Bloomberg News

FDA’s $6.4 Billion Plan for Quick Reviews Moves to Senate

May 21, 2012

Medtronic's capsure sense lead, a device that is inserted into a heart pacemaker. Fees for device makers will more than double to $609 million, according to the Congressional Budget Office. Photo: Munshi Ahmed/Bloomberg

Medtronic's capsure sense lead, a device that is inserted into a heart pacemaker. Fees for device makers will more than double to $609 million, according to the Congressional Budget Office. Photo: Munshi Ahmed/Bloomberg

A $6.4 billion effort to speed U.S. reviews of new drugs and medical devices is a step closer to law as the agreements Mylan Inc. (MYL:US), Pfizer Inc. (PFE:US) and other companies struck with regulators wind through Congress.

The Senate is set to begin voting as soon as today on more than $2 billion in new fees that drug and device companies will pay regulators through 2017 to review products for safety and efficacy. The figure includes $1.56 billion from generic-drug companies such as Canonsburg, Pennsylvania-based Mylan, which had been exempt from such fees.

Mylan, the largest U.S. generic-drug company, led the effort for its industry to quicken review times and deal with a backlog of applications, as well as to ensure the Food and Drug Administration has the resources to inspect foreign plants. The legislation also would speed approval of treatments for life- threatening conditions, enhance safety monitoring of devices after clearance and mitigate drug shortages.

“To get lifesaving drugs and devices to the patients that need them as quickly as possible, Congress must give the Food and Drug Administration the tools it needs to review and approve these products,” Senate Majority Leader Harry Reid, a Democrat from Nevada, said May 17 on the Senate floor.

Brand-name drugmakers will pay $4.1 billion, 6 percent more than the previous five-year period, while fees for device makers will more than double to $609 million, according to the Congressional Budget Office’s cost estimate. The device makers negotiated the new fees with the FDA in February, while drugmakers reached their agreement in September.

Biologic Drugs

Companies making generic versions of complex biologic drugs, a process not allowed until passage of President Barack Obama’s health law in 2010, also will pay a user fee, which the budget office determined would total $128 million through 2017.

The fees will “translate into greater transparency, efficiency and accountability from the FDA, certainly that’s the hope,” said John Manthei, a health-care lawyer and lobbyist at Latham & Watkins LLP in Washington.

Pharmaceutical companies have paid user fees since 1992 and device makers began their system in 2002. The current five-year program must be reauthorized by Oct. 1. Fees from brand-name drugmakers fund about 60 percent of FDA reviews, while the increase in device payments will support about 35 percent.

‘Sweet Spot’

The measure is a bipartisan compromise that Senator Tom Harkin, a Democrat from Iowa, said was built through consensus from both major political parties to ensure passage. Washington- based industry lobbying groups, the Pharmaceutical Research and Manufacturers of America and the Advanced Medical Technology Association, said they support the Senate legislation.

“We have hit the sweet spot,” Harkin, who is chairman of the Senate’s health committee, said during debate May 17. “We did not allow our differences to deflect us from the critically important goal of producing a bill that everyone could support. As a result, this is a truly bipartisan bill, and it is broadly supported by the patient groups and industry.”

The Senate will meet at 2 p.m. local time today to resume consideration of the bill. Reid scheduled a procedural vote today to limit debate on The Food and Drug Administration Safety and Innovation Act. A final vote on passage may happen this week, based on the typical timeline for Senate proceedings. The House of Representatives plans to take up its bill the week of May 28, Laena Fallon, a spokeswoman for House Majority Leader Eric Cantor, a Virginia Republican, said in an e-mail.

The Senate bill is S. 3187, and the House version is H.R. 5651.

Finding Value

In the legislation, the device companies, including Minneapolis-based Medtronic Inc. (MDT:US), and drugmakers obtained additional meetings with the FDA throughout the review process so companies can attempt to deal with concerns rather than receive a rejection letter. The legislation also directs the agency to help companies with medicines for life-threatening diseases plan clinical development programs that will most likely gain speedy approval.

“Drug developers feel there really is value in getting FDA’s perspective early to avoid surprises in an application review,” Nancy Bradish Myers, president of Catalyst Healthcare Consulting Inc. in McLean, Virginia, said in a phone interview.

Lawmakers sought to adjust device oversight, requiring post-market studies and pushing the FDA to implement a system to electronically track devices. Drug companies also would be required to report potential drug shortages to give regulators time to find alternate sources. Shortages, including cancer treatments, almost tripled to 178 in 2010 from 61 in 2005, according to a FDA report released in October.

Vaginal Mesh

Device companies successfully fought proposed language that would have barred clearance of low-to medium-risk devices if a similar device have been voluntarily recalled for a safety reason. The majority of devices go through a clearance process that requires proof they are similar to a product already on the market.

Vaginal mesh made by New Brunswick, New Jersey-based Johnson & Johnson (JNJ:US) -- linked to internal injuries, incontinence and painful sex -- was approved despite concerns about safety with earlier versions. Jeffrey Shuren, director of the FDA’s Center for Devices and Radiological Health, said he supports a legislative fix for the “loophole.”

“It may carry the same intrinsic defect that poses the same safety threat to patients,” Michael Carome, deputy director of the Health Research Group at consumer advocacy organization Public Citizen, said in a telephone interview.

Political Message

J.C. Scott, the chief lobbyist for the Advanced Medical Technology Association, said the prohibition would have had “a pretty devastating impact on the ability of companies to make incremental improvements on existing products.” The FDA has the power to determine a device is unsafe and reject its application, Scott said in a telephone interview.

Myers, of Catalyst Healthcare, said she doesn’t expect any surprises or major changes to the legislation.

“Most members of Congress want to go home with a satisfying health-care bill under their belt,” she said. “It is a good political message to say ‘I streamlined some of the regulatory process.’”

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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Companies Mentioned

  • MYL
    (Mylan Inc/PA)
    • $51.91 USD
    • 1.06
    • 2.04%
  • PFE
    (Pfizer Inc)
    • $29.93 USD
    • 0.44
    • 1.47%
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