[Senate Hearing 112-905]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 112-905

 
  FDA USER FEE AGREEMENTS: STRENGTHENING FDA AND THE MEDICAL PRODUCTS 
                  INDUSTRY FOR THE BENEFIT OF PATIENTS
=======================================================================


                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,

                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                                   ON

   EXAMINING FOOD AND DRUG ADMINISTRATION (FDA) USER FEE AGREEMENTS, 
FOCUSING ON STRENGTHENING FDA AND THE MEDICAL PRODUCTS INDUSTRY FOR THE 
                          BENEFIT OF PATIENTS

                               __________

                             MARCH 29, 2012

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions


      Available via the World Wide Web: http://www.gpo.gov/fdsys/




                  U.S. GOVERNMENT PRINTING OFFICE
90-814                    WASHINGTON : 2014
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001



          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                       TOM HARKIN, Iowa, Chairman

BARBARA A. MIKULSKI, Maryland
JEFF BINGAMAN, New Mexico
PATTY MURRAY, Washington
BERNARD SANDERS (I), Vermont
ROBERT P. CASEY, JR., Pennsylvania
KAY R. HAGAN, North Carolina
JEFF MERKLEY, Oregon
AL FRANKEN, Minnesota
MICHAEL F. BENNET, Colorado
SHELDON WHITEHOUSE, Rhode Island
RICHARD BLUMENTHAL, Connecticut

                                     MICHAEL B. ENZI, Wyoming
                                     LAMAR ALEXANDER, Tennessee
                                     RICHARD BURR, North Carolina
                                     JOHNNY ISAKSON, Georgia
                                     RAND PAUL, Kentucky
                                     ORRIN G. HATCH, Utah
                                     JOHN McCAIN, Arizona
                                     PAT ROBERTS, Kansas
                                     LISA MURKOWSKI, Alaska
                                     MARK KIRK, Illinois
                                       

                    Daniel E. Smith, Staff Director

                  Pamela Smith, Deputy Staff Director

     Frank Macchiarola, Republican Staff Director and Chief Counsel

                                  (ii)


                            C O N T E N T S

                               __________

                               STATEMENTS

                        THURSDAY, MARCH 29, 2012

                                                                   Page

                           Committee Members

Harkin, Hon. Tom, Chairman, Committee on Health, Education, 
  Labor, and Pensions, opening statement.........................     1
Enzi, Hon. Michael B., a U.S. Senator from the State of Wyoming, 
  opening statement..............................................     2
Murray, Hon. Patty, a U.S. Senator from the State of Washington..    34
Roberts, Hon. Pat, a U.S. Senator from the State of Kansas.......    35
Mikulski, Hon. Barbara A., a U.S. Senator from the State of 
  Maryland.......................................................    37
Burr, Hon. Richard, a U.S. Senator from the State of North 
  Carolina.......................................................    38
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode 
  Island.........................................................    40
Isakson, Hon. Johnny, a U.S. Senator from the State of Georgia...    41
Bennet, Hon. Michael F., a U.S. Senator from the State of 
  Colorado.......................................................    41
Merkley, Hon. Jeff, a U.S. Senator from the State of Oregon......    43
Blumenthal, Hon. Richard, a U.S. Senator from the State of 
  Connecticut....................................................    45
Franken, Hon. Al, a U.S. Senator from the State of Minnesota.....    46

                           Witnesses--Panel I

Woodcock, Janet, M.D., Director, Center for Drug Evaluation and 
  Research, Food and Drug Administration, Silver Spring, MD......     4
    Prepared statement...........................................     6
Shuren, Jeffrey, M.D., J.D., Director, Center for Devices and 
  Radiological Health, Food and Drug Administration, Silver 
  Spring, MD.....................................................    18
    Prepared statement...........................................    19

                          Witnesses--Panel II

Wheadon, David E., M.D., Senior Vice President of Scientific and 
  Regulatory Affairs, Pharmaceutical Research and Manufacturers 
  of America, Washington, DC.....................................    48
    Prepared statement...........................................    50
Radcliffe, Sara, Executive Vice President, Health, Biotechnology 
  Industry Organization, Washington, DC..........................    54
    Prepared statement...........................................    56
Gaugh, David R., R.Ph., Vice President for Regulatory Sciences, 
  Generic Pharmaceutical Association, Washington, DC.............    60
    Prepared statement...........................................    62
Nexon, David, Ph.D., Senior Executive Vice President, Advanced 
  Medical Technology Association, Washington, DC.................    67
    Prepared statement...........................................    68
Coukell, Allan, B.Sc.Pharm., Director of Medical Programs, the 
  Pew Charitable Trusts, Washington, DC..........................    72
    Prepared statement...........................................    74

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Senator Casey................................................    82

                                 (iii)



  FDA USER FEE AGREEMENTS: STRENGTHENING FDA AND THE MEDICAL PRODUCTS 
                  INDUSTRY FOR THE BENEFIT OF PATIENTS

                              ----------                              


                        THURSDAY, MARCH 29, 2012

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:06 a.m. in 
Room SH-216, Hart Senate Office Building, Hon. Tom Harkin, 
chairman of the committee, presiding.
    Present: Senators Harkin, Mikulski, Murray, Hagan, Merkley, 
Franken, Bennet, Whitehouse, Blumenthal, Enzi, Burr, Isakson, 
and Roberts.

                  Opening Statement of Senator Harkin

    The Chairman. The Senate Committee on Health, Education, 
Labor, and Pensions will please come to order.
    Last summer, FDA Commissioner Margaret Hamburg testified 
before this committee describing the history and importance of 
the user fee agreements between the FDA and the industries that 
it regulates. She detailed the impact that user fees had on 
FDA's ability to ensure that new medical products get to 
American patients as quickly as possible.
    Since then, we have had hearings on a number of policy 
areas relating to the FDA, including supply chain security, 
medical devices, and drug shortages. While we were engaged in 
those hearings, and a lot of related behind the scenes work, 
the FDA and industry were negotiating and finalizing this 
year's user fee agreements.
    Today, in our last hearing of this reauthorization process, 
we turn the spotlight to those agreements. We will focus on how 
the Prescription Drug User Fee Agreement, or as it is known, 
PDUFA, how it will improve FDA's review of the most novel drug 
products, and enhance the agency's commitment to regulatory 
science.
    We will discuss the exciting new Generic Drug User Fee 
Agreement--wouldn't you know it--called GDUFA, which is 
expected to slash review times to a third of current levels, 
drastically improving the speed with which generic products are 
made available to patients.
    We will also hear about the new Biosimilars User Fee 
Agreement--ready for this one--BsUFA, which will shepherd the 
nascent generic biologics industry as it grows and matures.
    On the device side, we will discuss the importance of the 
hard-fought Medical Device User Fee Agreement--one more time--
MDUFA, to improving the device review process while stimulating 
safety standards.
    In our first panel, Dr. Janet Woodcock and Dr. Jeff Shuren, 
the Directors of FDA's Drug and Device Centers, respectively, 
will discuss the critical role user fees play in helping them 
ensure that medical products are safe and effective, and that 
they reach patients as quickly as possible.
    In our second panel, Dr. David Wheadon from PhRMA, Miss 
Sara Radcliffe from BIO, and Mr. David Gaugh from GPhA will 
discuss the drug user fee agreements.
    The device industry, including members of the Medical 
Device Manufacturers Association, and the Medical Imaging 
Technology Association will be represented by Dr. David Nexon 
of AdvaMed.
    Finally, Mr. Allan Coukell will join us, from The Pew 
Foundation, to explain the benefits these agreements will have 
for patients and consumers.
    The testimony of today's witnesses will reflect strong 
agreement on the following points: these agreements were 
carefully negotiated and it is essential that we pass them. 
They are critical to FDA's ability to do its job, to the 
medical products industry's ability to survive these 
challenging economic times, and most importantly to the 
patients who are the primary beneficiaries of this longstanding 
and valuable collaboration between the FDA and the industry.
    After months of negotiation, the FDA and industry have 
crafted a win-win agreement that they stand behind, and they 
have done their job well. Now it is time for us to do ours. If 
we fail to authorize these agreements on time, the FDA will 
have to fire nearly 2,000 from its staff. Without adequate 
staff, review applications of the drug and device approval 
process will grind to an unacceptably low and slow pace. 
Patients whose health and lives depend on new medical 
treatments will suffer the devastating consequences. We cannot 
let that happen.
    We cannot let policy disagreements, or Presidential 
election year politics, or other politics keep us from doing 
our part to translate into legislation the arrangement and the 
deal that the FDA and the industry have struck for the benefit 
of American patients.
    As we have from the beginning of this process, Senator Enzi 
and I, and other members of this committee from both sides of 
the aisle, are continuing to work together to clear the path to 
authorization of the agreements that we will hear about today.
    With that, I will turn to our Ranking Member, Senator Enzi.

                   Opening Statement of Senator Enzi

    Senator Enzi. Thank you, Mr. Chairman and thank you for 
holding this hearing today.
    I also want to reiterate the comment that you just made 
about the cooperation between both sides and all of the people 
that have been involved and invested in getting this done. We 
know that it has to be done by September, and I think we are 
actually ahead of schedule on that, and hopefully we can stay 
that way. There has been good cooperation from everyone; still 
a few things to consider.
    The subject of today's hearing is the Food and Drug 
Administration's human medical product user fees; all of the 
``UFA's'' today.
    The first such agreement was enacted in 1992. It allowed 
FDA to collect certain agreed upon user fees from drug 
manufacturers in exchange for more timely, predictable, 
premarket review. It decreased review times and increased 
patient access to medicines. User fees are important to 
America's patients, jobs, and innovation. User fees currently 
support about 60 percent of the drug center's workforce, or 
about 20 percent of the device center's workforce.
    The current user fee agreements expire on September 30th of 
this year, 6 months from now. If they are not timely 
reauthorized, the FDA must layoff approximately 2,000 
employees. That would derail the agency's premarket review 
programs. It would threaten the biomedical industry jobs. It 
would limit patient access to therapies and America's global 
leadership in biomedical innovation.
    I am committed to enacting user fee legislation in a timely 
manner. I expect that all our witnesses today representing the 
administration, industry, and patient consumer groups alike 
share that commitment. They will brief us on the content and 
merits of the proposed agreements.
    The agreements contain important policies that will 
ultimately help patients. The proposed prescription drug user 
fee agreement would factor a better understanding of the 
patient perspective into benefit-risk decisions. It would also 
improve Risk Evaluation and Mitigation Strategies, or REMS.
    REMS enacted in 2007 were intended to let the FDA ensure 
that the benefits of a drug or biological product outweigh its 
risks, but implementation of the law produced a delay and 
confusion. The proposed agreement should go a long way toward 
fixing those problems. For instance, by standardizing the 
process and clarifying that the medication guides are not part 
of REMS.
    The proposed Medical Device User Agreement will help FDA 
hire and train more reviewers, managers, and technical writers. 
It will also improve the predictability of the pre-submission 
process, and ensure that no submission is left behind.
    The proposed Generic Drug User Fee Agreement will help the 
FDA inspect more foreign establishments, and attack a large 
backlog of applications. These new user fees will also help FDA 
tackle the problem of drug shortages, providing the resources 
needed to expedite the review and the approval of more generic 
drugs.
    The proposed Biosimilar User Fee Agreement will help get a 
biosimilar program up and running, with measures to prevent 
medication errors, resolve disputes, and authorize special 
protocol assessments.
    Today, the HELP committee will assess the proposed user fee 
agreements to make sure they will advance the public health. We 
need to make sure the policy is right. At the same time, we 
also need to enact user fee legislation in a timely manner. 
Patients, jobs, and innovation depend on it.
    Toward that end, the HELP committee plans to mark up one 
bill containing all four user fee agreements, and a small 
number of bipartisan consensus policy riders will face several 
obstacles that will make it difficult to enact these policies. 
Many outside forces, in some cases extraneous to FDA issues, 
all have the potential to derail our process, but the bill will 
need very broad bipartisan support to pass the Senate.
    I would encourage stakeholders to keep the big picture in 
mind as they contemplate trying to include proposals that could 
add cost, complexity, and/or controversy to the bill. We can 
only succeed if we work together for the greater good.
    On that note, I want to point out that the device under 
director Jeff Shuren and AdvaMed senior executive vice 
president David Nexon are both here today advocating for the 
proposed medical device user fee. The negotiations concerning 
these agreements were contentious, but in the end, through hard 
work and compromise, they reached agreement.
    In short, the FDA, industry, and the stakeholders have done 
their job. Now it is time for us to do our jobs and to get a 
bill done.
    I thank Chairman Harkin for his leadership, commitment, and 
courtesy. I thank the witnesses for coming today, and I look 
forward to their testimony.
    The Chairman. Thank you very much, Senator Enzi.
    Now we will turn to our first panel. Our first panel will 
be Dr. Janet Woodcock, Director of the Center for Drug 
Evaluation and Research at the Food and Drug Administration. In 
this position, Dr. Woodcock ensures that safe and effective 
drugs are available to address public health needs.
    Dr. Woodcock is no stranger to this committee. I was just 
reading that Dr. Woodcock joined the FDA in 1986, has held 
various leadership positions within the Office of the 
Commissioner FDA, including Deputy Commissioner and Chief 
Medical Officer, Deputy Commissioner of Operations, and Chief 
Operating Officer and Director of the Critical Path programs.
    We also have Dr. Jeff Shuren. He has been with FDA, I think 
since 1998, if I am not mistaken--is the Director of the Center 
for Devices and Radiological Health at FDA, and previously 
served as Acting Center Director. He has held various policy 
and planning positions within FDA from 1998 to the present 
time.
    Dr. Shuren received both his B.S. and M.D. degrees from 
Northwestern under its honors program in medical education; his 
J.D. from the University of Michigan Law School. I noted that 
Dr. Woodcock, you received your M.D. from Northwestern 
University. Is this some kind of ganging up by Northwestern 
Medical School or something?
    But welcome, both of you. Thank you for your service to our 
country. Your statements will be made a part of the record in 
their entirety, and I ask if you could sum them up within 
several minutes.
    Dr. Woodcock, welcome. Please proceed.

 STATEMENT OF JANET WOODCOCK, M.D., DIRECTOR, CENTER FOR DRUG 
 EVALUATION AND RESEARCH, FOOD AND DRUG ADMINISTRATION, SILVER 
                           SPRING, MD

    Dr. Woodcock. Thank you, Mr. Chairman.
    I would like to thank you and the members of the committee 
for the opportunity to testify about the three drug user fee 
proposals now before you for consideration. Included is a 
proposal for reauthorization of PDUFA, and recommendation for 
two new user fee programs: a groundbreaking program to support 
the generic drug review process, and a program to support the 
new biosimilars review activities.
    Each of these proposals was negotiated with stakeholders, 
including a transparent process that provided multiple 
opportunities for public input. We feel that, taken together, 
they will support a robust drug regulatory program that will 
both encourage innovation and ensure that the American public 
has continued access to high quality, safe, and effective 
medicines. I would like to briefly describe each of these user 
fee programs.
    To start with PDUFA, Congress instituted this program 
because patients in the United States were not getting access 
to new medicines as quickly as people in other parts of the 
world. This problem was known as ``the drug lag,'' and it was 
particularly severe in the 1980s. In that decade, only about 10 
percent of new medicines reached U.S. patients first.
    PDUFA was started by Congress in 1992 and quickly improved 
the availability of new medicines. I am a rheumatologist, a 
doctor who treats autoimmune diseases and arthritis, and I can 
attest to the revolution in therapy that has occurred since the 
start of PDUFA. Diseases that were crippling now have effective 
treatments that allow our patients to lead full lives.
    Recently, I was on an airplane and my seat mate showed me 
pictures of her garden that she maintained herself. Ten years 
ago, she had been in a nursing home, confined to a nursing home 
with crippling autoimmune disease. She was started on one of 
the new therapies and now is active and leads a full life.
    Since the start of PDUFA, increasing numbers of new 
medicines have been available first in the United States. 
Currently, we lead all other countries in introduction of new 
therapies. But every 5 years, the user fee program must be 
reauthorized and each cycle has brought new enhancements to the 
program.
    Recently, there has been a focus on improving drug safety 
and successful innovations such as our Sentinel Initiative have 
resulted from this.
    For this cycle of PDUFA renegotiation, Congress directed us 
to conduct a very open and inclusive process with significant 
public stakeholder participation. We have done that, and we 
believe that was wise direction on the part of Congress, and 
the outcomes of the negotiation have improved as a result of 
this participation.
    The drug development enterprise, though, that brings new 
therapies to patients is in a very different place than 
previous PDUFA negotiations. Drug developers face many of the 
problems of other industries due to the economic downturn. But 
more significantly, there is a severe productivity problem 
worldwide in which an ever increasing R&D investment is 
producing even fewer new drugs than before. It is no 
exaggeration to say this industry is in crisis.
    At the same time, the scientific opportunities have never 
been greater, and I can tell you it is incredibly frustrating 
as a physician to see the expansion of biomedical knowledge, 
and at the same time to watch the struggles and repeated 
failures in developing new medicines.
    Despite these serious problems, we think we may be seeing a 
turning point. Last year, we approved a very high number of new 
medicines and this year we have approved, this calendar year, 
eight novel medicines so far and many of them will make a 
significant difference for patients. It is critical that the 
regulatory system be able to change, and adapt, and keep 
bringing this innovation to the public.
    Through this process, we have developed a set of 
recommendations as laid out in my written testimony. These 
include new steps to incorporate these scientific advances into 
our regulatory process. To put the patient in the center of 
drug development by many patient-centered activities that are 
going to be supported by the new process, and to further 
enhance drug safety.
    The second proposal is for a groundbreaking Generic Drug 
User Fee. This program has two elements, one establishing a 
timely predictable process for review of generic drug 
applications, and establishing a worldwide level playing field 
for manufacturers of generic drugs and their active 
ingredients, so American consumers can receive the same 
assurance of quality no matter where the drug is sourced from.
    Finally, the user fee proposed are for the new biosimilars 
program, which is also a groundbreaking program established by 
Congress. This is intended to support implementation of this 
landmark legislation. Since there is no existing biosimilars 
industry in the United States, FDA worked with a wide range of 
stakeholders in crafting our proposal.
    The program differs from others in that fees are going to 
be paid during drug development to assist in providing advice 
because it is not known how to develop biosimilars for the U.S. 
market.
    In sum, these proposals will provide robust support for 
essential drug regulatory activities in the United States, and 
I look forward to answering your questions about them.
    [The prepared statement of Dr. Woodcock follows:]
               Prepared Statement of Janet Woodcock, M.D.
                              introduction
    Mr. Chairman and members of the subcommittee, I am Dr. Janet 
Woodcock, director of the Center for Drug Evaluation and Research 
(CDER) at the Food and Drug Administration (FDA or the Agency), which 
is part of the Department of Health and Human Services (HHS). Thank you 
for the opportunity to be here today to discuss the fifth 
reauthorization of the Prescription Drug User Fee Act (PDUFA),\1\ also 
referred to as DUFA-V, as well as the negotiated recommendations for a 
generic drug user fee program and a biosimilar user fee program.
---------------------------------------------------------------------------
    \1\ PDUFA was enacted in 1992 and authorizes FDA to collect fees 
from companies that produce certain human drug and biological products. 
Industry agrees to pay fees to help fund a portion of FDA's drug review 
activities, while FDA agrees to overall performance goals, such as 
reviewing a certain percentage of applications within a particular 
timeframe. The current legislative authority for PDUFA expires on 
September 30, 2012. On January 13, 2012, HHS Secretary Kathleen 
Sebelius transmitted recommendations to Congress for the next 
reauthorization of PDUFA.
---------------------------------------------------------------------------
Background on PDUFA
    FDA considers the timely review of the safety and effectiveness of 
New Drug Applications (NDA) and Biologics License Applications (BLA) to 
be central to the Agency's mission to protect and promote the public 
health. Prior to enactment of PDUFA in 1992, FDA's review process was 
understaffed, unpredictable, and slow. FDA lacked sufficient staff to 
perform timely reviews, or develop procedures and standards to make the 
process more rigorous, consistent, and predictable. Access to new 
medicines for U.S. patients lagged behind other countries. As a result 
of concerns expressed by both industry and patients, Congress enacted 
PDUFA, which provided the added funds through user fees that enabled 
FDA to hire additional reviewers and support staff and upgrade its 
information technology systems. At the same time, FDA committed to 
complete reviews in a predictable timeframe. These changes 
revolutionized the drug approval process in the United States and 
enabled FDA to speed the application review process for new drugs, 
without compromising the Agency's high standards for demonstration of 
safety, efficacy, and quality of new drugs prior to approval.
    Three fees are collected under PDUFA: application fees, 
establishment fees, and product fees. An application fee must be 
submitted when certain NDAs or BLAs are submitted. Product and 
establishment fees are due annually. The total revenue amounts derived 
from each of the categories--application fees, establishment fees, and 
product fees--are set by the statute for each fiscal year. PDUFA 
permits waivers under certain circumstances, including a waiver of the 
application fee for small businesses and orphan drugs.
    Of the total $931,845,581 obligated in support of the process for 
the review of human drug applications in fiscal year 2010, PDUFA fees 
funded 62 percent, with the remainder funded through appropriations.
PDUFA Achievements
    PDUFA has produced significant benefits for public health, 
providing patients faster access to over 1,500 new drugs and biologics, 
since enactment in 1992, including treatments for cancer, infectious 
diseases, neurological and psychiatric disorders, and cardiovascular 
diseases. In fiscal year 2011, FDA approved 35 new, ground-
breaking medicines, including two treatments for hepatitis C, a drug 
for late-stage prostate cancer, the first drug for Hodgkin's lymphoma 
in 30 years, and the first drug for lupus in 50 years. This was the 
second highest number of annual approvals in the past 10 years, 
surpassed only by 2009. Of the 35 innovative drugs approved in fiscal 
year 2011, 34 met their PDUFA target dates for review.
            Substantially Reduced Review Times
    PDUFA provides FDA with a source of stable, consistent funding that 
has made possible our efforts to focus on promoting innovative 
therapies and help bring to market critical products for patients.
    According to researchers at the Tufts Center for the Study of Drug 
Development, the time required for the FDA approval phase of new drug 
development (i.e., time from submission until approval) has been cut 
since the enactment of PDUFA in 1992, from an average of 2 years for 
the approval phase at the start of PDUFA to an average of 1.1 years 
more recently.\2\
---------------------------------------------------------------------------
    \2\ Milne, Christopher-Paul (2010). PDUFA and the Mission to Both 
Protect and Promote Public Health [PowerPoint slides]. Presentation at 
the FDA PDUFA Public Meeting, Rockville, MD.
---------------------------------------------------------------------------
    FDA aims to review priority drugs more quickly, in 6 months vs. 10 
months for standard drugs. Priority drugs are generally targeted at 
severe illnesses with few or no available therapeutic options. FDA 
reviewers give these drugs priority attention throughout development, 
working with sponsors to determine the most efficient way to collect 
the data needed to provide evidence of safety and effectiveness.
            Reversal of the ``Drug Lag''
    Importantly, PDUFA has led to the reversal of the drug lag that 
prompted its creation. Since the enactment of PDUFA, FDA has steadily 
increased the speed of Americans' access to important new drugs 
compared to the European Union (EU) and the world as a whole. Of the 35 
innovative drugs approved in fiscal year 2011, 24 (almost 70 percent) 
were approved by FDA before any other regulatory agency in the world, 
including the European Medicines Agency. Of 57 novel drugs approved by 
both FDA and the EU between 2006 and 2010, 43 (75 percent) were 
approved first in the United States.
    Figure 1 below shows that since the late 1990's, the United States 
has regularly led the world in the first introduction of new active 
drug substances.\3\ Preliminary data show that in 2011, over half of 
all new active drug substances were first launched in the United 
States.
---------------------------------------------------------------------------
    \3\ Scrip NCE Review/Scrip Yearbook/Scrip Magazine (1982-2005), 
PharmaProjects R&D Annual Review (2006-2010). New active substances 
include novel chemical or biological substances not previously approved 
to treat any disease. There is a close, but not complete overlap, 
between new active substances and new molecular entities: new active 
substances exclude radiopharmaceuticals.


