Getting Drugs To Market In Half The Time

Since 1981, the Food & Drug Administration has been party to an annual budget charade. The President and the Office of Management & Budget propose that a chunk of taxpayer funding for the agency be replaced by fees levied on drugmakers and other regulated companies. Then the script calls for the industries and Congress to squelch the idea, blasting it as a tax on innovation.

But this year, the game may have a different ending. Key members of Congress and the pharmaceutical industry have agreed to support "user" fees if the money is used to expand the FDA's corps of drug reviewers and speed up the approval process for new products. A bill set to go before Congress in September would require drug companies to ante up $75 million a year in fees. While the measure still faces hurdles, congressional sources say its chances of passing this year are running at least 50-50.

`MAJOR CRISIS.' Why the sudden switch? The main trigger is stark budgetary reality. A blue-ribbon panel convened in 1989 by Health & Human Services Secretary Louis W. Sullivan concluded that the FDA is simply unable to perform its basic tasks of regulating everything from sushi to AIDS drugs. Vice-President Dan Quayle's Competitiveness Council is loudly complaining that the drug approval process is too slow. Making matters worse, the number of new drugs (chart) and other products requiring FDA review is soaring. Without additional money, says David Beier, vice-president for government affairs at Genentech Inc., "we will all be facing a major crisis."

The extra money just isn't available, however. "I can't imagine the FDA getting more than a 3% or 4% increase a year," says a top OMB official. Indeed, for fiscal 1993, the agency's allotment is expected to climb to $779 million, a boost of only 2.6%--less than inflation. That's why Representatives John D. Dingell (D-Mich.) and Henry A. Waxman (D-Calif.) turned their attention to a user-fee bill earlier this year.

The key was getting the drug industry to agree to the new levy--and that took some fancy stepping. The pharmaceutical companies "had some conditions they thought were impossible to meet," says a top Waxman aide. They insisted that fees couldn't replace taxpayer funding, that the money be used only for drug reviews, and that the added resources buy them faster decisions.

To everyone's surprise, the lawmakers, with FDA help, met the conditions. The proposed bill says the fees would be levied only if Congress boosts the agency's budget by a certain amount, thus removing the temptation to skimp on regular taxpayer funds. The measure limits the use of the fees, which would range up to $150,000 per drug application, to the approval process. In addition, if the bill passes, FDA chief Dr. David A. Kessler has promised to add 620 new drug reviewers to his payroll and to try to cut average approval time from more than 2 years to 12 months. That could add millions of dollars to companies' revenues from important new drugs. "Any move to accelerate the review process is a positive step," says Russ McLauchlan, president of U.S. Bioscience, a small drug company near Philadelphia. "And having the industry pay the costs can't do anything but help."

There are still some knotty details to be worked out. One is figuring out how much the FDA budget has to rise before the user-fee provision kicks in. Another is arriving at equitable fees, so that small companies don't have to shell out as much as big ones. But for very different reasons, those who were once bitter enemies on this issue have a stake in overcoming these obstacles. "The most conservative Administration officials are eager to do it to save money," says former FDA Counsel Peter Barton Hutt, "while the most liberal congressmen want it to improve the FDA." With strange political bedfellows like that, FDA user fees may be an idea whose time has finally come.

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