As time was about to expire, Congress approved legislation reauthorizing the Prescription Drug User Fee Act of 1992 (PDUFA) for five years. The reauthorization of PDUFA was included in the bioterrorism leg islation passed in May by both houses of Congress, and was signed into law by President Bush on June 11th. Without approval, PDUFA would have expired Sept. 30, 2002. The law’s provision authorizing the third fiveyear extension of the Prescription Drug User Fee Act (PDUFA) of 1992 is of great sig nificance for the FDA’s drugreview process. It maintains the high performance goals of PDUFA II and its accompanying legislation, the FDA Modernization Act of 1997, which included greatly reduced drug review times and increased and accelerated consultations between the FDA and the product sponsors. In addition, PDUFA III meets two major FDA goals by remedying resource shortages that have affected the program in recent years. PDUFA III, which went into effect Oct. 1, 2002, puts the agency on sound financial basis by authorizing the collection of $1.2 billion in user fees over the next five years. This will enable the FDA to increase the staffing of the drug program by 450 fulltime employees, in part to help improve risk detection, identifica tion, assessment, and intervention, and improve working conditions and training. In addition, the law allows for expert con sultations for pivotal protocol review for biotechnology products, calls for expanded electronic submission capability and harmo nization of infrastructure for submissions across the FDA’s review centers, and provides for earlier feedback during application review in an effort to increase the number of applica tions approved on the first review cycle (see box on page 39 for more details). P.D.U.F.A STRONGER AND MORE EFFECT I VE THAN EVER “With the additional resources and an enhanced ability to monitor safety of new drugs as they enter the marketplace we’re taking a step forward in transforming the FDA into an even more efficient agency, while maintaining our high standards of safety. PDUFA will be stronger and more effective than ever.” Deputy FDA Commissioner Dr. Lester M.Crawford A BY KIM RIBBINK PDUFA III 39 PharmaVOICE O c t o b e r 2 0 02 and potential risks, suggestions for possible Phase IV epidemiology studies (studies done after approval of a drug), and proposals for tar geted postapproval surveillance. Evaluation might include using drug utilization databas es during the first three years after approval. The increased user fees for PDUFA III will enable the FDA to hire an additional 100 risk management officers during the fiveyear duration of the reauthorization. This translates into doubling the number of safety officers in Possibly even more important is the autho rization to spend $70 million of the user fees to increase the agency’s surveillance of the safe ty of drugs during the first two (or, for poten tially dangerous medications, three) years on the market. It is during this initial period, when new medicines enter the market in wide use, that the agency is best able to identify and counter adverse side effects that did not appear during clinical trials. PrePDUFA III, the review of a new drug or biologic application was separate from postmarketing safety review, which had not been funded by user fees. Under the new act, that postmarketing safety information will be addressed at the start of the application process, and the review of any riskmanagement plans developed will be funded by user fees. The elements of a riskmanagement plan may include: assessment of clinicaltrial limi tations and disease epidemiology, assessment of riskmanagement tools to address known PDUFA III— What’s New . . . . . . CONTINUOUS MARKETING APPLICATION (CMA) Key features under CMA are two pilot programs, a guidance to be published by fiscal year 2004, restricted to fasttrack products,and evaluation by a third party. The first pilot program is discipline review letters for presubmitted “reviewable units” of NDAs/BLAs. In this case, the product has had an endofphase 2 and/or a pre NDA/BLAmeeting,anddemonstratedsignif icant promise as a therapeutic advance in clinical trials. The FDA may enter into an agreement with the sponsor to accept pre submission of one or more “reviewable units.”There will be a discipline review letter on the individual “reviewable unit” from the discipline review team, (not final, definitive decisions) within six months of receipt. The second pilot program is frequent sci entific feedback and interactions during drug development.The pilot program is lim ited to one fasttrack product in each review division during the pilot program.The prod uct has had an endofphase 1 meeting,and the FDA may enter into an agreement with the sponsor to initiate a formal program of frequent scientific feedback and interactions regarding the drugdevelopment program. The reauthorization of PDUFA III provides for a total of $223 million in fees in fiscal 2003, rising to $260 