Regulatory Focus

The re-election of George W Bush as US President has created a mandate to carry forward reforms of the regulatory system. Given statements by Mr Bush during the election campaign about the need to simplify the tax code, restructure social security and return more personal responsibility to individuals, it is safe to assume that the next four years will see a decisive shift toward deregulation. With the exception of stem cells, which remains a difficult issue for US conservatives, there is a clear commitment on the part of Bush Administration officials to remove regulatory obstacles that may be preventing industry from commercialising new pharmaceutical and biotech discoveries. This is embodied in the Food and Drug Administration's (FDA) ‘critical path initiative’ which will almost certainly be pursued with renewed vigour in the coming months.

Asked during the election campaign to identify his first-term mistakes, Mr Bush said that he had not always made the best appointments. Not surprisingly, in the days following the vote, there was considerable speculation about which members of the cabinet would stay and which would leave. If Secretary of Health and Human Services Tommy Thompson is one of those to stay, he most likely will have a say in nominating a new commissioner for the FDA.

Dr Lester Crawford, an agency veteran, has been the acting FDA commissioner since March 2004. He stepped into this post after Dr Mark McClellan, the then commissioner, accepted the position of administrator of the Center for Medicare and Medicaid Services (CMS), the organisation that will be overseeing the Medicare drug benefit. Dr Crawford also headed the agency for just over eight months prior to Dr McClellan's appointment in November 2002¹.

US Senate has a role

At the time of writing, Mr Bush had not said whether he planned to nominate an outsider to head the FDA or put Dr Crawford forward for the job. The procedure for filling the FDA job is unusual in that the nominee must be approved by the US Senate. While the election gives the Republicans a clear Senate majority of 55 seats compared with 45 seats for the opposition, a controversial nomination could still be held up by a filibuster, a debate designed to delay a vote. According to Senate rules, it takes 60 votes to stop a filibuster, and this is five more votes than the new Republican majority will have. Under these circumstances, will the Bush Administration elect for continuity or for change?

Whatever the decision, the nominee is expected to face tough questions from the opposition Democrats over the FDA's role in monitoring the safety of Vioxx (rofecoxib) and in ensuring that the US has an adequate supply of flu vaccine in future. Representative Henry Waxman, a Democrat from California, has already accused Dr Crawford of deliberately withholding documents from Congress about manufacturing problems at the Chiron vaccine plant in the UK². In early October 2004, British authorities decided to suspend the plant's license after finding systemic good manufacturing practice (GMP) faults and bacterial contamination³. This resulted in a huge shortfall in the supply of flu vaccine for the US market.

The Business Roundtable

In the aftermath of the election, the Business Roundtable, an organisation representing chief executive officers (CEOs) from more than 150 US companies, was drawing up a position paper calling on the Bush Administration to continue its market-oriented approach to healthcare reform⁴. That the roundtable, one of the most prestigious business groups in the US, should take an interest in healthcare reform is no surprise. Its chairman, Hank McKinnell, is also chairman and CEO of Pfizer.

While the major thrust of US health policy is expected to be toward deregulation, there will be contraints. The new Bush Administration will start its second term with huge ongoing financial commitments to the military, homeland security and Medicare. How can the conservative impulse toward laissez-faire pricing be reconciled with its commitment to provide an expensive drug benefit for senior citizens starting in 2006? On the latter point, it is expected that the government, via Medicare, will spend more than $70 billion on drugs by 2008. As Joshua Cohen of the Tufts Center for the Study of Drug Development writes on page 867, this estimated outlay represents close to one-third of the current total US prescription drug spend.

The drafters of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 apparently realised that the government would not be able to finance this big new benefit at any price. The act allows US health plans, which will deliver the government benefit, to make their reimbursement decisions on the basis of cost as well as clinical effectiveness data. The law also allows the establishment of CMS-sponsored minimum formulary requirements. According to Mr Cohen, this, together with a move by many US health plans to implement formulary guidelines of the Academy of Managed Care Pharmacy, amounts to the introduction of a de facto fourth hurdle in the US.

In Europe, the concept of a fourth hurdle is not new. In fact, the National Institute for Clinical Excellence (NICE) of England and Wales is so well established that treatments, including drugs, that do not receive a NICE recommendation, are not automatically reimbursed by the National Health Service.

Does the CMS have something to learn from NICE? Apparently so. In September 2004, the CMS and NICE said they were exploring the possibility of pooling their knowledge and experience in the area of health technology assessment⁵. NICE Chairman Michael Rawlins said at the time that ‘the two organisations will investigate whether it might be possible to establish joint databases or registries, initially in the area of new interventional procedures, that might allow assessment of safety and efficacy (of these interventions) at an earlier stage in their development.’

