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Old 1st September 2011, 01:01 PM
Pharma Newshound Pharma Newshound is offline
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Default Pharma Pays 62% of FDA's Drug Review Budget

Source: WSJ

FDA, Brand Drug Firms Agree on Increased Fees
By THOMAS M. BURTON

WASHINGTON—The Food and Drug Administration has reached an agreement with the brand-name drug industry on a five-year plan that will increase industry fees paid to the agency by about 6% and continue to fund the expansion of new drug approvals, according to people familiar with the talks.

The relatively smooth negotiations between the agency and the prescription-drug industry stand in contrast to the contentious talks between the FDA and the medical-device industry. Those talks had neared an impasse in recent weeks, according to one person briefed on the talks, but participants said they are continuing.

The agreement on brand-name drugs, if approved by Congress, would continue a nearly two-decade-old system under which pharmaceutical companies provide a big portion of the FDA's funds for reviewing proposed drugs, in exchange for a promise that the FDA will act within certain deadlines. Supporters of the system say it ensures new drugs get to patients faster, while critics contend the FDA shouldn't rely for funding on the same companies it regulates.

Currently the user fees paid by the industry provide about 62% of the total of more than $930 million the FDA spends annually to review applications for new pharmaceuticals.

The fees were created by the 1992 Prescription Drug User Fee Act, responding to criticism that the FDA was understaffed and its reviews were too slow. In 2007, Congress reauthorized the user-fee program for five years, so the system needs another act of Congress by next year if it is to continue.

The FDA has said that the next extension of the law may include changes such as more meetings with companies during the drug-approval process and more postapproval monitoring of drugs by industry.

In addition, the generic-drug industry is in advanced talks with the FDA over creating a user-fee system for generics makers. The deal could lead to faster generic-drug approvals and more inspections by the agency of overseas manufacturing plants.

Device makers, who started paying fees after the 2002 reauthorization, are farther from agreement with the FDA. Published minutes of talks between the FDA and device makers show that the two sides are debating issues including how much the device makers should pay to finance FDA reviews. Also at issue, according to one person familiar with the talks, is whether the reauthorization should last only two years instead of five.

The device makers' user fees make up about 20% of the FDA device center's $292 million in annual funds to review product applications. The device industry and its allies have been especially vocal this year in denouncing what they perceive as the relative length and unpredictability of the FDA's device-approval process. That situation might get worse if the user fees aren't renewed next year, but companies say they need greater assurances that their device applications will receive speedy reviews before agreeing to pay larger fees.

Write to Thomas M. Burton at tom.burton@wsj.com
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