million in 2007. In addition to hiring more than 450 new FDA staff members, the funds will be allocated to several other initiatives, some of which are highlighted below. FIRST CYCLE REVIEW PERFORMANCE This program involves notification of issues identified during the filing review, good review management principles guid ance, training, and evaluation. IMPROVING FDA PERFORMANCE MANAGEMENT The program will have a performance fund of $7 million over 5 years and will be administered by the commissioner. It will fund studies aimed at gathering informa tion on review performance. The first two initiatives are: first cycle review performance; and process review and analysis. ELECTRONIC APPLICATIONS AND SUBMISSIONS The agency will centralize accountabili ty and funding.Goals include: implementa tion of a common solution for secure exchange of content; single point of entry for receipt of all electronic submissions; and providing a specification format for the electronic submission of the common technical document (eCTD). Quarterly briefings on IT issues will be chaired by the agency CIO. Source: Robert A. Yetter, Ph.D.,associate director for review managementat theCenter for Biologics Evaluation and Research. INDEPENDENT CONSULTANTS During the development period for a biotechnology product, a sponsor may request that the FDA engage an independent expert consultant, selected by the FDA, to participate in the agency’s review of the protocol for the clinical studies that are expected to serve as the primary basis for a claim. Guidance is to be developed, and there will be an evaluation of the program. Conditions are that it is a specified biotech nology product that represents a significant advance in the treatment,diagnosis,or preven tion of a disease or condition,or has the poten tial to address an unmet medical need. Also there needs to be a written request submitted in conjunction with a formal meet ing request. PRE AND PERINDA/BLA RISKMANAGEMENT PLAN ACTIVITIES Key features of the riskmanagement plan include submission and review of pre NDA/BLA meeting packages; preNDA/BLA meeting with applicant; review of NDA/BLA; periapproval submission of observational study reports; and periodic safety update reports. the FDA’s Office of Drug Safety. The extra staff will allow the FDA to more actively mon itor the riskmanagement plans, which will be specifically tailored to each drug application. “FDA views this as an important step to improving our ability to manage the risks and improve the safe use of approved drugs,” says John K. Jenkins, M.D., director of the Office of New Drug Safety, FDA, Center for Drug Eval uation and Research. “For the first time FDA will be able to use user fees to pay for postmar keting safety activities, such as review of adverse event reports. It is anticipated that the new user fees will allow FDA to double the size of its drug safety staff during the next five years. This should have a significant impact on drug safety since the agency and sponsors will be focusing increased efforts on managing the risks of drugs during the preapproval and first few years postapproval.” The new amendment not only impacts the regulatory agency but has direct implications for pharmaceutical and biotechnology manu facturers in making them more accountable. “The benefit of this legislation is that it finally puts teeth into the tacit expectation that pharma will take responsibility for the use and risks of drugs after marketing,” says Judith Jones, M.D., Ph.D., president and CEO of The Degge Group. “Although phar ma is responsible and liable, the new legisla tion is explicit, with clear expectations for actions and evaluation of the effectiveness of those actions to manage risk.” Some industry experts say postmarketing surveillance will be good for all stakeholders, including companies, because the initiative provides a systematic process to evaluate Phase IV, which had been absent in the past. Robert B. Naso, Ph.D., senior VP of qual ity regulatory and product development at Nabi Biopharmaceuticals concurs. “One of the problems the FDA always has had with Phase IV obligations is that many pharmaceutical companies said they would conduct some type of postapproval study, but never did. If we’re saying there’s value to companies performing Phase IV studies and safety followups post approval, we clearly must understand that the FDA has to be able to review the outcome of those studies and to monitor those studies, and clearly that adds cost to the agency.” There is a general consensus among indus try experts that the additional funding to enable the monitoring of postmarketing safe ty surveillance was necessary. “PDUFA III incorporates recognition of the need to have monitoring for several years post marketing so that there’s mandatory feed back and collection of data during that imme diate period,” says Harry Sweeney, chairman and CEO of Dorland Global Health Commu nications. “That way, if safety issues arise, there is a