May 30, 2012

Congress on the Verge of Enacting Sweeping FDA Reforms

Holland & Knight Alert
Michael J. Werner

The U.S. House of Representatives today is expected to pass its version of the Prescription Drug User Fee Act (PDUFA) by an overwhelming majority. With Senate passage of its bill last week, Congress is well on the way to enacting this critical legislation.

Designed to codify the user fee agreement negotiated between industry and FDA every five years - which sets fees for companies seeking FDA review of their products in exchange for FDA’s commitment to meeting review time performance goals - the PDUFA bills would also institute broad reforms and policy changes. Therefore, after final passage of the legislation, FDA will be developing regulations and guidance to implement these provisions. Below is a summary of key provisions of the legislation.

User Fees

The bills codify the negotiated agreement on user fees between industry and FDA. They reauthorize the prescription drug user fee program, allowing the FDA to continue to collect fees from industry to support the review process for human drug applications from fiscal year 2013 through fiscal year 2017. In exchange for fee increases, FDA agrees to:

  • meet performance goals regarding the timely review of drug applications
  • increase interaction between drug sponsors and FDA during the review process
  • improve engagement with patients, including those with rare diseases
  • undertake an assessment of its performance

In addition, the bills for the first time create user fees to support reviews of biosimilars - new versions of already-marketed biologics - as well as for generic drugs.

Accelerated Approval

Both bills codify a process whereby FDA can expedite reviews of marketing applications for drugs that treat serious or life threatening conditions at the request of the sponsor.

During the accelerated approval process, FDA can approve this product if it has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or a clinical endpoint that can be “measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality” or other clinical benefit taking into account the severity or rarity of the disease or condition and the availability of alternative treatments. Note that accelerated approval may be subject to a sponsor being required to perform post-approval studies and submit promotional materials prior to dissemination.

FDA is required to issue draft guidance implementing this process within one year. In addition, the legislation calls for an independent analysis of accelerated approval and its impact on the development of innovative treatments.

Both bills also would require FDA to expedite the development and review of a drug designated as a “breakthrough therapy.” To achieve this designation, a drug must be intended to treat a serious or life-threatening disease or condition, and preliminary clinical evidence must indicate that it may demonstrate substantial improvement over existing therapies.

Rare Diseases

Both bills contain provisions specifically designed to promote drug development for rare diseases. For example, the accelerated approval provisions noted above require FDA to consider the “severity or rarity” of the disease or condition being treated. In addition, both bills require that when FDA is developing its guidance to implement the program, the agency must specifically take into account issues relating to how the process will apply to development of products for very rare diseases. Moreover, both require FDA to ensure that opportunities exist for consultation with external experts to aid in its review of products for rare diseases.

Both bills also implement the provisions in the negotiated agreement between FDA and industry that call for utilizing user fees to address rare disease issues such as training FDA staff to better handle orphan drug applications. Moreover, FDA is expected to increase rare disease patient and advocate involvement in application reviews and add new staff for outreach to sponsors.

A major difference between the House and Senate is that the House bill provides the sponsor of a rare pediatric disease product with a voucher that entitles the sponsor to priority review of any other product (FDA must act on the application within six months). To qualify, the rare pediatric disease product cannot have an adult indication and the disease must primarily impact those up to 18 years of age. Companies that receive a voucher can use it for their own future products or transfer/sell the voucher to another sponsor.

Supply Chain Security

The Senate bill contains language to establish a uniform, national system of “track and trace” to monitor drugs (and biologics, devices, etc.) through the supply chain using serialization and 2D bar codes. After a phased-in implementation over the next few years, all manufacturers and wholesalers will be required to use this system. Note, however, that this language is simply a placeholder while negotiations between FDA, manufacturers, wholesalers, pharmacies and other stakeholders continue.

Supply chain stakeholders ? including manufacturers, distributors, third-party logistics providers and pharmacies ? have been advocating for a national system using serialization because it establishes a uniform tracing methodology that can effectively protect patients from counterfeit or adulterated drugs, in contrast to the patchwork of inconsistent state rules currently in place.

Adding to the sense of urgency, the state of California has recently passed a law establishing its own tracing system unless a federal law is enacted by 2015.

The House bill contains no supply chain provisions.

Drug Shortages

Both bills address drug shortages, though their provisions differ as discussed below.

DEA Quotas

The House bill acknowledges the impact of U.S. Drug Enforcement Administration (DEA) quotas on the supply of controlled substances such as products to treat ADHD as well as pain. The House bill states that 30 days after receiving notice of a drug shortage, the HHS secretary will determine if the shortage is caused by quotas of controlled substances, and if so, ask the attorney general to increase aggregate and individual quotas to address the shortage. If the attorney general does not believe an increase is needed, he must provide a written explanation to the HHS secretary.

A manufacturer of a schedule II product that is on the FDA drug shortage list can request an increase in aggregate and individual quotas, to which the attorney general must respond in at least 30 days. If the attorney general does not believe that the level of increase is necessary, he must provide a written explanation that the HHS secretary will put on the FDA’s website

Six months after enactment of PDUFA and annually thereafter, the attorney general will submit a report to Congress regarding quota requests, grants, denials and reasons for those denials. The report will also address coordination between DEA and FDA on efforts to alleviate drug shortages.

Although the Senate bill doesn’t address the quota issue, separately, Sens. Grassley (R-Iowa) and Whitehouse (D-R.I.) sent a letter to the U.S. Government Accountability Office (GAO) requesting a study on the impact of DEA quotas on shortages of controlled substances.

Drug Shortage List

Both bills modify existing rules regarding FDA’s drug shortage lists, though here again, the provisions between House and Senate bills differ.

For example, the Senate bill allows the secretary to include biologics on the shortage lists while the House doesn’t. In addition, the Senate bill requires the secretary to maintain records of drug shortages, including the number of manufacturers that reported shortages, the particular drugs in shortage, the factors contributing to the shortages and other matters.

The House version creates a drug shortage list that will detail the name of the drug in shortage, the manufacturer, the estimated duration of the shortage, and the reason for the shortage, which could be any of the following:

  • requirements related to complying with GMP
  • regulatory delay
  • shortage of an active ingredient
  • shortage of an inactive ingredient
  • discontinuation of the manufacture of the drug
  • delay in shipping of the drug
  • demand increase for the drug


Despite the sweeping nature of many of these provisions, the PDUFA debate thus far has avoided the rancor and partisanship faced by other health legislation. This is likely to continue over the next month as Republican and Democratic negotiators from the House and Senate meet to iron out the differences between their bills. A final bill is expected to be signed by President Obama by July 4.

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