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.

HELP Committee hears ardent support for next round of user fee agreements

Four witnesses expressed their support of the continuation of FDA user fee agreements before the Senate Committee on Health, Education, Labor, and Pensions (HELP) on April 4, 2017. These user fee agreements cover prescription drugs, biosimilar drugs, generic drugs, and medical devices (PDUFA, BDUFA, GDUFA, and MDUFA, respectively), requiring manufacturers to pay fees that fund the FDA’s approval processes. According to the witnesses, continuing to impose these fees is vital to ensuring the successful development and approval of future therapies.

Testimony

David Gaugh, a senior vice president of the Association for Accessible Medicines (AAM), emphasized the necessity of the partnership between the pharmaceutical industry and the FDA. Although there has been significant growth in the generic and biosimilar industries, he reminded the committee that the FDA is underfunded and depends on the user fees to speed up the approval process. The AAM also believes that the GDUFA program will incentivize competition by reducing the number of FDA review cycles, removing barriers to drug approval for companies and access to therapies for patients.

Scott Whitaker, president and CEO of the Advanced Medical Technology Association (AvaMed), felt the same way about MDUFA. He believes that the decline in the number of medical technology startups and venture capital investment in recent years is due to the length of time to develop devices, seek approval, and enter them into the stream of commerce. Whitaker noted the MDUFA IV agreement builds upon the provisions in the 21st Century Cures Act (Cures Act) to continually improve the efficiency of the approval process while maintaining strict standards for safety and effectiveness.

Cynthia Bens, vice president at Alliance for Aging Research, and Kay Holcombe, senior vice president at Biotechnology Innovation Organization (BIO), also expressed their support for the programs. Bens lauded Congress for allowing patient organizations to participate in the user fee negotiations, and expressed thanks to the FDA for allowing the Alliance to provide feedback throughout the negotiating process. She highlighted strengthening the FDA’s workforce, increased patient-focused drug and device development methods, and advancing clinical trials as positive outcomes from the user fees. Holcomb also stressed the necessity of integrating patient input into the decision-making process, noting that patients are best able to weigh in on the risks and benefits of treatment. Holcombe believes that the new round of user fee agreements will provide better program sustainability and financial transparency, allowing the FDA to better manage personnel, ramp up approval timelines, and develop innovative clinical trial designs.

PDUFA VI reauthorization would aid 21st Century Cures Act implementation

Since 1992, the Prescription Drug User Fee Act (PDUFA) has authorized the FDA to collect user fees from biopharmaceutical manufacturers to supplement Congressional appropriations. Revenues from these fees are used on activities related to the review and regulation of new drug products. In exchange for these fees, the FDA commits to meeting certain performance goals, such as reviewing applications within specified timeframes. The FDA’s ability to collect these fees must be reauthorized every five years. Each five-year reauthorization sets a total amount of fee revenue for the first year and provides a formula for annual adjustments to that total based on inflation and workload changes.

On March 22, 2017, the House Energy and Commerce Committee’s Subcommittee on Health held a hearing to examining the PDUFA program. PDUFA, as reauthorized by the Food and Drug Administration Safety and Innovation Act of 2012 (FDASIA) (P.L. 112-144), expires in September 2017, and must be reauthorized for the fiscal years 2018 to 2022.

This will be the sixth reauthorization of PDUFA. The proposed agreement (PDUFA VI), builds upon process improvements enacted pursuant to FDASIA, including enhanced support for the Breakthrough Therapy Program. Further, it would aid in the implementation of several key provisions in the 21st Century Cures Act and further streamline the development and review of innovative new drugs for patients. The FDA estimates that the fees negotiated in PDUFA VI will average approximately $1 billion per year.

At the hearing, the following individuals testified on how the program has been implemented to date and presented recommendations pertaining to its reauthorization:

Allen

In his testimony, Allen pointed out that: “Prior to the initial user-fee authorizations, patients in other parts of the world were gaining access to new medicines faster than Americans, with only about 10 percent of new treatments reaching U.S. patients first.” That paradigm has largely been reversed, according to Allen. “Between 2003 and 2016, 73 new cancer drugs were approved by both the FDA and EMA [European Medicines Agency]. Of those drugs, 97 percent (71 of 73) were available in the U.S. before Europe. Furthermore, the FDA approved new cancer drugs on average nearly 6 months faster than the EMA.”

