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Lester M. Crawford, Jr., D.V.M., Ph.D. - Global Pharmaceutical Conference

This text contains Dr. Crawford's prepared remarks. It should be used with the understanding that some material may have been added or deleted during actual delivery.

Financial Times of London
Global Pharmaceutical Conference

Remarks by
Lester M. Crawford, Jr., D.V.M., Ph.D.
Deputy Commissioner
U.S. Food and Drug Administration,
November 6, 2002

Good morning. It's a pleasure to be here and participate in this truly global exploration of the latest trends in the pharmaceutical field by some of the most distinguished experts and pace-setters in the industry.

My own role at this conference is to present a view of the regulators -- government officials whose mission is to protect consumers and promote the public health. In the case of the United States Food and Drug Administration, which I have the honor to represent, this mission covers a vast array of products that are important or critical for human survival and good health.

They include all food except for meat and poultry; all human and animal drugs; all medical devices; all vaccines, blood products, and tissues for transplantation; all equipment that emits radiation, and all cosmetics. Our agency -- the FDA -- sets the standards for all these goods, and sees to it that they are safe, or safe and effective. Recently, device manufacturers accepted the principle of paying user fees for FDA's evaluation of their products, and Congress passed a medical device user fee bill that the President has signed into a law.

Against this broad regulatory background, I believe that the best contribution I can make to the "search for the magic formula," to quote the title of this conference, is to describe the FDA's experience with a program under which we charge user fees for reviewing marketing applications for new medicines. I have chosen this topic well aware that user fees are hardly a new regulatory concept: the United Kingdom's Medicine's Control Agency has been levying user fees for 31 years, and our colleagues in Canada, Australia, and in the European Agency for the Evaluation of Medical Products also charge drug firms user fees.

The reason I want to discuss our drug user fee program is because it represents the FDA's most significant regulatory experience in many years; because it has been a great success; and because the program has produced some lessons that we have to keep in mind as we consider applying user fees to the processing of other products.

It is only fair to note that our drug user fee program -- which covers almost all new innovator drugs and biological products -- owes its origin to a failure: a failure of a principle that the American public, our Congress, and the FDA had believed in for many years. According to this one firmly-held tenet, public health protection is the exclusive responsibility of the government, to be fully funded from public coffers.

This concept served our country well until the second half of the last century when it came under severe stress caused by the all-too-familiar disparity between a growing regulatory workload, rising expectations of consumers, and lagging government resources. In the U.S., one particularly striking victim of this phenomenon -- which I believe has affected every regulatory agency in the world -- was a law passed in 1962 that among other obligations mandated the FDA to review new drug applications in 180 days.

It was a goal the agency almost never met. Congress made a few attempts to support the tight review deadline with increased resources, but the added appropriations were always outpaced by still greater added workload. The emergence of the AIDS epidemic in the 1980s brought the criticism of the FDA drug program to a critical mass. Although our agency had been very fast in processing new drugs for the disease, the agency's losing struggle with other backlogs received a great deal of publicity, and patient and consumer groups were in full cry for a radical improvement. So was the industry, whose new drugs waited on the average two-and-a-half years to be approved by the agency.

It was time to try something new, and that's what Congress did in 1992 by passing the Prescription Drug User Fee Act, which abandoned the tradition of fully government-funded protection of the public health. PDUFA, as we call the law, enacted a set of steeply rising drug review performance goals accepted by the agency in return for a scale of payments agreed to by the industry. The clear purpose of the fees was to support the reviews of new drugs and biological products in order to improve their efficiency, accountability and predictability. None of the added resources could be used to process generic products, or for post-market surveillance of the new medications' safety. The law was intended to sunset in five years, and Congress was not going to reauthorize unless the FDA met its goals.

And that the agency did, in an impressive fashion. The first five years of PDUFA -- PDUFA I, as we called it -- were a startling, unqualified success. FDA completely overhauled the drugs program's management, used the fees to upgrade its technological infrastructure, and hired an additional 600 drug reviewers and support staff. The results exceeded all expectations. Average review times of most drugs were reduced from 30 months to one year, and priority drugs of particular therapeutical benefit were reviewed in 6 months of less. The number of approved products increased by 40 percent; the total drug development time was shortened by almost one-fifth; and the quality of submissions improved so much that eight out of ten ultimately merited approval, as against six out of ten before PDUFA. The new review system was devoid of backlogs; it met or exceeded all of the review performance goals; and it made predictable the review times of drugs that were well supported by scientific evidence, and informed sponsors in a timely manner of the deficiencies that precluded their products' approval.

From the FDA viewpoint, the most important gains of PDUFA I were the benefits it brought to patients and consumers. They received well-substantiated new drugs not only more quickly, but also in much larger numbers. Before PDUFA, only 2-3 percent of new drugs world-wide were introduced first on the U.S. market. By 1998, the FDA's review efficiency impressed so many drug sponsors that the first introductions in the U.S. reached sixty percent.

