Notes from BIO: Getting Comfortable with REMS

No one wanted to use the word ‘albatross’ in the same sentence when describing REMS, or Risk Evaluation and Mitigation Strategy, at a panel session this week at BIO about the FDA Amendments Act of 2007. But the implication was hard to miss from the tone of some of the comments and the body language of some speakers.

A REMS, for those who may not recall, is the newly upgraded program to ensure a company has a strategy in place to manage and communicate a potentially serious risk with its medicine. And the implications are being gauged closely by industry, which is assessing whether REMS will wind up conferring a greater probability of approval or result in commercial dead-ends.

Drug makers, for instance, would like more guidance, according to Jeff Francer, assistant general counsel at PhRMA, who said REMS is the key issue to watch as a result of the FDAAA. “I would say it’s the effects of REMS on the approval process and post-marketing…We should continue to study how REMS and the implementation are affecting patient care. We, in industry, would like more formal guidance…For most of industry, it’s about REMS.”

A few feet away sat Jarilyn Dupont, director of regulatory policy in the Food and Drug Administration’s Office of the Commissioner, who said that “there’s always going to be tension” over the push and pull between industry and regulators over the requirements and implications. But she noted that the REMS program, which gives FDA some enforcement powers, is still new and that guidance will be forthcoming. “It’s really only out since September, so over time, you will see more guidance. But guidance development doesn’t happen over night.”

Another industry rep, Andrew Emmett, director of science and regulatory affairs for BIO, tried a more optimistic line by saying that, as “comfort levels are built and guidance” emerges, the REMS process should become smoother. Still, his comments about forthcoming REMS evaluations suggested an air of anxiety. The FDAAA requires that all REMS must include a timetable for assessments at 18 months, 3 years and 7 years after approval of a REMS. “There are a lot of questions in industry,” he said, “about what those are going to look like.”

FDA's "Secret" Opioid REMS Meeting

Who doesn’t love to find out about secret meetings? Especially secret meetings between FDA and your top competitors?

Well, if you have any interest in FDA’s implementation of Risk Evaluation & Mitigation Strategies—especially if you market opioids—then you’re in luck. Because we’ve got the scoop on what happened at the closed-door meeting FDA held last week about requiring a class REMS for extended-release pain killers.

FDA holds closed-door sessions with industry all the time. But as we reported in “The Pink Sheet,” this meeting was especially significant: the first in a series of discussions to develop a risk management plan that will be, in the words of one FDA official, “orders of magnitide” greater than anything industry has ever seen.

For the opioids under that umbrella—and those that are not—the REMS will change the commerical landscape for prescription painkillers.

To be fair, it wasn't really a “secret” meeting: FDA announced when was taking place (March 3), and disclosed who was invited (16 opioid manufacturers, listed here). But it also wasn't open to the public, and any information about what happened at the meeting had to be gathered after it took place.

Since we published our story, FDA has released a bit more information, posting the agenda and the slide decks from the three agency presentations on its website. Division of Analgesics, Anesthetics, and Rheumatology Products Director Bob Rappaport gave a history of the risk management of the opioid class; Associate Director for Policy Jane Axelrad reviewed FDA’s REMS authorities under the Amendments Act; and deputy division director Sharon Hertz outlined FDA’s initial thoughts on the proposed REMS.

Right now, FDA wants to see a class Medication Guide; elements to assure safe use (certification of health care providers, physician training on proper use, and patient-physician agreements); and an implementation system (database of all enrolled health care providers and a system to monitor and evaluate the REMS). That could all change, of course, but that is FDA's current thinking.

None of those elements are surprising; they have all been used in past REMS. And as scheduled drugs, opioids already carry some restrictions on their use. But given the sheer size of the market involved, the development and implementation of this REMS should be watched closely.

(Image by flicker user Anna C. used with permission through a creative commons license.)

“Reflections By a Guy Who is Headed Out of Town”: The Bush Legacy for Biopharma

When we got our “exclusive” invitation to cover President Bush discussing his legacy in domestic policy from the American Enterprise Institute, we were flattered that the White House has finally recognized the importance of the IN VIVO Blog in the world. Sam Donaldson, Ted Koppel and Wolf Blitzer—who cares what they think. Its about time they started courting the real thought leaders in Washington.