Allen also stated that PDUFA VI:

  • Advances the role of patients and their experiences;
  • supports the continued success of the Breakthrough Therapy Designation, a designation that may be given to a drug intended to treat a serious illness for which preliminary clinical evidence indicates a substantial improvement over any existing interventions. To date, 170 Breakthrough Therapy Designations have been granted, leading to 79 indications approved by the FDA using this process;
  • promotes qualifications and the use of drug development tools;
  • enhances the use of real-world evidence in regulatory decision-making; and
  • effectively communicated scientific advances.

Allen cautioned, however, that “proposed cuts to biomedical research will put the brakes on the engine of discovery, abandon progress on new tools to enhance product evaluation, impede opportunities for new businesses in the biotech sector, and most perilously, jeopardize the development of new medicines for patients desperate for progress.”

Pritchett

In supporting PDUFA VI reauthorization, Pritchett stated: “For nearly twenty-five years, PDUFA has provided much needed resources to the FDA’s human drug review program that has resulted in greater certainty and predictability for patients who depend on safe and effective innovative medicines.” Pritchett also noted the following benefits under PDUFA:

  • The FDA has approved over 1,500 new drugs and biologics since 1992, including treatments for cancer, cardiovascular, neurological, infectious and rare diseases.
  • The number of new medicines being approved on their first review cycle is at a historic high, including approvals for new medicines to treat rare diseases.
  • Review times for drug applications have dropped by nearly 55 percent.
  • The median approval time for standard applications has decreased from 22.1 months in 1993 to an estimated 10 months in 2015.
  • The median approval time for priority applications has similarly decreased from 13.2 months in 1993 to an estimated 7.9 months in 2014.

Pritchett concluded: “At a time when the U.S medical innovation ecosystem is facing severe strains and increased global competition, it is imperative that the FDA is equipped to help us deliver the next generation of new treatments and cures to meet patients’ unmet medical needs. PDUFA VI will help the FDA ensure that patients receive effective and lifesaving drugs, while maintaining the United States’ global leadership in biomedical innovation.”

Holcombe

Holcombe’s testimony cautioned Congress on the cost of the program: “Since 2002, the PDUFA program has grown at an average of 11 percent per year; this is unsustainable moving into the future. Changes are needed that address the fee collection structure to increase efficiency and reduce administrative burdens for both FDA and companies.”

Holcombe believes that the proposed PDUFA VI agreement would address these concerns by:

  • limiting the carryover balance levels, thus reducing possible over-collection of fees and the need for complicated administrative mechanisms to deal with such over-collections;
  • eliminating supplement fees, which will further simplify fee collections;
  • replacing the current product and manufacturing fees with a new program fee that will constitute 80 percent of the annual fee collections; and
  • reducing the percentage that application fees contribute to the total from the current 33 percent to 20 percent, thus mitigating the overall impact of this difficult-to-predict revenue source.

Holcombe also pointed out the benefits of important overlaps between provisions in the 21st Century Cures Act and the proposed PDUFA VI agreement. She offered the following examples of overlap:

  • The 21st Century Cures Act and PDUFA VI are complementary, in terms of ensuring that FDA (1) has and uses effectively an efficient process for qualifying biomarkers; (2) publishes guidance to help applicants for biomarker qualification understand the taxonomy and data standards; (3) makes public a list of qualified biomarkers and pending applications; and (4) engages external experts in biomarker qualification.
  • Patient-focused drug development. Guidance development, public meetings, development of methods and standards for collecting information and data, and use of patient perception and experience information in the FDA regulatory decision about the benefits and risks of a drug are all elements of both 21st Century Cures and the PDUFA VI agreement.
  • Real-world evidence. The 21st Century Cures Act provides helpful context for the work under PDUFA VI, and provisions of the two that differ are easily harmonized.
  • Innovative trial design. While the 21st Century Cures Act focuses on adaptive trials and Bayesian approaches, PDUFA VI takes a broader approach, opening its pilot program to other trial designs while also highlighting adaptive trials and Bayesian approaches.

Holcombe concluded by indicating the Biotechnology Innovation Organization strongly supports and applauds the enactment of 21st Century Cures, and it strongly supports the PDUFA VI proposed agreement.

