21st Century Cures Now A Partially Funded Mandate For FDA

Amended bill passes full House Energy and Commerce Committee unanimously with another $550 million in appropriations for FDA.

FDA's proposed new responsibilities in the 21st Century Cures legislation now are partially funded as opposed to barely funded.

House Energy and Commerce Committee members created an additional $550 million for the agency in the manager's amendment approved May 21 just before they advanced the bill to the House floor. It pushed the total amount of additional authorized appropriations for FDA to $640 million over five years.

While this does not equal FDA’s entire estimated cost of the bill, the amount would significantly cover it and at least somewhat calm agency fears about resource requirements.

The committee voted unanimously (51-0) to advance the bill after a mark-up mostly spent congratulating members and staff on the final product.

Committee leaders want to get the bill to President Obama by the end of the year. A similar effort is ongoing in the Senate Health, Education, Labor and Pensions Committee, but with a later completion (Also see "Senator Tells FDA To Create ‘Red Team’ For Regulatory Streamlining" - Pink Sheet, 28 Apr, 2015.).

A number of amendments were filed for the House mark-up, but only the manager’s amendment sponsored by Committee Chairman Fred Upton, R-Mich., was considered. The others were withdrawn, although some could come up again during floor consideration (see table below).

Upton’s amendment dealt with the FDA funding issue, creating the Cures Innovation Fund where $110 million would be appropriated each fiscal year from FY 2016 through FY 2020.

That is not to be confused with the National Institutes of Health Innovation Fund also created in the Cures bill, which adds $2 billion per year for five years to its budget (Also see "FDA Gains Cures Funding In Latest Draft" - Pink Sheet, 13 May, 2015.).

Upton said during the mark-up that the money in FDA’s Innovation Fund is intended to help fund regulatory modernization. Funds also could be used for a number of Cures responsibilities, including conducting natural history studies, developing and using data from clinical experience, and drug development tool qualification.

The additional money will not entirely cover FDA’s estimated cost of the Cures bill, however.

Agency officials said the biomarker qualification changes alone could cost up to $188 million, in part because each package likely will require the resources of a drug application with clinical data. The other Cures provisions would cost FDA $882.8 million over five years, the agency estimated (Also see "Biomarker Qualification Costs As Much As Application Review, FDA Says" - Pink Sheet, 20 May, 2015.).

FDA still finds itself about $300 million short of full funding for the Cures package, but given that previous language included only $90 million in additional appropriations, adding the new Cures Innovation Fund should be considered a win.

Still, there is no guarantee any of the money will be appropriated, especially with Republicans on the House Appropriations Committee already indicating FDA’s FY 2016 budget likely will be flat (Also see "FDA Funding In Cures Bill Complicated By Metrics, Appropriators" - Pink Sheet, 18 May, 2015.).

The answer may be to create another user fee for biomarker qualification to help pay the added costs (Also see "User Fees For Biomarker Qualification Might Improve Study Designs" - Pink Sheet, 20 Oct, 2014.).

The manager’s amendment also exempted FDA user fees from the budget sequester, which a number of industry groups applauded. In 2013, FDA lost $85 million in fees when the sequester went into effect (Also see "Hamburg, Like Industry, Wants Predictability – But In FDA Funding" - Pink Sheet, 5 Nov, 2013.).

Oil Sales Among Pay-Fors

Committee members also revealed the long-awaited methods of paying for the Cures legislation.

Among them is requiring the U.S. Strategic Petroleum Reserve to sell 8 million barrels of crude oil “during each of the fiscal years 2018 through 2025,” according to the bill text.

Crude oil closed at about $61 per barrel on May 21. That would make the SPR barrels to be sold worth about $3.89 billion, although given that the sales are to be staggered and that future prices could change, it is unclear how much money actually would be raised from the sale.

Another offset limits Medicaid reimbursement to states for durable medical equipment to Medicare rates, which would take effect in 2020.

The timing of reinsurance payments to prescription drug plan sponsors also was changed, as was the reimbursement system for using film X-ray imaging services.

America’s Health Insurance Plans said in a statement that it opposed “using seniors’ Medicare benefits to offset increased federal spending” in the Cures package, which could mean the provision may be in danger going forward.

The Generic Pharmaceutical Association said in a statement that it would continue trying to include language in the Cures bill limiting misuse of Risk Evaluation and Mitigation Strategies, which has been pitched as a potential pay-for previously. It may be difficult to insert the language, however, given the opposition to it (Also see "Did PDUFA V Pass Too Quickly?" - Pink Sheet, 25 Jun, 2012.).