Sure, our skeptical colleagues in the Fourth Estate may have suggested alternative theories. Like: “It’s tough getting any press to cover a lame duck President, especially one this unpopular.” Or “Everyone who matters is in Chicago for the Obama press conference.” Or “I knew FDC-Windhover’s strict no-shoe-tossing policy would pay off.” Or “Is he still President?”

But we weren’t about to let envious colleagues stop us from answering the call of our President. So we set off to the Mayflower hotel downtown, allowed a very polite Secret Service agent to pat us down while a German Shepherd sniffed our laptop bag (thank goodness it wasn’t the other way around!) and dutifully took our seats to hear what lessons the President has learned that would be of interest to our loyal biopharma readers.

After all—all kidding aside—President Bush’s legacy includes signing the two most important laws affecting the pharmaceutical industry in a generation: The FDA Amendments Act of 2007 and the Medicare Modernization Act of 2003.

Not surprisingly, Bush didn’t say a word about the more recent bill. FDAAA was never embraced by the administration, since it was ultimately packaged by Congress as a rebuke to the management of FDA under Bush. But it signals nothing less than a new era in drug regulation, and that alone will ensure that the Bush legacy matters for years to come.

The President did discuss the Medicare law, and especially the Part D prescription drug benefit that was its centerpiece. Bush’s reflections on the legislative debate and its ultimate outcome underscore why many in the biopharma sector will miss him when he’s gone—and why even some who won’t may ultimately owe him a huge debt of gratitude during the upcoming healthcare debate.

Bush explicitly declined to offer advice or policy prescriptions for the incoming administration, joking that his appearance was nothing more than “reflections by a guy who is headed out of town.”

But his analysis of the key lessons of Part D—as an alternative to price controls, as an endorsement of market-based health care, as proof of the power of competition, choice and consumerism in health care—has obvious resonance for the upcoming health care reform debate. (You can read more about Bush’s thoughts on Part D in “The Pink Sheet” DAILY, and on how Part D may play in the health care reform debate in an upcoming issue of The RPM Report.)

There were plenty of other things Bush said that resonate as well, things that weren’t explicitly relevant to biopharma companies—but easily could have been.

Such as:

“No matter how tough the issue might look, if we require a solution, go after it. The job of the President is to tackle the problem.” (On immigration reform, not health care reform…)

“These aren’t normal circumstances. That’s the problem.” (On the financial bailout, not biotech financing...)

“It is going to be harder to attract good people to government service if their
integrity is challenged at every level.” (On judicial nominees, not FDA Commissioner Andy von Eschenbach....)

“Technology will help change our habits.” (On hybrid cars, not personalized medicine....)

“Part of the problem is…that the regulatory scheme is such that people would risk a lot of capital and then have to seek permission for final approval late in the process
and would find themselves tied up.” (On nuclear power plants, not drug approvals…)

Waiting on Prasugrel: No News is Good News

Another NDA, another missed deadline.

This time around, it’s a product upon which Eli Lilly has hung much of its future, the anti-clotting drug prasugrel (Effient).

Lilly has already been on a rollercoaster ride on Wall Street over prasugrel once the risks associated with the drug surfaced (32% increased chance of bleeding). And time is not on Lilly’s side: the company is racing to establish the drug on the market before 2011, when Plavix generics will complicate the anti-clotting landscape.

Prasugrel has also been closely watched as another sign of how FDA will use its new risk management authorities under the FDA Amendments Act. The billion-dollar questions: would FDA agree that the bleeding risk associated with prasugrel could be appropriately managed by a REMS, or is more needed for approval? And is there any chance for a relatively clean label?

All that makes prasugrel the closest-watched drug approval this year. Indeed, between the September 26 prasugrel user fee deadline and the Wall Street bailout agreement, there were more than a few investors who were constantly refreshing their computer screens as Friday wore on.

While a bailout deal may be at hand, we’ll have to wait a little longer to find out about the fate of prasugrel. For now, Lilly’s not talking, except to say—in a press release that crossed the wires at 5 pm on Friday—that FDA would miss the deadline, that the review is “very far along,” and that Lilly “remains optimistic” that an approval is imminent.

Wall Street’s immediate reaction was not positive—the announcement drove Lilly shares down 3.9% to $45.01 in after-hours trading, and shares opened lower this morning. Les Funtleyder at Miller Tabak expressed his frustration in a research note: “This has become a bit of an unsettling trend at the FDA. The decision tree used to be pass or fail, now there is a third column, the ‘I don't know.’” (Hat tip to CNBC).

We think that pessimism is misplaced.

