Sequestration Has Less Impact on FDA? Just Not True

“The Hill” newspaper recently reported that: “a survey of federal budgets devoted to developing and enforcing regulations found that many agencies will spend more in 2013 and 2014 than in previous years, indicating that the writing and enforcing of new regulations is largely unimpeded by the massive cuts, known as sequestration.”

That certainly sounds authoritative…until you look at the analysis. In fact, the report’s authors appear to know nothing about the federal budget and have used inherently unreliable data in calculating FY 13 and FY 14 spending levels.  One can only hope that the authors—allegedly academic experts--know more about regulatory policy than they do about federal budgets.

When I first saw the “regulatory spending analysis” from George Washington University in DC and Washington University in St. Louis, I expected to write about how FDA’s budget is mostly not regulatory spending. After all, what fractional part of the FDA’s budget is actually devoted to “writing and enforcing regulations?” And the claim that FDA is growing is highly suspect, as addressed below.

Equally troubling to the “innovation economy” is that funding for the Patent and Trademark Office is counted as regulatory, placing PTO on par with the Securities and Exchange Commission (see page 6 of the report).  It is not a subtle nuance to say they are fundamentally different.

FDA and PTO are the “federal regulatory agencies” projected to have the largest growth and are the linchpins of the GW/Washington University study. If most of their budgets are not regulatory spending, then it is impossible to draw conclusions about how regulatory agencies are faring under sequester.  

But I can’t leave it there because the analysis is riddled with serious methodological issues.

The first of many errors is the use of the proposed spending levels in the FY 14 President’s Budget Request as the measure of what agencies will have to spend in fiscal year 2014. One example of the variation this creates: FDA’s “regulatory growth” is calculated by including the President’s request for more than $200 million in food user fees, a proposal that has drawn no Congressional interest.

More broadly, no one really knows what the actual FY 14 spending levels will be. They are dependent on the resolution of the difference between the House and Senate budget bills (about $90 billion in FY 14 discretionary spending), the actual spending levels adopted by Congress in appropriations bills, the vagaries of funding under (likely) continuing resolutions, and the very real threat of yet another sequester in FY 14. Most federal agency heads would be exceedingly grateful to wind up with as much money as the President requested for them.

The study’s assertions about the FY 13 spending levels are equally unfounded. The GW/Washington University report uses estimated “outlay” numbers contained in the appendix to the President’s FY 14 budget. Since these tables were compiled before the passage of the FY 13 Ag/FDA appropriations or the final FY 13 continuing resolution, the GW study is using estimates based on the President’s FY 13 request (as ungrounded in reality as the FY 14 request), perhaps modified by part-year CR’s passed in late 2012.

In short, the actual FY 13 spending levels were not used in the analysis (indeed, weren’t even determined at the time of the President’s FY 14 budget request). So, the already-unreliable numbers in the report are unadjusted for the subsequent rescission and sequester. How can the authors conclude that “agency spending levels for regulation have increased modestly despite sequester,” without having reliable numbers that reflect the sequester?

Mark Twain once observed: “There is something fascinating about science. One gets such wholesale returns of conjecture out of such a trifling investment of fact.” Thinking of the GW/Washington University study, I can only say “amen.

A Salmon on Every Plate/The Hard Road of Innovation

Chicken was once an expensive delicacy. In 1928, America’s quest for a better diet and a better standard of living was summarized by the campaign promise of “a chicken in every pot.” Today, chicken is a ubiquitous, low-cost source of protein, which we largely take for granted. Despite depletion of ocean-based stocks, fish hold similar potential.

To begin this transformation, FDA must approve a scientifically-based innovative product—a faster growing genetically-engineered (GE) Atlantic salmon. When FDA Matters wrote about this subject 18 months ago, I believed the agency was near to approval of this first-ever food product from a GE animal. It is still not resolved and there are implications for all innovations that require FDA approval.

Final comments on the “environmental assessment” of GE salmon are due to FDA in April. Hopefully, this is the final procedural step before a decision. Approval could come mid-year or may take months or may not happen at all. The agency is still dealing with the political fall-out of questionable safety claims from environmental groups…and politicians and companies trying to protect the market for Pacific salmon.

The health benefits of fish are well-known. They are also a valuable source of dietary protein. However, our oceans are over-fished and aquaculture is now the source of almost 50% of the fish consumed worldwide. Expanding the availability of fish products meets a growing demand and is an important component of improved nutrition for Americans.

The proposal before FDA is for a genetically-engineered salmon that is biologically and chemically identical to the Atlantic salmon that is served in restaurants and at our own tables. The only difference is the inclusion of a Chinook salmon gene that provides the potential to grow Atlantic salmon to market size in about half the time.

Opponents have labeled the product as “Franken-fish.” It’s a catchy slogan that tries to devalue over a decade of scientific research and undercut many years of FDA review. Ultimately, the appeal is to emotion—that something dramatically new and different must automatically be dangerous. At some point, scientific review and product safeguards should be sufficient for FDA to make a decision that is based on facts and not fears.

Decisions about new and different products are hard for FDA, as I wrote in a column entitled: “FDA and Things that Might Go Bump in the Night.”  Among other things, I reminded readers that in the late 1970’s and early 1980’s, biotechnology was subject to the same types of concerns and evaluation as FDA is currently giving nanotechnology, GE food and synthetic biology. While there are risks to saying “yes” to innovation, there are also potentially large consequences to saying “no.” Imagine today’s world without biotechnology.

Approval of genetically-engineered animals will always require serious consideration of safety, environmental and ethical issues.  In this case, no one questions the legitimate demands for plentiful, high quality supplies of salmon. Further, the sponsor has agreed upon multiple redundant safeguards. For example, the GE salmon will be sterile females and grown in inland fisheries without access to either wild or farmed salmon stocks.

And yet, the years have piled up, waiting for FDA to be ready to say “yes” or “no” to GE salmon. This isn’t intended as a complaint about FDA…it’s really more of a reminder for the rest of us that a pro-innovation culture at FDA requires hard work from stakeholders.

Scientifically-based, well developed applications are a must. Those of us who support innovation must also make common cause. This is both policy-driven (e.g. by supporting development of regulatory science) and procedural (e.g. not complaining too loudly when FDA takes a somewhat longer deliberative path than we might like).

Further, brave thoughtful decisions by FDA are easier if they are met by public and stakeholder support. GE salmon may be a food, but FDA’s decision affects the environment in which drug, vaccine, and device innovation are also being judged.

Thus, the current fight is not just about “a salmon on every plate.” It is also about whether FDA has the resources and support to sort through the many “alternative futures” represented by the products submitted for its approval.

Steven

More information about salmon, aquaculture, regulation of genetically-engineered foods and the current controversy can be found at: http://www.fda.gov/AdvisoryCommittees/CommitteesMeetingMaterials/VeterinaryMedicineAdvisoryCommittee/ucm222635.htm and http://www.aquabounty.com/PressRoom/#l7

A final note: I almost never write about or even mention individual products because FDA Matters’ aim is to analyze and comment on policy, regulation, and FDA trends.

This column is an exception because I believe that FDA’s consideration of GE salmon is an important part of understanding the agency’s role in innovation and how such decisions can become far more difficult that they should be. I have no clients or financial interests in development of GE food products.  On the other hand, a salmon dinner is a favorite.

Funding Cutbacks at FDA: A Sequester Primer

At a time when FDA’s responsibilities continue to grow rapidly, the agency has been caught in an across-the-board reduction (sequester) in federal discretionary spending, effective March 2, 2013. Although Congress may yet reverse course and restore money to affected federal agencies, this is not considered a high probability.

Altogether, FDA will lose about $209 million between now and September 30, 2013. This will reduce inspections, slow drug and device approvals, and restrict implementation of the Food Safety Modernization Act and other recent legislation. Because of the many questions about the process and outcome, this is FDA Matters’ primer on the sequester of FDA funds.

How much of FDA’s FY 13 (current year) money is involved and which funds are cut? 

Sequestration	FY 13 CR (to 3/27/13)	Less sequester	Net amount
Budget appropriations	$2.521 billion	$ 126 million	$2.395 billion
User fees (inc. tobacco & generics UF)	$1.647 billion	$   82  million	$1.565 billion
Totals	$4.168 billion	$ 209 million (rounded)	$3.960 billion (rounded)

Will all programs within FDA be cut by precisely the same amount? Generally, yes.  Unless Congress or OMB change the sequester rules (and they might), each Center and the Commissioner’s office will be cut by about 5.0% to achieve the $209 million reduction. However, fixed items (rent, utilities, etc.) will still cost the agency the same amount, creating an internal deficit. This will require additional cuts (above the 5.0%) from the agency’s program activities.

Beyond the specific dollars, why will the impact be greater on FDA than on most federal agencies?  FDA is a staff-intensive organization. More than 80% of its funding is spent on personnel-related costs. Much of the remainder is fixed costs, rather than grants or contracts that could be cancelled or cut back. Many federal agencies are hoping to meet their sequester obligations without personnel cutbacks. FDA will do its best to follow this model.

FDA has said that no employees will be furloughed as a result of the sequester. How is that consistent with the agency’s staff-intensive nature and the depth of the cuts? To absorb the $209 million without furloughs, most of the savings will have to come from unfilled and/or delayed filling of vacancies—a process that probably started months ago. Many offices are probably already short-staffed and most will become so as we get deeper into the sequester. Hence, the predicted impact of the sequester is slowdowns in food (and other) inspections, drug and device reviews, and implementation of new FDA legislation and its global responsibilities.

In offices where staff reductions are needed as part of the sequester but no vacancies exist, some appropriately qualified employees may be saved through internal transfers into slots that can be paid for by the Generic Drug User Fee program (FDA’s one big growth area this year and for which it will definitely need to be hiring).

How would you characterize FDA’s “story” about the impact of the sequestration?  While $209M is a large cut with severe consequences, it may well be achieved by a thousand little bits and pieces, a vacancy here, a training contract there, a bunch of cancelled plane flights, some underspending early in the year, etc. It doesn’t make for a very dramatic story, which may account for why FDA has been relatively quiet while other departments and agencies have been talking about the severe impact of the sequester cuts.

