Five Things Industry Can Do to Support True FDA Reform, and Restore Public Confidence

10/10/11Follow @xconomy

The FDA is one of the easiest punching bags in American politics. Depending on your point of view, it’s either too hard on business with its unreasonable demands, or too soft on those predatory drug companies seeking to profit off Grandma’s illness regardless of whether the products are safe.

When it does its job well, the FDA is like an umpire in baseball. Nobody notices. When it screws up, it’s screaming headline news. The polls show various scandals have taken a toll: About half of the U.S. public thinks the FDA is doing a bad job, and the perceptions are that drug companies put profits ahead of patients.

Not surprisingly, the FDA spends most of its time in a defensive crouch, fending off attacks from all angles, generally resisting most change. But last week it did an unusual thing, by sticking its neck out a couple inches. It suggested, in a 40-page strategic outline, a few ideas for how it can do a better job stimulating (not smothering) life sciences innovation in the U.S. It intends to do this while also ensuring the safety and effectiveness of new medical products.

FDA commissioner Margaret Hamburg has been feeling pressure behind the scenes from venture capitalists and their industry allies for the past 18 months or so. Sure enough, a day after she released the FDA report, the National Venture Capital Association released results of a survey that said the FDA—plagued by long delays, unpredictable decisions, poor communication, and excessive caution in new product reviews—has become the No. 1 reason why 40 percent of U.S. venture capitalists have cut their investments in life sciences the past three years, and that the same percentage plan to continue cutting U.S. investment the next three years. Jobs have been lost, and even more will be shipped overseas unless something is done at the FDA, the investors said.

Developing new drugs or medical devices has always taken a long time, cost a lot of money, and been risky. But it’s gotten worse lately. Government and industry now pour $95 billion a year into biomedical R&D, and somehow society keeps getting a stagnant number of new drugs coming out the other end. It’s a serious concern for patients.

The FDA’s report has some sensible, albeit small-bore, non-controversial ideas about how it can do a better job making this whole process work better. It says it wants to improve its outreach to small businesses; create a fast approval pathway for certain targeted therapies; improve data sharing among its divisions; and better train its scientific reviewers. The report is light on the details, but at least one VC who’s been active in pushing for FDA reform said it’s a start.

FDA commissioner Margaret Hamburg

“The FDA has finally acknowledged it has been a damper on innovation and has hurt the ability of American companies to grow and be competitive,” says Ross Jaffe, a managing director with Versant Ventures, a life sciences venture firm with $1.6 billion under management. “It’s an encouraging sign that things may hopefully things will start getting better,” he says, adding that the FDA of today doesn’t respect its own prior precedents, adds unpredictable new requirements, and seems oblivious to the time and money it takes businesses to respond to its questions.

I worry that the FDA could get distracted from its main job of ensuring product safety and effectiveness, if it cares too much about industry’s wishes. And there are plenty of companies willing to cut corners and do the quick-and-dirty thing whenever they can slip it by the FDA, so there has to be a well-resourced, tough watchdog on alert.

But if VCs and biotech and pharma lobbies are really serious about reforming the FDA, so that it can be a tough-but-fair regulator that instills public confidence in healthcare products, then the industry needs to quit heaping all the blame on the FDA and start accepting some responsibility of its own. The FDA depends on taxpayer support, so it needs to be sensitive to public sentiment. If the public is more confident in a more accountable FDA, I think you’d get a more efficient and predictable body.

Here are five suggestions for accomplishing that (many of which have been bandied about widely before) that I think the industry could get behind:

1. Support an increase in the FDA budget. Industry at various points in time has supported this idea, and has agreed to pay a lot in application user fees, but always with strings, and never much enthusiasm. Just for perspective, the agency requested a $4 billion budget for fiscal 2011, less than half of what the nation spends each year on the Coast Guard. Trying to regulate one-fourth of the economy takes a lot of money. Even after numerous safety debacles (Vioxx, Avandia), the FDA still doesn’t have a serious modern database that can capture and analyze data on adverse drug reactions for marketed pharmaceuticals in the U.S. It’s truly a national embarrassment that so little effort has gone into solving this problem. Adverse event reports are starting to spill out into the open from patients on Facebook, and nobody really knows what do about it. I just wrote recently about a California startup that is building a deep adverse events database on its own, with a plan to charge for access. The FDA ought to be able to do this itself, and bring its outdated Medwatch system into the 21st century. It ought to catch safety problems in something close to real-time, and update drug warning labels accordingly. And the industry should support this because it’s the right thing to do.

2. Voluntarily ban all direct-to-consumer TV advertising. Pharma companies helped create a new public perception about pharmaceuticals in the last decade through their annoying and misleading TV ads. The pharma companies helped create the national expectation, through ads that exaggerate benefits and downplay risks, that prescription drugs are like taking Honey Nut Cheerios. So guess what? People get righteously indignant and shocked when they find out that the drug that’s supposed to help you dance at your daughter’s wedding actually raises your risk of heart attack and stroke. These ads … Next Page »

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  • http://www.biotechtranslated.com Biotechtranslated

    Luke,

    I love your articles and I think you bring a lot of fresh thinking to the industry. However, I have to disagree with you on points 3 and 4.