We told you three months ago why we think FDA will approve prasugrel, and that reasoning hasn’t changed. Indeed, the fact that the agency missed the user fee deadline bodes even better for the drug’s prospects, because it indicates—barring any last-minute surprises—that an approval is close at hand.

Here’s why: Since FDA’s drug review divisions were given the green light to start missing deadlines, most of the applications delayed by workload issues were eventually approved within weeks, based on a recent analysis in The RPM Report. (If you don’t already subscribe, you can sign up for a 30-day trial to access the story.)

For one recent example, look no further than Amgen’s Nplate, which cleared FDA a little over two months after the user fee deadline. GlaxoSmithKline’s Entereg was approved 10 days late. UCB Pharma’s Cimzia was three weeks late. And there are other examples of how small allowances for heavier workloads at FDA have led to product approvals.

There are many reasons for a missed deadline, and some (like finding enough members to staff an advisory committee) have led to months-long delays for new products. But that’s doesn’t appear to be the case with prasugrel: “This is a very large, complex submission, and it should not be surprising that delays occur,” Lilly said.

Given the much-ballyhooed size of that NDA package, perhaps it’s not surprising that it would take FDA extra (and then some more) time to read through it. The absence of an advisory committee meeting for prasugrel is also a positive sign, given that drugs without one have a greater chance for a first cycle reviews.

Sanford Bernstein analyst Tim Anderson agrees that no news is good news: “Our best guess at this point is that while the Effient review is not yet complete, a final decision by FDA is not likely to require that LLY/Daiichi-Sankyo generate new clinical data; the issue may be a smaller one like finessing the label, the risk management plan, etc.”

We couldn’t agree more.

FDA's Brain Drain Continues

Sometimes it just doesn’t pay to work at FDA.

Even as FDA bulks up its drug review ranks with new money from Congress, attrition continues to affect the agency—including high-level defections to industry. Indeed, drug sponsors are more than willing to bring former agency officials into their ranks and pay them much more than the average government salary.

Florence Houn is the latest to jump ship; as reported in “The Pink Sheet” this week, the FDA official has been hired by Celgene as VP-regulatory policy and strategy.

Most recently,Houn was involved in vaccines regulation: she was deputy director of the Center for Biologics Evaluation and Research’s Office of Vaccines Research and Review. But she also knows a thing or two about drug reviews, having served in leadership positions of two different Offices of Drug Evaluation during her 15-year tenure at FDA.

For Celgene, Houn couldn’t come at a better time: the company is working to comply with the Risk Evaluation and Mitigation Strategies provision of the FDA Amendments Act. Celgene is responsible for two of the most restrictive REMS: thalidomide (Thalomid) and lenalidomide (Revlimid), a thalidomide analogue.

In deciding to leave FDA for industry, Houn is taking a page from her husband, former Office of Antimicrobial Drug Products director Mark Goldberger, who left in early 2007 for Abbott Labs. Other recent high-level departures from within the agency include former ODE II director Robert Meyer, who joined Merck in late 2007.

The Office of Drug Safety has probably had the hardest time holding onto talent. Predecessors to current director Gerald Dal Pan left for industry within a year or two of assuming the top drug safety post: Peter Honig to Merck as VP-risk management and Victor Raczkowski to Cephalon as VP-regulatory affairs.

Dal Pan is showing no signs of leaving anytime soon (and given the Office of Drug Safety's new powers and authority, why would he?). But given the monumental changes in drug regulation under the Amendments Act, FDA expertise is surely fetching quite a premium these days. For the agency's sake (and all of industry's), let's hope few other agency officials take advantage of it.

FDAAA Delays: Hurry Up and Wait

If you are going to be late, you might as well be late on everything.

That appears to be the mantra of the Food & Drug Administration these days. After alerting industry earlier this year to the fact that it would start missing approval deadlines, FDA is now warning members of Congress that it will miss implementation deadlines under the FDA Amendments Act.

As reported in "The Pink Sheet" this week, the first anniversary of FDAAA's passage on September 27 comes with it a spate of provisions with deadlines for implementation.

We don't claim to have any insight as to which ones won't happen as planned, but the dozen or so deadlines include one that should be of special interest to the drug industry: the start of the priority review tropical disease voucher system. Others include a report to Congress on best practices for communicating the risk-benefit balance to the public and the development of a post-marketing drug safety website.

