Drugmakers to pay FDA more for tests
They agreed to a 30% increase, including a fee for reviewing TV commercials for the first time. Congress must approve.
With a health-care showdown looming in Congress, the pharmaceutical industry agreed to pay 30 percent more for product-safety reviews, including a first-ever fee for scrutiny of its TV ads, officials said yesterday.
The bigger-than-usual increase in fees still has to be approved by Congress, where Democratic leaders have vowed to tighten rules on drug safety and push down drug prices in a move that would cut into industry profits.
But the new fee schedule, while required every five years under federal law, may help the industry counter calls for tighter controls.
"Our position is, the current system is working quite well," said Alan Goldhammer, a vice president at the industry's main lobbying group, Pharmaceutical Research & Manufacturers of America, or PhRMA, which agreed to the new rates.
If enacted, the Food and Drug Administration's revenue from application fees would undergo its greatest expansion since the user-fee system was created in 1992. Already, the industry accounts for 56 percent of the FDA's annual budget for drug reviews and expert staff.
Companies pay the fees when they apply for FDA review of new drugs, with amounts varying according to the specific products. Most companies keep the actual figures secret, but the cost can exceed millions of dollars a year. The new rates almost certainly would mean a sizable increase for each company.
The fees, under the Prescription Drug User Fee Act, or PDUFA, have been credited with stoking a huge increase in drug launches. But critics have said the fees also have made the FDA beholden to drug manufacturers and led to reckless approvals.
After months of negotiation by the FDA, PhRMA, and many consumer and patient advocacy groups, the industry committed to pay the FDA at least $392.8 million a year, or an increase of $87.4 million over the current base rate.
The increase would include $29 million for FDA scrutiny of drugs already on the market, or so-called post-market reviews. The FDA said it would hire 82 more experts to sift through real-world data from insurance firms, physicians and manufacturers to look for patterns of safety problems - a task it has been hard-pressed to do.
About $20 million in additional fees would go for new staff to handle, among other things, a crush of "consultations" with individual drug companies over their applications, the FDA said.
Nearly $12 million is needed to cover rent and other costs of the FDA's move to a new facility in Silver Spring, Md.
About $4 million would go to information-technology improvements meant to enable better FDA review of applications and safety data.
In a separate new program, the industry agreed to pay roughly $6 million a year in fees to support FDA reviews of drug commercials on TV, which under federal law must contain risk information about drugs without misleading consumers about benefits.
FDA reviewers have been overwhelmed in the last two years trying to keep up with commercials submitted by companies for review before airing, as requested - but not required - by the FDA. The new funds will enable the FDA to hire 27 more staffers. The program will not apply to print ads.
The total $399 million paid in user fees would be roughly 30 percent more than last year's $305 million. Until now, the average annual increase has been about 14 percent, according to FDA figures.
"The proposed recommendations would support significant improvements in FDA's ability to monitor and respond to emerging drug-safety issues," said Health and Human Services Secretary Mike Leavitt, who oversees the FDA.
Critics of the industry, however, bemoaned the FDA's deeper reliance on the drug companies it is supposed to regulate.
Sen. Charles Grassley (R., Iowa) called the new fees "a modest contribution" to drug safety but far from satisfactory. "To make sure the FDA is doing everything it should to keep American consumers safe, comprehensive reform of the agency's structure and culture is needed," Grassley said.
Steven Galson, director of the FDA's Center for Drug Evaluation and Research, said the FDA would not back down from requesting more money in Congress despite getting the industry boost.
"Absolutely not," Galson said when asked whether the $1.87-billion-a-year FDA would ask for less. "We've always said we're agnostic about where our resources come from. We're still aggressively engaged in that budgetary process."
At least one major drugmaker called the fee increase fair, but expected it to become part of a broader legislative package on health-care costs and safety.
"It is going to mean a significant increase in the cost to us," said Ian D. Spatz, vice president of public policy at Merck & Co. Inc. "We're trying to pay our fair share of regulatory costs that are related to our medicines."
Who Funds Drug Reviews
The Food and Drug Administration now gets more than half of its funding from user fees paid by the pharmaceutical industry. Amounts below are for the FDA's drug division.
Division Share from Share from
spending appropriations user fees
1995 $213,894,333 65% 35%
1996 $237,342,417 64% 36%
1997 $232,248,735 64% 36%
1998 $253,451,635 60% 40%
1999 $282,184,575 57% 43%
2000 $314,922,122 53% 47%
2001 $323,404,657 50% 50%
2002 $347,627,499 53% 47%
2003 $409,441,910 51% 49%
2004 $436,856,536 47% 53%
2005 $480,952,184 44% 56%
SOURCE: U.S. Food and Drug AdministrationEndText