FDA User-Fee Legislation

Published on: 
BioPharm International, BioPharm International-08-01-2012, Volume 25, Issue 8
Pages: 40–45

Import controls and risk strategies aim to promote quality and spur new drug development.

There was much celebrating on Capitol Hill in late June, as leading legislators reached across party lines to approve the Food and Drug Administration Safety and Innovation Act (FDASIA) in record speed. The bill (S. 3187) enables FDA to collect approximately $6 billion in fees over the next five years from pharmaceutical and medical device companies. These fees are crucial to maintaining an efficient prescription drug regulatory system.

Jill Wechsler

At the same time, the Supreme Court upheld the constitutionality of the Affordable Care Act. The decision ended speculation that FDA might lose authority to establish a pathway for developing new biosimilars [see Roundup].

Now the hard work begins to implement new policies and prepare the multiple guidance documents and reports required by FDASIA. As with most 300-page bills, the FDA legislation has something for everyone: patient advocates gained added incentives for developing crucial medicines; providers applauded policies to curb drug shortages; and manufacturers may benefit from speedier approvals and stiffer penalties for counterfeiters.

The basic user-fee program for drugs and biologics hashed out by manufacturers and FDA officials over the previous 18 months remained intact during the legislative process. Generic-drug makers agreed to pay almost $300 million annually to accelerate approvals, clear up an immense application backlog, and support timely inspections of foreign manufacturers. In addition, firms developing new biosimilars agreed to provide upfront fees to cover some of FDA's cost in providing guidance to sponsors, a program expected to raise $128 million over five years.


As the analysts and lawyers continue to pore over the fine print in FDASIA, some questioned whether policymakers should have taken more time to resolve some contentious issues, such as how to establish a national track-and-trace system for prescription drugs. Policymakers were stalemated by industry's support for tracking based on lot number, instead of individual vials and bottles, as FDA preferred. Manufacturers thus face multiple state tracking requirements, starting with a California law that goes into effect in 2015.

Still, the final law contains a wealth of provisions designed to help FDA detect and block adulterated and illegal medical products. All drug manufacturers and foreign suppliers have to register with FDA, using a unique facility identifier. Importers face a number of specific registration requirements, including electronic information submission. FDA can block the import of products from manufacturers that deny access to inspectors or fail to submit requested records. FDA has also been given authority to detain adulterated products at the border instead of having to send them back to the shipper, and in some situations to destroy violative imports.


Manufacturers are required to notify FDA if a drug may be stolen or counterfeited, and intentional adulteration for economic gain carries stiff penalties, including jail time. The consequences are even more serious for anyone who intentionally traffics in counterfeit drugs.

An important change overrides the established, but long unworkable two-year plant inspection requirement and permits FDA to inspect drug-manufacturing facilities on a schedule that reflects risk factors. Another innovative provision specifies that meeting cGMPs requires manufacturers to implement quality management systems and assure the quality of raw materials. FDA may share trade secret information with trusted regulatory counterparts and gains leeway to consider inspection information from such regulators in evaluating the risk level of an establishment. The bill also specifies that US law governing drugs and medical products may be applied to extraterritorial violations, such as economically motivated adulteration of products like heparin.

To curb shortages of critical drugs and biologics, the law extends reporting requirements for manufacturers anticipating short supply situations. FDA gains clear leeway to expedite establishment inspections and application reviews to help mitigate or prevent a shortage, along with requirements to issue an annual report on drug shortages and to maintain a drug-shortage list that will help patients and providers keep informed of supply problems. The Drug Enforcement Administration has to provide timely approvals or denials of requests to increase quotas of controlled substances when needed to address a drug shortage. And a new Health and Human Services (HHS) task force will examine ways to enhance the federal response to shortages and create a strategic plan to address these problems.


This fifth version of the Prescription Drug User Fee Act (PDUFA V) offers additional assistance for research sponsors and greater transparency in the application review process to complete more first-cycle reviews. Patient advocates played a prominent role in pressing for provisions to accelerate FDA approval of new treatments for serious and life-threatening conditions, along with articulation of an FDA risk-benefit framework to clarify that new drugs are never absolutely safe, and that patients accept a certain amount of risk in using new treatments.

Specific provisions provide expedited review of fast-track products and clarification of evidence and endpoints to support accelerated approval of drugs for serious or life-threatening conditions. Grants for developing orphan-drug products will continue, and revised conflict-of-interest rules will make it easier to bring in knowledgeable experts to serve on advisory committees, especially those committees dealing with rare diseases.

Infectious disease experts gained incentives for developing new antibiotics: an added five years exclusivity will apply to specific "qualified infectious disease products," which FDA has to define and list.

Other provisions encourage development of new formulations and expanding labels for drugs for children. The Best Pharmaceuticals for Children Act and the Pediatric Research Equity Act were made permanent, instead of requiring reauthorization every five years. A new pilot program will test whether an offer of priority review vouchers, which can be redeemed for a speedy FDA review of another product, will accelerate development of new therapies for rare childhood diseases.

A less-noticed but important provision requires electronic submission of applications for drugs, once FDA establishes policies and standards for doing so. In this part of the bill, legislators take the unusual step of permitting FDA guidance to set requirements, a strategy that aims to move this policy forward without a lengthy rulemaking process. And the final bill aims to reduce duplicative clinical studies by encouraging FDA to accept foreign clinical trial data to support new drug applications.