So far, we're hearing that Congressional members aren't too concerned about the missed deadlines. Which makes sense, given that FDA hasn't exactly had an on-time record for FDAAA over the past year. For example, the agency is already quite late on a report to Congress on the number of vacancies and disclosures related to advisory committees; it was due February 1.

We find the whole situation a bit ironic, since FDA has been telling sponsors that part of the reason it is missing user fee deadlines is because of all the work it is doing under FDAAA. The news that the agency will miss those deadlines as well seems to illustrate just how severly understaffed FDA actually is.

FDA is staffing up--of the 1,163 or so new employees that the agency will hire before the end of the fiscal year, 1,005 are already on board, and 158 are due to report in by September 28, according to FDA. Another 160 candidates have accepted offers but are still undergoing clearance and related security processes.

But even with all those new hires, FDA still has vacancies: The recent Food & Drug Law Institute advertising and promotions meeting, for example, sounded at times like a government job fair, with officials making a pitch for working at FDA from the podium.

Given the scope of the Amendments Act, perhaps missing deadlines was inevitable. For sponsors, whether or not FDA sends a report to Congress won't make or break a balance sheet. But it is just another reminder of just how stretched the agency is--and how long it will take before agency operations are back to normal.

Laying a Foundation for Success: Mark McClellan’s Vision for Reagan-Udall

If you want to build a new house, you start with a solid foundation. But if you want to build a solid foundation, where do you start?

For Mark McClellan, chairman of the Congressionally-chartered Reagan-Udall Foundation, that question turns out to be more difficult than anyone expected when the FDA Amendments Act—which chartered the foundation—was signed into law in September.

Reagan-Udall was supposed to begin operations with some seed funding from FDA, but concerns in Congress—primarily those of House Agriculture Appropriations Subcommittee chair Rose DeLauro—blocked that. So for now, the foundation has had to rely on 14 board members working on a pro bono basis to get up and running.

And the board has to accomplish two goals at the same time: crafting by-laws and processes to allow fundraising to begin, while working methodically to win over DeLauro and other concerned stakeholders to the broader mission of enhancing the scientific base governing the mission of the Food & Drug Administration.

“It will be a step-wise approach with getting the right bylaws, getting the right staff in place, having further opportunities for public input and discussion, and moving on to doing some broad based projects to improve the science for the FDA,” McClellan says. (For a complete transcript of our interview with McClellan, click here; a free registration is required.)

The first step in the process, finalizing the bylaws, should be complete in a matter of weeks, McClellan says. “Once our bylaws are in place and published, that is when we can start with the fund raising. There are a number of organizations and non-profit groups and the like that are interested in providing some of the core initial funding for the foundation. So that will be the next step and that means we will be able to have a staff in place and ongoing support for the product areas and initiatives.”

So it will still be a while before the foundation can actually get to work on supporting FDA’s scientific mission. There are at least three critically important areas where Reagan-Udall could play a prominent role in shaping the future of the agency and the pharmaceutical industry it regulates.

First, there is the directive for the foundation to shepherd and support FDA’s “Critical Path” Initiative, a program that has at least the potential to accelerate drug development. Second, the law also contemplates that the foundation will run a scientific fellowship program for FDA—a program FDA has already announced and is eager to get going.

Last but not least, the foundation is a good candidate to play a central role in the implementation of a new active surveillance system under development by FDA. That system could be the most revolutionary outcome of FDAAA, but its impact depends critically on scientific and procedural details that have yet to be worked out.

The foundation seems well on track to begin operations and start taking on those roles no matter what its Congressional critics think. However, the impact of the foundation’s work depends on winning over the concerned voices on the Hill. If the foundation ends up being painted as a vehicle for undue industry influence on FDA, any contributions it makes to the agency’s scientific underpinnings will become political hot-buttons.

McClellan, though, is optimistic that he can win over the skeptics. “We all share the same goal,” he says.

“There are a lot of good ideas from many members of Congress who all share the goal of improving the FDA’s ability to carry out its mission and improving the science available to promote the health of the public,” McClellan says. “Those perspectives are all going to get built into the further activities of the foundation.”

That’s why, in McClellan’s view, getting the process right on launching the Foundation is so critical.

“It is understandable that any kind of decisions involving FDA appropriations need to be made very carefully,” McClellan says. That is why there is “the need for transparency and clarity in the processes for the Foundation.” Concerned stakeholders must have “a good understanding of where funding would be coming from on the private side, and where it would be going,” McClellan says.

