FDA Matters Blog

STEVEN GROSSMAN 10/31/10 STEVEN GROSSMAN 10/31/10

All FDA Stakeholders Affected by Medical Device Reforms

There are so many visible, contentious FDA issues right now….that reform of the medical device approval process has received only a fraction of the attention it deserves. Other centers at FDA and non-device stakeholders need to be watching more closely. FDA Matters is.

The key area being examined is how FDA regulates Class II (medium risk) devices. Generally, they require a 510(k) Premarket Notification to be marketed. Under this process, a sponsor must show that a device is "substantially equivalent" to a device already marketed. The 510(k) is significantly less rigorous and time consuming than a full Product Marketing Application (PMA), the medical device equivalent of a drug NDA or a biologics BLA. A related area under review is the broad interpretation that "substantially equivalent" has been given.

Given the realities of the medical device industry, such an abbreviated process is necessary. In pharmaceuticals, product life cycles are typically 8 to 10 years or more after approval. In contrast, devices are being improved constantly. Products, as approved, might be on the market only 18 months to 2 years before the devicemaker is ready with improvements.

Thirteen months ago, FDA released an internal review of the agency's (mis)handling of the 510(k) device approval of a product from a company named ReGen. The report provided an inventory of issues to be re-evaluated and immediate impetus for FDA to improve the medical device approval process.

At the time, I expressed hope that FDA could formulate changes by itself, rather than give Congress a reason to consider amendments to the medical device statute. FDA also saw it this way and asked the IOM to formulate recommendations while the agency proceeded internally to develop its own proposals.

FDA released its recommendation in August, with public comments due in October. Industry agreed with some of the proposals, but was unhappy about the breadth of FDA's initiative and some specific recommendations. Some consumer groups thought the FDA proposals did not go far enough.

As a result of industry concerns, a bipartisan group of Members of the House Energy and Commerce Committee have written to Commissioner Hamburg asking FDA to slow down its implementation of changes. The group was careful not to endorse or criticize FDA's actions. The Members requested more transparency and reminded FDA of the importance to patients and the economy of medical device innovation. Similar caution and concerns are being expressed to FDA from the Senate side.

Why should other parts of FDA and non-device stakeholders care about these developments? First, FDA showed a rare capacity for self-criticism in the ReGen report. These types of inquiries will occur elsewhere at FDA when system failures occur.

Second, FDA has decided that it has the insight and statutory authority to substantially overhaul a major approval pathway. It has been doing so without close Congressional scrutiny. If food safety reform legislation isn't enacted this year, FDA may need to proceed in a similar manner. Other efforts may eventually be undertaken with drugs, biologics and other medical products.

Third, Congress may be taking a more bipartisan approach to FDA. A system of checks and balances may be evolving between Congress and FDA, where the agency is given room to develop policies under the arms-length scrutiny of Congress.

Fourth, the current effort is reminiscent of Representative Eshoo's successful efforts to add biosimilars legislation to health care reform. The key was that Democrats from states with biopharmaceutical companies were willing to join with Republicans in supporting changes in FDA's laws and actions. The current effort makes clear that medical device companies are capable of bringing together a similar coalition.

I recommend keeping an eye out for further developments in medical device reform. The lessons learned may well affect your own interests.

Steven

When Abbreviated May Not Mean Faster or Easier July 25th, 2010

FDA is working on an approval pathway for bio-similars, re-examining the way medical devices are reviewed, trying to upgrade the quality and speed of generic drug reviews and will soon be evaluating its process for granting accelerated approvals to drugs. These seemingly unconnected activities all have in common that they are supposed to be abbreviated processes to get new products to patients more quickly without risking safety or quality problems. Read the rest of this entry »

"No Surprise" That Medical Devices Are Under Scrutiny October 1st, 2009

Five weeks ago, I wrote a column entitled, "Re-Evaluating the Medical Device Approval Process." It was not widely-read. I assumed it was because everyone already knew that a review was underway at FDA with more activity coming. Apparently, I was wrong. Read the rest of this entry »

Re-evaluating the Medical Device Approval Process August 27th, 2009

Earlier this year, a GAO report concluded that many high risk medical devices have not been adequately reviewed. In June, the House Health Subcommittee held the first of what may be a series of hearings on medical devices. The media appears increasingly interested in medical devices and is raising more questions.

All these events are a prelude to FDA and Congress undertaking a major re-evaluation of the product approval process for medical devices. It would be a relief if FDA could diagnose and treat its own medical device problems, leaving the Congress and the media to watch. Read the rest of this entry »

STEVEN GROSSMAN 10/17/10 STEVEN GROSSMAN 10/17/10

Deficit Hawks in the New Congress Threaten FDA Funding

FDA Matters doesn't know who the majority party in the House and Senate will be next year. There seem to be a very large number of races where incumbents are vulnerable or are too close to call. The fate of FDA will be driven by the post-election tone of Congress, more than by the fates of individual Members or who holds the majority.

Looking around the country, nearly every candidate is running "against Washington." The major themes--among Democrats and Republicans alike--are the need to create more jobs and the need to reduce the burgeoning government deficit and the national debt.

Congress may be stymied in the jobs area, since it is unclear how to intentionally create more jobs in our current economic situation. In any case, Congress will have to work through divergent views about how to approach this task. If creating jobs proves difficult, then Members will be working extra hard to show the electorate that the deficit is being tamed.

This year's first continuing resolution only provides FY 11 funds for the federal government through December 3. It has to be seen for what it is: a placeholder for more severe cutting that might occur later this year or early in the next Congress. Regardless of the outcome of the election, there will be a working majority of Republicans and Democrats in the House and Senate in 2011 that are deeply committed to substantial deficit reduction.

While it may surprise many, President Obama has a strong commitment to deficit reduction and will be working with newly-empowered deficit-cutters in Congress.

The White House clearly sees what the campaigns see: nearly across the political spectrum, voters want the federal government to spend less…or at least dramatically slow the increases that are already built into budget projections. The White House is likely to disagree with Congress on some budget items, but the focus will be on very specific items or on how far and fast to cut. Philsophically, President Obama sees himself as a deficit-cutter.

None of this sounds good for FDA. And it isn't. The Alliance for a Stronger FDA anticipated a year ago that future increases would be harder to get for FDA. Throughout 2010, the Alliance has been building on the theme that FDA needs to be an exception to whatever budget cutting occurs.

The Alliance's focus has been to show how a well-resourced FDA creates jobs in the American economy, which is a particularly potent argument with nearly 10% unemployment. The Alliance has also focused on the extraordinary demands being placed on the agency, be it growing responsibilities for medical product reviews and food imports or unexpected items such as pandemic flu and contaminated eggs.

The case for FDA "exceptionalism" has been effective in at least two recent years when most of the federal government received flat funding and FDA received an increase. No one knows if it will work in 2011 and 2012. FDA Matters does know that the agency will find it hard to function if it is caught in an "across the board" 5% or 10% cut in domestic discretionary spending.

It could be even worse. At least one proposal being discussed would roll the Federal Government's funding levels back to the FY 08 base. For FDA, this would mean reducing funding from $2.345 billion in FY 10 to the FY 08 level of $1.713 billion. A quarter of the agency might disappear.

Can I imagine things going that badly? Frankly, no. But so many things happen that we don't believe possible that I worry for the agency and hope readers will lend their voices to those advocating for increased FDA funding.

Steven

For purposes of disclosure: I am a founder and Deputy Executive Director of the Alliance for a Stronger FDA. It is the only multi-stakeholder group devoted to education and advocacy to increase the appropriated resources available to FDA. Members include patient and consumer groups, professional societies, research advocacy groups, associations, companies, consultants and individuals. For more information about the Alliance, go to www.StrengthenFDA.org or write to me at sgrossman@StrengthenFDA.org.

FDA Funding for FY 11: Back to the Future
October 3rd, 2010

Not so long ago, FDA appropriations barely budged from year-to-year. A good year was a 2% to 3% increase. This changed four years ago, after the formation of the Alliance for a Stronger FDA. The agency's case for more resources—always a good one—finally had an independent, multi-stakeholder voice. Champions on the Hill and in the Executive Branch emerged.

The agency appropriation has grown 50% in the last three fiscal years. So far, FY 11 looks more like the past than it does the last few years. FDA Matters believes that the consequences could be severe. Read the rest of this entry »

STEVEN GROSSMAN 10/10/10 STEVEN GROSSMAN 10/10/10

Success is Uncertain for FDA’s Regulatory Science Initiative

FDA Matters was an early advocate for regulatory science. It has been exciting to see the concept grow from the Commissioner's first public speech to the President's request for $25 million in FY 2011. And now, FDA has released a White Paper describing the Regulatory Science Initiative (RSI).It is an excellent report and I applaud those who worked hard to create it. Still, I have misgivings about the way the White Paper characterizes regulatory science, leading to concerns about whether RSI will develop the necessary political and public support to be a long-term, permanent part of FDA.

It is an excellent report and I applaud those who worked hard to create it. Still, I have misgivings about the way the White Paper characterizes regulatory science, leading to concerns about whether RSI will develop the necessary political and public support to be a long-term, permanent part of FDA.

According to the report:

"Regulatory science is the science of developing new tools, standards, and approaches to assess the safety, efficacy, quality and performance of FDA-regulated products." (emphasis added).

I would suggest that:

"Regulatory science is the tools, techniques and knowledge needed by food, medical product and other FDA regulators to carry out their public responsibilities."

