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FDA User Fees Swell

Agency proposes huge increase in industry-paid fees to ensure food, drug safety

by Britt E. Erickson
February 27, 2012 | A version of this story appeared in Volume 90, Issue 9

Under President Barack Obama’s proposed fiscal 2013 budget, the Food & Drug Administration would receive a total of $4.5 billion—an increase of $654 million, or 17.1%, compared with 2012. The bulk of the increase, $643 million, would come from industry-paid user fees.

In 2013, FDA would receive a total of $2.0 billion in user fees, a 48.5% increase from 2012. The agency’s $2.5 billion in allocated money, on the other hand, is only 0.4% higher than the 2012 level.

The projected increase in user fees for 2013 includes first-ever fees for food, food packaging, cosmetics, generic drugs, and biosimilars, or generic-like versions of complex biological drugs. Congress has to approve the proposed fees, and it also needs to reauthorize existing user fee programs for prescription drugs and medical devices by Sept. 30, the end of this fiscal year.

Food safety would continue to be a priority for FDA in 2013 under the proposed budget. The agency is asking for $220 million from the food industry in new registration and inspection user fees to beef up inspections of food facilities and the review of imported food as required under the Food Safety Modernization Act.

It is unclear whether Congress will go along with the proposed food-safety user fees. Similar fees were included in early versions of the food-safety legislation, but they did not make it into the final bill that was signed into law last year.

Increased globalization of the food-packaging market has also prompted FDA to propose $5 million in new user fees to support FDA’s safety review of new food-packaging materials. And FDA is requesting $19 million in new user fees for cosmetics. The money would be used to enhance international activities, improve outreach and communications, and strengthen science in FDA’s cosmetics program.

For the first time, FDA is asking for $299 million in new user fees from manufacturers of generic drugs. The money would be put toward speeding up the review of low-cost generic drugs. Under the proposed budget, FDA would also receive $20 million from manufacturers of bio­similars to help cover the cost of reviewing the safety and efficacy of those products.

In terms of existing user fee programs, FDA would receive $713 million from prescription drug manufacturers, an increase of $11 million or 1.6% compared with 2012. The budget proposal also includes $70 million in medical device user fees, an increase of $12 million or 20.7% compared with 2012. FDA, however, is still working out the agreement with the medical device industry regarding user fees for 2013. The agency anticipates that the medical device fees will actually be higher than what is reflected in the proposed budget.

It is now up to Congress to reauthorize the Prescription Drug User Fee Act and the Medical Device User Fee & Modernization Act, as well as consider the host of other fees proposed by FDA for 2013. Lawmakers in the House of Representatives are already working on legislation to authorize such fees. Rep. Tim Murphy (R-Pa.) introduced the Generic Drug & Biosimilar User Fee Act (H.R. 3988) earlier this month. Prescription drug and medical device user fee bills are expected to be introduced soon.

The House Energy & Commerce Subcommittee on Health held three hearings earlier this month to consider FDA user fees for prescription drugs, generic drugs and biosimilars, and medical devices. Members used the opportunity to address a laundry list of concerns related to FDA’s regulatory process, some of which could delay reauthorization and approval of the user fees.

Rep. Joseph R. Pitts (R-Pa.), chair of the health subcommittee, has made it a goal to mark up FDA user fee legislation this spring. Amendments to the legislation, however, will likely slow its progress through Congress.

For example, some Republicans—including Pitts—are pushing to add controversial language that would require FDA to promote economic competitiveness, innovation, and job creation. “Some 4 million jobs in the U.S. are directly or indirectly supported by the drug industry,” Pitts pointed out at a Feb. 1 hearing on prescription drug user fees.

At the hearing, Rep. Michael C. Burgess (R-Texas) questioned whether the lack of predictability in FDA’s drug approval process is driving American drug manufacturers overseas. “Does FDA’s slow approval process send venture capitalists elsewhere where they can find more stability? Is there a way to continue to streamline the approval of single-molecule drugs?” he asked.

On the other side of the aisle, Rep. Henry A. Waxman (D-Calif.), ranking Democrat on the Energy & Commerce Committee, and others spoke in opposition to adding a job-creation component to FDA’s mission. “FDA should not take jobs into consideration when it is reviewing the safety and effectiveness of a new medicine,” Waxman stressed.

“It appears that many of these proposals are driven by rhetoric insisting that FDA has become too demanding of companies seeking to market their drugs and devices,” Waxman said. But such claims are not backed up by data, he noted. “To the contrary, I am aware of some studies showing, for example, that FDA actually approves drugs faster than our counterparts in Europe,” he said.

Other lawmakers at the hearing questioned whether FDA is putting too much weight on risk and not enough on benefit when approving new drugs and whether current conflict-of-interest provisions are making it difficult for FDA to find qualified experts to serve on drug review advisory committees.

Several lawmakers also brought up the growing problem of prescription drug shortages, as well as concerns over the quality of the increasingly globalized pharmaceutical supply chain. FDA’s deputy commissioner for global regulatory operations and policy, Deborah M. Autor, emphasized the need for a federal system to track drugs throughout the supply chain. “We are concerned that if a national system doesn’t go into place, we run the risk of having a patchwork of state laws,” Autor testified.

Other members of the committee focused on the safety of cosmetics, adverse effects of pharmaceuticals in children, and the lack of new antibiotics in the pharmaceutical pipeline.

Concerns about drug shortages and the quality of the drug supply chain were also raised at a Feb. 9 hearing by the same subcommittee on user fees for generic drugs and biosimilars. Both problems are hitting the generic drug industry particularly hard.

To help improve the quality of the supply chain, FDA will ensure that foreign generic drug companies are both held to the same quality standards that U.S. companies must meet and inspected biennially, Janet Woodcock, director of FDA’s Center for Drug Evaluation & Research, told lawmakers. Currently, U.S. drug facilities are inspected more often than those overseas, she acknowledged.

Woodcock also explained why FDA needs to levy generic drug user fees to speed up the review process. The number of generic drug applications submitted to FDA has skyrocketed over the past few years. “The current backlog of applications pending review is estimated to be over 2,500,” Woodcock noted. “The current median time to approval is approximately 31 months,” she said. FDA and the generic drug industry are hoping to cut that approval time to 10 months.

As part of an agreement reached last fall between the generic drug industry and FDA, “we have recommended a one-time backlog fee of $50 million paid at the start of the program,” Woodcock told lawmakers. FDA would commit to clearing up the backlog within five years, she said.

Any manufacturer that has a new generic drug application pending on Oct. 1 and has not received tentative approval from FDA will be subject to the one-time fee. The amount of the fee will be calculated by dividing $50 million by the total number of new generic drug applications pending on Oct. 1.

As Congress moves ahead with the re­authorization of FDA user fees and consideration of new ones, the pharmaceutical and generic drug industries are urging lawmakers to avoid adding controversial provisions that would slow down the process.

Some Democrats are also hoping to get the bills passed quickly. “We must reauthorize and establish these essential programs in a timely way so that FDA can do its job protecting the health and safety of America’s patients,” Waxman said at the hearing on prescription drug user fees. “It would be irresponsible to allow this legislation to become a vehicle for the wish lists of members seeking to move their own controversial bills.” ◾


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