the gentlelady from 
California, Ms. Eshoo, 5 minutes for questions, please.
    Ms. Eshoo. Thank you, Mr. Chairman. First, thank you to 
each witness. You did a terrific job. And I want to point out 
something that maybe some of you don't know, maybe everybody 
does. But even if everybody does, it is still worth saying it 
for the record, and that is that Kay Holcombe said when she 
began her testimony it is such an honor to be here. Here was 
her home. Kay Holcombe is one of the most distinguished 
individuals to have served on the staff of the Energy and 
Commerce Committee.
    And I remember so well the farewell reception for Kay, boo-
hoo, we were all boo-hooing. But that reception was filled with 
Republican senators, Democratic senators, Republican House 
members, Democratic House members. I mean, the breadth and the 
depth of her knowledge, her professionalism, and that 
recognition on a bipartisan basis is something that I will 
never forget. And I don't think there are that many people that 
could bring that kind of a crowd together. So she is a superb 
professional and you know what, Kay, it is in honor to see you. 
And I waited so I could say this. I waited so I could say this 
because I have got to get out to Dulles, and wheels up and 
westward bound.
    There is something in listening to the testimony of 
everyone here today, and members almost to a person have spoken 
about how the generic industry has grown, what it offers the 
American people. That generic drugs now account for 89 percent 
of prescriptions that are dispensed in the United States and 
that it saved the United States healthcare system almost, just 
rounding it off when you are talking about trillions, right, 
$1.5 trillion. That is not just walking-around money. That is 
not just loose change. And that is a period of over a decade.
    So my question to you is, that is a huge number and the 
savings are huge. Why do we have such a problem with the 
pricing of drugs in the country? They should be coming down not 
going up, according to these statistics. Can any of you speak 
to that?
    Mr. Leicher. I could speak to it from a biologics 
perspective.
    Ms. Eshoo. Short, because I have another question too.
    Mr. Leicher. We don't yet have the biosimilars pathway up 
and running at the full tilt, essentially, as Kay spoke to 
earlier.
    Ms. Eshoo. I know that one very well, believe me. I have 
shot more bullets across the bow on it.
    Mr. Leicher. And with the change in mix in products heavily 
to the biologics end of the spectrum, without this we had 
savings from generics.
    Ms. Eshoo. Well, how much of the generic industry would you 
say that biologics is?
    Mr. Leicher. How much of the generics industry is 
biologics? I am not sure I understand the question.
    Ms. Eshoo. Well, you are saying that biosimilars have 
really not arrived yet and I agree with you.
    Mr. Leicher. In the market----
    Ms. Eshoo. The Obama administration dragged their heels. I 
don't know what this administration is going to do. We don't 
have interchangeability. The pricing is what CMS has done and I 
think they screwed it up. So, it is not good, I don't think. I 
would give it a C- so far.
    Mr. Leicher. What I would say is the majority of the 
highest selling products today are shifted over to the 
biologics end of the spectrum, so the opportunity to capture 
savings from generic substitution has declined as the biologics 
have taken the lead.
    Ms. Eshoo. I appreciate what you have said. I am not so 
sure that I, in terms of the numbers that are stated and where 
we are in terms of drug prices, I don't know. Is there a fact 
gap in this, Kay? Do you want to take a stab at it?
    Mr. Gaugh. I think it is key to point out the----
    Ms. Eshoo. Is your name Kay?
    Mr. Gaugh. Sorry. No, it isn't.
    Ms. Eshoo. Kay.
    Ms. Holcombe. I don't know whether, there are some fact 
gaps which are much longer than a 5-minute conversation, but I 
do think that increased competition in the marketplace is going 
to drive down prices. And as Bruce pointed out, the biologics 
marketplace is at the chic end of the spectrum and as we have 
more biosimilars entering that marketplace I think we are going 
to see a difference. With the number of programs in development 
now, my speculation is that these programs represent the top 
used and the top selling biological products. These are the 
ones that are going to have biosimilars first. And I think we 
will, by the end of this next 5-year period we will be able to 
predict much more accurately what is going to happen in terms 
of the overall marketplace as we get more of these products on 
the market.
    Ms. Eshoo. Thank you very much. My time is up. Thank you, 
everyone. Have a great weekend.
     Mr. Burgess. The gentlelady yields back. The chair thanks 
the gentlelady. Before I yield to the gentleman from New 
Jersey, Mr. Gaugh, did you have something you wanted to offer 
us?
    Mr. Gaugh. I was just going to point out the facts that you 
are talking about. So 11 percent of the products on the market 
account for the opposite of 27, so 11 percent of the products 
on the market, the brand products, account for 63 percent of 
the dollars that are being spent. And those prices you see 
going up all the time, whereas in generics that is where the 
savings report comes. You see the savings from the generics and 
the prices typically going down and competition is what drives 
that. Thank you.
    Mr. Burgess. The chair thanks the gentleman, and the chair 
recognizes the gentleman from New Jersey for 5 minutes for 
questions, please.
    Mr. Pallone. Thank you, Mr. Chairman. As I mentioned 
earlier with the first panel, I believe as this committee looks 
at policies to encourage and support robust generic competition 
that we must also examine the barriers that are currently 
preventing generic access.
