FDA user-fee bill seen as speeding approvals, but harming smaller firms

A deal aimed at allowing the Food and Drug Administration to collect $400 million-plus annually in additional user fees could speed up pharmaceutical and device approvals, according to industry experts.

A bipartisan group of congressional leaders this month released a draft of the FDA Reauthorization Act, which would continue the FDA's authority to collect user fees from the makers of branded and generic prescription drugs, medical devices and biosimilars.

While the funds raised under the proposed reauthorization would allow the FDA to hire more staff and accelerate approvals, critics claim that the rising fees disproportionately harm smaller companies that cannot accommodate the fee hike.

Greg Cauchon, a former research scientist at Amgen who now runs the 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 cut the FDA's budget. Trump vowed to reform the FDA and its “slow and burdensome” approval process.

But that approval process isn't nearly as slow as Trump claims, according to the Information Technology and Innovation Foundation. In a February report, the think tank said the FDA considers drug applications quicker than its peer agencies, such as the European Medicines Agency, in large part due 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 consultant Stewart Lyman.

The user-fee programs make up a significant chunk of the agency's budget—accounting 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 in fiscal 2016.

The amount that user fees would contribute to the prescription drug review budget 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 of the agency's review process, meaning doctors and patients will be able to access treatments sooner, said Scott Whitaker, 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 said he hopes the fee hikes don't prevent companies from submitting new products.

Device user fees would rise from $130.2 million in 2017 to $183 million in 2018 and 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 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 go 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.

An independent fee structure will be initiated for biosimilars, with those user fees rising from $20 million in 2017 to $45 million in 2018.

Ultimately, Rosen hopes that communication improves between the agency and healthcare companies. It is difficult to communicate with the FDA and receive guidance,” he said. “There needs to be some better mechanism that ensures the agency responds in a timely manner.”