FDASIA also makes it easier for manufacturers to make minor modifications in risk evaluation and mitigation strategy (REMS) programs. Generic-drug makers, however, lost out in their campaign to prevent brand firms from using REMS to block access to products needed to test and develop new generic competitors, an issue that could affect biosimilar development down the road. However, other changes in generic exclusivity policy and procedures for handling citizens' petitions promise to enhance access to generic drugs.

Policymakers sought to add restrictions on the prescribing and sale of opioid painkillers to rein in the rampant abuse of these prescription products, but pharmacists objected strenuously. So instead, FDA will hold a public meeting on the need to reschedule hydrocodone and seek ways to exchange prescribing information across state lines to help pharmacists detect multiple painkiller prescriptions. These discussion are likely to address FDA's long-awaited REMS for extended-release opioids, which was issued just after FDASIA was finalized. The REMS stops short of mandating education for opioid prescribers, opening the door to further debate and legislative proposals on controlling these drugs.

Jill Wechsler is BioPharm International's Washington editor, Chevy Chase, MD, 301.656.4634, jwechsler@advanstar.com.

Hot Topic Roundup

Supreme Court upholds Obamacare

Pharmaceutical and biotech manufacturers can expect FDA to develop a pathway for testing and approving biosimilars as the Obama administration implements the multiple provisions of the Affordable Care Act following the landmark Supreme Court ruling. Industry also will continue paying higher Medicaid drug rebates and hefty excise taxes to the Treasury, along with discounts on drugs prescribed to Medicare patients in the "coverage gap." See Guest Editorial.

No overtime for sales reps

Another important Supreme Court decision for pharmaceutical companies rejected demands from sales representatives for overtime pay. A narrow conservative majority ruled that the detailers employed by GlaxoSmithKline are not protected by the Fair Labor Standards Act (FLSA) because they are "outside salesmen" that do not actually sell products, but provide information to physicians designed to stimulate prescribing. The ruling is regarded as a rebuke to the Department of Labor and the Obama administration, and it is expected to halt the wave of lawsuits filed against manufacturers over recent years. But the decision may be good for sales representatives, according to some analysts, because pharmaceutical companies otherwise might lay off even more detailers than they already have.

FDA promotes supply-chain pilot

Just as Congress approved FDA user-fee legislation without any provision for establishing a national drug track-and-trace system, the agency indicated it was moving forward with a long-planned pilot to test ways to ensure the quality and integrity of imported pharmaceutical ingredients and finished products. The Secure Supply Chain Pilot Program was originally proposed in 2009 but generated concerns about excessive red tape and oversight. Now FDA has revised the program and is seeking final approval from the Office of Management and Budget to move forward. FDA's plan is to select up to 100 manufacturers and importers that each submit information on how five drugs will be imported into the US. Applicants must maintain records documenting the product's movement through their secure supply chain, meet customs requirements to guard against terrorism, and demonstrate that they comply with good importer practices proposed by FDA.

Regulating apps

A fairly obscure provision in the FDA Safety and Innovation Act seeks to clarify how FDA may—or may not—regulate medical applications for smart phones and other computer devices, a hot issue with manufacturers and health authorities. The final bill stops short of prohibiting FDA from finalizing a draft guidance document issued last year that proposed agency regulation of software that links to a device, but not low-risk applications such as calorie counters. Consequently, FDA officials are expected to hold off on drafting a final guidance until it forms a working group, as required by FDASIA, to quickly (in 18 months) develop a strategy for an "appropriate, risk-based regulatory framework" on health IT "that promotes innovation, protects patient safety and avoids regulatory duplication." FDA will consult with the National Coordinator for Health Information Technology and the Federal Communications Commission and include manufacturers, payers, venture capitalists, IT vendors, patients, providers, and others in the working group.

The compromise measure reflects concerns of software and medical device companies that FDA will over-regulate this budding industry, squashing innovation and promising health technology. There already are some 40,000 medical apps, some developed by pharmaceutical manufacturers looking to enhance patient use of treatments for diabetes and other medical conditions and to help manage clinical trials. FDA regulates medical software that controls x-ray machines, infusion pumps, and certain implants and recently approved a medical app that displays radiological images. Some software developers support FDA regulation to gain more predictability in market requirements, despite the cost and time of compliance.

Biomedical innovation in trouble?

The time and cost of developing new drugs are rising, venture capitalists make no return on investments in biopharma R&D, and other countries are boosting support in this area while US policymakers propose funding cuts for the National Institutes of Health (NIH). Experts painted this bleak picture of the "state of biomedical innovation" at a June seminar sponsored by the Brookings Institution. There is a "relentless decline" in biopharma R&D productivity, as measured by the number of new drugs approved compared with spending on R&D, pointed out Jonathan Leff of Warburg Pincus. NIH Director Francis Collins warned that the US faces a decline in its scientific leadership and competitiveness as visionary scientists find research funding increasingly difficult to obtain. FDA Commissioner Margaret Hamburg cited the impact that reimbursement and immigration policy have on innovation, and that FDA strives to serve as a gateway, and not a barrier, to advancing new product development.

Amgen Chairman Kevin Shearer sounded a more optimistic tone, noting that the US biotech industry continues to "dominate the world," and that no other country "is even close" to the US in providing the financial support and scientific infrastructure for biopharmaceutical innovation. If you develop an innovative medicine in America "you'll be rewarded," he noted. The main strategy for the research community, said Shearer, is to continue investing in NIH, which he termed "a national treasure," and to "leave FDA officials alone."

Recently issued guidance document

• Toll-Free Number Labeling and Related Requirements for Over-the-Counter and Prescription Drugs Marketed with Approved Applications (FDA, Final).