Is the New FDA Different than the Old FDA?

Two weeks ago, FDA Matters explored Dr. Hamburg's legacy, focusing on advocacy for resources, prioritizing regulatory science and upgrading enforcement. These will be accomplished before she leaves office. But is she making similar progress in creating "a new FDA?"

Judging by her first year's effort, FDA is becoming "new" in some important ways. Still, there are signs of retrograde attitudes and some ways in which FDA just doesn't seem capable of changing.

Although FDA has long called itself a "public health agency," it has been run by individuals who came from academic health centers. Dr. Hamburg and Dr. Sharfstein ran big city health departments. The agency's decisionmaking standard has become "what's best for the public health." I think this is becoming a core part of "a new FDA."

Dr. Hamburg has had new funds to work with, through both appropriations and user fees. Along with normal turnover, this means a substantial part of the agency workforce ten years from now will have been hired and trained during Dr. Hamburg's tenure. All by itself, this contributes to "a new FDA" that will reflect her stamp.

Dr. Hamburg is trying to create "a new FDA culture," a difficult task in any governmental agency. Thus far, it is defined by an intensity of activity and a broad range of initiatives. I see a new spirit within the agency: issues can be addressed if there is a public health impact, regardless of whether they would have been acted upon in the past.

The idea of "a new FDA" may be making less progress elsewhere at the agency. Traditionally, tougher enforcement has been cyclical. It will not become a constant force unless Dr. Hamburg chooses wisely for the new head of Office of Regulatory Affairs. The character of this person--FDA knowledge, superior leadership skills, new ideas about effectiveness and fairness, commitment to standards—will determine whether enforcement becomes a central part of "a new FDA."

And then there are parts of FDA that still look a lot like "the old FDA." Issue and activity silos are still the norm rather than the exception. Dr. Hamburg is setting a good example with her efforts to strengthen science agency-wide. But FDA cannot be considered "new" without substantial progress in making FDA and the American public the first loyalty of employees. It cannot be their branch, division or Center.

Despite sincere efforts by Drs. Hamburg and Sharfstein to clarify and expand upon agency positions and actions, public communications are still "old FDA." The agency is struggling with so-called new media (Twitter, Facebook, blogs, etc), while attacking industry for recognizing and acting upon this new form of communications. FDA cannot be "new" (or even current) until it provides insight, guidance and "leadership by example" in this area. Efforts at improving transparency at FDA need to acknowledge that a broader range of senior leadership needs to be available to the press on a regular basis.

A "new FDA" cannot be achieved without the strongest possible commitment to innovation--in actions and not just words. Critical Path and advocacy for regulatory science don't go far enough. Efforts to develop bio-markers and new statistical methodologies are worthwhile, but have the feel of "one-offs" instead of concerted efforts to systemically modernize the clinical trials system and the standards for FDA approvals.

Like her legacy, Dr. Hamburg's effectiveness in creating "a new FDA" is still unwritten. It is too soon to know if she will succeed. She gets an A for having chosen far-reaching, worthy legacy items. The effort to create "a new FDA" must be considered a B- so far, showing good aptitude but still in need of better application and follow-through.

Steven

Not Too Soon to Consider the Hamburg Legacy
May 27th, 2010

It may seem premature to be discussing "the Hamburg legacy." But you know that she is thinking about it (all commissioners do), so why can't FDA Matters talk about it? Read the rest of this entry »

Fortuitous Timing and Public Health Leadership at FDA
March 14th, 2010

Commissioner Hamburg and Principal Deputy Commissioner Sharfstein are very good leaders who have also benefitted from their prior public health experiences and the timing of their appointments. Here is FDA Matters' analysis: Read the rest of this entry »

Commissioner Hamburg's Most Important Personnel Decision
February 21st, 2010

With due respect to the many fine individuals that Commissioner Hamburg has recruited, FDA Matters thinks the most important appointment needs to be made soon: choosing the right person to be Associate Commissioner for Regulatory Affairs. Read the rest of this entry »

Quality Control Woes: What’s a CEO to Do?

Medical products companies are struggling to assure FDA and the American people that their products are "safe as manufactured and distributed." We don't know whether quality control has become lax, FDA is discovering more problems or industry has just had a run of bad luck.

We do know that quality control relies on a lot of people maintaining tough standards…and that manufacturing is rarely a priority of a drug and device company CEO. Earlier this year, in the wake of Toyota's problems, FDA Matters asked: "what's a CEO to do?"

Here is an edited version of the answer I provided.

First and foremost, believe (really believe) that bad things can happen to you and your company. Being FDA-regulated means "always worrying that you will have to say you're sorry." Foods, drugs and devices are central to our everyday life. By their nature, problems are to be expected. Deadly consequences are never more than one mistake or misjudgment away.

Don't assume that you can limit the damage. Problems escalated quickly for Toyota, revealing flaws in the company's process and attitude, not just its products. And concerns kept multiplying, while confidence dwindled in the company's ability to fix the problems.

Recognize that "the buck stops here." Typically, Congress and the media are fascinated by what the CEO knew and when he knew it. But it is quite beside the point. The CEO is responsible and will be held accountable for the actions and failures of all the company's employees and contractors.

Trust, but verify. In a large, multi-national company, there are an endless number of decisions. Hiring good people and delegating is necessary, but not sufficient. Even the best employees find it difficult to tell their boss about a serious issue that might require costly pre-emptive action. It's too easy to think: last year's worst fears never materialized, so maybe today's concerns won't turn out to be bad either.

Don't drink the Kool-Aid. Everyone wants to be part of the team–-to believe in the products they are creating. It becomes hard to be objective about the good and bad points of what one's company and team are doing. The CEO needs to believe the worst is possible, ask the tough questions and be skeptical when everyone responds "we're okay."

Your crisis management plan is not enough. Crisis planning is a step-child of corporate communications. Not enough companies have such plans and few take them seriously enough to practice and update them. I doubt many companies have plans that prepare them to deal with simultaneous multi-system failure.

In a hurricane of adversity, it is unavoidable that companies will be "shaken to the core." As with real storms, the survivors will be those who built sounder structures, monitored performance closely, and put plans in place for the "once in a hundred years" event that devastates everything.

Such preparation does not happen naturally and cannot be delayed until the storm clouds appear.

However, CEO's can commit to running reviews that anticipate and prevent problems, as well as prepare for dealing with the worst. FDA Matters sees at least three keys to success in this type of "360 degree" inquiry:

• no person, project, product, or process can be protected from review,
• employees need to know that they can speak confidentially and without fear of reprisal, and
• outside experts are needed to perform reviews and audits, because no one can be sufficiently objective about their own work or team.

Please help me get this message into the hands of CEO's. The company and job you save may be your own.

Steven

Some related columns:

"Safe": Many Meanings Complicate FDA Policymaking
May 23rd, 2010 Being in favor of safe foods and safe medical products is not enough if you are FDA, the media, Congressional authorizers and appropriators, OMB, and industry. It sounds good, but what does it really mean? In the FDA context, "safe" means many things, some of which are barely related to each other. Read the rest of this entry »

Black, White, Shades of Gray
November 13th, 2009 Civil and criminal investigations are becoming a more prominent feature in the world of FDA-regulated industries. People who never gave any thought to this….suddenly find themselves needing to understand how investigations work. Read the rest of this entry »

The Beatings Will Continue…
November 1st, 2009 It has been an expensive year for pharmaceutical companies. Billions of dollars have been paid to federal and state governments and whistleblowers in settlement of allegations and lawsuits. The complaints include off-label marketing and overcharging Medicaid, but there are many others. Read the rest of this entry »

Not Too Soon to Consider the Hamburg Legacy

May 18 marked one year since Dr. Margaret Hamburg was sworn in as Commissioner of the US Food and Drug Administration. The challenges are great, the torrent of issues is never-ending and most days you can smile but you can't win. Nonetheless, I think it has been a very good first year for her and for Principal Deputy Commissioner, Dr. Joshua Sharfstein.

It may seem premature to be discussing "the Hamburg legacy." But you know that she is thinking about it (all commissioners do), so why can't FDA Matters talk about it?

Top-line: the agency has a renewed energy and sense of purpose, which I attribute to her leadership. She has been aided by something none of her recent predecessors have had: the flow of new monies. This has allowed her to make choices about priorities and invest time and manpower into them.

Dr. Hamburg's most important legacy will be whether she can sustain this momentum. FDA is still severely under-resourced. The FDA commissioner who can reverse this trend for more than a few years will always be remembered for that.

Improving regulatory sciences is apparently quite high on Dr. Hamburg's list and I have written favorably about it a number of times. I also know that a lot of FDA-watchers are puzzled by it. Here is FDA Matter's explanation:

"Regulatory sciences" means the tools, techniques and knowledge needed by food and medical product regulators to carry out their public responsibilities. Fundamental to the concept is that consumers, patients and regulated industries benefit when regulators have sophisticated, state-of-the art capabilities and use them transparently so that no stakeholder has to guess about the agency's approach.

