COMMISSIONER LEHMAN:  Thank you very much.
 
       Next, Mr. Frank Lasaracina.
 
       MR. LASARACINA:  Thank you, and good afternoon. 
       My name is Frank Lasaracina.  I am Vice President of
       Business Development for Ciba Pharmaceuticals.  We are based
       in Summit, New Jersey.
 
       Ciba is a research-based company with interests in
       agricultural chemicals, pharmaceuticals, as well as
       industrial chemicals.  I would add that on the
       pharmaceutical side, Ciba has interests in patent protected
       products, as well as in generics.
 
       As a matter of fact, Geneva Pharmaceuticals, which
       was mentioned a moment ago, is a Ciba company.
 
       We certainly appreciate the opportunity to be able
       to present oral testimony to you this afternoon to talk
       about the issues surrounding the GATT transition provisions. 
       As we see it, these transitional provisions were designed in
       such a way so as to permit extension of certain patent
       rights to patent holders, while at the same time permitting
       generic products to enter the marketplace.
       generic products to enter the marketplace.
 
       Should the transitional provisions not be able to
       function, we would be of the opinion that that would not be
       in agreement with the intent of Congress.  And this is what
       I would like to address in my brief comments.
 
       Let me begin by affirming my company's strong
       reliance on intellectual property rights.  These strong
       intellectual property rights give us the opportunity to grow
       and sustain our business.  Without those rights, we would
       not be able to.
 
       We believe that a strong global system is
       essential for our company, for our industry, and we believe
       it is good for the United States economy, in general.          For
       these reasons, we continue to support the provisions
       embodied in the GATT treaty.
 
       The problem we see is where the transitional
       provisions intersect with Waxman-Hatch.  As you know, the
       ANDA process is governed by Waxman-Hatch and it is where
       that intersection occurs.  The possibility exists that a
       company which has made a substantial investment prior to
       June 8th might, because of a certain interpretation, be
       prohibited from entering the market during this transitional
       phase.
 
       It seems to me that if a generic product company
       is prohibited from entering the market during the
       transitional phase, then by definition, for a generic
       industry, there is no transitional phase.  Lacking language
       to the contrary, we think that all industries were intended
       to be included.
 
       COMMISSIONER LEHMAN:  Can I ask you a question to
       try to clarify how this is going to work?  Mr. Armitage said
       there really isn't a role for the Patent and Trademark
       Office here, at all.  The regulatory role is really at the
       FDA.
 
       MR. LASARACINA:  Yes.
 
       COMMISSIONER LEHMAN:  Because the FDA is the
       entity which gives marketing approval for the generic
       product when the patent expires.
 
       MR. LASARACINA:  Yes.
 
       COMMISSIONER LEHMAN:  So what is going to happen
       here is that the FDA, in effect, is going to have to
       interpret this statute and is going to have to decide what
       requirements the statute places on it in a situation in
       which the patentee would arguably be able to say that their
       patent had been extended and is now a 20-year patent, which
       is longer than the term that they would have had, under
       Hatch-Waxman.
 
       I always want to say, Wax-Hatchman.  I'll bet I
       have even said that to Senator Hatch, which doesn't go over
       too well, sometimes.
 
       [Laughter.]
 
       COMMISSIONER LEHMAN:  So the way this is likely to
       be played out, tell me if I am wrong -- what is going to
       happen is that at some point --
 
       The FDA has a lot of control here, but let's
       assume that the FDA takes the position articulated by the
       generic pharmaceutical association.  They will then issue at
       the time the drug would have become available for marketing
       under Hatch-Waxman, under the old law, they will say:  Okay,
       you have the right to go on the market.
 
       Now, I guess we all agree, that there would be a
       royalty that would be paid.  But the question is, whether
       they can go on the market at all.
 
       At that point, if the patentee doesn't like that
       result, then he would sue for infringement and say:  No, the
       new law gives me exclusive rights, here, and so you can't go
       onto the market.
 
       Am I interpreting the way this is likely to play
       out, factually, correctly?
 
       MR. LASARACINA:  Well, let me clarify, and I
       apologize.  I didn't mention earlier, I am here only
       representing Ciba.
 
       COMMISSIONER LEHMAN:  I maybe should have asked
       Mr. Armitage this.
 
       MR. LASARACINA:  Our concern, and several of the
       questions you asked, which I will not address here orally
       but will be addressed in written testimony and delivered
       tomorrow, it is possible that one of the ways this may
       function would be to require recertification of the
       paragraph 3 in the ANDAs.
 