mechanism in place to get an early warning on what those issues are.” While the PDUFA III agreement on perfor mance goals does not give the FDA any additional authority to mandate postmarketing studies, it does expand the FDA’s authority to utilize user fees to cover regulatory activi ties in the postmarketing peri od, such as evaluating product utilization and the implemen tation of risk management for drugs and biologicals with safe ty concerns. “The goal of PDUFA I was to get faster, more predictable reviews of drug applications to counteract the drug lag without spending a lot of additional tax payer money,” says Christopher Milne, DVM, MPH, J.D., assistant director of Tufts. “PDUFA II went the next step and looked to enhance the envi ronment of the FDA’s response and communication with industry. PDUFA III adds to that by evaluating what happens during the life of a drug, what happens to drug utilization, what happens in the socalled periapproval stage. It will look at the whole consumer side, including safety and the limitations of the clinicaltrial process.” While the issue of postapproval surveillance might lead to a greater number of companies being asked to conduct Phase IV trials, there are potential benefits, including the possibility of forging closer relationships with physicians. “More companies are going to be required, as standard practice, to do at least one Phase IV program once a drug is approved, especially if it is approved in a more rapid time frame than the traditional time frame of five to seven years,” says William Van Nostrand, president of the clinical division of Dendrite. “While that will have a huge impact on the industry in terms of costs, there are potential benefits. One of those benefits is if physicians have a good experience as a result of that Phase IV trial, they’re going to continue to use that product. Physicians will learn how to use an individual product on an individual patient, helping to bring about better medicine.” Enhancing the physician relationship with an individual product can certainly help com panies from a marketing standpoint. PDUFA III DATA ON THE FDA’S WEBSITE INDICATE THAT SINCE PDUFA WAS APPROVED, THE WITHDRAWAL RATE FOR DRUGS HASN’T CHANGED. CARY GARNER IF SAFETY ISSUES ARISE THERE IS A MECHANISM IN PLACE TO GET AN EARLY WARNING ON WHAT THOSE ISSUES ARE. HARRY SWEENEY PharmaVOICE PharmaVOICE PDUFA III “Postmarketing studies are going to mean more expense for the pharmaceutical industry, but from a market ing perspective it will bring greater legitimacy to Phase IV clinical studies,” says Jim Clif ford, cochairman of Com monHealth. Properly enacted and fol lowed through, the amend ment should help more than it hurts. “In the end, all three major affected parties should bene fit,” says Patrick Durbin, VP and general manager of peri approval services at Covance Inc. “The regulatory agencies should more efficiently and effectively be able to review applications and followon tri als post approval and the industry should be able to bring safe, effective drugs to market more efficiently, and patients should benefit from both.” Industry experts caution, however, that none of this will happen overnight. “In the short term, it is doubtful that postapproval surveillance will speed up the process, since there are too many uncertainties about the meaning of risks, the ways to best manage them, and measure the impact of that man agement,” Dr. Jones points out. “However, over time, if these processes become more rou tine and/or they are geared to changes in the healthcare system, they might help speed the review process. But this likely will take years.” Annette Stemhagen, Dr.PH., VP of strate gic development services and periapproval ser vices at Covance agrees that all parties should benefit from the new law. “The FDA’s new focus on risk management looks at all the activities related to getting all of the stake holders, meaning not only the drug industry, but the practitioners and the patients, involved in protecting the public health and in ensuring patients are using drugs correctly.” EVALUATING THE IMPLICATIONS here is widespread support for the ongoing goals and new initiatives of PDUFA III, but the jury is out as to what increased surveillance will mean for the industry. The possibility that the FDA might require Phase IV studies has been around for some time. And, while the industry applauds the mission and goals of PDUFA III and the fee increase, potential peri approval clinical requirements raise some ques tions and concerns. No product is entirely safe, so industry insiders say the FDA’s decision to require a Phase IV trial for a particular drug needs to be considered carefully. The challenge will be for the FDA and sponsors to develop better communication channels to ensure that riskmanagement programs are reasonable, don’t delay product availability, and don’t interfere with the practice of medicine. “Asking for Phase IV isn’t harmful so long as it doesn’t become