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107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     107-702

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



 
          RARE DISEASES ORPHAN PRODUCT DEVELOPMENT ACT OF 2002

                                _______
                                

October 1, 2002.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4014]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 4014) to amend the Federal Food, Drug, and 
Cosmetic Act with respect to the development of products for 
rare diseases, having considered the same, report favorably 
thereon without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for Legislation..............................     2
Hearings.........................................................     2
Committee Consideration..........................................     2
Committee Votes..................................................     2
Committee Oversight Findings.....................................     2
Statement of General Performance Goals and Objectives............     3
New Budget Authority, Entitlement Authority, and Tax Expenditures     3
Committee Cost Estimate..........................................     3
Congressional Budget Office Estimate.............................     3
Federal Mandates Statement.......................................     5
Advisory Committee Statement.....................................     5
Constitutional Authority Statement...............................     5
Applicability to Legislative Branch..............................     5
Section-by-Section Analysis of the Legislation...................     5
Changes in Existing Law Made by the Bill, as Reported............     5

                          Purpose and Summary

    H.R. 4014, the Rare Diseases Orphan Product Development 
Act, reauthorizes the grant program originally established 
under the Orphan Drug Act through FY 2006. Grants awarded 
pursuant to this Act are used by researchers to investigate 
therapies to treat rare diseases, which are diseases affecting 
fewer than 200,000 individuals in the United States.

                  Background and Need for Legislation

    An ``orphan drug'' is a drug intended to treat a rare 
disease. Prior to 1983, few manufacturers sought to develop 
cures and treatments for these diseases due to the limited 
return on investment of such therapies. To respond to the fact 
that few drugs were developed to treat rare diseases, Congress 
passed the Orphan Drug Act, which created various incentives 
for developing orphan drugs. Included in the Act were 
provisions which provided a seven year exclusivity period 
(instead of the normal five year exclusivity period granted by 
the Food and Drug Administration for new chemical entities) for 
orphan drugs; a grant program which funds researcher for 
developing cures and therapies for orphan diseases; and tax 
incentives for such researchers.
    There are more than 6,000 rare diseases (diseases which 
affect fewer than 200,000 individuals in the United States) 
affecting roughly 25 million individuals in the United States. 
Prior to 1983, only 38 orphan drugs had been developed to treat 
orphan diseases. Since the Orphan Drug Act was passed, more 
than 220 orphan drugs have been approved and marketed in the 
United States.
    H.R. 4014 amends the Orphan Drug Act by reauthorizing the 
Orphan Products Research Grant program contained in the Act at 
the amounts already-appropriated in this year, and at $25 
million per year for the Fiscal Years 2003-2006. The new monies 
authorized under this program will result in more clinical 
trials for therapies for orphan diseases to be funded.

                                Hearings

    The Committee on Energy and Commerce has not held hearings 
on the legislation.

                        Committee Consideration

    On Thursday, September 5, the Full Committee met in open 
markup session and without objection, ordered H.R. 4014 
favorably reported to the House, without amendment, by 
unanimous consent, a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 4014 reported. A motion by Mr. Tauzin to order H.R. 4014 
reported to the House, without amendment, was agreed to by 
unanimous consent.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has not held oversight 
or legislative hearings on this legislation.

         Statement of General Performance Goals and Objectives

    The goals of the legislation are to provide for more 
treatments and cures for rare diseases by funding more 
researchers who are conducting clinical trials designed to 
discover such cures and treatments.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
4014, the Rare Diseases Orphan Product Development Act of 2002, 
would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 27, 2002.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed estimate of H.R. 4014, the Rare Diseases 
Orphan Product Development Act of 2002.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Julia M. 
Christensen.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 4014--Rare Diseases Orphan Product Development Act of 2002

