The Next Policy Battle For Biotech After Healthcare Reform
With a new healthcare bill (and its “fixes”) signed into law, one might think that the biotech industry could shift its attention away from Washington DC and get back to work in the labs. That would be wrong.
Starting this month, we begin a two-year project that will culminate, if things go according to plan, in 2012 with the fourth reauthorization of the Prescription Drug User Fee Act, known by its acronym PDUFA. For biotech companies, this legislation is arguably even more important than healthcare reform because PDUFA means FDA.
The Prescription Drug User Fee Act reshapes the rules of the long, complicated road that we travel with FDA when we set out to develop new prescription medicines. The basic structure of the arrangement is simple: the industry agrees to pay “user fees,” which are fees paid when we submit applications for new drug approvals, and the FDA commits to try to achieve certain performance goals in the process of regulating the development of new drugs.
When the first PDUFA became law, back in 1992, it was big news. Prior to that, drug companies had not paid fees to its regulators. With PDUFA 1, the total funding provided by industry was a small percentage of the total FDA budget for drug review, but the additional funding enabled FDA to add resources and improve processes. As a result, transparency and efficiency improved significantly. The first form of PDUFA was considered to be a real win for FDA, industry and patients.
By law, PDUFA expires, or “sunsets” every five years. With the success of the original law, we set out to build on it over the subsequent years in PDUFA 2, 3 and 4. I think it is fair to say that the incremental gains of each successive reauthorization have been real but diminishing, while the amount of the fees paid by industry have continued to grow.
Today, user fees represent almost 65 percent of FDA’s drug review budget. Critics on all sides argue that it is far too big a number, that a regulated industry should not support its own regulatory body at that level. Federal budget pressures being what they are, that percentage is more likely to increase than decrease.
So now we are embarking on PDUFA 5. It may prove to be the most complicated negotiation yet.
This reauthorization occurs at a time when there is significant public interest in the activities at FDA. With a series of highly visible enforcement actions taken on well known drugs and a focus on drug safety, coupled with accusations that FDA/industry relations are inherently compromised by the level of funding provided by user fees, there are more parties than ever interested in providing input.
On top of this, the pharmaceutical industry emerges from the healthcare reform process viewed (I would argue unfairly) by some as the beneficiary of a political deal negotiated to the detriment of the public.
This perception matters, because it reinforces an inaccurate view of the relationship between FDA and the companies and medications it regulates. PDUFA 5 may end up being very contentious. There may be calls for the elimination of user fees, for even more stringent safety requirements without consideration of patient benefit, for less interaction between FDA and industry. All very bad ideas if one is interested in the development of important new medicines for patients.
I can tell you with great conviction and I have the scars to prove it: FDA is a highly independent and rigorous regulatory authority. The process of developing new medications is risky and unpredictable, and FDA’s standards for safety and efficacy, both before and after approval, are higher than ever.
Ideally, the federal government would provide funds sufficient to operate the world’s most scientifically advanced regulatory body. But, for whatever reason, we citizens have not demanded that. The industry continues with PDUFA because it is the best way to ensure that FDA has the resources it needs to allow us to bring our innovations to patients.
Here we go. Good luck to us all.