One example of how the foundation is working on its dual objectives: McCellan is relying on pro bono help from the DC law firm Zuckerman Spaeder to craft the bylaws. McClellan cited two former FDAers at the firm, Partner Bill Schultz and Counsel Peggy Dotzel, as providing the assistance.

In addition to the help they are providing on interpreting the Congressional directives for the charter of the foundation, Schultz and Dotzel’s involvement should offer some reassurance to skeptics in Congress. Both served in the Commissioner’s office under David Kessler during the Clinton Administration, and Schultz in particular established a reputation for independence from industry based on his prior experience with Public Citizen and with Representative Henry Waxman’s committee staff.

There is no doubt that the ramp-up of the foundation is going to take longer than its advocates wanted. But it seems clear that if there is any hope to build a strong Foundation to support FDA’s mission, the first step will be building a strong foundation of support from skeptics in Congress.

Waiting for Sentinel: The Active Surveillance Revolution is Coming Soon

It sounds like the Food & Drug Administration is about ready to unveil its plans for a national active surveillance network, dubbed Sentinel. (Though hopefully that will be the only resemblence to the meanies in The Matrix.)

This long-discussed project was given a big push by the drug safety law enacted in 2007. The potential implications are truly revolutionary for biopharma companies—displacing the drug sponsor from its historic role as the center of the information flow about its own products.

The potential implications are one thing. The real implications will depend heavily on how the program is implemented—and by whom.

The new law directs FDA to set up a public-private partnership to help build an integrated national database of pharmacy claims, and develop the tools for analyzing signals to make regulatory decisions.

The law doesn’t say what role the pharmaceutical industry should or should not have in the system, how the agency should decide what signals to communicate publicly, or whether the claims data should be used for more than just safety assessments and made available to support other forms of research or even formulary decisions.

It is a safe bet that former Commissioner Mark McClellan will be involved; he championed the idea during the latter stages of the FDA legislative debate. In fact, the agency would really like to hand at least some of the project off to the newly formed Reagan-Udall Foundation chaired by McClellan but Congress has complicated that by prohibiting FDA from transferring funds to the Foundation.

The law does include some timelines and deliverables that mean the agency needs to get moving—something that regulators are eager to do anyway.

“Sentinel is a program you will be hearing about very soon,” FDA Commissioner Andrew von Eschenbach told the Food & Drug Law Institute annual meeting March 26.

How soon? Well, all we can say for sure is that it will be a month sooner than it was the last time we heard von Eschenbach discuss the idea, during an address to the National Press Club at the end of February.

But we do know a bit about where the agency is likely to be heading. Here are some “principles” that Associate Commissioner for Policy Jeff Shuren—who is the agency’s point person on Sentinel—outlined during Windhover’s FDA/CMS Summit in December. Shuren stressed that these are his personal thoughts.

(1) Scientific Credibility: Sentinel must win the “trust and confidence of patients, medical community, industry and other stakeholders.”

(2) Integrity: “The management structure and data analysis of this new system could be insulated from undue influence, whether by stakeholders or the political process.”

(3) Inclusiveness: “Stakeholders should have the opportunity to provide input into the standards and processes used by the system.”

(4) Transparency: “Protocols and study results should be made available to the public.”

(5) Privacy Protection and Data Security: This is “of paramount importance.”

Those principles seem hard to argue with.

Not everything is so simple, however. Shuren raised just a couple of the tough questions FDA and other stakeholders need to wrestle with.

For instance, there is the question of standards for interpreting safety signals in the Sentinel system. “When and with what level of confidence, can conclusions be drawn from the data?” Shuren asked.

“Even if we do not develop standards for such decision making—and it would be truly a challenging and controversial undertaking—we at least need to realize that there are likely different levels of confidence or certainty under which to make decisions regarding the treatment of a single patient versus formulary or coverage determinations versus decisions to change a product’s labeling," Shuren said. Which in turn raises the question: what access should FDA grant to the Sentinel data for other entities, like the Medicare agency or private payors, to support coverage decisions?

Those are the types of questions where most in industry would agree the right answer is worth waiting for.

Congress Has Lump of Coal for FDA in Funding Bill

Congress finished some important work before leaving town for the holidays, finally enacting new funding legislation for the federal government for fiscal 2008. The bill, signed by President Bush December 26, is critical for the Food & Drug Administration, because it allows the agency to start using the new, higher user fees it was authorized to collect by the drug safety law signed in September.