Conclusion

If food is less safe…if drug and devices reviews go more slowly….if problems with imports increase....and if regulatory science and agency modernization stall….then there is a huge loss to the American people.

This loss is made larger by the knowledge that the agency’s mission is not static.  Congress has passed 6 new laws since 2009 giving FDA substantially more responsibility. Globalization and complex science makes the agency’s job larger and more difficult each year.

FDA staff wasn’t large enough to get the whole job done last year. Problems will  multiply quickly over the coming months as existing employees represent an every smaller proportion of the numbers needed to carry out this year’s and next year’s responsibilities.

Steven

*  For purposes of disclosure: I am one of the founders and serve as Deputy Executive Director of the Alliance for a Stronger FDA, www.strengthenfda.org, a multi-stakeholder group that advocates for increased FDA funding.  For more information on joining, contact me at sgrossman@strengthenfda.org.

Note that my duties with the Alliance are in addition to, and apart from, the work of my policy and regulatory consulting firm, HPS Group, LLC, which is the publisher of FDA Matters.  The views expressed in FDA Matters are my own, and those of HPS Group, and are not necessarily the views or positions of the Alliance.

FDA Funding: Agency Mission "At Risk", Says Alliance President

FDA’s mission is “at risk” because of inadequate funding. So says Alliance for a Stronger FDA President Diane Dorman, testifying before the FDA Science Board. Her remarks come 5 years after the Science Board made a similar declaration, concluding that decades of underfunding had left FDA without the resources to fulfill its mandate and make science-based decisions.

Congress responded with more monies for the agency, but since then the FDA’s workload has increased even faster. The current threat to FDA comes from two sources: four major new laws to implement since 2009; and changes in the environment in which FDA operates, notably acceleration of globalization and increasing scientific complexity.

Ms. Dorman’s remarks are reprinted below. If you care about FDA, FDA Matters urges you to read her testimony, go to the Alliance’s site (www.StrengthenFDA.org) and join.

Testimony of Diane E. Dorman

President, Alliance for a Stronger FDA

Before the

Science Board of the U.S. Food and Drug Administration

February 27, 2013

Good afternoon and thank you for the opportunity to address the FDA Science Board.

My name is Diane Dorman and I am President of the Alliance for a Stronger FDA, as well as Vice President for Policy at the National Organization for Rare Disorders. The Alliance is a 200-member coalition of all FDA’s stakeholders—consumers, patients, health professionals, trade groups and industry. Our sole purpose is to advocate for increased appropriated resources for the FDA.

When we started in 2006, FDA appropriations stood at slightly less than $1.5 billion for an agency tasked with overseeing 100% of drugs, vaccines, medical devices, and personal care products and 80% of our nation’s food supply. Altogether, the products and industries regulated by FDA account for nearly 25% of all consumer spending in the United States.

In short, FDA was the victim of decades of underfunding. It was quite small, despite its vital, complex world-wide responsibilities. Presidents weren’t asking for nearly enough money for FDA and Members of Congress were responding by giving the bare appropriations that had been asked for.

The Alliance’s goal was to change this situation by galvanizing the FDA’s broad stakeholder community to focus attention on the consequences of underfunding. We never doubted the accuracy of our analysis or the importance of our cause.

Nonetheless, it was immensely helpful when--18 months after our founding--the FDA Science Board released its own report in November 2007. As the media described it---the FDA’s own Science Board evaluated the agency’s capacities and responsibilities and declared that the agency’s mission was “at risk.”  The word “crisis” was often used and was an appropriate description of the situation.

Subsequently—and with the Alliance’s broad stakeholder advocacy—the prospects for FDA improved. Policymakers acknowledged the underfunding and acted aggressively to reverse it.

Today, in FY 13, the FDA receives slightly more than $2.5 billion in appropriated funding. This amount, might have met the FDA’s funding needs in late 2007 when the Science Board report was issued…BUT NOT NOW.

Today, $2.5 billion is dramatically less than the amount the FDA needs. For reasons I will describe in my testimony, the agency’s mission is again “at risk.” Even without the possibility of funding cutbacks, the American people will lose if FDA does not receive increased funding.

FDA Responsibilities Grow Each Year Because Congress Enacts New Laws

Two months before the Science Board declared FDA to be “an agency at risk,” the FDA Amendments Act of 2007 was signed into law, renewing the prescription drug and medical device user fee programs. It added a slew of new responsibilities, notably in food and drug safety, regulatory science, clinical trial registries, and establishment of a program for risk evaluation and mitigation strategies for new drugs.

The new responsibilities--combined with delays in funding of existing and new programming--had severe consequences. For example, FDA’s efforts in the critical area of drug reviews and approvals were slowed substantially for nearly two years, as demonstrated by this CDER chart.

The message from this experience is clear, albeit not surprising: new laws take enormous resources to implement. Once implemented, they permanently increase agency responsibilities.

Since 2007, Congress has identified a number of new needs that fall within FDA’s jurisdiction. At least six new laws have been passed in the intervening five years:

• Family Smoking Prevention and Tobacco Control Act (2009)
• Biologics Price Competition and Innovation Act (2010)
• Secure and Responsible Drug Disposal Act (2010)
• Combat Methamphetamine Enhancement Act (2010)
• Food Safety Modernization Act (2011), and
• FDA Safety and Innovation Act (2012), including re-authorization of the Best Pharmaceuticals for Children Act and the Pediatric Research Equity Act

This is hardly the end of it. Congress is already looking at a number of legislative initiatives for 2013, covering topics such as:

• Bio-security
• Track and trace/counterfeit products,
• Drug compounding, and
• Drug shortages.

 In addition, this year’s legislative requirement--renewal of two Animal Drug User Fees--is widely seen as a vehicle for other legislative mandates that FDA will need to implement.

The problem is not solely Congress’ urge to legislate. While some of our Alliance members may quibble with some of the new programs and requirements, overall I believe there is strong public and stakeholder support for Congress addressing unmet needs and emerging challenges. We all want safe foods and safe and effective medical products.

Ultimately, the real problem is Congress’ failure to acknowledge FDA as a funding priority despite the austere budget environment. Transforming FDA’s mission and responsibilities needs to be met by the necessary resources to do the job well. The current appropriations level is totally inadequate to make up for decades of underfunding AND all of the new laws enacted since 2007.

FDA Responsibilities Grow Each Year Because of Globalization and Scientific Complexity

Even were Congress not active in legislating new mandates for FDA, the agency’s mission and responsibilities would grow enormously each year for reasons unrelated to new laws. While the list is long, my remarks will concentrate on two: globalization and increasing scientific complexity.

One of FDA’s highest priorities since the Science Board report has been to re-align to adjust for the accelerating globalization in all product categories overseen by the agency. While there is no one way to fully convey the enormity of this shift and the resources required, I offer the following sample of key facts:

•      Food Imports are growing 10% annually. Altogether, 10-15% of all food consumed in the U.S. is imported. This includes nearly 2/3 of fruits and vegetables and 80% of seafood.

•      Device Imports are also growing about 10% annually.  Currently, about 50% of all medical devices used in the US are imported.

•      Drug Imports are growing even more quickly, about 13% annually.  Approximately 80% of active pharmaceutical ingredients (API) are manufactured abroad, as are 40% of finished drugs.

Inspections at U.S. ports-of-entry are critical, but ultimately less than 2% of shipments can be inspected. The better alternative--the one encouraged by Congress and chosen by FDA--is to increase foreign inspections and to establish foreign offices to work globally to improve the standards and quality of products entering the U.S.

The value of this approach cannot really be quantified. We know that the cost of illness, death and lost markets--from just a single bad actor in a single food category--can cost as much or more than the entire investment we put into FDA’s food safety activities. Drugs and devices are harder to track for a variety of reasons, but there is no reason to doubt a similar effect.

In contrast to globalization, greater scientific complexity is diffused into every part of the agency and its mission. That makes dealing with it less visible, but doesn’t make it any less costly.

FDA has adopted several approaches, many from the FDA Science Board Report. These include creation of a commissioner-level science office, investment in regulatory science, expanded and more intensive training, changes in time and manpower allotments for complex assignments, and significant reworking of the drug and medical device approval pathways.

Specifically, we have identified five areas that FDA is working on to improve the review process and respond to more complex science. Each comes at a cost in additional dollars and manpower:

•      Sponsors Need More Meeting Time and Other Feedback from FDA

•      Product Applications Require More Patients, Study Sites and Analysis

•      Enhanced Timeliness and Consistency of Product Review is Paramount

•      Expansion of Pre-and Post-Market Safety is Essential

•      Sustain and Increase Core Programs That Enhance Innovation, Speed Approvals

Further, safety inspections have also become more complex—requiring more scientific training, more preparation and, often, more time during the inspection itself.

FDA: An Agency Still Very Much “At-Risk” for Lack of Adequate Funding

It is important to recollect that FDA is a staff-intensive organization. More than 80% of its budget is devoted to staff-related costs. Of the remainder, rent and utilities are fixed costs that must be paid first. There is little grant and contracting to cut.

Sequestration is the most immediate threat to the FDA’s already-inadequate funding. Just a few days from now, the agency faces a loss of 5.1% of its FY 13 (current year) budget. This is the nominal rate. The Alliance’s analysis, confirmed by OMB testimony, is that the actual impact will be close to 9%.

Even if sequestration is avoided, FDA faces challenging funding battles in FY 14 and beyond.

If cuts occur now or in FY 14—or even if the agency budget stalls and fails to grow over the next few years:

•      food will be less safe and consumers put at risk,

•      drug and device reviews will be slower, conflicting with promises made to consumers and companies,

•      problems with imports and globalization will become more numerous, and  

•      critical efforts to modernize the agency and improve its support for innovation will stall.

Is FDA’s mission again at risk? Absolutely, yes.

And those who have the most to lose are the American people.

FOR MORE INFORMATION: www.StrengthenFDA.org or contact Steven Grossman of the Alliance staff at (301) 539-9660, sgrossman@strengthenfda.org.

The State of the FDA---February 2013

FDA is the only federal agency that touches the lives of every American several times every day. Despite this, FDA will probably not be mentioned when President Obama delivers his State of the Union (SOTU) address to Congress on February 12.

