ANTITRUST CONCERNS AND THE FDA APPROVAL PROCESS HEARING BEFORE THE SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW OF THE COMMITTEE ON THE JUDICIARY HOUSE OF REPRESENTATIVES ONE HUNDRED FIFTEENTH CONGRESS FIRST SESSION JULY 27, 2017 Serial No. 115–27 Printed for the use of the Committee on the Judiciary ( Available via the World Wide Web: http://judiciary.house.gov U.S. GOVERNMENT PUBLISHING OFFICE 30–235 WASHINGTON : 2018 VerDate Sep 11 2014 06:19 Jun 07, 2018 Jkt 028040 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 E:\HR\OC\A235.XXX A235 COMMITTEE MEMBERSHIP ONE HUNDRED FIFTEENTH CONGRESS COMMITTEE ON THE JUDICIARY BOB GOODLATTE, Virginia, Chairman F. JAMES SENSENBRENNER, JR., JOHN CONYERS, JR., Michigan Wisconsin JERROLD NADLER, New York LAMAR SMITH, Texas ZOE LOFGREN, California STEVE CHABOT, Ohio SHEILA JACKSON LEE, Texas DARRELL E. ISSA, California STEVE COHEN, Tennessee STEVE KING, Iowa HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia TRENT FRANKS, Arizona THEODORE E. DEUTCH, Florida LOUIE GOHMERT, Texas LUIS V. GUTIE´ RREZ, Illinois JIM JORDAN, Ohio KAREN BASS, California TED POE, Texas CEDRIC L. RICHMOND, Louisiana JASON CHAFFETZ, Utah HAKEEM S. JEFFRIES, New York TOM MARINO, Pennsylvania DAVID CICILLINE, Rhode Island TREY GOWDY, South Carolina ERIC SWALWELL, California RAUL LABRADOR, Idaho TED LIEU, California BLAKE FARENTHOLD, Texas JAMIE RASKIN, Maryland DOUG COLLINS, Georgia PRAMILA JAYAPAL, Washington RON DESANTIS, Florida BRAD SCHNEIDER, Illinois KEN BUCK, Colorado JOHN RATCLIFFE, Texas MARTHA ROBY, Alabama MATT GAETZ, Florida MIKE JOHNSON, Louisiana ANDY BIGGS, Arizona SHELLEY HUSBAND, Chief of Staff and General Counsel PERRY APELBAUM, Minority Staff Director and Chief Counsel SUBCOMMITTEE ON REGULATORY REFORM, COMMERCIAL AND ANTITRUST LAW TOM MARINO, Pennsylvania, Chairman BLAKE FARENTHOLD, Texas, Vice-Chairman DARRELL E. ISSA, California DAVID CICILLINE, Rhode Island DOUG COLLINS, Georgia HENRY C. ‘‘HANK’’ JOHNSON, JR., Georgia KEN BUCK, Colorado ERIC SWALWELL, California JOHN RATCLIFFE, Texas PRAMILA JAYAPAL, Washington MATT GAETZ, Florida BRAD SCHNEIDER, Illinois (II) VerDate Sep 11 2014 06:19 Jun 07, 2018 Jkt 028040 PO 00000 Frm 00002 Fmt 5904 Sfmt 6646 E:\HR\OC\A235.XXX A235 C O N T E N T S JULY 27, 2017 OPENING STATEMENTS Page The Honorable Bob Goodlatte, Virginia, Chairman, Committee on the Judici- ary ......................................................................................................................... 5 The Honorable John Conyers, Jr., Michigan, Ranking Member, Committee on the Judiciary ................................................................................................... 4 The Honorable Tom Marino, Pennsylvania, Chairman, Subcommittee on Reg- ulatory Reform, Commercial and Antitrust Law, Committee on the Judici- ary ......................................................................................................................... 1 The Honorable David Cicilline, Rhode Island, Ranking Member, Sub- committee on Regulatory Reform, Commercial and Antitrust Law, Com- mittee on the Judiciary ........................................................................................ 3 WITNESSES Hon. Scott Gottlieb, M.D., Commissioner, Food & Drug Administration Oral Statement ..................................................................................................... 8 Mr. Markus H. Meier, Acting Director, Bureau of Competition and Assistant Director, Health Care Division, Federal Trade Commission Oral Statement ..................................................................................................... 10 Prof. David S. Olson, Esq., Associate Professor of Law, Boston College Law School Oral Statement ..................................................................................................... 27 Prof. Erika Lietzan, Esq., Associate Professor of Law, University of Missouri School of Law Oral Statement ..................................................................................................... 29 Mr. Alden Abbott, Esq., Deputy Director and Senior Legal Fellow, The Herit- age Foundation Oral Statement ..................................................................................................... 31 Prof. Aaron S. Kesselheim, M.D., M.P.H., Associate Professor of Medicine, Harvard Medical School Oral Statement ..................................................................................................... 