There were other, more subtle benefits: Before PDUFA, for example, the drug applications that received FDA's fastest reviews were generally submitted by large, research-oriented firms that had a greater experience in marshalling the required evidence of safety and effectiveness. Under PDUFA, the speed of reviews became more uniform because smaller firms did a better job compiling their applications -- presumably, because they had to pay user fees for their processing. Another pre-PDUFA anomaly of the FDA's review process -- exceptionally long review times for highly complex drugs -- also vanished as the agency had more resources to focus on such applications.

The gains in FDA's review efficiency were so great that in 1997, when PDUFA was reauthorized for another five years, the goals agreed upon by Congress, the FDA and industry were primarily focused no longer on application review times, but rather on reducing the drug development time. The new strategy relied heavily on tight deadlines for various contacts between the agency and product sponsors during the development phase for which no fees were charged -- such matters as meeting arrangements, responses to clinical holds, dispute resolutions, and responses to requests for the review of special protocols.

What happened during PDUFA II was another surprise, which this time was far from pleasant. On the one hand, the industry requests for many services which were not covered by the user fees went up sharply: for example, requests for authorization of clinical trials shot up by more than a third, and requests for 30-day responses to clinical holds, 45-day reviews of special protocol questions, and for 30-day major dispute resolutions nearly doubled. Overall, we found that PDUFA II tripled the number of reviewer actions whose deadlines were 20-50 percent shorter than under PDUFA I, and that it multiplied the sponsors' requests for other non-user-fee services.

On the other hand -- and this was biggest disappointment by far -- in the last five years the user fees have failed to reach the expected levels, primarily because of a decline in the number of paying submissions. For example, instead of last year's projected collection of more than $160 million, the user fees brought in only $135 million. This year, we expect to collect only $137 million, approximately $40 million less than projected.

The unexpectedly low collections had unwanted ripple effects. Reviewers working on user fee products put in 200,000 hours of uncompensated overtime to meet the mandated time frames, but had less time to provide feedback to drug sponsors on the form and contents of their drug applications. As a result -- even though all PDUFA II review times were met or exceeded -- submissions sometimes required several review cycles to reach approval, and the overall times to approval have crept up. Moreover, the user fee shortfall affected other FDA activities, because the agency had to keep the drug program going by diverting to it funds from other public health programs.

There was yet another development during PDUFA II that raised questions about the user fee system. At the end of the 1990s, manufacturers withdrew five drugs from the market in the space of one year. That was a highly unusual occurrence, and it rapidly triggered charges that the FDA was trying to please the user fees-paying firms by approving drugs too fast for the patient's safety.

In fact, most of the withdrawn products had been approved before PDUFA came into existence. In general, the safety-associated drug withdrawal rate during the life of the program has been around 3 percent, approximately the same that had prevailed for many years prior to the adoption of PDUFA. But as we all know, facts rarely trump suspicions easily, and in some circles, allegations of FDA's conflict of interest kept coloring the image of our agency.

PDUFA II thus taught the FDA two lessons, one of which was the importance of realistic estimates of future fee collections. The other message, rather forcefully delivered by consumer and patient groups, was that part of the American public was uncomfortable with the FDA's dependence on user fees from an industry it regulates. This, despite the fact that the user fees cover less than 50 percent of the PDUFA program.

On the positive side, the drug withdrawals focused the public's attention on the industry's reluctance to support the FDA's severely underfunded surveillance of the safety of marketed drugs. Last year, when the negotiations got underway for the third extension of PDUFA, consumer and patient groups gave strong support to the FDA's case for the assessment of user fees for its surveillance of new prescription drugs. The agency proposed to collect the fees during the first two to three years a new drug is on the market, when there is the greatest likelihood of the emergence of adverse events that did not show up during the clinical studies.

The industry accepted the FDA proposal and, in addition, agreed to an overall increase in user fees, while our agency committed to speed up its communications with product sponsors. PDUFA III, which was reauthorized this past summer by Congress as part of the broad Public Health Security and Bioterrorism Preparedness and Response Act, is now on what we consider a more sound financial basis. The higher user fees are expected to enable our agency to strengthen the PDUFA program with additional 450 employees, and improve their working conditions and training. It is particularly important that up to 50 of these new employees will be assigned to monitor the safety of new drugs, thereby greatly strengthening the postmarket drug surveillance staff.

Despite some setbacks during the last five years, the drug user fee program has proved to be a multiple asset. It has been a major boon for the public health: thanks to a 77-percent increase in FDA's medical and scientific reviewers, new drugs are reviewed and approved in less than half the time the agency used to take before 1992; almost 80 percent of the world's drugs are available to our patients within the first year of their worldwide marketing; and the withdrawal rate of new prescription drugs has remained generally unchanged despite the speedier reviews and approvals.

PDUFA has also brought huge financial benefits to pharmaceutical firms, whose user fees by the end of last year contributed $825 million to the $2.1 billion total cost of the program. The many months, if not years, that PDUFA has added to the protected marketing of their products have been worth billions of dollars.

