FDA effectively spends prescription drug user fee collections

After conducting its 2017 review of FDA policies and procedures and financial records related to the FDA’s use of prescription drug user fee collections, the Office of Inspector General (OIG) concluded that, overall, the FDA spent prescription drug user fee collections appropriately. Since the passage of the Prescription Drug User Fee Act (PDUFA) of 1992 (P.L. 102-571), prescription drug user fees have significantly helped in expediting the drug approval process and eliminating backlogs of pending human drug applications. The average approval time for an application prior to the PDUFA was two years (OIG Report, A-05-16-00040, September 2017).

The PDUFA

The PDUFA, which must be reauthorized by Congress every five years, authorizes the FDA to collect user fees from pharmaceutical and biotechnology companies that are seeking FDA approval of certain human drug and biological products to expedite the review of human drug applications. The user fees provide the FDA with resources, including the ability to hire more reviewers and support staff and upgrade information technology systems. According to the OIG, these resources help the FDA meet its goal of timely review of human drug and supplement applications.

Inadequate documentation

The OIG reviewed $796,065,980 in prescription drug user fees reported for October 1, 2014, through September 30, 2015, and determined that the FDA did not have adequate supporting documentation for $6,402 in travel expenses, made a duplicate payment for airfare of $1,213, and overpaid a traveler $587. The OIG attributed the inadequate documentation to oversight by FDA staff rather than a systemic issue. Therefore, the OIG made no recommendations.

Study finds weak results for outcomes-based drug contracts

There is no evidence that outcomes-based pharmaceutical contracts lead to less spending or higher quality health care, according to a study conducted by the Commonwealth Fund. The limited impact of outcomes-based reimbursement may be due to the fact that the reimbursement model is only used for a small subset of drugs which offers limited metrics to evaluate the model’s effectiveness. The Commonwealth Fund suggested that voluntary testing and more rigorous evaluation could lead to better understanding of outcomes-based pharmaceutical reimbursement.

Outcomes-based

Following the trend towards value-based reimbursement in health care, some pharmaceutical manufacturers and private payers have made a push towards an outcomes-based pricing model in the prescription drug market. Outcomes-based models attach rebates and discounts to the health care outcomes observed in the patients who receive certain drugs. The purported goal of such arrangements is to improve the value of pharmaceutical-based care by paying more for drugs that work and less for drugs that do not. The reimbursement model appeals to manufacturers and payers as a means to increase the scope of formularies and coverage while reducing prices.

Restrictions

The outcomes-based model is limited by the fact that the model cannot apply to pharmaceuticals that do not have reliable outcomes measurements. Additionally, the outcomes measurements that do exist typically rely on claims data and exclude significant clinical outcomes. In other words, the outcomes-based contracts may not lead to optimized value because the actionable outcomes are limited to those that can be measured. Thus, while outcomes-based pharmaceutical reimbursement has the potential to increase the value of pharmaceutical treatments, greater evaluation of the model’s effectiveness and implementation is necessary to determine its true benefit.

Cosmetic drug companies scarred by misbranding

A district court enjoined two individuals and two New Jersey drug companies from distributing unapproved injectable skin whitening drugs. In addition to preventing Flawless Beauty LLC and RDG Imports LLC from distributing the unapproved and misbranded drugs, the injunction requires the companies to recall and destroy all of the unapproved and misbranded injectable skin whitening drugs. The companies and individuals agreed to settle the case and be bound by a permanent injunction.

Complaint

According to the complaint, in addition to making skin whitening claims, the companies’ skin whitening drug products make other unsubstantiated therapeutic claims. For example, some of the products asserted that the drugs “contribute to good liver function” and “clinically treat degenerative brain & liver diseases including Parkinsons.” The complaint also identified public health risks associated with the companies purportedly sterile injectable skin whitening drugs—nerve or blood vessel damage, blood-borne infection, superficial skin infection, cellulitis, abscess formation, and toxic systemic reactions.

The complaint asserted that the products were misbranded because they contained false or misleading information, including the false implication of FDA approval. Other labeling issues identified in the complaint include improper directions for use and the absence of “Rx” on the label.