32 ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD Responses to Questions for the Record from the Hon. Scott Gottlieb, M.D., Commis- sioner, Food & Drug Administration Statement and letters submitted by the Honorable Tom Marino, Pennsylvania, Chairman, Subcommittee on Regulatory Reform, Commercial and Antitrust Law, Committee on the Judiciary. This material is available at the Committee and can be accessed on the Committee Repository at: https://docs.house.gov/meetings/JU/JU05/20170727/106333/HHRG-115- JU05-20170727-SD002.pdf Article submitted by the Honorable David Cicilline, Rhode Island, Ranking Member, Subcommittee on Regulatory Reform, Commercial and Antitrust Law, Committee on the Judiciary. These materials are available at the Committee and can be accessed on the Committee Repository at: https://docs.house.gov/meetings/JU/JU05/20170727/106333/HHRG-115- JU05-20170727-SD003.pdf (III) VerDate Sep 11 2014 06:19 Jun 07, 2018 Jkt 028040 PO 00000 Frm 00003 Fmt 5904 Sfmt 6621 E:\HR\OC\A235.XXX A235 IV Page Oral Statement —Continued Statement submitted by the Honorable Bob Goodlatte, Virginia, Chairman, Com- mittee on the Judiciary. These materials are available at the Committee and can be accessed on the Committee Repository at: https://docs.house.gov/meetings/JU/JU05/20170727/106333/HHRG-115- JU05-20170727-SD005.pdf VerDate Sep 11 2014 06:19 Jun 07, 2018 Jkt 028040 PO 00000 Frm 00004 Fmt 5904 Sfmt 6621 E:\HR\OC\A235.XXX A235 ANTITRUST CONCERNS AND THE FDA APPROVAL PROCESS THURSDAY, JULY 27, 2017 HOUSE OF REPRESENTATIVES SUBCOMMITTEE ON REGULATORY REFORM COMMERCIAL AND ANTITRUST LAW COMMITTEE ON THE JUDICIARY Washington, DC. The Subcommittee met, pursuant to call, at 1:00 p.m., in room 2141, Rayburn House Office Building, Hon. Tom Marino (Chairman of the Subcommittee) presiding. Present: Representatives Marino, Goodlatte, Gaetz, Cicilline, Conyers, Johnson, Swalwell, and Schneider. Staff Present: Ryan Dattilo, Counsel; Andrea Woodard, Clerk; and Slade Bond, Minority Counsel. Mr. MARINO. Good morning. The Subcommittee on Regulatory Reform, Commercial and Antitrust Law will come to order. We are going to vote in anywhere from 20 to 30 minutes. I may be speaking a little faster than I normally do because I would like to get our opening statements in and our distinguished witnesses’ opening statements in. So let’s begin. Without objection, the Chair is authorized to declare a recess of the committee at any time. We welcome everyone to today’s hearing on antitrust concerns and the FDA approval process. And I now recognize myself for an opening statement. The Committee has a robust history of examining competition in the healthcare marketplace to ensure patients receive the highest quality treatment at the lowest cost. In the past few years, the Subcommittee has held four hearings in this area, covering the top- ics of market consolidation, the impact of the Patient Protection and Affordable Care Act on competition, opioid addiction, and trends in pharmacy benefit management. We continue that tradi- tion today, focusing on the pharmaceutical industry and antitrust concerns surrounding the FDA drug approval process. Competition in the pharmaceutical market involves a delicate balance. On one hand, we want to encourage pharmaceutical man- ufacturers to invest in needed, but often expensive research and de- velopment in order to bring innovative and life-saving drugs to the market. On the other hand, we want to encourage sufficient com- (1) VerDate Sep 11 2014 06:19 Jun 07, 2018 Jkt 028040 PO 00000 Frm 00005 Fmt 6633 Sfmt 6602 E:\HR\OC\A235.XXX A235 2 petition to ensure that there is an appropriate check on consumer prices. Innovation is one of the hallmarks of our pharmaceutical indus- try and should be celebrated. However, there have been allegations that some companies may be abusing their roles as innovators to engage in the manipulation of regulations to preclude generic man- ufacturers from bringing competing products to the market. Such conduct is anticompetitive and should be put to a stop. Since its enactment, the Hatch-Waxman Act has provided oppor- tunities for manufacturers to make lower-cost generic versions of previously approved drugs available to the people of the United States in a timely manner, thereby lowering overall prescription drug costs for patients and taxpayers by billions of dollars each year. An essential piece of this framework is the ability of generic drug manufacturers to obtain sufficient samples of branded drugs to con- duct the testing necessary to support an application for FDA ap- proval of the drugs’ generic version. Concerns have been raised that generic manufacturers have been prevented from obtaining such samples, in some instances based on the position that the drugs in question are subject to a risk evaluation and mitigation strategy with elements to assure safe use under Section 505-1, the Federal Food, Drug, and Cosmetic Act. This is more commonly re- ferred to as the REMS program. While the enforcement of existing antitrust laws could address the refusal by some branded manufacturers to