Congress, regulators face reform challenges, funding issues in the year ahead

January 1, 2011

The political tensions wrought by last November's mid-term elections will play out in a number of situations affecting health plans and pharmaceutical companies this year.

Key Points

The political tensions wrought by last November's mid-term elections will play out in a number of situations affecting health plans and pharmaceutical companies this year. Congressional Republicans will seek to cut the federal deficit by squeezing resources to government agencies, including FDA and the Centers for Medicare and Medicaid (CMS). And they'll be looking for opportunities to criticize lax regulatory oversight and drug quality failures that compromise product safety.

One certainty is that Republican Congressional leaders will spend considerable time and energy grilling Obama administration officials on reform shortcomings. A Senate Finance Committee hearing during November's lame duck Congressional session was short and fairly friendly to CMS Administrator Donald Berwick. But House leaders will not be so gentle in coming months.

Challenges to the Obama administration's health reform program will create uncertainty about whether new fees and policies will be implemented as planned, or if insurers and manufacturers will have to pay stiffer taxes and rebates without gaining the millions of additional customers that would gain coverage under a reformed health insurance system. The conventional wisdom is that President Obama has 1 year to establish new programs before the political infighting becomes even more intense leading up to the 2012 presidential elections.

CHALLENGES AND OPPORTUNITIES

One Republican target is the Independent Payment Advisory Board (IPAB). It was established by the ACA to propose Medicare cost-cutting policies under procedures that limit Congressional oversight and legal review. But insurers, providers, and even consumers are leery that the Board will cut costs arbitrarily and require seniors to pay more for care.

The health reform legislation also expanded federal support for comparative effectiveness research (CER), and that initiative to compare the clinical effectiveness of different medical treatments will begin to take shape in the coming year. The governing board for the Patient-Centered Outcomes Research Institute (PCORI) held its first meeting in November where it adopted bylaws and explored operating procedures. Before PCORI awards grants for new CER projects to reduce costs and improve patient outcomes, the Board wants to assess what research and analysis already is going on in this field. The Department of Health and Human Services (HHS), National Institutes of Health, and the Agency for Healthcare Research and Quality, have dispersed $1.1 billion for CER projects over the last 2 years, and most of these initiatives are up and running.

Another key initiative for health plans and formulary boards is FDA's effort to establish standards and policies for the development and approval of "similar" versions of biotech therapies. Health plans, payers, patient advocates, and consumer groups seek a clear biosimilar development pathway to facilitate access to less-costly biopharmaceuticals, and FDA sought their opinions at a November public meeting, as stipulated by the ACA (see Formulary's, December 2010 Policy Watch column).

FDA officials appeared interested in identifying a middle ground between ensuring product safety and efficacy, and making affordable new treatments available to patients. But Commissioner Hamburg indicated at a later meeting that a complete approval pathway for biosimilars may be elusive, as the science and products will evolve continuously. FDA will be digesting the testimony of all stakeholders and other comments over the coming months.

FUNDING FDA

A top priority for FDA and pharmaceutical companies is to maintain an efficient drug approval process by negotiating revisions to the Prescription Drug User Fee Act (PDUFA). The program has to be reauthorized by Oct. 1, 2012, for FDA to continue collecting nearly $700 million in fees to support appropriate oversight for drugs and biologics. Although that legislative deadline may seem far away, agency officials want to have a PDUFA V plan ready to present Congress this fall in order to assure passage by summer; failure to renew user fees on time theoretically would force FDA to lay off hundreds of staffers and halt application reviews.

In April 2010, FDA's Center for Drug Evaluation and Research (CDER) launched a 2-year process for revising PDUFA. CDER Director Janet Woodcock noted that 65% of human drug review funding comes from user fees, a situation that some critics claim makes the agency overly dependent on industry. Yet, despite such qualms, no one suggested that FDA curtail any activities or cancel the fee program.

Pharma and biotech companies offered general support for user fees, while pointing out that multiple post-marketing requirements are slowing down the drug review process and undermining user fee approval timeframes. Patient advocates, pharmacists, and doctors agreed that the proliferation of risk evaluation and mitigation strategies (REMS) made drug development more costly, and also complicated prescribing and dispensing. Consumer groups focused more on direct-to-consumer drug advertising, seeking user fee support for mandatory pre-review of DTC ads, clearer prescribing information, better protection of patients in clinical trials, and full disclosure of clinical study results.

FDA has been discussing these and other issues at meetings with manufacturers, patient and consumer groups, healthcare professionals, and academic experts, part of a broad, transparent consultative process required by the FDA Amendments Act (FDAAA) of 2007. A main FDA goal for PDUFA V is to gain more flexibility in meeting review timeframes and responding to sponsor meeting requests. The agency has proposed extending the "review clock" for more complex applications, such as those with REMS, that require advisory committee review, or that involve inspections of foreign manufacturing facilities-but that appears to cover most new drugs. FDA also is looking to establish a program to collect user fees for generic drugs, an issue that has been discussed for years and now has industry support.

The overarching issue is to what extent industry fees should fund FDA initiatives to improve drug development and regulatory science. FDA proposes to tap fees to increase staff consultations on innovative clinical trial designs, on utilizing biomarkers in drug development, on complex manufacturing issues, and to standardize electronic submissions. The agency also seeks added resources to support its Sentinel active surveillance system, standards for meta-analysis, rare disease programs, and improved dose selection and safety assessments. However, this year's fee to process a new drug application with clinical data already exceeds $1.5 million, and expanding the pool of activities supported by PDUFA could boost rates further.

Many of these issues will be addressed by Congress as it crafts a broader FDA reform bill to carry the PDUFA reauthorization measure. As with FDAAA, this "must-pass" legislation is expected to establish a host of new FDA policies and programs. The Congressional "wish-list" already includes curbs on drug advertising, expanded drug reimportation, refinements to the REMS program, requirements that new drugs demonstrate comparative superiority, and enhanced FDA authority to pull drugs off the market; look for even more proposals in the coming months.

Ms Wechsler is a Washington-based reporter specializing in federal and state healthcare issues.