FDA's definition makes regulatory science about what FDA develops (new tools, standards, etc.) and about regulated products. Instead, it should be about how regulatory science makes it possible for FDA to carry out its public health mission in an increasingly complex scientific and global environment. It needs to be clear that consumers, patients and regulated industries benefit when regulators have sophisticated, state-of-the-art capabilities and use them transparently, so that no stakeholder has to guess about the agency's approach. These are public purposes for which it is possible to gather broad support.

Most agency funds are spent to carry out applied regulatory science. A smaller, but not insignificant part of the agency budget is already being spent to create and improve regulatory science. For example, much of the budget of the Center for Food Safety and Nutrition that is not spent on inspections and enforcement is focused on better tools and knowledge to create a safer food supply. Most of the work of the National Center for Toxicological Research is devoted to improving regulatory science through the creation of science-based standards.

Regulatory science is not new and is much larger than an agency initiative. Rather, it is a re-conceptualization of who the agency is and what it does. Without this larger and more visionary framework, I fear that RSI is going to be underfunded by Congress and pushed aside when dollars are tight.

What reason is there to think so? The Critical Path Initiative (CPI) was launched with significant fanfare. The original report was one of the most lucid statements I have ever read from a government agency. The projects that Critical Path supported appear to have been well-conceived and responsive to broad, serious regulatory science needs within FDA.

Yet, the Critical Path completely failed to capture Congress' imagination. It received very modest financial support from Congress, even in the last few years when the FDA's budget expanded significantly.

RSI risks the same failure if Congress and other policymakers can neither explain "regulatory science" nor understand why it is fundamental to FDA's mission success. As judged by CPI funding and the limited enthusiasm that it generated, Congress saw it as a nice add-on, but not a necessity.

If RSI can't do better than this, it will not grow and prosper once the initial excitement fades. This would be a great shame because improving regulatory science is essential to making FDA into a 21st century regulatory agency.

That's why it matters what FDA says now about the RSI. Undoubtedly, the agency wants regulatory science to be seen as a better, more holistic way to understand and improve the agency. At the moment, it still looks more like a collection of worthwhile agency improvements that have been bundled into a new initiative.

Steven

The FDA White Paper, Advancing Regulatory Science for Public Health, can be found here, along with the Commissioner's speech on the topic at the National Press Club: http://www.fda.gov/ScienceResearch/SpecialTopics/RegulatoryScience/default.htm

One of several earlier FDA Matters' columns on regulatory science:

CARS: The Vehicle for FDA's Future October 25th, 2009

Since Labor Day, Commissioner Hamburg has spoken a number of times about the importance of regulatory science. She is right. FDA must have the scientific tools and methodologies to be a 21st century regulatory agency. FDA needs to define regulatory science, develop programs to support it, and package them in a way that will quickly bring recognition and funding. Read the rest of this entry »

STEVEN GROSSMAN 10/3/10 STEVEN GROSSMAN 10/3/10

FDA Funding for FY 11: Back to the Future

Not so long ago, FDA's appropriation barely budged from year-to-year. A good year was a 2% to 3% increase. This changed four years ago, after the formation of the Alliance for a Stronger FDA. The agency's case for more resources—always a good one—finally had an independent, multi-stakeholder voice. Champions on the Hill and in the Executive Branch emerged.The agency appropriation has grown 50% in the last three fiscal years. So far, FY 11 looks more like the past than it does the last few years. FDA Matters believes that the consequences could be severe.

For the new fiscal year (FY 11) starting on October 1, Congress passed a Continuing Resolution (CR) that funds the government until December 3. As a result, the government is open, but no agency received new funding. For the next 2 months, government agencies (including FDA) will only be able to spend the amount they were appropriated in fiscal year 2010.

One of this year's Alliance themes has been the need for FDA to be an exception to the overall dismal federal budget situation. The agency must receive funding increases to do its job, which grows larger every day. There is strong support for this in Congress. The Alliance expects FDA to receive serious attention anytime Congress debates funding priorities.

This didn't happen for this first round of the CR for a fairly simple reason: Congress put this CR together without acknowledging any funding priorities. The Alliance believes FDA can win the debate to get increased funding, but only if that debate occurs.

When Congress returns in mid-November and looks at FY 11 funding again, there will be an opportunity to make the case that FDA should receive more funds. However, it is only a guess that this debate will occur before December 3. Congress may decide to pass the same CR to cover the period from December 3 to February 4. If so, the pain of level funding will only become more intense for FDA.

Funding FDA at last year's levels is a particularly acute problem because over 80% of the agency's budget is people-related costs: salary, benefits, rent, IT, travel, support services. FDA cannot delay spending, as NIH might, by waiting a few extra months to disburse grant funds.

FDA management is reviewing contingency plans to preserve its priorities and maximize output. Retaining the fiscal 2010 spending levels will impact FDA's ability to hire medical product reviewers and food inspectors and personnel for other areas of growing need. The agency must use its CR funding to pay for October 1 raises and rent increases, which obviously are not reflected in the FY 10 appropriations level.

The overall situation, as well as these new costs, restricts FDA's ability to make commitments in hiring, new programming, better IT, and contracts. They will also not want to create obligations now that they may not be able to fund later in the year.

Congress will eventually be ready to address the nation's funding priorities, hopefully in November. Regardless of when this debate occurs, all of FDA's supporters will need to rise up as one to convince Congress that more monies are needed.

Steven

FDA's Yearly Appropriations Growth Since FY 2003

FY 03 (base year): $1.390 billion

FY 04 ($11M increase): $1.401 billion

FY 05 ($51M increase): $1.452 billion

FY 06 ($41M increase): $1.493 billion

FY 07 ($77M increase): $1.569 billion (most domestic programs received no increase)

FY 08 ($145M increase): $1.714 billion (plus $150M one-time supplemental, non-add)

FY 09 ($325M increase): $2.039 billion

FY 10 ($306M increase): $2.345 billion

STEVEN GROSSMAN 9/19/10 STEVEN GROSSMAN 9/19/10

ACRA: Little Attention to an Important Appointment

For more than a year, FDA Matters has talked about the position of Associate FDA Commissioner for Regulatory Affairs (ACRA), who is the agency's chief officer for inspections, enforcement and compliance. Of FDA's appropriated (non-user fee) budget, the ACRA oversees one-third of the agency's monies and more than 40% of the staff. It is FDA Matters that dubbed the ACRA the "uncrowned prince" of FDA. Because of the importance of ACRA and the level of resources it receives, we have been awaiting a new appointee to this long-vacant position. This has now occurred, but the announcement was so unassuming as to raise concerns.

Because of the importance of ACRA and the level of resources it receives, we have been awaiting a new appointee to this long-vacant position. This has now occurred, but the announcement was so unassuming as to raise concerns.

Dara Corrigan, JD, will be the new ACRA and run the Office of Regulatory Affairs (ORA). She is a veteran of the HHS Inspector General's office and has also held policy positions at HHS. We wish her well. We also hope that she and the Commissioner can return this position to the visibility it needs.

Congressional and media attention are increasingly focused on FDA's capacity to perform effective inspections and rigorously enforce the law. The agency's good name and public credibility are tied to success in these areas.

Since the Commissioner has so many roles, she needs someone to be the highly-visible, public face of tough enforcement at FDA. Two decades ago, when I worked at HHS, the Inspector General was a former professor who had become the supervisor of the organized crime units in the FBI's Chicago Office. He was a good, smart man and a friend…but you knew immediately that you didn't want to be a target of one of his investigations.

FDA needs Ms. Corrigan to perform this function on behalf of ORA and FDA.

Well run, conscientious companies have little to fear. If you run a solid plant operation, import ingredients with care, use multiple system controls, and renew your commitment to pedigree and chain of custody, you are unlikely to be affected by a stronger ORA. If you have an inspections or enforcement problem: cooperate with FDA and correct it quickly.

On the other hand, if you are cutting corners, heedless of consumer and patient risk, or stonewalling the agency, you deserve what you get from FDA.

Commissioner Hamburg is working to make the agency more scientifically knowledgeable, more innovation-oriented and a more reliable partner in its interactions with industry and other stakeholders. She doesn't have the leeway to accomplish these goals if she doesn't continue to strengthen inspections and enforcement.

It makes sense to take ORA out of the FDA shadows and make it a more visible force. The initial announcement did not live up to this.

Steven

Commissioner Hamburg's Most Important Personnel Decision
February 21st, 2010

With due respect to the many fine individuals that Commissioner Hamburg has recruited, FDA Matters thinks the most important appointment needs to be made soon: choosing the right person to be Associate Commissioner for Regulatory Affairs. Read the rest of this entry »

The Uncrowned Prince of FDA
September 15th, 2009

Which FDA line manager has the most appropriated resources to work with in FY 09? Is it Janet Woodcock, head of the drug center or Stephen Sundlof, [then]head of the food center? The correct answer: neither. Read the rest of this entry »

STEVEN GROSSMAN 8/26/10 STEVEN GROSSMAN 8/26/10

FDA’s Pivotal Role Fighting Bioterrorism and Emerging Infectious Diseases

With Congress out of session until September 13, the Executive Branch has the opportunity to gain extra column inches and media bandwidth. Thus, last week's report on medical countermeasures (MCM), released by HHS Secretary Sebelius, drew a lot of interest and a minimum of Congressional comment. The Secretary released the findings and recommendations from a top-to-bottom review of the Department's efforts with regard to the development of MCM. In the view of FDA Matters, the report thrusts FDA back into its rightful place as a key agency deserving more resources and respect for its national security responsibilities.