There are and will continue to be, important differences between the way drug costs are managed in the US and the UK. For a start, the Medicare benefit will mainly be delivered by private health plans. And second, the Medicare legislation specifically prohibits the government from negotiating drug prices with the plans⁶. But as in England and Wales, cost effectiveness will be a consideration.

Formularies will play an important role. As reported on page 920, the US Pharmacopeia (USP) is drafting guidelines for a model formulary that might be followed the by US health plans. The draft model was sent out for consultation early in 2004 and, by August, it had attracted 1,100 responses. These included a call by the Pharmaceutical Research and Manufacturers of America (PhRMA) for a comprehensive revision. The debate over the cost of the Medicare drug benefit has only just begun.

Regulation in Russia

The Russian Federation, a country that often gets overlooked in discussions about the harmonisation of pharmaceutical regulation, is in the news again. In March 2004, President Vladimir Putin, abolished the Ministry of Health and replaced it with a new Ministry of Healthcare and Social Development. Five months later, a new Department on Pharmaceutical Activities issued procedures that companies must follow in getting approval for conducting clinical trials.

This new policy is described in an article on page 871 by Dr Dmitry Reihart, deputy head of the new department, and Pyotr Platonov, the RAJ correspondent in St Petersburg. As reported, a key feature of the new structure is the creation of a National Ethics Committee which will provide advice on ethical as well as legal matters. The committee is responsible for the review of informed consent forms as well as the professional qualifications of trial investigators.

Meanwhile, the Regulatory Affairs Professionals Society (RAPS), has been asked by the US Department of State to provide advice to Russian research facilities and scientific organisations on standards and guidelines. This includes standards for good laboratory practice. This is part of the US government's bioindustry initiative which aims to build a bridge between Russian medical institutions and those elsewhere. Another aim is to convert the biological weapons facilities of the former Soviet Union into peaceful, commercial use. Four RAPS members recently visited Moscow to evaluate Russia's current regulatory environment.

RAPS on the move

The Moscow visit is one of a number of international initiatives being undertaken by the organisation. In early December 2004, the RAPS Executive Director Sherry Keramidas was due to visit Japan to explore the possibility of starting a Japanese regulatory certification programme. ‘We have a number of members who want to learn about Japanese regulations,’ Ms Keramidas said in an interview. Therefore there is an opportunity to provide information about a system that is still evolving and is not well understood to outsiders. Significantly, the Ministry of Health is beginning to show an interest in interacting with industry associations. And people who work in regulatory affairs within companies are developing a professional identity, she said.

As reported, RAPS released its compensation survey of US regulatory professionals in October 2004 and it is due to issue a similar poll of European professionals in 2005⁷. The latter survey will look at pay and other types of compensation. The recent US survey showed that the salaries of regulatory professionals had increased, on average, by 6.5% in 2004 from a year earlier. This, together with anecdotal reports from companies about job vacancies, suggests that demand for regulatory professionals currently exceeds supply, Ms Keramidas said.

A possible explanation is that regulatory professionals are being called upon to perform a wider variety of tasks, from negotiating with health authorities to, in some cases, becoming CEOs of consultancies or of small companies. Also regulatory professionals who work at large companies have to be knowledgeable about markets in more than one country or region of the world.

In 2005, RAPS will be conducting a survey of personnel officers and heads of regulatory departments to find out what they think the qualifications of entry-level employees should be. It will also question mid and senior level professionals about their competencies. Senior professionals have already indicated a need for more training in business and finance. Among other things, alumni of the RAPS executive development programme at the Kellogg School of Management at Northwestern University in Illinois, want the organisation to offer a second course for senior professionals, Ms Keramidas said.

Besides conducting surveys, RAPS wants to use its position as a neutral platform to explore issues facing the industry. One is how clinical trial design can be improved; another is how combination products should be regulated.

Two global competitors?

The merger of the British and European regulatory societies in early 2004 to form a new regulatory professional group, TOPRA, means that there are now two global regulatory membership organisations. Ms Keramidas said that there were, as yet, no joint initiatives between RAPS and TOPRA, but that ‘we would like to collaborate’.

Victoria English

Editor

Regulatory Affairs Journals Ltd

References

1. www.fda.gov/oc/commissioners/henny.html

2. Scrip, 2004, No 3002, 17

3. Ibid, No 2998, 17

4. The Financial Times, 5 November 2004, 17

5. The Regulatory Affairs Journal - Pharma, 2004, 15(11), 848

6. The Regulatory Affairs Journal - Pharma, 2004, 15(1), 52

7. The Regulatory Affairs Journal - Pharma, 2004, 15(11), 793