       It is possible that we would be required to take
       pending ANDAs and recertify as to the later, only, the later
       date, ignoring the pre-GATT date.
 
       Under those circumstances, it seems to me, it
       might occur that we would be prevented from entering the
       marketplace in this so-called transitional period, and that
       is our great concern.
 
       COMMISSIONER LEHMAN:  You are speaking with your
       generic hat on, now.
 
       MR. LASARACINA:  Yes, I am, yes.
 
       COMMISSIONER LEHMAN:  And if that happens, then I
       assume that what you will do, or if you decide not to do it
       because you don't want to litigate it, other companies will
       do -- well, you wouldn't be the one who would do it.  The
       suit would come from the patentee.  They would sue for
       infringement.
 
       And at that point, the courts would resolve this
       ambiguity.
 
       MR. LASARACINA:  What we see is, if we were, for
       example, to recertify, and if we were to recertify only at
       the extended date, we would not be able to come to the
       marketplace.  Or, I should say, we wouldn't come to the
       market place prior to expiration of the extended date.
 
       COMMISSIONER LEHMAN:  But assuming the FDA takes
       your view, so the way this will be tested is that then there
       will be an infringement lawsuit and the court -- well, that
       is my point.
 
       MR. LASARACINA:  We have got a recommendation.
 
       COMMISSIONER LEHMAN:  Which is great, but I am
       just trying to envisualize, you know, what the various --
       how this will play out and who has responsibility for what. 
       And it sounds to me like we don't very much responsibility
       in the Patent Office itself, other than possibly to make
       some recommendation that might forestall litigation or make
       perhaps some recommendation to the FDA. 
 
       Of course, we have the FDA representative, here.
 
       MR. LASARACINA:  Yes, and we would tend to agree.
 
       We would recommend a minor modification to FDA
       procedure, which if implemented, we believe, would put the
       pharmaceutical industry, or specifically the generic portion
       of the pharmaceutical industry, on footing which is
       equivalent to what we think is the same as every other
       industry in the United States being effected here.
 
       So what we propose is a change to the paragraph 3
       certification, under Waxman-Hatch.  The ANDA applicant would
       certify to FDA that a substantial investment had been made
       prior to the June 8th cutoff date, and would certify further
       that the applicant had contacted the innovator company to
       inform them of such investment and such application being
       made.
 
       What this would do is, it would put the onus of
       clarifying the issue of substantial investment, what is it,
       has it been made, has it been made in the right time frame,
       as well as the issue of equitable remuneration, back out
       into the marketplace where the two parties should work
       together to amicably, hopefully, resolve those issues.  They
       may end up in litigation, as well, but we don't see that as
       a PTO issue and we see FDA's involvement being minor, only
       to the extent that regulation would be altered to allow this
       changed wording of the paragraph 3 certification, only.
 
       And then, we feel that the other forces in the
       marketplace would prevail.
 
       Now, in our written testimony, we are providing
       illustration of wording which we feel could implement this. 
       This is an option.  It is a proposal being made.  Certainly,
       there will be other.
 
       What we think is essential, though, is that
       generic pharmaceuticals be permitted the opportunity to
       commercialize the investments which have been made pre-June
       8, 1995.  
 
       The  mechanics of how we get there, there are
       people a lot more knowledgeable about that than I am.  I may
       be the only one presenting today who is not a lawyer.
 
       The mechanics are important, but I think what is
       essential is the outcome, as well.
 
       So in summary, we believe that the GATT
       transitional provisions were intended to extend certain
       patent rights to patent holders, but at the same time,
       permit generic marketing, if the requirements had been met. 
       I provided you with one option, which we think would
       function in such a way as to allow the generic industry to
       enjoy the rights and privileges and obligations that seem to
       us to have been bestowed on all other industries in the
       United States, as a result of the GATT implementing
       legislation.
 
       We believe that Congress really didn't intend to
       treat any one particular industry or industry segment any
       differently from all the rest.  We believe FDA has the
       authority to make this modification in its procedure.  We
       believe if such modification was to occur, that it would
       resolve the issue that we think, from Ciba's point of view,
       is important at this moment in time.
 
       As I said earlier, we will be submitting written
       testimony.  It will be coming in tomorrow.  It will address
       the questions which have been posed and more fully describe
       what I have spoken about, here.  Thank you very much.
 
       COMMISSIONER LEHMAN:  Anybody else have any
       questions?
 
       [No response.]
 
       COMMISSIONER LEHMAN:  Thank you very much.
 
       MR. LASARACINA:  Thank you.