NDMA AGREES TO USER FEE LEGISLATION FOR SWITCH APPLICATIONS; ASSOCIATION DOES NOT DEMAND PRE-EMPTION RIDER: FDA COM. KESSLER COURTING GENERIC INDUSTRY

The Nonprescription Drug Manufacturers Association is supporting the FDA user fee legislation authorizing the agency to assess charges for services and to allocate revenues to its drug programs. In a concerted effort to garner greater resources for FDA, Commissioner Kessler, members of Congress and representatives of the innovator prescription drug industry have been working to develop a bill authorizing FDA user fees. Because legislation has not been formally introduced and time remaining on Congress' legislative calendar is limited, any user fee bill must be universally accepted and free of controversial amendments to have a chance for enactment this year. NDMA agreed during the week of Aug. 24 to support legislation requiring sponsors of Rx-to-OTC switch applications to pay users fees. The association is attaching two conditions to its support. The association is stipulating that user fee revenues collected from the OTC industry should be allocated to the Office of OTC Drug Evaluation and that FDA must agree to meet performance standards in approving applications to transfer drug products from prescription to OTC status. NDMA's conditions are analogous to two "principles" endorsed by the innovator prescription drug industry and agreed to by FDA. Although the OTC drug industry previously opposed user fee legislation, NDMA apparently has come to believe that benefits of joining the legislative effort may outweigh drawbacks. Specifically, endorsement of the bill is expected to engender good will with FDA and Congress; user fees could benefit the OTC drug industry by benefiting the agency's Office of OTC Drug Evaluation; and OTC industry support may avoid creating further incentives for FDA to favor Rx NDA reviews over OTC applications. If FDA were faced with a choice of reviewing either an NDA supplement for which user fees are collected or a supplement for an OTC switch for which they are not, the agency would be inclined to favor the Rx application. Commissioner Kessler is now focusing on the generic drug industry for its endorsement. Rep. Waxman (D-Calif.), one of the key sponsors of the proposal, apparently also favors including the generic industry in the plan. Although both the Generic Pharmaceutical Industry Association and the National Association of Pharmaceutical Manufacturers have expressed opposition to user fees, they agreed to discuss the issue with FDA in a pair of meetings. Representatives of NAPM, GPIA and the National Pharmaceutical Alliance met with Office of Generic Drugs Director Roger Williams, MD, on Aug. 27. The meeting followed by a week a conference call placed by FDA to a number of industry representatives. The commissioner was scheduled to meet with the generic drug industry again on Aug. 31, but the meeting was postponed; he had a previous commitment to address the National Association of Chain Drug Stores' pharmacy conference in Chicago. The user fee meeting now is tentatively scheduled for Sept. 4. Generic drug companies are concerned that, unlike other segments of the drug industry, they cannot pass on the cost of user fees to their customers due to the level of price competition among generic drugs. They also reportedly believe that they have less to gain by generating additional resources for the Office of Generic Drugs, whose ANDA backlog has been greatly reduced over the past year. They further argue that the value of an ANDA approval is highly variable, particularly when FDA approves groups of applications for a single compound. Another of the still-unresolved issues is when and how application fees are paid. Kessler testified at an Aug. 10 hearing that small biotechnology companies without products would not have to pay application fees "until you're ready to go to the market" ("The Pink Sheet" Aug. 17, p. 6). However, there is concern that a conflict of interest might appear if established firms pay application fees only after approval. Furthermore, a number of PMA members are endorsing staggered payments for NDAs so that the entire amount is not paid when the application is filed and when the ultimate disposition of the NDA is in doubt. Roche President Irwin Lerner testified that the "staggering of payments would also help deal with concerns of some of the smaller research-based companies."