INTRODUCTION
Mr. Chairman and Members of the Subcommittee, I am Lester M. Crawford, Deputy Commissioner of the Food and Drug Administration (FDA or the Agency). I am pleased to be here today to discuss the Agency's success in implementing the Prescription Drug User Fee Act and to emphasize the importance of reauthorizing this law in advance of its September 30, 2002, expiration date.
BACKGROUND
In 1992, Congress enacted the Prescription Drug User Fee Act (PDUFA I). This law provided additional resources to hire more medical and scientific reviewers to conduct premarket reviews, to hire support personnel and field investigators to speed up the application review process for human drug and biological products, and to acquire and support critical information technology infrastructure.
In 1997, after the success of PDUFA I, Congress reauthorized the program for an additional five years. With this reauthorization (PDUFA II), came higher expectations for reviews and additional goals designed to reduce clinical drug development times. The President's budget request for Fiscal Year (FY) 2003 recommends that PDUFA be reauthorized through FY2007, and we have been engaged in discussions with consumers, health providers, and industry over the past year to develop proposals for PDUFA III. These discussions have been very useful, and we hope to complete the consultation process in the very near future and forward our PDUFA III recommendations to the Department of Health and Human Services.
PDUFA ACHIEVEMENTS
During PDUFA I and PDUFA II, FDA met the highest expectations for performance while continuing to adhere to rigorous standards for safety and effectiveness. We now have eight years of data on our efforts to achieve PDUFA goals, and the Agency's record of achievement is impressive. The Agency faced a total of 73 performance goals during this period. These goals governed the review of priority and standard new product applications, resubmitted applications, and supplements. During this eight-year timeframe, FDA met or exceeded 71 of 73 PDUFA performance goals.
In addition to the 73 performance goals, procedural and processing standards were instituted under PDUFA II. A total of 19 goals governing meetings, clinical holds, dispute resolution, and special protocols were established when the law was reauthorized. FDA met or exceeded 15 of 19 procedural and processing goals. If you combine our performance and procedural accomplishments, the Agency met or exceeded 86 out of 92 PDUFA goals.
Not only has FDA significantly reduced application review times under PDUFA, it also has significantly reduced product approval times, and therefore, the time for new drugs to reach the market. Review time is the time it takes FDA to review original or resubmitted new product applications, efficacy supplements, and manufacturing supplements and issue an action letter. Approval time is measured from the date an application was initially submitted to the date an approval letter is issued. Approval time includes the period of FDA review, as well as the time a sponsor may spend responding to deficiencies identified by the Agency during application review. Because of these deficiencies, some products require more than one review cycle. While PDUFA established goals for review times, and faster reviews tend to produce quicker approvals, the quality and completeness of an individual application and the public health priority of the product significantly affect time to approval.
The result of our efforts has been a dramatic reduction in product approval times. The median approval time for priority new drug and biologic applications dropped from 13 months in FY1993 to only six months in FY2000. We do not have complete data for FY2001, but median approval times are projected to remain at six months.
For standard new drug applications, the median approval time was 22 months in FY1993. By FY1999, however, median approval times had declined to 12 months. For a variety of reasons, such as competing PDUFA goals and priorities and unanswered questions that must be addressed within some applications, we may experience a slight increase in approval time in FY2000 for this category of applications. The data for FY2000 are only preliminary, however.
THE WORLD LEADER
Drugs are now reviewed in the U.S. as fast or faster than anywhere in the world, without compromising the very stringent standards that Americans have come to expect. Between FY1993 and FY 2001, pharmaceutical firms have introduced 285 new molecular entities (NMEs) and 73 biologics into the market, a dramatic increase compared to any other period of time.
Ten years ago, European pharmaceutical companies were the industry leaders. With the enactment of PDUFA, however, U.S. companies have overtaken their European counterparts and now have a commanding lead in world markets. According to a July 2001 report in the Financial Times, the European share of the world pharmaceutical market fell from 32 to 22 percent over the past ten years while U.S. market share rose from 31 to 43 percent. During this period, pharmaceutical R&D investment doubled in the European Union, while U.S. R&D increased a remarkable five-fold.
This turn-around prompted the Tufts Center for the Study of Drug Development to describe the U.S. environment for pharmaceutical innovation since PDUFA as "nothing short of remarkable." The members of this Subcommittee deserve a large share of the credit for championing PDUFA and for making these successes possible.
PDUFA RESULTS
Your efforts have produced significant benefits for public health. The public has gained access to 717 new drugs and biologics under PDUFA, including 174 that represent significant therapeutic advancements. During the PDUFA era, FDA reviewers have approved:
Every day, the lives of cancer patients are measurably improved as a result of the greater emphasis on priority review that we instituted under PDUFA. For example, Herceptin(r), a biological product to treat breast cancer, was approved by FDA in less than five months. In Europe, the approval process took 18 months. Because of FDA's priority review, 10,000 American women with advanced breast cancer had earlier access to this drug. These patients will gain an estimated 2,300 additional years of life because of early access to this important new therapy.