Instead, FDA Matters provides its third annual “State of the FDA.” As reflected in last week’s column, I think that FDA did well in 2012. And 2013 is very promising. Potential funding cutbacks are the primary impediment to future successes.

Strengths. Once again, FDA’s most important strength is the dedication of the agency’s staff.   Last year, I viewed staff’s efforts as invisible and largely unappreciated. I believe that more recognition is being given to the staff—driven by a banner year for drug approvals, progress on implementation of the Food Safety Modernization Act (FSMA), and the narrowing of the FDA-industry chasm on medical devices.

Another key strength is a growing self-confidence within the agency that it can solve problems and not just tread water to survive. Over the years, FDA has often spent extended periods in a bunker posture—harassed, defensive, waiting to be forced to act, speaking too softly for fear of unleashing criticism.

Over the last year or so, there appear to be many more instances where the agency has taken the initiative. To be sure, they have talked to stakeholders and checked in with experts first, but then they have acted by making an announcement, releasing guidelines, creating new policies or intervening to solve a problem. 

Both of these strengths have been heightened by continuity of leadership. In May, Commissioner Hamburg will have held the job for four years, the longest tenure of a commissioner since the mid-1990’s. It also feels like there have been fewer top-level personnel changes. In the past, constant changes have undercut achievement and sapped morale and self-confidence.

Weaknesses. Congress has given FDA an ever larger role without providing the funds to do the job. As a result, and despite the agency’s best efforts, important initiatives and activities are not getting the resources they need. Inadequate funding is the most pressing weakness of FDA.

There are really three parts to the problem:

• three new laws over the last three years need to be implemented: food safety (FSMA), biosimilars (BPCIA) and user fee amendments (FDASIA).
• Congressional pressure to do more in complex, expensive areas, such as medical innovation, safety, medical countermeasures, track and trace/counterfeit products, drug shortages and compounding.
• FDA’s job is getting bigger, tougher and more resource-needy each year independent of whether Congress gives them new responsibilities. This emanates from greater scientific complexity, industry globalization, and increased workload (meetings, NDA’s, etc).  

 As will be discussed further under “threats,” there is a strong potential for cuts in funding that would take FDA far below even the current inadequate level.

Opportunities. Dr. Hamburg has made it a priority to improve the agency’s scientific bench strength—better credentials, better training and better tools. The next step—still very much a work in progress—is to integrate patients and human concerns into FDA decisionmaking.  

The agency understands the importance of this opportunity, but underestimates the tension between patient viewpoints and the scientific process. The task is more nuanced than current efforts suggest….and the risk is that patient-input becomes a box that gets checked, rather than a meaningful improvement to the agency’s science-based decisionmaking. 

In a different vein, FSMA is a well-conceived solution to achieving a safe food supply in the 21^st century. The opportunity is enormous, the blueprint largely drawn, and only the inadequacy of funding a substantial barrier to success. I don’t know if the American people will ever properly appreciate the effort required by FSMA or the value its implementation adds to protecting the food supply. Without that public feedback and support, the challenge for FDA will be to continue to see FSMA as the transformative opportunity it is.

Threats. The largest threat to FDA is the potential for immediate and long-term cuts to the resources available to the agency. On March 1, FDA may lose more than 5% of its current-year funding. Even if that cut is averted, funding for domestic discretionary programs is going to be under pressure for the next decade.  

The increasing reliance of user fees for agency funding is also a threat. Including tobacco and the new generic drug user fees, the FDA is now 40% funded by industry. Those fees are put to good use and are not, by themselves, a problem. Rather, American taxpayers need to preserve--if not actually increase--their stake in funding FDA. There are philosophic reasons for this (the integrity of the agency) and practical ones (a large part of FDA’s mission cannot appropriately be funded by industry).

Conclusion. FDA’s strengths and opportunities are immediate and powerful...perhaps more so than in many years. The challenge is to preserve and expand the funding, particularly taxpayer funding, to support the agency. Trying to “do FDA on the cheap” is both a weakness and a threat to the agency and the American people.

Steven

Orphan Drugs at 30: Will Success Become Too Expensive?

The Orphan Drug Act (ODA) turned 30 this month, demonstrating that good laws really can have an enduring impact. Amidst the celebrations, a reporter asked me a provocative question: can we afford more orphan drugs costing hundreds of thousands of dollars per year? FDA Matters answered “yes.”

However, I added a caveat that should worry everyone eager for orphan drugs to succeed. When genomics and personalized medicine become successful, this will multiply the number of rare diseases and the overall cost of orphan drugs, perhaps beyond what the system can bear.

Orphan Drugs/1983. At the time of the 15^th anniversary of the ODA, I wrote an article entitled: A Good Law is Always at Risk. I tried to convey that the original Act had been no “slam-dunk.”

We were focused on diseases with almost no constituencies—ones that were unknown or neglected and had little chance of attracting human and capital investment. I still think of these as “traditional rare diseases,” such as Parkinson’s, Tourette’s, ALS and inborn errors of metabolism. This was the problem the ODA was designed to address.

Cancer was the counter-case—well-organized, lots of public awareness and concern, a well-funded NIH institute and the attention of researchers and drug companies. Only later did we realize that all but four types of cancers are “rare diseases.” One positive and unexpected outcome is that oncology patients have been among those who have received the most clinical benefit from the ODA.

From the beginning, there were worries that the law would richly incentivize drug development that would have occurred anyway. A rewrite of the ODA in the current environment would undoubtedly add restrictions to prevent “windfall profits,” “excessive pricing,” and “market exclusivity for blockbusters.” I have argued—and will continue to do so-- that the overwhelming benefits of the Act (including its remarkable stimulative effect on the growth of biotechnology) have been worth whatever it has cost society by not restricting these outlier situations.

Orphan Drugs/2013. The pace  of designations, approvals, and orphan drug investment has accelerated over the last few years. Along with continued strong Congressional support for orphan drugs, some very large drug companies have suddenly discovered the orphan market.

At the same time, orphans have seen more than their share of controversy and public questioning. At least one company took an inexpensive compounded drug and set a market price for their approved orphan version at $1500, more than 50 times its prior cost. Recently, there have been projections that orphan drugs in development may cost more than $400,000 per patient per year and that “million dollar orphans” are on the horizon.

It is this latter situation that prompted the reporter to ask me if we can afford orphan drugs and “doesn’t something need to be done?” I think not.

FDA approves orphans, but it is up to insurers, health plans and government programs to decide if they will pay for them. A prior column, Drug Pricing 101: A Fundamental Issue Revisited, explains how most companies come up with prices and how they justify them to payers. Apart from the occasional price made up in the boardroom (e.g. the $1500 drug mentioned above), orphans will continue to be reimbursed because some significant portion of their price is justified by the value they add to patient outcomes, the existing treatment costs they replace and/or the amount and length of the discovery and approval process.

I expect lots of future controversy because the per patient prices ARE shocking, but I also expect that the aggregate costs of traditional orphan drugs—including the more expensive ones that are coming—will still not be a major factor in health care cost containment. Downward payer pressure on orphan drug prices will definitely occur. Wholesale failure to pay for orphan drugs by insurers will definitely not occur.

Orphan Drugs/2023. The future of orphan drugs is not, however, as bright as this suggests because we are moving beyond traditional rare diseases and orphan drugs.

 I’ve argued it will take many years before genomics and personalized medicine finally emerge as cornerstones of FDA-approved medications. Slowly, however, over the next decade or so, large, seemingly homogenous diseases (e.g. breast cancer) will start to become subdivided into many diseases based on patient characteristics that are responsive to selective treatment (e.g. the BRAC mutation in breast cancer).

Any such treatment that works for only one group of patients may represent a “medically plausible subset” of less than 200,000 patients (FDA’s criteria for an orphan drug). Once we have reached the point where orphan drugs based on genomics and personalized medicine start to become numerous, then the societal and economic dynamics are different than today’s focus on orphan drugs for traditional rare diseases.  

Conclusion. I have confidence we can find the money for traditional orphan drugs in 2013 and the coming years. I do not know if the societal resources will be there when the scope of rare diseases is expanded by genomics and personalized medicine and the number of orphan drugs skyrockets.

Steven

Off-Label Promotion: Best Resolved by Congress, Not Courts

On December 3, a federal appeals court ruled against one of the FDA’s untouchable restrictions on industry—thou shalt not promote the off-label use of pharmaceutical products. An industry that is little interested in constitutional law suddenly finds itself talking about the First Amendment and whether, and on what grounds, the case will be appealed. 

Meantime, the court’s decision left FDA Matters torn between cheering and booing. Patients are poorly served if their doctor is prescribing drugs without being able to tap into all sources of relevant knowledge. However, permitting off-label promotion undercuts the incentive for companies to thoroughly investigate the safety and efficacy of a drug for a second or third use.

Benefits and abuses of off-label use. Off-label use is a medical necessity--an acknowledgement that the current inventory of approved drug indications is woefully inadequate to deal with the breadth, complexity and individual idiosyncrasies of human disease. All patients—but particularly those with rare diseases—would suffer grievously if physicians did not have flexibility with regard to the off-label use of pharmaceutical products.

Some off-label uses are supported by extensive published scientific studies, but no corporate entity or individual has the financial incentive to underwrite the FDA approval process. Many other off-label uses are in the evidence-thin realm of “we tried it for lack of alternatives and the patient seemed to be better.” The benefits of specific off-label uses are evaluated by published collections of expert opinions (known as compendia). The practice of prescribing off-label is monitored and approved (inconsistently) by payers.

If doctors can legally prescribe a particular drug for a specific use (albeit off-label), then companies ought to be able to provide “truthful and not misleading” information that they possess. Arguably, they can do so now (via reprints of scientific articles), but only in response to a physician’s request. This is a very limited means of disseminating information.*

The Struggle to Incentivize Approval of Second and Third Uses of Approved Drugs.  As I have written previously, it is in the public interest for off-label uses to become on-label indications. The agency is remarkably positive about deferring to the professional judgment of physicians, but would like to see every off-label use get the scrutiny necessary to assure it is safe and effective.