    Point #3
    I think you’re over simplifying the issue when you say “The pharma industry has [been] putting money in the pockets of leading U.S. physicians in an attempt to curry favor with these “thought leaders,” so they will influence peers to prescribe certain new drugs.”

    Drug companies are selling a product and unless they know what the customer wants (physician being key customers), they’ll never be able to produce profitable products. So, they develop relationships with high profile physicians so they can learn how their drug will fit into real-world clinical practice. Often these relationships involve “honoraria”, or payments for the physicians time or travel arrangements. Do these payment influence physician decisions? Sometimes, but I think many of these physicians would laugh at the thought of a $5K payment putting them in the pocket of the drug companies. Experts are experts for a reason and it shouldn’t be surprising that their time is in demand and they should be compensated for it. I think appropriate conflict of interest rules are warranted, but to say you can’t sit on an FDA committee because you hold pharma stock in your retirement fund is going overboard.

    Point #4
    The complete response letters often contain confidential information that a company doesn’t want made public (and shouldn’t have to make public). You could redact the letter’s, but then I would imagine they would look like the documents in the CIA releases where every other word is missing. Maybe a better way would be for the FDA to create a rating system (which would be public) where complete response letters would categorized as to the reason for the rejection along with some detail as to what’s required for approval (i.e. “The second phase III trial had inadequate statistical significance. A new trial will be required and unless the significance is larger than X%, the drug will not be approved). It provides enough info to the public without the need to release the entire letter. I agree that relying on the company for the information is a bad idea since they will also put it in the most positive light.

    Mike

  • http://Yahoo James Keeney

    Luke seems to be blaming industry the most for the slowdown in new drug approvals. He seems to forget that recent headlines, like the government thinking of limiting drug exclusivity to only seven years following drug approval, serve to discourage investment in drug and biotech R&D. Even twelve years of exclusivity is too short for companies to recoup expenditures on average of $1.5 billion to develop new drugs, let along fund ongoing R&D. The answer is to revise our patent laws on drugs in such a way that they resemble copyright laws, in other words, unending exclusivity. You’d shortly see prices on future new medications tumble from current current ridiculous levels and more investment in R&D were companies to have longer periods of exclusivity.

  • http://Yahoo J. Keeney

    Luke seems to be blaming industry the most for the slowdown in new drug approvals. He seems to forget that recent headlines, like the government thinking of limiting drug exclusivity to only seven years following drug approval, serve to discourage investment in drug and biotech R&D. Even twelve years of exclusivity is too short for companies to recoup expenditures on average of $1.5 billion to develop new drugs, let along fund ongoing R&D. The answer is to revise our patent laws on drugs in such a way that they resemble copyright laws, in other words, unending exclusivity. You’d shortly see prices on future new medications tumble from current ridiculous levels and more investment in R&D were companies to have longer periods of exclusivity.

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    Biotechtranslated—thanks for the comment. On #3, I have heard many physicians deliver that line about how “money doesn’t influence me, I only do what’s best for my patients.” These people are kidding themselves. Lots of studies over the years have shown that even tiny gifts like pens do have an influence. The public knows this, and it contributes to the perception that this is an insider’s game that puts vested interests ahead of the common good.

    I agree on #4 that a heavily redacted document might be no better than what we have today. A rating system on complete response letter might work, but I wonder if it might be even better for FDA to write a public version of the complete response letter that puts things in plain English. Like “Company X’s application is denied to market drug Y because it needs to run a second Phase III trial to confirm the results seen in previous trials.” Then it could offer an explanation of what the next steps look like.

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    J Keeney—I’ve always been curious where the 12 years of market exclusivity thing came from in the healthcare reform act, other than from BIO and PHRMA lobbyists. I haven’t really studied this one, but my sense is that 12 years of market exclusivity will help companies generate even more money from the life cycle of a product than they would under the existing patent system. It’s nothing for companies to complain about, that’s for sure.

    Allowing patents to expire may discourage investment in biotech R&D, but it’s just not practical to have perma-patents on drugs. The healthcare system is already broke, and getting in much worse financial trouble as the boomers age. The system depends on a steady supply of cheap generic drugs, for something like three-fourths of the drug supply. That trend will only continue. Orphan diseases of true unmet need is where much of the money can still be made in biopharma R&D.

  • http://Yahoo James Keeney

    Luke – Generics used to account for 40% of all prescriptions 10 years ago, and now they account for 75%. Why? The reason is that the generics industry has been sheltered in this country and allowed to capitalize on the increased flow of patent-expiring drugs introduced by R&D-oriented drug and biotech companies in the late 80s/early90s. And what discoveries have the generic companies brought to market in the interim – nada, save lower prices. And, most of the components of generic drugs are made abroad in India, China and Israel.

    I maintain that had “perma-patents” been in force during the same period, R&D-oriented companies would have long ago lowered their prices on existing drugs to just above generic prices. Moreover, they wouldn’t be now introducing their new medications at the ridiculously high prices that they are forced to charge today in order to recoup costs and fund ongoing R&D; let alone allow their shareholders the opportunity of making a nasty capitalist return on their investment.