Some members warned during their opening statements for the mark-up that offsets cutting Medicare benefits were problematic, but there did not appear to be much disagreement when the amendment was considered (Also see "Priority Review Voucher Extension Scaled Back In New Cures Bill" - Pink Sheet, 19 May, 2015.).

R&D Cost, Voucher Program Amendments Withdrawn

Among the amendments withdrawn was a provision that would require sponsors to disclose their research and development costs and the amount of National Institutes of Health funding used to offset those costs upon filing an FDA application.

Rep. Jan Schakowsky’s amendment also would have required the information be made public to generate more information explaining drug prices.

The Illinois Democrat used Gilead Sciences Inc.’s blockbuster hepatitis C treatment Sovaldi (sofosbuvir) as an example to question whether companies need more incentives for R&D investment. Schakowsky said increasing transparency will help the public better understand how drug prices are determined.

Gilead has been criticized for the high price it set for Sovaldi (Also see "Medicaid Directors Urge Federal Policy Changes To Fight High-Cost Drugs" - Pink Sheet, 29 Oct, 2014.).

Rep. G.K. Butterfield, D-N.C., also offered and then withdrew several amendments related to FDA’s priority review voucher programs.

The Cures package would extend the rare pediatric disease PRV program through the end of 2018 and lift any cap on the number of vouchers that can be issued.

FDA now is in the midst of a mandated one-year program pause since issuing its third voucher (Also see "Retrophin’s New Strategy Gets A Boost, And A Voucher, Thanks To Cholbam" - Pink Sheet, 18 Mar, 2015.).

Butterfield wanted to make a technical change that would allow any application designated as potentially eligible for a voucher before the end of 2018 to still receive it if approved after the program expires.

Upton indicated the provision could be included in the manager’s amendment moved during floor consideration.

FDA expects to be issuing many more vouchers if the program is extended. In its Cures bill cost estimate, the agency said participation could increase to seven to eight vouchers per year.

The rare pediatric disease PRV program has proven popular since its creation in the 2012 FDA Safety and Innovation Act. One awardee sold a voucher for $67.5 million, but it may prove to be worth more (Also see "Priority Review Weirdness: Tropical Voucher Sells For More; Owner Says It’s Worth Less" - Pink Sheet, 24 Nov, 2014.).

21^st Century Cures Amendments
Amendment	Sponsor	Outcome
Manager’s Package : Included spending offsets as well as a new Cures Innovation Fund with an additional $550 million in funding for FDA	Committee Chairman Fred Upton, R-Mich.	Passed by voice vote
Drug Cost Transparency : Required sponsors upon application filing to disclose research and development costs and any NIH funding that offset it. Information would be made public	Rep. Jan Schakowsky, D-Ill.	Withdrawn
Medicare Part D Drug Pricing : Required the federal government to negotiate drug prices	Rep. Peter Welch, D-Vt.	Withdrawn
Underrepresented Communities and Health Disparities : Expressed the sense of Congress that NIH should find ways to increase minority involvement in clinical trials, award grants to promote inclusion of underrepresented minorities in health professions, and make other related changes	Rep. Bobby Rush, D-Ill.	Withdrawn, but parts of sections on including more minorities in clinical trials and ensuring more under-represented communities in the biomedical workforce in strategic plans were included in the manager’s amendment
Medical Marijuana : Expressed the sense of Congress that more research is needed to determine the risks and benefits of medical marijuana and its derivatives	Rep. Morgan Griffith, R-Va.	Withdrawn
Rare Pediatric Disease Priority Review Voucher : Allowed a sponsor designated as potentially eligible for a voucher before program expiration to be able to receive it if approval is received after sunset	Rep. G.K. Butterfield, D-N.C.	Withdrawn
Rare Pediatric Disease Priority Review Voucher : Extended the program through Sept. 30, 2022	Rep. G.K. Butterfield, D-N.C.	Withdrawn
Tropical Disease Priority Review Voucher : Required that for voucher eligibility the sponsor must assure that the drug has not already been approved for any tropical disease indication outside the U.S. for more than 36 months before submission	Rep. G.K. Butterfield, D-N.C.	Withdrawn
Disposable Medical Devices : Required a payment method be established for disposable medical devices and related services	Rep. G.K. Butterfield, D-N.C.	Withdrawn