"Regulatory science" is most often thought of in relation to medical product approvals and food safety, but actually extends to every aspect of the FDA's responsibilities, including manufacturing, product tracking, laboratory procedures, post-market standards, sentinel monitoring, etc.

Accomplishing this—even getting it firmly launched—is a legacy item. We will all benefit if she succeeds…and we will certainly remember her for it.

A third area emerging as a legacy item is a new FDA toughness on enforcement. At one point, I had thought that this was a threshold item: Congress wouldn't let Dr. Hamburg address her other priorities unless she proved that she could assure the safety of medical products and food. That may even be how she thought of it a year ago.

This mission turned out to be more than just eliminating some marginal players and confirming that the mainstream regulated industries were playing by the rules. The past year, we have seen a number of established, name-brand companies held accountable for lapses that should not—by their own admission—have occurred.

One important consequence of inspections and enforcement is to keep everyone on their toes. Maybe CEO's of FDA-regulated companies are not asking tough enough questions or don't appreciate how much the company can be hurt by people many levels below them. If the behavior of mainstream industry is markedly improved and the agency is clearer and more predictable in its standards and enforcement actions, then this would be a powerful legacy for Commissioner Hamburg.

With a year in office, it's not too soon to discuss Dr. Hamburg's potential legacy. What do you think of my list? What would you add? Please post your comments or send them to me at sgrossman@fdamatters.com

Steven

Some previous columns that touch on each of these legacy items:

FDA: A Bargain at Two Cents Per Day Per American

March 28th, 2010

FDA touches every American many times each day. Today's investment (2 cents per day per American) is a pittance compared to the benefit of a strong FDA and the risk of an underfunded FDA. There cannot be many agencies in the US government that have such a vast scope of responsibilities and so few dollars to get the job done.

This is the powerful message that the Alliance for a Stronger FDA has been delivering to Capitol Hill. Even still, it will be a difficult year for any federal agency whose mission and responsibilities are growing. Read the rest of this entry »

CARS: The Vehicle for FDA's Future

October 25th, 2009

Since Labor Day, Commissioner Hamburg has spoken a number of times about the importance of regulatory science. She is right. FDA must have the scientific tools and methodologies to be a 21st century regulatory agency. FDA needs to define regulatory science, develop programs to support it, and package them in a way that will quickly bring recognition and funding. Read the rest of this entry »

Shaken to the Core: What FDA and FDA-Regulated Companies Can Learn from Toyota

February 25th, 2010

I do not believe that Toyota became a global success by cutting corners and ignoring safety concerns. Nonetheless, the company may not survive the investigations, the lawsuits, the civil and criminal fines, the securities litigation, the recalls (8.5 million cars so far), the loss of consumer confidence and the possible criminal indictments.

FDA Matters hopes that the CEO's of FDA-regulated companies are paying attention. They need to understand that their company can be "shaken to the core," as Toyota has. Read the rest of this entry »

“Safe”: Many Meanings Complicate FDA Policymaking

FDA Matters is in favor of safe foods and safe medical products. Who isn't? If you are a consumer, maybe that's all that matters.

However, being in favor of safe foods and safe medical products is not enough if you are FDA, the media, Congressional authorizers and appropriators, OMB, and industry. It sounds good, but what does it really mean? In the FDA context, "safe" means many things, some of which are barely related to each other.

What are FDA's safety goals and their means to achieve them? What programs should they strengthen? What people should they hire? Each of these questions has different answers depending on what kind of "safe" is being considered.

In the food area I can think of at least three non-redundant contexts in which the meaning of "safe" is different.

First, we want our foods to be "inherently safe," a product that is formulated properly and with no negative impact on our health. We do not want to be offered "tomato and arsenic soup." For this FDA needs food scientists and regulators to determine ingredients that are "generally recognized as safe" and to assure that products conform to standards of identify for specific types of foods.

We also want foods to be "safe from intentional and negligent contamination." We do not want melamine in milk nor heedless disregard of procedures to prevent botulism, pesticide residues, etc. FDA requires well-trained inspectors, backed by laboratories to perform chemical and biological analysis of otherwise safe foods. Criminal investigators and prosecutors are also part of assuring foods are safe from intentional and negligent contamination.

We also want foods to be "safe from unintentional contamination" by bacteria, insects, fungi, and naturally-occurring toxins. To provide this protection, FDA needs epidemiologists, biologists and health professionals with public health training, along with laboratories that can do sophisticated analysis of pathogens.

Likewise, in the medical products area I can think of at least three non-redundant contexts in which the meaning of "safe" is different.

First, we want medical products (drugs, biologics and devices) to be "safe for use" before they can be marketed. The FDA's team is composed of scientists and statisticians who can: analyze the chemical and biological foundations of a product; dissect the degree of safety demonstrated in animal and human trials; and work with fellow regulators to determine the balance of risk and benefit.

We also want medical products to be "safe as used" once they are in the marketplace. For this, FDA increasingly needs public health, data and medical analysts who can: evaluate individual case reports and derive usable knowledge from population-based data, such as FDA's new Sentinel System. I think that post-market safety is often considered a mere extension of pre-approval safety. This won't be true in five years.

We also want medical products to be "safe as manufactured and distributed." This requires well-trained inspectors, backed by engineers and manufacturing and supply chain experts. Data systems are needed here, too, to track facilities, shipments, processors, importers, etc. Criminal investigators and prosecutors are also part of assuring safe manufacturing and distribution of medical products.

As can be seen, Commissioner Hamburg's challenge is much more complex than "hiring more safety people" or "investing more of the agency's budget on safety programs." As she defends her priorities, her position would be stronger if it rested on a comprehensive analysis of how the agency is working on all the different meanings of "safe."

Steven

PS: This is a conceptual analysis with strong real-world consequences. There are many situations where the lines I've drawn are not as clear as I've suggested. Also, I do not want to diminish the abilities of many FDA staff who routinely contribute to more than one type of "safety."

Improving safety and improving information technology go together. Two earlier columns reflect on this:

The Science Board's IT Report: Too Technical to Read, Too Important to Ignore October 18th, 2009

Some of FDA's most difficult tasks are: defining the agency's role in nanotechnology, creating a pathway for follow-on biologics, implementing a risk-based food safety system, and establishing the right policy for "new media" communications. All rolled together, they are not as complicated or important as transforming information technology (IT) at FDA. Read the rest of this entry »

Turning Data into Knowledge    June 2nd, 2009

Through statute and directive, FDA has been asked to collect, analyze, interpret and utilize massive amounts of data. This includes biological, clinical, adverse event, production and distribution data, medical and food product tracking, and the Sentinel system for early discovery of potential drug safety problems. The systems are not in place to do any of this, at least not at the required level of sophistication. Even if they were, sifting valuable information from background noise is extraordinarily hard. As a result, FDA needs to manage Congressional and public expectations as to "what is possible and when." Read the rest of this entry »

Orphan Drugs and Bio-Similars: Is 12 Better than 7?

In the new bio-similars legislation, orphan drugs were granted protection for the longer of 12 years of data exclusivity or 7 years of market exclusivity. Since both are triggered by the date of approval, many people have assumed that 12 years protection is always better than 7 years protection.

FDA Matters says: not so. Other than patent protection, the Orphan Drug Act's grant of market exclusivity to orphan drugs is still the best friend of an innovator company.

The new bio-similars law creates a regulatory pathway by which biologics similar to ones already on the market can get approved more quickly and with less original data. In a prior column, FDA Matters pointed out that the data exclusivity provisions were both more and less beneficial to originators than it seemed:

• More because no bio-similar can use the abbreviated approval pathway if the reference (originator) drug was approved less than 12 years before. This "pathway exclusivity" includes data exclusivity, but is more far-reaching. Even if a bio-similar has its own data, it still can't use the new pathway to approval.
  
• Less because the new law protects reference (originator) products against bio-similars for 12 years, but only if the bio-similar seeks to use the new abbreviated approval process. Many of the companies planning bio-similars are going to use the full BLA approval process instead, where the 12-year pathway/data exclusivity doesn't apply.
  

When this is applied to orphan drugs, two different situations emerge:

• If the bio-similar wants to use the abbreviated pathway, then the 12 years of pathway/data exclusivity protects the original orphan product. In this case, the 12 years is better for the originator than 7 years of market exclusivity.
  
• If the bio-similar wants to use the regular BLA pathway, then the 7 years of market exclusivity protects the original orphan product. The 12 years of pathway/data exclusivity doesn't apply at all.
  