The Secretary released the findings and recommendations from a top-to-bottom review of the Department's efforts with regard to the development of MCM. In the view of FDA Matters, the report thrusts FDA back into its rightful place as a key agency deserving more resources and respect for its national security responsibilities.

MCM are products that will decrease morbidity and mortality from a bioterror attack or from naturally occurring emerging infectious diseases. Think anthrax or radioactivity from an improvised nuclear device for the first, think H1N1 influenza for the second.

Scientifically and medically, these are difficult products to discover and develop. Financially, they won't ever be developed without:

federal assistance to promising research; and
a strategic national stockpile and government contracts that will buy proven MCM's.

As with the larger promise of moving medical therapies from "bench to bedside," there is no progress without FDA. The agency encourages companies by helping them to define appropriate safety and efficacy endpoints for their particular MCM and works with them to resolve questions of animal models, lab standards, statistical plans, quality manufacturing, etc.

Then, the agency evaluates the testing results and determines whether to approve the product. This work has an additional wrinkle. With most MCM's (maybe all) it is unethical to do human efficacy trials (e.g. intentionally expose a human being to anthrax to see if the MCM works). Instead, the agency (and the company) must make the difficult evaluation as to whether efficacy in animals is a sufficient surrogate for efficacy in humans.

The Secretary (and the underlying report) found that FDA's efforts in this area are insufficiently funded. Perhaps for the first time, there was a more global recognition of FDA's central role in making us safer from bioterrorism and naturally occurring emerging infectious diseases. The Secretary also recognized that FDA needs resources above its current level to do this job well.

The Administration placed a price tag--$170 million in funds to be available until expended--on the size and scope of the monies needed to upgrade FDA's efforts in this area. The monies will come from dollars previously appropriated to HHS to combat pandemic flu. HHS and OMB have agreed that the monies can be transferred administratively as long as they retain their original purpose of helping to deal with pandemic flu.

However, the Secretary's recommendation is for the transferred funds to also be used for non-pandemic medical countermeasures. This requires a budget amendment to be sent to Congress to broaden the permitted uses of these funds. How likely is Congress to approve this? We probably won't know until after September 13.

What we do know for sure is that FDA can use the additional resources and America will ultimately be safer as a result.

Steven

FDA Matters' most recent (and still accurate) assessment of FDA and the FY 2011 appropriations process:

Update on FDA's Appropriation for FY 11 July 18th, 2010

On July 15, the Senate Appropriations Committee marked up its version of the Agriculture/FDA funding bill. The good news is that the Senate agreed that FDA needs better funding….and provided $2.516 billion, a $158 million in new monies. This is a bit more than 6%. Here is FDA Matters' analysis of this critical budget battle. Read the rest of this entry »

STEVEN GROSSMAN 7/18/10 STEVEN GROSSMAN 7/18/10

Update on FDA’s Appropriation for FY 11

On July 1, the House Appropriations Agriculture/FDA Subcommittee marked up it FY 11 bill. The bottomline was good for FDA: $2.571 billion, a $214 million increase over FY 10, about 9%. No further details will be released until the full committee marks up, possibly later this month.On July 15, the Senate Appropriations Committee marked up its version of the Agriculture/FDA funding bill. The good news is that the Senate agreed that FDA needs better funding….and provided $2.516 billion, a $158 million in new monies. This is a bit more than 6%. Here is FDA Matters' analysis of this critical budget battle.

The Senate's funding level for FDA is the same as the Administration's request. There was hope that the Senate could find the $55 million more to reach the House level. Even the House's proposed funding is not nearly enough to meet FDA's responsibilities in the coming year and the Senate is clearly even further behind with its number. Even so, the Senate's 6% increase is more than what most domestic federal agencies will receive.

The Senate mark-up proved one important point. Both the Senate and the House agree that FDA needs to be an exception to this year's tough round of budget-cutting.

There is still a ways to go. The House full committee needs to mark up its bill, and then both bodies will need to consider and approve these appropriations bills. This presumably would occur in September, although it may occur in late July. It looks like the Agriculture/FDA legislation might be one of the first appropriations bills to move through the pipeline. Hopefully it will be enacted into law before the Congress has to pass a Continuing Resolution (September 30 in advance of the new fiscal year, which starts on October 1).

The primary advocacy group for FDA resources, the Alliance for a Stronger FDA, continues to work for the House level or higher. It is difficult for any agency in this appropriations cycle. Hill deliberations are already sharply skewed by the upcoming 2010 elections. Despite this environment, the FDA's friends in the Administration, the House and the Senate are still trying hard to get the agency more money for FY 11. The Alliance is working with them to preserve FDA gains and to raise awareness that FDA is still under-resourced relative to the agency's responsibilities.

In past years, it would have been safe to assume FDA would receive an increase of $158 million to $214 million. However, none of the current numbers can be relied upon until the House and the Senate reach some understanding about total spending for FY 11.

The Senate is considering proposals that would reduce domestic discretionary spending by either $4 billion or $20 billion. If it is the latter, a large number of domestic programs will face deeper cuts than currently planned. Those who are doing comparatively better may find their gains wiped away. This macro-budgetary risk means the case for FDA must continue to be made and that numbers being discussed now cannot be relied upon.

Below I have provided links to prior columns that discuss why FDA's needs grow each year and why the agency must be an exception to budget cuts. Also below is a chart comparing FY 10 to the levels proposed by the Alliance, the Administration, the House and the Senate.

For information about adding your voice to those advocating for more FDA resources, go to www.strengthenfda.org or send me a note at sgrossman@strengthenfda.org.

Steven

For purposes of disclosure, I am one of the founders of the Alliance for a Stronger FDA and serve as its deputy executive director. FDA Matters is not affiliated in any way with the Alliance.

FDA: A Bargain at Two Cents Per Day Per American
March 28th, 2010

This is the powerful message that the Alliance for a Stronger FDA has been delivering to Capitol Hill. Even still, it will be a difficult year for any federal agency whose mission and responsibilities are growing. Read the rest of this entry »

FDA Needs at Least a $250 Million Increase in FY 2011
March 7th, 2010

FDA Matters feels strongly that this is not nearly enough. By my calculations, at least a $250 million increase for FDA would be needed, just to achieve the program levels anticipated in the President's budget request. The Alliance for a Stronger FDA has asked for a $495 million increase, which could be put to good use by the agency. Why is 6% not enough? Read the rest of this entry »

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Status of FY 11 Appropriations for the FDA

Compared to the Alliance for a Stronger FDA's FY 11 Request

Updated July 16, 2010

Budget Authority Appropriations (does not include user fees)

Function Note: budget authority only, by center	FY 10 Final (October 2009)	FY 11 Alliance Request	FY 11 President's Request Feb. 2010	FY 11 House Subcommittee 7/1/10	FY 11 Senate Committee 7/15/10

Food	$ 784 million	$ 955 million	$ 856 million		$856 million
Human Drugs	$ 465 million	$ 580 million	$ 484 million		$489 million
Biologics	$ 206 million	$ 255 million	$ 215 million		$215 million
Animal Drugs/Feed	$ 135 million	$ 165 million	$ 141 million		$141 million
Devices & Radiological Health	$ 315 million	$ 385 million	$ 326 million		$326 million
Natl. Ctr. For Toxicological Research	$ 59 million	$ 72 million	$ 61 million		$61 million
HQ, Office of Commissioner and Other	$ 144 million	$ 183 million	$ 162 million		$157 million
Rent & Facilities Cost	$ 237 million	$ 250 million	$ 259 million		$259 million
SUBTOTAL, Salaries and Expenses	$ 2.346 billion	$ 2.845 billion	$2.504 billion		$2.504 billion
Building and Facilities Repair	$ 12 million	$ 12 million	$ 12 million		$ 12 million
TOTAL, ALL Budget Authority Appropriations (no user fees)	$ 2.358 billion +$307M over FY 09	$ 2.857 billion Proposes $499 million over FY10	$2.516 billion Proposes $158 million over FY 10	$2.571 billion Proposes $214 million over FY 10	$2.516 billion Proposes $158 million over FY 10

Some columns may not add due to rounding.

The House has released the total for the FDA, but does not release the allocation until full committee mark-up expected later this month.

For more information about the Alliance for a Stronger FDA:

Ladd Wiley, phone: (202) 887-4083 email: lwiley@StrengthenFDA.org

Steven Grossman, phone: 1- (301) 539-9660 email: sgrossman@StrengthenFDA.org

STEVEN GROSSMAN 7/11/10 STEVEN GROSSMAN 7/11/10

Hot Town, Summer in the City—2010

For the news media, the only FDA story this coming week will be the two-day advisory committee meeting reviewing the diabetes drug, Avandia. Based on an earlier article (link below), FDA Matters will be looking at how Dr. Hamburg's FDA handles the discordant voices coming from within the agency.Missing from public dialogue is the extraordinary (perhaps unprecedented) number of large, consequential projects that FDA will be working on this summer. Every part of FDA is involved in some initiative that could become a "game-changer" for the agency.

Missing from public dialogue is the extraordinary (perhaps unprecedented) number of large, consequential projects that FDA will be working on this summer. Every part of FDA is involved in some initiative that could become a "game-changer" for the agency.