One of FDA’s great fears is that off-label prescribing will become dominant in clinical medicine (as I am told it has in certain areas of oncology). FDA is concerned that companies will receive approval for a first use, then (directly or subtly) encourage doctors to prescribe off-label. If this strategy is profitable, FDA worries that fewer and fewer companies will commit the time and money to gain approval for additional indications. If a company can’t promote off-label, then it is more likely to invest in clinical trials to gain approval of the additional indications.

Unrestricted promotion of off-label use would definitely undercut FDA. In such an environment, I believe that many companies will “game” the system by finding a comparatively easier first use for approval, then let sales for other uses build off-label. Nor do I think companies are universally concerned about “litigation commenced under states’ product liability laws for ineffective products and the resulting reputational harm from such lawsuits.”**

Congress, Not the Courts, Should Set the Ground Rules. By their nature, courts pick winners in these situations; they don’t create rules that maximize two competing public goods. I have been taught (and believe) that litigation is almost always the worst and most inefficient way to solve a problem. I consider this an example.

To achieve appropriate policy, Congressional action is needed.***  For many reasons, this may never happen. However, it is the only way to reconcile the competing and valid positions held by industry and FDA. I encourage Congress to try to bring peace to this area of contention.

Steven

*   Even without permissive policies, company sales and marketing practices are a source of constant problems, as discussed in Off-Label Promotion and Whistleblowing.

**  For those seeking a more legal and enforcement-oriented perspective on the court’s decision, including a number of critical nuances not covered here, I recommend  the FDA Law blog’s current analysis. The paragraph and the quote are based on that article’s description of why some commentators argue that off-label promotion is not a threat to FDA’s drug approval process.

***  A thorough and forthright FDA administrative proceeding (followed by guidelines or regulations) could also clear the air. This is unlikely because the agency generally lacks objectivity on a topic it feels so strongly about, plus the agency tends to respond to court directives, not act to break judicial deadlocks.  On a similarly thorny issue, the agency’s failure, after more than 15 years, to articulate sound policy (or any policy) on social media is indicative of why I don’t think the agency can resolve the “off-label promotion” issue by itself.

President Obama, Please Retain Commissioner Hamburg

With President Obama’s re-election, many people are sitting back and assuming that the U.S. Food and Drug Administration (FDA) won’t change much. In FDA Matters’ view, it doesn’t need to: Commissioner Hamburg is doing a good job; the agency is moving forward to improve food, drug and device safety; more rational and predictable review processes are being implemented; and there are at least three relatively new laws that need ongoing attention.

However, year five of an incumbent presidency almost always involves changes in personnel and policies, not the continuity one might expect. FDA may not be touched, but it seems short-sighted to think there won’t be any changes. And that could start at the top with Commissioner Hamburg.

The unwritten rule of senior political appointees is that you leave by the end of year three or you wait until after the election. Thou shalt not create vacancies during the campaign!

So, the list of who might be leaving now or over the next few months includes everyone who would have left anytime in the last year. There have been rumors that Commissioner Hamburg fits into this category….and equally plausible rumors that this is nonsense. Don’t ask me the answer on this; I have no idea. She may want to stay or she may have had enough of the job.

Then there is the matter of President Obama’s preferences. While those departing will be going to specific jobs or to pursue new (unspecified) opportunities, some will be truly voluntary departures and some will have been pushed out the door. At the moment, the focus is on Secretary of State (Hilary Clinton having said long ago that she would leave after the election) and other very high visibility jobs.

The next rung (individuals such as Health and Human Services Secretary Kathleen Sebelius) and the rung beyond that (FDA Commissioner Margaret Hamburg) will be playing out over the next two to eight months. Each individual will be evaluated—at least informally—and decisions made as to whether they fit into the President’s second term plans.  I would presume that they do fit—and that Secretary Sebelius and Commissioner Hamburg are welcome to stay if they want.

However, unless you have been at the table when White House, HHS and FDA have interacted AND been party to conversations among White House staff as to who they count on and trust, then you really have no idea what President Obama’s intended or evolving  position will be on the continuation of Commissioner Hamburg.  There are always surprises about who will be part of the second term team. Presuming a continuing role for Hamburg is just that—a presumption.

As stated at the outset, I hope that Commissioner Hamburg wants to stay and that President Obama chooses to keep her.  There are positive, agency-affirming reasons supporting this.

In contrast, the Commissioner’s departure, for whatever reason, would be bound to have negative consequences for the agency. Her successor, regardless of the quality of his/her credentials, would face a U.S. Senate confirmation hearing that is likely to be painful. To appreciate why requires an understanding of the confirmation process and its true goal.

The vast majority of Presidential appointees requiring Senate confirmation are clearly qualified to carry out the duties of the position for which they have been nominated. If competence were the primary criteria, then most nominees could be approved with just a staff-level review of their record and positions and an FBI check for character and national security.

Why hold confirmation hearings? In most cases, the purpose is for members of the Senate (acting on their own behalf, as well as those of various stakeholders) to restrict the appointee’s discretionary decisionmaking once in office. In the case of a newly-appointed FDA commissioner, that would mean running a gauntlet of questions about product approvals, medical device policy, unrestricted access to plan B “day-after” contraceptives, how to name biosimilars, etc.

A talented nominee can fend off most of the hardest questions with non-committal answers. However, at the end of the process (when the nominee is confirmed) they are certain to have provided a number of answers that restrain their ability to make the best medical and public health decisions.  Equally important, a new Commissioner will mean a new leadership team and an extended learning curve.

For the FDA, this IS the time for continuity. Let’s hope that Commissioner Hamburg and President Obama will deliver it.

Steven

A version of this article appeared in the December 3, 2012 online edition of Scrip Regulatory Affairs.

“Governing,” Not “Campaigning,” Key to Post-Election FDA

Since last week’s two columns on “FDA After the Election” (here and here or a combined version here), FDA Matters has been treated to some wild speculation about what will happen next. I have been told, in effect, that “if Obama is re-elected, there will be massive new industry regulation” and also that “if Romney is elected, FDA will be transformed into a non-entity that only says ‘yes’ to industry.”

What history tells us is different: whoever wins will have the burden of governing. As a result, massive new regulation is no more likely than FDA becoming a toothless regulatory agency. Winners, it turns out, spend a lot of time explaining why campaign promises haven’t been translated into action.

Of course, everyone is entitled to their own opinion—particularly to imagine their own worst fears.

My advice, however, is to pour a glass of your favorite beverage (alcoholic or not) and watch the election returns with the calm that is appropriate for democratic elections in the United States. Our Founding Fathers intentionally created a system of checks and balances that limits the ability of any one party or any one election to radically re-create government institutions.

FDA is one of those institutions that is changeable (which is actually a good thing), but not likely to be transformed into something dramatically different.

If Obama Wins.  Year 5 of an incumbent President almost always stresses changes in personnel and policies, rather than continuity.  The focus will shift toward new ways of dealing with budget and fiscal matters, jobs and unemployment, and stabilizing our nation’s global position while winding down our involvement in Afghanistan.  Implementing ObamaCare will likewise be a key priority, as major provisions of the law go into effect over the next few years.

While Obama’s focus will follow the campaign promises, the specific actions will probably not. Most likely, he will still be dealing with a hostile House of Representatives and a sharply divided Senate. Events will occur that will also reshape what happens—something unforeseeable like 9/11 or Hurricane Sandy or something foreseeable like a massive fight over the next extension of the federal debt ceiling.

Given this larger picture, what is the probability that FDA will suddenly turn regulation-happy and start a major push to burden industry? I say “none at all.” The entire tenor of Commissioner Hamburg’s tenure—public statements and actions—has been to try to create more science-based decisionmaking, publish more guidances for industry, and to listen to both Congress and industry about FDA’s role in supporting medical innovation.

If there is more regulation in 2013 and 2014, it will be largely to satisfy the legal requirements of new laws passed by Congress on a bi-partisan basis over the last three years. If that winds up feeling excessive to industry, it will certainly not be because of President Obama's philosophy.

If Romney Wins. Year 1 of a new President is inherently one of change—but remembering back to four years ago, one could argue that the predominant motif is uncertainty, not change. If Governor Romney is elected, there will be a continuous stream of speculation. Nobody knows…and those fearing the worst will get the most attention.

A newly-elected President Romney will actually be dealing with the same issues as President Obama would be: budget and fiscal matters, jobs and unemployment, foreign policy and implementing (or failing to implement) ObamaCare.  FDA will be very low on the list of priorities—if it appears at all. (A conclusion also reached by Matthew Herper of Forbes).

What changes should we expect with a Romney victory and when will we know? The answer is nothing too dramatic and it will take months to play itself out.

I have argued that a Romney Administration would do best to find a well-known, well-respected, candidate who could win easy Senate confirmation. Taking me at my word, Ed Silverman in a Pharmalot column has suggested that Romney could nominate a well-respected commissioner to cut back on safety and speed up approvals (i.e. carry out Romney’s campaign promises and please industry). However, Senate confirmation will not be easy for such an individual—regardless of how well respected—unless they commit to fairly specific boundaries for such changes. (If Romney wins, you will be hearing much more about this in future columns).

If you are an American citizen, please take the time to vote.

Steven

FDA After the Election---Part 2: Leadership and Change

Apart from an occasional reference, FDA is not part of the campaign dialogue leading up to the November 6 nationwide U.S. election. Yet, FDA Matters believes that FDA will be strongly impacted by the election’s outcomes.  Part 1 of “FDA After the Election” concentrated on the agency’s budget situation.

Part 2 of “FDA After the Election” focuses on leadership and change--directly and as they may be affected by potentially large budget cuts. There are some predictable elements, but other elements with great impact may depend upon the perspective of those in power for the next two years and beyond.

Drivers of Change, Post-Election.  Whether President Obama is re-elected or Governor Romney becomes President-elect, FDA’s primary responsibilities remain roughly the same: to be the guardian of food, drug and device safety and to provide a reasonable and responsible pathway for pre-market review of drugs and devices. Likewise, no President has the power to alter the main drivers of FDA’s increasing workload: globalization, scientific complexity, growing regulated industries and new legislative and regulatory mandates in food safety, drugs and devices.