    Summary: H.R. 4014 would authorize funding for an existing 
grant program administered by the Food and Drug Administration 
(FDA) that sponsors clinical testing of the safety and 
effectiveness of new products to treat or diagnose rare 
diseases.
    The bill would authorize the appropriation of $25 million a 
year for fiscal years 2003 through 2006. CBO estimates that 
implementing H.R. 4014 would cost $8 million in 2003 and $93 
million over the 2003-2007 period, assuming the appropriation 
of the authorized amounts. The legislation would not affect 
direct spending or receipts; therefore, pay-as-you-go 
procedures would not apply.
    H.R. 4014 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
State, local, and tribal governments could enter into contracts 
and receive grants authorized by the bill, and any costs they 
incur would be voluntary.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 4014 is shown in the following table. 
The costs of this legislation fall within budget function 550 
(health).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal year, in millions of dollars--
                                                           -----------------------------------------------------
                                                              2002     2003     2004     2005     2006     2007
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level.......................................        0       25       25       25       25        0
Estimated Outlays.........................................        0        8       21       23       24       17
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: H.R. 4014 would authorize funding for an 
existing grant program administered by the FDA that sponsors 
clinical studies on the safety and effectiveness of new 
products to treat or diagnose rare diseases. The amount 
appropriated for fiscal year 2002 for the current program is 
$13 million. The bill would authorize the appropriation of such 
sums as already have been appropriated for fiscal year 2002, 
and $25 million for each of the fiscal years 2003 through 2006.
    Research grants awarded under the program would defray some 
of the costs associated with clinical testing of certain orphan 
drugs, biologicals, medical devices, and medical foods. An 
orphan drug is a drug or biological that is used to treat or 
diagnose an illness usually affecting fewer than 200,000 people 
in the United States. Eligible medical devices and medical 
foods include products for which there is no reasonable 
expectation of development without grant assistance because the 
condition occurs relatively infrequently in the United States.
    CBO estimates that implementing H.R. 4014 would cost $8 
million in 2003 and $93 million over the 2003-2007 period, 
assuming appropriation of the necessary amounts. This estimate 
incorporates general spending patterns for research grant 
programs administered within the Public Health Service.
    Pay-as-you-go considerations: None.
    Estimated impact on state, local, and tribal governments: 
H.R. 4014 contains no intergovernmental mandates as defined in 
UMRA. State, local, and tribal governments enter into contracts 
and receive grants authorized by the bill, and any costs they 
incur would be voluntary.
    Estimated impact on the private sector: The bill contains 
no private-sector mandates as defined in UMRA.
    Previous estimate: On December 5, 2001, CBO transmitted a 
cost estimate for S. 1379, the Rare Diseases Act of 2001, as 
ordered reported by the Senate Committee on Health, Education, 
Labor, and Pensions on November 1, 2002. S. 1379 contains a 
provision very similar to H.R. 4014 that funds FDA's grant 
program for the development of orphan products. The main 
difference between the provision in the two bills is that S. 
1379 would authorize the appropriation of $25 million in 2002 
and such sums as necessary for each subsequent year while H.R. 
4014 would authorize such sums as already have been 
appropriated for fiscal year 2002, and $25 million in funding 
each year from 2003 through 2006.
    Estimate prepared by: Federal Costs: Julia Christensen, 
Impact on State, Local, and Tribal Governments: Leo Lex; and 
Impact on the Private Sector: Jennifer Bowman.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 of the legislation provides the short title for 
the bill.

Section 2. Findings and purposes

    Section 2 provides the findings and purposes of the bill.

Section 3. Food and Drug Administration; grants and contracts for the 
        development of orphan drugs

    Section 3 reauthorizes the Orphan Products Research Grant 
program at such sums which have already been appropriated for 
FY 2002, and at $25,000,000 for each of Fiscal Years 2003 
through 2006.

Section 4. Technical amendment

    Section 4 provides for a technical amendment to the Federal 
Food, Drug, and Cosmetic Act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                    SECTION 5 OF THE ORPHAN DRUG ACT


  GRANTS AND CONTRACTS FOR DEVELOPMENT OF DRUGS FOR RARE DISEASES AND 
                               CONDITIONS

  Sec. 5. (a) * * *

           *       *       *       *       *       *       *

  [(c) For grants and contracts under subsection (a) there are 
authorized to be appropriated $10,000,000 for fiscal year 1988, 
$12,000,000 for fiscal year 1989, $14,000,000 for fiscal year 
1990.]
  (c) For grants and contracts under subsection (a), there are 
authorized to be appropriated such sums as already have been 
appropriated for fiscal year 2002, and $25,000,000 for each of 
the fiscal years 2003 through 2006.

           *       *       *       *       *       *       *

                              ----------                              


        SECTION 527 OF THE FEDERAL FOOD, DRUG, AND COSMETIC ACT

          protection for drugs for rare diseases or conditions

  Sec. 527. (a) Except as provided in subsection (b), if the 
Secretary--
          (1) approves an application filed pursuant to section 
        505, or
          (2) issues a license under section 351 of the Public 
        Health Service Act
for a drug designated under section 526 for a rare disease or 
condition, the Secretary may not approve another application 
under section 505 or issue another license under section 351 of 
the Public Health Service Act for such drug for such disease or 
condition for a person who is not the holder of such approved 
application[, of such certification,] or of such license until 
the expiration of seven years from the date of the approval of 
the approved application[, the issuance of the certification,] 
or the issuance of the license. Section 505(c)(2) does not 
apply to the refusal to approve an application under the 
preceding sentence.

           *       *       *       *       *       *       *