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Another Election In the Books



What changes should we expect to see at the FDA?



By Michael A. Martorelli



Writing in mid-October, I don't know yet what happened on November 7. But the reader knows whether or not the Democrats will have control of either body of the 110th Congress. Will it make a difference? The simple answer is "Yes," but I suppose political pundits with shorter editorial deadlines have already written ad nauseam about the likely impact such a change in control might have in a variety of areas.

With or without such a change, I believe the odds are good that the 110th Congress will pass legislation changing the authority and control of the FDA.

It's not possible to enumerate all the features of a bill that might combine recommendations from two or three independent reports, a couple of bills already in the hopper, and the sporadic pronouncements of Democratic representatives and/or senators who would accede to committee chairmanships. But it is possible to outline some basic changes that seem to represent a consensus of opinion about aspects of the FDA's mandate and functioning.

Separating Decisions about Safety and Efficacy Seems Unlikely



I'm willing to bet that the Institute of Medicine (IOM) report will override the knee-jerk reactions of some legislators. Deliberations about the safety and efficacy of a new product represent two sides of the same coin. I suspect any new legislation will not call for the formation of an entirely new administrative office within the FDA for regulating safety alone. Implicit in that assumption is my belief that Congress will beef up the Agency's efforts to get ahead of the curve on important safety issues.

Embrace the Lifecycle Approach To Drug Regulation



Get used to it. Receiving FDA marketing approval will no longer represent the end of the regulatory trail. I suspect new legislation will give the FDA the clear authority to mandate post-approval safety studies, impose meaningful penalties on those who do not execute such studies, and remove from the market products whose safety is called into question. Taking these actions probably will require the creation of an improved system for proactively seeking up-to-date information about important safety issues.

Risk/Benefit Analysis Should Prevail



The IOM report called for a special label on every new product in order to heighten the public's awareness about the incomplete nature of safety data for a newly-approved drug. It also suggested a five-years-later safety review of each newly-approved drug. A group of authors writing in the Archives of Internal Medicine suggested the idea of a "conditional approval" category for drugs with clear benefits but unanswered questions regarding serious adverse events. I suspect that some combination of these ideas will be considered more workable than S3807's call for the establishment (by the sponsor) and review (by the FDA) of an extensive, expensive and unwieldy Risk Evaluation and Management Strategy (REMS) for every new drug.

The Funding Crisis Will Be Addressed



There's no disputing the fact that the FDA is severely underfunded. There's also no consensus on the best way to correct that situation. The amount and prescribed usage of user fees required under PDUFA will be a major bone of contention until all the signatures on that bill's reauthorization are dry. PDUFA IV will probably allow the agency to spend a much greater percentage of those fees on issues other than new drug review. I'll be very interested to see if the new Congress will a) appropriate more federal tax dollars for the FDA, b) impose a small tax on each prescription written to help fund that agency (an IOM idea), or c) develop another creative way to overcome the national embarrassment that should attach to a country that can not find a way to adequately fund the agency that regulates 25% of that country's GDP.

Finally…



I write a financial column, not a political one. I suspect Congressional leaders named Pelosi, Reid, Kennedy, Dingell, and Waxman would act differently from those named Hastert, Enzi, Grassley, Barton, and Bennett in a variety of areas. But it's not playing politics to suggest that FDA "reform" is coming, no matter who rules the Congressional roost. And that reform will have a financial impact on drug sponsors and their outsourcing partners.

Michael A. Martorelli is a Research Partner at the investment banking and capital advisory firm Fairmount Partners. To discuss further the topics covered in this column, please contact him at michael.martorelli@fairmountpartners.com, or at Tel: (610) 260-6232; Fax (610) 260-6285.