Manufacturers and FDA Gear Up for User-Fee Action

Published on: 
BioPharm International, BioPharm International-09-01-2011, Volume 24, Issue 9
Pages: 40–45

PDUFA renewal legislation sets stage for new policies affecting revenue, research, and oversight.

The United States may be in danger of losing its leadership position in biopharmaceutical research due to certain regulatory policies and reductions in reimbursement for new breakthrough therapies. Prescription-drug user fees are scheduled for reauthorization by Congress next year, and all parties anticipate a push for new policies to improve the drug-approval process. Although the broader goal is to spur biopharmaceutical research and new drug development, manufacturers fear that cost-cutting efforts by the Obama administration and Congress will curb resources for FDA and squeeze drug-payment policies. The rhetoric is heating up as industry moves to deflect measures it fears will limit support for discovery and for regulatory oversight of new medical treatments.

Jill Wechsler


A main message from pharmaceutical companies is that US policies that undermine investment in biopharmaceutical innovation will prompt manufacturers to shift R&D to more hospitable climes. The European Union's Innovative Medicines Initiative has earmarked $2 billion to fund collaborative research projects and build expert networks to support pharmaceutical innovation in Europe. The Chinese government is targeting the biopharmaceutical industry as part of a five-year economic development campaign, which includes providing $1.5 billion to invest in startup companies.

At a press briefing in July 2011, John Castellani, president of the Pharmaceutical Research and Manufactures of America (PhRMA), explained how the biopharmaceutical industry has thrived in the US because of policies that protect intellectual property, support scientific research, and place a high value on medicines. Now, other countries, such as Germany and France, want to attract back biopharmaceutical firms, he warned. At the same time, Singapore and other emerging economies have identified the biopharmaceutical sector as crucial to their economies. Merck President Kenneth Frazier similarly observed in a Wall Street Journal op–ed in July, that the designation of the US as the "medicine chest to the world" and its claim to be home to 82% of the world's biotech R&D activity will be undermined if the federal government imposes price controls on the Medicare drug program and establishes the Independent Payment Advisory Board (IPAB) (1).

The price controls mentioned by Frazier refer to additional rebates on drugs covered by the Medicare Part D drug benefit, specifically those medicines consumed by low-income seniors who previously obtained medicines from state Medicaid programs that negotiate rebates with pharmaceutical manufacturers. The shift of those "dual eligibles" to Part D plans eliminated those rebates, and industry critics, led by Rep. Henry Waxman (D-CA), have been pressing to recoup this pharmaceutical "windfall" for several years.

The Congressional Budget Office (CBO) estimates that rebates on drugs for some 10 million seniors who receive low-income subsidies under Part D would save $112 billion over the next decade, or $10 billion a year. That's a big number that will be hard for budget-cutters to ignore.


PhRMA is fighting the rebate policy and other actions with analysis claiming that the policy could prompt biopharmaceutical companies to shift operations, and thus US jobs, overseas. A Battelle study for PhRMA calculates that a $10-billion reduction in on industry revenues would kill 130,000 high-paying jobs, thereby exacerbating the nation's already high unemployment rate.

Even more troubling are suggestions that the rebate plan could destabilize the Part D program which has been a huge success in providing less costly medicines to seniors. Another report for PhRMA by the IMS Institute for Healthcare Informatics documents how Part D has led to lower spending on medicines for seniors. More important, a separate study published in the Journal of the American Medical Association finds that increased use of prescription drugs due to the Medicare drug benefit significantly reduced medical spending by seniors on hospital and nursing home care (2). Medicare reports that the program's total cost is 41% less than initial CBO estimates, partly because plans have negotiated hefty discounts from manufacturers. Layering on another level of rebates, says PhRMA senior vice-president Rick Smith, would be "a double whammy."


If a Part D rebate plan does not end up in Medicare cost-cutting proposals as part of broad deficit-reduction legislation slated to come before Congress, it will be on the list of pharma-related reforms included in next year's legislation to reauthorize the Prescription Drug User Fee Act (PDUFA V). After a year of consultation with industry and other stakeholders, FDA officials and manufacturers reached a new PDUFA agreement this past spring; it faces further public discussion before it is formally transmitted to Congress in January 2012. The current user-fee program expires on Sept. 30, 2012, and a new program has to be in place before then in order for FDA to be able to continue collecting industry payments, which now support more than 60% of the cost of the approval process for new drugs and biologics.

Members of Congress already are gearing up to add a range of pet programs to the user-fee legislation. A number of drug-related policies calculated to generate savings for government health programs will include bills to legitimize drug reimportation, reduce exclusivity for biosimilars, and curb brand–generic patent settlements. There will be a strong push to extend steep 340B discounts on drugs used by safety-net hospitals to include inpatient treatment and orphan medicines.

The basic PDUFA proposal is not radically different from the current user-fee program and by itself should win Congressional support fairly easily. FDA is looking to boost user-fee revenue by about $40 million per year, according to FDA Director of the Center for Drug Evaluation and Research (CDER) Janet Woodcock's testimony to the Energy and Commerce Committee—that's a "modest" 6% annual increase that will bring in nearly $700 million in fiscal year 2013. The most notable change gives FDA an extra two months to review applications, here in the guise of a 60-day "administrative filing period" after submission of an application; this timeframe will permit agency reviewers to fully vet the filing before starting the official review clock.

More meetings will take place between reviewers and sponsors, with a new cadre of FDA liaison officials to enhance communications. FDA will assess meta-analysis methods, biomarkers, and patient-reported outcomes measures to improve clinical studies. The plan also calls for standardizing risk evaluation and mitigation strategies (REMS); boosting FDA's Sentinel system to improve postmarket drug-safety surveillance; and implementing an electronic submissions system for clinical data, something that has been in the works for years.