a general requirement for every product that comes along, whether it’s needed or not,” says Ken Berkowitz, a health care industry consultant who provides counsel to the industry on a variety of FDA, health care, and publicaffairs issues. In 1992, Mr. Berkowitz chaired the joint user fee PhRMA/BIO staff task force that worked with the FDA to develop PDUFA. “As long as the FDA doesn’t do that under pressure from Congress and other groups, then there’s noth ing wrong with Phase IV. I don’t see any sign of that happening, but that’s always a concern that once the FDA does something it will become a general requirement.” Dr. Naso agrees, saying, “Phase IV trials should really only be required where there is some significant concern about safety, or some significant area of doubt about safety, and the FDA believes these types of studies would be necessary to generate more information. I’m not suggesting that costs should outweigh safety concerns, but there should be an element of cau tion with regard to the types of Phase IV stud ies that might be required. I don’t see too much in PDUFA that provides guidance to the FDA with regard to the types of studies, the size of studies, and the duration of studies that the agency might require.” Should PDUFA lead to substantially more Phase IV requirements, the industry will have to contend with sev eral factors. “The negative impact of mandatory postapproval, or Phase IV trials, is increased costs to sponsors and increased resource requirements, which may not necessarily provide additional useful information or data,” says Juliet Singh, THE IMPACT OF MANDATORY POSTAPPROVAL, OR PHASE IV TRIALS, IS INCREASED COSTS TO SPONSORS AND INCREASED RESOURCE REQUIREMENTS. PDUFA IS A MODEL OF PUBLIC/PRIVATE PARTNERSHIP THAT PROVIDES SIGNIFICANT HEALTH BENEFITS FOR THE AMERICAN PEOPLE. JULIET SINGH NEHL HORTON T PharmaVOICE Ph.D., VP of regulatory affairs and quality assurance at Collateral Therapeutics Inc. “But the positive side of Phase IV trials is the gener ation of additional safety data, expansion of indications and patient populations, and avoid ance of large clinical trials.” The agency’s goal is to ensure companies adhere to current good manufacturing practice (cGMP) for pharmaceutical products. In doing so the FDA seeks to eliminate, or at least min imize, potential risks to public health. But, say some industry sources, there does need to be a balance between risk and the potential reward of a curative drug. “The agency is under a lot of pressure on one hand to get new drugs out and on the other hand to be on the safe side, and it’s unclear where the pendulum is right now,” says Wayne L. Pines, president of regulatory services and healthcare at APCO Worldwide. “Certainly over the past two or three years, the agency has been much more conservative in terms of new drug approvals, insisting on more data and putting companies through an additional cycle or two of review.” As the industry, Congress, and the FDA move forward with PDUFA III, all entities will have to weigh what is in the best interest of the public, in terms of safety, availability, and cost. “The challenge for the FDA is to integrate the new postmarketing surveillance pro grams into new riskmanagement programs to try to come up with uniform and rational ways to monitor the safety of drugs after they’re approved,” Mr. Pines says. “That’s a great challenge, because once a drug is approved, there is a loss of con trol. It’s very difficult to gather information, to get good infor mation, and it’s virtually impossible to get comprehen sive information.” Introducing riskmanage ment programs and assigning funds to those programs alters PDUFA’s original goals. “The implications may be fairly broad, since this tends to shift the focus from efficacy and benefit to risk and benefit, and the implication is that companies will need to do careful planning that includes risk management as part of the approval package,” Dr. Jones says. “Further, this planning will require consideration of interventions far beyond label ing and simple education pro grams for physicians to assure that the drugs, once released, are used to maximize benefit, minimize risk.” STREAMLINING THE PROCESS efore 1992, taxpayers paid for product reviews through bud gets provided by Congress. Under PDUFA, the industry provides a portion of this fund ing in exchange for FDA agree ment to meet drugreview performance goals, which emphasize timeliness. Any time a com pany wants the FDA to approve a new drug or biologic before marketing, it must submit an application along with a fee to support the review process. In addition, companies pay annual fees for each manufacturing establishment and for each prescription drug product marketed. “There’s no question that added resources have made a marked difference to the review process at the FDA since PDUFA I was enacted in 1992,” says Alan Gold hammer, Ph.D., associate VP for regulatory affairs at PhRMA. “The issue of adding extra