The Food and Drug Administration (FDA) regulates 25% of the U.S. economy. For fiscal year 2016, the FDA’s budget is $4.9 billion, with $2.2 billion (or 45%) generated from user fees, payments collected by the FDA from companies submitting new drug, biologics and medical device applications for review. They were authorized under the Prescription Drug User Fee Act (PDUFA, 1992) and Medical Devices User Fee Act (MDUFA, 2002).
User fees cost $2,374,200 for a new drug, $261,388 for a new biologic product and high risk device and $5,228 per low risk (510k) medical device. Their purpose is to provide the FDA with additional funds used to process new product applications more expeditiously. The time frames within which new products are required to be reviewed are 10 months for a standard new drug or biologic; six months for a priority new drug/biologic and high risk device; and 90 days for a low risk device.
Unfortunately, FDA performance is not in line with the review time frames established by user fees. In 2013, the median approval times for drugs was 304 days—meaning that approval times for 50% of applications exceed the PDUFA goal. Absurdly, FDA-reported review times are not counted in calendar or business days, rather in “review days,” whereby the FDA stops and starts the review clock at its sole discretion. This masks the true underperformance of the FDA, which is actually much worse than reported.
FDA performance with devices is equally poor—median review times for standard and priority high risk devices were seven and eight months, respectively, in 2012. For the first half of 2015, the average review time for high risk devices was 17.1 months. In 2014, the average review time for a 510k was six months, and a company submitting a 510(k) had just a 22% chance of getting it cleared within the three month review target, and a 61% chance of getting it cleared within 6 months.
Much to the consternation of patients, their loved ones, tax payers and the companies paying user fees, the FDA continually tells the public that it is doing a great job. For example, the FDA likes to boast that it approved the latest generation of minimally invasive heart valve replacement devices by Medtronic and Edwards Lifesciences just a few months later than its European counterparts. But those were follow-ons to the original devices. Edward’s first-generation device of this type was approved in Europe four years prior to getting the FDA’s go-ahead. And similarly, additional products from companies like Boston Scientific and St. Jude Medical, as well as smaller players, are now on the market in Europe, but their devices are still awaiting FDA approval.
Clearly, user fees are not working as anticipated. One of the reasons this is the case is due to the fact that Congressional oversight is lacking. With the advent of user fees, Congress assumed that the companies paying the fees would exercise oversight and speak-up about the FDA’s poor performance. This is not the case. Instead, companies are loath to publicly criticize the FDA for fear of retribution from the agency.
Patients are frustrated, and they are doing something about it. The fact that 20 states have passed Right to Try Laws, which permit experimental products to be made available to patients with no alternatives, tells us that Americans are not satisfied with the FDA.
PDUFA and MDUFA require Congressional re-authorization in 2017. Debates in the House and Senate on the renewal legislation are being scheduled and will take place throughout 2016. In our most recent Medical Innovation Impact Index Alert, we propose a number of policy changes that can help, for example, having the FDA ombudsman report directly to the FDA Commissioner, and making the ombudsman present quarterly reports to Congress. In addition, Congress should have frequent FDA performance oversight meetings, and the FDA should be made to issue comprehensible and transparent performance reports.
Another needed change is to impose penalties on the FDA when performance criteria are not met: a per diem reduction in user fees when review period limits are exceeded, and a transferrable tax credit per day of delay for small companies. And of course, review periods should be counted in business or calendar days, not “review days.”
The FDA’s statute-defined mission is to “promote the public health by promptly and efficiently reviewing clinical research and taking appropriate action on the marketing of regulated products in a timely manner.” PDUFA and MDUFA must be reworked to ensure that the FDA lives up to its mission.
Patients are sick of waiting.
This piece originally appeared at www.forbes.com on Wednesday, September 9, 2015.