Along with PDUFA, FDA and manufacturers are working on a new user-fee program for generic drugs, while also discussing a formula for fees for new biosimilar-product applications. Support for renewing pediatric-drug development and research incentives is strong, preferably on a permanent basis. The aim is to move away from the five-year sunset-and-reauthorization process linked to PDUFA for the Best Pharmaceutical for Children Act and the Pediatric Research Equity Act to encourage more pediatric product development.

The Medical Device User Fee Act (MDUFA) also is up for renewal, and negotiations on that program have been much more contentious than those for drugs. FDA is embroiled in evaluating proposals for overhauling its 510k regulatory process for low-risk devices, which has device makers up in arms. A recent Institute of Medicine (IOM) report advises FDA to find a better way to assess the safety and efficacy of these products, an approach that industry feels will stymie medical device innovation and product development. FDA has to reduce fees for 2012 because it collected too much from industry this year. This situation, along with the larger device regulatory issues, has not smoothed the process for negotiating future fees.

As the PDUFA legislation emerges, pharmaceutical companies are looking to line up behind a number of drug-related measures, such as proposals to boost incentives for the development of new antibiotics and to update FDA's orphan-drug program. Industry backs efforts led by Rep. John Dingell (D-MI) to strengthen oversight of imported drugs and active ingredients, with added FDA authority for recalls and import controls and required registration and fees on foreign manufacturing facilities to cover the costs of overseas inspections. Companies also support Republican-backed efforts to make REMS requirements less burdensome and to revise FDA conflict-of-interest policies that exclude many qualified experts from seats on FDA advisory committees.

The Biotechnology Industry Organization (BIO) recently unveiled its own wish-list of policy changes to spur biotech R&D. BIO wants to make FDA an independent agency, more like the Federal Trade Commission, and to depoliticize it by appointing the FDA commissioner to a fixed six-year term, separate from the presidential election cycle. BIO wants to require FDA to tell sponsors specifically why it's not approving an application, and also proposes a conditional or "progressive" drug-approval procedure that permits therapies for diseases that lack any effective treatment to come to market on a limited basis while the sponsor completes clinical studies. The list also includes reviving the Reagan–Udall Foundation, an independent research organization established by the FDA Amendments Act of 2007, but never funded by legislators.


FDA laid out its goals for user-fee renewal legislation at House and Senate hearings in July 2011. FDA Commissioner Margaret Hamburg outlined for the Senate Health, Education, Labor, and Pensions (HELP) Committee how user fees support patient access to new drugs and medical products. Panel leaders expressed strong support for renewing user fees for drugs and devices, hopefully by next spring. But Sen. Richard Burr (R-NC) threatened to block PDUFA reauthorization if FDA doesn't change its approval process for medical devices. Hamburg acknowledged that devices raise problems, but blamed approval delays on poor quality applications that require reviewers to ask manufacturers for additional data not found in the original filing.

Woodcock provided the House Energy and Commerce Health subcommittee with a fairly positive report on FDA's drug approval process, describing how proposed PDUFA V enhancements will further address drug access and safety issues. Most Democrats and Republicans praised the fee program, as did industry and patient representatives.

Energy and Commerce Committee Chairman Fred Upton (R-MI) laid out top Republican concerns: REMS requirements may be thwarting new drug development, and "rigid and unrealistic" conflict-of-interest policies keep top scientists off advisory committees, thus preventing these panels from vetting new drug candidates in a timely manner. Marc Boutin, executive vice-president of the National Health Council, backed conflict-of-interest policy changes, noting that the rules have created "alarming" committee vacancy rates.

Woodcock credited the 20-year-old user-fee program with establishing a more efficient, predictable drug approval process that has sped up the review process for new drugs and biologics "without compromising the agency's high standards for demonstration of safety, efficacy, and quality of new drugs." FDA has provided patients with access to more than 1500 new drugs during the past two decades, she commented, including important cancer therapies that a recent study shows are available to US patients before reaching the market in Europe.

Woodcock also reported that FDA is on track to approve more new medicines in 2011 than in recent years, with 20 new drugs already okayed at the mid-year point; the number rose to 21—the 2010 total—soon after when FDA added AstraZeneca's Brilinta to the list. Woodcock also noted that CDER's rate of first-cycle approvals for priority new molecular entities (NMEs) is going up, citing recent action on landmark treatments for hepatitis C and for late-stage melanoma. And she noted how the REMS program can facilitate access to high-risk products, such as a new thyroid cancer treatment that FDA approved with a REMS to limit product use to truly needy patients.

The real problem, she said, is not slow approvals, but that too many experimental drugs continue to fail during development. PDUFA support for more FDA–sponsor meetings will help, along with added resources to develop further guidance and new methods for testing and evaluating experimental drugs.

Many of these undertakings are included in a CDER report identifying science and research needs that can enhance the development of new drugs and biologics. This July 2011 publication from CDER's Science Prioritization and Review Committee builds on the Critical Path Opportunities reports of 2004 and 2006 in citing research projects that FDA would like to pursue, ideally in partnership with industry, academia, or other government agencies (3). The topics include ways to improve analysis of postmarket data, product-quality assessment, clinical trial design, and individualized treatments.

Jill Wechsler is BioPharm International's Washington editor, Chevy Chase, MD, 301.656.4634,


1. K. Frazier, Wall Street Jrnl., July 13, 2011.

2. J. McWillians et al., JAMA 306 (4), 402–409 (2011).

3. CDER Science Prioritization andReview Committee, "Identifying CDER's Science and Research Needs Report," (FDA, Rockville, MD, July 2011). ?