What comes next depends heavily on FDA. The law is new and lacks clarity on many key points; the patent provisions border on the unworkable. The new pathway may not turn out to be usable.

Nonetheless, the new law clearly empowers FDA to find ways to get more bio-similar products on the market. Since, at best, this can only be partially achieved through the abbreviated pathway, I believe the agency will be looking for ways to make the BLA process friendlier for bio-similar and bio-better products.

This suggests that bio-similars of orphan products are going to use the BLA process a lot. Seven years of market exclusivity will still be the core protection that all orphan companies will want for their products.

For innovators of orphan drugs, the message is: prepare for competition. Don't assume that you will have more time because of problems with the new pathway or the protections it grants. Seven years of market exclusivity is all you can really count on.

For those planning bio-similars of orphan drugs, the message is: don't violate the originator's patent(s) and get your own data to support a BLA filing. Also, prepare to discount in order to get market share. It will never be like the generic drug market, but with biologics costing upwards of $300,000 per year….offering a 20% discount is serious money that will be welcomed by health plans and patients.

A final thought: costs to enter the bio-similar market are going to come down over the next 5 to 8 years. This means that orphan products with less than $1 billion in annual revenue are going to see competition much sooner than many predict.

Steven

My earlier column:

Data Exclusivity and Bio-Similars: Both More and Less Than It Seems
May 2nd, 2010

FDA Matters has been very upbeat about the prospects for the bio-similar marketplace. "Smart money" (i.e. companies currently making billions from their ability to discover or license new bio-pharmaceuticals and market them) decided to play before they knew the ground rules on exclusivity and patents. We can only conclude that there must be substantial amounts of money to be made, regardless of the specifics.

With this in mind, FDA Matters explores why there is a persistent belief that the bio-pharmaceutical industry got something better than data exclusivity. I also explore whether data exclusivity will really provide valuable protection for original reference biologic products. Read the rest of this entry » or go to: www.fdamatters.com/?p=921.

Dissent and Efficiency: Difficult Trade-offs for FDA

FDA has a reputation for being tough on dissent, whether it comes from employees or regulated companies. It is often alleged that FDA employees with contrary views are re-assigned, marginalized or ousted. Within the regulated industries, there is a widespread belief that arguing with FDA has adverse consequences for a company.

Whatever the truth has been in the past, FDA is trying to develop an institutional cultural that welcomes and accepts dissent from employees, industry and other stakeholders. It is difficult, even messy, to do this. Yet, FDA's reputation and authority rests on showing that it listened to all competing views--without unreasonably slowing the decisionmaking process.

Forming a consensus and "speaking with one voice" are logical and sensible for FDA, but not an accurate reflection of what happens when well-trained, analytically-oriented people gather to make a decision. FDA can acknowledge this….or feed the perception that senior managers impose their biases on subordinates. I believe this is the exception and not the rule, but there is no denying the perception.

FDA Matters sees three needed changes at FDA:

• Incorporate dissent into the decisionmaking process,
  
• Resist the urge to ignore, punish or marginalize dissent, and
  
• Tolerate the ambiguity of decisions made in the face of dissent.
  

Incorporate dissent. FDA makes decisions in an increasingly complex scientific environment in which there are bound to be disagreements. For example, reviewers focused on the risk-benefit of a medical product are often at odds with reviewers whose focus is safety.

Near the end of April, the Center for Devices and Radiological Health (CDRH) announced that FDA presentations at CDRH advisory committee meetings will reflect the diversity of views from the review group, rather than a unified, consensus analysis. In time, I predict this approach will be expanded to other advisory committees and a broad array of FDA activities. Dissenting views from other stakeholders, including industry, will also be increasingly visible as part of new processes.

Resist the urge to ignore, punish or marginalize dissent. This is incredibly hard to do and probably requires the most cultural change. We are programmed to exclude people who persistently disagree and who can't imagine themselves as being wrong. But sometimes they are right…and sometimes their concerns lead to better conclusions or better reasoning to support a decision. And the agency can hardly claim they have incorporated dissent if a consequence is exclusion or punishment.

Tolerate the ambiguity of decisions made in the face of dissent. One fear of empowering dissent is that every decision will look suspect, regardless of what decision was made. Visible dissent also invites Congress, media, advocacy groups and industry to second-guess the agency. At the moment, Congress seems particularly inclined to question the agency's decisions.

How does FDA adjust to the challenge of showing it listens to dissenting views, knowing it is inviting those disputes to be re-argued in multiple forums? One answer is that the agency must continue to work hard on increasing trust in the agency's decisionmaking. This is already a priority for Commissioner Hamburg.

It is inevitable that FDA will need to become more open to dissent. Thoughtful structures need to be put in place to channel it and not suppress it. The risk is that the agency will become less efficient as it spends more time on debating decisions….and less on making and implementing them. For those patients and companies looking for progress against disease, this is of the greatest concern. The supposed trade-off of dissent and efficiency needs to be confronted and thoughtfully resolved by FDA leadership.

Steven

This column has focused more on internal dissent within FDA, but industry also feels pressure not to question FDA. I often hear companies say they pushed hard on an issue and found the agency more open and willing to listen than they expected. On the other hand, two products were approved this year only after the companies persisted in the face of negative FDA decisions.

The announcement of new procedures at CDRH, including the change from unified, consensus presentations, is at: http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm209791.htm.

Data Exclusivity and Bio-Similars: Both More and Less Than It Seems

FDA Matters has been very upbeat about the prospects for the bio-similar marketplace. "Smart money" (i.e. companies currently making billions from their ability to discover or license new bio-pharmaceuticals and market them) decided to play before they knew the ground rules on exclusivity and patents. We can only conclude that there must be substantial amounts of money to be made, regardless of the specifics.

With this in mind, FDA Matters explores why there is a persistent belief that the bio-pharmaceutical industry got something better than data exclusivity. I also explore whether data exclusivity will really provide valuable protection for original reference biologic products.

Those who keep referring to market exclusivity under the new law point to the fact that FDA can't approve a bio-similar under the abbreviated bio-similar pathway until 12 years after the original, reference drug was first approved. That sounds like market exclusivity.

My understanding of the BIO interpretation: it doesn't prevent another company from going and generating its own data and getting its own approval through the existing BLA approval pathway. Hence, all that is protected is the company's data.

The new law "protects" the reference product from competitors….by denying competitors the benefits of the new approval pathway for 12 years. It is not market exclusivity because there are other ways to get a bio-similar approved. It is more than just data exclusivity because the competitive product can have its own data and still not be able to use the new abbreviated pathway for approval.

What has been granted to the reference product is "pathway exclusivity" for 12 years.

This suggests that the market is going to divide. Those who wish to market bio-similars of drugs that were approved more than 12 years ago will have a choice between the abbreviated pathway and filing a full BLA application for approval. For those who wish to market bio-similars of drugs that were first approved less than 12 years ago, the choices are: wait or go the full BLA route.

Many companies—even those with the opportunity to take the abbreviated pathway-- are going to decide that the advantages of a full BLA exceed the cost of collecting additional data. Some will take the data from their European bio-similar approvals and talk with FDA about which pathway will work best. Others will work toward approval of BLAs for so-called "bio-betters." These are new products that are bio-similar to an existing product, but are safer, more effective or easier to use.

What comes next depends in part on FDA. The new law clearly empowers FDA to find ways to get more bio-similar products on the market. Since this can only be partially achieved through the abbreviated pathway, I believe the agency will be looking for ways to make the BLA process friendlier for bio-similar and bio-better products.

FDA approval of a bio-similar will not assure a marketplace unless other changes occur. I envision health plans, insurers and government programs shifting toward "therapeutic substitution," where lower-priced bio-similar products will be put on formularies in place of the original reference product.

This has already occurred in the statin market, where an increasing percentage of prescriptions are filled with a generic statin, regardless of whether the doctor wants the patient to have a brand product. Right now, it seems like a stretch for bio-similars to be subject to therapeutic substitution, but FDA approvals of bio-similars and bio-betters will open up this possibility. Insurers needing to save money (and companies willing to lower prices to gain market share) will do the rest.

This brings me back to my other point: that the bio-pharmaceutical industry will find that the benefits of data exclusivity (and pathway exclusivity) will prove to be much less valuable than they seem now. BLAs are going to get easier, the marketplace will start substituting therapeutically, and all that "smart money" will prove to have been well-invested.

What do you think? Post a comment.

Steven

For those readers who want to familiarize themselves with what the new law says, it is pages 686 to 703 at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h3590enr.txt.pdf

More on bio-betters: "Pfizer Pushes on New Biotech Drugs"

http://online.wsj.com/article/SB10001424052748704464704575208580328253618.html?mod=dist_smartbrief#articleTabs%3Darticle

Center-Envy: Are Foods Doing Better than Drugs?

