Affordable, quality health care. For everyone.

To The Point

Drug Pricing and Pandemic Preparedness in the 2022 FDA User Fee Reauthorization Process

drug pricing and pandemic preparedness

This week, the U.S. Food and Drug Administration (FDA) is holding two virtual public meetings discussing “user fees” that are paid by the pharmaceutical industry to facilitate the agency’s regulation and review of prescription drugs and generic drugs. These meetings kick off a process that happens every five years to renegotiate those fees. Because Congress must pass legislation enacting the newly negotiated fees, this process presents lawmakers with an opportunity to revise FDA policies and authorities. Some members of Congress will likely try to use this legislation to advance policies to reduce high drug prices. But with the COVID-19 pandemic as a backdrop, there are also likely to be discussions about how the FDA might improve its public health preparedness capabilities.

FDA User Fees

The FDA was first authorized to collect user fees in 1992 to provide funding during a period of federal budget cuts. User fees are paid by biopharmaceutical and medical device companies to the FDA annually and when certain regulatory applications are submitted. Through successive reauthorization processes, user fees have grown to provide the FDA with nearly half of its $6 billion budget. Prior reauthorization legislation has included provisions to ensure safety, efficacy, and competition in drug and device markets. Without these resources, the FDA would be forced to significantly curtail the number of prescription drugs and other medical products it reviews each year. The sixth user fee reauthorization –– passed in 2017 –– will expire in 2022.

Emergency Preparedness and Response

The FDA has always played a central role in the federal response to public health emergencies. The user fee reauthorization enacted in 2002, which followed the 9/11 attacks in 2001 and the 2002 anthrax attacks, “rode” on the Public Health Security and Bioterrorism Preparedness and Response Act, which established the National Disaster Medical System and the Strategic National Stockpile for drugs, vaccines, and other products, as well as the office that would become the Assistant Secretary for Preparedness and Response at the Department of Health and Human Services.

Congress is already examining the FDA’s performance during the pandemic as it reviews governmentwide response. This review could lead to proposals for changes at the FDA, including whether FDA standards for approving therapies and vaccines during a public health emergency are appropriate and how to ensure access to such medicines when they are manufactured overseas.

Drug Pricing and the 116th Congress

While this Congress has endeavored to enact drug pricing reform focused on how Medicare pays for drugs, it has paid relatively little attention to how changes at the FDA might increase competition and reduce drug prices. With unfed appetite for broader pricing reform, the next user fee authorization bill may prove too tempting a vehicle for Congress to pass up. Some issues that could be considered include whether the biosimilar review pathway needs to be simpler, whether current expedited drug approval pathways make it too easy for new drugs with questionable efficacy to come to market, and if current policies allow drug manufacturers to delay competition for too long.

Influence of Senator Burr

Next year, Senator Richard Burr (R–N.C.) may chair the Health, Education, Labor, and Pensions Committee, which has jurisdiction over the FDA and public health preparedness. In 2002, then-Representative Burr championed the Public Health Security and Bioterrorism Preparedness and Response Act and he has been vocal in support of various preparedness initiatives since then.

Burr is also a longtime critic of the imposition of FDA user fees from pharmaceutical companies. Last year he spoke against a new over-the-counter drug user fee, arguing that such fees drive drug prices higher. During the 2017 reauthorization process, Burr suggested that the agency failed to deliver product approvals expediently and did not vote on that bill. He also was one of four Senators to vote against the 2012 reauthorization package.

If Senator Burr becomes chair, a key question will be what he prioritizes during the reauthorization process. He could use his influence to reshape the user fee program in order to impose greater limits on the FDA. Alternatively, if he opted to use the reauthorization process to make changes to public health preparedness policy, he might have to accept fewer changes to the user fees.

What’s Next?

What will ultimately pass in the user fee reauthorization bill is anyone’s guess, but the meetings and congressional hearings to come may shed light on the future of the FDA, drug pricing, and the country’s public health. Some questions to consider include:

  • How will Congress balance its investments into national disaster preparedness, which will require proactive funding for future and riskier financial bets to identify, produce, and distribute COVID-19 treatments and vaccines?
  • Will legislators call for the FDA to be more rigorous in its reviews or press for faster drug development and approval?
  • Will Congress pursue COVID-19 drugs at any cost and how will this choice impact its efforts to rein in drug prices?
  • How will supply chain security play into the future of medical product approvals and what impact will that have on drug prices in the future?
  • What is the future of public–private partnerships in drug development, particularly during a public health emergency?

The coronavirus outbreak exposed an unprepared public health infrastructure, fragile medical supply chains, and gaping holes in the disease surveillance system. While the user fee reauthorization process offers an opportunity to address the apparent crisis and rebuild in its wake, the competing concerns of drug pricing and FDA operational changes complicate what can be expected from the 2022 reauthorization.

Publication Details

Publication Date: July 23, 2020
Citation:

Jeremy Sharp and Kahaari Kenyatta, "Drug Pricing and Pandemic Preparedness in the 2022 FDA User Fee Reauthorization Process," To the Point (blog), Commonwealth Fund, July 23, 2020. https://doi.org/10.26099/qqr1-n007

Experts

Jeremy Sharp
Vice President, Waxman Strategies
KAHAARI KENYATTA
Associate, Waxman Strategies