The Next Policy Battle For Biotech After Healthcare Reform


Xconomy National — 

With a new healthcare bill (and its “fixes”) signed into law, one might think that the biotech industry could shift its attention away from Washington DC and get back to work in the labs. That would be wrong.

Starting this month, we begin a two-year project that will culminate, if things go according to plan, in 2012 with the fourth reauthorization of the Prescription Drug User Fee Act, known by its acronym PDUFA. For biotech companies, this legislation is arguably even more important than healthcare reform because PDUFA means FDA.

The Prescription Drug User Fee Act reshapes the rules of the long, complicated road that we travel with FDA when we set out to develop new prescription medicines. The basic structure of the arrangement is simple: the industry agrees to pay “user fees,” which are fees paid when we submit applications for new drug approvals, and the FDA commits to try to achieve certain performance goals in the process of regulating the development of new drugs.

When the first PDUFA became law, back in 1992, it was big news. Prior to that, drug companies had not paid fees to its regulators. With PDUFA 1, the total funding provided by industry was a small percentage of the total FDA budget for drug review, but the additional funding enabled FDA to add resources and improve processes. As a result, transparency and efficiency improved significantly. The first form of PDUFA was considered to be a real win for FDA, industry and patients.

By law, PDUFA expires, or “sunsets” every five years. With the success of the original law, we set out to build on it over the subsequent years in PDUFA 2, 3 and 4.  I think it is fair to say that the incremental gains of each successive reauthorization have been real but diminishing, while the amount of the fees paid by industry have continued to grow.

Today, user fees represent almost 65 percent of FDA’s drug review budget. Critics on all sides argue that it is far too big a number, that a regulated industry should not support its own regulatory body at that level. Federal budget pressures being what they are, that percentage is more likely to increase than decrease.

So now we are embarking on PDUFA 5. It may prove to be the most complicated negotiation yet.

This reauthorization occurs at a time when there is significant public interest in the activities at FDA. With a series of highly visible enforcement actions taken on well known drugs and a focus on drug safety, coupled with accusations that FDA/industry relations are inherently compromised by the level of funding provided by user fees, there are more parties than ever interested in providing input.

On top of this, the pharmaceutical industry emerges from the healthcare reform process viewed (I would argue unfairly) by some as the beneficiary of a political deal negotiated to the detriment of the public.

This perception matters, because it reinforces an inaccurate view of the relationship between FDA and the companies and medications it regulates. PDUFA 5 may end up being very contentious. There may be calls for the elimination of user fees, for even more stringent safety requirements without consideration of patient benefit, for less interaction between FDA and industry. All very bad ideas if one is interested in the development of important new medicines for patients.

I can tell you with great conviction and I have the scars to prove it: FDA is a highly independent and rigorous regulatory authority. The process of developing new medications is risky and unpredictable, and FDA’s standards for safety and efficacy, both before and after approval, are higher than ever.

Ideally, the federal government would provide funds sufficient to operate the world’s most scientifically advanced regulatory body. But, for whatever reason, we citizens have not demanded that. The industry continues with PDUFA because it is the best way to ensure that FDA has the resources it needs to allow us to bring our innovations to patients.

Here we go. Good luck to us all.

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6 responses to “The Next Policy Battle For Biotech After Healthcare Reform”

  1. Scott says:

    I’m a bit unclear how you can effectively state “The first form of PDUFA was considered to be a real win for FDA, industry and patients” because nearly all of the money generated by those fees was earmarked to speed up the approval process, and hardly any post-market analysis has ever been required.

    This funding mechanism also created a disproportionate emphasis on approving brand-name drugs quickly, and the part of the agency that reviews new drugs gets 65% its money from user fees, and grew rapidly since being introduced. On the other hand, the FDA units that monitor safety, ensure manufacturing standards, and check ads for accuracy have languished and/or shrunk, all while the industry began sourcing materials with hardly any oversight, including places like China (is it any wonder why the Heparin scandal occurred?)

    Only in 2010, under pressure from Congress, did the the new FDA leadership under Dr. Margaret Hamburg FINALLY ask Congress to implement similar legislation for generics manufacturers to clear a huge backlog of un-reviewed applications, but whether Congress does anything about that remains to be seen, because the U.S. has a dysfunctional political system plagued by partisan issues that shows no signs of cooperating on much of anything.

    What’s more, it’s a bit hard to claim that the PDUFA has really benefited patients when the rush to approve new drugs has lead to such blatant debacles as Vioxx and Avandia, while generics were delayed unncessarily due to lack of staffing. As you suggest, I would argue that the PDUFA created what could be called (and has been) the biggest conflict-of-interest anywhere in science, putting the FDA on the payroll of the very industries it regulates. Even if taxpayers did not fund the changes directly, we have all paid the price through higher prices.

  2. David MillerDavid Miller says:

    Scott, your statements are a good example of a common logic flaw and/or lack of understanding about drugs and drug development. In addition, there are factual errors.

    There is no such thing as a “safe” drug. Wave a bag of peanuts under the nose of everyone walking in to a large stadium and you’ll kill (or badly sicken) a dozen or more. Drugs are not immune from that sort of unexpected genetic diversity in the human species.

    The FDA is not charged with making drugs completely safe. If it was, it would not approve any drug. What it is in charge of is making decisions that balance safety with patient benefit. The FDA does that with varying degrees of success.

    You point out two very public examples of where the FDA approved drugs under “more rapid” PDUFA timelines that turned out to have more side effects than thought at the time of approval. For those two examples, there are dozens (if not hundreds) of examples over the last 18 years where drugs with outstanding benefit to risk ratios were approved with slightly quicker review times offered under PDUFA. Overly focusing on the mistakes leads to conclusions about the process simply not confirmed by the facts.

    The implication the FDA has created “rushed” approval pathways since PDUFA 1 in 1992 is false. Drug development is longer and more expensive now than at any time in the history of drug development. The FDA continually requires larger and larger studies, which are more expensive and take longer to complete. While the part of the process between application submission and decision has shortened, the other 90% of the process has lengthened considerably.

    Finally, for every example you can cite where the FDA had to pull a drug approved since 1992 off the market due to side effects (bad benefit to risk ratio), I can find at least one (and probably 2) drugs where the FDA screwed up the other direction — made too much of some minor flaw in the trial process or data that delayed or prevented a beneficial drug from coming to market. Oncology has far too many such examples. Many would argue antibiotics are another.

    The opinion and facts you shared are common and oft repeated. Unfortunately, they are inaccurate.

    We can and should make improvements to PDUFA and FDA approval regulations to weed out conflicts and make the process more predictable, thereby generating safer drugs more cheaply.

  3. The first PDUFA was a real breakthrough, permitting an approval process to work in a timely fashion so that many important therapeutics made it to market rapidly enough to save a lot of lives.

    But it costs a lot of money for the FDA to accomplish its mission in a way that provides for both safe products after approval and the beneficial products themselves. For various reasons, the Federal government has not wanted to fully fund the needed resources to effectively accomplish both goals. Thus the increasing addition of user fees to provide needed revenues, allowing useful therapeutics to get to people in a reasonable amount of time.

    In order for the needed therapeutics to continue to make it to the market, and, importantly, for us to be assured that the ones that do make it are safe, someone has to (fully) pay the piper.

    Who will that be?

    Arguing over who is more corrupt or culpable – the companies or the government – will not solve this conundrum. But, as we have often seen, blame is a lot easier to do than actually working together.

    I certainly hope that those working on the new PDUFA have a boatload of good luck and of aspirin. They will need both.