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FDA USER FEE LEGISLATION BEING NARROWED TO PRESCRIPTION DRUGS TO STREAMLINE ENACTMENT; AGENCY OFFERS INDUSTRY DRUG REVIEW "PERFORMANCE COMMITMENTS"

Executive Summary

FDA user fee legislation may focus on prescription drugs only in order to help speed enactment of a bill this year. The House Energy & Commerce/health subcommittee will convene an Aug. 10 hearing on Rx drug and biologic user fees featuring testimony by FDA and representatives of the pharmaceutical and biotechnology industries. Subcommittee Chairman Waxman (D-Calif.) and Committee Chairman Dingell (D-Mich.) are drafting user fee legislation; Senate Labor and Human Resources Committee Chairman Kennedy (D-Mass.) and ranking Republican Hatch (Utah) also have participated in the user fee discussions. Because this year's legislative calendar is shortened by the November elections, legislators believe they must streamline the enactment process by trimming any controversial provisions from user fee legislation. The OTC drug, medical device, food and cosmetic industries all have objected to the concept of user fees; consequently, the focus is now solely on the prescription drug industry, which tentatively is receptive in principle. Generic companies also are expected to be excluded from the legislation because the generic industry opposes user fees. In a series of meetings this summer, FDA Commissioner Kessler, MD, has pressed Capitol Hill and the industry vigorously for a bill that will produce additional resources for his agency ("The Pink Sheet") July 20, T&G-8 and Aug. 3, In Brief). It is currently envisioned that prescription drug user fee legislation could raise an estimated $50 mil.-$100 mil. in additional resources for the agency. Witnesses scheduled to appear at the subcommittee hearing include Kessler; Pharmaceutical Manufacturers Association President Gerald Mossinghoff; Merck Research Labs Exec Director for Regulatory Affairs David Blois; Glaxo Inc. Chief Exec Charles Sanders, MD; Upjohn Vice President Mark Novitch, MD; Roche President Irwin Lerner; Genentech VP-Government Affairs David Beier and Industrial Biotechnology Association board member Mark Skaletsky, chairman of Cambridge, Mass.-based Enzytech. All witnesses are expected to present testimony is support of user fees. However, the industry representatives are said to be insistent that FDA use the proposed revenues in ways that speed new product approvals measurably. FDA reportedly has developed a series of performance commitments for industry. A number of breakdowns of how FDA would spend the additional money have been circulated to industry and on Capitol Hill. The legislation ultimately fashioned by Congress probably will not stipulate these goals or standards, although it will provide - - like a draft bill circulated earlier this year -- that user fees must be additive to appropriations and that revenues must be applied to FDA's new product review program ("The Pink Sheet" June 15, p. 3). The performance commitments are described as a matter of long-term agreement between the agency and the industry. It is not expected that a change in administration would adversely affect the agency's commitment to use the fees solely to enhance the new product review process. Although the legislation is not likely to stipulate performance (approval) goals, it may contain provisions designed to enforce them indirectly. For example, the IBA in testimony prepared for the hearing is urging that the bill provide for "yearly independent outside" audits of FDA's performance. The association also commends the draft legislation's inclusion of a sunset provision as "essential to assessing how well FDA is utilizing the user fees." Another check on FDA's use of fee revenues undoubtedly will be the congressional Appropriations Committees. They will review FDA's use of the revenues closely to ensure that appropriations are being allocated to programs Congress intended and that the fees are truly additive to appropriations. Congress is still considering raising the revenues through fees in four areas: applications, product registration, establishment registration, and import fees. However, import fees may be dropped due to difficulties with General Agreement on Tariffs & Trade negotiations. Dingell had been averse to application fees as a tax on innovation; Waxman supports them. Dingell reportedly has softened his resistance to application fees, particularly now that other forms of charges no longer can be spread over all FDA-regulated industries. Proponents predict that if the user fee program is successful, other industries will accept it within the next few years. This prediction holds that such industries will acknowledge FDA's need and the benefits from speeding approvals of their products. Congress also will have more time to negotiate with reluctant industries next year.
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