Several times this year, I have been told: FDA's food activities have been getting most of the new monies at the expense of human drugs (CDER) and biologics (CBER). But is it true that food activities (mostly CFSAN, the Center for Food Science and Applied Nutrition) are receiving preferred treatment?

FDA Matters ran the numbers to see. We conclude that center-envy is bad in its own right, but even worse when it is based on misinformation and misperceptions.

Here is a chart providing relevant comparisons over nine fiscal years, including the current one.

Center	FY 2002	FY 2007	FY 2010
FOOD--Total	$393 million	$457 million	$784 million
Center	-------$143 million	-------$159 million	-------$237 million
Field activities	-------$250 million	-------$298 million	-------$547 million
User fees	-------none	-------none	-------none
HUMAN DRUGS & BIOLOGICS--Total	$542 million	$746 million	$1.185 billion
Centers	-------$289 million	-------$349 million	-------$503 million
Field activities	-------$104 million	-------$113 million	-------$168 million
User fees	-------$149 million	-------$284 million	-------$514 million

Center, field activities and user fees combined. These are the number across the two rows marked "total." In FY 2002, the FDA's food budget was 72% of the amount allocated to human drugs/biologics received.

In FY 2007, it had declined to 61% and rebounded slightly to 66% in FY 10. Thus, over this 9 year period (8 appropriations cycles), funding for food activities has actually declined slightly compared to CDER/CBER.

Excluding field activities from funding available for Center activities. "Field activities" is FDA-speak for investigations and enforcement. The funds supporting field activities are in each Center's budget, but are transferred to the Office of Regulatory Affairs (ORA). These funds do not support core Center activities.

If field activities in ORA are excluded over the nine year period, CFSAN grew by 60%. CDER and CBER (including user fees) grew by more than 150%. Thus, it is possible to conclude that the core functions of CDER and CBER have done far better than the core functions of CFSAN.

The pace has changed over the last 3 years. During this period, CFSAN grew by 67% compared to CDER and CBER's growth (including user fees) of 62%. Funding for drugs and biologics, which grew enormously through the mid-2000's, is now growing at a rate comparable to foods. However, for foods this means an increase of $78 million, while CDER/CBER grew by $384 million over the three years.

Excluding User Fees, as well as field activities. Core appropriated funding for the centers grew at about the same rate over both the longer and shorter period. For the nine years (eight appropriations cycles), CFSAN grew by 60%, CDER/CBER by 57%. For the last three years, CFSAN has grown by 67% compared to 69% for human drugs and biologics. In effect, the food and drugs centers have been treated almost identically, with user fees tilting the comparison dramatically in favor of CDER and CBER.

Bottom-line: Increases in CFSAN have gotten a lot of attention, but CDER and CBER budgets have grown by far more over the last nine years if user fees are included. If user fees are excluded, then CFSAN and CDER/CBER have grown at comparable rates over the nine year period and also over the last three years.

PS: In the President's FY 11 request, the proposed appropriations increase for CFSAN is larger than for CDER and CBER combined. However, all of the differential is in 87 people and $40 million that is being proposed for new food inspectors. If ORA is excluded, as well as user fees, the food increase and the drug/biologics increases are about equal on a percentage basis.

Steven

Two past columns have discussed the Office of Regulatory Affairs and a recent column urged less reliance on user fees to fund CDER.

The Uncrowned Prince of FDA
September 15th, 2009

Which FDA line manager has the most appropriated resources to work with in FY 09? Is it Janet Woodcock, head of the drug center or Stephen Sundlof, head of the food center? The correct answer: neither. Read the rest of this entry »

Commissioner Hamburg's Most Important Personnel Decision
February 21st, 2010

With due respect to the many fine individuals that Commissioner Hamburg has recruited, FDA Matters thinks the most important appointment so far has been Michael Taylor to be Deputy Commissioner for Foods. An even more important decision needs to be made soon: choosing the right person to be Associate Commissioner for Regulatory Affairs. Read the rest of this entry »

Wrestling for the Soul of FDA
March 17th, 2010

User fees are a bad way to fund FDA, a public health regulatory agency that oversees nearly a quarter of all consumer spending. It's not that user fees are corrupting. FDA is capable of making good and bad decisions without regard to where the money comes from. But user fees have the potential to erode public confidence in the agency. Read the rest of this entry »

Animal Welfare and FDA

A coalition of animal rights organizations has filed a lawsuit to force FDA to address issues about animal testing that were raised in its 2007 citizen petition (FDA Law Blog, www.fdalawblog.net). The animal rights organizations want FDA to mandate that companies consider non-animal tests before using animals. This is apparently the standard in the EU.

It would be nice if FDA answered their citizen petition. A "no" with explanation is all that is required. And FDA Matters believes that "no" is the right answer.

FDA now encourages the use of alternative, non-animal tests for pre-clinical safety, but most drug and biologic applications rely heavily on animal data. But what's the big deal? Is "mandating consideration of alternative tests by sponsors" really much different from "encouraging sponsors to use non-animal alternatives?"

According to the animal rights organizations, the new language would reduce or eliminate "ineffective and costly animal testing methods that fail to identify the dangerous and lethal effects of drugs and devices on humans, and yet needlessly inflict pain and suffering on millions of animals each year."  And therein, their real agenda is revealed. They want to discredit animal research in order to force use of alternative tests. You can hear them shouting: get rid of animal testing, even if it means an increased risk to humans.

Thankfully, FDA doesn't see it that way. Along with other government agencies and industry, it is working on the development, validations, and utilization of alternatives to animal testing. But this is hard work and progress does not appear to be rapid. Meantime, unlike the activists, FDA believes that animal testing provides critical information that could not be gotten any other way.

In an earlier column, I wrote that animal research and testing is one of FDA's (unacknowledged) core values. Using animals to gain insight is a vital first step in the development of new medical products. Before any safety or efficacy testing is permitted in humans, FDA must be satisfied with animal testing data submitted by the product sponsor. Pick any medical breakthrough and you will find animals were tested prior to humans.

Everybody should be for protecting the welfare of animals. Any means to lessen our dependence on research animals should be welcome. Animals should always be treated ethically and pain reduced or eliminated. The fewest number of animals should be used to reach a conclusion that can be relied upon.

There are elaborate arguments about whether animals should have rights or just have their welfare protected. For me, the choice is easy. I want a product or procedure tested in animals before it is given to me or my loved ones. I believe in protecting animals, but human rights come first.

In the face of animal rights activism, FDA seems willing to stand its ground. The FDA stakeholder community needs to "seize the day" and make clear where its stands. Those who benefit from animal research and testing (including consumers and patients) need to provide the manpower and financial resources to counter the animal rights movement in America and its threat to medical progress for humans.

The value of animal research in the life sciences is usually considered an NIH issue. FDA Matters believes that the FDA and its stakeholders need to be equally concerned.

Steven

The link to the FDA Law Blog article on the lawsuit is: http://www.fdalawblog.net/fda_law_blog_hyman_phelps/2010/04/fda-sued-by-animal-rights-advocates-and-ear-holistic-candle-advocates.html

My earlier column that relates to this topic:

Animal Research: One of FDA's Core Values

November 5th, 2009

Earlier this year, ABC's Nightline did a story about alleged abuses at the nation's largest primate research center. Fueled by this, the Great Ape Protection Act (HR 1326) now has 95 co-sponsors, compared to 29 sponsors on a similar bill in the last Congress.

The bill would virtually eliminate research using chimpanzees, even where there is no other animal model that could serve to predict safety in humans. This is a threat to animal research and, ultimately, to ourselves. The loss of chimpanzees would be a serious blow to research and would encourage animal rights activists to push for even more restrictions. Read the rest of this entry »

Clinical Trials: Gold Standard In Need of Improvement

There is an emerging crisis in the development of drugs, biologics and complex new medical devices. Clinical trials take too long, cost too much and often produce imperfect knowledge. Many promising medical products are not developed because of the difficulty and expense of proving safety and efficacy—a loss that is costly to society.

FDA Matters believes that the key lies in developing new approaches to generating rigorous data and analysis. Ultimately, this will require the re-invention of the clinical trial.

Clinical trials produce the knowledge that makes FDA approvals possible. Without them, we would all become test subjects in a dangerous game of medical trial and error. FDA (and patients) want a reasonable level of certainty about safety, efficacy and risk-benefit before medical products are marketed. Except in extraordinary cases, FDA should never be put into a position to accept less.

The clinical trial is, and must remain, the gold standard. To understand why, it is useful to look at another type of medical knowledge that is increasingly in vogue: analysis of real-world data. The Medicare Claims database would be an example. Another would be patient data compiled by large health plans. Analysis of real-world data sets is becoming a cornerstone of reimbursement policy and plays a significant role in comparative effectiveness determinations.