Historically, change at FDA is affected by:  

• the interest level of the President (most Presidents aren’t interested in FDA),
• a growing or shrinking agency budget  (budget cutbacks distract, reduce options),
• an acting vs. a confirmed Commissioner (“acting’s” tend to be placeholders),  and
• the political will of Congress (legislation, oversight/investigations, or indifference).

If President Obama is Re-elected….then the two main drivers of change are likely to be whether Commissioner Hamburg decides to stay and the federal budget situation.  

This chart explores the variables and draws some conclusions about the opportunities for change. Not surprisingly, they are greatest if Dr. Hamburg stays and there is no sequester. The worst case would be a sequester and a long-term “acting” commissioner; it is only a slight exaggeration to suggest the agency would be set adrift and some panic might set in.

President	Commissioner	Most like what prior situation?	Budget Status	Opportunities for change
Obama Year 5	Hamburg	Kessler 1993-1994	No sequester	Change continues
			Sequester	Orderly retreat?
	New nominee	Von Eschenbach    2006-08	No sequester	Orderly transition: some change
			Sequester	Disorderly retreat?
	“Acting” for >  than 6 months	Crawford 2004-05	No sequester	Orderly transition: few changes
			Sequester	Agency set adrift?

If Governor Romney is Elected…..then the main drivers of change are likely to be his interest level (his plate is likely to be full elsewhere), how quickly he nominates a new commissioner, how controversial his nominee is, and the federal budget situation.

This chart (as the one above) explores the variables and draws some conclusions about the opportunities for change. The best situation would be a well-known, well-respected, candidate who could win easy confirmation. That person would have the opportunity to make a lot of changes—although there would be notable differences if a new commissioner faces budget cuts. The worst case for change would be a replay of 2001-2002, when President Bush allowed more than 18 months to go by without a commissioner in place.

President	Commissioner	Most like what prior situation?	Budget Status	Opportunities for change
Romney Year 1	New nominee easy to confirm	Hamburg  2009-2010	No sequester	Time to shake the place up
			Sequester	Accelerates shake-up?
	New nominee  hard confirmation (not “acting”)	None?	No sequester	Congressional constraints in exchange for confirmation?
			Sequester	How long is someone acting?
	“Acting” for >  than 6 months	2001-2002	No sequester	Confusion: who to serve?
			Sequester	Panic in the streets?

Timeframes.  While the charts provide a more comprehensive overview of the prospects for leadership and change at FDA, the scenarios will actually unfold over a period of months. Presumably, we will know who will be President within a day or two of the election. However, sequester (or other budget cuts) are not likely to be determined until later this year or may be delayed into next year.

Whether Dr. Hamburg stays will be both her decision and that of President Obama. That might be announced quickly or not.  If there is to be a Romney Administration, it is likely to be at least March 2013 (more likely later) before a nominee is announced.

Steven

FDA After the Election---Part 1: Budget

Apart from an occasional reference, FDA is not part of the campaign dialogue leading up to the November 6 nationwide U.S. election. FDA Matters believes this is probably good—any intelligent  discussion of FDA’s future requires a long-term perspective and a mastery of detail and nuance—both of which are in short supply during “sound bite”-oriented politicking.  

Yet, FDA will be strongly impacted by the election’s outcomes. Part 1 of “FDA After the Election” concentrates on the agency’s budget situation, while Part 2  focuses on leadership and change (http://www.fdamatters.com/?p=2164).

Both parts reflect that ultimately FDA is people-driven—not only by who leads, but also because over 80% of the agency’s costs are people-related. More money = more people = more capability and activity. Less money will have the opposite effect.

The Potential for 8.2% Cuts in January 2013. Most of the current focus is on the potential 8.2% across-the-board federal budget cuts slated for January 2, 2013. Sequester, as the process is known, will leave FDA with about $320 million less to spend in FY 13 than it did in FY 12.

This includes cuts to taxpayer-funded FDA appropriations (about a $2.5 billion base) and user fee revenue (nearly a $1.4 billion base). If the cuts were applied entirely to FDA personnel, the agency would have to lay-off or furlough about 1000 employees.

We know that the sequester of FDA funding has consequences:  food will be less safe; drug and device approvals will be slower; problems with imports and globalization will become more numerous; and FDA modernization will be severely slowed. Note that this is the opposite of what everyone--critics included--wants. The precise impact is hard to quantify because FDA will try to prioritize its remaining manpower to avoid immediate disasters and avoid any visible failure to approve life-saving therapies.

Congress does not want to reduce the federal deficit through a sequester. This view is supported by President Obama and his opponent, Governor Romney.  Despite this seeming unanimity, an alternative deficit reduction package would need to deal with entitlement programs and taxes. So—politically—deficit reduction is a mess and sequester may happen.

Budget Threats Will Continue, Regardless of Sequester. Even if sequester were somehow to be avoided, pressure on federal spending will continue far beyond the immediate future. Sequester is the most immediate hurdle in what is likely to be an annual challenge to all federal agencies, including (and especially) FDA.

In the face of this, the Alliance for a Stronger FDA* is asking Congress for three sane and sensible things that should help FDA:

• Recognize and properly fund the special and growing role of FDA as a protector of food and drug safety and a gateway to medical innovation and science.
• Find alternative means to reduce the budget deficit and avoid the across-the-board sequestration of 8.2% of federal agency funding on January 2, 2013.
• Return federal budget-making to a process under which national priorities (such as FDA) are adequately funded.

The Alliance’s call for a return to funding based on national priorities is a statement of faith: that FDA is a core function of national government and that we can demonstrate that funding the agency is essential.

Re-affirming FDA as a National Priority. We should not, however, assume that FDA’s core governmental role is self-evident to everyone. We need to convince policymakers, the media, and the public that we belong in the very special group of federal programs that need to grow--even as other important programs suffer cutbacks and some even wither and die. Implicitly, the responsibilities of the federal government are going to be redefined, whether consciously or as the residue of decisions that will be forced on the President and Congress after the election and over the next few years.

How well will FDA compete for scarce dollars, assuming that the situation is not pre-determined by across-the-board cuts? The elite tier of federal programs has some heavy-hitters, such as air-traffic controllers and the nation’s judiciary. The absence of funding in their areas often has more concrete and immediate consequences than a lack of funding for FDA.

With FDA funds being used to oversee products and services that mount in the trillions and encompass 25% of consumer spending….our case is equally compelling. Everyone involved with FDA has an obligation to make themselves advocates for increased funding.

Steven

*  For purposes of disclosure: I am one of the founders and serve as Deputy Executive Director of the Alliance for a Stronger FDA, www.strengthenfda.org. It is the only multi-stakeholder (consumers, patients, health professionals, industry) that advocates for increased FDA funding. Our strength is in the breadth and number of our members, so I urge you to contact me for more information about belonging. Contact me at sgrossman@strengthenfda.org.

Note that my duties with the Alliance are in addition to, and apart from, the work of my policy and regulatory consulting firm, HPS Group, LLC, which is the publisher of FDA Matters.  The views expressed in FDA Matters are my own, and those of HPS Group, and are not the views or positions of the Alliance.

Why Orphan Drugs are a Key Part of Pharma’s Future

I was recently interviewed about orphan drugs for the British website, “pharmaphorum” and thought my readers might be interested. Here is a sample:

HB: How has the orphan drug space changed since the introduction of the Orphan Drug Act 1983?

SG: There is really no way to compare the situation. When we passed the Act, we hoped to stimulate the development of a few drugs that would make a difference in people’s lives. No one foresaw that we were creating what would become a multi-billion dollar market segment in which companies might compete fiercely to be first. The timing was also fortuitous — in that the Act was adopted just as our capabilities in biotechnology began to grow and the two movements are closely intertwined.

The full interview is as at: http://www.pharmaphorum.com/2012/08/22/fda-matters-orphan-drugs-key-part-pharmas-future/.

Steven

FDA and the 2012 U.S. Presidential Election

FDA Matters has been wondering: when is the right time to start talking about the 2012 U.S. Presidential election and how it might affect FDA’s future? The best answer is: when Congress has finished its FDA policy work for the year. With the enactment of FDA user fee reauthorization legislation and a pending agreement on government funding for the first half of FY 2013 (starts October 1, 2012), it is now time to start talking. 

Without picking sides: what issues face FDA after the election and in 2013? How might the agency be affected by whether President Barack Obama is given another four year term or challenger Mitt Romney is elected President?

For those of us deeply involved in the FDA world, the most important difference between the candidates might well be their approach to the agency and particularly toward FDA leadership.

President Obama has not yet issued any statements about FDA on his   campaign website  . However, based on the last 3 ½ years, he supports FDA and its mission and sees that the agency’s role is likely to continue to grow because of globalization, public health and safety, and the need to encourage innovation. 

His overall regulatory positioning might be considered less favorable to FDA. New agency regulations must pass through the Office of Management and Budget (OMB)’s Office of Information and Regulatory Affairs (OIRA). Cass Sunstein, a distinguished legal scholar appointed to head OIRA in 2009, is considered to be more open to de-regulatory approaches that may be inconsistent with FDA’s growing responsibilities. For example, it is his office that is currently holding up some of the regulations needed to implement the Food Safety Modernization Act.

The Republic nominee, Mitt Romney, has not yet issued any specific policy statements on FDA. However, he appeared at a medical device company event in late March and       su   ggested     that FDA is part of an “attack on free enterprise” by “the thousands upon thousands of bureaucrats that work in Washington.”

His campaign website does not reference FDA, but it does have a position paper on regulation. In it, he advocates:

·                  Imposing a regulatory cap of zero dollars on all federal agencies*

·                  Requiring congressional approval of all new “major” regulations

One should never take campaign speeches too seriously. Even allowing for that, it would appear there are significant differences in how the two candidates view FDA today.  These differences may narrow or expand in the three months until Election Day. 

Just as the two candidates appear to differ strongly on the role of FDA, they are also likely to differ on their choice of FDA commissioners. This is not just a matter of whether Romney wins, but also if Commissioner Hamburg is thinking about leaving (and we have no knowledge of this, only that it is not uncommon for Administration leaders to leave in the year after a President is re-elected).