FDA shares at least two summer issues with Congress: comprehensive food safety reform and drug safety reorganization. Food safety legislation has passed the House. A different version is awaiting Senate floor action. Since final legislation is not guaranteed, FDA is working hard to develop an approach that is not dependent on statutory changes.

Although drug safety is not an active legislative item, several senior Members of Congress have been persistently calling for re-organization and other changes in how drug safety is evaluated and tracked. The Avandia advisory committee meeting has providing focus for these critics, but their positions do not depend on the outcome.

FDA's efforts to stay in control of drug safety are reflected in at least three initiatives that FDA is working on this summer: creating workable risk management plans (REMS) to accompany drug approvals; safety issues that are becoming part of the negotiations on renewal of drug user fees; and continuing efforts to update Sentinel and related tools for tracking adverse events and safety signals in large populations.

FDA continues its efforts to clarify its policies on safety and effectiveness of medical devices. Pre-approval issues include possible changes in the 510(k) pathway. Post-approval efforts include better device tracking.

Follow-on biologics (now re-named bio-similars) are also keeping FDA busy. This is the first new drug approval pathway in 25 years and FDA has already declared itself ready to accept product applications. At the same time, the agency has acknowledged that there are multiple policy issues to be resolved before agency guidance will be available. What FDA decides now (both on applications and policy) will reshape the world of bio-pharmaceuticals.

Some other top-level agency initiatives with potentially large consequences:

FDA is grappling with its role in comparative effectiveness research.
The FDA's Transparency Task Force has just reported its findings and recommendations.
Upgrading inspections and enforcement are an immediate and ongoing priority for the agency.
FDA is building a new relationship with NIH through a series of initiatives that will fail without serious attention.

Around the agency, here are a few more that could bring significant changes:

FDA, NIH, patients and industry are trying to upgrade research on rare diseases and increase approvals of orphan drugs.
FDA has promised guidance later this year on medical product communications on the Internet and in social media.
FDA is wrestling with antibiotic use in food animals and kicking up some controversy.
Implementation of the year-old tobacco legislation is ratcheting up after various provisions became effective in June.

Even upcoming product reviews may have interesting consequences. Over the next few months, FDA will be looking at three new drugs to treat obesity. This is a difficult product category with a history of safety problems. Yet, millions of Americans are likely to use these products if they are approved.

Despite the number of potential "game-changers" I have identified…no one knows better than Drs. Hamburg and Sharfstein how incomplete my list is. Fortunately, FDA has a great staff. I suspect most of them will be overloaded this summer.

Steven

FDA commissioners need to stay focused on their legacy, while dealing with the mountain of important issues discussed in today's column:

Not Too Soon to Consider the Hamburg Legacy
May 27th, 2010

May 18 marked one year since Dr. Margaret Hamburg was sworn in as Commissioner of the US Food and Drug Administration. The challenges are great, the torrent of issues is never-ending and most days you can smile but you can't win. It may seem premature to be discussing "the Hamburg legacy." But you know that she is thinking about it (all commissioners do), so why can't FDA Matters talk about it? Read the rest of this entry »

My earlier column that relates to the Avandia advisory committee meeting:

Dissent and Efficiency: Difficult Trade-offs for FDA
May 9th, 2010

FDA has a reputation for being tough on dissent, whether it comes from employees or regulated companies. Whatever the truth has been in the past, FDA is trying to develop an institutional cultural that welcomes and accepts dissent from employees, industry and other stakeholders. It is difficult, even messy, to do this. Yet, FDA's reputation and authority rests on showing that it listened to all competing views–without unreasonably slowing the decisionmaking process. Read the rest of this entry »

STEVEN GROSSMAN 5/27/10 STEVEN GROSSMAN 5/27/10

Not Too Soon to Consider the Hamburg Legacy

May 18 marked one year since Dr. Margaret Hamburg was sworn in as Commissioner of the US Food and Drug Administration. The challenges are great, the torrent of issues is never-ending and most days you can smile but you can't win. Nonetheless, I think it has been a very good first year for her and for Principal Deputy Commissioner, Dr. Joshua Sharfstein.It may seem premature to be discussing "the Hamburg legacy." But you know that she is thinking about it (all commissioners do), so why can't FDA Matters talk about it?

It may seem premature to be discussing "the Hamburg legacy." But you know that she is thinking about it (all commissioners do), so why can't FDA Matters talk about it?

Top-line: the agency has a renewed energy and sense of purpose, which I attribute to her leadership. She has been aided by something none of her recent predecessors have had: the flow of new monies. This has allowed her to make choices about priorities and invest time and manpower into them.

Dr. Hamburg's most important legacy will be whether she can sustain this momentum. FDA is still severely under-resourced. The FDA commissioner who can reverse this trend for more than a few years will always be remembered for that.

Improving regulatory sciences is apparently quite high on Dr. Hamburg's list and I have written favorably about it a number of times. I also know that a lot of FDA-watchers are puzzled by it. Here is FDA Matter's explanation:

"Regulatory sciences" means the tools, techniques and knowledge needed by food and medical product regulators to carry out their public responsibilities. Fundamental to the concept is that consumers, patients and regulated industries benefit when regulators have sophisticated, state-of-the art capabilities and use them transparently so that no stakeholder has to guess about the agency's approach.

"Regulatory science" is most often thought of in relation to medical product approvals and food safety, but actually extends to every aspect of the FDA's responsibilities, including manufacturing, product tracking, laboratory procedures, post-market standards, sentinel monitoring, etc.

Accomplishing this—even getting it firmly launched—is a legacy item. We will all benefit if she succeeds…and we will certainly remember her for it.

A third area emerging as a legacy item is a new FDA toughness on enforcement. At one point, I had thought that this was a threshold item: Congress wouldn't let Dr. Hamburg address her other priorities unless she proved that she could assure the safety of medical products and food. That may even be how she thought of it a year ago.

This mission turned out to be more than just eliminating some marginal players and confirming that the mainstream regulated industries were playing by the rules. The past year, we have seen a number of established, name-brand companies held accountable for lapses that should not—by their own admission—have occurred.

One important consequence of inspections and enforcement is to keep everyone on their toes. Maybe CEO's of FDA-regulated companies are not asking tough enough questions or don't appreciate how much the company can be hurt by people many levels below them. If the behavior of mainstream industry is markedly improved and the agency is clearer and more predictable in its standards and enforcement actions, then this would be a powerful legacy for Commissioner Hamburg.

With a year in office, it's not too soon to discuss Dr. Hamburg's potential legacy. What do you think of my list? What would you add? Please post your comments or send them to me at sgrossman@fdamatters.com

Steven

Some previous columns that touch on each of these legacy items:

FDA: A Bargain at Two Cents Per Day Per American

March 28th, 2010

CARS: The Vehicle for FDA's Future

October 25th, 2009

Shaken to the Core: What FDA and FDA-Regulated Companies Can Learn from Toyota

February 25th, 2010

FDA Matters hopes that the CEO's of FDA-regulated companies are paying attention. They need to understand that their company can be "shaken to the core," as Toyota has. Read the rest of this entry »

STEVEN GROSSMAN 4/25/10 STEVEN GROSSMAN 4/25/10

Center-Envy: Are Foods Doing Better than Drugs?

Several times this year, I have been told: FDA's food activities have been getting most of the new monies at the expense of human drugs (CDER) and biologics (CBER). But is it true that food activities (mostly CFSAN, the Center for Food Science and Applied Nutrition) are receiving preferred treatment? FDA Matters ran the numbers to see. We conclude that center-envy is bad in its own right, but even worse when it is based on misinformation and misperceptions.

FDA Matters ran the numbers to see. We conclude that center-envy is bad in its own right, but even worse when it is based on misinformation and misperceptions.

Here is a chart providing relevant comparisons over nine fiscal years, including the current one.

Center	FY 2002	FY 2007	FY 2010

FOOD--Total	$393 million	$457 million	$784 million
Center	-------$143 million	-------$159 million	-------$237 million
Field activities	-------$250 million	-------$298 million	-------$547 million
User fees	-------none	-------none	-------none

HUMAN DRUGS & BIOLOGICS--Total	$542 million	$746 million	$1.185 billion
Centers	-------$289 million	-------$349 million	-------$503 million
Field activities	-------$104 million	-------$113 million	-------$168 million
User fees	-------$149 million	-------$284 million	-------$514 million

Center, field activities and user fees combined. These are the number across the two rows marked "total." In FY 2002, the FDA's food budget was 72% of the amount allocated to human drugs/biologics received.

In FY 2007, it had declined to 61% and rebounded slightly to 66% in FY 10. Thus, over this 9 year period (8 appropriations cycles), funding for food activities has actually declined slightly compared to CDER/CBER.

Excluding field activities from funding available for Center activities. "Field activities" is FDA-speak for investigations and enforcement. The funds supporting field activities are in each Center's budget, but are transferred to the Office of Regulatory Affairs (ORA). These funds do not support core Center activities.

If field activities in ORA are excluded over the nine year period, CFSAN grew by 60%. CDER and CBER (including user fees) grew by more than 150%. Thus, it is possible to conclude that the core functions of CDER and CBER have done far better than the core functions of CFSAN.

The pace has changed over the last 3 years. During this period, CFSAN grew by 67% compared to CDER and CBER's growth (including user fees) of 62%. Funding for drugs and biologics, which grew enormously through the mid-2000's, is now growing at a rate comparable to foods. However, for foods this means an increase of $78 million, while CDER/CBER grew by $384 million over the three years.