That means the agency can continue its full-steam ahead approach to implementing the user fee provisions of the FDA Amendments Act—the one piece of the legislation that both FDA and industry share unreserved enthusiasm for.

But the new funding comes with a big hitch: a provision stipulating that FDA cannot transfer any money to its other initial priority in implementing the law: the new Reagan-Udall Foundation, a public-private partnership that is supposed to help FDA develop new scientific tools to enhance its regulatory mission.

That may not sound like much to worry about. The new foundation is broadly supported by industry, which welcomes any opportunity to advance drug development science—but it seems like an afterthought in the context of the big changes in FDA’s regulatory authority over drug safety that are the centerpiece of the new law.

There are, however, very significant implications to the dispute, which could ultimately be critical to determining what role industry will have in the development of a new active surveillance system for pharmaceuticals.

Representative Rosa DeLauro, who chairs the House Agriculture Appropriations Subcommittee that oversees FDA, is concerned that the foundation may be an avenue for the pharmaceutical industry to exert more influence over the agency. She registered her concerns in a letter to FDA November 1.

FDA didn’t help the situation when it selected the board members for the foundation. The agency chose a very distinguished group to oversee the foundation, including former GlaxoSmithKline R&D President Tachi Yamada, who now heads the Gates Foundation’s global health program. On paper, Yamada is a perfect choice—his industry R&D background and current philanthropic position are hard to beat when considering the type of people who should oversee the foundation.

But the timing of the choice was disastrous. FDA announced the board selections on November 15—the same day that the Senate Finance Committee released a report on its investigation of claims that GSK intimidated an academic researcher who questioned the safety profile of Avandia. The report reviews a number of communications between GSK and the researcher, including emails from Yamada, and concludes that “the documents in the Committee’s possession raise serious concerns about the culture of leadership at GSK.”

Given DeLauro’s position that the foundation is an avenue to give industry undue influence over FDA, that made the selection of Yamada seem like a blunder.

Industry should hope that cooler heads prevail, and that DeLauro’s concerns can be assuaged. The Reagan-Udall Foundation should be a positive for drug development, and so pharma wants it to get off the ground.

But it is also the most viable short-cut to getting moving on a new active surveillance system for pharmaceuticals. The new law directs FDA to set up a public-private partnership to help build the database and develop the tools for analyzing signals to make regulatory decisions. The agency is leaning towards giving that mission to the new foundation—McClellan was one of the champions of including the provision in the FDA law in the first place.

Putting the new foundation in charge of developing the active surveillance system would address industry’s biggest concern with the project—whether product sponsors will have an appropriate role in shaping the new system.

That’s where things get really tough. DeLauro is already concerned about industry influence in the foundation. And Chuck Grassley, the ranking Republican on the Senate Finance Committee who oversaw the Avandia report, wants to play a role in shaping how the active surveillance project develops—at least to the extent it involves Medicare claims data. And Grassley’s view is that industry should have no role in analyzing that data.

So the fight over Reagan-Udall is probably just beginning. For industry the stakes may be higher than they seem.

Venturing to Washington II: Fleecing the Drug Industry

The primary concern of Day 1 of the FDA/CMS Summit was just how bad for the industry are the unofficial tollgates of a more safety-conscious FDA and the official post-approval burdens imposed by the FDA Amendments Act.

Day 2 focused on a perhaps more inchoate fear – the chance that payors of all stripes will take the savings they need out of the hide of the drug industry.

And they will need them. Amgen VP of Global Coverage and Reimbursement Josh Ofman noted the variety of ways drugs cut overall health costs – but ultimately acknowledged, as did a variety of other speakers, that cost-containment was going to hit drugs hard – either, says Ofman, through controlling market access, restricting coverage (e.g., through formulary controls), or by imposing conditional coverage.

Most speakers did not expect the industry nightmare of a single-payor to soon take flesh. And the popularity of unfettered drug choice makes dispensing restrictions political and economic non-starters. But without them, the easiest (and most politically popular) target for cutting costs, separately noted Eli Lilly’s top politico Alex Azar and Rob Seidman, the influential former pharmacy chief at Wellpoint, is the biopharma industry—through price reductions and rebates (which fatten PBM profits as much as they cut drug expenses). Drugs covered by Part D—where consumer choice is most obvious (“what do you mean I can’t have Lipitor?” the consumer bellows at the pharmacist)—will likely face the brunt of the pricing assault.

