The brand-name drug industry is urging FDA in back-room negotiations to advocate that biosimilars user fees should only be utilized once a set level of appropriated dollars is spent by the agency on these products, a position that could effectively create a separate spending account for the healthcare reform-created follow-on biologics pathway that would render it vulnerable to being completely shuttered, according to several sources and internal documents obtained byFDA Week. That change would require new statutory language and encourage lawmakers to create a new pot of money for biosimilars, therefore FDA might back the plan although the prospects of
Congress supporting the proposal might be dim given the current deficit reduction climate, sources said.
Several Washington insiders said the brand-name pharmaceutical industry is pushing FDA in biosimilars user fee negotiations to create a trigger that would allow FDA to utilize user fee dollars, with that level currently set at $20 million dollars in the proposal. A trigger exists as part of the Prescription Drug User Fee Act and the proposal would create a parallel structure for biosimilars. As it stands, new drugs and biosimilars draw from the same appropriation but spending on new medicines must reach a threshold before turning to user fee funding, known as the trigger. This proposal could effectively change the existing system by spinning biosimilars out, sources said.
The brand-name drug industry has long said that the new biosimilars pathway should not delay approval of new drugs or siphon money away from innovator products, therefore this trigger proposal could create the separate appropriation for the biosimilars pathway — as opposed to including biosimilars in the new drug review account — and represents a major twist in the creation of this highly watched and controversial pathway.
Both the Pharmaceutical Research and Manufacturers of America and the Biotechnology Industry Organization are represented in biosimilars user fee talks alongside traditional generic drug makers, although the brand-name medicine manufacturers are present to, at least in part, defend innovators’ interests.
“PhRMA’s view is that the new drug budget is their budget and that somehow biosimilars need to get their own budget,” said a drug industry source who opposes the plan. “They actually think they own the taxpayer dollars that go to the FDA.”
PhRMA declined to comment on the creation of a new and isolated appropriation for biosimilars.
In fact, the necessary statutory language changes have already been drafted to note that collected biosimilars fees should be refunded if FDA does not spend its appropriated dollars designated “for the review of biosimilar and interchangeable biologic development plans, applications and supplements,” according to the draft legislative text included in one of the leaked documents. That designation of money for biosimilars is effectively the new account created for these products, the industry source said.
In the event this trigger system creates an isolated biosimilars spending account that is separate from the overall drug appropriation, Congress could decide not to fund the program, which some say is a realistic prospect given lawmakers’ deficit reduction fever. In that scenario, a lack of funding for the account would effectively implode the biosimilars pathway because FDA would not obtain the necessary money to meet the trigger and be unable to collect fees, therefore no applications could be reviewed.
“If you create a separate program and don’t get the appropriations, then you can never actually set it up,” the industry source said. “What PhRMA and BIO are trying to make sure happens is that none of that appropriated money goes to biosimilars.”
But, an FDA official said the creation of a separate appropriation is a “mischaracterization” of the PhRMA position, and noted that the trigger system is also included in PDUFA.
“Our understanding is that PhRMA believes that there should be a separate biosimilar biologics user fee program, and that program should include a separate statutory trigger, or requirement, for FDA to spend a specified amount from its appropriated non-user fee funds on the process the review of biosimilars, in order to have the authority to collect and spend biosimilar user fees,” the official said in an email.
With the PDUFA trigger system, though, Congress appropriates enough money to meet and significantly exceed that threshold, although the possibility of biosimilars receiving new money is in doubt.
Any appropriation specifically for biosimilars would require Congress to effectively create a new program, which would mandate more money, an unlikely scenario during the budget tightening exercise consuming Capitol Hill, sources said. House Republicans have already pushed legislation that would cut FDA funding by approximately 12 percent, although higher overall spending established in the recently passed deficit reduction package is expected to enable a much greater FDA appropriation.
“The word ‘new’ right now is not going to get anybody very far,” a congressional aide said, referencing creating a separate biosimilars appropriation.
The statutory change — which FDA is discussing with industry, according to documents also leaked — would be required because the healthcare reform law adds biosimilars to the relevant definitions of long-standing FDA policy — 21 U.S.C. 379g(1)(B)) — to designate these products as human drugs and therefore reviewable with that appropriated money. A change to the biosimilars portion of healthcare reform — which created section 351(k) for these products in relevant FDA law — would have to include the removal of biosimilars from the definition of new drugs to ensure that FDA obtains money specifically designated for biosimilars and that these products cannot be assessed with overall human drug appropriations, one of the industry sources said.
“If you didn’t have a separate program, the current law says a 351(k) is a new drug so it goes within the 379g definition of a new drug,” the industry source said. “You have to redefine a biosimilar, a (k), as no longer a 379g and then you would get a separate appropriation of $20 million.”
The proposal could theoretically be implemented as part of the reauthorization of PDUFA, which is expected to become an omnibus user fee bill to incorporate medical device fees and establish biosimilars and generic medicine fees.
“PhRMA is essentially saying renegotiate the statute … presumably through an amendment to PDUFA,” one of the drug industry sources said. “They’ve linked the pathway with the user fee negotiations, and yet in the user fee negotiations they’re arguing for statutory changes.”
Aside from potential logistical and political hurdles to making the appropriations change, the drug industry source said the biosimilars pathway was created specifically to ensure that the correct FDA experts assess biosimilars, and that the agency reviewers with the knowledge necessary to evaluate an application are not sidelined and forced only to examine innovator drugs.
“The whole point of the statute is that you’re reviewed by the same review division,” the industry source said.
The prospect of a separate account might garner FDA support, though, as it would enable the agency to ask for more money in light of the creation of a new program. FDA funding advocates have argued that the agency needs at least a 5 percent increase in appropriations every year to maintain program levels, therefore, in light of budget cuts, any new money to the agency would be critical.
“Anything that gives them an excuse to ask for more money is seen as a good thing,” the industry source said. “FDA’s perspective is simply biosimilars give them an argument for asking for more money.”
PhRMA recently said the biosimilars pathway should not siphon any money from the review of new drugs, although the group did not provide details on what it envisions.
“Such a program must be funded through specific congressional appropriations supplemented by user fees,” PhRMA said in the recent statement. “It must not divert resources from the review of innovative new medicines and slow the availability of new treatments for unmet medical needs.”
The White House’s fiscal 2012 budget request included $13 million for the development of the biosimilars pathway, with $2.2 million of that money allocated to hiring and training investigators (see FDA Week,Feb. 25). The $20 million figure is an extension of that request to approximate resource needs for the program in fiscal 2013, one of the sources said. — Ben Moscovitch (email@example.com