House Passes FDA’s $6.4 Billion Fee Plan for Drug Reviews

The $6.4 billion accord that Teva Pharmaceutical Industries Inc. (TEVA), Johnson & Johnson (JNJ) and other companies reached with U.S. regulators to fund new medicine and device reviews through 2017 passed the House of Representatives.

The House voted late yesterday 387-5 in favor of the legislation, which is similar to a measure approved by the Senate May 24. Lawmakers must reconcile differences in the bills, such as dates for the Food and Drug Administration to comply with certain provisions and language in the Senate’s version that would require more scrutiny for some new devices.

The legislation would raise the so-called user fees industries pay the FDA for safety and efficacy reviews by more than $2 billion from the previous five-year period. Drugmakers in September and device companies in February agreed to the increases in exchange for more meetings with the FDA throughout the review process that may produce faster product approvals.

“This bill will foster American innovation because it includes significant accountability and reform measures designed to hold the FDA responsible for its performance,” Representative Fred Upton, a Republican from Michigan and chairman of the House Energy and Commerce Committee, said during debate on the bill.

The Food and Drug Administration Reform Act of 2012, H.R. 5651, also includes measures to speed approval of treatments for life-threatening conditions, enhance safety monitoring of devices after clearance and mitigate drug shortages. The Senate and House bills must be reconciled in time for the president to sign the legislation by an Oct. 1 deadline.

Generic Drugs

Brand-name drugmakers will pay $4.1 billion, 6 percent more than the previous five-year period, while fees for device makers will more than double to $609 million, according to the Congressional Budget Office’s cost estimate. Brand-name drugmakers have paid the fees since 1992 and device makers began their system in 2002.

Generic-drug companies, which had been exempt from user fees, will pay $1.58 billion. Canonsburg, Pennsylvania-based Mylan Inc. (MYL), the largest U.S. maker of copycat medicines, led its industry effort to participate in the fee program to quicken review times and deal with a backlog of applications, as well as to ensure the FDA has the resources to inspect foreign plants.

Companies making generic versions of complex biologic drugs, a process not allowed until passage of President Barack Obama’s health law in 2010, will pay user fees, which the budget office determined would total $128 million through 2017.

Tracking System

Lawmakers sought to adjust regulatory oversight of medical devices, requiring post-market studies and pushing the FDA to implement a system to electronically track the products. The legislation also directs the agency to use an accelerated approval program already taken advantage of by cancer and AIDS treatments that requires a lower standard of evidence for initial clearance of medicines for life-threatening diseases.

The legislation requires companies to report potential drug shortages to give regulators time to find alternate sources. Shortages, including cancer treatments, almost tripled to 178 in 2010 from 61 in 2005, according to a FDA report released in October.

Senators Michael Bennet, a Democrat from Colorado, and Richard Burr, a Republican of North Carolina, are working on language for a final bill that would help the FDA better police drugs from manufacturing to distribution to pharmacies. Representatives Brian Bilbray, a Republican from California, and Jim Matheson, a Democrat from Utah, have worked on the issue in the House, and plan to be involved in negotiating a tracking system when the House and Senate merge their bills, Fred Tayco, a spokesman for Bilbray, said.

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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