Unfair? Absolutely. As much BS as drug companies hand out about their R&D spend, the fact is they can’t invest in new medicines if they can’t charge enough for the ones they get to market. Investors, for one, won’t allow it. Rob Seidman somewhat cynically commented that if the drug companies can’t create new products for less than $1 billion, they “need to build a better mousetrap.”

So—some mousetrap suggestions. First, there are ways of cutting that cost. Lilly’s Chorus division has shown it can get products to proof-of-concept much quicker than traditional development programs, giving their late-stage clinical colleagues a much broader choice of likely programs to push forward (and their business development colleagues a slew of out-licensing candidates that would otherwise have been dust-collectors on lab shelves).

Second, former Pfizer exec Stephen Williams, now with a new firm he founded called Decisionability, offered an interesting solution to the rising reimbursement risks – securitizing them in much the same way private equity firms and royalty buyers have learned to securitize drug-development programs. Instead of packaging development-stage products into tradeable securities (e.g., Morgan Stanley’s Pharmaceutical Royalty Monetization Assets—click here for more on just how clever the financial community can be), theoretically one could bundle approved products into packages that could cut a sponsor’s risk of reimbursement problems and permit investors to share in the upside of a positive outcome.

But drug companies also need to figure out ways of cutting reimbursement risk without turning to Wall Street. And one very practical solution is to start exploring how to create at least two formulations, one Part D and one Part B, for a molecule entering development (it’s a point we’ve mentioned before—here for example). That means exploring how a small-molecule headed for Part D might be useful in an IV infusion…and doing so at the earliest stages of planning for proof-of-concept. Take those biotechs, for example, developing small-molecule therapies for cancer or as replacements for niche drugs in orphan diseases, like lysosomal storage disorders: oral is convenient, sure. But IV can have both therapeutic and reimbursement advantages, too.

It’s reimbursement-oriented portfolio management – and it’s why R&D executives need to be au courant on the challenges their commercial colleagues face with payors (and why the marketing guys should focus on more than just market size when they kibbitz on drug development issues).

Final suggestion: there were roughly 200 attendees at the FDA/CMS Summit. More than half were the drug companies’ policy mavens. It’s clear, at least to this blogger, that what was once inside-the-beltway wonk material is now central to financial and drug-development strategy. If senior marketing, finance and R&D execs are leaving this stuff to their Washington groups, they’re leaving themselves wide open to the competitors who aren’t.

DTC User Fees Clear First Hurdle; New Era for Advertisers Ready to Begin

An update on an item we reported last week: the status of the new direct-to-consumer advertising user fee program created as part of the huge Food & Drug Administration Amendments Act enacted in September.

As of November 26, FDA had received commitments from advertisers to submit at least 130 television ads for prescription drugs for pre-review by the agency.

That is well above the 68 commitments the agency needed to get by November 26 in order to launch the program. It is also way more than the 47 commitments the agency had received when Division of Drug Marketing Advertising & Communications Director Tom Abrams provided an update during a Food & Drug Law Institute conference 10 days earlier.

The program was designed with the assumption that there would be about 150 pre-reviews per year. That looks like a pretty sound estimate. FDA may be a little short of that number in advance commitments, but sponsors can decide later in the year to submit ads (albeit with a higher fee as a penalty).

“The next steps are to tally the number of ads and establish the fee per ad,” FDA says. The agency plans to “issue a Federal Register Notice stating the fee and will also invoice the participating companies.” The law requires FDA to have the money in hand by January 26, so there may still be some nervous moments early in 2008 while the agency waits for the checks to come in.

FDA is authorized to collect $6.25 million in fees to fund reviews in 2008, plus another $6.25 million to establish a reserve fund for future years. So if the agency ends up with exactly 130 commitments, the fee for a review will be just under $100,000.

That may sound like a lot to pay for the privilege of having a regulator criticize your ad before it airs.

But it is a pretty small price to pay compared to the alternatives. FDAAA didn't just authorize the new user fee program; it also gave FDA new authorities to punish advertisers that the agency thinks cross the line. Ads pre-reviewed by FDA are safe, as long as the sponsor made all the changes suggested by the agency. The new fines for violative ads start at $250,000 for a first offense, and increase to $500,000 for repeat violations. That’s not a ton of money, but then you have to factor in the cost of being made an example of by the agency.

