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UPDATE: Increase in FDA s Drug-Review Fee May Not Hurt Young Drug Developers

NEW YORK, Feb. 8 - A recent federal budget proposal to increase by 60 percent the US Food and Drug Administration's fee to review a new-drug application may not be that much of a headache for young drug developers, experts say. And if ultimately approved, the increase will represent only a tiny fraction of what it costs to bring a drug to market.

 

Passed nearly 10 years ago, the FDA's Prescription Drug User Fee Act was designed to speed the drug-review and -approval process. The FDA would charge drug companies a fee, usually $300,000 or more, to hire additional reviewers to help keep the regulatory gears spinning smoothly. Both sides were happy.

 

But a line item in President Bush's budget proposal for fiscal 2003, released on Monday, includes $272 million in PDUFA fees, a 60 percent jump from the $169 million expected in 2002. Fighting bioterror next year will be expensive, experts say, so the government decided to pass some of those costs onto biotech and pharma firms in the form of increased PDUFA fees. (Without the increase, the FDA would only get $1.43 billion, an anemic 1 percent bump up from what it gets this year.)

 

Predictably, this has spurred the pharma and biotech bunch into a tizzy. Stephan Lawton, a vice president for regulatory affairs and general counsel for the Biotechnology Industry Organization, calls the proposed increase "pretty shocking" in a Wall Street Journal article.

 

Lawton would not return phone calls seeking additional comment. However, BIO President Carl B. Feldbaum said in a statement on Friday that "this current budget proposal reflects a basic misunderstanding of the economics of the biotechnology industry. The proposal to more than double fees on biotechnology product applications for FDA approval would impose a disproportionate burden on many small, emerging biotechnology companies."

In the grand cost of getting a drug to market--$802 million, according to a report put out last year by the Tufts Center for the Study of Drug Development--a 60 percent increase on $300,000 appears to be a drop in the bucket. Some experts say that both new and mature drug developers may not balk at paying half a million dollars or more to have their drug reviewed, especially if that drug has great market promise. And smaller, younger genomics firms who covet royalties from their R&D alliance with those drug developers may accept that increase if shouldered with it.

 

"At the end of the day it's the order of magnitude that matters," said George Steinfels, an official with QED Solutions, a life-science consulting company based in Houston. "Look at the percentage of the user fee relative to the total cost of getting a drug approved. It's not going to deter [drug developers] from doing business any differently than they're doing right now, because they know to be successful they need to put products on the market."

 

"That fee will be more than amply recouped with a successful product launch," he said.

 

To be sure, it is still too early to determine how the FDA will justify the increase, and an FDA official conceded to the Journal that the $272 million number represents the agency's "best guess" and was simply a "place holder" until it can revisit the issue and peg a more accurate figure.

 

In any event, PDUFA is set to expire in October, and drug companies and the FDA--both of whom have been smitten by the little act--will have to convince the government to reauthorize it.