  • David

    Great Article, Luke! I agree with all of it.

  • Sally M.

    As a former recent employee of the FDA I completely agree that the FDA has gross mismanagement, terrible communication, and most importantly has untrained and biased employees who do in fact hurt the ability of American companies to grow and be competitive.

    However, I disagree about increase funding to the FDA. The FDA is a joke. They never are the ones to catch food outbreaks, drugs take years to get approved and regulations haven’t changed from the 1970′s. There is an insane amount of overspending, mismanagement and ability for under-trained investigators to “flip-flop” their decisions during investigations which determine companies’ fate.

    When I say mismanagement I give examples such as the Director of Investigations of the Chicago District Office FDA, Ricki A. Chase (“Chase-Off”) runs all FDA operations for the third largest city, one of the largest import stations (O’Hare) and all of Illinois. She is currently being sued by a multi-million dollar drug firm in Utah for submitting false evidence, submitting evidence based on a personal vendetta and gross exaggerations during an investigation. You can’t really ever fire federal employees so to get her out of Utah she got promoted! Ha, a joke. Further, I worked with an investigator who failed our open-book, open-notes investigator entrance exam 3 times! They couldn’t fire him because he was in FDA for a year so he is there to stay! FDA is graciously funding his six-figure pay while he does 10% of the work normal investigators would accomplish. My Supervisor was out of the office on sick leave, which you all paid his six-figure income, for over a year and a half. You can believe me or not. Google “Ricki Chase-Off” and you will see. All information and documents are available to the public under the Freedom of Information Act. All you have to do is call an FDA office if you would like to see! I could go on and on…

    More funding to FDA will not solve all of these problems. Actually, the private companies who audit the same firms as the FDA have more control, better audits, and improved results of safety and are structured in a way to BENEFIT private industry while maintaining safety. It is funny, manufacturing firms care more about private industry audit results and ratings then when the FDA comes in (well that is unless the FDA investigator that day is feeling like doing their job or being a jerk). We really don’t even need the FDA for much!

    The FDA has terrible control over our food, drugs, devices and cosmetics. Further, and of most concern, should be their concerning lack of control over imported products. I believe in reducing FDA funding, especially considering our nation’s economic situation, immediately.

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  • http://www.epcotint.com Girish Malhotra

    Industry has to have manufacturing processes that are properly designed for the chemistry. Today it has chemistry that is fitted in the available equipment. This causes quality issues and prevents companies to practice “good manufacturing practices” in earnest. Right equipment and chemistry will lower costs and improve their profitability. Industry has not done that as consumer pays for their inefficiencies. Right processes will reduce the regulatory load.

    Yes industry can do lot more on its own at no extra cost.

  • http://www.visionarypharma.com A. L.

    I agree with many of Sally’s comments. A s a former FDA employee, I have also seen the mismanagement of funds, inefficiency of processes, favoritism and redundancy. There is no accountability and very unfair practices. Increasing funding would promote these practices even more. Instead, FDA must improve its quality systems and management practices and processes, the same ones that FDA investigators are charged to evaluate when they conduct inspections. You have to walk the talk not just talk. The management style is also very much like conquering by dividing. Anyone who comes from industry does not stay long unless they are close to retirement.

    I also think that consumers need to educate themselves as well. Drugs are not panacea and all have side effects. Why do they believe the commercials? Do they believe those for other products? The doctors are the middlemen in all this and the experts and have to honor the oath they gave. They need to have all the information though and maybe the package insert and medication guide are not enough. I bet they get more information from the industry albeit not the right information always.

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    A.L. —thanks for your comments about the FDA mismanagement. I’ve been wondering about this for a while, too. If you look at a historical timeline of FDA commissioners, one thing you’ll notice is that since David Kessler (1990-1997), not one commissioner has served more than 2.5 years in that job. Hamburg, who started in May 2009, is already the longest serving commissioner since Kessler, and there are a lot of gaps in the leadership timeline.

    http://en.wikipedia.org/wiki/FDA_commissioner

    Maybe some highly capable executive from industry would be a good choice to head up the FDA in the future? I know it would probably be impossible to get such a commissioner confirmed by Congress, because people would accuse a commissioner from industry of having conflicts of interest. But if you could find a principled and highly effective manager from industry, he or she could stake out a position as a competent and tough-but-fair regulator. Over time, that might go a long way toward fixing some of the problems A.L. describes above.

  • ET

    I agree with all of your suggestions except #3. Reducing the pool of eligible people to serve on advisory committees would not help the process. Advisory committee meetings are expensive and time-consuming to set up, and can take months to arrange after the FDA has completed its review of a product, adding additional delay to the timeline.

    Conflict of interest is definitely a big issue, and a physician who has been directly funded by the company under review should certainly not serve on an advisory committee. But the rules are already tight enough.

    Re the earlier comments about mismanagement, perhaps there is a place for independent auditors in investigations. But the survey suggested that VCs are concerned about time to approval, which is mainly controlled by the drug and device reviewers at FDA. The reviewers are separate from the field inspector offices.

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