Dangerous Prescription: Renewing the FDA's Chief Source of Funding

The Food and Drug Administration (FDA) has become too cozy with the industry it regulates, and it looks like that problem is likely to get worse. Right now, Congressional lawmakers are pushing to reach a final agreement this week on legislation that would supposedly help fund the FDA for the next 5 years (by having much of the Agency's budget being funded by the companies it is supposed to be regulating).

The current law expires Sept. 30. Last week FDA Commissioner Andrew von Eschenbach said the FDA would have to start the process of sending out so-called reduction-in-force notices to up to 2,000 employees if an agreement on new FDA legislation isn't reached by Sept. 21. The user fees help fund the FDA along with some TINY annual appropriations from Congress. Put another way, if the user-fee legislation isn't renewed by Sept. 30, the FDA would eventually have to lay off up to 20% of its work force because the Agency cannot afford to pay them with its appropriations from Congress.

Critics of the 1992 Prescription Drug User Fee Act argue that industry funding of the drug review and approval process gives pharmaceutical companies, and their lobbying arm, PhRMA, too much influence.

The Boston Globe argues that in effect, the user fee act put the FDA on the payroll of the industry it regulates. It reports that last year, those fees came to about $300 million, which the companies recoup many times over by getting their drugs to market faster.

But while it's a small investment for drug companies, it's a lot of money for the Agency, and it has drastically changed the way it operates -- creating a disproportionate emphasis on approving brand-name drugs in a hurry. Consequently, the part of the agency that reviews new drugs gets more than half its money from user fees, and it has grown very rapidly. Meanwhile, the parts that monitor safety, ensure manufacturing standards, and check ads for accuracy have languished or even shrunk.

According to Dr. Sidney Wolfe, M.D., who has been the Director of Public Citizen's Health Research Group since its founding in 1971, the pharmaceutical industry's influence gets exerted in a number of different ways. The most notable one, starting 10 years ago [with the Prescription Drug User Fee Act (PDUFA)], the influence was exerted by their directly funding, paying cash right up front, for FDA review. So in many ways, the FDA started looking upon the industry as their client, instead of the public and the public health, which really should be considered the FDA's client.

Another way in which the industry's influence has been allowed to grow considerably has been with the absence of Congressional oversight. Up until 12 years ago, whenever the FDA would make a mistake -- such as the series of mistakes they've made in the late 1990s -- there would be a Congressional hearing. They would have to explain to the legislative branch of the government what went wrong. They would be -- properly, and in the best public health sense -- on the defensive to try and explain what went wrong.

But no one is there in the Congress [now]. There have been essentially 1 or 2 days of oversight hearings in 12 years, as opposed to maybe the previous 12 years with dozens and dozens of oversights. So they're getting away with no Congressional oversight.

Dr. Wolfe argues that the culture at the FDA has become, "Please the industry. Avoid conflict. Look upon our role as getting out as many drugs as possible."

To see more of the PBS Frontline story on this subject, see here for details. John Kelly, the spokesman for PhRMA, the industry's lobbying organization, had a different perspective, but the point is that the user fee structure means the FDA is no longer on the U.S. taxpayer's payroll, and as a result, there have been fundamental shifts in the way the Agency operates.

If we as a society complain about the FDA's handling of type 2 diabetes drug Avandia, we need to give serious consideration to how we fund the Food and Drug Administration. Unfortunately, Congress is borrowing heavily from China and other countries to pay for an unsustainable war in Iraq, and this President has vowed to veto spending on anything other than what he believes is a priority, and that does not include the FDA. The FDA user fees were created in the early 1990's as temporary means to fund the Agency, but has instead become the primary means of funding the government Agency who is supposed to be looking out for our safety. Our lawmakers should only be considering proposals to extend current user fees by a short time, not making it a permanent source of funding.

Congress Presses for Agreement On Funding, More Clout for FDA
By Jennifer Corbett Dooren, The Wall Street Journal
September 19, 2007 11:15 a.m.

WASHINGTON -- Congressional lawmakers are pushing to reach final agreement this week on legislation that would help fund the Food and Drug Administration for the next five years and give the agency new powers to regulate new drugs after they go on the market.

Earlier this year, the House and Senate each approved separate bills that would reauthorize programs allowing the FDA to charge pharmaceutical and medical device user fees.

Current law expires Sept. 30. Last week FDA Commissioner Andrew von Eschenbach said the FDA would have to start the process of sending out so-called reduction-in-force notices to up to 2,000 employees if an agreement on new FDA legislation isn't reached by Sept. 21. The user fees help fund the FDA along with annual appropriations from Congress. If the user-fee legislation isn't renewed by Sept. 30, the FDA would eventually have to lay off up to 20% of its work force.

Earlier this month, lawmakers were considering a proposal to extend current user fees by three months, but Sen. Mike Enzi (R., Wyo.) the ranking member on the Senate Health Education, Labor and Pensions Committee, opposed the plan, saying legislation needs to be passed before reduction-in-force notices go out. Although employees wouldn't be immediately laid off, Mr. Enzi said he was concerned the FDA would lose employees targeted for layoff to the private sector. He said it took 18 months for the FDA to become fully staffed the last time layoff notices went out even though the agency never actually had to cut its work force.

Each of the bills also contains provisions aimed at boosting drug safety by giving the FDA more power to require drug companies to conduct new studies of drugs already on the market, limiting distribution and ordering label changes if the agency deems them necessary.

The FDA's authority in those areas isn't clearly defined so the agency often has to negotiate with companies, using its leverage before it grants approval for a new drug with the indirect threat of its bully-pulpit power to get the concessions it seeks.

The FDA has faced bipartisan criticism over its handling of safety issues over drugs such as Merck & Co.'s withdrawn painkiller Vioxx and, more recently, GlaxoSmithKline PLC's diabetes drug Avandia. Both drugs were linked to an increase in heart attacks after they were approved.

While the House and Senate bill are broadly similar, they do contain differences that must be worked out, approved again by both chambers and sent to President Bush for his signature. Among the differences in the bills are the amount of fines that could be levied on drug and medical-device companies for failing to comply with FDA rules and different conflict-of-interest rules for outside medical experts who serve on FDA advisory committees.

The bills also give the FDA authority to require drugs entering the market to enter into a risk-mitigation plan for a certain time period to allow the agency to formally track safety problems that might come up after a drug reaches the market.

Since 1992, the FDA and drug and medical-device companies have negotiated user-fee agreements every 5 years. User fees fund part of the FDA's budget while Congress appropriates money to fund the rest. Traditionally, user fees were aimed at expediting the review of drugs and medical devices and the use of the money had largely been directed at pre-market review. Now a larger chunk of money would be used for post-market safety reviews.

The FDA had asked Congress for the authority to collect $393 million in funding from drug companies next year. However, the Senate bill would require drug companies to pay an additional $50 million and the House bill would require companies to pay an additional $225 million over 5 years.

Both the House and Senate bills would also authorize the FDA to collect about $287 million in fees over the next five years from medical-device companies. Such fees are collected, for example, when companies file applications seeking FDA approval of products.

Write to Jennifer Corbett Dooren at jennifer.corbett-dooren@dowjones.com

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