    In recent years, FDA's drug review times also have been, on 
average, significantly faster than those in the EU. It is difficult to 
compare length of approvals for fiscal year 2011, because many of the 
drugs approved in the United States have not yet been approved in the 
EU. A comparison of drugs approved in the United States and the EU 
between 2006 and 2010 is illustrative, however. For priority drugs 
approved between 2006 and 2010, FDA's median time to approval was 6 
months (183 days), more than twice as fast as the EU, which took a 
median time of 13.2 months (403 days). For standard drug reviews, FDA's 
median time to approval was 13 months (396 days), 53 days faster than 
the EU time of 14.7 months (449 days).
    A recent article in the journal Health Affairs also compared cancer 
drugs approved in the United States and EU from 2003 through 2010. 
Thirty-five cancer drugs were approved by the United States or the EU 
from October 2003 through December 2010. Of those, FDA approved 32--in 
an average time of 8.6 months (261 days). The EU approved only 26 of 
these products, and its average time was 12.2 months (373 days). This 
difference in approval times is not due to safety issues with these 
products. All 23 cancer drugs approved by both agencies during this 
period were approved first in the United States.\4\
---------------------------------------------------------------------------
    \4\ ``Despite Criticism of the FDA Review Process, New Cancer Drugs 
Reach Patients Sooner in the United States Than in Europe,'' Samantha 
A. Roberts, Jeff D. Allen, and Ellen V. Sigal, Health Affairs, June 
2011.
---------------------------------------------------------------------------
            Speeding Access to New Therapies
    PDUFA funds help support a number of existing FDA programs to 
expedite the approval of certain promising investigational drugs, and 
also to make them available to the very ill before they have been 
approved for marketing, without unduly jeopardizing patient safety.
    The most important of these programs are Accelerated Approval, Fast 
Track, and Priority Review. In 1992, FDA instituted the Accelerated 
Approval process, which allows earlier approval of drugs that treat 
serious or life-threatening diseases and that fill an unmet medical 
need based on a surrogate endpoint that is reasonably likely to predict 
clinical benefit but is not fully validated to do so, or, in some 
cases, an effect on a clinical endpoint other than survival or 
irreversible morbidity. A surrogate endpoint is a marker--a laboratory 
measurement, or physical sign--that is used in clinical trials as an 
indirect or substitute measurement for a clinically meaningful outcome, 
such as survival or symptom improvement. For example, viral load is a 
surrogate endpoint for approval of drugs for the treatment of HIV/AIDS. 
The use of a surrogate endpoint can considerably shorten the time to 
approval, allowing more rapid patient access to promising new 
treatments for serious or life-threatening diseases. Accelerated 
Approval is given on the condition that sponsors conduct post-marketing 
clinical trials to verify the anticipated clinical benefit.
    Over 80 new products have been approved under Accelerated Approval 
since the program was established, including 29 drugs to treat cancer, 
32 to treat HIV, and 20 to treat other conditions such as pulmonary 
arterial hypertension, Fabry disease, and transfusion-dependent anemia. 
Three of the thirty new molecular entities (NMEs) and new BLAs approved 
in 2011 in CDER were approved under Accelerated Approval. Corifact, the 
first treatment approved for a rare blood-clotting disorder, also was 
approved under Accelerated Approval in FDA's Center for Biologics 
Evaluation and Research (CBER) on February 17, 2011.
    Fast Track is a process designed to facilitate the development, and 
expedite the review, of drugs to treat serious or life-threatening 
diseases that will fill an unmet medical need. Once a drug receives 
Fast-Track designation, early and frequent communications between FDA 
and a drug company are encouraged throughout the entire drug 
development and review process. The frequency of communications ensures 
that questions and issues are resolved quickly, often leading to 
earlier drug approval and access by patients. For example, Zelboraf 
(vemurafenib) was given a Fast-Track designation because it had the 
potential to improve overall survival in patients with melanoma, the 
most dangerous type of skin cancer. Because of convincing early 
findings with this drug, FDA scientists worked proactively with the 
sponsor during drug testing to encourage early submission of the 
application. FDA approved Zelboraf in 2011 to treat patients with late-
stage (metastatic) or unresectable (cannot be removed by surgery) 
melanoma.
    In 1992, under PDUFA, FDA agreed to specific goals for improving 
drug review times and created a two-tiered system of review times--
Priority Review and Standard Review. FDA aims to review priority drugs 
more quickly, in 6 months versus 10 months for standard drugs. Priority 
review designation is given to drugs that offer major advances in 
treatment, or provide a treatment where no adequate therapy exists, 
while Standard Review is applied to drugs that offer at most only minor 
improvement over existing marketed therapies. FDA reviewers give 
Priority Review drugs priority attention throughout development, 
working with sponsors to determine the most efficient way to collect 
the data needed to provide evidence of safety and effectiveness. For 
example, on January 31, 2012, FDA approved Kalydeco (ivacaftor) to 
treat patients age 6 or older with Cystic Fibrosis (CF) and who have a 
specific genetic defect (G551D mutation), after a Priority Review. CF 
occurs in approximately 30,000 children and adults in the United 
States. The G551D mutation occurs in approximately 4 percent of 
patients with CF, totaling approximately 1,200 patients in the United 
States. CF is a serious inherited disease that affects the lungs and 
other organs in the body, leading to breathing and digestive problems, 
trouble gaining weight, and other problems. There is no cure for CF, 
and despite progress in the treatment of the disease, most patients 
with CF have shortened life spans and do not live beyond their mid-30s. 
After the results of studies of ivacaftor showed a significant benefit 
to patients with CF with the G551D mutation, ivacaftor was reviewed and 
approved by FDA in approximately 3 months--half of the Priority Review 
period. Ivacaftor is the first medicine that targets the underlying 
cause of CF; to date, therapy has aimed at treating symptoms or 
complications of the disease.
    FDA also recognizes circumstances in which there is public health 
value in making products available prior to marketing approval. A 
promising but not yet fully evaluated treatment may sometimes represent 
the best choice for individuals with serious or life-threatening 
diseases who lack a satisfactory therapy.
    FDA allows for access to investigational products through multiple 
mechanisms. Clinical trials are the best mechanism for a patient to 
receive an investigational drug, because they provide a range of 
patient protections and benefits and they maximize the gathering of 
useful information about the product, which benefits the entire patient 
population. However, there are times when an individual cannot enroll 
in a clinical trial. In some cases, the patient may gain access to an 
investigational therapy through one of the alternative mechanisms, and 
FDA's Office of Special Health Issues assists patients and their 
doctors in this endeavor.
    We are committed to using these programs to speed therapies to 
patients while upholding our high standards of safety and efficacy. 
Balancing these two objectives requires that we continue to evaluate 
our use of the tools available to us and consider whether additional 
tools would be helpful. We are eager to work with Congress in this 
area, and we note that several of the enhancements proposed for PDUFA-V 
are aimed at expediting the availability of new therapies and providing 
FDA the scientific understanding necessary to modernize and streamline 
our regulatory process.
            Providing Guidance to Industry
    Increased resources provided by user fees have enabled FDA to 
provide a large body of technical guidance to industry that clarified 
the drug development pathway for many diseases, and to meet with 
companies during drug development to provide critical advice on 
specific development programs. In the past 5 years alone, FDA has held 
over 7,000 formal meetings with drug sponsors within a short time after 
a sponsor's request. Innovations in drug development are being advanced 
by many new emerging companies as well as more established ones, and 
new sponsors may need, and often seek, more regulatory guidance during 
development. In fiscal year 2009 through fiscal year 2011, more than 
half of the meetings FDA held during drug development were with 
companies that had no approved product on the U.S. market.
            Weighing Benefit and Risk
    It should be noted that FDA assesses the benefit-risk of new drugs 
on a case-by-case basis, considering the degree of unmet medical need 
and the severity and morbidity of the condition the drug is intended to 
treat. This approach has been critical to increasing patient access to 
new drugs for cancer and rare and other serious diseases, where 
existing therapies have been few and limited in their effectiveness. 
Some of these products have serious side effects but they were approved 
because the benefit outweighed the risk. For example, in March of last 
year, FDA approved Yervoy (ipilimumab) for the treatment of 
unresectable or metastatic melanoma. Yervoy also poses a risk of 
serious side effects in 12.9 percent of patients treated, including 
severe to fatal autoimmune reactions. However, FDA decided that the 
benefits of Yervoy outweighed its risks, especially considering that no 
other melanoma treatment has been shown to prolong a patient's life.
    As discussed in more detail below, PDUFA-V will enable FDA to 
develop an enhanced, structured approach to benefit-risk assessments 
that accurately and concisely describes the benefit and risk 
considerations in the Agency's drug regulatory decisionmaking.
Challenges for the Current Drug Program
    Although we can report many important successes with the current 
program, new challenges have also emerged that offer an opportunity for 
further enhancement. While new authorities from the Food and Drug 
Administration Amendments Act of 2007 (FDAAA) have strengthened drug 
safety, they have put strains on FDA's ability to meet premarket review 
performance goals and address post-market review activities. In 
addition, there has been a significant increase in the number of 
foreign sites included in clinical trials to test drug safety and 
effectiveness, and an increase in the number of foreign facilities used 
in manufacturing new drugs for the U.S. market. While foreign sites can 
play an important role in enabling access to new drugs, the need to 
travel much farther to conduct pre-approval inspections for clinical 
trials and manufacturing sites overseas has created additional 
challenges for completion of FDA's review within the existing PDUFA 
review performance goals, while at the same time trying to communicate 
with sponsors to see if identified issues can be resolved before the 
review performance goal date.
    Despite these challenges, FDA has maintained strong performance in 
meeting the PDUFA application review goals, with the exception of a dip 
in fiscal year 
2008-9, when staff resources were shifted within the discretion 
afforded FDA to ensure timely implementation of all the new FDAAA 
provisions that affected activities in the new drug review process. 
Recent performance data show that FDA has returned to meeting or 
exceeding goals for review of marketing applications under PDUFA. This 
is shown in Figure 2.


    However, FDA wants to meet not only the letter, but also the spirit 
of the PDUFA program. That is, we want to speed patient access to drugs 
shown to be safe and effective for the indicated uses while also 
meeting our PDUFA goals.
    The NDA/BLA approval phase of drug development is reported to have 
the highest success rate of any phase of drug development. That is, the 
percentage of drugs that fail after the sponsor submits an NDA/BLA to 
FDA is less than the percentages that fail in preclinical development 
and in each phase of clinical development. At the same time, it is 
critical to our public health mission that we work with industry and 
other stakeholders to take steps to reduce uncertainty and increase the 
success of all phases of drug development. We must leverage advances in 
science and technology to make sure that we have the knowledge and 
tools we need to rapidly and meaningfully evaluate medical products. 
The science of developing new tools, standards, and approaches to 
assess the safety, efficacy, quality, and performance of FDA-regulated 
products--known as regulatory science--is about more than just speeding 
drug development prior to the point at which FDA receives an 
application for review and approval. It also gives us the scientific 
tools to modernize and streamline our regulatory process. With so much 
at stake for public health, FDA has made advances in regulatory science 
a top priority. The Agency is both supporting mission-critical science 
at FDA and exploring a range of new partnerships with the National 
Institutes of Health (NIH) and academic institutions to develop the 
science needed to maximize advances in biomedical research and bring 
the development and assessment of promising new therapies and devices 
into the 21st century. With this effort, FDA is poised to support a 
wave of innovation to transform medicine and save lives.
    For example, FDA is working to improve the science behind certain 
clinical trial designs. Recent advances in two clinical trial designs--
called non-inferiority and adaptive designs--have required FDA to 
conduct more complex reviews of clinical trial protocols and new 
marketing applications. Improving the scientific bases of these trial 
designs should add efficiency to the drug review process, encourage the 
development of novel products, and speed new therapies to patients.
    FDA also has taken steps to help facilitate the development and 
approval of safe and effective drugs for Americans with rare diseases. 
Therapies for rare diseases--those affecting fewer than 200,000 people 
in the United States--represent the most rapidly expanding area of drug 
development. Although each disease affects a relatively small 
population, collectively, rare diseases affect about 25 million 
Americans. Approximately one-third of the NMEs and new biological 
products approved in the last 5 years have been drugs for rare 
diseases. Because of the small numbers of patients who suffer from each 
disease, FDA often allows non-traditional approaches to establishing 
safety and effectiveness. For example, FDA approved Voraxaze 
(glucarpidase) in January 2012 to treat patients with toxic 
methotrexate levels in their blood due to kidney failure, which affects 
a small population of patients each year. Methotrexate is a commonly 
used cancer chemotherapy drug normally eliminated from the body by the 
kidneys. Patients receiving high doses of methotrexate may develop 
kidney failure. Voraxaze was approved based on data in 22 patients from 
a single clinical trial, which showed decreased levels of methotrexate 
in the blood. Prior to the approval of Voraxaze, there were no 
effective therapies for the treatment of toxic methotrexate levels in 
patients with renal failure.
PDUFA Reauthorization
    In PDUFA-IV, Congress directed FDA to take additional steps to 
ensure that public stakeholders, including consumer, patient, and 
health care professional organizations, would have adequate opportunity 
to provide input to the reauthorization and any program enhancements 
for PDUFA-V. Congress directed the Agency to hold an initial public 
meeting and then to meet with public stakeholders periodically, while 
conducting negotiations with industry to hear their views on the 
reauthorization and their suggestions for changes to the PDUFA 
performance goals. PDUFA-IV also required that minutes from negotiation 
sessions held with industry be made public.
    Based on a public meeting held in April 2010, input from a public 
docket, and the Agency's own internal analyses of program challenge 
areas, FDA developed a set of potential proposed enhancements for 
PDUFA-V and in July 2010, began negotiations with industry and parallel 
discussions with public stakeholders. These discussions concluded in 
May 2011 and we held a public meeting on October 24, 2011, where we 
solicited comments on the proposed recommendations. We also opened a 
public docket for comments. We considered these comments, and on 
January 13, 2012, we transmitted the final recommendations to Congress.
    We are very pleased to report that the enhancements for PDUFA-V 
address many of the top priorities identified by public stakeholders, 
the top concerns identified by industry, and the most important 
challenges identified within FDA. I will briefly summarize these 
enhancements.
            A. Review Program for New Drug Applications, New Molecular 
                    Entities, 
                    and Original Biologics License Applications
    FDA's existing review performance goals for priority and standard 
applications--6 and 10 months respectively--were established in 1997. 
Since that time, additional requirements in the drug review process 
have made those goals increasingly challenging to meet, particularly 
for more complex applications like new molecular entity (NME) NDAs and 
original BLAs. FDA also recognizes that increasing communication 
between the Agency and sponsors during the application review has the 
potential to increase efficiency in the review process.
    To address the desire for increased communication and greater 
efficiency in the review process, we agreed to an enhancement to FDA's 
review program for NME NDAs and original BLAs in PDUFA-V. This program 
includes pre-submission meetings, mid-cycle communications, and late-
cycle meetings between FDA and sponsors for these applications. To 
accommodate this increased interaction during regulatory review, as 
agreed to with industry, FDA's review clock would begin after the 60-
day administrative filing review period for this subset of 
applications. The impact of these modifications on the efficiency of 
drug review for this subset of applications will be assessed during 
PDUFA-V.
            B. Enhancing Regulatory Science and Expediting Drug 
                    Development
    The following five enhancements focus on regulatory science and 
expediting drug development.
  1. Promoting Innovation Through Enhanced Communication Between FDA 
                  and Sponsors During Drug Development
    FDA recognizes that timely interactive communications with sponsors 
can help foster efficient and effective drug development. In some 
cases, a sponsor's questions may be complex enough to require a formal 
meeting with FDA, but in other instances, a question may be relatively 
straightforward such that a response can be provided more quickly. 
However, our review staff 's workload and other competing public health 
priorities can make it challenging to develop an Agency response to 
matters outside of the formal meeting process.
    This enhancement involves a dedicated drug development 
communication and training staff, focused on improving communications 
between FDA and sponsors during development. This staff will be 
responsible for identifying best practices for communications between 
the Agency and sponsors, training review staff, and disseminating best 
practices through published guidance.
                      2. Methods for Meta-analysis
    A meta-analysis typically attempts to combine the data or findings 
from multiple completed studies to explore drug benefits and risks and, 
in some cases, uncover what might be a potential safety signal in a 
pre-market or post-market context. However, there is no consensus on 
best practices in conducting a meta-analysis. With the growing 
availability of clinical trial data, an increasing number of meta-
analyses are being conducted based on varying sets of data and 
assumptions. If such studies conducted outside FDA find a potential 
safety signal, FDA will work to try to confirm--or correct--the 
information about a potential harm. To do this, FDA must work quickly 
to conduct its own meta-analyses to include publicly available data and 
the raw clinical trial data submitted by drug sponsors that would 
typically not be available to outside researchers. This is resource-
intensive work and often exceeds the Agency's on-board scientific and 
computational capacity, causing delays in FDA findings that prolong 
public uncertainty.
    PDUFA-V enhancements include the development of a dedicated staff 
to evaluate best practices and limitations in meta-analysis methods. 
Through a rigorous public comment process, FDA would develop guidance 
on best practices and the Agency's approach to meta-analysis in 
regulatory review and decisionmaking.
                   3. Biomarkers and Pharmacogenomics
    Pharmacogenomics and the application of qualified biomarkers have 
the potential to decrease drug development time by helping to 
demonstrate benefits, establish unmet medical needs, and identify 
patients who are predisposed to adverse events. FDA provides regulatory 
advice on the use of biomarkers to facilitate the assessment of human 
safety in early phase clinical studies, to support claims of efficacy, 
and to establish the optimal dose selection for pivotal efficacy 
studies. This is an area of new science where the Agency has seen a 
marked increase in sponsor submissions to FDA. In the 2008-10 period, 
the Agency experienced a nearly fourfold increase in this type of 
review work.
    PDUFA-V enhancements include augmenting the Agency's clinical, 
clinical pharmacology, and statistical capacity to adequately address 
submissions that propose to utilize biomarkers or pharmacogenomic 
markers. The Agency would also hold a public meeting to discuss 
potential strategies to facilitate scientific exchanges on biomarker 
issues between FDA and drug manufacturers.
                  4. Use of Patient-reported Outcomes
    Assessments of study endpoints known as patient-reported outcomes 
(PROs) are increasingly an important part of successful drug 
development. PROs measure treatment benefit or risk in medical product 
clinical trials from the patients' point of view. They are critical in 
understanding drug benefits and harm from the patients' perspective. 
However, PROs require rigorous evaluation and statistical design and 
analysis to ensure reliability to support claims of clinical benefit. 
Early consultation between FDA and drug sponsors can ensure that 
endpoints are well-defined and reliable. However, the Agency does not 
have the capacity to meet the current demand from industry.
    PDUFA-V enhancements include an initiative to improve FDA's 
clinical and statistical capacity to address submissions involving PROs 
and other endpoint assessment tools, including providing consultation 
during the early stages of drug development. In addition, FDA will 
convene a public meeting to discuss standards for PRO qualification, 
new theories in endpoint measurement, and the implications for multi-
national trials.
               5. Development of Drugs for Rare Diseases
    FDA's oversight of rare disease drug development is complex and 
resource intensive. Rare diseases are a highly diverse collection of 
disorders, their natural histories are often not well-described, only 
small population sizes are often available for study, and they do not 
usually have well-defined outcome measures. This makes the design, 
execution, and interpretation of clinical trials for rare diseases 
difficult and time consuming, requiring frequent interaction between 
FDA and drug sponsors. If recent trends in orphan designations are any 
indication, FDA can expect an increase in investigational activity and 
marketing applications for orphan products in the future.
    Another PDUFA-V enhancement includes FDA facilitation of rare 
disease drug development by issuing relevant guidance, increasing the 
Agency's outreach efforts to the rare disease patient community, and 
providing specialized training in rare disease drug development for 
sponsors and FDA staff.
            C. Enhancing Benefit-Risk Assessment
    FDA has been developing an enhanced, structured approach to 
benefit-risk assessments that accurately and concisely describes the 
benefit and risk considerations in the Agency's drug regulatory 
decisionmaking. Part of FDA's decisionmaking lies in thinking about the 
context of the decision--an understanding of the condition treated and 
the unmet medical need. Patients who live with a disease have a direct 
stake in the outcome of drug review. The FDA drug review process could 
benefit from a more systematic and expansive approach to obtaining the 
patient perspective on disease severity and the potential gaps or 
limitations in available treatments in a therapeutic area.
    PDUFA-V enhancements include expanded implementation of FDA's 
benefit-risk framework in the drug review process, including holding 
public workshops to discuss the application of frameworks for 
considering benefits and risks that are most appropriate for the 
regulatory setting. FDA would also conduct a series of public meetings 
between its review divisions and the relevant patient advocacy 
communities to review the medical products available for specific 
indications or disease states that will be chosen through a public 
process.
            D. Enhancement and Modernization of the FDA Drug Safety 
                    System
    The enhancements for PDUFA-V include two post-market, safety-
focused initiatives.
       1. Standardizing Risk Evaluation and Mitigation Strategies
    FDAAA gave FDA authority to require a Risk Evaluation and 
Mitigation Strategy (REMS) when FDA finds that a REMS is necessary to 
ensure that the benefits of a drug outweigh its risks. Some REMS are 
more restrictive types of risk management programs that include 
elements to ensure safe use (ETASU). These programs can require such 
tools as prescriber training or certification, pharmacy training or 
certification, dispensing in certain health care settings, 
documentation of safe use conditions, required patient monitoring, or 
patient registries. ETASU REMS can be challenging to implement and 
evaluate, involving cooperation of all segments of the health care 
system. Our experience with REMS to date suggests that the development 
of multiple individual programs has the potential to create burdens on 
the health care system and, in some cases, could limit appropriate 
patient access to important therapies.
    PDUFA-V enhancements initiate a public process to explore 
strategies and initiate projects to standardize REMS with the goal of 
reducing burden on practitioners, patients, and others in the health 
care setting. Additionally, FDA will conduct public workshops and 
develop guidance on methods for assessing the effectiveness of REMS and 
the impact on patient access and burden on the health care system.
    2. Using the Sentinel Initiative to Evaluate Drug Safety Issues
    FDA's Sentinel Initiative is a long-term program designed to build 
and implement a national electronic system for monitoring the safety of 
FDA-approved medical products. FDAAA required FDA to collaborate with 
Federal, academic, and private entities to develop methods to obtain 
access to disparate data sources and validated means to link and 
analyze safety data to monitor the safety of drugs after they reach the 
market, an activity also known as ``active post-market drug safety 
surveillance.'' FDA will use user fee funds to conduct a series of 
activities to determine the feasibility of using Sentinel to evaluate 
drug safety issues that may require regulatory action, e.g., labeling 
changes, post-marketing requirements, or post-marketing commitments. 
This may shorten the time it takes to better understand new or emerging 
drug safety issues. PDUFA-V enhancements will enable FDA to initiate a 
series of projects to establish the use of active post-market drug 
safety surveillance in evaluating post-market safety signals in 
population-based databases. By leveraging public and private health 
care data sources to quickly evaluate drug safety issues, this work may 
reduce the Agency's reliance on required post-marketing studies and 
clinical trials.
            E. Required Electronic Submissions and Standardization of 
                    Electronic Application Data
    The predictability of the FDA review process relies heavily on the 
quality of sponsor submissions. The Agency currently receives 
submissions of original applications and supplements in formats ranging 
from paper-only to electronic-only, as well as hybrids of the two 
media. The variability and unpredictability of submitted formats and 
clinical data layout present major obstacles to conducting a timely, 
efficient, and rigorous review within current PDUFA-goal timeframes. A 
lack of standardized data also limits FDA's ability to transition to 
more standardized approaches to benefit-risk assessment and impedes 
conduct of safety analyses that inform FDA decisions related to REMS 
and other post-marketing requirements. PDUFA-V enhancements include a 
phased-in requirement for standardized, fully electronic submissions 
during PDUFA-V for all marketing and investigational applications. 
Through partnership with open standards-development organizations, the 
Agency would also conduct a public process to develop standardized 
terminology for clinical and non-clinical data submitted in marketing 
and investigational applications.
            F. User Fee Increase for PDUFA-V
    The cost of the agreed upon PDUFA-V enhancements translates to an 
overall increase in fees of approximately 6 percent.
            G. PDUFA-V Enhancements for a Modified Inflation Adjuster 
                    and Additional Evaluations of the Workload Adjuster
    In calculating user fees for each new fiscal year, FDA adjusts the 
base revenue amount by inflation and workload as specified in the 
statute. PDUFA-V enhancements include a modification to the inflation 
adjuster to accurately account for changes in its costs related to 
payroll compensation and benefits as well as changes in non-payroll 
costs. In addition, FDA will continue evaluating the workload adjuster 
that was developed during the PDUFA-IV negotiations to ensure that it 
continues to adequately capture changes in FDA's workload.
Generic Drug User Fees
    As a result of the Drug Price Competition and Patent Term 
Restoration Act of 1984, commonly known as Hatch-Waxman Amendments 
passed by Congress more than a quarter of a century ago, America's 
generic drug industry has been developing, manufacturing, and 
marketing--and FDA has been reviewing and approving--lower-cost 
versions of brand-name drugs. This legislation and the industry it 
fostered has been a true public health success. Last year, 
approximately 78 percent of the more than 3 billion new and refilled 
prescriptions dispensed in the United States were filled with generics. 
In the last decade alone, generic drugs have provided more than $931 
billion in savings to the Nation's health care system.\5\
---------------------------------------------------------------------------
    \5\ ``An Economic Analysis of Generic Drug Usage in the U.S.'' 
Independent Analysis by IMS Health, Sept. 2011, http://gphaonline.org/
sites/default/files/GPhA%20IMS%20Study%20WEB
%20Sep20%2011.pdf.
---------------------------------------------------------------------------
    This success, however, also has come to represent a significant 
regulatory challenge, and delays in approvals of generic drugs have 
emerged as a major concern for the generics industry, FDA, consumers, 
and payers alike. Unlike the brand manufacturers who pay fees under 
PDUFA, the generic industry does not pay a user fee to support FDA 
activities related to its applications. Over the last several years, 
the time it takes for FDA to approve a generic drug has nearly doubled 
as FDA's resources have not kept pace with an increasing number of 
Abbreviated New Drug Applications (ANDA) and other submissions related 
to generic drugs. The number of generic drug submissions sent annually 
to FDA has grown rapidly, reaching another record high this year, 
including nearly 1,000 ANDAs. Drug Master Files \6\ have grown at a 
comparable pace and have reached similar heights. The current backlog 
of applications pending review is estimated to be over 2,500. The 
current median time to approval is approximately 31 months, though it 
should be noted that this includes time the application is back with 
the sponsor to answer any questions FDA may have about the application.
---------------------------------------------------------------------------
    \6\ Drug Master Files are widely used to provide FDA with 
information about the drug substance, also known as the active 
pharmaceutical ingredient (API).
---------------------------------------------------------------------------
    The regulatory challenge of ensuring safe, high-quality generic 
drugs includes inspecting manufacturing facilities, where the challenge 
is not just one of numbers but also of geography. To keep pace with the 
growth of the generic drug industry, FDA has had to conduct more 
inspections as the number of facilities supporting those applications 
has also increased, with the greatest increase coming from foreign 
facilities. Currently, the number of foreign Finished Dosage Form (FDF) 
\7\ manufacturers exceeds the number found in the United States. The 
generic industry is also experiencing significant growth in India and 
China, a trend expected to continue. Foreign inspections represent a 
significant challenge and require significant resources.
---------------------------------------------------------------------------
    \7\ An FDF is the final drug product (e.g., tablet, capsule). An 
FDF is made up of both API(s) and any inactive excipients.
---------------------------------------------------------------------------
    The generic drug user fee agreement is designed to address the 
regulatory challenges mentioned above in an affordable manner. The 
annual fee total proposed represents approximately one-half of 1 
percent of generic drug sales. This modest cost should be offset by 
benefits received by the industry, as faster review times will bring 
products to market sooner.
            Overview of the Proposed Generic Drug User Fee Program
    To develop recommendations for a generic drug user fee effective 
beginning fiscal year 2013, FDA conducted a process that involved the 
generic drug industry and public stakeholders. In addition to the 
negotiation sessions with industry trade associations, there were 
numerous public stakeholder meetings open to all, including industry, 
patient advocates, consumer advocates, health care professionals, and 
scientific and academic experts. The final agreement and the goals FDA 
and industry have agreed to were transmitted to Congress on January 13, 
2012.
    The Generic Drug User Fee Act (GDUFA) proposal, as negotiated, is 
aimed at putting FDA's generic drugs program on a firm financial 
footing and providing the additional resources necessary to ensure 
timely access to safe, high-quality, affordable generic drugs. The 
proposal focuses on quality, access, and transparency. Quality means 
ensuring that companies, foreign or domestic, that participate in the 
U.S. generic drug system are held to the same consistent high-quality 
standards and that their facilities are inspected biennially, using a 
risk-based approach, with foreign and domestic inspection frequency 
parity. Access means expediting the availability of low-cost, high-
quality generic drugs by bringing greater predictability and timeliness 
to the review of ANDAs, amendments, and supplements. Transparency means 
requiring the identification of facilities involved in the manufacture 
of generic drugs and associated APIs, and improving FDA's 
communications and feedback with industry to expedite product access 
and enhance FDA's ability to protect Americans in our complex global 
supply environment.
    The additional resources called for under the agreement will 
provide FDA with the ability to perform critical program functions that 
could not otherwise occur. With the adoption of user fees and the 
associated savings in development time, the overall expense of bringing 
a product to market is expected to decline. The program is expected to 
provide significant value to small companies and first-time entrants to 
the generic market. In particular, these companies will benefit 
significantly from the certainty associated with performance review 
metrics that offer the potential to dramatically reduce the time needed 
to commercialize a generic drug, when compared to pre-GDUFA review 
times.
    In addition, the variety of funding sources for the program will 
ensure that participants in the generic drug industry, whether FDF 
manufacturers or API \8\ manufacturers, whether foreign or domestic, 
appropriately share the financial expense and benefits of the program. 
The broad range of funding sources, including and across facility and 
application types, as well as the large number of each, ensures that 
individual fees remain reasonable and significantly lower than 
associated branded drug fees.
---------------------------------------------------------------------------
    \8\ An API is the drug substance responsible for the therapeutic 
effect (e.g., the chemical aspirin that is combined with excipients to 
produce the FDF aspirin tablet).
---------------------------------------------------------------------------
    As in all of FDA's other medical product user fee programs, under 
the proposed generic drug user fee program, user fee funding would 
supplement appropriated funding to ensure sufficient resources for the 
Agency's generic drug review program, and guarantees are in place to 
ensure that the user fees are supplemental to annual appropriations in 
the budget.
Biosimilars User Fees
    A successful biosimilars review program within FDA will spark the 
development of a new segment of the biotechnology industry in the 
United States. The Biologics Price Competition and Innovation Act (BPCI 
Act) of 2009, which was enacted as part of the Affordable Care Act of 
2010, established a new abbreviated approval pathway for biological 
products shown to be ``biosimilar to'' or ``interchangeable with'' an 
FDA-licensed biological product. With this new abbreviated approval 
pathway, a biosimilar biologic can be approved by demonstrating, among 
other things, that it is highly similar to a reference biological 
product already licensed by FDA. Development of biosimilars is expected 
to be less risky, less costly, and take less time; therefore, approved 
biosimilars are expected to be less expensive than the reference 
product. This program will provide significant benefits for patients, 
making available more affordable treatments that clinicians will know 
are biosimilar or interchangeable. The development of this new market 
segment will expand the opportunities for technical innovation and job 
growth.
            Background
    A biosimilar is a biological product that is highly similar to a 
U.S.-licensed reference product, notwithstanding minor differences in 
clinically inactive components, and for which there are no clinically 
meaningful differences between the biosimilar product and the reference 
product in terms of the safety, purity, and potency of the product.
    Under the transition provisions in the BPCI Act, user fees for a 
biosimilar biological product are assessed under PDUFA. Accordingly, 
currently, user fees for biological products are the same, regardless 
of whether the BLA is submitted under the new, abbreviated biosimilar 
pathway or under the previously existing approval pathway for 
biological products. However, PDUFA-IV expires on September 30, 2012, 
and the BPCI Act directs FDA to develop recommendations for a 
biosimilars user fee program for fiscal years 2013 through 2017. To 
develop these recommendations, FDA consulted with industry and public 
stakeholders, including patient advocates, consumer advocates, health 
care professionals, and scientific and academic experts, as directed by 
Congress. The final recommendations were transmitted to Congress on 
January 13, 2012.
            Program Funding and Metrics
    The proposed biosimilars user fee program for fiscal year 2013 to 
2017 addresses many of the top priorities identified by public and 
industry stakeholders and the most important challenges identified by 
FDA. The proposed biosimilars user fee program is similar to the PDUFA 
program in that it includes fees for marketing applications, 
manufacturing establishments, and products. However, there are some 
differences because of the nascent State of the biosimilars industry in 
the United States. For example, there are no currently marketed 
biosimilar biological products; accordingly, the recommended 
biosimilars user fee program includes fees for products in the 
development phase to generate fee revenue in the near-term and to 
enable sponsors to have meetings with FDA early in the development of 
biosimilar biological product candidates.
    As in all of FDA's medical product user fee programs, the proposed 
biosimilars user fee program supplements appropriated funding to ensure 
sufficient resources for the Agency's review programs. Under the 
proposed biosimilars user fee program, FDA would be authorized to spend 
biosimilars user fees on Agency activities related to the review of 
submissions in connection with biosimilar biological product 
development, biosimilar biological product applications, and 
supplements. This would include activities related to biosimilar 
biological product development meetings and investigational new drug 
applications (INDs). It would also include development of the 
scientific, regulatory, and policy infrastructure necessary for review 
of biosimilar biological product applications, such as regulation and 
policy development, related to the review of biosimilar biological 
product applications, and development of standards for biological 
products subject to review and evaluation.
    The biosimilars user fee program would support FDA activities at 
the application stage, such as review of advertising and labeling prior 
to approval of a biosimilar biological product application or 
supplement; review of required post-marketing studies and post-
marketing studies that have been agreed to by sponsors as a condition 
of approval; the issuance of action letters that communicate decisions 
on biosimilar biological product applications; and inspection of 
biosimilar biological product establishments and other facilities 
undertaken as part of FDA's review of pending biosimilar biological 
product applications and supplements (but not inspections unrelated to 
the review of biosimilar biological product applications and 
supplements). Finally, it would support some activities at the post-
approval stage, such as post-marketing safety activities, with respect 
to biologics approved under biosimilar biological product applications 
or supplements.
                               conclusion
    PDUFA-IV expires on September 30, 2012, and FDA is ready to work 
with you to ensure timely reauthorization of this critical program. If 
we are to sustain and build on our record of accomplishments, it is 
critical that the reauthorization occur seamlessly without any gap 
between the expiration of the old law and the enactment of PDUFA-V. The 
passage of both a new generic drug user fee and a new biosimilars user 
fee would allow FDA to build upon the success of PDUFA.
    Thank you for your contributions to the continued success of PDUFA 
and to the mission of FDA. I am happy to answer questions you may have.

