Life Science Compliance Update

June 13, 2017

President Trump’s Budget Proposal: Renegotiation of FDA User Fees?

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President Donald Trump’s FY 2018 budget proposal seeks a renegotiation of user fee deals made over the last two years to make up for roughly a 30% decrease in the United States Food and Drug Administration (FDA) budget.

The budget, which calls for more than $1 billion in new user fees to replace appropriations, comes while both the House and Senate have advanced their individual versions of the user fees reauthorization legislation with the previously negotiated user fee levels agreed to between the FDA and the pharmaceutical, medical device, generic drug, and biosimilar industries.

Current user fees cover an average of 60% of FDA premarket review costs, ranging from 30% for animal drug review to 70% for prescription drugs. Under the budget plan, all of those costs would fall on industry. Scott Gottlieb, the recently confirmed FDA commissioner, echoes the calls for these cuts, as does HHS Secretary Tom Price.

For the FDA, the proposed budget would increase user fees by $1.306 billion or 68% from FY 2017, to $3.223 billion, accounting for nearly two-thirds of the agency’s total budget, up from 42.5% in FY 2016.

Prescription drug developers would face $508 million in new fees, which would rise from $755 million to $1.262 billion. Medical device user fees—a category that includes diagnostics—would more than triple, from $126 million to $429 million.

FDA’s total program-level spending would rise by $456 million or nearly 10%, to $5.116 billion, mostly due to increases in salaries and expenses; spending on programs affecting human drugs would see the largest increase of $287 million, up to $1.612 billion.

However, representatives from BIO, AdvaMed, and AAM all spoke with the Senate HELP committee in April, reiterating what FDA officials told the House Energy & Commerce Committee in March, that a failure to act on the already agreed to reauthorizations would be devastating. The Alliance for a Stronger FDA also noted that this supposed modest increase in budget for FDA is actually a large budget cut for the Agency.

Troy Zimmerman, Alliance President, said in a statement on Tuesday: "We are especially concerned because the Congress has made clear that these additional user fees will not be adopted ... Thus, the Administration has not proposed a viable pathway for the agency to avoid a 31% cut in FDA’s BA [taxpayer-funded budget authority] appropriation."

Higher user fees are likely not to come into effect this year. Senator Lamar Alexander, Chairman of the United States Senate’s Committee on Health, Education, Labor, and Pensions, told HHS Secretary Tom Price in a letter that the user fee hikes were “an interesting proposal” but “way too late to have an impact on this year's agreements, which have been negotiated over the last 2 years” with biopharma and other FDA-regulated industries.”

June 09, 2017

FDA Office of Regulatory Affairs to Undergo Realignment

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In a March hearing before the House Energy & Commerce Committee, FDA’s Jeffery Shuren announced the FDA’s Office of Regulatory Affairs (ORA), would undergo a program realignment. As the FDA notes, on September 6, 2013, then Commissioner Margaret Hamburg, M.D., created a Program Alignment Group (PAG) comprised of senior FDA officials. The PAG was charged with identifying and developing plans to modify FDA’s functions, processes, and structure in order to meet the challenges posed by scientific innovation, globalization, the increasing breadth and complexity of the products that we regulate, and new legal authorities.

May 2017 Realignment

Regulatory Focus received direct comment from FDA on the imminent changes. As they wrote, the long-planned program alignment for ORA will kick off in May 2017, saying the office "will be moving away from a geographic (regional) management model and align with a commodity-based program structure. All regional food and drug directors (RFDDs), regional directors and regional staff will transition into other positions in ORA."

As of May 17, Meyer says that FDA will sunset its five regional offices, replacing them with six commodity-focused divisions for drugs, biologics, medical devices, bioresearch monitoring, food and tobacco. Meyer also told Focus that the agency will maintain its 20 existing districts, with district directors gaining program specific responsibilities. Meyer also noted that the agency would not be closing any offices, and no employees will lose their jobs or be asked to move as a result of realignment.

How does ORA's new model affect FDA stakeholders?

As described the FDA, for a given product type the entire reporting chain for ORA’s inspection and compliance staff will specialize in that particular commodity. This is a significant change from ORA’s existing geographic-based model, where employees, regardless of their area of expertise, may do work in more than one program area. Ultimately these changes will result in a high level of technical expertise and more uniform application of ORA’s policies and processes. 