The supposed advantage is the ability to look at hundreds of thousands of patients and discern patterns that might not be seen in clinical trials. However, the association of data points tells us nothing about causality. It only signals where additional analysis is needed. Real-world datasets also lack rigor:

Real-world data sets → post-hoc analysis using uncontrolled variables + inconsistent definitions + incomplete data collection + questionable data accuracy

By comparison, clinical trials produce a wealth of reliable knowledge (albeit far from infallible). This can be expressed as:

Clinical trial data sets → prospectively-defined analysis using controlled variables + randomization of patients + double-blind protocol + placebo controlled + pre-defined standard for data collection and data integrity

"Prospectively planned" means a drug or device sponsor must declare in advance the precise findings that will determine whether the treatment caused a beneficial outcome. Sponsors are limited in their ability to go back afterward to "data dredge" for positive correlations that might be spurious. To some extent, all analysis of real-world data sets is data dredging.

"Controlled variables" means that the outcomes of patients in the clinical trial can be compared with some degree of reliability. In real-world data sets, you can never be sure.

"Randomization" and "double blind" work together to assure there is no bias in patient selection (e.g. putting healthier patients in one arm of the trial) and that neither patients nor medical staff knows who is getting the study drug.

"Placebo controlled" allows a reliable determination of the impact of treatment. Since some patients will improve regardless of whether they are getting treatment or placebo, treatment effectiveness is the differential between those who improve in one study arm over the ones who improve in the other.

"Pre-defined protocols for data collection and data integrity" assures that definitions stay constant and results from different trial sites and different investigators can be combined. In real-world data sets, no one has yet figured out why medicine is practiced differently in Boston compared to Hartford.

Taken together, these features of the clinical trial serve to produce reliable data that support a conclusion (or not) that the treatment caused the benefit. The challenge is to improve upon this gold standard while maintaining confidence in the results.

Future columns will explore how this might be done. Meantime, readers are encouraged to post their thoughts or send me their ideas.

Steven

Here are two earlier columns that partially address this topic:

Long-term Challenges Need Short-term Attention

December 13th, 2009

We are less than 7 months into the new Commissioner's tenure. Three or four years from now, she will be judged by whether she moved the agency forward in these areas. I think she has gotten off to a very good start, but there is immense amount of work still required. Read the rest of this entry »

Turning Data into Knowledge

June 2nd, 2009

Through statute and directive, FDA has been asked to collect, analyze, interpret and utilize massive amounts of data. This includes biological, clinical, adverse event, production and distribution data, medical and food product tracking, and the Sentinel system for early discovery of potential drug safety problems. The systems are not in place to do any of this, at least not at the required level of sophistication. Even if they were, sifting valuable information from background noise is extraordinarily hard. Read the rest of this entry »

About FDA Matters

FDA Matters has grown steadily since I started it less than a year ago. My inaugural column was about the goals of the blog, but I have not written on the topic since or about my background and viewpoint.

I started the blog because of my frustration about how FDA was being described and analyzed during the period from Election Day to Dr. Hamburg's confirmation. In particular, I spent a month telling colleagues: it is not true that there is going to be a power-sharing arrangement where Dr. Hamburg will concentrate on foods, while Dr. Sharfstein will concentrate on drugs and devices.

Even though I had no inside information, it was so clear to me…and yet many people thought otherwise and were impossible to persuade. I wished I had a platform to speak out, so I created one and launched it about 6 weeks later!

My goal is to write a blog that provides fresh insights and new perspectives for the broader community of people "involved in FDA matters and for whom FDA matters." Hopefully, it is achieving that purpose by focusing on what the agency is thinking and how its actions are shaped by Congress, the media, stakeholders and external events. FDA Matters aspires to be a source of understanding about FDA, both directly and by stimulating dialogue.

Since FDA Matters began, one continuing theme has been the need to plan for FDA's future. Another has been how the public health backgrounds of FDA's leadership team make their thought process and actions quite different from any of their predecessors. Some themes I want to explore this year: re-inventing the clinical trial, the roll-out of the new regulatory pathway for follow-on biologics and improving regulatory science.

FDA Matters is not a voice for any interest group. The blog reflects my own analysis and commentary based on 35 years working in DC on health policy and legislative and regulatory issues. Earlier in my career, I was Health Staff Director and Counsel to the Senate Committee on Labor and Human Resources (now the HELP Committee). I had the great fortune to be one of the negotiators on the Drug Price Competition and Patent Term Restoration Act (Hatch-Waxman) and on the Orphan Drug Act.

Subsequently, I was a Deputy Assistant Secretary for Health at HHS, responsible for policy development, planning and evaluation for the Public Health Service agencies. Since then, I have been a public affairs and regulatory consultant for a big firm, then started HPS Group, LLC in 2001 (www.hpsgroup.com).

One of my more recent accomplishments was helping to found the Alliance for a Stronger FDA (www.strengthenFDA.org). I serve (part-time) as the Deputy Executive Director of the organization. I believe strongly that FDA is dramatically underfunded and I write about this a lot. However, anything I write in FDA Matters is my own view and not that of the Alliance.

Over the years, my clients have included patient groups, health professions societies, research advocacy groups and individual companies. Many clients use me for legislative and regulatory analysis and to facilitate the development of policy and regulatory positions. Other clients use me for strategic regulatory counsel to help with development of medical products that are in phase II or phase III.

I welcome reader's comments, either posted on the blog or by e-mail. I would be pleased if readers helped me initiate two features of the blog: point/counterpoint exchanges and "Ask Steven About FDA."

Most of all: I believe that a better FDA is worth the effort to stay involved. I hope you see it that way, too.

Steven

It’s 12 Years of Data Exclusivity

For an updated analysis, go to the May 2, 2010 column: Data Exclusivity and Bio-Similars: Both More and Less Than It Seems.Read the rest of this entry »

On several occasions, FDA Matters has asked Congressional staffers: how many of the Senators and Representatives understand that the follow-on biologics debate is about the amount of data exclusivity, not market exclusivity? In reply, I always get a smile that confirms my suspicion.

The confusion is not limited to the Hill. The New York Times referred to "market exclusivity" in its article on industry winners and losers on the day of the key House vote. A prominent industry trade publication—whose staff clearly knows better—referred to "bullet-proof market exclusivity" in a story the next day. The San Francisco Chronicle got it right—perhaps because of the concentration of bio-pharmaceutical companies in the Bay Area.

None of this would matter if data and marketing exclusivity were similar to each other…or even of roughly equal value. They are not. The future of bio-similar products cannot be understood without grasping the difference.

Intellectual property (IP) protection comes in several forms—the more types you have for the longest possible time, the less likely you will have competition.

The most familiar is patent protection. You own a product, formula or process for a number of years set by law and subject to various other considerations. For example, Hatch-Waxman provides for patent extensions to cover part of the time that pharmaceutical products are delayed in regulatory review.

On the other hand, patents can be challenged both as to their legitimacy and when they expire, thus negating or shortening the patent. At the end of the patent's life, the product, formula or process is (at least potentially) in the public domain, available for copying.

Another form of intellectual property protection is market exclusivity. For a period of time, a regulatory approval agency (FDA) will not accept another application for the same drug and indication. The best-known example is the seven years of market exclusivity granted to orphan drugs.

Market exclusivity runs independently from the patent. It can also protect the ability to market a product that is unpatentable or for which the patent has expired. With some exceptions, market exclusivity cannot be challenged in court….meaning that there are situations where it is better than a patent. Note that market exclusivity is primarily about regulatory forbearance, not ownership.

Data exclusivity under the new law is about ownership of the safety and efficacy data that supported the reference (originator) product when it received regulatory approval. Specifically, for a period of 12 years, FDA cannot approve a bio-similar product using the data (owned by a different company) that supported the original approval.

Data exclusivity does not prevent a second company from generating their own data. Nor does it prevent FDA from deciding that a 200 person trial is sufficient when the original approval was based on 2000 patients. Further, the science of characterizing biological substances is likely to advance rapidly over the next few years, providing the potential for additional ways for a bio-similar product to satisfy FDA requirements.

Data exclusivity is valuable. The investment community's enthusiasm for the 12 years of protection is appropriate. However, patents and market exclusivity are extremely powerful barriers to competition….and data exclusivity is not.

In a future column, I will further explore the implications of these distinctions…particularly, my view that the new law will lead to significant growth in the biopharmaceutical marketplace for both innovator and bio-similar products.

If you are not a subscriber and don't want to miss that column and future analysis of FDA and bio-pharmaceutical issues, I recommend going to www.fdamatters.com to register for free updates.

Steven

Two earlier columns on this topic:

Follow-on Biologics: 1-2-3-GO

March 21, 2010

The long fight is over for follow-on biologic (FOBs). The Senate-passed version of health reform will become law, even while the larger fight continues over the reconciliation package. Within 10 days, FDA will be busy implementing an approval pathway for FOBs.

