The Complete Pharm Exec Guide to PDUFA

September 1, 2007

Pharmaceutical Executive

Volume 0, Issue 0

The history of prescription drug laws is a complex mix of evolution and politics-in particular, the politics following real or perceived public health crises. The bipartisan PDUFA IV legislation currently pending in Congress is no exception: The bills-the Senate FDA Revitalization Act (S. 1082) and the House FDA Amendments Act (H.R. 2900)-would both continue existing programs and create new regulatory burdens.

The history of prescription drug laws is a complex mix of evolution and politics—in particular, the politics following real or perceived public health crises. The bipartisan PDUFA IV legislation currently pending in Congress is no exception: The bills—the Senate FDA Revitalization Act (S. 1082) and the House FDA Amendments Act (H.R. 2900)—would both continue existing programs and create new regulatory burdens.

In essence, the user-fee framework and pediatric-research laws will likely remain in place, while FDA will have new powers to increase postmarket safety monitoring, impose civil penalties, and require drug manufacturers to register post–Phase I clinical trials and results in a national database. A "placeholder" is also included in the Senate bill for approval of follow-on biologics, but the details of such a contentious issue are unlikely to be hammered out before October 1, when PDUFA III sunsets.

Many drug companies have no doubt followed the congressional path of PDUFA IV—not to mention the near-constant media debates about drug safety, FDA accountability, and industry transparency in whose shadow the bills were drafted. But most firms are only beginning to consider the upcoming legislation's practical impact on their operations and products. To get you moving, Pharm Exec offers this guide to PDUFA IV—detailing the many provisions the two bills have in common as well as their few, but telling, differences. But reader, beware: At press time, the two versions of the legislation had not yet moved to conference, so what follows is a best guess about what PDUFA IV will look like.

The Safety Issue

PDUFA I was originally enacted in 1992, in the midst of a very different type of controversy: a widespread concern—driven by AIDS activism and industry lobbying—that FDA had inadequate resources to approve drugs fast enough and was lagging behind other nations in permitting lifesaving therapies to come to market. Although some continued to question the propriety of a bargain between industry funding and agency regulatory activities, the user-fee framework was showing promise, and PDUFA II in 1997 further developed the user-fee model as part of broader FDA-modernization legislation, providing additional resources for critical FDA drug-review.

The 2002 version of PDUFA, passed as part of bioterrorism legislation, sought to enhance the stability of FDA drug-review funding and to introduce a new element: limited use of user-fee funding to address growing concerns about postmarket drug-risk management.

Despite these efforts, a series of drug safety concerns—whipped into a "crisis" by congressional investigations, FDA "whistle-blowers," and product-liability litigation—made many in industry fear that PDUFA IV would become a vehicle for onerous new regulatory requirements. In particular, some predicted wholesale structural FDA reform that would ensure a disproportionate focus on postmarket safety relative to the benefits of drugs for patients.

In fact, PDUFA IV is heavily focused on drug safety—and that means more regulation. Yet, despite the rhetoric, longtime congressional leaders on FDA issues have sought to channel the frenzy over drug safety into "FDA revitalization" rather than unproductive reform. These legislators have focused on enhancing postmarket drug safety monitoring, while making FDA's activities more transparent and independent. Although most in industry hope to see changes to troubling provisions in the pending bills, the general consensus is: "It could have been worse." If the bills are properly modified and implemented reasonably, the result could be a stronger FDA that engenders greater public respect for difficult drug safety decisions.

1 User Fees

Certain members of Congress once again advocated killing the Prescription Drug User Fee Act outright this time, claiming that user-fee funding of the drug-review process has created an inappropriate industry–agency interdependence. But in the end, budget realities left those arguments with little traction. In fact, both pending bills will not only reauthorize the user-fee program but extend it into areas far beyond the legislation's original mandate of drug review. And, not surprisingly, total annual user fees will increase to $393 million a year—about one-quarter of the agency's $1.6 billion yearly budget.

As in the past, the bills would largely adopt a prenegotiated user-fee framework in which industry funding pays for product-review activities (not to be confused with approvals!). In turn, FDA has once again committed to specific performance goals relating to the efficiency, speed, and quality of the review process. While PDUFA III limited use of user-fee money for drug risk-management activities to three years following approval, that limitation has been removed, permitting use of user-fee money to address postmarket safety without a time constraint.

PDUFA IV would also establish a new system for FDA review of direct-to-consumer (DTC) TV ads. This program would be voluntary, with companies funding its operations as well as paying a review fee. Such fees would not be trivial—the 2008 limit would be $83,000. However, participants will greatly reduce the likelihood of encountering a later FDA objection to an extremely expensive DTC campaign.