    The Chairman. Thank you very much, Dr. Woodcock.
    Dr. Shuren.

 STATEMENT OF JEFFREY SHUREN, M.D., J.D., DIRECTOR, CENTER FOR 
DEVICES AND RADIOLOGICAL HEALTH, FOOD AND DRUG ADMINISTRATION, 
                       SILVER SPRING, MD

    Dr. Shuren. Mr. Chairman and members of the committee, I am 
Dr. Jeff Shuren, Director of Center for Devices and 
Radiological Health, or CDRH, at the FDA. Thank you for the 
opportunity to testify today.
    I am pleased to tell you that FDA and representatives from 
the medical device industry reached an agreement on proposed 
recommendations for the reauthorization of the Medical Device 
User Fee Act, or MDUFA, the details of which we provided to you 
on March 16.
    These recommendations would authorize FDA to collect $595 
million in user fees over 5 years to help fund a portion of the 
agency's medical device review program with FDA agreeing to 
certain overall performance goals. As required by law, we held 
a public meeting yesterday and will receive public comments on 
the proposal package until April 16 before sending a final 
package to Congress in late April.
    When I came to CDRH in 2009 in response to concerns 
expressed by industry and others, we initiated a review of our 
device premarket review programs. The following year, we 
released two reports that concluded, as I have testified 
before, that we have not done as good a job managing the review 
programs as we should have.
    The No. 1 problem we found was insufficient predictability, 
which was leading to inefficiencies, higher costs for industry 
and FDA, and sometimes delays in bringing safe and effective 
products to market.
    In January 2011, we announced a plan with 25 specific 
actions that we would take that year to improve the 
predictability, consistency, and transparency of our premarket 
programs. We announced additional steps since then.
    As of today, 27 actions have been completed or are well 
underway. They are intended to create a culture change toward 
greater transparency, interaction and appropriate balancing of 
benefit and risk. They focus on assuring predictable and 
consistent decisionmaking, and application of the least 
burdensome principle, and implementing more efficient 
regulatory processes.
    We believe that these actions have had, and will have, a 
visible, positive impact by providing greater predictability 
about data requirements through guidance, reducing unnecessary 
or inconsistent data requests through training, and policy and 
process changes, implementing policies that lead to 
appropriately balanced benefit-risk determinations, using 
external experts more extensively and effectively, creating 
incentives to conduct clinical studies first in the United 
States, speeding up clinical trial approval decisions, and 
implementing the innovation pathway.
    Preliminary data indicates that the actions we have taken 
have started to bear fruit. For example, the backlog of 510(k) 
submissions that had been steadily increasing from 2005 to 
2010, decreased for the first time last year and is continuing 
to decline in 2012. However, we still have much work to do.
    Reauthorization of MDUFA will provide the resources that 
CDRH needs to continue improving the device review programs and 
help reduce the high staff turnover that has adversely affected 
review predictability and consistency.
    The proposed MDUFA recommendations we have agreed upon with 
industry will also include several important process 
improvements.
    For example, if a performance goal on a device application 
is missed the MDUFA proposal would require FDA and applicants 
to work out a plan to complete work on the submission, ensuring 
that no submission is left behind. Requiring a new, substantive 
interaction between FDA and an applicant halfway through the 
targeted time for reviewing the application, would help assure 
sufficient time for the applicant to properly respond to 
appropriate questions. Clear criteria for when FDA will refuse 
to accept an incomplete application means more efficient use of 
resources to the benefit of both FDA and industry.
    These and other proposed enhancements are intended to 
achieve a shared outcome goal of reduced average total time to 
the decision, which both we, and industry, believe is an 
important indicator of a successful premarket review program.
    The agreement we have reached with industry strikes a 
careful balance between what industry agreed to pay and what 
FDA can accomplish with the amount of funding proposed. 
However, we are concerned that even if device user fee 
resources are increased under MDUFA-III, additional new 
legislative mandates imposed on CDRH could divert resources and 
undermine FDA's ability to achieve the new performance goals.
    When PDUFA was last reauthorized in 2007, as Mr. Enzi, you 
pointed out, the addition of new policy-related requirements 
ultimately resulted in FDA's drug review program having to 
temporarily suspend meeting its PDUFA review goals in order to 
meet the statutory mandates. We want to avoid such a situation, 
so that CDRH can focus on meeting the ambitious new MDUFA 
program goals and achieving timely access to safe and effective 
devices, which is an objective that we share with industry, 
healthcare professionals, patients, consumers, and you.
    Mr. Chairman, we share your goal of timely reauthorization 
of MDUFA, and I look forward to working with you toward 
enactment of this critical legislation.
    I commend the committee's efforts, and am pleased to answer 
any questions the committee may have.
    [The prepared statement of Dr. Shuren follows:]
            Prepared Statement of Jeffrey Shuren, M.D., J.D.
                              introduction
    Mr. Chairman and members of the committee, I am Dr. Jeffrey Shuren, 
Director of the Center for Devices and Radiological Health (CDRH) at 
the Food and Drug Administration (FDA or the Agency). I am pleased to 
be here today to discuss reauthorization of the Medical Device User Fee 
Act, or MDUFA.
Background on MDUFA
    The enactment in 2002 of the Medical Device User Fee and 
Modernization Act (MDUFMA I) was prompted by growing concerns about the 
medical device review program's capacity and performance. MDUFMA I and 
MDUFA II (enacted in 2007) authorized user fees for the review of 
medical device premarket applications, reports, supplements, and 
premarket notification submissions. These additional resources enabled 
FDA to make its reviews more timely, predictable, and transparent to 
applicants. MDUFA fees and mandated appropriations for the medical 
device program helped FDA expand available expertise, modernize its 
information management systems, provide new review options, and provide 
more guidance to prospective applicants.
    MDUFA authorizes FDA to collect user fees for certain medical 
device applications, the registration of certain medical device 
establishments, and certain other purposes. Small businesses may 
qualify for a waiver or a reduced fee on certain submissions to FDA.
    Of the total $292,707,540 obligated in support of the process for 
the review of medical device submissions in fiscal year 2010, MDUFA 
fees funded about 20 percent. The remainder of the funding was through 
appropriations. Fees currently charged for device review under MDUFA 
include $220,050 for a Premarket Approval (PMA) application for high-
risk medical devices (a business with gross receipts under $100 million 
qualifies for the ``small business'' PMA fee of about $55,000, and for 
firms with gross receipts under $30 million, the firm's first PMA fee 
is also waived). For lower-risk devices cleared under the 510(k) review 
program, manufacturers pay $4,049 per 510(k) application review ($2,024 
for small businesses).\1\ As a point of comparison, PDUFA fees--nearly 
$568 million in fiscal year 2010--currently account for about two-
thirds of the drug review program's budget, and the current fee for 
fiscal year 2012 associated with review of a New Drug Application (NDA) 
requiring clinical data is $1,841,500.\2\
---------------------------------------------------------------------------
    \1\ See U.S. FDA, ``Medical Device User Fee Rates for Fiscal Year 
2012,'' 76 Federal Register 45,826-45,831 (Aug. 1, 2011), available at 
http://www.gpo.gov/fdsys/pkg/FR-2011-08-01/html/2011-19335.htm.
    \2\ See U.S. FDA, ``Prescription Drug User Fee Rates for Fiscal 
Year 2012,'' 76 Federal Register 45,831-45,838 (Aug. 1, 2011), 
available at http://www.gpo.gov/fdsys/pkg/FR-2011-08-01/pdf/2011-
19332.pdf.
---------------------------------------------------------------------------
    The medical device user fee program has produced benefits for 
public health. A better-resourced premarket device review program has 
enhanced FDA's abilities to help bring more safe and effective medical 
devices to the market, while keeping pace with the increasing 
complexity of technology and changes in clinical practice. Since MDUFA 
II was reauthorized in 2007, FDA has approved 106 original PMAs and 
cleared more than 13,000 devices under the 510(k) program.
    For example, approvals have included devices intended to address 
unmet needs in the pediatric population, such as the first heart pump 
designed to support the hearts of infants to adolescents until they 
receive a heart transplant, and the first percutaneous heart valve 
(approved for both children and adults).
    The device program also has approved important new laboratory 
tests, including an emergency-use diagnostic test in response to H1N1 
outbreak in humans, and the first quick test for malaria. Device 
reviews have significantly contributed to the very important trend 
toward personalized medicine through clearance of a test system that 
can assist in assessing the risk of tumor recurrence and long-term 
survival for patients with relatively high-risk breast cancer.
    Other important devices that have become available to patients over 
the course of MDUFA II include, for example, the Implantable Miniature 
Telescope (IMT), used for monocular implantation to improve vision in 
elderly patients with stable severe to profound vision impairment 
associated with end-stage age-related macular degeneration (AMD) \3\; 
the Infrascanner--infrared brain hematoma detector, a non-invasive 
hand-held device that uses near-infrared spectroscopy to evaluate 
suspected brain hematomas at the site of injury within the ``golden 
hour'' (the period following head trauma when pre-hospital analysis is 
needed to rapidly assess a patient's neurological condition) \4\; and 
the NeuRx DPS--RA/4 Respiratory Stimulation System, an implantable 
electronic device that stimulates the diaphragm and allows certain 
spinal cord injury patients to breathe for at least 4 hours a day 
without a mechanical ventilator.\5\
---------------------------------------------------------------------------
    \3\ See FDA News Release, ``FDA Approves First Implantable 
Miniature Telescope to Improve Sight of AMD Patients'' (July 6, 2010), 
available at http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/
ucm218066.htm.
    \4\ See Office of Naval Research, ``Naval Technology Could be a 
Lifesaver'' (Dec. 21, 2011), available at http://www.onr.navy.mil/
Media-Center/Press-Releases/2011/Infrascanner-brain-TBI-FDA-
approval.aspx.
    \5\ See FDA News Release, ``FDA Approves Diaphragm-Pacing Device'' 
(June 18, 2008), available at  http://www.fda.gov/ForConsumers/
ConsumerUpdates/ucm116914.htm.
---------------------------------------------------------------------------
    However, neither the FDA nor industry believe that the user fee 
program has reached the level of performance, or produced the extent of 
benefits, that it has the potential to achieve.
MDUFA II Performance
    FDA has been meeting or exceeding goals agreed to by FDA and 
industry under MDUFA II for approximately 95 percent of the submissions 
we review each year. For example, FDA completes at least 90 percent of 
510(k) reviews within 90 days or less. In the few areas where FDA is 
not yet meeting its MDUFA goals, the Agency's performance has generally 
been improving--despite growing device complexity and an increased 
workload. FDA's performance over the course of MDUFA II has not been 
limited to achieving quantitative goals for the timely review of 
premarket submissions like PMAs and 510(k)s; we have also accomplished 
a number of ``qualitative'' goals set by MDUFA II in 2007, including 
issuing more than 50 new and updated guidances for industry. Guidance 
documents are important resources for industry because they describe 
the Agency's interpretation of, or policy on, regulatory issues, and as 
such, are critical to support industry efforts to comply with the law 
and develop new products that may benefit the public health.\6\ The 
availability of guidance documents also facilitates regulatory 
predictability and consistency.
---------------------------------------------------------------------------
    \6\ Guidance documents include documents that relate to: (1) the 
design, production, labeling, promotion, manufacturing, and testing of 
regulated products; (2) the processing, content, and evaluation or 
approval of submissions; and (3) FDA's inspection and enforcement 
policies. See generally, ``Food and Drug Administration Report on Good 
Guidance Practices: Improving Efficiency and Transparency'' (issued 
Dec. 2011), available at http://www.fda.gov/downloads/AboutFDA/
Transparency/TransparencyInitiative/UCM285124.pdf.
---------------------------------------------------------------------------
    It is important to note that MDUFA metrics reflect FDA time only; 
they do not reflect the time taken by device sponsors to respond to 
requests for additional information. Overall time to decision--the time 
that FDA has the application, plus the time the manufacturer spends 
answering any questions FDA may have--has increased steadily since 
2001. As the graphs below illustrate, while the time FDA spends 
reviewing an application has improved (for both low-and high-risk 
devices), average total days for the review of 510(k)s has been 
increasing since 2005, and has been increasing for PMA applications 
since 2004.




    FDA bears some responsibility for the increase in total time to 
decision, and we have been instituting management, policy, and process 
changes to address this issue. As a result, we are starting to see 
indicators of improved review performance. For example, the Agency has 
currently completed review of 85 percent of the 510(k) submissions 
received in fiscal year 2011. The graph below, illustrating average 
time to decision during the last 5 years at this same point (85 percent 
of 510(k)s reviewed), shows that progress was made, starting last year, 
in stabilizing 510(k) review times.


    In addition, in fiscal year 2011, CDRH for the first time began 
reducing what previously was an increasing backlog of unresolved 510(k) 
submissions, as indicated in the next chart--and that trend is clearly 
continuing as we approach the mid-point of fiscal year 2012.


    Likewise, there had been a continuous annual increase, since fiscal 
year 2002, in the percentage of 510(k) submissions requiring an 
Additional Information (AI) letter \7\ after the first review cycle, 
which had contributed to the increasing total time from submission to 
decision. As indicated in the chart below, however, in fiscal year 
2011, the percentage of 510(k)s requiring an AI letter declined for the 
first time since 2002.
---------------------------------------------------------------------------
    \7\ If, after reviewing an application, FDA determines that it 
cannot approve or clear the application in its current form, FDA sends 
a letter informing the sponsor of this decision. For 510(k) 
applications, this is called an ``Additional Information'' (AI) letter.