Excluding User Fees, as well as field activities. Core appropriated funding for the centers grew at about the same rate over both the longer and shorter period. For the nine years (eight appropriations cycles), CFSAN grew by 60%, CDER/CBER by 57%. For the last three years, CFSAN has grown by 67% compared to 69% for human drugs and biologics. In effect, the food and drugs centers have been treated almost identically, with user fees tilting the comparison dramatically in favor of CDER and CBER.

Bottom-line: Increases in CFSAN have gotten a lot of attention, but CDER and CBER budgets have grown by far more over the last nine years if user fees are included. If user fees are excluded, then CFSAN and CDER/CBER have grown at comparable rates over the nine year period and also over the last three years.

PS: In the President's FY 11 request, the proposed appropriations increase for CFSAN is larger than for CDER and CBER combined. However, all of the differential is in 87 people and $40 million that is being proposed for new food inspectors. If ORA is excluded, as well as user fees, the food increase and the drug/biologics increases are about equal on a percentage basis.

Steven

Two past columns have discussed the Office of Regulatory Affairs and a recent column urged less reliance on user fees to fund CDER.

The Uncrowned Prince of FDA
September 15th, 2009

Which FDA line manager has the most appropriated resources to work with in FY 09? Is it Janet Woodcock, head of the drug center or Stephen Sundlof, head of the food center? The correct answer: neither. Read the rest of this entry »

Commissioner Hamburg's Most Important Personnel Decision
February 21st, 2010

With due respect to the many fine individuals that Commissioner Hamburg has recruited, FDA Matters thinks the most important appointment so far has been Michael Taylor to be Deputy Commissioner for Foods. An even more important decision needs to be made soon: choosing the right person to be Associate Commissioner for Regulatory Affairs. Read the rest of this entry »

Wrestling for the Soul of FDA
March 17th, 2010

User fees are a bad way to fund FDA, a public health regulatory agency that oversees nearly a quarter of all consumer spending. It's not that user fees are corrupting. FDA is capable of making good and bad decisions without regard to where the money comes from. But user fees have the potential to erode public confidence in the agency. Read the rest of this entry »

STEVEN GROSSMAN 3/31/10 STEVEN GROSSMAN 3/31/10

It’s 12 Years of Data Exclusivity

On several occasions, FDA Matters has asked Congressional staffers: how many of the Senators and Representatives understand that the follow-on biologics debate is about the amount of data exclusivity, not market exclusivity? In reply, I always get a smile that confirms my suspicion.None of this would matter if data and marketing exclusivity were similar to each other…or even of roughly equal value. They are not. The future of bio-similar products cannot be understood without grasping the difference.

For an updated analysis, go to the May 2, 2010 column: Data Exclusivity and Bio-Similars: Both More and Less Than It Seems.Read the rest of this entry »

The confusion is not limited to the Hill. The New York Times referred to "market exclusivity" in its article on industry winners and losers on the day of the key House vote. A prominent industry trade publication—whose staff clearly knows better—referred to "bullet-proof market exclusivity" in a story the next day. The San Francisco Chronicle got it right—perhaps because of the concentration of bio-pharmaceutical companies in the Bay Area.

None of this would matter if data and marketing exclusivity were similar to each other…or even of roughly equal value. They are not. The future of bio-similar products cannot be understood without grasping the difference.

Intellectual property (IP) protection comes in several forms—the more types you have for the longest possible time, the less likely you will have competition.

The most familiar is patent protection. You own a product, formula or process for a number of years set by law and subject to various other considerations. For example, Hatch-Waxman provides for patent extensions to cover part of the time that pharmaceutical products are delayed in regulatory review.

On the other hand, patents can be challenged both as to their legitimacy and when they expire, thus negating or shortening the patent. At the end of the patent's life, the product, formula or process is (at least potentially) in the public domain, available for copying.

Another form of intellectual property protection is market exclusivity. For a period of time, a regulatory approval agency (FDA) will not accept another application for the same drug and indication. The best-known example is the seven years of market exclusivity granted to orphan drugs.

Market exclusivity runs independently from the patent. It can also protect the ability to market a product that is unpatentable or for which the patent has expired. With some exceptions, market exclusivity cannot be challenged in court….meaning that there are situations where it is better than a patent. Note that market exclusivity is primarily about regulatory forbearance, not ownership.

Data exclusivity under the new law is about ownership of the safety and efficacy data that supported the reference (originator) product when it received regulatory approval. Specifically, for a period of 12 years, FDA cannot approve a bio-similar product using the data (owned by a different company) that supported the original approval.

Data exclusivity does not prevent a second company from generating their own data. Nor does it prevent FDA from deciding that a 200 person trial is sufficient when the original approval was based on 2000 patients. Further, the science of characterizing biological substances is likely to advance rapidly over the next few years, providing the potential for additional ways for a bio-similar product to satisfy FDA requirements.

Data exclusivity is valuable. The investment community's enthusiasm for the 12 years of protection is appropriate. However, patents and market exclusivity are extremely powerful barriers to competition….and data exclusivity is not.

In a future column, I will further explore the implications of these distinctions…particularly, my view that the new law will lead to significant growth in the biopharmaceutical marketplace for both innovator and bio-similar products.

If you are not a subscriber and don't want to miss that column and future analysis of FDA and bio-pharmaceutical issues, I recommend going to www.fdamatters.com to register for free updates.

Steven

Two earlier columns on this topic:

Follow-on Biologics: 1-2-3-GO

March 21, 2010

The world of biopharmaceuticals will never be the same, but not in the ways that many players expect. Here is FDA Matters' guide to understanding the next phase. Read the rest of this entry »

The Follow-on Biologics Market
June 23, 2009

Since the debate began several years ago, the policy and politics of follow-on biologics (FOB) have been driven by assumptions and projections of the anticipated market. There has been a lot of fuzzy thinking about what type of companies will be players and how they will position themselves. Read the rest of this entry »

STEVEN GROSSMAN 3/28/10 STEVEN GROSSMAN 3/28/10

FDA: A Bargain at Two Cents Per Day Per American

FDA touches every American many times each day. Today's investment (2 cents per day per American) is a pittance compared to the benefit of a strong FDA and the risk of an underfunded FDA. There cannot be many agencies in the US government that have such a vast scope of responsibilities and so few dollars to get the job done. This is the powerful message that the Alliance for a Stronger FDA has been delivering to Capitol Hill. Even still, it will be a difficult year for any federal agency whose mission and responsibilities are growing.

In recent testimony to the House and Senate Appropriations Committees, the Alliance focused on the large gap between FDA's responsibilities and resources. The Alliance also points to ways in which the agency's job becomes tougher each year—notably through increased scientific knowledge and rapid industry globalization.

In the style of David Letterman's Top Ten lists, the Alliance has its own list of 10 things they hope policymakers will know and remember about FDA:

FDA is a comparatively small agency with a small appropriation: just $2.35B in 2010 to regulate products that represent a quarter of all consumer spending.
Twenty-five years ago, FDA and CDC were the same size; today the CDC budget is nearly 2 1/2 times as large.
A strong FDA is good for the US economy and for our balance of trade.
FDA is an integral part of our response to public health emergencies, including defense against bioterrorism.
FDA's appropriation is almost entirely staff costs, requiring nearly 6% increase each year to sustain program levels.
After three years of good increases (thank you, Congress), FDA staffing levels from the 2010 appropriation have only just been restored to the previous high-level achieved in 1994.
User fees serve valuable functions, but they are targeted and support only specific activities. They don't strengthen the FDA in carrying out its overall public health mission.
All FDA stakeholders support a stronger FDA (consumers, patients, health professionals, and industry).
FDA's responsibilities increase each year---through new mandates, globalization, and scientific complexity.

And the single most important reason (and the one raised at the beginning of this column):

FDA touches every American many times each day. Today's investment (2 cents per day per American) is a pittance compared to the benefit of a strong FDA and the risk of an underfunded FDA.

To their credit, the Obama Administration has committed to cutting domestic spending by funding priority programs, rather than relying on across-the-board cuts. This is a challenge FDA can meet: showing that increased funding brings substantial benefits to the American people and is worthy of increases beyond what other agencies are getting.

Going from 2 cents to 3 cents per day doesn't seem like much, but it would add $1 billion to the FDA budget.

Steven

For purposes of disclosure, I am one of the founders of the Alliance for a Stronger FDA and serve as its deputy executive director. FDA Matters is not affiliated in any way with the Alliance.

For more information about the Alliance, send me a note at sgrossman@strengthenfda.org.

The Alliance for a Stronger FDA's House testimony is at:

http://fdaalliance.files.wordpress.com/2009/11/alliance-statement-house-appropriations-committee-fy-11.pdf

STEVEN GROSSMAN 3/20/10 STEVEN GROSSMAN 3/20/10

Follow-on Biologics: 1-2-3-GO

The long fight is over for follow-on biologic (FOBs). The Senate-passed version of health reform will become law, even while the larger fight continues over the reconciliation package. Within 10 days, FDA will be busy implementing an approval pathway for FOBs. The world of biopharmaceuticals will never be the same, but not in the ways that many players expect. Here is FDA Matters' guide to understanding the next phase.

The world of biopharmaceuticals will never be the same, but not in the ways that many players expect. Here is FDA Matters' guide to understanding the next phase.