The Senate bill would also require FDA to provide annual PDUFA reports to Congress and to consult with a wide range of stakeholders in the development of PDUFA V. Due to controversy over the number of FDA meetings with industry relative to patient groups in PDUFA IV negotiations, the House bill would further require FDA to make the content of all such meetings available on the fda.gov Web site.

2 Medical Devices

The first reauthorization of medical-device user fees, initially adopted in 2002, is also part of both bills. In addition to a fee hike, the legislation would revise the current device-facility inspection program—a voluntary program intended to assist companies in harmonizing global inspections and to allow FDA to prioritize its resources—to expand participation. The current law has largely been neglected as unworkable.

3 REMS in Drug Reviews

The centerpiece of the FDA "revitalization" legislation is, as previously stated, provisions for new FDA funding and oversight of drug safety and risk minimization. The core of the drug safety provisions—a new statutory framework for integrating a Risk Evaluation and Mitigation Strategy, or REMS, into drug applications—is actually an evolution from PDUFA III, which provided funding for FDA risk-management guidance and review of voluntary risk-management plans. Many of the risk-minimization tools provided in the legislation are already in use as part of drug approvals (or for bringing risky drugs back to market), as a result of negotiations between the FDA and drug sponsors. The difference post–PDUFA IV will be that FDA will have explicit authority to seek significant limits on the systemic distribution and use of drugs—and to pursue enforcement against companies that fail to adhere to such requirements.

Both bills would authorize FDA to require that drug sponsors submit a proposed REMS for certain applications. In the House bill, a REMS proposal may be required for new drug applications, abbreviated new drug applications, biologic license applications, and major supplements if FDA "determines such a strategy is necessary to ensure that the benefits of the drug involved outweigh the risks of the drug." The Senate bill provides that an applicant may voluntarily include a proposed REMS "if there is a signal of a serious risk with a drug" and that FDA may require one "if [it] is necessary to assess or mitigate [the signal of a serious risk]." There are a number of differences in how each bill defines REMS. Proposed requirements range from core elements, such as labeling, to monitoring, registries, restrictions on distribution and use, training and certification requirements, preview of certain advertisements, and postapproval research.

Although the bills limit the inclusion of distribution and use controls—requirements that could dictate precise parameters for physician prescribing, pharmacy dispensing, and patient access—they also require companies to monitor, evaluate, and work to improve the implementation of such controls. The House-bill REMS would permit companies to stop distribution of the drug to physicians who fail to adhere to the REMS requirements. Since current risk-minimization programs already contain reasonable efforts to monitor compliance, there is considerable concern among manufacturers that PDUFA IV may require companies to police the use of their products and become more directly involved in physicians' practice of medicine. Physician groups have also raised objections to the potential burdens of implementing multiple REMS at the patient level. Nonetheless, many believe that the REMS approach is an inevitable compromise that is needed to put the drug safety debate on more rational footing. Indeed, the implementation of similar measures is hardly "voluntary" in current drug sponsor–FDA negotiations, and many companies are already complying with similar frameworks in other jurisdictions.

The House's bill would go further than the Senate's in authorizing FDA to require postapproval studies of drug risks. It would also allow the agency to require companies to submit proposals for "marketing plans and practices for the drug," to ensure that such plans do not undermine the REMS. While the FDA would not be authorized to make or direct changes, this provision has been met with alarm by industry as an unprecedented step toward entangling the agency in highly proprietary business activities—and an attempt to go beyond current postmarket enforcement focused on off-label promotion to actually dictating the terms of industry marketing.

Both bills lay out processes and timetables for review of REMS proposals as well as for resolution of sponsor–FDA REMS disputes, with the Drug Safety Oversight Board tagged to give its OK. REMS would be reassessed on a periodic basis, potentially resulting in the addition (or, likely more rarely, subtraction) of new REMS requirements. As for company submissions of REMS assessments, the House bill would require them—at a minimum—for each of the first three years after approval, and then again at year seven. The Senate bill, by contrast, would require reviews at the 18-month and three-year marks.

Such reassessments could become a critical element of postmarket drug safety. Although companies have long attended to drug safety issues after approval, the REMS model would introduce a much more holistic and regularized approach. While the tools in the REMS toolkit will become more refined and understood over time, the new framework will inevitably intensify the regulatory burden on companies, not to mention healthcare practitioners and patients. Enforcement of the REMS provisions could include civil penalties (with the House bill, $10 million for one violation and up to $50 million for continued violations, while the Senate bill provides a maximum $2 million penalty for multiple violations).