Smart Regulation's Role in Facilitating Medical Device Innovation
    FDA recognizes that, if the United States is to maintain its 
leadership role in this area, we must continue to streamline and 
modernize our processes and procedures to make device approval not just 
scientifically rigorous, but clear, consistent, and predictable, 
without compromising safety. We are committed to continued improvements 
in the device approval process to address legitimate concerns raised by 
industry and other stakeholders.
    A little over 2 years ago, CDRH recognized that, given the growing 
complexities of medical product development, we needed to re-evaluate 
and modernize our regulatory review processes in order to ensure that 
patients had timely access to safe and effective medical devices. At 
that time, CDRH began to undertake a new systematic approach to device 
regulation, moving away from the traditional misperception that safety 
and effectiveness and innovation are incompatible. Rather than focus on 
more regulation or less regulation, we began to focus on ``smart 
regulation.''
    Our goal has been to ensure that safety and effectiveness and 
innovation are complementary, mutually supporting aspects of our 
mission to promote the public health. As part of our process to improve 
CDRH's internal systems, we first reached out to stakeholders to hear 
their concerns and listen to their recommendations about our premarket 
programs. This is what we heard: industry felt that inadequate 
predictability, consistency, and transparency were stifling innovation 
and driving jobs overseas; and consumer groups, third-party payers, and 
some health care professionals believed that one of our premarket 
pathways--the 510(k) program--did not provide adequate protection for 
American patients and did not generate sufficient information for 
practitioners and patients to make well-informed treatment and 
diagnostic decisions. In turn, CDRH employees expressed concerns that 
the 510(k) program had not adapted to the increasing complexity of 
devices, and that poor-quality 510(k) submissions, poor-quality 
clinical studies conducted in support of PMA applications, and an ever-
growing workload were straining already overburdened premarket 
programs.
    We also began two assessments of our premarket programs to identify 
issues, their root causes, and the appropriate solutions. One 
assessment focuses on the 510(k) program. The other looks at how we use 
science in regulatory decisionmaking, touching on aspects of several of 
our premarket review pathways, such as our clinical trials program. In 
addition, we contracted with the Institute of Medicine (IOM) to conduct 
an independent evaluation of our 510(k) program.
    In August 2010, following extensive public input, we released two 
reports that identified issues regarding our premarket programs and 
proposed potential actions for us to take to address the underlying 
root causes. The No. 1 problem we found was insufficient predictability 
in our premarket programs, which can create inefficiencies, increase 
costs for industry and FDA, and delay bringing safe and effective 
products to market. We identified several root causes of these issues. 
They include very high reviewer and manager turnover at CDRH (almost 
double that of FDA's drug and biologics centers); insufficient training 
for staff and industry; extremely high ratios of employees to front-
line supervisors; insufficient oversight by managers; CDRH's rapidly 
growing workload, caused by the increasing complexity of devices and 
the number of overall submissions we review; unnecessary and/or 
inconsistent data requirements imposed on device sponsors; insufficient 
guidance for industry and FDA staff; and poor-quality submissions from 
industry.
    While it is true that providing more user fee resources alone won't 
solve the problems with our premarket programs, insufficient funding is 
at the root of, or a contributing factor to, several of these problems. 
Adequate and stable funding is one key component to our and industry's 
success in bringing safe and effective devices to market quickly and 
efficiently.
    After considering extensive and varied public input on our 
recommendations, in January 2011, FDA announced a Plan of Action that 
included 25 specific actions that we would take in 2011 to improve the 
predictability, consistency, and transparency of our premarket 
programs. We continued to engage in dialog about issues of importance 
to CDRH and to members of the public, including the medical device 
industry, health care professionals, patients, and consumers,\8\ and 
followed up the Plan of Action with eight additional steps we would 
take. As of March 2012, 27 actions are already completed or well 
underway.\9\ In February 2011, we announced our Innovation Initiative, 
which included several proposals to help maintain the position of the 
United States as the world's leader in medical device innovation, 
including the creation of a new approach for important, new 
technologies called the Innovation Pathway.
---------------------------------------------------------------------------
    \8\ Numerous public meetings and workshops, including three ``town 
hall'' discussions with the Center Director and senior CDRH management, 
were held in 2011; similar CDRH outreach to stakeholders is ongoing. 
For more details, see http://www.fda.gov/MedicalDevices/NewsEvents/
WorkshopsConferences/ucm111051.htm.
    \9\ More information about FDA's progress in implementing the CDRH 
``Plan of Action for 510(k) and Science'' is available on FDA's Web 
site at  http://www.fda.gov/AboutFDA/CentersOffices/
OfficeofMedicalProductsandTobacco/CDRH/CDRHReports/ucm276 286.htm.
---------------------------------------------------------------------------
    Since then, we have announced additional efforts to improve our 
premarket programs, including actions to improve our program for 
clinical trials and the Investigational Device Exemption (IDE) program. 
The actions we are taking can be grouped into three main areas of 
emphasis. Overall, our actions seek to:

     Create a culture change toward greater transparency, 
interaction, collaboration, and the appropriate balancing of benefits 
and risks;
     Ensure more predictable and consistent recommendations, 
decisionmaking, and application of the least-burdensome principle; and
     Implement more efficient processes and use of resources.

    Specific steps that we are taking include:

     Issuing guidance clarifying the criteria used to make 
benefit-risk determinations a part of device premarket decisions. This 
will provide greater predictability and consistency and apply a more 
patient-centric approach by considering patients' tolerance for risk in 
appropriate cases (draft guidance issued August 15, 2011, and final 
guidance issued on March 27, 2012);
     Creating standard operating procedures for when a reviewer 
can request additional information regarding a premarket submission and 
identifying at what management level the decision must be made. These 
steps are intended to provide greater predictability, consistency, and 
the appropriate application of the least-burdensome principle by 
reducing the number of inappropriate information requests (Standard 
Operating Procedures issued November 10, 2011);
     Developing a range of updated and new guidances to clarify 
CDRH requirements for predictable, timely, and consistent product 
review, including device-specific guidance in several areas such as 
mobile applications (draft guidance released July 19, 2011) and 
artificial pancreas systems (draft guidance released December 1, 2011);
     Revamping the guidance development process through a new 
tracking system, streamlined processes, and, to the greatest extent 
possible within available resources, core staff to oversee the timely 
drafting and clearance of documents (December 2011);
     Improving communications between FDA and industry through 
enhancements to interactive review (some enhancements are already in 
place);
     Streamlining the clinical trial (IDE) processes by 
providing industry with guidance to clarify the criteria for approving 
clinical trials, and the criteria for when a first-in-human study can 
be conducted earlier during device development. These actions aim to 
create incentives to bring new technologies to the United States first 
(guidances issued November 10, 2011) (IDEs are required before device 
testing in humans that involves significant risks may begin, and they 
ensure that the rights of human subjects are protected while gathering 
data on the safety and efficacy of medical products);
     Implementing internal business process improvements to 
ensure that decisions are made by the appropriate level of management, 
that decisions are made consistently and efficiently, and that we 
appropriately apply the least-burdensome principle. For example, CDRH 
created the internal Center Science Council to actively monitor the 
quality and performance of the Center's scientific programs and ensure 
consistency and predictability in CDRH scientific decisionmaking 
(Center Science Council established March 31, 2011);
     Creating a network of experts to help the Center resolve 
complex scientific issues, which will ultimately result in more timely 
reviews. This network will be especially helpful as FDA confronts new 
technologies (Standard Operating Procedures issued September 30, 2011);
     Instituting a mandatory Reviewer Certification Program for 
new reviewers (program launched September 2011);
     Beginning a pilot Experiential Learning Program to provide 
review staff with real-world training experiences as they participate 
in visits to manufacturers, research and health care facilities, and 
academia (to begin in April 2012);
     Providing industry with specific guidance on how to ensure 
the quality and performance of clinical trials while applying the 
least-burdensome principle, so that industry conducts studies that are 
more likely to support the approval of their products (guidance 
released August 15, 2011); and
     Streamlining the de novo review process, the pathway by 
which novel, lower-risk devices without a predicate can come to market 
(draft guidance released October 3, 2011).

    Our efforts to improve the premarket review programs at CDRH are 
ongoing. We recently released our Strategic Priorities for 2012,\10\ in 
which we commit to completing or continuing the work we already started 
in four priority areas: (1) Fully Implement a Total Product Life Cycle 
Approach,\11\ (2) Enhance Communication and Transparency, (3) 
Strengthen Our Workforce and Workplace, and (4) Proactively Facilitate 
Innovation to Address Unmet Public Health Needs. Our plan for 2012 
includes timeframes associated with each strategy and specific actions 
we will take to meet those goals or make significant progress toward 
achieving those goals, including, for example:
---------------------------------------------------------------------------
    \10\ CDRH, ``2012 Strategic Priorities,'' available at http://
www.fda.gov/AboutFDA/Centers
Offices/OfficeofMedicalProductsandTobacco/CDRH/CDRHVisionandMission/
ucm288735.htm.
    \11\ A Total Product Life Cycle (TPLC) approach involves making 
well-supported regulatory decisions that take into consideration all of 
the relevant information available to CDRH at any stage of a product's 
life cycle to assure the safety, effectiveness, and quality of medical 
devices and the safety of non-device radiation-emitting products. The 
Center's TPLC database integrates premarket and post-market data about 
medical devices. For more information, see CDRH's Web site at http://
www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/
CDRH/CDRHTransparency/ucm199906.htm.

     By April 1, 2012, begin the Triage of Premarket 
Submissions Pilot to increase submission review efficiency and better 
manage the premarket review workload;
     By September 30, 2012, make recommendations on how to 
adequately recognize good employee performance and address poor 
performance;
     By September 30, 2012, create processes and tools that 
will improve the pipeline for innovative medical devices and transform 
the way CDRH works with medical device innovators, such as the new 
Entrepreneurs-in-Residence program;
     By September 30, 2012, develop methods and procedures for 
the systematic analysis and use of medical device recall information;
     By October 31, 2012, develop a comprehensive strategy to 
assess real-world device performance;
     By December 31, 2012, conduct an evaluation of CDRH 
staffing, infrastructure, policies, and practices pertaining to medical 
device software;
     By December 31, 2012, review remaining Class III pre-
amendment medical devices;
     By December 31, 2012, fully implement the Experiential 
Learning Program to enhance premarket reviewer knowledge of how medical 
devices are designed, manufactured, and utilized by providing real-
world learning opportunities; and
     By December 31, 2012, launch the CDRH Leadership 
Enhancement and Development (LEAD) program to provide CDRH managers and 
supervisors information and tools to ensure effective leadership.

    We believe the actions that we've taken and plan to take in the 
future will have a positive impact on the device review process by 
providing greater predictability of data requirements through guidance, 
reducing unnecessary data requests through training and policy and 
process changes, implementing policies to appropriately balance 
benefit-risk determinations, using external experts more extensively 
(consistent with conflict-of-interest guidelines), creating incentives 
to conduct clinical studies first in the United States, speeding up IDE 
approval decisions, implementing the Innovation Pathway 2.0 (a priority 
review program to expedite development, assessment, and review of 
important technologies), and instituting efficiencies in the premarket 
review process.
    For example, I'm pleased to report that, consistent with our many 
improvements to the 510(k) program, the recent increase in the ``not 
substantially equivalent'' (NSE) rate \12\ appears to be turning 
around. For manufacturers and FDA, NSE determinations often represent 
an inefficient use of time and resources. NSE determinations require 
significant Agency resources and time, yet fail to result in the 
marketing of a new product. As shown in the next chart, from a peak of 
8 percent in fiscal year 2010, the NSE rate has decreased to 4 percent 
by the end of the first 5 months of fiscal year 2012. Just as 
important, we also may be seeing a reversal in the trend of declining 
rate in Substantially Equivalent (SE) decisions that clear a 510(k) 
submission for marketing. After several years of declining percentages, 
reaching a low of 73 percent in 2010, SE rates increased by 6 
percentage points by the end of the first 5 months of fiscal year 2012, 
as shown in the chart below.
---------------------------------------------------------------------------
    \12\ Among the reasons that 510(k) submissions result in NSE 
determinations are: lack of a suitable predicate device; intended use 
of the new device is not the same as the intended use of the predicate; 
technological characteristics are different from those of the predicate 
and raise new questions of safety and effectiveness; and/or performance 
data failed to demonstrate that the device is as safe and effective as 
the predicate. The vast majority of NSE decisions are due to the 
absence of adequate performance data, sometimes despite repeated FDA 
requests.


    To best serve patients, both the medical device industry and FDA 
must have the flexibility to be innovative and entrepreneurial. CDRH 
must continue making critical improvements to our device program. At 
the same time, the medical device industry and CDRH must continue to 
work together to ensure that the Center receives high-quality 
submissions that contain the information we need to make well-informed 
and timely decisions. Finally, CDRH must have adequate and stable 
resources to get the job done right and quickly. Timely reauthorization 
of MDUFA, as well as the congressional appropriations process, is 
critical to achieving these goals.
Moving Forward: Reauthorization of MDUFA
    When MDUFA was reauthorized in 2007, Congress directed FDA to take 
additional steps to ensure that public stakeholders would have adequate 
opportunity to provide input to any program enhancements. In addition 
to FDA receiving input from stakeholders during an initial public 
meeting \13\ in September 2010, as directed by Congress, we met with 
stakeholders, including representatives of patient and consumer groups, 
between January 2011 and February 2012, and made the minutes of those 
meetings available to the public.\14\
---------------------------------------------------------------------------
    \13\ A transcript of the September 2010 public meeting, and related 
meeting materials, are available on FDA's Web site at http://
www.fda.gov/MedicalDevices/NewsEvents/Workshops
Conferences/ucm218250.htm.
    \14\ The minutes of the stakeholder discussions on MDUFA III 
reauthorization are available on FDA's Web site at http://www.fda.gov/
MedicalDevices/DeviceRegulationandGuidance/Overview/
MedicalDeviceUserFeeandModernizationActMDUFMA/ucm236902.htm.
---------------------------------------------------------------------------
    During that 13-month period, we also held discussions with 
representatives of the medical device industry, as required under the 
MDUFA II statute, in an effort to develop a package of proposed 
recommendations for MDUFA reauthorization. Minutes of those 
consultation meetings were also made available to the public.\15\
---------------------------------------------------------------------------
    \15\ The minutes of the industry discussions on MDUFA III 
reauthorization are available on FDA's Web site at  http://www.fda.gov/
MedicalDevices/DeviceRegulationandGuidance/Overview/
MedicalDeviceUserFeeandModernizationActMDUFMA/ucm236902.htm.
---------------------------------------------------------------------------
    We were pleased to announce last month that FDA and representatives 
from the medical device industry reached an agreement on the proposed 
recommendations for MDUFA III. That agreement, which would authorize 
FDA to collect $595 million in user fees over 5 years (plus increases 
based on inflation), strikes a careful balance between what industry 
agreed to pay and what FDA can accomplish with the amount of funding 
proposed. We believe that it will result in greater predictability, 
consistency, and transparency through a number of improvements to the 
review process. On March 15, 2012, FDA made public the package of 
proposed recommend-
ations,\16\ requested written public comment on those proposed 
recommendations, and announced that we would be holding a public 
meeting on March 28, 2012, at which interested stakeholders could 
present their views.
---------------------------------------------------------------------------
    \16\ The proposed package of recommendations for MDUFA III is 
available on FDA's Web site at  http://www.fda.gov/MedicalDevices/
NewsEvents/WorkshopsConferences/ucm292860.htm.
---------------------------------------------------------------------------
    The proposed recommendations for MDUFA III address many of the 
priorities and concerns identified by public stakeholders and the 
device industry and many of the important challenges identified by FDA. 
Some of the notable improvements to the MDUFA program in the MDUFA III 
proposed recommendations include:

     Review Process, Infrastructure, and Capacity Enhancements:

          Facilitating earlier and more transparent and 
        predictable interactions between FDA and the applicant, both 
        during the early product development or ``pre-submission'' 
        stage as well as during the review process, by implementing a 
        structured process for managing pre-submissions and continuing 
        to incorporate an interactive review process;
          Providing more detailed and objective ``submission 
        acceptance criteria'' for determining when a premarket 
        submission is complete and when a premarket submission is 
        incomplete and should not be accepted for review;
          Improving the process of developing, reviewing, 
        tracking, issuing, and updating guidance documents;
          Recommending reauthorization of the third-party 
        review program and working with interested parties to 
        strengthen and improve the current program as resources permit;
          Fully implementing guidance on factors to consider 
        when making benefit-risk determinations, meeting with patient 
        groups to better understand the patient perspective on disease 
        severity and unmet medical need, and increasing FDA's 
        utilization of Patient Representatives to provide patients' 
        views early in the medical product development process;
          Identifying additional low-risk medical devices to 
        exempt from premarket notification requirements;
          Working with industry to develop a transitional In 
        Vitro Diagnostics (IVD) approach for the regulation of emerging 
        diagnostics;
          Enhancing scientific and regulatory review capacity 
        by hiring additional staff and reducing the ratio of review 
        staff to front line supervisors--FDA is seeking to obtain 
        streamlined hiring authority in order to accomplish this;

     More Rigorous Review Performance Goals and Shared Outcome 
Goals:

          Adopting streamlined FDA review goals to provide 
        better overall performance and greater predictability, 
        including a commitment to meet with an applicant if FDA's 
        review of their submission extends beyond the goal date;
          Eliminating the ``two-tier'' goal structure of MDUFA 
        II and adopting a more simplified structure, incorporating a 
        single, high-percentage goal for each performance metric;
          Instituting more rigorous performance review goals:

            increasing the percentage of 510(k) reviews that 
        are completed in 90 review days from the current 90 percent to 
        95 percent by fiscal year 2015;
            increasing the percentage of PMA reviews that are 
        completed within 180 review days, from the current 60 percent 
        to 90 percent by fiscal year 2016, for PMAs not requiring 
        external advisory panel review--for PMAs that do undergo panel 
        review, FDA will complete 90 percent of the reviews within 320 
        review days by fiscal year 2017;

          Instituting a Substantive Interaction goal for 
        several submission types to track the Agency's communication 
        with applicants at specified points during the review process;
          A joint commitment between FDA and industry to 
        accomplish shared outcome goals to reduce the total average 
        calendar time to a decision for PMAs and 510(k)s so that safe 
        and effective devices reach patients and health care 
        professionals more quickly;

     Enhanced Metrics for Improvements to the Premarket Review 
Process:

          Conducting a comprehensive independent assessment of 
        the premarket review process to identify potential enhancements 
        to efficiency and effectiveness, and incorporating those 
        findings and recommendations into management of the review 
        program;
          More detailed quarterly and annual reporting of MDUFA 
        III review program performance.

    Additional details regarding the proposed recommendations for 
reauthorization of MDUFA, including the draft MDUFA III commitment 
letter and legislative language, are available on FDA's Web site at 
http://www.fda.gov/MedicalDevices/NewsEvents/WorkshopsConferences/
ucm292860.htm.
    The public comment period for review of the proposed 
recommendations for MDUFA III began on March 15, 2012. After the 
conclusion of the public comment period on April 16, 2012, FDA will 
consider the public's views and comments, revise the proposed 
recommendations as necessary, and transmit a final package of 
recommendations to Congress, along with a summary of the views and 
comments that were received and any changes that were made to the 
proposed recommendations in response to the public's views and 
comments. As we continue to work with all interested stakeholders and 
Congress toward reauthorization of MDUFA in order to provide adequate 
and stable funding for the program, we will also be moving forward with 
our ongoing CDRH program improvements, focusing on smart regulation 
that will facilitate device innovation. As these new policies and 
processes continue to be implemented, we expect to see notable 
improvements in the consistency, transparency, and predictability of 
our premarket review programs.
Smart Regulation's Role in Assuring Patient Safety
    As we continue to look for ways to improve our ability to 
facilitate innovation and to speed safe and effective products to 
patients, we must not lose sight of the benefits of smart regulation to 
the medical device industry, to patients, and to society. Smart 
regulation of medical devices results in better, safer, more effective 
treatments as well as worldwide confidence in, and adoption of, the 
devices that industry produces.
    We at FDA see daily the kinds of problems that occur with medical 
devices that are poorly designed or manufactured, difficult to use, 
and/or insufficiently tested. We appreciate the concern that some 
devices come on the market in the European Union (EU) before they do in 
the United States. While we want devices to be available to American 
patients as soon as possible, consistent with U.S. law, they need to be 
both safe and effective. The U.S. system has served patients well by 
preventing devices from entering the U.S. market that were later shown 
to be unsafe or ineffective.\17\
---------------------------------------------------------------------------
    \17\ See, e.g., D. Cohen and M. Billingsley, ``Europeans Are Left 
to Their Own Devices,'' British Medical Journal, 342:d2748 (2011), 
available at http://www.bmj.com/content/342/bmj.d2748.
---------------------------------------------------------------------------
    There are significant differences between the EU and the U.S. 
medical device review systems. In the EU, manufacturers must 
demonstrate safety and performance, while in the United States, the 
standard for approval is safety and effectiveness.\18\ In the EU, more 
than 70 private, non-governmental entities called ``Notified Bodies'' 
review and approve devices by giving them a ``CE mark.'' These 
decisions are kept confidential and are not released to the public or 
to EU regulatory bodies. In fact, the EU does not have one centralized 
regulatory body. Instead, each country can designate an entity as a 
Notified Body, yet the decision of one Notified Body applies to all EU 
countries.
---------------------------------------------------------------------------
    \18\ See ``Recast of the Medical Devices Directives: Public 
Consultation,'' available at  http://ec.europa.eu/consumers/sectors/
medical-devices/files/recast_docs_2008/public_consultation
_en.pdf; European Commission, ``Guidelines on Medical Devices: Clinical 
Evaluation: A Guide for Manufacturers and Notified Bodies'' (Dec. 
2009), at p. 4, available at http://ec.europa.eu/health/medical-
devices/files/meddev/2_7_1rev_3_en.pdf.
---------------------------------------------------------------------------
    Because of these factors, it is impossible to track medical device 
approvals, adverse events, or recalls in the EU, since there are few to 
no publicly accessible, centralized systems for collecting and 
monitoring information about medical device approvals or safety 
problems. The use of Notified Bodies has been criticized as encouraging 
``forum shopping'' by sponsors to identify those Notified Bodies with 
the most lax operating standards, and the varying levels of expertise 
among Notified Bodies has been critiqued.
    Some have suggested that the United States adopt the medical device 
regulatory system of the EU. Yet, outside the United States, pressure 
is growing toward greater premarket scrutiny of medical devices. A June 
2011 report from the Belgian Health Care Knowledge Centre (a 
governmental agency that produces studies to advise policymakers when 
deciding on health care and health insurance) \19\ concluded that 
``[f]or innovative high-risk devices the future EU Device Directive 
should move away from requiring clinical safety and ``performance'' 
data only to also require pre-market data that demonstrate `clinical 
efficacy,' '' and ``[t]he device industry should be made aware of the 
growing importance of generating clinical evidence and the specific 
expertise this requires.'' \20\
---------------------------------------------------------------------------
    \19\ Additional information about the Belgian Health Care Knowledge 
Centre, and its mission and activities, is available at https://
kce.fgov.be/content/about-the-kce.
    \20\ Belgian Health Care Knowledge Centre, ``The Pre-market 
Clinical Evaluation of Innovative High-risk Medical Devices,'' KCE 
Reports 158 (2011) at p. vii, available at http://www.kce.fgov.be/
index_en.aspx?SGREF=202677.
---------------------------------------------------------------------------
    In May 2011, the European Society of Cardiology (ESC) issued a 
``case for reform'' of the European medical device regulatory system: 
that body's recommendations included creating a unified regulatory 
system, imposing stronger clinical data requirements, and requiring 
more accountability for notified bodies.\21\ The ESC cited examples of 
several different cardiovascular technologies that were implanted in 
patients in the EU that were later proven to be unsafe and/or 
ineffective through clinical trials required under the U.S. system and 
were subsequently removed from the European market.
---------------------------------------------------------------------------
    \21\ See ``Clinical evaluation of cardiovascular devices: 
principles, problems, and proposals for European regulatory reform,'' 
Alan G. Fraser, ET al., European Heart Journal, May 2011.
---------------------------------------------------------------------------
    Also in May 2011, a series of feature articles was published in the 
British Medical Journal, criticizing the opacity of the European 
medical device regulatory system, and raising concerns about the 
regulation of high-risk devices and how well they are tested before 
coming on to the European market.\22\ Several of the featured articles 
cited the FDA system's transparency as helping physicians to make 
informed decisions about which devices to use and providing patients 
with access to information about the devices that will be used on them.
---------------------------------------------------------------------------
    \22\ ``The Truth About Medical Devices,'' British Medical Journal, 
vol. 342, at PP. 1115-30 (May 21, 2011), available at http://
www.bmj.com/content/342/7807/Feature.full.pdf (Deborah Cohen, ``Out of 
Joint: The Story of the ASR,'' British Medical Journal 2011; 342:d2905; 
Deborah Cohen and Matthew Billingsley, ``Medical Devices: European 
Patients Are Left to Their Own Devices,'' British Medical Journal 2011; 
342:d2748); see also Fiona Godlee, ``Editorial: The Trouble With 
Medical Devices,'' British Medical Journal 2011; 342:d3123, available 
at http://www.bmj.com/content/342/bmj.d3123.full; Carl Heneghan, ET 
al., ``Medical-Device Recalls in the UK and the Device-Regulation 
Process: Retrospective Review of Safety Notices and Alerts,'' BMJOpen 
(May 2011), available at http://bmjopen.bmj.com/content/early/2011/05/
12/bmjopen-2011-000155.full.pdf.
---------------------------------------------------------------------------
    Most recently, France's Directorate General for Health and its 
consumer safety body AFSSAPS \23\ issued a report \24\ urging stronger 
national and European regulation and monitoring of medical devices. In 
an accompanying statement, France's Minister of Health, Xavier 
Bertrand, said that EU rules on regulating and monitoring medical 
devices ``must be radically overhauled.'' \25\
---------------------------------------------------------------------------
    \23\ Agence francaise de securite sanitaire des produits de sante, 
France's Agency for the Safety of Health Products.
    \24\ See AFSSAPS, ``Poly Implant Prothese: remise d'un rapport de 
la DGS ET de l'Afssaps aux ministres charges de la sante--Communique,'' 
available at http://www.afssaps.fr/index.php/Infos-de-securite/
Communiques-Points-presse/Poly-Implant-Prothese-remise-d-un-rapport-de-
la-DGS-et-de-l-Afssaps-aux-ministres-charges-de-la-sante-Communique.
    \25\ See ``France Calls for Europe-wide Control on Prosthetics 
following PIP Breast Implant Scare,'' The Telegraph (Feb. 1, 2012), 
available at http://www.telegraph.co.uk/health/women_shealth/9054282/
France-calls-for-Europe-wide-control-on-prosthetics-following-PIP-
breast-implant-scare.html.
---------------------------------------------------------------------------
    FDA continues exploring ways to get medical products to patients 
with serious and life-threatening diseases or conditions faster, but 
lowering U.S. approval standards isn't in the best interest of American 
patients, our health care system, or U.S. companies whose success 
relies on the American public's confidence in their products. We are 
pleased that a U.S. medical device industry trade association, AdvaMed, 
has stated that it supports maintaining our current rigorous standards 
of safety and effectiveness for marketing medical devices: ``The 
medical technology industry has long recognized that a strong and well-
functioning FDA is vital to maintaining America's pre-eminence in 
medical technology innovation, and we support the current regulatory 
framework in the United States.'' \26\
---------------------------------------------------------------------------
    \26\ Advanced Medical Technology Association (AdvaMed), ``AdvaMed 
Statement on the House Energy and Commerce Subcommittee Hearing on FDA 
Device Regulation'' (July 20, 2011).
---------------------------------------------------------------------------
                               conclusion
    Over the course of MDUFA II, and especially during the last 2 
years, CDRH has been working, with extensive input from industry and 
other stakeholders, to take concrete actions toward creating a culture 
change toward greater transparency, interaction, collaboration, and the 
appropriate balancing of benefits and risks; ensuring predictable and 
consistent recommendations, decisionmaking, and application of the 
least-burdensome principle; and implementing efficient processes and 
use of resources. These actions--geared toward a system of smart 
regulation--have already started to have a measurable, positive impact 
on our premarket programs, and we fully expect that positive trend to 
continue as we proceed to implement the improvements we have committed 
to make.
    While we work with industry, other stakeholders, and Congress in 
the statutory process toward the reauthorization of medical device user 
fees, in order to ensure adequate and stable funding of the program, we 
are also continuing to move forward with CDRH program improvements. 
MDUFA II is scheduled to expire on September 30, 2012, and FDA is ready 
to work with you to ensure timely reauthorization of this critical 
program. If we are to sustain and build on our record of 
accomplishment, it is critical that the MDUFA reauthorization occurs 
seamlessly, without any gap between the expiration of current law and 
the enactment of MDUFA III. At the same time, we must remain mindful 
that, unlike the PDUFA program in which fees fund more than 60 percent 
of drug review costs, user fees under MDUFA III (as described in the 
recently announced agreement) will fund about a third of the total cost 
of the medical device premarket review process, making it important to 
keep these resources focused on the performance goals identified in the 
MDUFA agreement.
    Mr. Chairman and members of the committee, I share your goal of 
smart, streamlined regulatory programs. Thank you for your commitment 
to the mission of FDA, and to the continued success of our medical 
device program, which helps to ensure that patients and practitioners 
have access to safe and effective innovative medical technologies on a 
daily basis. I am happy to answer questions you may have.

