Senate OKs plan to require drug firms to pay FDA fees

October 08, 1992|By New York Times News Service

WASHINGTON -- The Senate approved a plan yesterday to require pharmaceutical companies to pay fees to the government to help cover the cost of reviewing the safety of new drugs and to speed up the process.

The legislation, approved unanimously by voice vote, marks a major change in the relationship between the Food and Drug Administration and the industry it monitors. The bill has already been approved by the House, and President Bush is committed to signing it.

The change is important not only for federal drug approvals, but also for the precedent it sets as a way for federal regulatory agencies to raise money in difficult times.

Other regulatory agencies, like the Environmental Protection Agency, have considered expanding their fees on the companies they regulate to raise new money and are watching the FDA program to see if it succeeds.

In return for collecting what is expected to be about $300 million over the next five years from companies that want their drugs reviewed, Dr. David Kessler, the commissioner of food and drugs, agreed to hire 600 examiners to speed drug approval.

Dr. Kessler said the FDA's goal is to cut the time of drug review in half -- to six months for the most important drugs and 12 months for others.

The FDA receives about 100 applications for new drugs, not including generic ones, each year, and approves about 30.

The plan is considered politically feasible because the companies might make millions of dollars at the same time they pay new fees to the government. The FDA estimates that companies may earn an average of $10 million for each additional month they have a drug on the market.

Dr. Kessler said yesterday that the action was "a major milestone for this agency" and for government regulatory agencies facing increasing workloads at the same time budgets are cut.

The FDA said the number of new drugs needing review among biotechnology products alone was expected to increase 10-fold over the next five years. "If we did nothing, the time it would take to approve drugs would increase dramatically," Dr. Kessler said in an interview.

Gerald J. Mossinghoff, president of the Pharmaceutical Manufacturers Association, the trade group for the drug industry, said yesterday that "a concerted effort over the past several months has enabled Congress to enact into law this historic agreement," which he said would get life-saving drugs to patients faster.

Richard D. Godown, president of the Industrial Biotechnology Association, a Washington lobbying group for biotechnology companies, said the fee law was "a landmark in cooperation between a regulatory agency, lawmakers in Congress and the private sector."

The agreement on "user fees" came after increasing tension and frustration in the past several years over the agency's inability to fulfill its legal obligations.

Many regulations required by law have simply been shelved because the agency has not had the money to issue all the required regulations.

Both government and industry agreed that the agency was underfinanced. At the same time it has been unable to meet all its statutory obligations, the number of new drug applications is increasing rapidly, especially because of the boom in biotechnology products.

There were barriers to establishing the fees previously. Drug companies were unwilling to pay fees if the money would not go directly to review of their products.

The companies feared that the money would instead be deposited in the Treasury and used to reduce the government's deficit, without offering specific help to the Food and Drug Administration or to drug makers.

Government budget and taxing mechanisms created serious technical problems among the White House, the congressional appropriators and the congressional tax committees.

The logjam was broken this year when staff members from the offices of Reps. Henry A. Waxman, D-Calif., and John D. Dingell, D-Mich., and Sens. Edward M. Kennedy, D-Mass., and Orrin G. Hatch, R-Utah, joined the FDA to convince industry officials the plan could work.

Currently, companies are not charged when they submit applications for drug approval; the agency's budget must cover the cost of reviewing the applications.

The new law, the Prescription Drug User Fee Act of 1992, will charge companies $100,000 for each drug application, rising to $233,000 per application five years from now.

It will also charge each company $50,000 annually, rising to $138,000 five years from now. It would also charge $6,000 annually for each product already on the market, rising to $14,000 five years from now.

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