The world of biopharmaceuticals will never be the same, but not in the ways that many players expect. Here is FDA Matters' guide to understanding the next phase. Read the rest of this entry »

The Follow-on Biologics Market
June 23, 2009

Since the debate began several years ago, the policy and politics of follow-on biologics (FOB) have been driven by assumptions and projections of the anticipated market. There has been a lot of fuzzy thinking about what type of companies will be players and how they will position themselves. Read the rest of this entry »

FDA: A Bargain at Two Cents Per Day Per American

FDA touches every American many times each day. Today's investment (2 cents per day per American) is a pittance compared to the benefit of a strong FDA and the risk of an underfunded FDA. There cannot be many agencies in the US government that have such a vast scope of responsibilities and so few dollars to get the job done.

This is the powerful message that the Alliance for a Stronger FDA has been delivering to Capitol Hill. Even still, it will be a difficult year for any federal agency whose mission and responsibilities are growing.

In recent testimony to the House and Senate Appropriations Committees, the Alliance focused on the large gap between FDA's responsibilities and resources. The Alliance also points to ways in which the agency's job becomes tougher each year—notably through increased scientific knowledge and rapid industry globalization.

In the style of David Letterman's Top Ten lists, the Alliance has its own list of 10 things they hope policymakers will know and remember about FDA:

• FDA is a comparatively small agency with a small appropriation: just $2.35B in 2010 to regulate products that represent a quarter of all consumer spending.
  
• Twenty-five years ago, FDA and CDC were the same size; today the CDC budget is nearly 2 1/2 times as large.
  
• A strong FDA is good for the US economy and for our balance of trade.
  
• FDA is an integral part of our response to public health emergencies, including defense against bioterrorism.
  
• FDA's appropriation is almost entirely staff costs, requiring nearly 6% increase each year to sustain program levels.
  
• After three years of good increases (thank you, Congress), FDA staffing levels from the 2010 appropriation have only just been restored to the previous high-level achieved in 1994.
  
• User fees serve valuable functions, but they are targeted and support only specific activities. They don't strengthen the FDA in carrying out its overall public health mission.
  
• All FDA stakeholders support a stronger FDA (consumers, patients, health professionals, and industry).
  
• FDA's responsibilities increase each year---through new mandates, globalization, and scientific complexity.
  

And the single most important reason (and the one raised at the beginning of this column):

• FDA touches every American many times each day. Today's investment (2 cents per day per American) is a pittance compared to the benefit of a strong FDA and the risk of an underfunded FDA.
  

To their credit, the Obama Administration has committed to cutting domestic spending by funding priority programs, rather than relying on across-the-board cuts. This is a challenge FDA can meet: showing that increased funding brings substantial benefits to the American people and is worthy of increases beyond what other agencies are getting.

Going from 2 cents to 3 cents per day doesn't seem like much, but it would add $1 billion to the FDA budget.

Steven

For purposes of disclosure, I am one of the founders of the Alliance for a Stronger FDA and serve as its deputy executive director. FDA Matters is not affiliated in any way with the Alliance.

For more information about the Alliance, send me a note at sgrossman@strengthenfda.org.

The Alliance for a Stronger FDA's House testimony is at:

http://fdaalliance.files.wordpress.com/2009/11/alliance-statement-house-appropriations-committee-fy-11.pdf

Follow-on Biologics: 1-2-3-GO

The long fight is over for follow-on biologic (FOBs). The Senate-passed version of health reform will become law, even while the larger fight continues over the reconciliation package. Within 10 days, FDA will be busy implementing an approval pathway for FOBs.

The world of biopharmaceuticals will never be the same, but not in the ways that many players expect. Here is FDA Matters' guide to understanding the next phase.

Laws set the rules, but what happens next is remarkably dynamic and unpredictable. I was one of the Senate negotiators on the Patent Term Restoration and Drug Price Competition Act (Hatch-Waxman) and the Orphan Drug Act (ODA). What we thought would happen…and what actually happened…were not the same. Not necessarily better or worse. Just different.

We thought Hatch-Waxman would create an orderly world of patent extensions and generic approvals. We could not imagine the scandal in the generic drug office a few years later and would have been astounded that companies might still be litigating ground rules 25 years later.

The ODA was a triumph of good intentions, but would not have worked without the subsequent amendment redefining orphan drugs as affecting fewer than 200,000 Americans each year. We were not thinking about cancer patients. Yet they have been among those who have benefitted most by the ODA.

What will happen to FOBs will be just as dynamic and unpredictable.

The market was not waiting for the law to pass. Even though a legislatively-created FOB approval process was uncertain, Pfizer, Merck, Novartis, Teva and other major biopharmaceutical companies had already made decisions to be involved. Billions have already been spent or committed by companies before they knew the final FOB ground rules in the US.

More knowledge about the discovery, creation and manufacturing of biologics will be good for innovators, as much as imitators. Some of those biologically-similar products will themselves be innovative. As a result, many will require full approvals rather than being able to take advantage of an abbreviated FOB pathway.

Innovators will benefit from progress on characterizing biologic molecules, new testing methodologies and manufacturing improvements. To take a single example, the FOB market will force new investments in understanding immunogenicity that will benefit the entire industry, as well as patients.

FDA will be remarkably conservative for at least the next 5 years. FDA is ready for FOBs. Passage of the law gives the agency an important new public health mission: assure the safety and efficacy of biological products that will provide better access and greater affordability for life-saving and life-enhancing therapies.

Enthusiasm aside, the FDA is likely to be conservative in its policies and actions. They have not forgotten the problems in managing generic drug applications after Hatch-Waxman. They are fully aware of potentially big consequences in very small differences in biological products. They have lived through contaminated heparin and Genzyme's manufacturing problems.

FDA will want new safety and efficacy data from all applicants, with an emphasis on immunogenicity testing. Knowledge in these matters will increase rapidly and FDA will loosen up over time. But not soon…and in measured steps.

Steven

Here is an earlier column on the likely dynamics of the FOB marketplace.

The Follow-on Biologics Market

Since the debate began several years ago, the policy and politics of follow-on biologics (FOB) have been driven by assumptions and projections of the anticipated market. There has been a lot of fuzzy thinking about what type of companies will be players and how they will position themselves. Read the rest of this entry »

Wrestling for the Soul of FDA

User fees are acceptable if they pay for processing passports or extra services at national parks. I don't worry that the American public will lose confidence in the State Department or the National Park Service. This doesn't translate to every user fee and every government department.

User fees are a bad way to fund FDA, a public health regulatory agency that oversees nearly a quarter of all consumer spending. It's not that user fees are corrupting. FDA is capable of making good and bad decisions without regard to where the money comes from. But user fees have the potential to erode public confidence in the agency.

FDA Matters gets it. The agency needs more money to fulfill its mission and the Congress won't pay for all of the costs. In FY 10, nearly $700 million came from user fees charged to drug and device manufacturers and a few others. (This total and the remaining discussion omit tobacco user fees. No one thinks tobacco companies are getting favorable treatment for their monies!).

FDA received $2.345 billion from public funds in FY 10, more than three times the amount from user fees. It would take a long-time and a lot of user fees for the overall balance in the agency to be threatened.

The real story (and the worry for the future of the rest of the agency) is the Center for Drug Evaluation and Research (CDER). It receives about $750 million to run the drug approval process and other CDER activities (other than inspections and enforcement). Of that total, about $335 million comes from public funds (45%); $415 million from user fees (55%). How can it be good for industry to provide the predominant funding for CDER or any of the other FDA centers?

Nothing wrong is occurring. But the overreliance on user fees is confidence-eroding for Congress, media and the American public…and dispiriting for FDA staff.

Now is the time to raise and debate these issues.

• FDA has begun the public hearing process for the next drug user fee act (PDUFA V). Another round of user fee increases could push CDER into even greater dependence.
  
• The appropriations committees have started consideration of the agency's FY 11 appropriation. Under the President's request, existing user fees (excluding tobacco and proposed new fees) will grow about 15%, while public funds only 6%.
  
• Congress may pass new food safety legislation and the House version includes $220 million in new user fees to pay part of the costs of new responsibilities. This is about 20% of the food monies in the President's FY 11 budget request. This percentage could increase if Congress doesn't provide several times this amount from public funds to implement the law.
  

For fiscal and political reasons, user fees are here to stay and FDA will never be funded entirely from public monies. This should not blind us to the risk of FDA slipping into dependence on user fees. Nor should it blind us to how user fees are a drag on public confidence in FDA.

I believe that FDA, regulated industries, Members of Congress and other stakeholders agree with FDA Matters. Yet, you are unlikely to hear them say so. Each fears that FDA would shrink without user fees. Someone needs to go first and say: we will find public monies to keep FDA from becoming dependent on user fees.