    The Chairman. Thank you very much, Dr. Shuren.
    We will begin a round of 5 minute questions. We have a good 
turnout here today, so we will try to move right along.
    Starting with you, Dr. Shuren, we hear a lot about speeding 
up the review times for devices, applications.
    Referring back to your testimony, which I had gone over 
last evening, you said, ``Our goal is not more regulation or 
less regulation, but smart regulation.'' You said, ``Our goal 
has been to ensure that safety and effectiveness and innovation 
are complementary,''--complementary--``mutually supporting 
aspects of our mission to promote the public health.''
    We hear a lot about speeding up review times, but how will 
user fees be used to ensure that devices are safe for patients? 
Safe.
    Dr. Shuren. What is critical in the user fee agreement 
along those lines is we are not changing the standards for a 
product to come to market.
    These fees are going to allow us to put in place process 
improvements, and have the staff to make well-informed and 
timely decisions assuring that those products are safe and 
effective when they are coming to market. We will not 
shortchange the quality of our decisions. What we will do is be 
able to speed up those decisions, but still assure the safety 
and effectiveness of devices coming forward.
    The Chairman. The same question I will ask of Dr. Woodcock 
is how would patients be affected if we did not reauthorize 
this on time? How would your patients be affected, both of you, 
Dr. Shuren, on your devices and then Dr. Woodcock?
    Dr. Shuren.
    Dr. Shuren. We would have to let go staff and it is more 
than just that. Our program will actually be in a death spiral 
because our good people will leave the program, it will go 
down. There will be delays in reviewing products. There will be 
disincentives for innovation and that will lead to new 
technologies, jobs, all going overseas. That is not in the best 
interest of patients. It is not in the best interest of 
industry. It is not in the best interests of the U.S. 
Government.
    The Chairman. Thank you. Dr. Woodcock. How would patients 
be affected if we did not get the prescription drug user fees?
    Dr. Woodcock. The Prescription Drug User Fee Act, if 
terminated, would require us to begin to layoff a large number 
of staff involved in review, and also probably some involved in 
managing drug safety post-marketing.
    We would go back to the point, unfortunately, where 
innovative products are reaching American patients last in the 
world instead of first in the world.
    But in addition, the other user fee programs also provide, 
for example, the generics. We need a robust generic drug 
industry because 80 percent of prescriptions dispensed in this 
country are generic drugs, and our patients rely upon those 
drugs: their safety, their quality, and their affordability. So 
that program needs more support to keep building on its 
success.
    The Chairman. Dr. Woodcock, let me followup with another 
question. I have heard from many members of the rare disease 
community about the unique challenges that this community faces 
in getting drugs developed and approved to treat their serious 
ailments.
    How does PDUFA-V, as we are calling it, enhance focus on 
orphan drugs for rare diseases?
    Dr. Woodcock. The program includes enhancements of our 
ability to support those companies that are developing a rare 
disease--their specific support added will be able to add staff 
because often, these are small companies that need a great deal 
of advice.
    There is also a provision for assisting small companies 
where we will be adding significant staff that will be able to 
help small companies or new companies through the review and 
approval process.
    The Chairman. Very good. That is all I have for right now 
unless I have another second round.
    Senator Enzi.
    Senator Enzi. Thank you, Mr. Chairman.
    I will begin with Dr. Shuren. The proposed medical device 
user fee agreement will give you resources to hire and train 
more reviewers, more managers, and more technical writers.
    What effect can we expect and how will you make that 
happen? What kind of training?
    Dr. Shuren. We have already put in place a new reviewer 
certification program. Every new reviewer that comes in the 
door, now goes through standardized coursework, oversight of 
the applications that they are reviewing.
    We are going to follow that up this year, and actually in 
the next few weeks, with a pilot for what we call an 
experiential learning program. We are going to let our staff go 
out to manufacturer facilities, healthcare facilities, and get 
real world experience.
    We are also putting in place core curriculums for each of 
the critical roles in our center in premarket review and 
elsewhere. This includes for managers, medical officers, lead 
reviewers, engineers, and on down the line.
    Senator Enzi. Thank you.
    Dr. Woodcock, the proposed prescription drug user fee 
agreement addresses issues concerning the Risk, Evaluation, and 
Mitigation Strategies, or REMS. REMS was intended as a tool to 
let the FDA ensure that the benefits of a drug or biological 
product outweigh its risks, but implementation resulted in some 
delays and confusion.
    Can you describe the challenges of implementing REMS over 
the past few years and how this agreement addresses the 
outstanding concerns?
    Dr. Woodcock. Certainly. We think the REMS are a good tool 
because some drugs have to have additional safety measures to 
be on the market because they have some severe safety risk.
    However, the original implementation of the REMS was not 
standardized, and it was one off for each REMS that was 
implemented. This caused difficulties for the manufacturers, 
but it also caused tremendous difficulties for the health care 
system.
    We had a public meeting about this, and we heard, believe 
me, very clearly that we need standardized tools. We need one 
way to do this. It has to be convenient, both for the 
physicians, healthcare professionals, and the pharmacists in 
particular who have to implement these REMS. And the user fee 
program will provide us with the goals and the resources to do 
that.
    Senator Enzi. Thank you.
    This question will be for both of you because I see that 
the proposed, both fees, have provisions concerning the patient 
perspective on benefit-risk decisions.
    What does that mean to each of you? Let's start with Dr. 
Woodcock.
    Dr. Woodcock. We are very excited about these provisions 
because taken as a whole, we think they will move toward 
patient-centered drug development because, actually I hate to 
tell you, but drugs are not really safe. Most drugs have 
liabilities. They have risks, and so the benefits are taken 
into account with those risks.
    But we need to understand what tradeoffs a patient is 
willing to take. What risks might they be willing to receive in 
order to get the benefits? And that tradeoff, we need to hear 
from patients. It turns out that doctors, or regulators, we do 
not really know, we do not really speak with a patient's voice.
    The agreement proposes that we get 20 diseases, that we go 
through a process to elicit the patient's point of view, and we 
are piloting that now in obesity, and we are learning a great 
deal, even with this pilot we are doing.
    We also are developing a standardized benefit-risk 
framework, which we would publish for each drug, that would go 
over the benefits, the risks, the uncertainties, and the 
alternative therapy, and let people know how the new therapy 
stacks up.
    Then we hope to incorporate patient-reported outcomes into 
the trials, so we hear from the patient point-of-view how they 
experienced the disease and the drug, and how the drug 
mitigated the disease, as well as how the side effects burdened 
the patient.
    This would really revolutionize, I think, our understanding 
when taken together of how therapies actually impact patients.
    Senator Enzi. I will probably have a couple of followup 
questions, but I will go to Dr. Shuren first.
    Dr. Shuren. I share Dr. Woodcock's perspective, as does my 
center, how important it is to take into account what a patient 
perceives as a risk and what they are willing to take. As I 
tell my reviewers, they are not the ones who are getting these 
devices; the patients are and the patients have to make a 
choice.
    We, too, under MDUFA-III have committed to develop a 
benefit-risk determination framework that takes into account 
patient's tolerance for risk. I am pleased to say that, 
actually, it was something we were pursuing. We put out a draft 
proposal in August of this year and we just issued the final 
framework on the 27th, this week. It will go into effect 
starting on May 1st. We are going to begin to do training of 
our staff, and it will move forward.
    We, too, have committed for engagements with the patient 
community to better understand their perspective. We already 
have developed a survey tool that we are going to be piloting. 
We are also looking in the obesity context. We will be 
leveraging the meetings that CDHR is putting together and we 
think, together, this will actually move the program in a very 
positive direction.
    Senator Enzi. Encouraging. My time has expired. Thank you, 
Mr. Chairman.
    The Chairman. Thank you, Senator Enzi. I remind members of 
the committee that we have another panel of five after this 
panel. Also, it looks like we are going to have a vote here 
sometime soon, so we will have to take a break, so I ask all 
Senators to please respect the 5 minute time.
    I have in order now, Senator Murray, Senator Roberts, 
Senator Mikulski, Senator Burr, and then Senators Whitehouse, 
Bennett, Murphy, Hagan, and Blumenthal.
    Senator Murray.

                      Statement of Senator Murray

    Senator Murray. Thank you very much, Mr. Chairman.
    I really want to thank all of our witnesses for being here 
to talk about this really important issue. The medical device, 
pharmaceutical, and biotechnology industry is really working 
hard to find cures for diseases that affect millions of 
Americans and their families. Companies in this industry are 
also really critical to our local economies.
    In my home State of Washington, biotech companies employ 
about 18,000 workers directly and almost 50,000 more through 
their economic activity. Medical device companies employ about 
9,000 people and supports the employment of another 20,000.
    These are not just any jobs. These are high-skilled, stable 
jobs that pay good wages. I think they are exactly the kind of 
21st century careers we are all working hard to create here in 
America.
    I am very encouraged by the success and growth of this 
industry, and that is why I am very focused, Mr. Chairman, on 
making sure the Federal Government is doing what it can to make 
sure they are successful, and why this important discussion is 
happening today. I am really pleased that we are working 
together to strengthen the FDA user fee system.
    Dr. Woodcock, Dr. Shuren, you have answered my questions, 
and I know we have another panel. I just wanted to mention, Dr. 
Woodcock, you said, ``If we do not reauthorize this, we will go 
from first to last,'' which is frightening, I think, for a lot 
of patients in this country, who really depend on the FDA. I 
really appreciate you pointing that out.
    Dr. Shuren, I wanted to quickly ask you, can you give us an 
idea of some of the products or disease categories where FDA is 
currently leading the world in advancing innovation that would 
be impacted should we not reauthorize the user fees 
legislation?
    Dr. Shuren. I think you can actually go down the list of 
any innovative technology we want to get to patients here in 
the United States first.
    If the program goes down, that will not even be a dream. It 
will be an impossibility.
    Senator Murray. Thank you very much.
    I do know you have another panel, Mr. Chairman, so I will 
wait to hear their testimony. Thank you.
    The Chairman. Thank you, Senator Murray.
    Senator Roberts.

                      Statement of Senator Roberts

    Senator Roberts. Thank you, Mr. Chairman, for a very timely 
hearing. Thank you for your leadership.
    And to all of the five witnesses, we always have 
obligations, and I apologize for not being here. But you have 
really put together an excellent panel following this panel.
    I particularly want to thank Sara Radcliffe, who is 
speaking for BIO and its 1,100 members. She says in her 
testimony, ``Given the recent establishment of the biosimilars 
at the FDA, only modest appropriations are currently allocated 
to the program.'' So, of course, they have agreed to, ``An 
equitable balance of fees and appropriations,'' and that is 
what we are facing here in terms of user fees.
    I do not like user fees, but under the circumstances, there 
is not any real alternative, and it is a challenge we face, I 
think, in almost every program that we have here before the 
Senate, regardless of what committee it is. But she sort of hit 
the nail on the head and I thank her for her testimony.
    Then I would like to move, still on the second panel, a 
farmer points out that, ``America in 2009. We are talking about 
674,192 direct jobs, $918 billion for the total economic 
sector.'' So that is why this reauthorization is such an 
important factor, and this agreement holds.
    I would also like to thank Dr. David Gaugh, I hope I am 
pronouncing that right, I apologize if I am not. But he says, 
and he is here to represent the generics,

          ``By designing the programs to spread fees across 
        multiple stakeholders and sources to keep individual 
        amounts as low as possible, the programs will help 
        assure that American consumers continue to receive a 
        significant cost savings from generics,''

ET cetera, etc. My question is, how do we do that?
    After all of that, I would like to ask our two witnesses, 
in terms of user fees, who really pays? Who really pays?
    Dr. Shuren. In reality, it is probably the American public 
who pays. They pay through----
    Senator Roberts. Exactly, that is right.
    Dr. Shuren [continuing]. Appropriations and then the cost 
for user fees.
    Senator Roberts. Yes, I know the appropriations.
    Dr. Shuren. Right.
    Senator Roberts. And I know that we would like to have more 
appropriations, so would the Chairman, so would the Ranking 
Member, but it is going to be the public that pays the user 
fees. Now, with all of that, I do not need to ask you, Doctor, 
the exact same thing.
    Dr. Woodcock, how exactly does the FDA plan to meet the 
commitments outlined in the agreements? How do we plan to meet 
these deadlines because, as you know, FDA has missed time and 
time again?
    Dr. Woodcock. FDA is currently exceeding the vast majority 
of its PDUFA goals, and over the 20-year history of the 
program, we have met those goals consistently, except for 
immediately after the FDA Amendments Act, where we had the REMS 
and multiple other assignments.
    Senator Roberts. Right.
    Dr. Woodcock. We have crafted this very carefully to make 
sure that the goals will work for industry, but that are also 
achievable by us. And I have every confidence that we will meet 
the goals of the drug user fee programs that are proposed.
    Senator Roberts. Good. And I hope the committee stands 
behind you in your endeavors, I am sure.
    Now, I am concerned by comments I have heard recently that 
the culture at the FDA has changed and folks feel that FDA is 
moving away from working in a collaborative way with industry 
to more of a regulatory enforcement kind of culture.
    Is that the case? Are we going to tell this committee about 
any improvements that are being made to the culture at FDA?
    Dr. Woodcock. CDHR went through an entire culture effort 
over the last 4 years. And I think that we are not changing our 
approach to our standards of drug regulation.
    The issues I have heard are that we are not able to 
interact with the industry as often as the industry would like, 
and we are not as transparent. I have looked into this, and it 
really is a workload issue.
    In fact, the user fee, the prescription drug user fee 
program proposal that is before you explicitly addresses this 
issue.
    Senator Roberts. OK.
    Dr. Woodcock. And it puts a negotiation discussion----
    Senator Roberts. OK. I am out of time and the Chairman is 
going to bang the gavel. So you are telling, basically us, if 
we do our job and get this done, you can do your job, and then 
industry will not complain about this issue.
    I have one other question for Dr. Shuren, but I am out of 
time. I will just submit that for the record. Thank you for 
coming by my office, sir, and paying me a courtesy call. We had 
a good visit.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Roberts.
    Senator Mikulski.

                     Statement of Senator Mikulski

    Senator Mikulski. Mr. Chairman, thank you for organizing 
this hearing as we are on the brink of an actual mark up of a 
variety of user fees. I am going to welcome our panel.
    Mr. Chairman and colleagues, Maryland is the home of life 
science jobs. We are very proud of our innovation corridor and 
a substantial number of the jobs in that corridor are in 
research. NIH is an international icon and Hopkins speaks for 
itself.
    But after the research, you have to deal with the valley of 
death, which is taking all the great research and converting it 
into products that people can use to have a better life and a 
sustained life. This is why I am excited about moving the user 
fees process forward.
    I am proud of the 5,000 people who work at FDA at all 
levels. I am often dismayed about the harassment and hazing 
that these employees go through from the public--cheap 
political shots and cutesy one-liners at town hall meetings. 
Despite this harassment, we expect them to show up every day 
with an attitude of, ``Hoo-rah, hoo-rah!'' and be ready to work 
with us. So I think we need to get real, as we have very real 
expectations of them.
    Now let me move on to my questions.
    In regard to this whole user fee process, I have been 
involved in every user fee since 1992. I thought this version 
had intellectual rigor and had a process that was open and 
transparent. That process actually engages with industries in 
conversation and, even taken corrective action with the 
certification program. This authorization is welcoming everyone 
to the table.
    Having said that, however unlike other authorizations, we 
have sunsets on the user fees. If we do not act in light of 
these sunsets, what would be the consequences to the workforce 
in FDA?
    Dr. Shuren. We would lose all the positions being supported 
by user fees and more because----
    Senator Mikulski. Because you would have to give RIF 
notices?
    Dr. Shuren. We would have to give RIF notices.
    Senator Mikulski. When would you have to give RIF notices?
    Dr. Shuren. As a matter of regulations, it would start 
around July, about that time. We are required to give at least 
60 days advance notice, and then start to wind down the 
program.
    Senator Mikulski. Approximately how many employees would 
that involve?
    Dr. Shuren. It would involve approximately 250. The problem 
is once people know that is happening, more people leave, and 
that is a problem.
    Senator Mikulski. So I say, Mr. Chairman and colleagues, if 
we are talking about RIF notices in July, we know that people 
will begin to worry in May and April. We need to really adhere 
to your mark up schedule in a very rigorous way. A mark up in 
April would keep the process and morale going as we work out 
our legislative issues.
    Am I correct in thinking that?
    Dr. Shuren. Yes.
    Senator Mikulski. In summary, we should have a sense of 
urgency and adherence to our own timelines and compliance 
issues?
    Dr. Shuren. I have to tell you that message alone would be 
very welcome by the staff at FDA. They are really looking for 
help, and knowing the commitment of this committee, and the 
process is moving quickly and help is on the way, and this 
program will survive, and will mean a lot. And it will help us 
move things forward.
    Senator Mikulski. That is heartening to hear, and I think 
we need to take it to heart.
    Now, lets talk about all the bipartisan agreements and 
letters of agreement with the industries. I am sure both of 
you, have participated in and read these agreements. Do you 
feel that the agreements offer guidance? Further, do you feel 
satisfied with the three drug agreements in existence, and also 
the two new agreements in generic and biosimilar? I know these 
agreements contain pretty sophisticated science and complicated 
regulatory measures, but do you feel if we follow any of those 
five agreements you have flashing yellow lights?
    Dr. Woodcock. For the drug agreements, we feel very 
confident about all three of them that they will accomplish our 
mutual goals of getting these products through in a timely and 
sound way, and also supporting the safety of products for the 
United States.
    Senator Mikulski. What about biosimilar and generic?
    Dr. Woodcock. The same. The generics are, as you know, 
directed partly at improving and assuring the quality and 
safety of the generics no matter where they are sourced in the 
world. We regard this as a critical issue.
    Senator Mikulski. Oh, I know. We could talk about that 
issue as a whole separate hearing.
    Dr. Woodcock. And the biosimilars, we are very confident 
that we can enact a biosimilars program and we are doing that 
now. However, as these applications really start to roll in, we 
will need the staff to support this program. We will need 
additional resources.
    Senator Mikulski. And the training.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Mikulski.
    Senator Burr.

                       Statement of Senator Burr

    Senator Burr. Mr. Chairman and my colleagues, the proposed 
reauthorization is an unprecedented level of user fees. There 
is going to be on our part the need for an unprecedented level 
of oversight, transparency, and accountability as part of these 
reauthorizations, and I hope my colleagues will remember that.
    Dr. Coburn and I are releasing a GAO report today that 
confirms a disturbing trend: the FDA is taking longer and 
longer to make final decisions on life-saving medical devices. 
GAO also confirms that the FDA is not meeting some of its 
performance goals.
    I would like to take this opportunity today to share some 
of the key findings of this report with my colleagues because I 
think it is crucial and critical that we consider these 
findings as we work through the user fee reauthorizations.
    Let us start with the findings that relate to PMA's, and I 
quote their GAO report,

          ``The FDA was inconsistent in meeting performance 
        goals for PMA submissions. The average time to final 
        decision for original PMA's increased from 462 days for 
        fiscal year 2003 to 627 days for fiscal year 2008, 
        which is the most recent year for which complete data 
        was available.''

    I go on to quote,

          ``This report shows that the average number of review 
        cycles increased for certain PMA's, while the 
        percentage of PMA's approved after one review cycle 
        generally decreased.''

    Now, let us look at the 510(k)'s, and I quote,

          ``Even though FDA met all medical device performance 
        goals for 510(k)'s, the elapsed time from submission to 
        final decision has increased substantially in recent 
        years from fiscal year 2005 through fiscal year 2010, 
        the average time to final decision for 510(k)'s 
        increased 61 percent.''

    It goes on to quote,

          ``The average number of review cycles in FDA's 
        request for additional information for 510(k) 
        submissions also increased.
          ``Clearly, reporting only on the user fee performance 
        goals negotiated by the industry and the FDA does not 
        paint a full picture of the FDA's performance and how 
        well the agency is fulfilling its public health 
        mission. The proposed user fee agreements have been 
        sent to Congress for reauthorization. The goal of the 
        user fees is to ensure timely review and action on 
        medical products.
          ``This is why increasing times are so concerning. 
        Patients rely upon FDA to make sound medical decisions 
        in as timely a manner as possible. Increasing 
        regulatory uncertainty and unnecessary delays are 
        stifling investment in the development of lifesaving 
        medical devices.
          ``If Congress fails to ensure consistent oversight 
        and transparency at the FDA, we risk continuing to 
        drive medical innovation and job creation overseas, 
        jeopardizing American patients' access to the most 
        cost-cutting medical devices created.''

    So where do we go from here? I know you are probably going 
to tell us a little more about all the new initiatives that the 
FDA has committed to put in place, and there are some good 
concepts. I commend you for some of the changes that you have 
made within CDRH.
    Comments were made 5 years ago and they have not been met. 
A doubling of user fees is not going to guarantee the agency 
meets its goal. If we are going to fix what is not working that 
well at the FDA, these commitments have to be fulfilled 
consistent with the law.
    My question to you, Dr. Shuren, is at the end of the day, 
what are the clear matrix by which CDRH will be held to ensure 
that the qualitative and quantitative goals agreed to under 
this proposed agreement are fulfilled? In other words, what are 
the metrics Congress and the American people can use to measure 
if the commitments made in this agreement and the steps FDA is 
proactively taking to address concerns are actually translating 
into more predictable and consistent day-to-day action across 
CDRH?
    Dr. Shuren. In our commitment letter, we have two pages of 
metrics that we are committing to. In fact, the largest section 
in the commitment letter goes to our reporting on metrics and 
transparency.
    In MDUFA-II, we have reported over the 5 years on about 
157,000 data points in our quarterly reports and 180,000 data 
points in our annual reports. In MDUFA-III, it will be 10 times 
the amount. By the end of the 5 years, we will have reported on 
over 3 million data points. That is more than you will see for 
any other country.
    We are being very transparent in what we do, and we are 
putting in tough metrics. I will say what we are putting in 
this time is a metric for total time. This is a shared goal. It 
requires work on our part. It requires work on industry's part 
and that is reflected in the commitment letter.
    I will note in the GAO report, that they also talk about 
the actions we are taking to address the challenges facing the 
program. They, too, have acknowledged that the actions we are 
taking are directed, and it looks like they will address those 
challenges. I am very glad to see that reflected in the report 
as well.
    Senator Burr. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Burr.
    Senator Whitehouse.