More importanly, the pre-review program is probably the last chance for industry to fend off more draconian measures to restrict or even ban DTC ads. An outright ban is unlikely to survive Constitutional review by the courts, but that doesn’t mean Congress won’t find other ways to make advertisers miserable.

Now the question is: what exactly will FDA do with its pre-reviews? The agency has always been willing to make comments on ads prior to broadcast, but it has never before had enforcement tools to punish companies that decline to take its advice. We think that change in the balance of power will make a significant difference. You could read more of our thoughts on that in “The New Era of DTC,” from The RPM Report in October.

Uncertainty Surrounds FDAAA Implementation

The recurring joke at the Food & Drug Law Institute’s November 16 conference on implementation of the Food & Drug Administration Amendments Act was that no one knows what to call the law. The acronym (FDAAA) is decidedly unfriendly, prompting pronunciations ranging from “F-D-triple-A,” to “fuh-DAAAA,” to (our favorite), “F-D’oh.”

The uncertainty about what to call the thing is funny. The uncertainty about what some of the key provisions mean for FDA and industry is no laughing matter.

The FDA speakers at the FDLI conference ended up raising at least as many questions about the new law as they answered. Here are just a few key ones.

(1) When will FDA be able to spend the new user fees it is collecting under the bill? Hard as it may be to believe, the new Prescription Drug User Fee Act, negotiated over the course of 2006 and enacted essentially intact in FDAAA this year, has not yet given FDA the raise it so desperately wanted. FDA started collecting the fees at the new, 25% higher rate on October 1, but because Congress has not yet passed an appropriations bill for the agency, it can’t actually spend the money. FDA Chief of Staff Susan Winckler told FDLI that the agency should be able to cope with the current budget situation for the rest of the year, but it will definitely struggle to meet new performance goals if it doesn’t get authorization to spend the money by the first quarter of 2008.

(2) When do sponsors have to file Risk Evaluation & Mitigation Strategies for drugs currently covered by risk management programs? March 24. Or September 24. It depends how you read the law. FDA Chief Medical Officer Janet Woodcock said that issue will be resolved by the agency’s chief counsel. Since the REMS authority is the centerpiece of the new law—and since it is by no means clear to sponsors what products are going to be covered by the REMS provisions—that is a pretty important deadline.

(3) Will all Phase IV commitments be mandatory under FDAAA, or just ones that FDA considers most critical? “I hadn’t thought about that,” Woodcock said. Typically, new drug approvals include a host of different types of post-marketing commitments, Woodcock noted, some of which are more important than others. But at this point FDA has no idea whether it plans to make all post-marketing commitments mandatory—and hence subject to new enforcement authorities included in the law.

(4) Will the new direct-to-consumer ad user fee program get off the ground? It looks like a close call. We delved into this one already, so we won’t repeat ourselves. (Click here.)

(5) What on earth did Congress mean to do by revising the Citizen Petition rules? A three person panel at FDLI, including FDA deputy associate general counsel Jeffrey Senger, spent a good while parsing the language. The section is clearly meant to address concerns that petitions are used by brand manufacturers to delay generic launches. But how will it work in practice? There are lots of "thorny" questions; “I don’t have answers,” Senger said. “Truly the courts will determine many of them.”

So there is plenty of uncertainty ahead for industry as it awaits decisions about FDA on the new rules for drug safety and other sections of FDAAA. FDA is plowing through the issues, and Woodcock pledged that the agency will make it all work. “I am not a lawyer, but I am an implementer,” she told FDLI. “We will be doing these things in the timeframes envisioned by the law.”

Some progress is clear: new requirements for registration of clinical trials take effect December 26, and the National Library of Medicine will have the system ready for industry to start using on that date. The new user fees are in place, even if FDA can’t spend the money yet. And discrete steps—like forming a new internal pediatric review committee and an external risk communication advisory committee—are done.

More importantly, it sure sounds like FDA thinks it can implement the key REMS section without any new guidance or regulation. “I don’t see a lot of regs coming from this,” Woodcock said, noting that FDA already has guidances on risk management plans in effect.

And, most significantly of all, it is clear that the new legislation is going to be implemented with an eye towards making the drug safety system work better for everyone. FDAAA signals a “new phase in drug regulation,” Woodcock said. The new authorities are “pretty groundbreaking.”

But, she added, “it doesn’t diminish our commitment to make safe and effective drugs available in a timely manner.” FDA will use its new powers “judiciously.” And, she said, the new tools “may help ensure that treatments get to and remain on the market.”

If only industry could be sure about that....