FDAAA Boosts Fees, Broadens Disclosure

Published on: 
BioPharm International, BioPharm International-11-01-2007, Volume 20, Issue 11
Pages: 40–45

Congress postpones debate on follow-on biologics while adopting new policies likely to reshape drug development

Final enactment of the Food and Drug Administration Amendments Act (FDAAA) took longer than expected and forced the legislators to compromise on many specific issues. Congress managed to approve it in time to reauthorize the Prescription Drug User Fee program (PDUFA IV) before that expired on September 30, 2007, but the last-minute rush could have long-term ramifications for agency operations as well as company R&D decisions.

Jill Wechsler

Overall, manufacturers applauded Congress' enactment of FDAAA. In addition to continuing user fee support for FDA approval of drugs, biologics, and medical devices, the final bill curbed the scope of new penalties for fraud and noncompliance and provided FDA with leeway to weigh the need for special distribution safeguards for riskier products. At the same time, FDA gained more authority to control drug marketing and labeling, to require postapproval studies, to establish active surveillance systems, and to make clinical trial operations and results more transparent.



One of the final decisions was to put off establishing a legal pathway for FDA to approve follow-on versions of biotech therapies (FOBs), also called biosimilars. The Senate Health Committee approved bipartisan legislation in June that authorizes biosimilars, but the House did not address the issue. Despite Senate efforts to include FOB legislation in FDAAA, Congressional leaders conceded in early September that time was running out for such action. Rep. Henry Waxman (D-CA) told the Generic Pharmaceutical Association (GPhA) that the chances of adding generics biologics legislation to FDAAA were "extremely slim." And Rep. Frank Pallone (D-NJ), who chairs the House Energy & Commerce Health subcommittee, said that the House would not just "take the Senate bill" but would hold hearings on FOBs later in the year. Although some Congressional leaders talked of pushing through a bill this year, most are now looking to 2008 or beyond. Democrats may decide to wait until they take over the White House to really tackle the issue.

FOB advocates recognize that gaining House and Senate consensus on biosimilar legislation will take time because of considerable disagreement over what kind of exclusivity to grant FOBs. The Senate bill provides protection for 12 years, a compromise designed to ensure continued R&D investment by innovators. This is less than the 14 years demanded by the Biotechnology Industry Organization (BIO), but much more than generics makers consider reasonable. Waxman told GPhA that he wants to see hard data supporting any exclusivity period, and that the brand industry "can't just make up these numbers." A related issue is whether innovators could extend exclusivity beyond the 12 years by reformulating products. Another challenge is interchangeability. Innovators maintain that "similar" does not mean "the same" and that unlike conventional generic drugs, a biosimilar should not have the same generic name as the innovator, as is the case for conventional generic drugs.

Meanwhile, the biogenerics bandwagon is picking up steam. The European Union recently approved new biosimilar versions of erythropoietin, (see BioPharm International, October 2007) and other biosimilar applications are pending. Generics makers point to analytical advances that make characterizing of FOBs more precise, but are willing to accept FDA case-by-case review of FOB applications. Developing biosimilars is "a moral issue," said Hospira CEO Chris Begley at the GPhA meeting, because it will allow patients to access low cost, high-quality, life-saving treatments. Hospira hopes to build on its expertise in producing generic injectables to become a biosimilars leader; a number of generics makers and small biotech companies are eyeing similar opportunities. FOB enthusiasts predict significant savings for patients even though biosimilars are likely to cost only 25% less than innovators.


The industry is mulling over hundreds of pages of the FDAAA's fine print. The bill contains at least 200 specific provisions, noted FDA commissioner Andrew von Eschenbach in discussing next steps for the agency. Delays in finalizing the legislation and late additions to the user fee program also put off the calculation of actual user fees for the fiscal year that began October 1, 2007. The final bill provides $225 million in additional safety funding over five years, which boosts drug fees by another $25 million for 2008.

Although the main elements of the legislation have been known for months (see BioPharm International, September 2007), many important details were finalized only at the very end of the debate. There had been uncertainty over what activities would be part of the new Risk Evaluation and Mitigation Strategy (REMS) program, and what requirements would apply to all drugs.

The final bill enhances FDA authority to require labeling changes, additional postmarket studies, and advertising curbs for all drugs and biologics, not just for products that warrant a REMS. The legislation stops short of requiring a REMS for all new drugs, as originally proposed, and leaves it up to FDA to decide whether a drug seeking market approval warrants REMS components to ensure that the product's benefits outweigh the risks. FDAAA also authorizes FDA to require agency pre-review of planned television ads, and it expands current clinical trial registration requirements to include all trials for drugs, biologics, and medical devices beyond Phase 1 intended to support market applications. This trial registration system will link to a clinical trial results database that will eventually give the public access to information on the outcomes and safety issues generated by these trials.

Although the legislation authorizes Congress to provide additional funds to accomplish the many goals established by this complex bill, FDA is unlikely to get all the money it needs. And there may be little in added resources for FDA initiatives to improve the drug development process or to spur development of new antibiotics. The Reagan-Udall Foundation established by FDAAA is meant to award grants to scientists in and outside the agency engaged in projects related to FDA's Critical Path initiative, but the agency is authorized to spend a maximum of $1.3 million on the program, and that funding has to come from its own tight budget.

Some last-minute changes may also create serious legal problems for pharmaceutical and biotech companies. The final bill contains vague language on whether FDA regulations pre-empt state drug labeling laws. This complex issue has pitted federal regulators against states eager to establish more stringent disclosure policies for medical products. The wording of the FDAAA provision is expected to lead to a major legal battle on this topic, which may end up before the Supreme Court.

Many observers believe that FDA's enhanced authority to require companies to conduct postapproval studies, make labeling changes, and clearly disclose risks in direct-to-consumer ads will limit the agency's use of REMS. Manufacturers that fail to make requested labeling changes, conduct timely postmarketing studies, or implement an approved REMS, would be in violation of the law and subject to civil monetary penalties. This new enforcement policy plus the added regulatory tools will make the agency less likely to delay a new approval, observes Scott Lassman of WilmerHale.

Most biotech therapies are likely to be identified as "high risk" and thus candidates for REMS. The prospect of stiffer label warnings, limited distribution programs, and broad research disclosure may "make marginal drugs even more risky" for R&D programs, observes John Kamp, executive director of the Coalition for Healthcare Communication. Safety or efficacy questions about a product in Phase 2, he predicts, may make a company hesitant about going forward.

Jill Wechsler is BioPharm International's Washington editor, 7715 Rocton Avenue, Chevy Chase, MD 20815, 301.656.4634, jwechsler@advanstar.com