    And so if I could start with Mr. Gaugh--I hope I am 
pronouncing it right. In her testimony, Dr. Woodcock noted that 
certain brand companies are using REMS programs to delay or 
deny generic manufacturers access to reference product. Can you 
please discuss further ways, or the ways in which certain brand 
companies directly or indirectly refuse access to the reference 
product for generic drug development?
    Mr. Gaugh. Yes, thank you. In the REMS program they are set 
up under--and not all REMS. There are multiple different levels 
of REMS. But in the REMS ETASU programs they are set up where 
they are restricted distribution programs. It is much like an 
early drug investigational review product where you keep tight 
controls so that you know exactly where each tablet, capsule, 
injectable vial went to from a patient standpoint.
    They have done the same thing in the REMS, and so when you 
try to buy or try to purchase that since you are not a 
qualified patient, if you will, you don't get access to those 
drugs. And even though the REMS was not set up for that and 
there is a process currently where you contact the FDA, the FDA 
writes a letter to the company, that is really the only thing 
that happens. There is no stick to that, if you will.
    Mr. Pallone. Thank you. I didn't realize that Dr. Woodcock 
was here. I really love the fact you stay for the second panel. 
You are one of the few people that does that.
    Mr. Leicher, I also understand--well, I want to ask you 
something about utilizing restricted distribution programs 
also, but that was a tactic that Turing was utilizing to block 
competition to Daraprim. Can you discuss how certain brand 
companies are using the restricted distribution practices also 
to block access to reference product and the types of product 
that these practices are being used for?
    Mr. Leicher. Well, thank you for the question, and what I 
would like to add to is this is not just a REMS problem, and it 
is actually a much bigger problem, actually, in many respects, 
in the biosimilars business, because when we are developing 
generic drugs we need a smaller quantity to do analytical 
testing.
    When we are developing biosimilars we have to do clinical 
trials with blinded vials and purchase very large quantities to 
do the adequate studies. And when you call a wholesaler to 
purchase a drug with an adequate medical license or pharmacist 
license, what you are finding increasingly today is wholesalers 
saying we can't sell it to you because you are doing biosimilar 
testing. And when we ask why, it is because they have to 
provide our name to the manufacturer and the manufacturer says 
you can't supply it.
    And that is the reason why we are very, we strongly support 
the FAST Generics Act or the CREATES Act as a solution to make 
that practice unlawful, because it ought to be a condition of 
approval that products are made available to licensed regulated 
companies by the FDA to develop biosimilars.
    Mr. Pallone. OK, thanks. One more question of Mr. Coukell. 
In your testimony you discussed a landscape with a number of 
different drug pricing challenges including launch prices and 
year-over-year increases. You have also talked about the need 
to increase generic competition, specifically policies to 
ensure generic companies have access to samples of the 
reference product for bioequivalence testing. Could you 
describe how that policy could be implemented in a way that 
yields the most savings?
    Mr. Coukell. Yes, sir. So first of all, REMS are there to 
protect patients and we have to make sure that those 
protections remain in place, but that is completely doable. And 
then there is sort of two pieces to it. One is, can the generic 
company get access to the product for purposes of testing, and 
there is a number of mechanisms and a couple have just been 
mentioned in the pieces of legislation that were mentioned. And 
then the second piece is can the company marketing the product 
that is under a REMS have access to the REMS program itself 
which is another barrier.
    So they have to be able to get the product for testing and 
then they either have to be able to negotiate their way into a 
shared REMS program or stand up their own independent REMS 
program, and the FDA needs discretion to help them find the 
right solution on that latter part.
    Mr. Pallone. OK. Well, I want to thank you all and thank 
the chairman also, because it is my hope that the committee 
continues to discuss legislation to promote generic competition 
and that we also consider policies that will address the use of 
REMS as a barrier for generic entry.
    One of the concerns I have, Mr. Chairman, is I am starting 
to hear from different people who will say, well, generics 
aren't really a factor in trying to keep drug prices down, and 
I continue to believe that they are. I am kind of shocked by 
the fact that even some of my colleagues will say that they are 
not. So I think it is important, the things that we are 
discussing today and in the future. Thanks again.
    Mr. Burgess. The gentleman yields back. The chair thanks 
the gentleman. And seeing that there no further members wishing 
to ask questions, I do want to thank our witnesses for being 
here today. It was a long hearing and I appreciate your 
indulgence.
    Two unanimous consent requests, or three unanimous consent 
requests from Mr. Schrader to enter into the record a letter 
from Premier, an alliance of 3,700 hospitals \1\; the American 
Academy of Ophthalmology \2\; and a letter from the American 
Academy of Dermatology. \3\ And then further, Mr. Long of 
Missouri had asked that we include a letter from the Federal 
Trade Commission in the record. So, without objection, so 
ordered.
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    \1\ The information was unavailable at the time of printing.
    \2\ The information was unavailable at the time of printing.
    \3\ The information was unavailable at the time of printing.
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    [The information appears at the conclusion of the hearing.]
    Mr. Burgess. Pursuant to committee rules, I remind members 
they have 10 business days to submit additional questions for 
the record. I ask the witnesses to submit their response within 
10 business days upon receipt of the questions. And without 
objection, the subcommittee stands adjourned.
    [Whereupon, at 2:03 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
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