Drug Safety Bill Authorizes Fines On Industry, But Does Not Include User Fees

The Center for Postmarket Drug Evaluation & Research proposed in legislation from Sens. Grassley and Dodd would be funded by appropriations, not user fees.

The "FDA Safety Act" (^FDL-1 S 930), introduced by Senate Finance Chairman Charles Grassley (R-Iowa) and Sen. Chris Dodd (D-Conn.) in April, proposes the creation of an independent drug safety center that would have expanded authorization over postmarketing surveillance (¹ (Also see "FDA Safety Act Calls For “Expedited Procedures” For Drug Withdrawals" - Pink Sheet, 2 May, 2005.), p. 8).

To fund the new center, the bill would authorize $500 mil. in appropriations over five years, starting with $50 mil. for fiscal year 2006 and increasing to $150 mil. in FY 2010.

Grassley had explored user fees as a potential source of funding for an enhanced drug safety program, and asked Acting FDA Commissioner Lester Crawford about the concept in written questions submitted as part of the confirmation process.

Crawford maintained a neutral position on the issue during the Senate Health Committee's March 17 confirmation hearing.

However, Crawford suggested earmarking user fees for drug safety would likely be part of reauthorization discussions for the Prescription Drug User Fee Act. The current user fee authorization expires in 2007 (² (Also see "Drug Safety User Fees Explored By Sen. Grassley In Questions For Crawford" - Pink Sheet, 21 Mar, 2005.), p. 6).

The user fee program has been criticized for creating too tight of a relationship between FDA and industry.

The agency is currently conducting a study comparing the rate of addition of "black box" warnings and product withdrawals before and after the user fee program. An interim analysis has shown no significant difference (³ , p. 7).

A separate bill has been introduced in the House that would dismantle the existing user fee system. The "FDA Improvement Act of 2005" (HR 2090) from Rep. Maurice Hinchey (D-N.Y.) attempts to increase the agency's independence by severing the connection to industry created by user fee payments.

Rather than FDA collecting funding from the companies it regulates, user fee funds would be deposited into the Treasury. The bill would require mandatory spending to compensate for the redirected user fee moneys.

Hinchey's legislation proposes establishment of an independent "Center for Post-Market Drug Safety & Effectiveness" similar to Grassley/Dodd's CPDER; changing conflicts of interest rules for members of FDA's advisory committees; and reverses the agency's pre-emption policy in the context of state product liability litigation (⁴ (Also see "FDA Chief Counsel Troy Resigns; Agency Says It Will Still Support Preemption" - Pink Sheet, 22 Nov, 2004.), p. 15).

The bill also attempts to reduce off-label use of prescription drugs.

The bill calls for a crackdown on off-label promotions, and would require doctors to inform patients when they are prescribing a drug for an unapproved use.

Grassley/Dodd's bill also includes civil monetary penalties. CPDER would have the power to levy fines on companies that do not complete postmarketing study commitments on time or fail to comply with a prescribed "corrective action."

Civil monetary penalties start at $250,000 for the first 30 days, and double every 30 days the firm is non-compliant (up to $2 mil. per 30-day period).

Although the fines are likely to draw objection from industry, Pharmaceutical Research & Manufacturers of America CEO Billy Tauzin endorsed the concept of stronger safety regulation.

"We strongly support an independent board within FDA composed of people who are not part of the approval process," Tauzin said at a May 2 press briefing. "It is wholly within the pharma companies' interest to have a strong FDA, to have a strong safety regime."

"Just ask any of our companies that are subject to these massive lawsuits, and they'll tell you that they have all kinds of reasons to be for good safety review. If not a matter of social conscience, it's an economic matter," Tauzin stated.