The soul of the FDA may not be at stake. But we should not underestimate the damage to the agency from a public perception that user fees are darkening its soul.

Steven

At the March 10, 2010 House Appropriations Committee hearing, Commissioner Hamburg addressed the relationship between user fees and FDA decisionmaking:

…. [E]xamining the integrity of our decision making and ensuring that it is free from conflict of interest and other concerns is one of the most essential elements of FDA being able to do its work, being able to have the trust and confidence of policy makers and the public and certainly one of my highest priorities.  So we take it very seriously. We have established firewalls in terms of the use of user fees. We are committed to a science-driven decision making process, and it's a dynamic concern. We can't just sit back and say our systems are in place, move onto the next issue. It's something we have to continually be monitoring, continually responsive to concerns as they're raised and ensuring that we have the right checks and double checks.

My earlier blog column on this topic:

It's Time to Change CDER Funding

    September 17th, 2009

As most readers know, bio-pharma companies pay user fees, based on activities (such as submitting a New Drug Application) and on the number of their manufacturing facilities. The amounts are set by law. As part of the arrangement, FDA agrees to certain performance goals, which are also specified in law.

We often hear how dependent CDER is on user fees. The actual numbers are startling and deserve to be well-aired. Read the rest of this

Fortuitous Timing and Public Health Leadership at FDA

At the end of March, Commissioner Hamburg will have been at FDA for 10 months and Dr. Sharfstein for a year. They are very good leaders who have also benefitted from their prior experiences and the timing of their appointments. Here is FDA Matters' analysis:

Public Health vs. Academic Medicine. Since at least the mid-1970's, FDA commissioners have come from academic health centers or government. Not one had run a public health agency at the federal, state or local level. In contrast, Dr. Hamburg spent 6 years leading the New York City Health Department. Dr. Sharfstein was recruited from his job heading the Baltimore City Health Department.

The difference is largely unappreciated. Running an academic health center is inwardly focused, with the goal of making a highly-complex institution run well. The primary outputs are patient care, research, and teaching.

Power in an academic health center is widely shared and interaction based on collegial ties. External forces, particularly the government political process, are often intermittent and remote and crises rarely come from outside the organization. Accountability is a virtue, but often not a requirement. Diplomacy and people management are the primary skills.

In contrast, a city public health agency is externally focused, with the goal of improving the health of a population. The primary outputs are programs of intervention and education, along with regulations. The structure in a public health department is hierarchical at every level.

The commissioner is integral to the political process and must be responsive to the Mayor and the City Council. External forces drive much of the activity. Crises are so frequent as to become routine and accountability is a necessity. Diplomacy and people management are valuable skills, but the premium is on concrete actions occurring in real-time, even if someone's feelings are bruised.

FDA is very much like a big-city health department, only minimally like an academic health center. This gives an enormous advantage to Drs. Hamburg and Sharfstein.

FDA in 2010: A Chance to Grow Stronger. In a hostile and uninterested environment, the very best leadership can survive, but not prosper. The new FDA leadership team is fortunate to have the best situation in 30 years for improving FDA.

FDA's budget has grown over the last three fiscal years, providing the new Commissioner with resources to strengthen the agency and prioritize initiatives. Over much of the prior two decades, the agency received annual increases close to, or below, inflation. There is not much new you can do when you are struggling to fund pay raises and rent increases.

Further, it matters when a Commissioner serves in the Presidential life cycle. As a rule, there is a lot of policymaking in the first few years of a Presidency and comparatively little in the later years. If policy improvements are to be made at FDA, 2010 is the time.

In addition, President Obama is alone among the post-war presidents in his interest in public health. Inadvertently, this was reinforced last year when he had to handle the peanut crisis himself because there were no confirmed appointees at DHHS. President Obama knows what FDA does and has a feeling for why it is important.

None of this is to take anything away from Drs. Hamburg and Sharfstein. They deserve credit for progress occurring at FDA. They are fortunate to have experience and timing that are likely to take them further than most of their predecessors.

Steven

FDA Needs at Least a $250 Million Increase in FY 2011

The President's proposal to freeze domestic discretionary programs in FY 2011 (and beyond) will force painful cuts across government and in programs that millions of American rely upon. Even some traditionally-favored agencies, such as NIH, are looking at only small increases. With a proposed 6% increase (about $150 million), FDA would seem to be doing far better than most.

FDA Matters feels strongly that this is not nearly enough. By my calculations, at least a $250 million increase for FDA would be needed, just to achieve the program levels anticipated in the President's budget request. The Alliance for a Stronger FDA has asked for a $495 million increase, which could be put to good use by the agency. Why is 6% not enough?

Despite three good years of increases for FDA, we are still fighting decades of neglect. Appropriated staffing levels in 2010 are only back to where they were in 1994. Over a 25-year period, CDC has grown from an agency the size of FDA to one that is three times as large. Meantime, FDA has new responsibilities and an ever more-complex environment in which to function.

A 6% increase doesn't go very far. A tad more than $100 million will be taken up by increases in salaries, benefits and rents. Other costs go up also. On a FY 10 base of $2.35 billion, about $40 million is available for new programming in FY 11. It will probably go to hire more food inspectors, which is an important need.

This suggests that the rest of the agency (apart from food inspection) will be able to operate in FY 11 at their FY 10 staffing/program levels. In reality, this won't be the case unless the Congress provides FDA with an appropriation above the President's request.

Here is why the picture is actually quite grim. According to FDA budget documents, the increased cost of salaries in FY 11 is $66 million. As far as I can tell, only about $3 million is actually part of the President's request. So, what we consider as an increase to cover inflation…..actually does nothing of the sort. The President has told Congress: give FDA a $146 million increase in monies and it will provide a $143 million increase in programming.

So, food inspections, patient safety and advancing regulatory science  (the President's budgetary priorities) will happen….and parts of the rest of the agency will shrink (because they can't cover inflation) OR vital, existing services will continue, but FDA won't be able to deliver on the President's initiatives. It will take an extra $100M (an increase of $250 million total) to cover inflation in salary, rents, etc. and provide the new programming in the President's request.

To bring this down to specifics, the President has requested $25 million for advancing regulatory sciences. This is a priority of Commissioner Hamburg and much lauded by the stakeholder communities. At an IOM meeting last week on regulatory science, there was palpable excitement that the President had made a great first-year commitment. But follow the logic of this analysis and it is unclear whether there really will be monies to get started in FY 2011.

The bottomline: FDA needs more than the increase proposed in the President's request. The President, by his budget justification, agrees....and envisions an FDA that will require at least a $ 250 million increase.  

Steven

Some recent thoughts on the same topic, but with a different focus:

The President's Budget Request: Is 6% Enough for FDA?

February 4th, 2010

The President's FY 11 budget request for FDA includes a $146 million increase in appropriated (non-user fee) funding. This is about 6% of the $2.36 billion appropriation that FDA received in FY 10. With the President's tough talk about deficit reduction, anything above a freeze should be considered good. Why was the Alliance for a Stronger FDA disappointed? Read the rest of this entry »

Shaken to the Core: What FDA and FDA-Regulated Companies Can Learn from Toyota

I do not believe that Toyota became a global success by cutting corners and ignoring safety concerns. Nonetheless, the company may not survive the investigations, the lawsuits, the civil and criminal fines, the securities litigation, the recalls (8.5 million cars so far), the loss of consumer confidence and the possible criminal indictments.

FDA Matters hopes that the CEO's of FDA-regulated companies are paying attention. They need to understand that their company can be "shaken to the core," as Toyota has.

What's a CEO to do?

First and foremost, believe (really believe) that bad things can happen to you and your company. Being FDA-regulated means "always worrying that you will have to say you're sorry." Foods, drugs and devices are central to our everyday life. By their nature, problems are to be expected. Deadly consequences are never more than one mistake or misjudgment away.

Don't assume that you can limit the damage. Problems escalated quickly for Toyota, revealing flaws in the company's process and attitude, not just its products. Most of the product lines are involved. And concerns keep multiplying, while confidence dwindles in the company's ability to fix the problems.

Recognize that "the buck stops here." Congress and the media are fascinated by what Mr. Toyoda knew and when he knew it. But it is quite beside the point. His public humiliation and the likely ruin of the Toyota brand are going to occur regardless of his level of knowledge. The CEO is responsible and will be held accountable for the actions and failures of all the company's employees and vendors.

Trust, but verify. In a large, multi-national company, there are an endless number of decisions.

Hiring good people and delegating is "necessary but not sufficient." Even the best employees find it difficult to tell their boss about a serious issue that might require costly pre-emptive action. It's too easy for them to think: last year's worst fears never materialized, so maybe today's concerns won't turn out to be bad either.