The history of appointments of FDA commissioners is quite varied, starting with 1991 when Dr. David Kessler became the first Commissioner to face a Senate confirmation hearing. He resigned at the beginning of Clinton’s second term (analogous to an Obama victory and a decision by Dr. Hamburg to leave). It took nearly two years for President Clinton to appoint his successor and the Senate to confirm the appointment.

Hiring a new commissioner was not a priority for the new Bush Administration in 2001. Dr. Mark McClellan was confirmed in November 2002, more than 20 months after the new Administration took office. In contrast, Dr. Hamburg was appointed by the Obama Administration and was confirmed by May, a delay of less than 5 months.

So, if Romney wins or Obama wins/Hamburg resigns….we may have a new Commissioner quickly or the job may be vacant for a long time.

Overall, the differences between Barack Obama and Mitt Romney are likely to matter a great deal to FDA. In turn, this will affect FDA stakeholders….regardless of their politics or their views on whether FDA needs continuous improvement or an outright overhaul.

   Steven

*   My understanding of this: the private sector cost impact of any new federal regulation must be offset by the private sector savings from repealing or significantly revising an existing federal regulation.

P.S. For those wanting more on FDA and the U.S. elections, FDA Matters intends to write often on this topic over the next few months.

FDA’s E-Mail Scandal: First Impressions

According to the New York Times, FDA collected more than 75,000 employee e-mails in an effort to identify leaks of confidential trade secret information. At some point, a narrow, possibly legitimate inquiry into a handful of scientists at the Center for Devices and Radiological Health (CDRH) turned into a massive e-mail surveillance of selected individuals and their contacts.

So far, FDA is not contrite. FDA’s position, while still not quite official, appears to be: we tried to accommodate these individuals’ complaints within the personnel and dispute resolution systems. We had legitimate concerns that trade secrets were leaving FDA in their correspondence with third parties.

FDA Matters believes we don’t know the whole story yet.

The immediate perception is that the agency--in the name of protecting trade secrets--targeted internal critics and found ways to monitor their strategy and actions.

Fueling concerns is that a number of the monitored e-mails were sent to media, the President, and Members of Congress. Among others, Republican Senator Charles Grassley and Democratic Congressman Chris Van Hollen, have expressed concerns that correspondence with their staffs had been part of the surveillance.

Further, the surveillance appears to have included correspondence with the Office of Special Counsel, an independent federal investigative and prosecutorial agency with jurisdiction to oversee whistleblower complaints. Understandably, they are unhappy when they perceive that other federal agencies are interfering in their investigations.

In short—even with Congressional recess coming up and a national election—this issue is not likely to go away.

Every day FDA receives confidential trade secret information that it is legally obligated to protect. Any individual failing to do so is open to penalties—I assume both criminal and civil. To me, the key paragraph of the NY Times story is this one:

F.D.A. officials went to the inspector general at the Department of Health and Human Services to seek a criminal investigation into the possible leak, but they were turned down. The inspector general found that there was no evidence of a crime, noting that “matters of public safety” can legally be released to the news media.

Undeterred, agency officials began the electronic monitoring operation on their own.

If true, this is quite damning of the agency and provokes the usual question of why senior FDA officials did not exercise more restraint and better judgment.  

However, the agency’s unofficial semi-response suggests that this is not the full picture. At some point, the Office of General Counsel (OGC) at FDA became involved and authorized surveillance. Assuming this is true, did OGC have the authority to do so…and did they know that they were authorizing a broad surveillance? (I refuse to think of 75,000 e-mails as a narrow search).

According to an on-line Wall Street Journal article, the key individual in this case is a “serial whistleblower” (my term, not theirs), having filed lawsuits at two previous jobs. Supposedly, in both cases, the allegations of institutional misconduct were not proven in court, but he received settlements for “wrongful terminations” that followed his whistleblowing. What happened previously and elsewhere is irrelevant, except perhaps to remind us how hard it is for government agencies and public entities to fire an employee who they believe to be a disruptive force.

There is no way that FDA can look good if it is seen as approving devices that should not be on the market, squelching internal scientific disagreements, pursuing vendettas against its employees, or interfering with the prerogatives of Congress and the Office of Special Counsel.

In the face of all of this—the allegations and FDA unwillingness or inability to respond fully--it is hard not to worry about the agency. It is an institution that badly needs public and congressional support to do its job, especially when its responsibilities are growing and its budget isn’t.

FDA Matters hopes that Commissioner Hamburg and her senior staff are able to respond more fully and “on the record” in a way that helps stakeholders, Congress, the media and OSC understand why the extensive surveillance became necessary and what public purposes it served.

Steven

Here is more background, provided as a courtesy by BioCentury:  http://www.biocenturytv.com/freecontent/tbr_072312.pdf.

Some of the other relevant documents available only through subscription trade media:

1/ FDA’s response to Senator Grassley is available from Inside Health Policy (www.insidehealthpolicy.com, by subscription) at: FDA letter to Grassley.

2/ According to Dickinson’s FDA Webview (www.fdaweb.com, by subscription) Commissioner Hamburg on 7/17/12 sent the following email to all employees:

Over the past few days, a handful of stories, first appearing in The New York Times, were written regarding the agency’s monitoring of the computers of five CDRH employees.

I want to reinforce that the FDA’s greatest strength is our people. I value the expertise, professionalism and dedication each of you brings to this agency every day. There is no greater mission than that with which we are charged – protecting the public health. I have great confidence in FDA’s leadership and employees, and we have worked hard to foster a culture where differing opinions on scientific data, regulatory issues and product approvals may be expressed freely. In addition, employees have avenues available to them to voice their concerns both inside and outside the organization without disclosing proprietary information that is protected by law from unauthorized disclosures. I want to reiterate the FDA's commitment to protecting the rights of whistleblowers who are doing a service by bringing public safety concerns to the forefront. It is only in working together with the highest levels of professionalism and ethics that we will continue to achieve our mission.

Regarding the recent news stories, I want to stress that the FDA’s ability to fulfill our mission of protecting and promoting public health necessarily relies upon our ability to protect confidential information. Protecting such information in our possession allows us to work with industry and other stakeholders to ensure the quality of FDA-regulated products and the integrity of FDA-decision-making.

In 2010, the agency initiated monitoring limited to the government-owned computers of five CDRH employees. The impetus for the monitoring was a March 2010 New York Times article and a letter from GE Healthcare that indicated a pattern of unauthorized disclosures of confidential information related to pending medical device applications and submissions over the course of more than a year. The intent of the monitoring was to determine whether confidential commercial information had been inappropriately released and to stop any further unauthorized disclosures, since any such disclosures are a violation of the law.

Although the FDA, as with other federal agencies, has the discretion to conduct appropriate monitoring of government computers, we do so only in very limited circumstances. We do not take lightly the decision to monitor government computers.

I hope this note offers a bit more context to the situation. We will continue to update you as best we can. Please be assured that your work and your opinions are appreciated.

2012 Mid-Year Report on FDA: Opportunities, Threats and Accomplishments

So much is going on at FDA right now, that it is difficult to pick just one topic for this week’s FDA Matters. Instead, we are going to take a quick tour of some “hot spots” at FDA and how they might affect the agency over the remainder of the year and beyond.

Please read on…there is something for everyone in the topics covered.

The “Lost” FSMA Regulations. At the very end of 2010, Congress passed the Food Safety Modernization Act (FSMA). The law was intended to fundamentally re-set the term under which FDA acts to assure a safe food supply. It focuses on preventing problems, rather than fixing or limiting them afterward. FSMA provides the agency with new authorities and additional resources consistent with FDA’s role of overseeing a global food supply.

The first provisions of FSMA went into effect in January 2012 and additional requirements become effective this month. To guide implementation of these requirements, FDA has produced four draft regulations. None have been published; all are stuck in the review process at OMB.

The mystery of the “lost” FSMA regulations prompted two reporters to call me this past week and ask: is OMB holding back these (and other) regulations until after the election, presumably for political reasons. I couldn’t see an electoral connection, plus the first of the proposed regulations was submitted to OMB in December 2011, a very long time before the election.

The “lost” FSMA draft regulations are worrisome by themselves, but especially with so much else going on at FDA that may require OMB review.  

FDA’s Drug Safety Monitoring Program Hits Target, Will Expand. We don’t read often enough about the successes that come from cooperation and hard-work at FDA. In the 2007 user fee reauthorization legislation, Congress directed FDA to construct a nationwide electronic post-market safety monitoring system that would allow FDA to examine tens of millions of patient records to discover or refute possible safety concerns about FDA-approved products.

In a recent edition of FDA Voice, the FDA’s own blog site, the agency reported that the monitoring system, called “Sentinel,” now has access to the de-identified medical and/or insurance records of about 126 million Americans, collected through 17 data sources (e.g. VA, Kaiser). Sentinel is definitely still a “work in progress” on a number of levels, but it will be of increasing value as medical products become even more complex and even more integral to medical care.  

Funding Ups and Downs. Despite Congressional reauthorization of the prescription drug and medical device user fee programs, the budget authority (BA) (taxpayer-funded) portion of FDA’s budget is still the bulk of the dollars. The Senate has included a small increase in BA funding for FDA for FY 13; the House has proposed a small decrease.

Of compelling concern is the strong potential that FDA (along with all federal discretionary funding programs) will be hit with a 7% to 10% “sequestration”—an across-the-board cut--on January 2, 2013. This would reduce the agency’s budget  by between $175 million and $250 million in FY 13. This is FDA’s "contribution" to saving the federal budget more than $1 trillion over the next 10 years. 

If sequestration occurs, FDA will try to avoid lay-offs by shifting more employees from taxpayer funding to user fees. In that case, increases in user fee income will be backfilling the BA cuts, rather than contributing to real agency growth. Yet, FDA will be obligated to undertake the user fee-driven activities and meet the law’s performance measures as if the new user fee money was paying for additional staff.

User Fee Reauthorization Will Drive, Not Disrupt, the Agency Agenda. Five years ago, the user fee reauthorization (PDUFA 4) didn’t become law until late September, a few days before fiscal year 2008. The combination of immediate deadlines, delays in collecting user fees, and insufficient trained personnel set off a series of problems that took three years to fully overcome.