Woodcock

At the hearing, Subcommittee Vice Chairman Brett Guthrie (R-Ky) asked Woodcock for an update on the FDA’s Oncology Center of Excellence, a key component of 21st Century Cures and a committee-supported initiative. Woodcock elaborated on the center’s structure and the important work it will be doing.

With regards to PDUFA VI, Woodcock noted: “The PDUFA VI reauthorization proposal . . . was submitted to Congress in December under the previous Administration, and reflects a different approach to the federal budget.” She also stated: “Center to PDUFA VI, and its largest single investment component, are plans to elevate patient voices in developing new drugs to treat their diseases. The agreement shares the committee’s goals reflected in the 21st Century Cures Act – and the highest priority of our stakeholders – to leverage essential patient input and insights to fight disease.”

User fee program reauthorizations necessary for product development

The House Energy and Commerce Subcommittee on Health focused its attention on the FDA’s generic drug and biosimilar user fee programs by inviting the FDA and industry leaders to a hearing to discuss how the programs have been implemented to date and recommendations on reauthorization. Both the Generic Drug User Fee Amendments of 2012 (GDUFA) and the Biosimilar User Fee Act of 2012 (BsUFA) expire in September 2017 and must be reauthorized for the Fiscal Years 2018 to 2022. The hearing also discussed H.R. 749, the Lower Drug Costs Through Competition Act, which seeks to increase generic competition through a shortened review cycle of six months.

Background

Since 1992 and based on the Prescription Drug User Fee Act (PDUFA), Congress has authorized the FDA to collect fees from regulated industry to supplement congressional appropriations. Revenues generated from these fees have been used on specific activities related to the review and regulation of medical products. In exchange for industry agreeing to pay fees, the FDA agrees to meet certain performance goals, such as completing product reviews within specified timeframes. Industry concerns about the length of time it was taking the FDA to review generic drug applications, known as abbreviated new drug applications (ANDA), and the backlog of such applications pending at the agency led Congress to pass GDUFA as part of the Food and Drug Administration Safety and Innovation Act (FDASIA).

Likewise, the Biologics Price Competition and Innovation Act (BCPIA) of 2009, as passed with the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), established a new regulatory authority for the FDA to create an abbreviated approval pathway for biological products demonstrated to be “highly similar” to, or “interchangeable” with, a previously licensed biological product. As part of FDASIA, Congress passed BsUFA to authorize FDA to collect user fees from biosimilar product manufacturers.

Pew Charitable Trusts

Allan Coukell, Senior Director of Health Programs, The Pew Charitable Trusts presented testimony on rising pharmaceutical costs, within and beyond the user fee context. He noted the rising cost of new medicines—especially high-cost specialty drugs, which are only used by 1 to 2 percent of the population, but account for more than one-third of drug spending. Although the FDA’s approval processes outlined in the generic and other user-free agreements offer some potential to address drug spending, he stressed that competition via generic drugs.

As such, the Lower Drug Costs through Competition Act (H.R. 749) would award a generic priority review voucher to any manufacturer that brings a generic drug to market in cases of limited competition or a drug shortage. It would also establish a six-month timeline for FDA review of priority applications, faster than the GDUFA review. In addition to accelerated review, the Pew Charitable Trusts called for Congress to consider requiring greater transparency of contract terms and definitions between payers and pharmacy benefit managers (PBM), as well as mandating the ability to audit these deals, and ensuring that entities that advise purchasers on PBM contracts do not also have financial relationships with the PBMs themselves.

Association for Accessible Medicines

David Gaugh, Senior Vice President for Sciences and Regulatory Affairs at the Association for Accessible Medicines (AAM), which was previously known as GPhA—the trade association representing the manufacturers and distributors of generic prescription drugs, manufacturers and distributors of bulk pharmaceutical chemicals—testified that the best way of achieving the goal of providing patients access to generic alternatives is through the development of policies that promoted competitive markets. The AAM stressed that the best way to control drug costs generally was through policies that incentivize competition, such as GDUFA.

The user fee program supports small business by exempting them from a facility fee until the first ANDA in that facility is approved. The proposal also provides for a tiered structure of annual ANDA program fees based on small, medium, and large companies. Designing GDUFA to spread fees across industry to keep individual amounts as low as possible, the AAM believed the program would help assure that patients continue to receive the significant cost savings from generics alternatives.