resources, with out changing the underlying regulatory structure — drugs need to be approved on the basis of safety and effica cy — leads both industry and the FDA to hope that the process will run more smoothly.” While the FDA’s chief concern is safety, it too views the new act as possibly help ing to further cut review and approval times. “The increased resources under PDUFA III, along with some of the new pilot programs — Continuous Marketing Applications — are expected to allow the FDA to meet the PDUFA goals for review and to improve the efficiency of drug development and review,” Dr. Jenkins says. “Shorter review times and an increased ability of FDA staff to interact with sponsors during the IND and NDA/BLA phase may translate into shorter times to approval.” Since PDUFA was first enacted, PhRMA estimates that the pharmaceutical industry will have paid $980 million in user fees by the fall of 2002. And despite recent concern that review times have slowed, the fees have enabled the FDA to pay the salaries of more than 1,000 highly qualified reviewers and to cut the average review time. In 2001, pharmaceutical and biotechnolo gy companies added 32 new treatments to the nation’s medicine chest — 24 drugs and 8 biologics, according to PhRMA.The 24 drugs approved in 2001 were reviewed by the FDA in an average of 16.4 months, and the 8 bio logics were reviewed in an average of 19.6 months. This represents a slight improvement over review times in 2000 — when review times for drugs and biologics were 17.6 months and 25.8 months respectively — but approval times for both drugs and biologics in 1999 and 1998 were somewhat shorter. “User fees were adopted after rigorous dis cussion and debate within the industry because it was an essential means to provide resources to the agency to hire scientific, toxocological labo ratory personnel,” Mr. Berkowitz says. PDUFA III THE CHALLENGE FOR THE FDA IS TO TRY TO COME UP WITH UNIFORM AND RATIONAL WAYS TO MONITOR THE SAFETY OF DRUGS AFTER THEY’RE APPROVED. THE FDA’S NEW FOCUS NOT ONLY LOOKS AT THE DRUG INDUSTRY, BUT THE PRACTITIONERS AND THE PATIENTS INVOLVED IN PROTECTING THE PUBLIC HEALTH AND ENSURING PATIENTS ARE USING DRUGS CORRECTLY. WAYNE PINES ANNETTE STEMHAGEN B PDUFA III PharmaVOICE Even with shorter review times, safety has not been compromised during the tenure of PDUFA. “No data during the life of PDUFA have shown that decreased review times have in any way increased the number of drugs withdrawn,” says Cary Garner, VP and general manager of Phase IV at Parexel. “Data on the FDA’s Web site indicate that since PDUFA was approved, the withdrawal rate for drugs hasn’t changed. It’s still 2.7%, even though the approval cycle has gone from 30 months to 12 months.” The cut in review time has helped push the U.S. to the forefront of the world pharmaceu tical market. “Supporting the FDA in the review of drugs through user fees has had a very positive impact on the agency’s more rapid response to new drug applications and probably has helped pull the U.S. into the forefront of drug research and accessibility of products for patients,” Mr. Clif ford says. “One only has to look back 10 years when products were introduced into Europe first and sometimes we didn’t get them here for 7 to 10 years. It’s not all because of user fees, but that has played a significant part in the turnaround.” With the enactment of PDUFA, U.S. com panies overtook their Euro pean counterparts and now have a commanding lead in world markets. According to a July 2001 report in the Finan cial Times, the European share of the world pharmaceutical market fell from 32% to 22% during the past 10 years while U.S. market share rose from 31% to 43%. During this period, pharmaceutical R&D investment doubled in the European Union, while U.S. R&D increased fivefold. “PDUFA is a model of public/private partnership that provides significant health benefits for the American people, while maintaining rigorous drug approval standards,” says Nehl Horton, senior director of corporate media relations at Pfizer. “Just a decade ago, the average FDA review of a new drug application took about two and onehalf years. Patients in the U.S. watched as drugs that could alleviate their dis eases or conditions — or even save their lives — were approved in other countries many months or years before they were available in the U.S. With the passage of PDUFA in 1992, and its reauthorization in 1997 and 2002, that unfor tunate situation has changed.” One of the primary goals of PDUFA has been to set time frames in which the FDA will review applications. The agency commits to acting on 90% of standard NDAs in 10 months and 90% of priority NDAs in six months. “This is placing a great deal of pressure on FDA reviewers to work hard and quickly,” says Alberto Grignolo, Ph.D., senior VP of world wide regulatory affairs at Parexel International. FDA officials also have noted that these commitments have placed certain pressures on the agency. According