4 Labeling Changes

At present, while companies can theoretically make certain safety-related labeling changes without prior FDA agreement—known as the "changes being effected," or "CBE" regulation—as a practical matter, FDA ultimately controls the label. Most significant label changes are the product of scientific exchange and negotiation over labeling language. The Senate bill would create a new process for safety-related labeling changes, with specific timelines and mechanisms for dispute resolution and FDA action. The House bill would go further, authorizing FDA to order safety-related labeling changes (based upon new safety information).

Congressional critics of FDA safety oversight have sought to minimize the potential impact of any such labeling-change process on preemption of product-liability suits, in which plaintiffs have long sought to second-guess FDA labeling decisions by alleging that the manufacturer could have implemented a labeling change under the "CBE" regulation. In fact, once a definitive, expedited FDA safety-labeling-change process is in place, a "CBE" regulation does not make sense and will only thwart effective risk communication. Thus, the best outcome would be a definitive science-based labeling-change regime that avoids both overemphasizing a drug's dangers relative to its benefits and second-guessing FDA labeling decisions in product-liability litigation.

5 Safety Information

Both bills would provide $25 million in funding for FDA to do "routine active surveillance" of postmarket drug safety. The Senate bill aims for a public–private partnership in which the agency would pool data from federal and private health databases and hire private research groups to investigate priority safety signals. The House bill, by contrast, would direct the agency to consult with experts to develop methods of integrating and analyzing data from multiple sources and then require it to enter into partnerships to allow the analysis of available data from various sources to support identification of safety signals.

Under either approach, the key will be ensuring that the methodologies are sound and that the information emerging from these analyses is properly communicated. A loosely controlled data-mining effort could raise a stream of drug safety "concerns," with little context provided for physicians or patients. Of significant concern is the fact that neither bill is explicit about whether drug sponsors—presumably the best source of information on the safety of products—would have a significant role in developing these data-mining efforts. Although industry involvement would undoubtedly be met with allegations of a conflict of interest, it is in fact essential to ensuring full information and rigorous analyses.

The Senate bill also would establish, one year after enactment, a Web site devoted to pharmaceutical data and risk communication. The House bill would again go much further, requiring FDA to collect, analyze, and publish an array of "emerging" safety information, including: a summary analysis of the adverse-drug-reaction reports received for recently approved drugs; a biweekly report based on a screening of the Adverse Event Reporting System (AERS) database; a report to Congress on the Office of Surveillance and Epidemiology recommendations and consultations on postmarket safety activities; an annual review of the entire backlog of postmarket safety commitments to determine which require revision or elimination; and the development of "postmarket safety performance measures...as measurable and rigorous as the ones already developed for premarket review." Many in the industry are concerned that such use of the AERS database will whip up unwarranted, premature panics among patients and in the media regarding possible drug dangers.

6 DTC Advertising

An earlier attempt in the PDUFA IV legislative process to authorize FDA to impose moratoria on DTC advertising as part of a REMS failed, partly as a result of intense advertising-industry lobbying and constitutional concerns. The House bill would require every DTC ad to include the following statement: "You are encouraged to report adverse effects of prescription drug medication to the FDA. Log onto www.fda.gov/medwatch or call 1-800-FDA-1088." Moreover, as part of the new REMS framework, FDA could also demand specific risk disclosures in DTC advertising. Both bills include civil penalties for running a false or misleading consumer ad.

7 Pediatric Research

Both bills would reauthorize the Best Pharmaceuticals for Children Act (BPCA) and the Pediatric Research Equity Act (PREA). However, in a provision that could create a dangerous precedent and weaken pediatric-research incentives, the Senate bill would cut pediatric exclusivity to three months if US sales of the drug exceed $1 billion annually. This so-called blockbuster provision, which grew out of accusations that companies were being unjustly enriched for their pediatric-research efforts, was stricken from the House bill. The Senate bill also includes a five-year sunset on the changes to PREA, while the House bill makes the provision permanent.

8 Clinical Trials Database

While both bills would require the public registration of clinical trials post–Phase I, they differ over publicizing clinical trial results. The House bill would establish a registration-and-results database within one year of enactment, spelling out specific requirements for the content of results submissions; the Senate bill provides for a negotiated rule-making, with a final rule issued within two and a half years of enactment. Although many believe the creation of this national database is a laudable step toward increasing the transparency in industry research efforts, it will almost certainly fuel further public drug safety debates—some constructive, others alarming to patients.