Biotechnology Innovation Organization

Kay Holcombe, Senior Vice president, Science Policy, Biotechnology Innovation Organization (BIO), offered testimony to the Subcommittee on reauthorization of BsUFA and H.R. 749. BIO supported the reauthorization of BsUFA, as well as expressed its support for competition in the prescription drug marketplace not only between innovator biologics and biosimilars, but also between innovator drugs and generic drugs, which is the subject of H.R. 749. BIO urged the FDA to lay out its thinking on interchangeability and believed it was crucial for the FDA to clarify its expectations for the data needed to determine that a biosimilar product is interchangeable with its reference biological product. Such a determination could serve to encourage greater prescribing and use of biosimilars as the availability of biosimilar products increases, provided the determination is sufficiently rigorous.

As for H.R. 749, BIO did not adopt a position on the question of timelines for generic drug review or awarding certain generic drug applicants with priority review vouchers under the proposed legislation. BIO did note that it supported policy intended to lower drug prices through the promotion of competition in the drug marketplace, including the timely entry of generics and biosimilars once patents and exclusivities for innovator drugs have expired.

Biosimilars Council

Bruce Leicher, Senior Vice President and General Counsel at Momenta Pharmaceuticals, and Chair of the Biosimilars Council Board of Directors, a division of AAM, noted that the BsUFA reauthorization user fees were now tied to the level of resources needed and adjust with resource demand. As such, it was vital that Congress understood that the funding provided by user fees is in addition to, not a substitute for, congressional appropriations.

Biosimilars Forum

Juliana Reed, Vice President of Government Affairs for Coherus BioSciences, stated that the Biosimilars Forum entered into the BsUFA reauthorization negotiation process with four primary goals: (1) ensuring solid financial support for the program; (2) improving communication between the FDA and biosimilars product sponsors during the approval process to improve efficiency; (3) increasing transparency during the approval process and regarding the spending of user fees; and (4) preventing the expenditure of BsUFA funds on extraneous policy issues or activities that are not exclusive to biosimilars. The Biosimilars Forum was pleased to see that the BsUFA draft met these goals.

In addition, the Biosimilars Forum urged Congress require CMS to review its current reimbursement policy for biosimilars and make it consistent with FDA biosimilar policies. Specifically, it noted that the FDA policy on biosimilars acknowledges the unique nature of each biosimilar, and CMS should align its policy by assigning unique, individualized billing codes to each biosimilar.

FDA

Janet Woodcock, Director of the Center for Drug Evaluation and Research (CDER) at the FDA, discussed both GDUFA and BsUFA during her testimony before the Subcommittee. GDUFA achieved a number of notable goals during the course of its five-year authorization. The FDA approved or tentatively approved 835 ANDAs—the most approvals in the history of the agency—in fiscal year (FY) 2016 alone. The previous high was 619. In addition, approximately 25 percent of all currently approved generic drugs were approved over the past four years. Prior to GDUFA, ANDAs were approved in one review cycle less than one percent of the time. Now, approximately nine percent of ANDAs are approved in the first review cycle.

The FDA did note some challenges to GDUFA, namely submission completeness and volume of applications. Historically, it has taken on average about four review cycles to approve an ANDA as a result of deficiencies by generic drug sponsors in submitting complete applications. More work by both the FDA and industry will be necessary to have the filings be accurate the first time. Moreover, in FYs 2012, 2013, and 2014, the FDA received over 1,000, nearly 1,000, and nearly 1,500 applications, respectively, which taxed the agency’s ability to timely process the ANDAs.

The FDA was also supportive of and fully engaged with the development and approval of biosimilar and interchangeable products. One of the first steps in the development and review process for a biosimilar is for an applicant to join the FDA’s Biosimilar Product Development (BPD) Program. As of February 2017, 64 programs were enrolled in the BPD Program and CDER has received meeting requests to discuss the development of biosimilars for 23 different reference products. Moreover, the FDA finalized six guidances and issued four draft guidances during the timeframe in question. The FDA’s challenge, however, was a result of staffing shortages. Without additional staffing to handle the increased workload for biosimilar review, the FDA warned that review performance would be impacted.