to the FDA, assuring that enough appropriated funds are spent on the process for the review of human drug appli cations to meet requirements of PDUFA, and at the same time spending resources in a way that best protects the health and safety of the Amer ican people has become increasingly difficult. “We did see a slight slowdown in drug reviews over the last 18 months and the FDA did make a persuasive case that in part that was a result of a lack of resources within the agen cy,” Dr. Goldhammer says. Employing more reviewers and improving the application process, it is hoped, will ease those burdens. “The way to cut down the time to review applications is to have more staffers to review the documents, and also auto mate the process and allow for more electronic review of data,” Dr. Stemhagen says. The expectation is that by increasing by 450 the number of reviewers, current time frames can be met. But some warn it might be some time before those reviewers are, firstly hired, and secondly brought up to speed. And, in the early goings, new staff may actually slow the process. “Whenever there is an infusion of new peo ple into any situation, there’s going to be inher ent inefficiencies,” Mr. Pines notes. “The next year or two has the potential to be a difficult time for the industry, until the new people are fully on board. One of the difficul ties compa nies face is when the FDA reviewer overseeing their drug changes. When that happens, there is a possi bility of the new person being inexperienced or having a different perspective, and some of commitments that previously were made might not be adhered to.” Adhering to review time frames and bring ing drugs to market more rapidly are just part of the problem for industry. The FDA notes that while fewer drugs have been approved in recent years, that was not the result of any decrease in performance by the agency. Rather approvals are determined, in part, by the number of new drug and biologics applica tions filed by companies. While the number of standard applications filed has been steady, the agency says the number of priority applica tions dropped sharply in 2001. The sharp increase in fees, however, will increase pressure on the FDA to ensure it meets its stated timelines. “FDA has done pretty well for the past 10 years,” Dr. Grignolo says. “From PDUFA I to PDUFA II the agency is performing better than before PDUFA, thereby justifying indus try’s continued support of the program. As PDUFA III gets under way, the industry and Congress will expect these timelines to be met or else there will not be a PDUFA IV.” “PDUFA has worked extremely well for the agency and the industry, and ultimately for the consumer because it has provided the agency with the resources necessary to cut the review time down,” Mr. Garner says. “PDUFA has actually been a very good example of industry, agency, and the government working together to solve a problem.” In the meantime, the FDA also is having to contend with not having a fulltime commis sioner. While this does pose concerns over sta bility within the agency, most believe PDUFA is so entrenched that there is unlikely to be any backlash once a new commissioner is named. “Commissioners have a lot to do in terms of ONE BENEFIT IS IF PHYSICIANS HAVE A GOOD EXPERIENCE AS A RESULT OF A PHASE IV TRIAL, THEY’RE GOING TO CONTINUE TO USE THAT PRODUCT. WILLIAM VAN NOSTRAND IF IT MEANS MAKING SURE THAT PEOPLE AREN’T HURT THEN COST IS JUSTIFIED, AND COST IS GOING TO BE A SECONDARY ISSUE. LOUIS MORRIS PDUFA III PharmaVOICE leadership and policy, but not in terms of day today activities,” says Louis A. Morris, Ph.D., president and founder of Louis A. Morris & Associates. “There’s no question that not having a commissioner is a concern, but in this partic ular instance I think the FDA is proceeding in a pretty straightforward fashion.” BOOSTING FEES efore the latest renewal of PDUFA, the FDA noted that the fees it had collected during PDUFA II were significantly less than expected due to the reduced number of new drug applications and the increased proportion of applications where fees are waived. The hope is that the lat est renewal of PDUFA will give the FDA the resources to further improve its operations and efficiency. Fees for PDUFA III are assessed on certain types of applications and supplements for the approval of drug and biological prod ucts, certain establishments where such prod ucts are made, and certain marketed products. The FDA has announced that its rates for pre scription drug user fees for fiscal year 2003 are $533,400 for an application requiring clinical data, and $266,700 for an application not requiring clinical data or a supplement requir ing clinical data. Establishment fees are $209,900, and product fees $32,400. The fees are effective from October 1 until September 30, 2003, after which fee revenue amounts will be adjusted for inflation and to reflect changes in workload for the process for the review of human drug