FDA user fee extension poised to benefit healthcare companies
The tentative deal to reauthorize the FDA's ability to collect user fees could be a boon to many healthcare companies by providing more certainty and efficiency in the product-approval process, healthcare and legal experts said.
The bipartisan leaders of the Senate's and U.S. House of Representatives' health committees released a draft of the bipartisan Food and Drug Administration Reauthorization Act Friday that would reauthorize the FDA's four user-fee agreements that renew the agency's authority to collect user fees from the makers of prescription brand drugs, medical devices, generic drugs and biosimilars, and several crucial programs at the FDA.
The draft calls for more than $400 million in new user fees for the first year that would allow the FDA to hire more staff and speed up approvals, which could help healthcare companies streamline operations, supporters argue. Yet, critics claim that the rising fees disproportionately affect smaller companies that cannot accommodate the fee hike.
Greg Cauchon, a former research scientist at Amgen who now runs the Thousand Oaks, Calif.-based biotech incubator Ventura BioCenter, would rather see the user fees removed to create a level playing field, he said.
The fees "merely act to entrench the larger firms at the expense of smaller ones while providing the paying companies with undue regulatory influence," Cauchon said. "If regulating the nation's drug supply is important enough for the federal government to do it they should be able to fund it properly."
The agency will have to lay off more than 5,000 employees if the agreements are not reauthorized before the end of September. A reauthorization delay also would postpone the review of many drugs and devices.
In his proposed 2018 budget, President Donald Trump planned to double the $1 billion in revenue the fees generate and lower the FDA's budget. Trump vowed to reform the FDA and its "slow and burdensome" approval process, he said.
But that approval process isn't nearly as slow as Trump claims, according to the Information Technology and Innovation Foundation. The think tank said in its February report that the FDA considers drug applications quicker than its peer agencies such as the European Medicines Agency, thanks in large part to the prescription drug user-fee agreement.
"Others look to (the FDA) as the gold standard for regulatory decisionmaking. I think that will continue," said Stewart Lyman, who owns Lyman BioPharma Consulting. "Whenever you can introduce more certainty, that's a good thing."
The user-fee programs make up a significant chunk of the agency's budget. They accounted for 70% of the brand-drug review budget, 36% of the medical-device review budget, 75% of the generic-drug review budget, and 29% of the biosimilar review budget for fiscal 2016.
The base user-fee amount for prescription drugs would increase from $718.7 million in fiscal 2017 to $878.6 million in 2018. The agreement restructures the fees to reduce the administrative burden and make funding more predictable. It also changes the fee structure from one-third facility fees, one-third application fees and one-third product fees to 20% application fees and 80% program fees for approved products.
Ultimately, the drug user fees will improve the efficiency and predictability to the agency's review process, meaning doctors and patients will be able to access treatments sooner, said Scott Whitaker, president and CEO of the Advanced Medical Technology Association, which represents devicemakers. The Pharmaceutical Research and Manufacturers of America echoed that sentiment.
The approval time frame changes will help reduce the FDA's extensive backlog, said David Rosen, a former FDA official and current head of the FDA Regulatory practice group at law firm Foley & Lardner. Yet, he hopes that the fee hikes do not prevent companies from submitting new products, Rosen said.
Device user fees would rise from $130.2 million in 2017 to $183 million in 2018 and eventually to $213.7 million in 2022. The agreement allows fees to be collected for "de novo" devices, or ones that don't pose high risk of injury to users. It also establishes a new pilot program that gives the FDA the authority to audit and certify labs that conduct device testing to a recognized standard.
Generic-drug user fees would jump from $299 million in 2017 to $493.6 million in 2018. A new fee structure provides more predictability for the FDA and flexibility for small business, according to the agreement. Fees would also scale to the number of applications a company submits, which is an important element, Rosen said.
For the first time, an independent fee structure will be implemented for biosimilars. Biosimilar user fees would increase from $20 million in 2017 to $45 million in 2018.
Rosen would've liked to see a provision regarding drug shortages. Certain drug-review processes should be expedited when there is a shortage, he said.
Ultimately, Rosen hopes that communication improves between the agency and healthcare companies.
"It is difficult to communicate with the FDA and receive guidance," Rosen said. "There needs to be some better mechanism that ensures the agency responds in a timely manner."
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