Laws set the rules, but what happens next is remarkably dynamic and unpredictable. I was one of the Senate negotiators on the Patent Term Restoration and Drug Price Competition Act (Hatch-Waxman) and the Orphan Drug Act (ODA). What we thought would happen…and what actually happened…were not the same. Not necessarily better or worse. Just different.

We thought Hatch-Waxman would create an orderly world of patent extensions and generic approvals. We could not imagine the scandal in the generic drug office a few years later and would have been astounded that companies might still be litigating ground rules 25 years later.

The ODA was a triumph of good intentions, but would not have worked without the subsequent amendment redefining orphan drugs as affecting fewer than 200,000 Americans each year. We were not thinking about cancer patients. Yet they have been among those who have benefitted most by the ODA.

What will happen to FOBs will be just as dynamic and unpredictable.

The market was not waiting for the law to pass. Even though a legislatively-created FOB approval process was uncertain, Pfizer, Merck, Novartis, Teva and other major biopharmaceutical companies had already made decisions to be involved. Billions have already been spent or committed by companies before they knew the final FOB ground rules in the US.

More knowledge about the discovery, creation and manufacturing of biologics will be good for innovators, as much as imitators. Some of those biologically-similar products will themselves be innovative. As a result, many will require full approvals rather than being able to take advantage of an abbreviated FOB pathway.

Innovators will benefit from progress on characterizing biologic molecules, new testing methodologies and manufacturing improvements. To take a single example, the FOB market will force new investments in understanding immunogenicity that will benefit the entire industry, as well as patients.

FDA will be remarkably conservative for at least the next 5 years. FDA is ready for FOBs. Passage of the law gives the agency an important new public health mission: assure the safety and efficacy of biological products that will provide better access and greater affordability for life-saving and life-enhancing therapies.

Enthusiasm aside, the FDA is likely to be conservative in its policies and actions. They have not forgotten the problems in managing generic drug applications after Hatch-Waxman. They are fully aware of potentially big consequences in very small differences in biological products. They have lived through contaminated heparin and Genzyme's manufacturing problems.

FDA will want new safety and efficacy data from all applicants, with an emphasis on immunogenicity testing. Knowledge in these matters will increase rapidly and FDA will loosen up over time. But not soon…and in measured steps.

Steven

Here is an earlier column on the likely dynamics of the FOB marketplace.

The Follow-on Biologics Market

STEVEN GROSSMAN 3/17/10 STEVEN GROSSMAN 3/17/10

Wrestling for the Soul of FDA

User fees are acceptable if they pay for processing passports or extra services at national parks. I don't worry that the American public will lose confidence in the State Department or the National Park Service. This doesn't translate to every user fee and every government department.User fees are a bad way to fund FDA, a public health regulatory agency that oversees nearly a quarter of all consumer spending. It's not that user fees are corrupting. FDA is capable of making good and bad decisions without regard to where the money comes from. But user fees have the potential to erode public confidence in the agency.

FDA Matters gets it. The agency needs more money to fulfill its mission and the Congress won't pay for all of the costs. In FY 10, nearly $700 million came from user fees charged to drug and device manufacturers and a few others. (This total and the remaining discussion omit tobacco user fees. No one thinks tobacco companies are getting favorable treatment for their monies!).

FDA received $2.345 billion from public funds in FY 10, more than three times the amount from user fees. It would take a long-time and a lot of user fees for the overall balance in the agency to be threatened.

The real story (and the worry for the future of the rest of the agency) is the Center for Drug Evaluation and Research (CDER). It receives about $750 million to run the drug approval process and other CDER activities (other than inspections and enforcement). Of that total, about $335 million comes from public funds (45%); $415 million from user fees (55%). How can it be good for industry to provide the predominant funding for CDER or any of the other FDA centers?

Nothing wrong is occurring. But the overreliance on user fees is confidence-eroding for Congress, media and the American public…and dispiriting for FDA staff.

Now is the time to raise and debate these issues.

FDA has begun the public hearing process for the next drug user fee act (PDUFA V). Another round of user fee increases could push CDER into even greater dependence.
The appropriations committees have started consideration of the agency's FY 11 appropriation. Under the President's request, existing user fees (excluding tobacco and proposed new fees) will grow about 15%, while public funds only 6%.
Congress may pass new food safety legislation and the House version includes $220 million in new user fees to pay part of the costs of new responsibilities. This is about 20% of the food monies in the President's FY 11 budget request. This percentage could increase if Congress doesn't provide several times this amount from public funds to implement the law.

For fiscal and political reasons, user fees are here to stay and FDA will never be funded entirely from public monies. This should not blind us to the risk of FDA slipping into dependence on user fees. Nor should it blind us to how user fees are a drag on public confidence in FDA.

I believe that FDA, regulated industries, Members of Congress and other stakeholders agree with FDA Matters. Yet, you are unlikely to hear them say so. Each fears that FDA would shrink without user fees. Someone needs to go first and say: we will find public monies to keep FDA from becoming dependent on user fees.

The soul of the FDA may not be at stake. But we should not underestimate the damage to the agency from a public perception that user fees are darkening its soul.

Steven

At the March 10, 2010 House Appropriations Committee hearing, Commissioner Hamburg addressed the relationship between user fees and FDA decisionmaking:

…. [E]xamining the integrity of our decision making and ensuring that it is free from conflict of interest and other concerns is one of the most essential elements of FDA being able to do its work, being able to have the trust and confidence of policy makers and the public and certainly one of my highest priorities. So we take it very seriously. We have established firewalls in terms of the use of user fees. We are committed to a science-driven decision making process, and it's a dynamic concern. We can't just sit back and say our systems are in place, move onto the next issue. It's something we have to continually be monitoring, continually responsive to concerns as they're raised and ensuring that we have the right checks and double checks.

My earlier blog column on this topic:

It's Time to Change CDER Funding

September 17th, 2009

As most readers know, bio-pharma companies pay user fees, based on activities (such as submitting a New Drug Application) and on the number of their manufacturing facilities. The amounts are set by law. As part of the arrangement, FDA agrees to certain performance goals, which are also specified in law.

We often hear how dependent CDER is on user fees. The actual numbers are startling and deserve to be well-aired. Read the rest of this

STEVEN GROSSMAN 3/7/10 STEVEN GROSSMAN 3/7/10

FDA Needs at Least a $250 Million Increase in FY 2011

The President's proposal to freeze domestic discretionary programs in FY 2011 (and beyond) will force painful cuts across government and in programs that millions of American rely upon. Even some traditionally-favored agencies, such as NIH, are looking at only small increases. With a proposed 6% increase (about $150 million), FDA would seem to be doing far better than most.FDA Matters feels strongly that this is not nearly enough. By my calculations, at least a $250 million increase for FDA would be needed, just to achieve the program levels anticipated in the President's budget request. The Alliance for a Stronger FDA has asked for a $495 million increase, which could be put to good use by the agency. Why is 6% not enough?

Despite three good years of increases for FDA, we are still fighting decades of neglect. Appropriated staffing levels in 2010 are only back to where they were in 1994. Over a 25-year period, CDC has grown from an agency the size of FDA to one that is three times as large. Meantime, FDA has new responsibilities and an ever more-complex environment in which to function.

A 6% increase doesn't go very far. A tad more than $100 million will be taken up by increases in salaries, benefits and rents. Other costs go up also. On a FY 10 base of $2.35 billion, about $40 million is available for new programming in FY 11. It will probably go to hire more food inspectors, which is an important need.

This suggests that the rest of the agency (apart from food inspection) will be able to operate in FY 11 at their FY 10 staffing/program levels. In reality, this won't be the case unless the Congress provides FDA with an appropriation above the President's request.

Here is why the picture is actually quite grim. According to FDA budget documents, the increased cost of salaries in FY 11 is $66 million. As far as I can tell, only about $3 million is actually part of the President's request. So, what we consider as an increase to cover inflation…..actually does nothing of the sort. The President has told Congress: give FDA a $146 million increase in monies and it will provide a $143 million increase in programming.

So, food inspections, patient safety and advancing regulatory science (the President's budgetary priorities) will happen….and parts of the rest of the agency will shrink (because they can't cover inflation) OR vital, existing services will continue, but FDA won't be able to deliver on the President's initiatives. It will take an extra $100M (an increase of $250 million total) to cover inflation in salary, rents, etc. and provide the new programming in the President's request.

To bring this down to specifics, the President has requested $25 million for advancing regulatory sciences. This is a priority of Commissioner Hamburg and much lauded by the stakeholder communities. At an IOM meeting last week on regulatory science, there was palpable excitement that the President had made a great first-year commitment. But follow the logic of this analysis and it is unclear whether there really will be monies to get started in FY 2011.

The bottomline: FDA needs more than the increase proposed in the President's request. The President, by his budget justification, agrees....and envisions an FDA that will require at least a $ 250 million increase.

Steven

Some recent thoughts on the same topic, but with a different focus:

The President's Budget Request: Is 6% Enough for FDA?

February 4th, 2010

The President's FY 11 budget request for FDA includes a $146 million increase in appropriated (non-user fee) funding. This is about 6% of the $2.36 billion appropriation that FDA received in FY 10. With the President's tough talk about deficit reduction, anything above a freeze should be considered good. Why was the Alliance for a Stronger FDA disappointed? Read the rest of this entry »

STEVEN GROSSMAN 2/25/10 STEVEN GROSSMAN 2/25/10

Shaken to the Core: What FDA and FDA-Regulated Companies Can Learn from Toyota

I do not believe that Toyota became a global success by cutting corners and ignoring safety concerns. Nonetheless, the company may not survive the investigations, the lawsuits, the civil and criminal fines, the securities litigation, the recalls (8.5 million cars so far), the loss of consumer confidence and the possible criminal indictments. FDA Matters hopes that the CEO's of FDA-regulated companies are paying attention. They need to understand that their company can be "shaken to the core," as Toyota has.