This time, Congress finished the reauthorization in late June and FDA has been planning the law’s smooth implementation for months. Instead of panic, CDER in particular, seems to be feeling good about the path forward and the many changes called for in PDUFA 5. 

Dr. Janet Woodcock, head of CDER, has listed her priorities as, among other things: timely transition to new user fee requirements (including start-up of new generic drug and biosimilars user fees); dealing with drug shortages, moving forward on data standards and new IT support systems, and advancing regulatory science.

Results are still what matters and there are always critics….but a sense of optimism at CDER is always welcome.

 Steven

User Fee Reauthorization—Critics Come Out Before the Ink Is Dry

The House passed the final user fee reauthorization legislation last week and (as of this evening) the Senate has also passed the bill. It will now go to the President for signature. FDA Matters says: well done, Congress! Despite my fear of delays and bickering, you completed this process on time and with broad bipartisan support.

However, critics are already emerging, "before the ink is dry.” The advocacy group, Public Citizen, is complaining that drugs and devices will be less safe as a result of the legislation. At the same time, Dr. Scott Gottlieb, a former FDA official, has published an essay arguing the legislation doesn’t go far enough to expedite review of drugs for serious medical conditions.

The Public Citizen Health Research Group’s critique is to be expected. They were founded 40 years ago and have consistently been critical of the agency’s handling of drug and medical device approvals. Their continued opposition rests on three primary points:

1. User fees created by PDFUA have created a conflict of interest because the agency is funded in part by the industry it is supposed to be regulating.
2. This has led to poor quality reviews of drugs and thus the release of dangerous products. Since PDUFA, more drugs have been approved and then banned, causing needless deaths/injuries.
3. Working conditions at the FDA have plummeted since PDUFA, resulting in high staff turnover and sweatshop-like conditions.

I, too, wish that FDA were 100% taxpayer funded, but user fees are reality, a compromise that makes it possible for FDA to have the funds to operate. There is no evidence of bias generated by the fees, plus Americans would be far worse off if a quarter of FDA’s budget (user fees) were to suddenly disappear.

With regard to the quality of drug reviews, I see no evidence they’ve declined and the methodology of the PDUFA/drug approval study is suspect. Working conditions and staff turnover are definitely a matter of “compared to what?” I don’t think FDA does badly when you look at it that way.

Far more of a surprise is the essay by Dr. Scott Gottlieb, former deputy commissioner for medical and scientific affairs at FDA.  Using primarily examples of orphan drugs, he argues that FDA is over-focused on long-term safety and on reining in physician prescribing practices. As a result, the agency is stifling medical innovation and disregarding the needs of patients with serious medical conditions. I don’t agree with him on a number of points, but you can hit the link and judge for yourself.

His argument might be more compelling if he referenced large-market products, such as pain killers and obesity drugs. However, by using orphan drug examples, Dr. Gottlieb winds up attacking the new user fee reauthorization legislation as insufficient to expedite review of drugs that target serious medical conditions.

FDA Matters has already praised changes affecting orphan drugs and accelerated approval. My view is shared by much of FDA and the FDA stakeholder communities; for example: FDA and other leaders, BIO, the National Health Council and the National Organization for Rare Disorders.

So, why attack PDUFA’s bold new efforts on behalf of orphan drugs and patients with serious medical conditions? 

To Dr. Gottlieb, these “legislative fixes” are inadequate because “the agency’s staff will still have wide discretion in determining when to employ these [new] tools.” If overcautious, reluctant reviewers are still in charge, then even Congressional changes in the FDA law will not improve the review process to benefit patients with serious medical conditions.

His proposed solution is to remove the approval of drugs from the review divisions and give that authority to a panel of senior scientists with the “experience and stature to exercise the policy judgment required to make careful decisions about how to weigh risk and benefits…” An even better solution, in his mind, would be to follow the European Medicine Agency’s model in which staff does analysis and evaluation, but the final approval decisions are made by politically-appointed individuals.

I think both of these approaches would severely weaken—if not outright undermine—the existing FDA approval process. This would be particularly unfortunate now, when the new legislation empowers agency leadership to lower the barriers, so that review staff can be more flexible and apply new approaches to evaluating therapies for serious medical conditions.

Conclusions. Before more drastic actions are considered, let’s give the new user fee reauthorization legislation time to work. The ink isn’t even dry!

Steven

Many readers were out of town this past Friday and may have missed:

Biosimilars Update: Keys for the Next Year and Beyond   June 22nd, 2012

The biosimilars market in the U.S. will not grow large overnight. By a decade from now, sales of biosimilars will be creating new winners and losers in the overall biopharmaceutical marketplace. In light of this, I was recently asked: what should a developer or investor be looking to achieve over the next year in the area of biosimilars? What should they be looking to achieve in the years after that?  Read the rest of this entry

Spinal Cord Injury—Innovation Measured in Decades, Not Headlines

We are undergoing a supposed “national crisis” in medical innovation.  Congress, FDA, NIH, and industry are involved in multiple initiatives to “cure” this problem. This is particularly visible now because the user fee reauthorization process is underway, but the state of medical innovation is always relevant because of our headline-driven, crisis-oriented culture. 

To FDA Matters, this approach profoundly distorts medical accomplishment. You can’t use “where are we today” to judge the success or failure of a medical research process that is inherently broad, iterative, uneven, filled with false starts and driven by cumulative success more often than miraculous breakthroughs. As a case in point, I offer efforts to achieve spinal cord regeneration.  

In the mid-to-late 1970’s, I worked for an advocacy group that, among other things, represented the interests of medical research institutions. There was one Congressman on the right committee who was friendly to our cause and with whom we should have had a great relationship.

However, he had two key positions with which we could not agree. He was, simultaneously, the leading Congressional advocate for animal rights and perhaps the only Congressional advocate for spinal cord regeneration. We opposed his position on animal rights because we thought it would hinder medical research.

Surprisingly, we were also against his legislation that would stimulate medical research on spinal cord regeneration. We supported groups promoting the fight against cancer or cardiovascular disease because their proposals allowed NIH significant discretion to determine priorities. In contrast, we were against legislation that would require research on narrow and specific topics, such as spinal cord regeneration.

But our objection (and the vehemence of our objection) went well beyond that. The promise of biomedical research was so great, it was wrong to waste research monies on areas that held no promise.

After all, we thought, spinal cord regeneration was the stuff of science fiction. Despite the death and disability from spinal cord injury—an area of genuine unmet need—there was nothing that could be done. People could dream of a future world where medical science could achieve such miracles, but for the foreseeable future it was wasted money and unfairly gave hope to patients to suggest that spinal cord regeneration was possible.

Flash forward 30 plus years and the Congressman looks like a visionary….and the organization I worked for looks like unwitting advocates for the status quo. A rich base of scientific discoveries has improved supportive care, provided mechanisms for limiting the damage from spinal cord injuries and given reasonable hope that spinal cord regeneration is a possibility for humans in the next 10 to 15 years, maybe sooner. 

To gain perspective on this, along with a sense of NIH’s current commitment to this area of research, go to http://www.ninds.nih.gov/disorders/sci/detail_sci.htm and also follow some of the links from that site.

I don’t think we were fools in 1998 because we couldn’t see spinal cord regeneration as a promising research area. Despite the organization’s considerable expertise, we underestimated how far medical research could take us—given enough time, interest, commitment and funding. Also, in retrospect, it is remarkable how willing researchers are to contribute to a process of innovation and discovery for which someone else might eventually gain most of the credit.

Forgive me if I don’t see the crisis of “medical innovation” about which it is so fashionable to complain.

As a result of the user fee reauthorization legislation and other FDA and NIH initiatives, I foresee a more conducive regulatory environment for development and approval of medically-innovative products, particularly orphan drugs. The goal is to allow more flexibility, while maintaining rigor. However, these process enhancements are only valuable if there is a wealth of medical innovation, not a dearth of it.

There is more innovative medical research being done today than at any time in history. But the truly great achievements are usually built on many people’s work undertaken over many decades—and until near the end, they hardly ever rate a headline unless someone is intentionally hyping them. Look beneath the surface and you will find that medical innovation is alive and well and just needs our continued encouragement---via regulatory and funding support.  

Steven

PDUFA Reauthorization: Major Upgrades for Orphan Drugs

Congress is to be congratulated on its progress toward passage of user fee reauthorization legislation. House and Senate-passed versions are being reconciled by staff, with a few fairly tough issues yet to be resolved. There is no apparent barrier to a final piece of legislation later this month or during July.  

One of the big winners in this process has been the rare disease/orphan drug (RD/OD) community. Notwithstanding a few remaining (minor) disputes in the RD/OD space (more on this later), the final legislation will contain the strongest set of improvements for the community since the original 1983 Orphan Drug Act.

The RD/OD community had three overriding objectives during the multi-year process of hearings and negotiations that culminated in the House and Senate-passed legislation:

• FDA flexibility in reviewing orphan drugs
• Resources  and process improvements for development  of biomarkers/pharmacogenomics
• Overhaul of the humanitarian device program

The community achieved all three plus a number of additional items that will also be part of the final package.  

The Commissioner’s Commitment Letter. The user fee agreement is only partially contained in the law—much of the detail is in a commitment letter signed by the Commissioner. As part of this, FDA agreed to the Rare Disease Initiative, which includes:

• increased staffing of the CDER/CBER Rare Disease Programs (RDP) (which provides expertise in orphan drug development to the product review divisions)
• increased FDA efforts to assure that product reviewers, industry, and patients are working together
• broadening  research and programming in the areas of non-traditional clinical trial design, endpoints, and statistical analysis associated with orphan drug development
• enhanced staff training for reviewers with specific regard to approval of drugs for rare diseases
• better integration of RDP staff into review teams

When the PDUFA legislation becomes law, these will be firm commitments that FDA must carry out for Fiscal Years (FY) 2013 (starts October 1, 2012) through FY 17.

Other RD/OD Priorities.  A number of other proposals, critical to the RD/OD community are in both the House and Senate bills:

• establishing procedures for faster review and more flexibility for promising therapies for unmet (orphan) medical needs. This will be accomplished by:
  •  updating and codifying FDA’s existing accelerated approval process, and
  •  adding a new process to speed development of drugs demonstrating strong efficacy in the early stages of clinical development (the Breakthrough Act).
• encouraging greater use of the existing, successful Humanitarian Use Device (HUD) program. The reauthorization legislation expands the scope of HUD (adult and not just children’s devices) and allows companies to make a profit.