Injunction. Until the companies meet specific remedial measures, the injunction requires them to stop importing, receiving, manufacturing, preparing, processing, packing, labeling, holding, and/or distributing unapproved drugs. The companies have 20 days to meet the mandate to recall and destroy the unapproved drugs.

Over-the-counter drug monograph reform the topic of subcommittee hearing

Under proposed legislation, “Over-the-Counter Monograph Safety, Innovation, and Reform Act of 2017,” the over-the-counter (OTC) monograph process would be modernized to streamline rule-making and cut down on FDA resources, while being funded through the establishment of a user fee program. In a hearing before the House Committee on Energy and Commerce’s subcommittee on health on September 13, 2017 regarding the discussion draft, witnesses from the industry and the FDA voiced their support, as well as real world examples and reasoning, for the proposed changes.

Monographs and current process

Unless the FDA has approved a new drug application, the only way an OTC drug can be marketed is if it conforms to a monograph—a standard set of specifications established by the FDA for each therapeutic category of product—and is thus considered generally recognized as safe and effective (GRASE). A monograph is created through a three-step public rulemaking process via the Federal Register and a public comment period. It requires the convening of advisory review panels, publishing of an advanced notice of proposed rulemaking (ANPRM) with a comment period, review by the FDA, publishing a tentative final monograph (TFM), and later finalization of the monograph and subsequent amendments and updates. The FDA has around 88 rulemakings in 26 therapeutic categories covering over 100,000 OTC drug products, and there are 800 active ingredients for over 1,400 uses that the FDA oversees. There are no user fees associated with monograph products currently, and a small staff oversees the OTC program as well as attending to other current mandates. The rulemaking process spans many years and the industry waits for a decade or more for finalized monographs, for example, the ANPRM for external analgesic products was published in 1979 and the monograph has still not been finalized.

Legislation

Since 2014, the FDA has examined monograph reform and the possible creation of a user fee program. The discussion draft includes proposes the following changes: (1) authorizing of the OTC Monograph User Fee Program; transition of OTC monographs from a rulemaking process to an administrative order procedures; (2) expediting administrative order procedures for OTC monograph drugs that pose an imminent hazard to public health or are associated with serious adverse events; (3) providing for a procedure to account for minor changes; (4) providing for a two-year exclusivity period for certain OTC innovative changes; and (5) clarifying how sunscreens would be reviewed.

Stakeholder witnesses

 Witnesses from across the industry presented statements before the subcommittee. They touched not only on the problems with the current process and their support of the proposals, but also their support in the industry supplementing the government’s efforts with the user fee program.

  • Bridgette L. Jones, MD, FAAP, representing the American Academy of Pediatrics (AAP), raised an example of how long it takes to get a monograph changed. Over a decade ago, in response to a petition to the FDA, an FDA advisory committee voted unanimously “that it was no longer appropriate for adult data on cough and cold products to be extrapolated to establish efficacy of the drugs in children under 12 . . . [and that] cough and cold drugs not be used in children under 6 years of age.” Currently, not even draft changes have been made to the monograph. She also noted that it is appropriate that the monograph be amended to provide dosing instructions for children under two years of age and that “if the monograph process worked better, surely this change would have happened years ago.”
  • Scott Melville, President and CEO of Consumer Healthcare Products Association (CHPA), notes the value that OTC medicines bring to the health of Americans and to the U.S. health care system and stresses that it’s important that the oversight process “is one that is efficient, transparent, and accommodating to innovation.” He also notes that his industry “is willing to supplement government resources with a modest user fee program.”
  • Kirsten Moore, Project Director, Health Care Products, The Pew Charitable Trusts, gave examples of the “unnecessary delay incorporated into a multi-step rulemaking system, which compromises FDA’s ability to respond swiftly to address new safety information and protect consumers” and urged Congress to pass the legislation as soon as possible.
  • Michael Werner, Partner, Holland & Knight, on behalf of the Public Access to SunScreens (PASS) Coalition, and Gil Roth, President, Pharma & Biopharma Outsourcing Association, also spoke in support of the OTC legislation.
  • Janet Woodcock, MD, Director for the Center for Drug Evaluation and Research (CDER) with the FDA confirmed the troubles with the current process and the present staffing levels raised by the other stakeholders. Her agency, as well as the other organizations, offered to continue to work with Congress to make the OTC reforms a reality.