FDA Matters hopes that the CEO's of FDA-regulated companies are paying attention. They need to understand that their company can be "shaken to the core," as Toyota has.

What's a CEO to do?

First and foremost, believe (really believe) that bad things can happen to you and your company. Being FDA-regulated means "always worrying that you will have to say you're sorry." Foods, drugs and devices are central to our everyday life. By their nature, problems are to be expected. Deadly consequences are never more than one mistake or misjudgment away.

Don't assume that you can limit the damage. Problems escalated quickly for Toyota, revealing flaws in the company's process and attitude, not just its products. Most of the product lines are involved. And concerns keep multiplying, while confidence dwindles in the company's ability to fix the problems.

Recognize that "the buck stops here." Congress and the media are fascinated by what Mr. Toyoda knew and when he knew it. But it is quite beside the point. His public humiliation and the likely ruin of the Toyota brand are going to occur regardless of his level of knowledge. The CEO is responsible and will be held accountable for the actions and failures of all the company's employees and vendors.

Trust, but verify. In a large, multi-national company, there are an endless number of decisions.

Hiring good people and delegating is "necessary but not sufficient." Even the best employees find it difficult to tell their boss about a serious issue that might require costly pre-emptive action. It's too easy for them to think: last year's worst fears never materialized, so maybe today's concerns won't turn out to be bad either.

Don't drink the Kool-Aid. Everyone wants to be part of the team--to believe in the product they are creating. It becomes hard to be objective about the good and bad points of what one's company and team are doing. The CEO needs to believe the worst is possible, ask the tough questions and be skeptical when everyone responds "we're okay."

Your crisis management plan is not enough. Crisis planning is a step-child of corporate communications. Not enough companies have such plans and even fewer take them seriously enough to practice and update them. I doubt many companies have well-honed plans that prepare them to deal with multi-system failure.

In a hurricane of adversity, it is unavoidable that companies will be "shaken to the core." As with real storms, the survivors will be those who built sounder structures, monitored performance closely, and put plans in place for the "once in a hundred years" event that devastates everything.

Such preparation does not happen naturally and cannot be delayed until the storm clouds appear.

However, CEO's can commit to running "shaken to the core" reviews—to anticipate and prevent problems, as well as prepare for dealing with the worst. FDA Matters sees at least three keys to success in this type of "360 degree" inquiry:

no person, project, product, or process can be protected from review,
employees need to know that they can speak up confidentially and without fear of reprisal, and
outside experts are needed to perform reviews and audits, because no one can be sufficiently objective about their own work or team.

And yes, FDA Commissioner Hamburg is a CEO….. and this column applies to FDA as much as it does to any FDA-regulated company.

Steven

Some related columns:

Executions in China: A Thanksgiving Message

November 24th, 2009

Sometimes it takes other people to give us a perspective on our own values. Read the rest of this entry »

Black, White, Shades of Gray

November 13th, 2009

Civil and criminal investigations are becoming a more prominent feature in the world of FDA-regulated industries. People who never gave any thought to this….suddenly find themselves needing to understand how investigations work. Read the rest of this entry »

The Beatings Will Continue…
November 1st, 2009

It has been an expensive year for pharmaceutical companies. Billions of dollars have been paid to federal and state governments and whistleblowers in settlement of allegations and lawsuits. The complaints include off-label marketing and overcharging Medicaid, but there are many others. Read the rest of this entry »

STEVEN GROSSMAN 2/21/10 STEVEN GROSSMAN 2/21/10

Commissioner Hamburg’s Most Important Personnel Decision

With due respect to the many fine individuals that Commissioner Hamburg has recruited, FDA Matters thinks the most important appointment so far has been Michael Taylor to be Deputy Commissioner for Foods. An even more important decision needs to be made soon: choosing the right person to be Associate Commissioner for Regulatory Affairs.

Not so many years ago, the Associate Commissioner for Regulatory Affairs—who heads the Officer of Regulatory Affairs (ORA)—was the #2 or #3 person at FDA, depending on whether there was a principal deputy. If the commissioner was abroad or unavailable, the person with the regulatory affairs portfolio was next in line. This changed at some point, but I am not sure when or why.

The head of regulatory affairs oversees all of the inspection and enforcement activities of the agency. This is an extraordinarily powerful position, even though very few people know who heads ORA or much about it. FDA seems to consciously downplay the leadership, mission and importance of the office.

Yet, the Associate Commissioner for Regulatory Affairs controls more than one-third of the FDA's appropriated budget and oversees about 4,000 people spread across the US and the world. Last year, I proclaimed the head of regulatory affairs to be "the uncrowned prince of FDA."

On January 27, FDA posted a job notice seeking a new Associate Commissioner for Regulatory Affairs. Since the job has been vacant, the responsibilities have been carried out by an "acting" associate commissioner. Applications must be received by February 24.

The FDA needs a permanent head for the Office of Regulatory Affairs…and the sooner the better. Congressional and media attention have increasingly focused on FDA's capacity to perform effective inspections and rigorously enforce the law. The agency's good name and public credibility are tied to success in these areas. If the FDA's rigor as a regulator comes into questions, its ability to undertake initiatives elsewhere in the agency may ultimately flounder.

Since the Commissioner has so many roles, she needs someone to be the highly-visible, public face of tough FDA enforcement. Two decades ago, when I worked at HHS, the Inspector General was a former professor who had become the supervisor of the organized crime units in the FBI's Chicago Office. He was a good, smart man and a friend…but you knew immediately that you didn't want to be a target of one of his investigations. FDA needs someone like him.

I don't have any particular candidate in mind. Even if the "acting" associate commissioner were to be promoted, he would have more authority than at present.

Getting the right Associate Commissioner for Regulatory Affairs is Commissioner Hamburg's most important personnel decision. Once a decision is made, I hope she will see the value of creating a stronger profile for both the office and the office-holder.

Steven

The job posting is at:

https://jobs.smartbrief.com/action/listing?listingid=E5035373-B323-472F-8D7F-A765DE87A093&briefid=3e572e18-3fbc-11d5-ad13-000244141872&sid=9ae0455d-fd94-42bf-aca1-47b8d3adbfa7

Earlier columns relevant to this topic:

A New Food Agency Has Become Unnecessary (For Now)

January 15th, 2010

FDA Matters applauds the appointment of Mr. Michael Taylor to be the first Deputy Commissioner for Foods at FDA. With more authority, experience and stature than any previous food leader, he has the opportunity to shape and re-shape food regulation and the safety of the food supply. Because Mr. Taylor will be outstanding in this new post, the campaign for a separate food agency will go away, at least for a couple of years. Read the rest of this entry »

Executions in China: A Thanksgiving Message

November 24th, 2009

Sometimes it takes other people to give us a perspective on our own values. Read the rest of this entry »

The Uncrowned Prince of FDA

September 15th, 2009

STEVEN GROSSMAN 2/4/10 STEVEN GROSSMAN 2/4/10

The President’s Budget Request: Is 6% Enough for FDA?

Or to be more precise, the Alliance (www.StrengthenFDA.org) appreciated that FDA got more than most agencies, but felt that an inflation level increase was insufficient for FDA. The Alliance pointed out that the increase will not cover the ever-growing demands on the agency or strengthen the agency's capacity to fulfill its mission. They added: three good appropriations cycles for FDA (FY 08 to FY 10) have not undone more than a decade of budgetary neglect.

Of the $146 million increase for the agency's appropriated budget, CFSAN would get $60 million, about an 8% increase. This is a little more than an inflationary increase and foods programs will be able to grow marginally in FY 11. This is progress…though not nearly what is needed to meet the continued challenge of keeping foods safe and the increasing complexity and international scope of the food supply chain.

Far less was provided for medical products. Drugs and biologics received a combined $28 million increase in the President's request (about 4%). Devices received an $11 million increase (less than 4%), which does not cover the cost of pay increases. Other items that will increase this year (rent, IT, training, and travel) will need to come from existing program dollars.

There is near-universal acceptance that the federal budget needs to be trimmed. Few domestic agencies did better in the President's request than FDA.

But there are differences in the needs of federal agencies. FDA's budget is almost entirely people costs. Salaries are more than 60% of the agency's budget. When you add in benefits, rent, IT services, travel, training, etc., 80% of the budget is devoted to people and the support they need to do their jobs.

If the FDA's appropriated budget does not grow by at least inflation each year, then staff levels decrease. This is what happened in most years from 1994 to 2007.

For example, after 9/11 the agency received significant new monies to hire inspectors to decrease the risks of agro- and bio-terror. Within 5 years, this increase in the FDA field force had disappeared, due to inflation, attrition and a lack of supportive funding. There is nothing hypothetical about the consequences of underfunding FDA.

Undoubtedly, FDA will find ways to be more efficient in FY 11, which will relieve a little of the pressure of doing more without new money. However, the amount to be gained in this manner is not large.

In contrast, there are plenty of areas for additional investment. FDA is operating a 1990's IT system, requiring it to work with databases that are incomplete and do not provide sophisticated support for decision making. Training the FDA workforce is another priority for additional funding.