The agency states it wishes to keep pace with the acceleration of scientific innovation, global expansion of markets, and modern legal authorities, such as the FDA Safety and Innovation Act of 2012, the Drug Quality and Security Act of 2013, and the 21st Century Cures Act of 2016.

In addition to the FDA’s comments, the FDA Law Blog made several important points about this realignment back in 2016. Three specific quotes of interest:

“In other words, if you are spending two-thirds of your time as an investigator inspecting run-of-the-mill food, feed or tobacco facilities, does it really make sense for that same person to also be conducting inspections of recombinant biotech drug firms? The answer seems self-evident, until you realize that little in a huge bureaucracy is self-evident, and even less is readily achievable even when it is self-evident.”

“So, what to make of these objectives? From an industry perspective, having specialists, rather than generalists, analyzing a firm’s key systems seems like a no-brainer in terms of the specialist being better able to understand the complexities of the businesses being inspected and developing a better understanding of the inspected firm’s concerns. However, that alone does not mean that the quality of future inspections will be satisfactory.”

“One thing is certain. Firms that have thus far counted on investigators not discovering fundamental problems with their key systems are less likely to succeed after the PAG plan’s implementation, owing to the greater level of knowledge and specialization of investigators.”

June 06, 2017

Senate HELP Committee Advances FDARA

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On Thursday, May 11, 2017, the Senate Health, Education, Labor, and Pensions (HELP) Committee advanced an amended version of the Food and Drug Administration Reauthorization Act (FDARA) to the Senate floor by a 21-2 vote during an executive session. Senator Bernie Sanders and Senator Rand Paul were the two votes against the bill.

In addition to the manager’s amendment, two additional amendments were added by voice vote, including one from Senators Susan Collins of Maine and Al Franken of Minnesota that would expedite the review of some generic drug applications, and another led by Senator Orrin Hatch of Utah that would expand clinical trial criteria to allow sicker patients to participate.

Generic Approvals

Senator Collins and Senator Franken’s amendment was intended to improve access to affordable medicines by increasing the competition of generic drugs. Senator Collins noted that the language gives a clear time frame of eight months for the FDA to act on the issue and that new reporting requirements would provide transparency on the backlog of generics that are currently awaiting approval. She also noted that the amendment would require the FDA to track when drugs are exiting the market to help prevent shortages.

Clinical Trial Criteria

Senator Orrin Hatch of Utah spoke about the importance of including the Enhanced Clinical Trial Design Act. He explained that the amendment was bipartisan and proposed ways to address the way clinical trials are designed early in their development and included a wider patient mix in earlier trials. He noted that it would enhance the safety of drugs and allow patient access to effective therapies by making it easier for patients to use an FDA program to receive unapproved drugs when they do not qualify for trials.

Importation Amendment

Further, the committee voted 13-10 to table an importation amendment by Senator Bernie Sanders of Vermont that would have allowed for prescription drug importation from Canada. The amendment also received support from Senator Bob Casey from Pennsylvania, who explained that the language included several safeguards that were overlooked by the debate. He also clarified that foreign manufacturers are required to register with the FDA and only those drugs that are approved by the Administration may be imported.

Senator Hatch made clear that he did not support the amendment, declaring that it would pose serious public health concerns for Americans due to the lack of foreign site inspections by the Canadian government – over the past two years he noted that the Canadian government has only completed seventeen foreign site inspections (compared to the 842 the FDA completed just last year).

The amendment also received support from Democrat Senators Elizabeth Warren, Christopher Murphy, and Maggie Hassan.

While Committee Chairman Lamar Alexander acknowledged support of the concept, he described the amendment as controversial and asked to delay a vote on it until the bill reaches the floor to keep the committee process bipartisan. Committee Ranking Member Patty Murray and Senator Tim Kaine, both Democrats, agreed with Senator Alexander’s assessment of holding off on the vote.

Conclusion

Many Democrats used the hearing to protest the Senate process for developing a counterpart to the House-passed ACA repeal bill, calling on committee Republicans to hold hearings.

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