The pharmaceutical industry also enjoys significant R&D savings as a result of shorter review times. Under PDUFA, FDA reduced new drug review by 12 months. Each month of reduced review results in an average saving of $2.5 million, or $30 million in R&D cost savings over 12 months. Given that FDA approves an average of 40 NMEs and biologics per year, the savings to industry represent $1.2 billion annually. The program represents a bargain in light of the $133 million that industry paid in user fees in FY2001.
Finally, PDUFA has also brought significant benefits for FDA:
FDA GOALS FOR PDUFA III
1. SOUND FINANCIAL FOOTING
While our experience under PDUFA II has generally been good, a number of significant issues have surfaced that undermine the program's financial foundation. In PDUFA III, we are working to address these issues and ensure that the Agency has a sound financial footing to conduct essential review and approval activities.
During the final three years of PDUFA II, the amount of fees collected has been substantially less than the cost of performing review activities. FDA has been able to sustain its review effort only by spending fee revenue collected in previous years that has been held in reserve-an arrangement permitted under the Act. In FY2001 and FY2002, spending from fee revenues will exceed fee income by about $30 million each year. FDA is reducing operations in FY2002 to adjust to this revenue shortfall. However, unspent revenues from previous years will be depleted by the end of this fiscal year and there will be little or no fee balances available after September 30. Establishing a fee structure to ensure that income covers the cost of enhancements to the drug and biologic review process authorized by PDUFA is an issue that we are working to address in PDUFA III.
Another problem is that PDUFA application fees are only paid on new drug and biologic applications and efficacy supplements. Yet the review of fee-paying applications represents only a fraction of FDA's actual review workload. There are many activities associated with the process for the review of human drugs and biological products that are not covered by PDUFA fees. These activities continue to grow steadily and demand more resources each year, while the number of fee-paying applications, and the revenue they generate, fluctuates considerably. This dynamic was not taken into account when the fee formula was established.
The uncertainty about fee revenue is further complicated by the relationship between application fees and the product and establishment fees that also we collect under PDUFA II. The law directs that establishment and product fees rise and fall based upon the number of fee-paying applications, yet the volume of work associated with these activities has little or no relationship to the number of applications. The reality of this situation is inconsistent with the expectation that product and establishment fees were intended to be a stable element of PDUFA revenue in order to insure a consistent and predictable source of fees.
2. RISK MANAGEMENT
While drugs and biological products are under development, clinical testing is usually limited to small, carefully selected populations of 5,000 or less. After approval, however, millions of patients may be exposed to the drug. When the drug is exposed to a much larger and diverse population, adverse events not seen during clinical trials often emerge in the first few years after a new product is on the market. PDUFA has fostered a dramatic reduction in product approval times, and the U.S. market is increasingly the country where drugs are first launched.
There is no evidence that drugs are being withdrawn from the market for safety reasons at a greater rate during the PDUFA era than prior to the enactment of this landmark legislation. In fact, the withdrawal rate for new drugs approved prior to PDUFA is identical to the rate of withdrawal for drugs approved since PDUFA was enacted (2.7 percent). However, the need to institute a more effective program of risk management for new drugs, and thereby ensure greater patient safety, is clearly warranted by the intrinsic limitations of drug development programs (particularly the size of clinical trials) and the reality that more drugs are launched for the first time in the U.S. Where risks can be effectively managed, we avoid the need to withdraw drugs that are highly beneficial to many patients, though harmful to some.
CONCLUSION
As you know, PDUFA II expires on September 30, 2002, and I want to emphasize again the importance of achieving a timely reauthorizion of this law. FDA is ready to work with you to accomplish this.
I have described the status of FDA's user fee account - Agency carryover balances will be exhausted by the end of the current fiscal year. If we are to sustain our record of accomplishment under PDUFA II, it is critical that the reauthorization occur without a gap between the expiration of the old law and the enactment of PDUFA III.
Timely reauthorization is a priority for the pharmaceutical industry, the American public, and the many talented staff at FDA that we rely upon to conduct human drug and biologic reviews. Retaining FDA's skilled employees is essential to the success of PDUFA III. Any hesitation or delay in the reauthorization of this program could trigger sudden erosion in our work force, particularly among senior reviewers whose skills are in very high demand. The repercussions of such a loss would be with us for years to come.
Thank you for your commitment to the mission of FDA, and to the continued success of PDUFA. I am happy to answer questions you may have.
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