• permitting FDA to use a wider range of experts and to use the government-wide standards for assessing conflicts of interest
• re-authorizing and improving the Orphan Drug grant program.

The Remaining Issues. There are three RD/OD issues that differ between the bills.

The first is in the Senate bill and tries to expand and strengthen the patient voice in FDA discussions. FDA is already doing this. However, the agency has a weak understanding of how much risk some rare disease patients might be willing to bear in order to have even a small possibility of benefit. Patients need to be heard in this debate. I hope the House agrees to this provision.

The second provision is in the House bill. It would revise the accelerated approval process to allow its use when there is little or no data on a rare disease with a particularly small population. I think these represent situations where FDA can best judge each situation themselves rather than being prodded into what might well be an unscientific review process. I hope the Senate does not adopt this provision.

Finally, the House has included a pilot program to encourage development of drugs and biologics for rare pediatric diseases. There are some questions about how this will work, so making it a pilot program makes sense. I hope the Senate agrees to this provision.  

Steven

About once a year, I check on progress in bettering the lives of people with rare diseases:

• Orphan Drugs Return to Center Stage (2009) http://www.fdamatters.com/?p=239
• For Twenty-Five Million Zebras: New Hope for Therapies (2010) http://www.fdamatters.com/?p=1046
• Public Incentives and Drug Development: More is Usually Better (2011) http://www.fdamatters.com/?p=1361

A Well-Funded FDA: Only if Congress Stands Behind its Own Words

This week, FDA Matters raises the delicate question: can Congress be counted to act upon its own words supporting the FDA? This is desperately important as Congress makes decisions on FDA’s FY 13 funding and possible sequestration.

 Over the last few weeks, the Senate and the House have passed the FDA user fee reauthorization legislation by large bipartisan majorities with almost no opposition. Both bodies have extolled the importance of the FDA. The urgency of it funding needs have been fully acknowledged. The incredible breadth of support for the agency has been counted and documented. But will Congress provide the funding to back this up?

The single most important determinant of FDA’s success is whether it has the money to carry out its responsibilities. Yet, this is a very tough environment for any agency to receive funding increases.

So, it was particularly encouraging that the FDA’s cause became linked to J-O-B-S during House passage of the user fee legislation. The House Energy and Commerce Committee fact sheet on the legislation begins:

The United States has led the global medical device and biopharmaceutical industries for decades.  This leadership has made the U.S. the medical innovation capital of the world, bringing hundreds of thousands of high-paying jobs to our country and life-saving devices and drugs to our nation’s patients.  U.S. medical device-related employment totals over 2 million jobs, and these are good, rewarding jobs as employees in the device industry earn an average of $60,000 per year.  The U.S. biopharmaceutical industry is responsible for over 4 million U.S. jobs. 

The media has noted that the user fee legislation assures FDA of nearly $6.5 billion in industry monies over the next 5 years. This is indeed a lot of money. FDA will need every dollar of it to meet the commitments it has made in writing to use these monies on specific activities and on achieving specific performance benchmarks.  

User fees, then, are basically set for the next five years. However, they only supplement the funding FDA needs to carry out its responsibilities. FDA CANNOT LIVE BY USER FEES ALONE.  

To conduct the bulk of its functions, FDA received a budget authority (BA) appropriation of about $2.5 billion in FY 12. This is taxpayer, not industry, monies. Assuming a very modest 6 % annual increase in costs and responsibilities each year, FDA will need about $150 million more to meet its responsibility in FY 13. Additional 6% increases would be needed annually in succeeding years.

Using the 6% annual growth and projected out to five-years--as has been done for the user fee monies--FDA will need a total of $15 billion in non-user fee, BA appropriations from FY 13 to FY 17.  This is in addition to the industry contribution of $6.5 billion over the same 5-year period.

Prospects for 6% increases, even in the first year (FY 13), do not look good. The Senate is recommending only a 0.5% increase for FY 13 (about +$25 million of the needed 6% increase of $150 million). The House appropriations subcommittee is marking the bill up later this week. There is no reason to be optimistic since the House is operating under a total budget ceiling that is much lower than the Senate.

Even worse, the BA appropriations portion of the FDA budget faces a potential January 2013 sequester (automatic across-the-board reduction in most federal discretionary spending) of about 8% of BA funds ($200 million).

If the sequester occurs, FDA would be provided only $2.3 billion in FY 13, taking the agency below the funding level it had in FY 10. Even if 6% increases were to start in FY 14 after an FY 13 sequester, FDA would receive only $13 billion in BA funding from FY 13-17. That is about a $2 billion gap in BA funding over 5 years, solely as a result of the possible FY 13 sequestration. 

The modest $15 billion, 5-year estimate for BA appropriations (based on 6% annual increases) does not account for the costs of the Food Safety Modernization Act.  Nor does it account for the increased non-user fee responsibilities Congress has incorporated in the user fee reauthorization legislation (e.g. provisions to deal with drug shortages). Further, the FDA’s job becomes larger and more difficult each year (globalization, more complex science) so that the agency budget should increase by more than 6% each year.  

This brings us back to the delicate question we began with: will the Senate and House stand behind their own words about the importance of FDA and its role in job-creation and the economy?  If so, Congress needs to appropriate more money for FDA in FY 13 and each of the succeeding four years and it must exempt FDA from any sequestration.  

Steven

For purposes of disclosure: I am one of the founders and serve as Deputy Executive Director of the Alliance for a Stronger FDA, www.strengthenfda.org. It is the only multi-stakeholder (consumers, patients, health professionals, industry) that advocates for increased FDA funding. Our strength is in the breadth and number of our member, so I urge you to contact me for more information about belonging. Contact me at sgrossman@strengthenfda.org.

Note that my duties with the Alliance are in addition to, and apart from, the work of my policy and regulatory consulting firm, HPS Group, LLC, which is the publisher of FDA Matters.  The views expressed in FDA Matters are my own, and those of HPS Group, and are not the views or positions of the Alliance.

Biosimilars and the U.S. Supreme Court: FDA Program Could Be Nullified

The U.S. Supreme Court will rule on the constitutionality of the Affordable Care Act (ACA) (also known as ObamaCare) no later than early July. One of the possible results is nullification of the entire Act, although FDA Matters thinks this is the least likely outcome.

Nonetheless, the U.S. biosimilars law—passed as a separate section of ACA—could be rendered void if the Supreme Court overturns the entire ACA. Where would that leave FDA? What about those companies that have invested hundreds of millions of dollars to be part of the emerging U.S. biosimilars marketplace?

Controversy over The Affordable Care Act. The ACA, passed in March 2010, creates a comprehensive national approach to the problems of access and affordability of health care.  While not a pure “national health insurance” program that would be recognizable in most of the world, it is more far-reaching than any prior U.S. health legislation since the creation of Medicare (for the over-65 population) and Medicaid (a federal-state program for the poor) in the mid-1960’s. Numerous cost-containment provisions are also included in the ACA.

The ACA nearly didn’t pass Congress at all….and heated opposition has not lessened since its passage. A number of lawsuits have attacked the constitutionality of the law—with the leading case being led by the attorneys general of about 20 states. The US Supreme Court listened to oral arguments earlier this year and will decide the case before it adjourns in early July.

Biosimilars at Risk.   The Supreme Court may uphold the entire law as constitutional. Or they might decide only specific parts of the law are unconstitutional, none of which relate to biosimilars.  In either scenario, FDA will proceed with its current plans to implement the biosimilars law.

However, the Supreme Court might decide that a constitutional problem with one part of the law (e.g. mandating that individuals buy health insurance) is so far-reaching that the entire law is unconstitutional. In this last situation, FDA might be stripped of its authority to implement the biosimilars program enacted into law as part of ACA.

Little Precedent on What Comes Next. The Supreme Court rarely rules that Congressional actions are unconstitutional. When it does so, the Court usually looks for the narrowest Constitutional grounds possible—trying to preserve as much of the legislation as it can. This makes it most likely that biosimilars will survive the Court’s review. It also means there is little precedent as to what would happen to the biosimilars program if the ACA is invalidated in its entirety.  

One possibility is that FDA has innate authority to create and regulate a category of biosimilar drugs and does not need a legislative grant of authority.  This was discussed when Congress was first considering biosimilars legislation seriously in 2007 and 2008. At the time, FDA wisely deferred on the question, stating that it wanted Congressional guidance (meaning legislation). 

Should the law be overturned, the “innate authority” question might be re-raised, allowing FDA to continue with little or no change in its plan. The agency might even argue that Congress has given the agency guidance—treating the language of the 2010 law as a directive rather than a mandate.*

There is no hint as to whether FDA is thinking along these lines. When I asked FDA, I was told: we are confident that the Affordable Care Act is constitutional.

Failing a decision by FDA that it has the innate authority to approve biosimilars, it would fall to Congress to find a way to restore the program by legislation.  According to the trade publication, FDA Week, biosimilars’ leader, Hospira, is gearing up to pursue a legislative re-enactment should the Supreme Court overturn the biosimilars program. The Biotechnology Industry Organization (BIO) and Congress would also want to assure there is a biosimilars pathway.**

The problem: legislative re-enactment might not be so easy. While Congress is generally happy with the current biosimilars law, it was the product of a series of compromises and political maneuvering that left winners and losers. Merely re-adopting current law might prove surprisingly difficult.

Meantime, we all await the Supreme Court’s decision. And it’s safe to say that no one in the bio-pharma community is looking forward to the possibility of a new fight over biosimilars.

Steven

* There is no lack of support in Congress for the biosimilars program. Both the House and Senate versions of the user fee reauthorization legislation contain a new user fee to cover part of FDA’s costs for reviewing applications for biosimilar products approvals.

** For those with subscriptions to FDA Week, the article can be found at: http://insidehealthpolicy.com/FDA-Week/FDA-Week-05/11/2012/hospira-to-pursue-biosimilars-bill-if-scotus-strikes-down-health-care-law/menu-id-721.html