Drug company fees for FDA reviews haven't accelerated approvals, study finds

December 17, 2003

ANN ARBOR, Mich. - For the past ten years, drug companies have paid the U.S. Food and Drug Administration fees to review each new drug they want approved. But a new study shows that this program hasn't made the approval process any quicker -- its main goal -- than increased federal funding for the FDA was already doing before the industry fee program began.

The study, by a team from the University of Michigan and Harvard University, also counters critics' claims that the fee-based system might cause the FDA to give special treatment to larger, more powerful drug companies. The researchers found no evidence that those firms got faster approvals for their products. The results will be published online Dec. 17 by the journal Health Affairs.

"The bottom line is that the more staff the FDA has reviewing drug applications, the faster the approval process will be," says senior author A. Mark Fendrick, M.D., of the U-M Medical School and School of Public Health. "If you want more rapid assessment of new drugs, hire more people. And if you're still concerned about external influence or potential conflicts, fund them through additional mechanisms."

Fendrick and his colleagues compiled the new findings using a detailed analysis of 843 new drugs submitted for FDA approval between 1977 and 2000, including 320 drugs that were rejected. They looked at approval times for the drugs submitted in each year, and concurrent levels of FDA drug-review staffing. The analysis also included scrutiny of each drug's disease indications, and each drug company's sales totals, number of recent FDA submissions and lobbying budget.

The results enabled the researchers to see trends both before and after the passage of the Prescription Drug User Fee Act (PDUFA) in 1992. PDUFA set fees that companies pay to the FDA, to offset the cost of hiring additional reviewing staff. In the 10 years since PDUFA took effect, companies have paid about $1 billion in fees.

Overall, the average time from a drug's submission to its approval decreased dramatically over the 13 years studied, from 24 to 36 months in the 1980s to roughly 14 months in the late 1990s. The researchers also report that the number of FDA staff reviewing drug applications rose steadily throughout the period from 1980 to 1998.

In fact, staffing levels were growing rapidly for about five years before PDUFA took effect, because of increased federal funding to the FDA budget. The researchers found that this prolonged, steady rise in review staff, not any particular aspect of PDUFA, was responsible for the drop in approval times.

In all, the average review time for a drug dropped by 3.3 months for every 100 additional FDA staff hired. If FDA staffing had stayed constant at 1980 levels throughout the 1980s and 1990s, the researchers show, average drug approval time would have stayed around 24 months.

Says Harvard government professor and lead author Daniel Carpenter, "The effect of enhanced staffing levels on decreasing approval times was substantial and observable several years before PDUFA was passed. Analyses designed to identify other effects of PDUFA, beyond those attributable to increased staff, was unrevealing."

Moreover, says Carpenter, "We found no evidence that larger or more politically active pharmaceutical firms fared better in the review process after PDUFA was enacted. In fact, approval times may have declined less rapidly for firms with larger sales, even as FDA staff resources grew."

While the source of the funding for additional staff doesn't appear to affect the speed of the review process, some critics have faulted the industry fee program for allegedly compromising the FDA's independence in other ways, or for speeding up approvals so much that dangerous side effects are overlooked. Effects beyond approval time, such as the quality of review or the number of recalls among the drugs that received approval, were not studied for the current report.

The study was motivated by several high-profile critiques of the PDUFA system, including allegations that the FDA had become a "servant of industry." Soon after the interdisciplinary team was assembled, the researchers realized that the effect of PDUFA on approval times -- and especially on approval times for drugs from major companies -- could be rigorously measured. They gathered data from publicly available sources, and analyzed it using several computer models.

The product is the first study that incorporates not only drug approval times and FDA staffing levels, but also rejected drugs, and characteristics of both the drugs and the companies that make them. The authors used three separate models to evaluate how approval times were changing before PDUFA took effect, to look for any shift in approval times after PDUFA, and to look at effects correlated to the submitting company's total sales, lobbying budgets, and number of previous New Drug Application submissions.

Overall, the results showed no major effect from PDUFA on top of what was already under way when PDUFA was passed, and no extra-rapid decrease in approval times for drugs from larger companies that pay the largest fees. As a result, the authors say the findings cast doubt on claims that PDUFA benefited more powerful firms disproportionately, or that the user fees directly promote industry influence on the drug approval process.

But their findings also call into question the industry's claims that PDUFA and its user fees are directly responsible for the ongoing decrease in drug approval times. "We strongly believe that nearly all of the decrease in approval times would have been achieved had the FDA been appropriated these funds directly, instead of relying on industry user fees," says co-author Michael Chernew, Ph.D., a health economist from the U-M School of Public Health. "And, such an appropriation would have avoided the suspicion of industry influence on drug approvals that has surrounded the FDA ever since."

In addition to Fendrick, Carpenter and Chernew, the study's authors include Dean G. Smith, Ph.D., of the U-M School of Public Health. The study was not supported in any way by pharmaceutical industry or FDA sources.

University of Michigan Health System

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