applications. Where certain condi tions are met, the FDA may waive or reduce fees. “While there could be shortterm implications with the high application fee, in the long term it will be to the benefit of the industry and the patients because products that are safe and effective are able to get to patients more quickly,” Mr. Berkowitz says. “That should mean companies are able to make back that money from the fees in a much more reasonable time frame.” The FDA does not see increased fees as an undue burden upon the industry, especially when put into the context of the amount it costs to research and develop a pharmaceutical or biologic. “The total amount of user fee revenue rep resents significantly less than 1% of total expenditures for the pharmaceutical industry and is not expected to have any impact on the cost of new drugs,” Dr. Jenkins says. Arduous or not, the higher fees and poten tial costs from Phase IV trials as a result of increased postmarket surveillance do pose the question, who pays? In the case of smaller companies already battling with tight profit margins, there is the likelihood that increased costs will be passed on to the consumer to some degree. “The kinds of costs associated in general with PDUFA are not insignificant for small pharmaceutical companies,” Dr. Naso notes. “For a company such as ours, a $500,000 pay ment to the FDA to review a BLA or NDA is a pretty big chunk of cash, and can make the dif ference between a profitable year and a non profitable year. Then a large Phase IV safety fol lowup study, which can be two or more years, can be a very expensive possibility. These all add costs that will come back to the consumer.” Others agree that it could cost the con sumer but note that greater surveillance is to the benefit of patients, allowing them to feel more confident about the safety of a product. “Increased user fees will help the consumer feel that as drugs are approved there will be greater surveillance, or oversight, of how the medicines are prescribed, how they’re distribut ed by the pharmacies, and how they should be taken by patients,” Mr. Van Nostrand says. “There’s no question that there’s going to be increased costs to do this, but the increased costs are sup posed to be for the benefit of the patient.” The burning issue is can the costs be justified? “We have to recognize that the money to do anything has to come from somewhere,” Dr. Naso notes. “Costs have to go back to the consumer and/or out of the profits of a company. And the c o mp a n i e s a r e owned by share holders, who are both consumers who want safe and effective drugs, and investors who want a f a i r a nd f a s t return on their investment. There fore, somebody’s going to pay.” Some experts, however, warn that recent reports criti cizing the pharma ceutical industry’s pricing policies make it difficult for compa nies to pass further increases on to the patient. In June, Express Scripts, one of the nation’s largest pharmacy benefits managers reported that prescription drug spending in 2002 is expected to rise 15.9%, driven by higher prices and increased usage. According to the report, overall drug price inflation totaled 5.5% in 2001, topping 5% for the fourth con secutive year. “The pharmaceutical company is going to be required to take a big brunt of this,” Mr. Van Nostrand says. “The price tag to the patient will be higher over time, but not proportionate to the user fees and what the pharmaceutical companies have to spend. In other words, I think the profit margins are going to come down on the products. The industry will have to be more price sensitive to the consumer.” Even if it turns out that industry is forced to absorb the majority of the increased costs, there are potential silver linings in terms of money saved elsewhere. “If the work that’s required postapproval potentially helps mitigate or eliminate product withdrawals or product liability lawsuits, I would think PDUFA III, if executed properly by the FDA and the industry, may be to the industry’s financial advantage,” Mr. Durbin comments. “Every product that comes out has a liability associated with it, and product liabili ty risks can run into the hundreds of millions of dollars. In certain cases, there probably could be some benefit in mitigating or avoiding that sit uation.” ONE ONLY HAS TO LOOK BACK 10 YEARS WHEN PRODUCTS WERE INTRODUCED INTO EUROPE FIRST ANDWE DIDN’T GET THEM HERE FOR 7 TO 10 YEARS. JIM CLIFFORD THE IMPLICATION IS THAT COMPANIES WILL NEED TO DO CAREFUL PLANNING THAT INCLUDES RISK MANAGEMENT AS PART OF THE APPROVAL PACKAGE. JUDITH JONES B PDUFA III PharmaVOICE According to Mr. Durbin, “User fees are both economic and noble — both elements of what a pharmaceutical company exists for — since it improves patient health globally and delivers value for shareholders. If a company gets a safe, effective drug to market faster, that means that the product has a longer sell ing life and treats more patients for a longer period of time.” Others