9 Conflicts of Interest

While the Senate bill would largely codify current FDA practices for granting waivers for advisory committee members with a "financial interest," the House bill would limit advisory committee meetings to one financial conflict-of-interest waiver per meeting. This rigid requirement could deprive FDA of critical advice from the best experts in the field.

10 Citizen Petitions

Both bills include provisions seeking to limit delays in the approval of generic applications due to Citizen Petitions, submissions to the agency—typically by innovator companies—putting new scientific data and legal arguments before the agency for review. While Citizen Petitions have been criticized as a tool to delay competition, many submissions have brought critical scientific information and safety concerns to agency attention. Both bills seek to mandate approval timelines and final agency action in response to petitions, although the Senate bill permits an exception for delays that are necessary to protect the public health.

11 Reagan-Udall Foundation

The House and Senate adopted identical language establishing a public–private foundation to lead collaborations to support FDA's mission. Such collaborations would be focused on Critical Path activities, including boosting R&D productivity and making product development and safety more predictable and manageable. Although some funding for the foundation could come from FDA appropriations, the bills contemplate that funding largely will be provided by industry and philanthropies.

12 Antibiotics and Enantiomers

The Senate bill includes language that would expand exclusivity for certain forms of older antibiotics with a new dosage form or a new indication. Sponsors of antibiotics approved before November 21, 1997, may be granted three-year exclusivity, while sponsors of an application submitted, but not approved, before November 21, 1997, are eligible to receive three or five years of exclusivity, as applicable, or a patent-term extension. Other Hatch-Waxman provisions (except other exclusivity provisions) apply.

Under conditions where approval is sought for new therapeutic categories relying on full clinical studies, the Senate bill would also permit Hatch-Waxman exclusivity for non-racemic drugs containing as an active ingredient a single enantiomer also contained in a racemic drug. The House bill does not contain a corresponding provision.

13 Importation and Anticounterfeiting

The Senate bill contains a provision allowing for drug importation from certain countries but requires FDA to certify that implementation of drug importation will "(1) pose no additional risks to the public's health and safety and (2) result in a significant reduction in the cost of covered products to the American consumer." The House bill does not include an importation provision.

The Senate importation certification requirement would not affect the bill's anticounterfeiting measures. The Senate bill would require a standardized numerical identifier unique to each drug package, harmonized with international consensus standards and applied at the point of manufacturing and repackaging. It would also require, for the 50 prescription drugs with the highest US sales, optically variable counterfeit-resistant technologies that could be seen with the naked eye, similar to what is used to secure US currency. These drugs must be manufactured and distributed in a secure and controlled environment, and they must include additional nonvisible features within two and a half years of enactment. The bill would also allow for the use of other technologies with a comparable security function.

The House bill also promotes anticounterfeiting, yet adopts a more realistic approach by calling for the development of standards and validated technologies for effective implementation.

14 The Biosimilar Debate

A wild card in PDUFA IV is whether to authorize the approval of biosimilars, or generic biologics. Various factors, including the relatively smooth development of the FDA "revitalization" amendments, have led to bipartisan cooperation and progress on the issue in both houses of Congress. Although critical flaws remain to be addressed, the current Senate biosimilars legislation, S. 1695, is somewhat closer to a compromise than many believed was possible given the contentious nature of the debate. The process has been more heated in the House, with a number of key members opposing the inclusion of biosimilars legislation in the conference negotiations, citing open scientific and legal issues and a lack of consideration in House committees. It remains to be seen whether the gap between the sides can be bridged in time for PDUFA IV to include biosimilars authorization. If not, many believe the issue will be pressed as part of other legislation this session.

Whatever the outcome, the big picture is clear: We are now on the brink of significant drug and biologic regulatory changes. Companies should expect a much more significant oversight of the systemic use of their drug products, with constant reevaluation of critical drug safety issues. They should also anticipate the increasing use of data mining—by FDA and third parties—to engender what will essentially be an "open source" drug safety dialogue with the scientific and medical community. The sponsor–FDA dialogue—and any resolutions, whether actual or notional—of drug safety issues will continue to be questioned even if the perception of FDA grows stronger after PDUFA IV implementation. Companies should also anticipate enforcement activities testing the scope and impact of new PDUFA IV authorities. Given the stakes, although the final details remain to be written, manufacturers should plan now to help shape the implementation of PDUFA IV.

Daniel Kracov is partner and head, FDA and Healthcare Practice Group, Arnold & Porter LLP. He can be reached at daniel_kracov@aporter.com.