FDA is still very much in the catch-up mode from past underfunding. Six percent is not enough!

Steven

For purposes of disclosure, I am one of the founders of the Alliance for a Stronger FDA and serve as deputy executive director. FDA Matters is not affiliated in any way with the Alliance.

Chart provided by the Alliance for a Stronger FDA:

President Obama's FY 11 Request for the FDA

Compared to the Alliance for a Stronger FDA's FY 11 Request

Budget Authority Appropriations (does not include user fees)

Function Note: budget authority only, by center	FY 08 Actual (December 2007)	FY 09 Final (March 2009)	FY 10 Final (October 2009)	FY 11 Alliance Request	FY 11 President's Request

Food	$ 510 million	$ 649 million	$ 784 million	$ 955 million	$ 848 million
Human Drugs	$ 353 million	$ 413 million	$ 465 million	$ 580 million	$ 484 million
Biologics	$ 155 million	$ 183 million	$ 206 million	$ 255 million	$ 215 million
Animal Drugs/Feed	$ 97 million	$ 116 million	$ 135 million	$ 165 million	$ 141 million
Devices & Radiological Health	$ 238 million	$ 280 million	$ 315 million	$ 385 million	$ 326 million
Natl. Ctr. For Toxicological Research	$ 44 million	$ 52 million	$ 59 million	$ 72 million	$ 61 million
HQ, Office of Commissioner and Other	$ 97 million	$ 121 million	$ 144 million	$ 183 million	$ 162 million
Rent & Facilities Cost	$ 220 million	$ 223 million	$ 237 million	$ 250 million	$ 259 million
SUBTOTAL, Salaries and Expenses	$ 1.714 billion (+$145M over FY 07)	$ 2.039 billion (+$325M over FY 08)	$ 2.346 billion (+$307M over FY 09)	$ 2.845 billion	$2.496 billion
Building and Facilities Repair	$ 8 million	$ 16 million	$ 16 million	$ 12 million	$ 12 million
TOTAL, ALL Budget Authority Appropriations (no user fees)	$1.722 billion	$2.055 billion	$ 2.362 billion	$ 2.857 billion (Proposes + $495M over FY10)	$2.508 billion (Proposes $146 million over FY 10)

Because OMB includes new and proposed user fees in their totals, these numbers vary considerably from those being discussed by the Administration and reported by many sources. Notably, the President's request includes user fees being collected for the new tobacco center at FDA, monies that exactly match the cost of new responsibilities added this year.

STEVEN GROSSMAN 1/28/10 STEVEN GROSSMAN 1/28/10

FDA, SOTU, and the President’s Budget Request

The President's State of the Union (SOTU) address gave no clues as to the fate of the FDA budget for FY 11 (begins October 1, 2010). Both the general and specific details for the agency await the February 1 release of the President's budget request.While the House and Senate have control over the final amount that FDA receives, the President's request is the baseline against which the Congress works. FDA Matters is pleased to offer a guide to interpreting this first stage of the FY 11 appropriations process.

While the House and Senate have control over the final amount that FDA receives, the President's request is the baseline against which the Congress works. FDA Matters is pleased to offer a guide to interpreting this first stage of the FY 11 appropriations process.

What the State of the Union didn't tell us. There was hope that the President would make reference to FDA or touch upon food safety. This didn't occur and there was almost nothing on public health in the address. Even a reference to cancer research did not lead to a mention of support for NIH.

The President announced a three-year freeze on discretionary domestic spending, followed by inflationary increases for the rest of the decade. Within this, some agencies and programs will continue to grow, while others will need to be cut substantially or eliminated. Other than to exclude defense and veteran's affairs, the President did not give any indication of who would be favored with budget increases.

What to expect when the President's budget request is released. It will be confusing. Increased revenue from existing and new user fees is likely to be included in totals showing that FDA is growing. This will mask whether the non-user fee budget authority (BA) appropriations (public funds) will increase under the President's request.

Media often report straight from the OMB summary sheets, so don't believe any reported numbers unless they recognize the distinction between user fees and BA appropriations. Another potential point of confusion is whether the user fees that fund the new Tobacco Center will be represented as providing more resources to FDA.

The distribution of any new funds among the FDA functions is also important. It is possible, for example, for food safety to receive increases while the rest of FDA is flat-funded.

Looking strictly at BA appropriations, FDA received $2.35 billion for FY 10. Based on year-over-year inflation in FDA costs, the agency needs an increase of $120 to $140 million just to maintain current staffing and program levels. Any less will mean cutbacks within the agency.

It is possible the President's request will include new responsibilities for FDA. Unless separate additional funding is provided, this will also hinder efforts to strengthen the agency.

For comparison purposes, FDA received a $306 million increase in FY 10. The Alliance for a Stronger FDA is recommending a $500 million increase for FY 11.

What Congress does next. Just as the President has weighed FDA against competing priorities, so must Congress. Action will accelerate through the Spring, with hearings, mark-ups and negotiations. Congress will be trying to get appropriations done by September 15, well before the elections.

Why advocacy is essential to funding the FDA. The Alliance for a Stronger FDA has 180 members and represents all FDA stakeholder groups: consumer and patient groups, health professional societies, associations, companies and individuals. Former FDA commissioners and Secretaries of HHS have chosen to be honorary members and support efforts to provide better funding for FDA.

The Alliance has been a potent force over the last 3 years by successfully reversing a decade of budgetary neglect of FDA. The Alliance needs your support to continue its work in what appears to be a very rough year. For information about becoming a member, please write to me at sgrossman@StrengthenFDA.org.

Steven

For purposes of disclosure, I am one of the founders of the Alliance for a Stronger FDA and serve as deputy executive director. The Alliance is not affiliated in any way with FDA Matters or with my consulting practice, HPS Group, LLC.

An earlier column with additional background:

Can FDA Withstand the FY 11 Budget-Cutters?

December 6th, 2009

The President's FY 11 budget request is likely to be deeply constrained. Having advocated successfully for a number of costly initiatives, President Obama will need to show that he can also reduce the deficit. He asked Cabinet secretaries to submit their budget requests at a no-growth level and an alternative budget on the assumption that their Department might be reduced by 5% overall. Read the rest of this entry »

STEVEN GROSSMAN 1/24/10 STEVEN GROSSMAN 1/24/10

Mr. Brown Goes to Washington

The election of Massachusetts' new Senator, Scott Brown, has set off a media frenzy about the fate of health care reform legislation. However, the ramifications of his election reach far beyond health reform.FDA turns out to be a good example. FDA Matters sees at least three consequences of his election that may affect the agency in 2010.

FDA turns out to be a good example. FDA Matters sees at least three consequences of his election that may affect the agency in 2010.

Congressional Focus. Health reform is still alive, but it will require considerable effort to re-start the process and advance new legislation. This could mean yet another year in which the nation's dialogue on health issues will be largely limited to one topic, health reform.

If health reform is re-started, Congress may enact food safety reform and hold scattered hearings on medical devices, drug safety, and medical innovation. However, Congress will lack the time and focus to attend to other important FDA issues.

Regulatory Pathway for Follow-on Biologics. A regulatory pathway for approval of follow-on biologics (FOB) is a probable casualty of the Brown election and the demise of current health reform legislation. Chairman Waxman has never wanted FOB in health reform. In the days before Senator Brown's election, he was reportedly working with the White House and the Democratic leadership to reduce the 12-year data exclusivity that had been in both the House and Senate-passed legislation.

If FOB is to be adopted in 2010, it will probably have to be as stand-alone legislation. This is a mixed blessing for the biopharmaceutical industry. While it gives Chairman Waxman a new opportunity to shape the House version, the strength of the industry has been in the ranks, rather than with leadership. The key to the industry's earlier victory in the House was that the legislation sponsored by Representative Anna Eshoo had 140 bi-partisan co-sponsors from every part of the country.

The time for legislation may also have passed. I believe more companies are going to file full Biological License Applications (BLA), rather than waiting for a generic-oriented pathway. BLA's are more expensive, but there are offsetting proprietary advantages. Some companies may also be able to build their US BLA on clinical data that had been compiled to support abbreviated applications in Europe.

Deficit Reduction. Senator Brown's election may also be a harbinger of another trend that could impact FDA. President Obama had already announced that the Administration's appropriations requests for 2011 (considered in 2010) would focus on deficit reduction.

Congressional enthusiasm for deficit reduction is always strong on rhetoric, but weak on follow-through. Many members of Congress see the Massachusetts special election as reflecting a growing and ugly mood in America about the economy and jobs. Because the federal deficit is an important contributor to this mood, Members of Congress may take deficit reduction more seriously this year.

If the deficit reduction fervor increases further, FDA is at-risk of receiving a very small increase at a time when the agency's needs are growing and it still working to overcome a decade of budgetary neglect.

It is rare for a Congressional special election to affect DC. This one is different and we are likely to see considerable change as Mr. Brown comes to Washington. FDA Matters will continue to watch closely how the election may impact: Congressional attention to FDA, the follow-on-biologics debate and the fate of FDA's appropriation.

Steven

For more background on the battle over FOB's in the House last year:

The Best Little Chess Game in Town

August 3rd, 2009

One of the reigning champions of political chess, Representative Henry Waxman, has found himself in an endgame on follow-on biologics (FOB). His three decades of success have been built on extraordinary mastery of Congressional procedure, artful compromise and strategic alliances. His defeat seems unavoidable, but no one should assume that he can't yet win or draw this game. Read the rest of this entry »