in the industry believe that any potential savings from getting products approved sooner are likely to be mitigated by increased costs from postmarket studies and surveillance. “People think that pharmaceutical compa nies have unlimited resources, but that’s not true,” Dr. Morris says. “But again because it’s the basic safe use of the drug, resources have not been perceived as a major issue. They clear ly are, but if it means making sure that people aren’t hurt then it’s perceived to be justified, and cost is going to be a secondary issue.” “A lot of the costs in drug development today are, some argue, related to the regulato ry nature of what companies are doing,” Mr. Durbin adds. “There’s an imperative within the pharmaceutical industry to drive costs out of development, without cutting corners, and continuing to do safe, effective trials using technology more efficiently. Companies would argue that if the regulatory process was more efficient, that should help them.” A recent study authored by Joseph A. DiMasi, Ph.D., director of economic analysis at the Tufts Center, determined that cutting development and regulatory review times by 25% would lower total costs by $129 million, while a 33% reduction in development and regulatory review time would decrease average capitalized cost per approved new drug $167 million. F PharmaVoice welcomes comments about this article. Email us at [email protected]. Experts on this topic KENNETH P. BERKOWITZ. Healthcare industry consultant,Pinebrook,N.J.;Mr. Berkowitz provides counsel to the industry on FDA,healthcare,and public affairs issues; he also chaired the 1992 joint PhRMA/bio staff task force on user fees that worked with the FDA to develop PDUFA JIM CLIFFORD.Cochairman, CommonHealth,Parsippany, N.J.; CommonHealth is a leading healthcare communications network PATRICK DURBIN.VP,general manager, periapproval services, Covance Inc., Princeton,N.J.; Covance is a comprehensive drugdevelopment services company CARY GARNER.VP,general manager,Phase IV, Parexel International,Waltham, Mass.; Parexel is a pharmaceutical outsourcing organization providing a broad range of knowledgebased contract research, medical marketing, and consulting services ALANGOLDHAMMER,PH.D.AssociateVP, regulatory affairs,The Pharmaceutical Research and Manufacturers of America (PhRMA),Washington,D.C.; PhRMA represents the country’s leading research based pharmaceutical and biotechnology companies ALBERTO GRIGNOLO,PH.D. Senior VP, worldwide regulatory affairs, Parexel International,Waltham, Mass.; Parexel is a pharmaceutical outsourcing organization ROBERT B.NASO,PH.D.Senior VP, quality regulatory and product development, Nabi Biopharmaceuticals,Boca Raton, Fla.; Nabi discovers,develops, manufactures, and markets products that power the immune system to help people with serious, unmet medical needs WAYNE.L.PINES.President, regulatory services and healthcare,APCO Worldwide, Washington,D.C.;APCO is a public affairs and strategic communications firm JULIET SINGH,PH.D.VP, regulatory affairs and quality assurance,Collateral Therapeutics Inc., San Diego,Calif.; Collateral Therapeutics is a biopharmaceutical company and a memberof the Schering AG,Germany Group ANNETTE STEMHAGEN,DRPH.VP, strategic development services and peri approval services, Covance Inc., Princeton, N.J.; Covance is a comprehensive drug development services company HARRY SWEENEY.Chairman,CEO,Dorland Global Health Communications, Philadelphia; Dorland is a fullservice healthcare communications agency WILLIAMVANNOSTRAND.President, clinical division, Dendrite,Morristown,N.J.; Dendrite is a worldwide leader in salesforce effectiveness and CRM solutions for the pharmaceutical industry providing a broad range of knowledgebased contract research,medical marketing,and consulting services NEHL HORTON. Senior director, corporate media relations, Pfizer Inc., NewYork;Pfizer is a global pharmaceutical company JOHNK.JENKINS,M.D. Director, Office of New Drug Safety, Food and Drug Administra tion, Center for Drug Evaluation and Research, Washington,D.C.;The FDA’s mission is to promote and protect the public health by helping safe and effective products reach the market in a timely way,and monitoring products for continued safety after they are in use JUDITH JONES,M.D.,PH.D.Founder, president,and CEO,The Degge Group Ltd., Arlington,Va.;The Degge Group consults in clinical drug safety, pharmacovigilance,and pharmacoepidemiology CHRISTOPHERMILNE,DVM,MPH,J.D. Assistant director,The Tufts Center for the Study of Drug Development,Boston;The center, affiliated with Tufts University, provides strategic information to drug developers, regulators, and policy makers LOUIS A.MORRIS,PH.D.President and founder,Louis A.Morris &Associates,Dix Hills, N.Y.; Louis A.Morris engages in four healthcare areas, including risk management,Rx to OTC switches, regulation of marketing practices, and patient information and education

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