                    Statement of Senator Whitehouse

    Senator Whitehouse. Thank you, Chairman.
    Kenny Sparks from Little Compton, RI was diagnosed 6 years 
ago with a disease called frontotemporal dementia. He died last 
year on August 30, 2011 and his wife Cheryl said that it was a, 
``Difficult and lonely journey.''
    One of the reasons it was a difficult and lonely journey 
was because this was a rare disease and there were few 
treatments and no cure. So I would urge you to continue to 
press forward in every way you can to make sure that the orphan 
drugs, as the Chairman mentioned, are pursued so that that 
journey for these families becomes a little less lonely.
    My question to you, however, is about foreign manufacture 
of pharmaceuticals. Things have changed in this industry. What 
used to be very much a home built industry is now reliant on 
international supply chains. We do not inspect international 
factories.
    How much has this problem grown recently? How urgent is 
this problem? And do you think the steps we have taken to 
address it are adequate?
    Dr. Woodcock. There are two issues here. One is FDA's 
ability to inspect those foreign facilities, and the generic 
drug user fee program squarely addresses that, and will level 
the playing field, and make sure that the intensity of 
inspection, domestic, foreign, no matter where, will be the 
same. We will be able to use a risk-based approach to 
inspection.
    The other issue, though, is the tools that we might have to 
keep counterfeit or improperly manufactured drugs out of the 
U.S. drug supply. There, of course, we do not have modern 
tools, probably because the statute was written at a time when 
domestic manufacture was really the norm and was considered.
    For example, we really do not have the ability based on our 
suspicions to stop drugs at the border if we have suspicion. We 
have a burden of proof that we have to prove something is 
wrong, and I find that shocking, and I think that American 
consumers would find that shocking as well.
    There are additional tools, I think, that other countries 
certainly have to stop products at their border that are 
suspicious and other enforcement tools that we currently lack.
    Senator Whitehouse. Thank you very much.
    Do you care to add anything else, Doctor? Do you care to 
add anything?
    Dr. Shuren. Regarding shortages, we had to deal with a 
slightly----
    Senator Whitehouse. No. The question was regarding the 
international supply chain and its integrity, and what that 
means for American consumers.
    Dr. Shuren. Yes, I was just going on the shortage side with 
the supply chain for devices, but we do have concerns about 
assuring the integrity of the supply chain.
    On the device side, we deal with certain different kinds of 
challenges, but we also have issues with foreign sourcing. Many 
of the companies do just-in-time production, and because 
devices are becoming increasingly complex, as they rely on 
foreign suppliers, just a problem with one component in a 
device can hold up the manufacturing and the availability of 
that technology even when all the different parts and 
components may be available.
    Senator Whitehouse. Thank you, Chairman.
    The Chairman. Thank you, Senator Whitehouse.
    Senator Isakson.

                      Statement of Senator Isakson

    Senator Isakson. Mr. Chairman, I will defer. I just walked 
in the room, and I would probably be repetitive. So I will 
defer to the next questioner.
    The Chairman. Thank you, Senator Isakson.
    Senator Bennet.

                      Statement of Senator Bennet

    Senator Bennet. Thank you, Mr. Chairman.
    I want to start by saying how grateful I am and Colorado is 
for your leadership here.
    The Chairman. Thanks.
    Senator Bennet. And for the Ranking Member's leadership in 
producing this bipartisan basis for this legislation going 
forward.
    It is not only important for all the reasons Senator 
Mikulski said and the urgency of getting this done, I think it 
sets a model for what the rest of Congress should be doing. I 
am very proud to have the chance to work with both of you on 
this, and with my democratic and republican colleagues on a 
series of important bills here.
    I wanted to ask Dr. Woodcock, in that context, about drug 
innovation. This area of drug and biotech innovation is of 
great interest to me because Colorado has a growing bioscience 
community with cutting edge researchers. They are desperate 
that this not move overseas, and I know the FDA does not want 
that either.
    In an effort to work across the aisle, Senators Hatch, 
Burr, and I have introduced a bill that would provide certainty 
when drugs show promising prospects or even dramatic results 
early on. And I know you have been a strong advocate of having 
a more formal designation for breakthrough therapies.
    Can you talk to us about how you see this working at FDA, 
and give us some examples of products where this would be a 
helpful designation, where today there is none?
    Dr. Woodcock. Certainly, and I thank you for your 
leadership and the other members for their leadership on this 
issue.
    Today, with modern science, we are seeing something that we 
rarely saw before with therapeutics, which is sometimes very 
early in human testing. Sometimes it is the very first low 
doses that are carefully given to people, we see responses to 
the treatment that we have never seen before. And this might be 
for a serious and life threatening disease such as a dementia, 
where no treatment exists, it is effective.
    When that happens, we need what I call, ``all hands on 
deck.'' Everybody needs to sit up straight, get together, and 
figure out how to evaluate that therapy as rapidly as possible, 
so that if it actually has the promise that it shows in that 
early testing, it can be moved to patients as quickly as 
possible.
    Some of these may fail. However, the fact that some of them 
may work and actually be a breakthrough for patient and offer 
treatment that has never been seen before, a benefit, means 
that we have an ethical obligation to work as rapidly as 
possible.
    The designation process, I believe, would get everyone's 
attention. There would be an obligation to get that development 
path as efficient as possible. We also can run into ethical 
problems.
    If you had a serious or life threatening disease, and there 
was a tremendously promising therapy, would you want to be on 
the placebo group for 6 months?
    We need to design trials and evaluations that also take 
those issues into account. As soon as we lose what is called 
``clinical equipoise,'' and as soon as we think the therapy is 
much more likely to be better than anything out there, we need 
to take the appropriate steps.
    That is what this is about. It is different than Fast 
Track, which is actually a designation about review and 
working, rolling review and working with the company, and so 
forth. This is for those exceptional therapies which, we hope 
with the new science, we are going to be seeing more often 
where we really have to pay attention.
    Senator Bennet. I think it is a critical component of 
trying to create a patient-centric approach here. So I 
appreciate very much your words.
    Dr. Shuren, I do not have a lot of time left, and you and I 
have gone over some of this before, and you have been kind 
enough to visit Colorado, which I deeply appreciate.
    I wonder if you could talk specifically about how the user 
fees, in your view, are going to help smaller and mid-size 
companies that may not have the same resources as larger ones 
navigate the FDA?
    Dr. Shuren. There are a number of improvements and 
enhancements that we will see under MDUFA-III, and I will just 
highlight a few.
    One of them is in the pre-submission process. That is where 
now a company can come to us before they have actually even 
done the testing, or a lot of testing on their product, to get 
advice from us. This will be a much more rigorous process where 
we provide that advice. We write it down. We stand behind it, 
unless we wind up generally getting new information that is 
raising new issues. That is a big deal for these companies to 
have that kind of advice.
    The second is we are getting some additional people. It is 
only five. But you know what? Five can help a lot for putting 
out more guidance documents. We think putting out guidance is 
critical. It provides clarity, transparency, and predictability 
for companies. And this will help us get there.
    I will make one comment on that, though. On the drug side, 
a much bigger program, they have about 82 people in their 
office who handles those regulatory issues, guidance in those 
rules. We are at 18; the 5 will put us up to 23. It will help, 
but we have a way to go.
    Senator Bennet. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Bennet.
    Senator Merkley

                      Statement of Senator Merkley

    Senator Merkley. Thank you, Mr. Chair.
    And thank you all for your testimony. I am going to try to 
keep my questions short because I want to get through several 
of them.
    The first, Dr. Woodcock and Dr. Shuren, I wanted to ask 
about the issue of developing the Unique Device Identifier, 
UDI, in the context of medical devices, particularly 
implantable devices in order to be able to track the results 
and close the feedback loop.
    How important is that to accomplish?
    Dr. Shuren. Unique Device Identifiers are a game-changer. 
That number now on the device, being able to now either track 
or to link to information about that device or experience, is 
critical for things like recall, rapidly identifying the 
product, more robust adverse event reporting, taking advantage 
of insurance claims data, electronic health records to identify 
safety problems.
    But also to reduce the cost for some companies on doing 
their postmarket studies because we can have a more rigorous, 
robust postmarket surveillance system, and use that information 
to maybe reduce the evidentiary needs on premarket review.
    Senator Merkley. This would be included in the Sentinel 
Postmarketing Studies?
    Dr. Shuren. To actually participate in Sentinel in any 
meaningful way, we cannot do without a UDI.
    Senator Merkley. Dr. Woodcock.
    Dr. Woodcock. Yes, we feel that electronic health records 
and electronic health data provide tremendous benefit in order 
to find out what is actually happening with patients with all 
these new technologies.
    The Sentinel program right now has 125 million lives in it. 
In none of these are the patient data sent to FDA. They stay 
with the provider, but they are able to perform analyses. We 
hope to increase that so that we are looking at what most 
Americans experience, and we would love to have the device 
program robustly participate in that.
    Senator Merkley. I believe that the UDI rule is currently 
stalled at OMB. Any insights on how we can get that rule 
accomplished in order to have these benefits?
    Dr. Shuren. I will say any kind of help to try to get a UDI 
system in place would be most welcome by the agency. And I 
think expressing the importance and maybe even the expectations 
for having a UDI system in place.
    Senator Merkley. Maybe we should raise it in a hearing like 
this and shine a light on it?
    Dr. Shuren. Would be helpful and then some.
    Senator Merkley. All right. Great, great.
    Also, I am working with some other folks to develop a bill, 
if necessary, to basically put a deadline on getting this rule 
accomplished so we can try to benefit from this. There are a 
host of issues associated with this, including the 510(k) 
process in which a device is approved based on a predicate 
device that is substantially equivalent.
    There is something interesting that occurs, that even if 
there is a recall of a device in that it can still serve as a 
predicate for other devices under 510(k).
    How is it possible that we allow a device that has been 
recalled, by the manufacturer, to be utilized as the foundation 
for other, similar devices to bypass by the regular pre-market 
approval system?
    Dr. Shuren. That is one challenge in the 510(k) program. I 
will say the real issues occur very infrequently, and that is 
where you have a device that has a design flaw that affects 
safety and effectiveness, and gets recalled. Then a new device 
comes, and they replicate that design flaw.
    Senator Merkley. Yes, exactly.
    Dr. Shuren. Under the law, it can be substantially 
equivalent. We try to work with companies, but oftentimes it is 
issues about labeling. The burn does not flip the other way to 
say either the design flaw is not there, so we do not worry, or 
adequate mitigations have been taken to assure that that device 
is, in fact, safe and effective.
    Senator Merkley. It does seem like using a flawed design as 
a foundation for approving another device under 510(k) is 
something that we need to wrestle with. It does not make sense 
to patients who have these implanted devices, and are not too 
happy to find out the device that was implanted in them, was 
based on a design that has been recalled.
    Dr. Shuren. Yes, agreed.
    Senator Merkley. Last, I wanted to raise the issue of drug 
shortages and drug scalping. My understanding, Dr. Woodcock, is 
you have not found much evidence of drug scalping. But I keep 
hearing from practitioners in Oregon of being offered drugs at 
10, 20 or even 100 times the price.
    So I am trying to figure out, how is it I can hear all 
these examples from practitioners, but the agency cannot seem 
to find any evidence that it is a problem?
    Dr. Woodcock. We have referred to the Department of Justice 
a compilation of the complaints which is more than 100 drugs in 
shortage, and we would encourage your constituents to report 
any of these instances to the FDA, so that we can forward them 
to the Department of Justice for appropriate investigation.
    Senator Merkley. OK. We will try to channel as many as 
possible. It does seem like there is an issue here with 
middlemen buying up drugs, and then reselling them, and it is 
such an easy market to corner, when there is a small amount of 
drugs available in the system.
    One of my colleagues referred to the international flow of 
ingredients, and sometimes that causes shortages that in its 
moment, that a scalper can capitalize.
    I am really hoping we can try to solve this problem because 
when patients are told, ``Well, we are partway through your 
cancer treatment, and we cannot get the drugs.'' Or, ``We are 
partway through the cancer treatment and we can only get the 
drugs at many multiples of what they should cost,'' something 
is fundamentally wrong.
    Thank you.
    The Chairman. Thank you very much, Senator Merkley.
    I understand the votes are going to start at 11:15. Let us 
see how far we can go. We have Senator Hagan. Senator 
Blumenthal.

                    Statement of Senator Blumenthal

    Senator Blumenthal. Thank you. Thank you, Mr. Chairman.
    If I may ask you, Dr. Woodcock first, how many drugs are in 
shortage today in the United States?
    Dr. Woodcock. In 2010, there were 178. We have seen an 
increasing number. There were 250 shortages tracked in 2011, 
some of those have been mitigated, but additional ones. So I 
cannot tell you a summary, but there are over 200 drugs in 
shortage.
    Senator Blumenthal. What is the FDA doing to mitigate those 
shortages?
    Dr. Woodcock. We have taken multiple actions, including 
allowing importation of drugs that are not approved in the 
United States.
    Senator Blumenthal. What is the FDA doing to mitigate those 
shortages by addressing problems with the manufacturing 
process?
    Dr. Woodcock. We work very carefully with manufacturers who 
are having manufacturing problems to try and keep them in 
production of the drugs in shortage.
    Senator Blumenthal. Have cases of drug shortages and black 
market issues been referred to the Department of Justice?
    Dr. Woodcock. Absolutely. Any time we receive any 
information, we do refer either of price gouging or, of course, 
when there is an issue of counterfeits.
    Senator Blumenthal. Can you tell me which, in the last 3 
months, have been referred to the Department of Justice?
    Dr. Woodcock. We can get that information to you. I do not 
have it.
    Senator Blumenthal. Can you give it to me within the last 
year?
    Dr. Woodcock. We certainly can get that to you. Absolutely.
    Senator Blumenthal. What steps are being taken to notify 
the public more expeditiously about those shortages, including 
the medical community?
    Dr. Woodcock. We have a Web page. We really try, as much as 
possible, to both work with the associations and also reach out 
to the affected communities.
    Senator Blumenthal. Have you considered steps that can be 
taken beyond the way the working group has proposed, or will be 
proposing within the next few days?
    Dr. Woodcock. No. I would refer you to the HHS analysis of 
the root causes of drug shortages by the Assistant Secretary 
for Planning and Evaluation, which I think has the most in-
depth analysis of what caused these shortages and----
    Senator Blumenthal. Let me just say that I think that the 
response of the FDA so far has been inadequate. I have said it 
before at a hearing, I am not sure whether you were here or 
not, I feel that working group's proposals are a small step, a 
baby step, a tiptoe that also fails to address this issue.
    I think that the American people will be justly outraged, 
not just angry and impatient, but outraged when they understand 
both the causes and the impacts of drug shortages in this 
country. I will be very disappointed if this Congress fails to 
do much more than is contemplated right now in addressing these 
problems in the course of reauthorizing these agreements.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Blumenthal. Again, let me 
just thank you for your diligence in this area, and your focus 
on this whole area of the drug shortages, what is causing them, 
and its impact on our economy and people. I thank you very 
much.
    Senator Blumenthal. Thank you, Mr. Chairman, and I will 
look forward to receiving that additional information from the 
FDA.
    The Chairman. Absolutely.
    Senator Franken.

                      Statement of Senator Franken

    Senator Franken. Thank you, Mr. Chairman.
    Dr. Shuren, it is good to see you again. Thank you for 
being so willing to meet with me, and for coming to Minnesota a 
number of times, and meeting with our medical device industry 
there.
    You and I share a goal of patient safety, and as you 
acknowledge in your testimony as Director of the office that 
approves medical devices at the FDA, your job is to make sure 
that patients are safe.
    As you also acknowledged in your testimony, part of patient 
safety is getting treatments to patients who need them in a 
timely manner. If a patient with a disease or a condition 
cannot get a device that would help them stay healthier or even 
alive, we are failing at keeping that patient safe.
    When I talk with medical device manufacturers in Minnesota, 
they tell me how frustrated they are, that they are developing 
innovative and potentially lifesaving devices, but they cannot 
get them to patients because the FDA has not approved them yet, 
and you certainly referenced that in your testimony.
    I know that you have been working with Minnesota's 
LifeScience Alley, which just so happens to be the largest life 
sciences trade association in the Country, on an initiative to 
develop a regulatory science initiative. I want to thank you, 
again, for reaching out to Minnesota's biotech industry to work 
together on this. I hope that initiatives like this one will 
lead to a real change in the way that you and the industry 
communicate.
    Can you update me on the status of that partnership? And 
what are your next steps?
    The Chairman. Before you answer, Dr. Shuren, I just want to 
note that the vote has started at 11:16. It is my intention 
that after we finish with Senator Franken's round, that we will 
recess, and then we will come back and start the second panel.
    Dr. Shuren. We have been working with LifeScience Alley to 
start to identify the specific projects that we would begin to 
work on together as first steps, and we have actually gotten it 
to a short list. Our goal is in the coming weeks to finalize on 
a set of activities that we will be doing jointly together. 
That will include on the research side. It will include on the 
education side as well.
    Senator Franken. OK.
    Dr. Shuren, my bill, the Patient Access to Medical 
Innovation Act, will help get treatments to patients who need 
them. As you know, my bill has two provisions.
    The first part will help patients with rare diseases get 
them new and innovative treatments. The second part will remove 
red tape that keeps the FDA from consulting with the experts in 
health care and biotechnology which, I think, dovetails with 
the goals you have with your regulatory science initiative with 
LifeScience Alley.
    I am happy to say that both of these provisions have been 
included in the bipartisan health committee consensus draft 
legislation that will be attached to the user fee legislation 
later this year.
    As Director of the office that reviews devices, do you 
believe that the added flexibility that my bill gives you to 
consult with experts will help you get safe devices to the 
market faster? How do you think this flexibility would help 
you, if that is the case?
    Dr. Shuren. I do think this is helpful. This will allow us 
to more quickly and with broader scope include critical experts 
in our pool of special Government employees who can be on our 
advisory committees, and provide us with advice and 
recommendations. That is very important to us.
    Senator Franken. My other provision will reward innovators 
who develop devices to treat rare conditions, and Senator 
Whitehouse talked about the importance of pharmaceuticals for 
that.
    Do you believe that my bill will help patients with rare 
diseases? And how will it help patients, do you think?
    Dr. Shuren. I do and actually, I want to commend you on 
this particular provision because you have tried to strike that 
balance of preserving the incentive already in place for 
developing devices for pediatric conditions, while extending 
that incentive for developing devices for other rare 
conditions.
    There are some technical things we would like to work with 
the committee on for that provision, but this can be an 
important step forward for getting and incentivizing 
development of devices for rare conditions.
    Senator Franken. I would be happy to work with you on that 
and with the Chairman. Thank you both for your testimony.
    Now I guess we should go vote.
    The Chairman. The committee will be in recess for about 10 
minutes, then we will come back.
    Thank you both very, very much. Appreciate it, Dr. Shuren 
and Dr. Woodcock.
    [Recessed.]
    The Chairman. I'll ask our panelists to come up and take 
their respective seats.
    As I said to all of you at the beginning when I made my 
opening statement, when I introduced you and who you are 
representing, I thank you for being here. Your statements will 
all be made a part of the record in their entirety. We will go 
from left to right and I ask if you would sum up your testimony 
in 5 minutes or so, we would be most appreciative.
    We will start with Dr. David Wheadon, senior vice president 
for Regulatory Affairs at PhRMA.
    Dr. Wheadon, please proceed.

 STATEMENT OF DAVID E. WHEADON, M.D., SENIOR VICE PRESIDENT OF 
SCIENTIFIC AND REGULATORY AFFAIRS, PHARMACEUTICAL RESEARCH AND 
            MANUFACTURERS OF AMERICA, WASHINGTON, DC

    Dr. Wheadon. Thank you. Chairman Harkin, Ranking Member 
Enzi, members of the committee, good morning.
    I am David Wheadon, senior vice president of Scientific and 
Regulatory Affairs at the Pharmaceutical Research and 
Manufacturers of America, better known as, PhRMA.
    PhRMA appreciates this opportunity to testify today, and 
share our views on the fifth reauthorization of the 
Prescription Drug User Fee Act, PDUFA, and the authorization of 
the Biosimilars User Fee Act, BsUFA.
    The PDUFA-V performance goals letter is the result of 
extensive negotiations between the U.S. Food and Drug 
Administration and the innovative biopharmaceutical industry, 
and is intended to improve FDA's ability to conduct thorough 
and efficient reviews of new medicines for patients.
    FDA's process in negotiating these performance goals 
included unprecedented transparency and input from all 
stakeholders, including patient advocates, healthcare 
professionals, consumers, and academia.
    PhRMA, as the representative of the country's leading 
pharmaceutical research and biotechnology companies, strongly 
supports the original intent and goals of PDUFA. Namely, to 
provide patients with faster access to innovative medicines; to 
preserve and strengthen FDA's high standards for safety, 
efficacy, and quality; and to advance the scientific basis for 
the agency's regulatory oversight.
    PhRMA strongly endorses the recommendations of the PDUFA-V 
performance goals letter and urges Congress to reauthorize 
PDUFA in a timely manner, based on the PDUFA-V agreement. This 
agreement will provide FDA with the resources and tools 
required to further enhance the timeliness, completeness, and 
efficiency of the drug review process.
    As you have heard this morning, failure to authorize PDUFA 
in a timely manner would have catastrophic effects on the FDA's 
ability to carry out its important role in bringing new 
medicines to patients with debilitation diseases.
    PDUFA-V will improve the review process for new molecular 
entity drug and biologic applications, which will be 
particularly significant for patients because NME's are novel 
compounds that have the potential to address unmet medical 
needs in advanced patient care. The enhanced NME review process 
addresses the increasing complexity of reviewing new drug 
applications and biological license applications, and provides 
for increased communication between FDA and drug sponsors prior 
to and during the drug review process.
    As a result, the NME review program is expected to improve 
the efficiency of the review process and reduce the overall 
time until new medicines become available to patients. The 
success of the new review program and of the agency's ability 
to achieve its drug review goals will be independently assessed 
and publicly reported in 2015 and 2017.
    Several new provisions in the PDUFA-V performance goal 
letter afford FDA with appropriate staffing and resources to 
develop, through public input, new tools and methods to 
integrate emerging scientific data and techniques into the drug 
development and review process.
    Provisions to enhance FDA's regulatory review capabilities 
include, but are not limited to, the use of pharmacogenomics 
and biomarkers to decrease drug development time by helping 
demonstrate therapeutic benefits more rapidly, and identifying 
patients who are likely to benefit from treatment, as well as 
those at increased risk for serious adverse events.
    Avenues for accelerating drug development for rare and 
orphan diseases, and providing FDA with the necessary 
regulatory flexibility to encourage and advance research into 
novel treatments for patients with significant unmet needs 
today. And forming a public process to help standardize Risk 
Evaluation and Mitigation Strategies, or REMS, with the intent 
to assess and reduce burden on healthcare providers and 
patients.
    PDUFA has advanced public health by accelerating the 
availability of innovative medicines to patients who are 
helping to insure patient safety. PDUFA-V will continue to 
provide FDA with the resources and tools that are essential to 
support patient safety and promote medical innovation through 
enhanced timeliness, completeness, and efficiency of the drug 
review process.
    PhRMA urges Congress to reauthorize PDUFA in a timely 
manner based on the negotiated PDUFA-V performance goals, and 
to minimize the inclusion of additional provisions that may 
have the unintended consequence of distracting from the Act's 
original intent.
    I will just briefly comment on BsUFA, but I know my 
colleague will be focusing on that. But the BsUFA performance 
goals are consistent with congressional intent to create a 
unique user fee program to meet the needs of biosimilar product 
applicants, and to provide FDA with the means necessary to 
build, essentially from scratch, its capacity for science-based 
review for biosimilar applications.
    Among the key aspects of the proposed BsUFA performance 
goals is the expectation for FDA in fiscal year 2013 to review 
and act on 70 percent of original biosimilar application 
submissions within 10 months of receipt, and to review and act 
on 70 percent of resubmissions within 6 months of receipt. As 
the agency's review capacity for biosimilar products develops, 
review performance goals will gradually increase.
    In summary, PhRMA and our managed member companies are 
committed to working closely with FDA and all stakeholders to 
ensure the continued success of PDUFA in bringing safe, 
effective, innovative medicines forward to address unmet 
medical needs for all patients.
    PhRMA stands ready to work with the FDA and other 
stakeholders in establishing a science-based approach to the 
development and review of biosimilar and interchangeable 
biological products.
    We therefore urge Congress to reauthorize PDUFA in a timely 
manner based on the negotiated PDUFA-V agreement and to 
authorize BsUFA with congressional appropriations allocated in 
support of this program for fiscal years 2013 through 2017.
    Thank you, and I would be happy to answer any questions.
    [The prepared statement of Dr. Wheadon follows:]
              Prepared Statement of David E. Wheadon, M.D.
                                summary
    The Prescription Drug User Fee Act (PDUFA) has been a great success 
for patients since its initial passage in 1992. The PDUFA user fee 
program provides FDA with the additional staffing and resources it 
needs to significantly reduce the timeframe for the review of new 
medicines, while protecting public health by assuring the safety of 
these products.

     The PDUFA-V performance goals letter is the result of 
extensive negotiations between the FDA and the innovative 
biopharmaceutical industry. FDA's process for negotiating these 
performance goals included unprecedented transparency and input from 
all stakeholders, including patient advocates, healthcare 
professionals, consumers and academia.
     A number of important new commitments are detailed in the 
PDUFA-V performance goals letter, including provisions to make the 
regulatory review of new medicines more efficient and timely, advance 
regulatory science and modernize drug development, improve benefit/risk 
decisionmaking, and further strengthen FDA's focus on patient safety.
     PhRMA urges Congress to reauthorize PDUFA in a timely 
manner based on the negotiated PDUFA-V performance goals and to 
minimize inclusion of additional provisions that may distract from the 
Act's original intent--faster access to innovative medicines while 
preserving and strengthening the FDA's high standards for safety, 
efficacy and quality.
     Failure to reauthorize PDUFA in a timely manner would not 
only have an extraordinarily disruptive effect on the FDA and impede 
patients' access to new and innovative treatments, but such a failure 
would also endanger biopharmaceutical innovation.