Don't drink the Kool-Aid. Everyone wants to be part of the team--to believe in the product they are creating. It becomes hard to be objective about the good and bad points of what one's company and team are doing. The CEO needs to believe the worst is possible, ask the tough questions and be skeptical when everyone responds "we're okay."

Your crisis management plan is not enough. Crisis planning is a step-child of corporate communications. Not enough companies have such plans and even fewer take them seriously enough to practice and update them. I doubt many companies have well-honed plans that prepare them to deal with multi-system failure.

In a hurricane of adversity, it is unavoidable that companies will be "shaken to the core." As with real storms, the survivors will be those who built sounder structures, monitored performance closely, and put plans in place for the "once in a hundred years" event that devastates everything.

Such preparation does not happen naturally and cannot be delayed until the storm clouds appear.

However, CEO's can commit to running "shaken to the core" reviews—to anticipate and prevent problems, as well as prepare for dealing with the worst. FDA Matters sees at least three keys to success in this type of "360 degree" inquiry:

• no person, project, product, or process can be protected from review,
  
• employees need to know that they can speak up confidentially and without fear of reprisal, and
  
• outside experts are needed to perform reviews and audits, because no one can be sufficiently objective about their own work or team.
  

And yes, FDA Commissioner Hamburg is a CEO….. and this column applies to FDA as much as it does to any FDA-regulated company.

Steven

Some related columns:

Executions in China: A Thanksgiving Message

November 24th, 2009

Sometimes it takes other people to give us a perspective on our own values. Read the rest of this entry »

Black, White, Shades of Gray

November 13th, 2009

Civil and criminal investigations are becoming a more prominent feature in the world of FDA-regulated industries. People who never gave any thought to this….suddenly find themselves needing to understand how investigations work. Read the rest of this entry »

The Beatings Will Continue…
November 1st, 2009

It has been an expensive year for pharmaceutical companies. Billions of dollars have been paid to federal and state governments and whistleblowers in settlement of allegations and lawsuits. The complaints include off-label marketing and overcharging Medicaid, but there are many others. Read the rest of this entry »

Commissioner Hamburg’s Most Important Personnel Decision

With due respect to the many fine individuals that Commissioner Hamburg has recruited, FDA Matters thinks the most important appointment so far has been Michael Taylor to be Deputy Commissioner for Foods. An even more important decision needs to be made soon: choosing the right person to be Associate Commissioner for Regulatory Affairs.

Not so many years ago, the Associate Commissioner for Regulatory Affairs—who heads the Officer of Regulatory Affairs (ORA)—was the #2 or #3 person at FDA, depending on whether there was a principal deputy. If the commissioner was abroad or unavailable, the person with the regulatory affairs portfolio was next in line. This changed at some point, but I am not sure when or why.

The head of regulatory affairs oversees all of the inspection and enforcement activities of the agency. This is an extraordinarily powerful position, even though very few people know who heads ORA or much about it. FDA seems to consciously downplay the leadership, mission and importance of the office.

Yet, the Associate Commissioner for Regulatory Affairs controls more than one-third of the FDA's appropriated budget and oversees about 4,000 people spread across the US and the world. Last year, I proclaimed the head of regulatory affairs to be "the uncrowned prince of FDA."

On January 27, FDA posted a job notice seeking a new Associate Commissioner for Regulatory Affairs. Since the job has been vacant, the responsibilities have been carried out by an "acting" associate commissioner. Applications must be received by February 24.

The FDA needs a permanent head for the Office of Regulatory Affairs…and the sooner the better. Congressional and media attention have increasingly focused on FDA's capacity to perform effective inspections and rigorously enforce the law. The agency's good name and public credibility are tied to success in these areas. If the FDA's rigor as a regulator comes into questions, its ability to undertake initiatives elsewhere in the agency may ultimately flounder.

Since the Commissioner has so many roles, she needs someone to be the highly-visible, public face of tough FDA enforcement. Two decades ago, when I worked at HHS, the Inspector General was a former professor who had become the supervisor of the organized crime units in the FBI's Chicago Office. He was a good, smart man and a friend…but you knew immediately that you didn't want to be a target of one of his investigations. FDA needs someone like him.

I don't have any particular candidate in mind. Even if the "acting" associate commissioner were to be promoted, he would have more authority than at present.

Getting the right Associate Commissioner for Regulatory Affairs is Commissioner Hamburg's most important personnel decision. Once a decision is made, I hope she will see the value of creating a stronger profile for both the office and the office-holder.

Steven

The job posting is at:

https://jobs.smartbrief.com/action/listing?listingid=E5035373-B323-472F-8D7F-A765DE87A093&briefid=3e572e18-3fbc-11d5-ad13-000244141872&sid=9ae0455d-fd94-42bf-aca1-47b8d3adbfa7

Earlier columns relevant to this topic:

A New Food Agency Has Become Unnecessary (For Now)

January 15th, 2010

FDA Matters applauds the appointment of Mr. Michael Taylor to be the first Deputy Commissioner for Foods at FDA. With more authority, experience and stature than any previous food leader, he has the opportunity to shape and re-shape food regulation and the safety of the food supply. Because Mr. Taylor will be outstanding in this new post, the campaign for a separate food agency will go away, at least for a couple of years. Read the rest of this entry »

Executions in China: A Thanksgiving Message

November 24th, 2009

Sometimes it takes other people to give us a perspective on our own values. Read the rest of this entry »

The Uncrowned Prince of FDA

September 15th, 2009

Which FDA line manager has the most appropriated resources to work with in FY 09? Is it Janet Woodcock, head of the drug center or Stephen Sundlof, head of the food center? The correct answer: neither. Read the rest of this entry »

Transition at PhRMA

Former Representative Billy Tauzin tendered his resignation this week, ending a 5 ½ year tenure as President of the Pharmaceutical Research and Manufacturing Association (PhRMA). When his successor is chosen, it will tell us a lot about how the pharmaceutical industry sees itself….and what the big pharmaceutical companies think is their next major challenge. Here is FDA Matters' analysis.

Congressman Tauzin has won some major battles for the association's members. Depending on the news story, his departure is linked to criticisms of the industry's health reform deal with the White House or to Board unhappiness with his management style. His contract is up this year, so the timing may be nothing more than a mutual parting.

Tauzin was hired in 2005. Immediately before, the otherwise successful battle for the Medicare Part D benefit had revealed how far the industry's relationship with Congress had deteriorated. Industry was feeling very insecure about reimportation, follow-on biologics, counterfeiting, access to generic drugs, and drug price negotiations. Among other things, Tauzin built relationships with Democrats, balancing the industry's traditional political strength with Republicans.

In retrospect, it seems obvious that PhRMA's new President would be well-connected and well-respected on Capitol Hill. Yet, PhRMA had never before looked to Congress for a leader to run the association.

Going back more than 30 years, the Congressman's four predecessors at PhRMA were politically savvy and experienced—but not of, or close to, Congress. Each was also quite different from another.

The first one I remember was Joseph Stetler, president during the 1970's. At the time, the pharmaceutical industry's greatest challenge was from the medical professions. There were complaints about industry influence on medical education and clinical practice…and questions about whether medical journals should carry ads from pharmaceutical companies.

Among Stetler's qualifications: he had been general counsel to the American Medical Association for 12 years.

Lewis Engman followed Stetler in the late 1970's, as the industry became more concerned about attacks on its business practices, notably efforts to keep generic drugs off the market. He was President during the negotiations on the Hatch-Waxman legislation in 1983 and 1984, which fundamentally changed the industry's business model.

Among Engman's qualifications: he had been chairman of the Federal Trade Commission.

His successor was Gerald Mossinghoff, who guided the industry through implementation of Hatch-Waxman. As generics were becoming serious market players, he moved PhRMA toward a more far-reaching and comprehensive positioning on the protection of the industry's intellectual property.

Among Mossinghoff's qualifications: he had been head of the US Patent and Trademark Office.

His successor was Alan Holmer. The pharmaceutical industry of the mid-1990's was feeling the pressure of globalization. Worldwide markets had become increasingly important. Trade barriers had begun to threaten the industry, which still had a strong domestic focus.

Among Holmer's qualifications: former Deputy US Trade Representative and a Deputy Assistant Secretary for Import Administration in the Department of Commerce.

Holmer was as accomplished and renowned as an international trade lawyer as his predecessors had been in their areas of expertise. Tauzin followed, filling the industry's need to mend fences and improve relations with Congress.

I don't know what the PhRMA board is thinking with regard to a new President to succeed Representative Tauzin. It may not be a former member of Congress, as many assume.

History tells us that the new PhRMA President will reflect the Board's view of the state of the industry and its most pressing needs.

I recommend a bowl of popcorn and a comfortable place on the couch as we watch the pharmaceutical industry decide who they are and what they want to be.

Steven