The Food and Drug Administration is currently in negotiations with the pharma community to increase the so-called "user fees" that go toward approval processes, among other FDA costs. Established under 1992's Prescription Drug User Fee Act, the fees help fund FDA programs that directly affect the industry.
There has been some criticism that the more money the pharma industry contributes to the FDA through user fees, the more leverage it may have with its regulator. However, "the FDA and the industry discuss various enhancements and their value to industry, and we'd never agree to anything that compromises our integrity or standards," Janet Woodcock, deputy FDA commissioner (below), told The Wall Street Journal. "But aspects of the review program that are of less interest to industry are not likely to be funded out of user fees."
While the user fee was introduced in fiscal year 1993, the $8.9 million tag accounted for just 7% of the FDA's drug-review budget. But subsequent reviews have pushed the fee up to $232 million in fiscal year 2004 - 53% of the total budget. This time around, pharma could potentially be asked to cover the cost for almost 66% of the FDA budget.
Why does it matter?
"The more money the agency has from the industry for enforcement, the more enforcement issues that are likely to result - more warning letters, a greater scrutiny over communications, more budget to look at and evaluate risk-management plans and post-marketing studies - all of which communications plays an important part of," says Mark Senak, an SVP at Fleishman-Hillard and author of the blog Eye on the FDA.
1 In the past, the user fees have accounted for a faster FDA approval time, from 10 to 12 months, with companies' contributions being based on the number of drugs they sell in the US and how many facilities they have.
2 It is unknown what the negotiations entail, but The Wall Street Journal and other media speculated that trade group PhRMA is pushing for a set time period for the FDA to review ad campaigns, which would allow for better planning of campaigns and more efficient ad spending.
3 Biotech industry group BIO has voiced resistance to user fees being spent on ad approval because the group does not do DTC advertising.
4 The talks are held between the FDA and trade groups, not individual companies, but the largest companies affected include Pfizer, Amgen, and Johnson & Johnson.
5 Prescription drug advertising ranks second in ad spending by product category for January-June 2006 by Nielsen Monitor-Plus; behind that of auto industry ad spending.