Different approach to FDA user fee reauthorizations needed

Initially passed in 1992 and 2002, respectively, PDUFA (Prescription Drug User Fee Amendments) and MDUFA (Medical Device User Fee Amendments) require reauthorization every five years. Hearings for the 2017 reauthorization are being scheduled to take place throughout 2016.

Forty-five percent, or $2.2 billion, of the Food and Drug Administration’s (FDA) $4.9 billion fiscal 2016 budget is generated from user fees, payments collected by the FDA from companies submitting new drug, biologics and medical device applications for review.

{mosads}User fees cost $2.4 million for a new drug, $261,388 for a new biologic product and high-risk device, and $5,228 per low-risk (510[k]) medical device. The purpose of user fees is to provide additional funds to the FDA to process new product applications more expeditiously. The timeframes within which new products are required to be reviewed are 10 months for a standard new drug or biologic (NDA or BLA); six months for a priority new drug/biologic and high risk device (PMA); 90 days for a 510k, and 75 days for a Humanitarian Device Exception (HDE).

User fees are not working as they were intended. In 2013, FDA median approval times for drugs was 304 days; this meant that approval time exceeded the PDUFA goal of 10 months for 50 percent of applications. The FDA touts that device approval times in the five years up to 2014 have improved markedly (13 percent for 510(k)s and 31 percent for PMAs) compared to a decade earlier — however, timeframes remain longer than MDUFA targets. In the first half of 2015, the average review time for a PMA was 17.1 months and HDE took 16.7 months. In 2014, the average review time for a 5109(k) was six months, and a company submitting a 510(k) had just a 22 percent chance of getting it cleared within three months, or a 61 percent chance of getting it cleared within 6 months.

Note that review time is counted in “review days,” not calendar days, whereby the FDA stops and starts the review clock at its discretion, typically requesting that sponsors answer questions that emerge in the review of new products by submitting PMA, NDA and BLA amendments, which then extend the review period. This has the effect of increasing the percent of applications reviewed within target dates defined in PDUFA and MDUFA and reported by the FDA to Congress.

Notwithstanding the facts, the FDA continually tells the public that it is doing a great job! If the FDA were doing such a great job, why would priority review vouchers be commanding such high prices? AbbVie just bought United Therapeutics’ Rare Pediatric Disease Priority Review Voucher for $350 million.

Even worse, user fees and attendant PDUFA/MDUFA legislation have created four huge unintended consequences that are damaging medical innovation:

1. Lack of congressional oversight. It seems that Congress has assumed that the companies paying the fees would exercise oversight and speak up about the FDA’s poor performance. This is not the case; rather, the companies are loath to criticize the FDA publicly for fear of retribution from the agency. The performance reports that the FDA provides to Congress are unintelligible and misleading — greater transparency is needed in order to ascertain whether FDA review performance is in conformity with the law and to perform meaningful analyses.

2. Mounting body of confusing law. In an effort to meet review deadlines, at least for some new products, PDUFA amendments have ushered in a rapidly expanding series of regulatory incentives for niche areas of “high unmet medical need” with such programs as Fast Track, Priority Review, Breakthrough Therapy Designation (BTD), Qualified Infectious Disease Products (QIDP), pediatric exclusivity and Rare Pediatric and Tropical Diseases Priority Review vouchers. This has created a very disjointed and cumbersome body of law for FDA reviewers and drug developers to master. Without proper time for these to mature and settle into practice, great uncertainty and inconsistency with respect to their application has ensued. New FDA reviewers have great difficulty mastering the existing firm body of law to which special cases continue to be layered on top, seemingly with every PDUFA reauthorization.

3. Significant shift in approval standards. The industry is afraid to voice opposition and so the FDA has proceeded unchecked. By resisting little to paying more for less FDA performance, the agency has become increasingly empowered by the industry to make changes in policy that compromise medical innovation. An anti-innovation culture has taken root, as seen in the FDA’s unauthorized shifting of safety and effectiveness standards to clinical utility, with clinical outcomes and survival as the preferred bases of approval, and lack of serious implementation of the least burdensome approach for medical devices.

4. Preferential development of products for niche populations. Increasingly, even the largest of companies are abandoning their research and development efforts dedicated to diseases that address large populations of patients. Rather, they are focusing their resources on the “high unmet medical need areas” to take advantage of the more rational safety and effectiveness standards and faster review times afforded by the various niche disease incentive programs that have been implemented under PDUFA and MDUFA.

So, how should we approach PDUFA and MDUFA reauthorization?

A “clean” reauthorization of user fees is needed (see our fourth Medical Innovation Impact Alert). In lieu of the additions to the body of regulations that have accompanied prior PDUFA and MDUFA (re)authorization legislation — including regulatory incentives and other extraneous provisions — we support reauthorization only if the following changes are enacted:

1. Define safety and effectiveness explicitly and immutably. Immediately correct existing rules and guidance documents that are in conflict with the definition of safety and effectiveness.

2. Require mandatory review performance from the FDA and impose penalties when performance criteria are not met. The FDA must make transparent and comprehensible congressional reports of PDUFA and MDUFA performance data. Review periods must be counted in business days, not “review days” from the date of application acceptance/filing, with clear enumeration of days at the FDA versus days at sponsor (in response to questions). Impose a 1 percent reduction in user fees per day exceeding review period limits. For small companies, a transferrable tax credit of $10,000 per day of delay.

3. Remove all expedited programs, except for Qualified Intellectual Disabilities Professional and Orphan Drug status for drugs. If the FDA met its review times and honored the definition and principles of safety and effectiveness and least burdensome approach (for devices), there would be no calls for performance incentives by industry.

4. Make the FDA ombudsman report to the commissioner — as opposed to center directors — and submit quarterly reports to Congress, which must have yearly FDA performance oversight meetings.

5. FDA advisory committees must vote on the approvability of new products and make recommendations as to labeling that would support market approval based on the existing body of data in appropriate populations of patients. Advisory committees must be comprised of experts who treat the disease under consideration. In addition, FDA conflict of interest rules must be waived to include panel members who have performed clinical studies or consulted for more than one drugmaker.

Medical innovation is too important to allow the trends that have been established under PDUFA and MDUFA to continue. The system can only be fixed with serious efforts to address the underlying drivers of inefficiency. The FDA needs to be encouraged to fulfill its statute-defined mission to promote the public health by promptly and efficiently reviewing clinical research and taking appropriate action on the marketing of regulated products in a timely manner, rather than vilified when unfortunate outcomes do occur. Fear on the part of the agency is the principal driver of the anti-innovation posture the agency has taken.

PDUFA and MDUFA do not address the fear — rather, PDUFA and MDUFA seem to create more unintended, barriers to medical innovation. Approaching reauthorization the same way will continue to handicap medical innovation and deprive patients.

Gulfo is the executive director of the Rothman Institute of Innovation and Entrepreneurship at Fairleigh Dickinson University and author of Innovation Breakdown: How the FDA and Wall Street Cripple Medical Advances (Post Hill Press). He has more than 25 years of experience in the biopharmaceutical and medical-device industries and is the former CEO of Mela Sciences. Follow him on Twitter @josephgulfo.