Last but far from the least, the drug program has confirmed the effectiveness of FDA-industry cooperation, particularly when it is focused on mutually rewarding goals and sanctioned by Congress. The example of PDUFA has convinced even the American medical device firms, which have long resisted the user fee formula. Recently, device manufacturers accepted the principle of paying user fees for FDA's evaluation of their products, and Congress has passed a medical device user fee bill that the President has signed into a law.

Despite the sea-change produced by PDUFA, we are aware that some of our drug processes need additional improvement. In the course of this year, we have therefore launched three initiatives, one of which is a major overhaul of our system of current Good Manufacturing Practice, or cGMP, for human and veterinary drugs and biological products.

The standards embodied in the cGMP are the backbone of product quality: they're the criteria on which the FDA and the regulated firms rely most heavily for assurance that pharmaceutical products are of the highest quality. These standards have been hardly touched in the last 25 years, and they still do the job. But they need to be brought abreast of the changed public health, technological, and industrial environment in which we regulate and live.

Drugs play much greater role in health care than they used to: last year, American pharmacists dispensed 3.1 billion prescriptions, a 60-percent increase over 1992. Manufacturers are using more advanced equipment, and are inspected less frequently than they used to be because of FDA's resource constraints. And the new methods of quality management and the globalization of industry, among other production changes, need to be accounted for in manufacturing standards.

We are therefore going to evaluate both our product review processes and the cGMP standards for consistency in scientific approach and implementation, and, if necessary, make adjustments in accordance with several principles. Most important among them is our need to focus our limited resouces on the greatest public health risks. We also want to incorporate in FDA's standards and policies the latest science, in order to encourage advances in drug manufacturing and technology.

We want to coordinate the review of product applications with our cGMP inspections, and address the global cGMP performance in such forums as the International Conference on Harmonization. And of course, we will continue vigorous enforcement of the existing regulatory requirements, and provide strong public health protection until the new system is launched.

Our second initiative is designed to consolidate the review and oversight of certain types of biological products in our center for drugs. The goal is to bring under one roof reviews of products that are similar in clinical development, clinical data analysis, and use in medical practice.

The shift will enable the biologics center to focus its expertise on vaccines and blood products -- which are critical for our homeland defense -- and on such issues as gene therapy and tissue transplantation. These technologies, as we all know, are likely to be the great vehicles of medical progress in this new century.

Incidentally, this consolidation is still in the planning stage -- so if any of you have business to conduct with the FDA that involves biological products, please continue dealing with our center for biologics until you hear from us something else.

Finally and most recently, President Bush has announced an FDA initiative that is likely to be welcome by millions of Americans who take prescription medicines. Our proposal, issued just two weeks ago, is designed to prevent unwarranted delays in the approval of generic drugs, which in the U.S. are generally much less costly than brand-name products.

In the past, brand-name drug producers could secure repeated 30-month stays of FDA's approval for competing generics by suing for infringement of patents, some of which involved such characteristics as packaging, metabolites, or intermediates. Under our proposal, brand-name firms would be able to obtain only one 30-month stay for each generic drug, and inappropriate patents would not be acceptable for listing by the FDA.

The proposal is now open for commments, and if finalized, it will speed up the availability of generic drugs, and it is estimated to save our patients $3.5 billion a year.

Ladies and gentlemen, I have focused mostly on PDUFA and other major FDA activities to increase our regulatory efficiency, but I can't conclude this report without briefly addressing the impact on our agency of the blow of September 11, 2001. The FDA has been put on a war footing and charged with the responsibility of helping deter or minimize the effects of a bioterrorist attack on our population. It is a potential risk that, unfortunately, we cannot disregard.

To give you an example of the steps we're taking, our agency last fall clarified that the antibiotics doxycycline and penicillin G procaine are effective and approved to treat all forms of anthrax infections. This assurance was important for the public's peace of mind after the appearance in the mails of several envelopes with anthrax powder, and there was a concern about a potential shortage of medications if the attack should become more widespread.

We are also working on measures to encourage the development of new drugs to counter the toxic effects of chemical, biological, radiological and nuclear weapons; to assure adequate supply of products for immunization against anthrax, botulinum, small pox and other substances that might be used by terrorists; and to optimize safe use of anthrax vaccine. Our agency has contributed to the development of methodology for the detection of biological agents with bioterrorism potential, and we've helped develop a guidance on the use of potassium iodide to reduce the risk of thyroid cancer in radiation emergencies.

Our most significant bioterrorism program, however, involves the protection of the U.S. food supply. This is a truly massive effort that includes hiring and training of more than 800 new employees, and an unprecedented intensification of our surveillance of imported and domestic food. The same increased vigilance applies to the security of all products the FDA regulates, including medicines.

I have briefly departed from my report on the modernization of FDA's regulation of pharmaceuticals, but I am sure that you recognize that there is a connection between our efforts to increase our regulatory efficiency and the bioterrorism program. The greater the pressures on our agency, the more critical is our need to become more up-to-date and effective in all our public health functions. PDUFA and the other pharmaceutical programs I mentioned make a meaningful contribution to this end.

This concludes my presentation. If you have any questions, I'll do my best to answer them.