    The Biologics Price Competition and Innovation Act of 2009 (BPCIA) 
established an abbreviated pathway for biosimilar products and 
interchangeable biological products. PhRMA was a participant in the 
technical negotiations with the FDA that, together with input from 
patient and healthcare provider groups, resulted in the Biosimilars 
User Fee Act (BsUFA)performance goals letter.

     The BsUFA performance goals are consistent with 
congressional intent to create a unique user fee program to meet the 
needs of biosimilar product applicants, and to provide FDA with the 
means necessary to build, essentially from scratch, its capacity for 
science-based review of biosimilar applications.
     PhRMA believes that the review process for biosimilar and 
interchangeable biological products must be scientifically rigorous, 
timely, and above all, protective of patient safety. Achieving these 
objectives will require a clear and formalized regulatory pathway for 
biosimilar products, quality standards equal to standards for 
innovative products, and adequate preclinical and clinical testing to 
ensure that biosimilars are both safe and effective.
     PhRMA urges Congress to authorize BsUFA with congressional 
appropriations allocated in support of this program for fiscal years 
2013-17.
                                 ______
                                 
    Chairman Harkin, Ranking Member Enzi, members of the committee, 
good morning. I am David Wheadon, senior vice president, Scientific and 
Regulatory Affairs at the Pharmaceutical Research and Manufacturers of 
America (PhRMA). PhRMA appreciates this opportunity to testify today 
and share our views on the fifth reauthorization of the Prescription 
Drug User Fee Act (PDUFA) and the authorization of the Biosimilars User 
Fee Act (BsUFA).
    reauthorization of the prescription drug user fee act (pdufa-v)
    PDUFA has been a great success for patients--the tens of millions 
of Americans who rely on innovative drugs and biologics to treat 
disease and to extend and improve the quality of their lives. The PDUFA 
user fee program has provided FDA with additional staffing and 
resources it needed to significantly reduce the timeframe for review of 
new medicines, while protecting public health by assuring the safety of 
these products. Furthermore, PDUFA has helped to improve America's 
competitiveness around the world. Since the passage of the original 
Prescription Drug User Fee Act in 1992, the United States has become 
the world leader in bringing new medicines to patients first.
    The PDUFA-V performance goals letter is the result of extensive 
negotiations between the U.S. Food and Drug Administration (FDA) and 
the innovative biopharmaceutical industry and is intended to improve 
FDA's ability to conduct thorough and efficient reviews of new 
medicines for patients. FDA's process for negotiating these performance 
goals included unprecedented transparency and input from all 
stakeholders, including patient advocates, healthcare professionals, 
consumers and academia.
    PhRMA and its members, the country's leading pharmaceutical 
research and biotechnology companies, strongly support the original 
goals of PDUFA, namely--to provide patients with faster access to 
innovative medicines, to preserve and strengthen FDA's high standards 
for safety, efficacy and quality, and to advance the scientific basis 
for the Agency's regulatory oversight.
    PhRMA strongly endorses the recommendations of the PDUFA-V 
performance goals letter. This agreement will provide FDA with the 
resources and tools required to further enhance the timeliness, 
completeness, and efficiency of the drug review process. Failure to 
reauthorize PDUFA in a timely manner would have catastrophic effects on 
the FDA's ability to carry out its important role in bringing new 
medicines to patients suffering from debilitating diseases.
    The Role of PDUFA in Encouraging Innovation and Economic Growth. 
Ensuring that the United States maintains a policy and regulatory 
environment that encourages an efficient, consistent and predictable 
drug review process is key to keeping America competitive in today's 
global economy. A 2011 report by Battelle \1\ found that the U.S. 
biopharmaceutical industry ``is well recognized as a dynamic and 
innovative business sector generating high quality jobs and powering 
economic output and exports for the U.S. economy.'' According to the 
report, nationwide the sector supported a total of 4 million jobs in 
2009, including 674,192 direct jobs. The total economic output from the 
sector's direct, indirect, and induced impacts was $918 billion. 
Because PDUFA has injected greater consistency, transparency and 
predictability into the FDA's drug review process, its reauthorization 
is an important factor in ensuring that biopharmaceutical companies 
maintain this level of job creation and economic growth. Failure to 
reauthorize PDUFA in a timely manner would not only have an 
extraordinarily disruptive effect on the Agency and impede patients' 
access to new and innovative treatments, but such a failure would also 
endanger biopharmaceutical innovation.
---------------------------------------------------------------------------
    \1\ Battelle Technology Partnership Practice. The U.S. 
Biopharmaceuticals Sector: Economic Contribution of the Nation. July 
2011. Battelle Memorial Institute. Prepared for the Pharmaceutical 
Research and Manufacturers of America.
---------------------------------------------------------------------------
    There are a number of important new commitments in the carefully 
negotiated PDUFA-V performance goals letter, including provisions to 
make the regulatory review of new medicines more efficient and timely, 
to advance regulatory science and modernize drug development, to 
improve benefit/risk decisionmaking, and to further strengthen FDA's 
focus on patient safety.
    Below I discuss these significant enhancements of the PDUFA-V 
performance goals letter.
    Enhanced NME Review Program. PDUFA-V will improve the review 
process for new molecular entity (NME) drug and biologic applications 
which will be particularly significant for patients, because NMEs are 
novel compounds that have the potential to address unmet medical needs 
and advance patient care. The enhanced NME review model addresses the 
increasing complexity of reviewing new drug applications (NDAs) and 
biologic license applications (BLAs), and provides for increased 
communication between FDA and drug sponsors prior to and during the 
drug review process. A validation period will help FDA plan activities 
such as inspections and advisory committee meetings, and will 
accommodate iterative interactions between sponsors and the Agency. As 
a result, the NME review program is expected to improve the efficiency 
of the review process and reduce the overall time until new medicines 
become available to patients. Specifically, it is anticipated that 
earlier and more comprehensive communication between the Agency and 
drug sponsors will improve the rate of ``on-time, first-cycle'' 
successes--that is, the number of new medicines that are fully reviewed 
and for which definitive regulatory action is taken within the target 
timeframe following initial submission. The success of the new review 
program and of the Agency's ability to achieve its drug review goals 
will be independently assessed and publicly reported in 2015 and 2017.
    Advancements in Regulatory Science. Several new provisions in the 
PDUFA-V performance goals letter will afford FDA with appropriate 
staffing and resources to develop, through public input, new tools and 
methods to integrate emerging scientific data and techniques into the 
drug development and review process. These advancements in regulatory 
science will rely on engagement with industry, academia and other 
stakeholders to identify best practices so the Agency can provide 
appropriate guidance to stakeholders involved in drug development.
    Provisions to enhance FDA's regulatory review capabilities include:

     The use of pharmacogenomics and biomarkers to decrease 
drug development time by helping demonstrate therapeutic benefits more 
rapidly, and identifying patients who are likely to benefit from 
treatment, as well as those at increased risk for serious adverse 
events.
     Avenues for accelerating drug development for rare and 
orphan diseases and provide FDA with the necessary regulatory 
flexibility to encourage and advance research into novel treatments for 
patients with significant unmet needs today.
     Standards for and validation of patient-reported outcomes 
and other assessment tools that may assist regulators in evaluating 
treatment benefits and potential risks from the patient's point of 
view.
     And the evaluation of the use of meta-analyses in 
regulatory review and decisionmaking, highlighting best practice and 
potential limitations.

    Systematic Approach to Benefit-Risk Assessment. A key provision in 
the PDUFA-V performance goals letter recognizes that the drug review 
process could be improved by a more systematic and consistent approach 
to benefit-risk assessment that fairly considers disease severity and 
unmet medical needs. During PDUFA-V, the Agency will implement a 
structured benefit-risk framework, and hold public meetings to assess 
the application of such frameworks in the regulatory environment. In 
addition, over the course of PDUFA-V the Agency will hold a series of 
public meetings with the patient advocacy community to identify disease 
states that--from the patient perspective--have considerable unmet 
needs. Development and implementation of a patient-focused, structured 
framework for evaluating benefits and risks of new treatments will help 
inform the drug development process as well as ensure that regulatory 
decisions are consistent, appropriately balanced, and based on best 
science.
    Modernizing the U.S. Drug Safety System. Finally, further 
enhancement and modernization of the FDA drug safety system under 
PDUFA-V will ensure that patient safety remains paramount. The PDUFA-V 
performance goals letter provides for a public process to help 
standardize risk evaluation and mitigation strategies (REMS), with the 
intent to assess and reduce burden on healthcare providers and 
patients. Additionally, FDA will continue to evaluate the feasibility 
of using the Agency's Sentinel Initiative to actively evaluate post-
marketing drug safety issues.
    PDUFA has advanced public health by accelerating the availability 
of innovative medicines to patients while helping to ensure patient 
safety. The PDUFA program has strengthened the scientific basis of 
FDA's regulatory review process through the development and application 
of new tools, standards, and approaches that facilitate assessment of 
the safety and efficacy of innovative drugs and biologics. PDUFA-V will 
continue to provide FDA with the resources and tools that are essential 
to support patient safety and promote medical innovation through 
enhanced timeliness, completeness, and efficiency of the drug review 
process. PhRMA encourages Congress to reauthorize PDUFA in a timely 
manner based on the negotiated PDUFA-V performance goals, and to 
minimize the inclusion of additional provisions that may have the 
unintended consequence of distracting from the Act's original intent--
to provide patients with faster access to innovative medicines, to 
preserve and strengthen FDA's high standards for safety, efficacy and 
quality, and to advance the scientific basis for the Agency's 
regulatory oversight.
authorization of a user fee program for biosimilar biological products 
   under the biologics price competition and innovation act of 2009 
                                (bsufa)
    An abbreviated approval pathway for biosimilar products and 
interchangeable biological products was established in the Biologics 
Price Competition and Innovation Act of 2009 (BPCIA) and PhRMA has been 
supportive of FDA's ongoing efforts to implement BPCIA in a manner that 
ensures patient safety and encourages biopharmaceutical innovation. 
PhRMA was a participant in the technical negotiations with the U.S. 
Food and Drug Administration (FDA) that, together with input from 
patient and healthcare provider groups, resulted in the Biosimilars 
User Fee Act (BsUFA) performance goals letter.
    The BsUFA FDA performance goals are consistent with congressional 
intent to create a unique user fee program to meet the needs of 
biosimilar product applicants, and to provide FDA with the means 
necessary to build, essentially from scratch, its capacity for science-
based review of biosimilar applications. PhRMA believes that the BsUFA 
performance goals will benefit patient safety and public health as 
biosimilar products will be required to meet FDA's high standards for 
safety, purity, and potency.
    Several of PhRMA's member companies for many years have been 
actively engaged in the development of innovative biological products. 
In addition, some of PhRMA's member companies have expressed their 
intent to develop biosimilar products. PhRMA therefore supports the 
development of a robust user fee program for biosimilar products to 
provide FDA with the resources needed to review biosimilars without 
diverting resources from the review of innovative medicines. PhRMA is 
further supportive of the appropriation of congressional funds for this 
purpose, a feature common to existing user fee programs, to ensure that 
user fees supplement, rather than replace, appropriations.
    PhRMA believes that the review process for biosimilar and 
interchangeable biological products must be scientifically rigorous, 
timely, and above all, protective of patient safety. Achieving these 
objectives will require a clear and formalized regulatory pathway for 
biosimilar products, quality standards that meet standards for 
innovative products, and adequate preclinical and clinical testing to 
ensure that biosimilars are both safe and effective.
    PhRMA recognizes that, for the purpose of this first authorization, 
the biosimilar user fee program must be structured differently from 
other user fee programs. It will be necessary, for example, to collect 
fees earlier in the biological product development process, until fees 
from licensing applications can provide sufficient ongoing revenues to 
support the Agency's activities. It must be understood, however, that 
the proposed user fee program for biosimilar products--and, in 
particular, the provision for payment of a portion of the application 
fee at the time of an Investigational New Drug (IND) submission and 
yearly thereafter--is a stop-gap measure, subject to review at the time 
of BsUFA reauthorization in 2017.
    Among the key aspects of FDA's proposed BsUFA performance goals is 
the expectation for FDA, in fiscal year 2013, to review and act on 70 
percent of original biosimilar application submissions within 10 months 
of receipt and to review and act on 70 percent of resubmissions within 
6 months of receipt. As the Agency's review capacity for biosimilar 
products develops, review performance goals will gradually increase.
    The BsUFA performance goals further provide for specific FDA/
sponsor meetings to facilitate the biosimilars development phase. This 
provision includes a special protocol assessment mechanism for clinical 
study protocols that are intended to establish biosimilarity and/or 
interchangeability with a reference biological product, to help ensure 
that the study design is adequate to meet scientific and regulatory 
requirements for approval.
    The proposal also calls for FDA to issue guidance on procedures for 
meetings between the Agency and sponsor prior to submission of a 
biosimilar licensing application, and PhRMA urges the Agency to 
accelerate its guidance development in this area. Eventually, the 
biosimilar application process should be codified in regulations 
similar to all other approval pathways.
    Additionally, user fees will be applied to enhance patient safety 
through implementation of measures to reduce medication errors related 
to similar sounding proprietary names, unclear labeling, and confusing 
package design.
    PhRMA supports the proposed BsUFA performance goals agreement as a 
means of advancing public health by making adequate resources available 
to FDA to build a capacity for regulatory review of biosimilar 
products, consistent with the Agency's high standards for patient 
safety and scientific rigor.
    PhRMA and its member companies are committed to working closely 
with FDA, and all stakeholders, to insure the continued success of 
PDUFA in bringing safe, effective innovative medicines forward to 
address unmet medical needs for all patients. Additionally, PhRMA 
stands ready to work with the FDA and other stakeholders in 
establishing a science-based approach to the development and review of 
biosimilar and interchangeable biological products. PhRMA therefore 
urges Congress to reauthorize PDUFA in a timely manner based on the 
negotiated PDUFA-V agreement and to authorize BsUFA with congressional 
appropriations allocated in support of this program for fiscal years 
2013 through 2017.
    Thank you for the opportunity to testify today and I welcome any 
questions you may have.

    The Chairman. Thank you very much, Dr. Wheadon.
    Now we turn to Miss Radcliffe representing the 
Biotechnology Industry Organization.
    Miss Radcliffe, welcome.

STATEMENT OF SARA RADCLIFFE, EXECUTIVE VICE PRESIDENT, HEALTH, 
      BIOTECHNOLOGY INDUSTRY ORGANIZATION, WASHINGTON, DC

    Ms. Radcliffe. Thank you very much.
    Chairman Harkin, Ranking Member Enzi, members of the 
committee, it is my privilege to provide testimony before you 
today.
    My name is Sara Radcliffe and I am executive vice president 
for Health for the Biotechnology Industry Organization. In that 
role, I had the opportunity to manage BIO's involved in the 
Biosimilars User Fee, or BsUFA, technical discussions with FDA 
as well as lead BIO's engagement in the Prescription Drug User 
Fee Act technical discussions.
    BIO represents over 1,100 members involved in the research 
and development of innovative healthcare, agricultural, 
industrial, and environmental technologies.
    The U.S. biotechnology industry is poised to be a major 
driver in an innovation-driven economy. Biotechnology offers 
real solutions to our most pressing healthcare needs, curing 
disease, reducing costs, increasing quality, and insuring that 
people enjoy not only longer lives, but also better and more 
productive lives.
    I am here today primarily to express BIO's strong support 
for the authorization of the biosimilars user fee program as 
part of FDA's ongoing implementation of a well-constructed, 
science-based pathway with the approval of biosimilar 
biological products that protects patient safety and preserves 
incentives to innovate.
    Throughout both the legislative consideration of the 
Biologics Price Competition and Innovation Act of 2009 and 
ongoing FDA implementation of the pathway, BIO articulated a 
number of principles that will promote the development of an 
effective regulatory framework for biosimilar biological 
products including: that patient safety be insured, that the 
scientific differences between drugs and biologics be 
recognized, that incentives for innovation be preserved, that 
transparent statutory and regulatory processes be established 
and followed, and that FDA would continue to prioritize the 
review and approval of innovative therapies and cures.
    BIO believes that the proposed standalone user fee program 
is consistent with these principles. BsUFA will provide FDA 
with dedicated user fee resources and review capacity to 
facilitate the development and evaluation of biosimilar, 
biological products while also continuing to prioritize the 
review of innovative drugs and biologics under PDUFA.
    I would like to mention a few key features of the BsUFA 
program. First, the biosimilars user fee program establishes a 
unique product development fee, which is ultimately deducted 
from the sponsor's application fee. Because there is currently 
no established biosimilar industry to form a stable funding 
source for activities that occur before submission of 
applications, it is important to front load the fees through 
this product development fee so that the agency has resources 
available to meet with sponsors during development to provide 
scientific advice and feedback.
    We note, however, that this situation with respect to 
biosimilar biological products should not establish any 
precedent for investigational new drug or IND fees under the 
PDUFA program. Additionally, an IND-associated fee should 
sunset permanently in fiscal year 2018 when both PDUFA and this 
new user fee program would sunset.
    PDUFA also promotes robust postmarket safety for biosimilar 
biological products by establishing a lifecycle approach to 
product evaluation and directing resources to FDA's postmarket 
pharmaco vigilance activities in alignment with approach to 
drug safety that has been adopted by innovative sponsors.
    BIO also recognizes that historically most FDA user fee 
programs have been established on a preexisting base of 
appropriations. However, only modest appropriations are 
currently allocated to biosimilars review processes. To 
facilitate an equitable balance of fees and appropriations, FDA 
and industry support a trigger provision similar to the 
established appropriations triggers in other user fee programs 
that would ensure FDA allocates at least $20 million per year 
to the program.
    BIO encourages Congress to recognize the importance of a 
well-resourced and viable biosimilars pathway at FDA, and we 
request that adequate new funding be appropriated for the 
program.
    I would also like to address briefly the Prescription Drug 
User Fee Act or PDUFA reauthorization. We have addressed the 
elements of the PDUFA-V technical agreement in detail in our 
written testimony. In short, BIO believes that the PDUFA 
program represents a critical element of our Nation's overall 
innovation ecosystem. The set of PDUFA-V enhancements that were 
agreed by FDA, BIO, and PhRMA seek to reinforce FDA's review 
program and get back to basics for patients.
    Timely PDUFA reauthorization will enhance the drug 
development and review process through increased transparency 
in scientific dialog, advanced regulatory science, strengthen 
postmarket surveillance, and help establish best practices for 
timely interactive dialog between sponsors and the agency 
during drug development. Most importantly, our hope is that 
PDUFA-V will provide patients and doctors with earlier access 
to important new therapies.
    In conclusion, a transparent, predictable, and balanced 
regulatory framework for the review and approval of biosimilars 
accompanied by reasonable performance goals and a dedicated 
independent funding stream will ensure that FDA can facilitate 
the development and evaluation of biosimilars products. Both 
user fee programs, BsUFA and PDUFA, will enhance FDA's ability 
to protect and promote the public health, and we strongly 
encourage Congress to enact them in a timely manner.
    Thank you.
    [The prepared statement of Ms. Radcliffe follows:]
                  Prepared Statement of Sara Radcliffe
                                summary
    BIO supports swift enactment of the Biosimilars User Fee Agreement 
(BsUFA). The funding and goals contained in this proposal, along with a 
well-constructed, science-based, transparent pathway for the approval 
of biosimilar products, will ensure that FDA can facilitate the 
development and evaluation of biosimilars products.
    BIO recognizes that 351(k) applications will raise novel and 
complex questions of science and law, requiring substantial time, 
expertise, and additional resources to ensure a thorough regulatory 
review. BIO believes that one of the principal goals of this new user 
fee program must be to ensure that workload associated with biosimilar 
applications does not harm the Agency's ability to efficiently review 
innovative drugs and biologics, and that new treatments continue to 
have the highest review priority. Accordingly, we agree with FDA's 
principle that the Agency needs sufficient review capacity and 
dedicated user fee resources for 351(k) applications to assure that 
resources are not redirected from innovator reviews.
    Additionally, BsUFA promotes robust post-market safety for 
biosimilar products by establishing a life-cycle approach to product 
evaluation and directing resources to FDA's post-market 
pharmacovigilance activities. Because biologics are complex and 
challenging to characterize, and the nature of a biologic is closely 
dependent on the starting materials and processes used to make that 
product, minor changes made by a manufacturer to starting materials or 
to manufacturing processes can lead to changes in the product that may 
not be detectable by current technologies. Therefore, a carefully 
designed pharmacovigilance effort is important.
    BIO also recognizes that, historically, most FDA user fee programs 
have been established on a pre-existing base of appropriations. 
However, given the recent establishment of the biosimilars program at 
FDA, only modest appropriations are currently allocated to the program, 
and this funding is inadequate to meet the anticipated workload 
demands. To facilitate an equitable balance of fees and appropriations, 
FDA and industry support a trigger provision--similar to the 
established appropriations triggers in other user fee programs--that 
would ensure that FDA allocates at least $20 million per year to the 
program. BIO encourages Congress to recognize the importance of a well-
resourced and viable biosimilars pathway at FDA and we request that 
adequate new funding be appropriated for the program.
    The biosimilars user fee program also establishes a unique 
biosimilar product development fee, which is ultimately deducted from 
the sponsor's application fee. The assessment of a product development 
fee is unique to this situation with respect to biosimilar products and 
should not establish any precedent for investigational new drug (IND) 
fees under the PDUFA program. Additionally, any IND-associated fee 
should sunset permanently in fiscal year 2018 when both PDUFA and this 
new user fee program would sunset.
    A key to the success and the future of the U.S. biotechnology 
industry is a reliable, predictable, and science-based regulatory 
environment, and the PDUFA program represents an important element of 
our Nation's overall innovation eco-system. While establishing a sound 
BsUFA was a priority for BIO, so too is reauthorizing PDUFA. The 
principles which guided BIO in our technical discussions with FDA 
regarding PDUFA reauthorization were that a science-based, transparent, 
and well-managed review process that appropriately balances benefits 
and risks can enhance public trust and increase patient access to new 
medicines. With these principles in mind, BIO, PhRMA, and FDA agreed 
upon a set of enhancements under PDUFA-V that seek to reinforce FDA's 
review performance and get back-to-basics for patients. These proposals 
have also been informed by an unprecedented level of public input 
through workshops, meetings, and stakeholder outreach, which further 
strengthened the technical agreement.
    Under the PDUFA-V agreement, industry has reinforced its commitment 
to a well-funded drugs and biologics review program that supports 
sound, science-based regulation consistent with FDA's public health 
mission. However, user fees are intended to support limited FDA 
activities around the drug review process and were never intended to 
supplant a sound base of appropriations. User fees currently account 
for nearly two-thirds of the cost of human drug review. We urge 
Congress to support FDA's mission and fund the Agency at the 
Administration's fiscal year 2012 requested levels.
    Finally, it is critical for PDUFA to be reauthorized well in 
advance of PDUFA-IV's expiration in September 2012, to avoid a 
reduction in force at the FDA. Even the threat of a downsizing at the 
FDA would be devastating to the Agency's public health mission and its 
ability to review new drugs and biologics.
                                 ______
                                 
    Chairman Harkin, Ranking Member Enzi, members of the committee, it 
is my privilege to provide testimony before you today. My name is Sara 
Radcliffe and I am executive vice president for Health for the 
Biotechnology Industry Organization (BIO). In that role, I have had the 
opportunity to manage BIO's involvement in the biosimilars user fee 
(BsUFA) technical discussions, as well as lead BIO's engagement in the 
Prescription Drug User Fee Act (PDUFA) technical discussions with the 
Food and Drug Administration (FDA).
    BIO represents over 1,100 members involved in the research and 
development of innovative healthcare, agricultural, industrial, and 
environmental technologies. The U.S. biotechnology industry is poised 
to be a major driver in an innovation-driven economy. Biotechnology 
offers real solutions to our most pressing health care needs: curing 
disease, reducing costs, increasing quality, and ensuring that people 
enjoy not only longer lives, but better and more productive lives.
    I am here today to express BIO's support for the establishment of 
the biosimilars user fee program as part of FDA's ongoing 
implementation of a well-constructed, science-based pathway for the 
approval of biosimilar products that protects patient safety and 
preserves incentives to innovate. BsUFA will provide FDA with the 
resources and capacity to facilitate the development and evaluation of 
biosimilars products, while also continuing to prioritize the review of 
innovative drugs and biologics under PDUFA so that safe and effective 
new treatments--many for currently untreatable and serious diseases--
can be made readily available to patients.
    BIO also supports timely reauthorization of PDUFA, which we believe 
will enhance the drug development and review process through increased 
transparency and scientific dialog, advance regulatory science, and 
strengthen post-market surveillance. Most importantly, our hope is that 
PDUFA-V will provide patients and doctors with earlier access to 
important new therapies.
      i. bio supports passage of the biosimilars user fee program
    BIO supports FDA's ongoing implementation of a well-constructed, 
science-based pathway for the approval of biosimilar products. A 
transparent, predictable, and balanced regulatory framework for the 
review and approval of biosimilars, accompanied by reasonable 
performance goals and a dedicated, independent funding stream, will 
ensure that FDA can facilitate the development and evaluation of 
biosimilars products.
    Throughout both the legislative consideration of the Biologics 
Price Competition and Innovation Act of 2009 (BPCIA) and ongoing FDA 
implementation of the pathway, BIO has articulated several key 
principles that will promote the development of an effective regulatory 
framework for biosimilar products:

     Ensuring Patient Safety
     Recognizing Scientific Differences Between Drugs and 
Biologics
     Maintaining the Physician-Patient Relationship
     Preserving Incentives for Innovation
     Ensuring Transparent Statutory and Regulatory Processes
     Continuing to Prioritize FDA Review and Approval of New 
Therapies and Cures

    BIO believes that the proposed user fee program is consistent with 
these principles and supports congressional enactment of the program.
    The establishment of a stand-alone, independent biosimilars user 
fee program is consistent with congressional intent and precedent 
established under other user fee programs. BIO recognizes that 351(k) 
applications will raise novel and complex questions of science and law, 
requiring substantial time, expertise, and additional resources to 
ensure a thorough regulatory review. BIO believes that one of the 
principal goals of this new user fee program must be to ensure that 
workload associated with biosimilar applications does not harm the 
Agency's ability to efficiently review innovative drugs and biologics, 
and that new treatments continue to have the highest review priority. 
Accordingly, we agree with FDA's principle that the Agency needs 
sufficient review capacity and dedicated user fee resources for 351(k) 
applications to assure that resources are not redirected from innovator 
reviews.
    Additionally, BsUFA promotes robust post-market safety for 
biosimilar products by establishing a life-cycle approach to product 
evaluation and directing resources to FDA's post-market 
pharmacovigilance activities. Because biologics are complex and 
challenging to characterize, and the nature of a biologic is closely 
dependent on the starting materials and processes used to make that 
product, minor changes made by a manufacturer to starting materials or 
to manufacturing processes can lead to changes in the product that may 
not be detectable by current technologies. Therefore, a carefully 
designed pharmacovigilance effort is important.
    BIO also recognizes that, historically, most FDA user fee programs 
have been established on a pre-existing base of appropriations. 
However, given the recent establishment of the biosimilars program at 
FDA, only modest appropriations are currently allocated to the program, 
and this funding is inadequate to meet the anticipated workload 
demands. To facilitate an equitable balance of fees and appropriations, 
FDA and industry support a trigger provision--similar to the 
established appropriations triggers in other user fee programs--that 
would ensure that FDA allocates at least $20 million per year to the 
program. BIO encourages Congress to recognize the importance of a well-
resourced and viable biosimilars pathway at FDA and we request that 
adequate new funding be appropriated for the program.
    The biosimilars user fee program also establishes a unique 
biosimilar product development fee, which is ultimately deducted from 
the sponsor's application fee. Because there is no established 
biosimilars industry, facility base, and product base to form a stable 
funding source for activities that occur before submission of 
applications, it is important to ``front-load'' the fees through the 
product development fee so that the agency has resources available to 
meet with sponsors during development to provide scientific advice and 
feedback. It should be noted, however, that the assessment of a product 
development fee is unique to this situation with respect to biosimilar 
products and should not establish any precedent for investigational new 
drug (IND) fees under the PDUFA program. Additionally, any IND-
associated fee should sunset permanently in fiscal year 2018 when both 
PDUFA and this new user fee program would sunset.
            ii. pdufa-v: getting back to basics for patients
    A key to the success and the future of the U.S. biotechnology 
industry is a reliable, predictable, and science-based regulatory 
environment, and the PDUFA program represents an important element of 
our Nation's overall innovation eco-system. Since 1992 Congress, FDA, 
and the biopharmaceutical industry have supported this carefully 
structured user fee program to help fund FDA's human drug review 
activities. The program has contributed to the approval of more than 
1,200 new medicines and, initially, reduced review times for the 
newest, most innovative drugs by more than a year.
    While establishing a sound BsUFA was a priority for BIO, so too is 
reauthorizing PDUFA. The principles which guided BIO in our technical 
discussions with FDA regarding PDUFA reauthorization were that a 
science-based, transparent, and well-managed review process that 
appropriately balances benefits and risks can enhance public trust and 
increase patient access to new medicines. With these principles in 
mind, BIO, PhRMA, and FDA agreed upon a set of enhancements under 
PDUFA-V that seek to reinforce FDA's review performance and get back-
to-basics for patients. These proposals have also been informed by an 
unprecedented level of public input through workshops, meetings, and 
stakeholder outreach, which further strengthened the technical 
agreement. These enhancements include:

     New Molecular Entity (NME) Review Program: Historically, 
nearly 80 percent of all NME applications submitted to FDA are 
ultimately approved, but fewer than half are approved on the first 
submission.\1\ Sponsors and FDA can and must do better for patients. By 
strengthening scientific dialog and transparency between FDA and 
Sponsors under the proposed review program for novel drugs and 
biologics, we can minimize the potential review issues that can delay 
patient access to needed treatments. Increased FDA-Sponsor scientific 
dialog and transparency, such as a mid-cycle communication, exchange of 
discipline review letters and advisory committee information, and a 
significant new late-cycle meeting, will help to identify and resolve 
issues earlier in the review. This represents a significant paradigm 
shift in FDA's review process while maintaining FDA's high standards 
for safety and efficacy. An additional 2-month validation period 
preceding the review period will help to ensure FDA has all the 
information it needs at the beginning of the process to perform a 
complete review. Finally, a robust third-party evaluation will provide 
data on whether we have been successful in this program of leading to 
fewer review cycles, shorter approval times, and earlier patient access 
to needed treatment.
---------------------------------------------------------------------------
    \1\ Fiscal year 2010 PDUFA Performance Report, p. 4, http://
www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/
UserFeeReports/PerformanceReports/PDUFA/UCM
243358.pdf.
---------------------------------------------------------------------------
     Enhanced Communication during Drug Development: To help 
advance American innovation and promote the development of the next 
generation of modern medicines, FDA has also committed to a philosophy 
under PDUFA-V that timely, interactive communication with biotechnology 
and life science companies during drug development is a core Agency 
activity.
    FDA's recent report on driving biomedical innovation highlights 
that ``the private sector is the engine of innovation, and much of this 
innovation begins with small business.'' \2\ Indeed, many small 
biotechnology companies operate on the cutting edge of biomedical 
science to develop new therapies for devastating diseases. Yet we must 
acknowledge that the scientific method does not operate in a vacuum, 
and it is critical to promote interactive, scientist-to-scientist 
communication between FDA and Sponsors. In the course of drug 
development, Sponsors sometimes have simple or clarifying questions, 
the responses to which could have a significant impact on the 
development program, but which are not extensive enough to warrant 
formal meetings. To obtain timely responses to such questions, Sponsors 
currently often have to engage in a lengthy exchange of multiple formal 
letters with FDA, which is an inefficient and cumbersome use of both 
FDA's and the Sponsor's time. For small biotechnology companies reliant 
on limited venture capital, these delays can create significant 
impediments to development programs.
---------------------------------------------------------------------------
    \2\ FDA, Driving Biomedical Innovation: Initiatives for Improving 
Products for Patients, October 2011, http://www.fda.gov/downloads/
AboutFDA/ReportsManualsForms/Reports/UCM274464
.pdf.
---------------------------------------------------------------------------
    Additionally, independent reports commissioned by FDA have 
demonstrated that enhanced communication during drug development 
ultimately results in higher quality applications, which can improve 
efficiency for FDA reviewers.\3\
---------------------------------------------------------------------------
    \3\ Booz Allen Hamilton, Independent Evaluation of FDA's First 
Cycle Review Performance--Final Report. July 2008, http://www.fda.gov/
ForIndustry/UserFees/PrescriptionDrugUserFee/ucm127117.htm.
---------------------------------------------------------------------------
    BIO fully supports the PDUFA-V proposal to promote innovation 
through enhanced communication between FDA and Sponsors during drug 
development, which will establish best practices for this type of 
interactive dialog, train staff on communication practices, and provide 
the Agency with additional staff capacity to respond to sponsor 
inquiries in a timely manner.
     Modernizing Regulatory Science: Additionally, the PDUFA-V 
agreement makes new resources available to modernize regulatory 
science, for example, in the areas of personalized medicine and rare 
disease drug research. Modern approaches to drug development and 
evaluation, such as the application of new tools for rare disease drug 
development, flexibility with regard to creative study designs and new 
endpoints, and greater utilization of biomarkers and patient-reported 
outcome measures, will introduce new efficiencies in the drug 
development enterprise and provide FDA with additional tools to 
evaluate the benefits and risks of pharmaceutical products. These 
proposals will also integrate more structured and systematic approaches 
to assessing benefits and risks of therapies, and allow FDA to conduct 
outreach to patients and hold workshops to understand better patient 
perspectives on disease severity and unmet medical need.
     Robust Drug Safety and Post-Market Surveillance Capacity: 
PDUFA-V continues industry's commitment to a lifecycle approach to 
product evaluation by strengthening FDA's post-market surveillance and 
benefit/risk management capacity. Earlier discussion of risk management 
strategies, standardized approaches to REMS, and further validation of 
the Sentinel Network will promote patient confidence in drug and 
biologics.
    Under the PDUFA-V agreement, industry has reinforced its commitment 
to a well-funded drugs and biologics review program that supports 
sound, science-based regulation consistent with FDA's public health 
mission. However, user fees are intended to support limited FDA 
activities around the drug review process and were never intended to 
supplant a sound base of appropriations. User fees currently account 
for nearly two-thirds of the cost of human drug review. We urge 
Congress to support FDA's mission and fund the Agency at the 
Administration's fiscal year 2012 requested levels.
    Additionally, it is critical for PDUFA to be reauthorized well in 
advance of PDUFA-IV's expiration in September 2012, to avoid a 
reduction in force at the FDA. Even the threat of a downsizing at the 
FDA would be devastating to the Agency's public health mission and its 
ability to review new drugs and biologics.
    BIO looks forward to working with Congress and FDA to fully 
implement these enhancements under PDUFA-V.
                            iii. conclusion
    In conclusion, BIO supports enactment of the proposed biosimilars 
user fee program, which will provide FDA with adequate resources and 
promote predictability in FDA's biosimilars review process, while 
continuing to promote the development and evaluation of innovative 
therapies for unmet medical needs under PDUFA. Both user fee programs 
will enhance FDA's ability to protect and promote the public health, 
and we encourage Congress to enact both legislative provisions in a 
timely manner.

    The Chairman. Thank you very much, Miss Radcliffe.
    Senator Enzi. Mr. Chairman, I apologize.
    I am going to leave. I want to thank Dr. Woodcock and Dr. 
Shuren for staying to hear this testimony, and my staff will be 
staying to hear the testimony, and I will have questions to 
submit.
    The Chairman. I appreciate that.
    Senator Enzi. Thank you.
    The Chairman. Thank you very much, Senator Enzi.
    I thank you very much, Miss Radcliffe.
    Now we turn to David Gaugh, the vice president for 
Regulatory Sciences at the Generic Pharmaceutical Association. 
Did I pronounce that name right?
    Mr. Gaugh. Gaugh.
    The Chairman. Gaugh.
    Mr. Gaugh. Yes.
    The Chairman. Thank you very much, Mr. Gaugh.

    STATEMENT OF DAVID R. GAUGH, R.PH., VICE PRESIDENT FOR 
   REGULATORY SCIENCES, GENERIC PHARMACEUTICAL ASSOCIATION, 
                         WASHINGTON, DC

    Mr. Gaugh. Good morning, Chairman Harkin, Ranking Member 
Enzi, and members of the committee.
    Thank you for asking me to participate in this timely and 
important hearing. I am David Gaugh, vice president for 
Regulatory Sciences at the Generic Pharmaceutical Association 
and a licensed pharmacist.
    GPhA represents the manufacturers, distributors, and 
finished dose generic pharmaceuticals, both pharmaceutical 
chemicals and the suppliers of goods and services to the 
generic industry. Generic pharmaceuticals account for 80 
percent of all prescriptions dispensed in the United States, 
but consumed as 25 percent of the total drug spending for 
prescription medicines.
    I would like to begin today by commending the committee for 
your continued focus on this important issue that we are going 
to examine today. As someone who has worked in and around the 
generic industry for more than two decades, I witnessed 
firsthand the industry's remarkable growth and the vital role 
it plays in the lives of Americans every day.
    This growth in the generic industry has also served to 
underscore the critically important role of the Food and Drug 
Administration. As I will highlight, the levels of cooperation 
between the industry and the FDA have never been greater, and 
it is our hope that this collaboration will continue, and 
extend throughout all of the interactions with the agency.
    However, the agency remains underfunded and the 
responsibility of insuring access to safe and affordable 
medicines is shared by one that rests on the entire 
pharmaceutical industry and not just the FDA. That is why the 
generic industry has stepped up to help provide the FDA with 
additional resources to address the ongoing challenges caused 
by an increasingly global drug supply chain.
    Currently, more than 2,700 generic drug applications are 
awaiting approval from the FDA's Office of Generic Drugs and 
the average approval time for an application is now stretching 
beyond 30 months, more than five times longer than the 
statutory 6 months that were required by Hatch-Waxman. 
Unfortunately, this backlog keeps safe, low-cost generics off 
the market and reduces competition that may drive drug prices 
down even further.
    The proposed Generic Drug User Fee Act, or GDUFA, that we 
are discussing today, will help alleviate this backlog and 
expedite consumer access to generic drugs.
    GPhA also recognizes, however, that while providing early 
access to effective medicines is critical and the key aim of 
all the existing user fee programs, an equally important pillar 
of FDA and industry mission is insuring drug safety. This is 
why GDUFA takes the unprecedented step of holding all players 
contributing to the generic U.S. drug system, foreign and 
domestic, to the same inspection standards, and enhances FDA's 
ability to identify and require the registration of active 
pharmaceutical ingredient and finished dose foreign 
manufacturers involved in each generic drug product sold in the 
United States.
    It is paramount that as we work to shape the future of our 
country's generic industry, we also work to bring the FDA into 
the 21st century, and ensure that the agency's authority to 
achieve its mission in this global age are up to date.
    This is further exemplified by the other user fee program 
we will discuss today for generic biologic drugs or 
biosimilars. Biologic medicines are often the only lifesaving 
treatment for many of the most severe diseases encountered by 
patients today. In many respects, they represent the future of 
medicine. Their high price tag, however, can keep them out of 
the reach of many patients.
    During biosimilar user fee negotiations, GPhA expressed its 
support for user fees funding to provide FDA with the adequate 
resources to apply consistent regulatory standards to all 
biologics, and review new applications as they are filed. Both 
industry and patients will benefit from the user fee program by 
gaining a higher degree of certainty and timeliness in the 
applications that are reviewed.
    We applaud the FDA for recognizing the importance of 
biosimilars and the need to apply state-of-the-art science in 
all agency activities governing and reviewing the approval of 
these important drugs.
    By designing both of these user fee programs to spread fees 
across multiple stakeholders and sources to keep individual 
amounts as low as possible, the programs will help assure that 
the American consumers continue to receive significant cost 
savings from generics that, over the past 12 years, have 
provided more than $1 trillion in savings to the national 
healthcare system.
    It is also important to emphasize that the funding provided 
by both of these user fee agreements is in addition to, and not 
a substitute for, congressional appropriations.
    In conclusion, Mr. Chairman, this is truly an historic time 
for GPhA, the user fee proposals are the culmination of months 
of negotiation between the FDA and the industry, and the final 
product as transmitted to Congress represents a careful balance 
among all the stakeholders involved.
    We respectfully urge the committee to approve GDUFA and 
BsUFA as negotiated by the FDA and industry, and without 
changes to the underlying agreements.
    Thank you, and I will take any questions.
    [The prepared statement of Mr. Gaugh follows:]
              Prepared Statement of David R. Gaugh, R.Ph.
                                summary
    I am David Gaugh, vice president for Regulatory Sciences at the 
Generic Pharmaceutical Association and a licensed pharmacist. GPhA 
represents the manufacturers and distributors of finished dose generic 
pharmaceuticals, manufacturers and distributors of bulk pharmaceutical 
chemicals and suppliers of other goods and services to the generic 
industry. Generic pharmaceuticals fill 80 percent of the prescriptions 
dispensed in the United States but consume just 25 percent of the total 
drug spending.
    Thanks to the efforts of the Food and Drug Administration (FDA), 
the U.S. drug supply remains the safest in the world, and the FDA's 
drug approval and inspection processes represent the gold standard for 
regulatory agencies worldwide. However, the agency remains underfunded, 
and the responsibility of ensuring access to safe and affordable 
medicines is a shared one that rests with the entire pharmaceutical 
industry, not just the FDA.
    That is why the generic industry, through the negotiation of two 
new user fee agreements, has stepped up to help provide the FDA with 
additional resources to address the ongoing challenges faced by the 
agency. The Generic Drug User Fee Act (GDUFA) and the Biosimilar User 
Fee Act (BsUFA) will help ensure U.S. drug safety, establish a more 
level playing field among all participants in the U.S. pharmaceutical 
supply chain, and make certain that all Americans receive timely access 
to safe, effective and affordable generic drugs. We urge the committee 
to approve GDUFA and BsUFA as negotiated by FDA and industry in a 
timely manner, so that patients, the FDA, and generic manufacturers can 
begin to see the many benefits of these agreements.
      landmark user fee programs will provide additional resources
    Currently, more than 2,700 generic drug applications are awaiting 
approval from the FDA's Office of Generic Drugs (OGD), and the average 
approval time for an application is now stretching beyond 30 months. 
The Generic Drug User Fee Act (GDUFA) will help alleviate the backlog 
and expedite consumer access to generic drugs, while also enhancing 
drug quality and safety. FDA will receive $299 million per year over 
the 5-year GDUFA program, or about $1.5 billion in total. The new user 
fee program will also establish performance goals for the FDA. The 
agreement's performance goals call for FDA to complete, by the end of 
year five, the review of 90 percent of all ANDAs that are pending on 
October 1, 2012--effectively eliminating the current application 
backlog. By the end of the program's fifth year, GDUFA calls on the FDA 
to review 90 percent of ANDAs within 10 months after they are 
submitted--almost 2 years faster than today's average review time. 
GDUFA also takes the unprecedented step of holding all players 
contributing to the U.S. generic drug system, foreign or domestic, to 
the same inspection standards, and enhances FDA's ability to identify 
and require the registration of API and finished dosage form 
manufacturers involved in each generic drug product sold in the United 
States.
                        biosimilar user fee act
    The Biosimilar User Fee Act (BsUFA) will benefit both patients and 
industry by providing a higher degree of certainty in the timeliness of 
application reviews. The program creates a separate review platform for 
biosimilar sponsors that will be jointly financed annually by industry 
and the FDA through $20 million in congressional appropriations and 
then supplemented by user fees equivalent to those under the 
Prescription Drug User Fee Act. The program's performance goals call 
for FDA, by the end of the program's fifth year, to review 90 percent 
of the original biosimilar applications it receives within 10 months of 
their submission.
                                 ______
                                 
    Good morning Chairman Harkin, Ranking Member Enzi and members of 
the Senate Committee on Health, Education, Labor, and Pensions. Thank 
you for asking me to participate in this timely and important hearing.
    I am David Gaugh, vice president for Regulatory Sciences at the 
Generic Pharmaceutical Association and a licensed pharmacist. GPhA 
represents the manufacturers and distributors of finished dose generic 
pharmaceuticals, bulk pharmaceutical chemicals, and the suppliers of 
other goods and services to the generic industry. Generic 
pharmaceuticals now fill 80 percent of all prescriptions dispensed in 
the United States, but consume just 25 percent of the total drug 
spending for prescription medicines.
    According to a recent analysis by IMS Health, the world's leading 
data source for pharmaceutical sales, the use of FDA-approved generic 
drugs in place of their brand counterparts has saved U.S. consumers, 
patients and the health care system more than $931 billion over the 
past decade--$158 billion in 2010 alone--which equates to $3 billion in 
savings every week.
    Prior to joining GPhA, I was vice president and general manager for 
Bedford Laboratories, the generic injectable division of Ben Venue 
Laboratories, I have also served as senior director, Pharmacy 
Contracting and Marketing, for VHA/Novation, one of the largest Group 
Purchasing Organizations in the United States, and was system director 
of pharmacy for a regional referral tertiary-care healthcare system in 
the Midwest.
                              introduction
    I would like to begin today by commending the committee for your 
continued focus on the important issues we will examine today. As 
someone who has worked in and around the generic industry for more than 
two decades, I have witnessed firsthand the industry's remarkable 
growth and the vital role it plays in the lives of Americans every day. 
By providing consumers access to safe and effective medicines at an 
affordable price, the generic industry fills an essential role not only 
for patients, but for our health care system and, indeed, our national 
economy.
    This growth in the generic industry has also served to underscore 
the critically important role of the Food and Drug Administration 
(FDA). As I will highlight, the level of cooperation between industry 
and the FDA has never been greater. The two historic user fee 
agreements we are discussing today represent only a small measure of 
our ongoing collaboration. It is our hope that this collaboration will 
continue and extend throughout all of our interactions with the agency.
    As evidenced by these accomplishments, the FDA's work during this 
period of growth for the generic industry has been extraordinary. 
Thanks to their efforts, the U.S. drug supply remains the safest of 
anywhere in the world, and the FDA's drug approval and inspection 
processes represent the gold standard for regulatory agencies 
worldwide.
    However, the agency remains underfunded, and the responsibility of 
ensuring access to safe and affordable medicines is a shared one that 
rests with the entire pharmaceutical industry, not just the FDA. That 
is why the generic industry has stepped up to help provide the FDA with 
additional resources to address the ongoing challenges caused by an 
increasingly global drug supply chain, the increase in the agency's 
workload and the regulation of new and complex technologies.
    Throughout much of last year, GPhA and our member companies worked 
closely with the FDA to negotiate two separate user fee programs 
designed to help the agency obtain additional resources to ensure all 
participants in the U.S. generic drug system, whether U.S.-based or 
foreign, comply with all of our country's strict quality standards. 
Most importantly, the programs will make certain that all Americans 
receive timely access to safe, effective and affordable generic drugs. 
Let me provide some more details.
      landmark user fee programs will provide additional resources
    Currently, more than 2,700 generic drug applications are awaiting 
approval from the FDA's Office of Generic Drugs (OGD), and the average 
approval time for an application is now stretching beyond 30 months, 
more than five times longer than the statutory 6-month review time 
called for by Hatch-Waxman. Unfortunately, this backlog keeps safe, 
low-cost generic drugs off the market and reduces competition that may 
drive drug prices down further.
    The proposed Generic Drug User Fee Act, or GDUFA, that we are 
discussing today will help alleviate the backlog and expedite consumer 
access to generic drugs, while also enhancing drug quality and safety 
by ensuring inspection parity among both foreign and domestic 
manufacturing sites.
    Specifically, FDA will receive $299 million per year over the 5-
year GDUFA program, or about $1.5 billion in total. Of that funding, 80 
percent, or about $240 million, will come from finished-dose 
manufacturers, and the remaining 20 percent will be paid by 
manufacturers of active pharmaceutical ingredients. Thirty percent of 
the funding will stem from application fees and 70 percent will be 
derived from fees on manufacturing sites, or facility fees.
    Splitting the fees in this manner will provide the FDA with a 
predictable source of annual income, as the number of facilities 
manufacturing generic drugs on a yearly basis provides a more 
consistent figure than the number of generic drug applications 
submitted. Finished dose facilities that manufacture both generic and 
brand medications will be required to pay both a Prescription Drug User 
Fee Act facility fee and a GDUFA facility fee.
    The new user fee program will also establish performance goals for 
the FDA. As part of these goals, GDUFA calls for the agency to 
complete, by the end of year five, the review of 90 percent of all 
generic drug applications--commonly referred to as Abbreviated New Drug 
Applications, or ANDAs--that are pending on October 1, 2012--the 
proposed start date for the program. By achieving this goal, the GDUFA 
agreement will effectively eliminate the current application backlog.
    In addition, by the end of the program's fifth year, GDUFA calls on 
the FDA to review 90 percent of ANDAs within 10 months after they are 
submitted--almost 2 years faster than today's average review time.
    These are great strides that will go a long way toward ensuring 
patients have timely access to safe and effective generic medicines for 
years to come. But GPhA also recognizes that while providing earlier 
access to effective medicines is critical--and the key aim of all other 
existing user fee programs--an equally important pillar of FDA's and 
industry's mission is ensuring drug safety.
    Since the enactment of the Federal Food, Drug and Cosmetic Act in 
1938, the core public health mission of the FDA has been to protect and 
promote the public's health. As part of that mission, the FDA has a 
critical responsibility to ensure the safety, efficacy and security of 
the entire U.S. drug supply, both brand and generic. Ensuring a safe 
and effective drug supply, however, is significantly more challenging 
today than it was in 1938 due to the increasing globalization of drug 
manufacturing, supply and testing and an increase in FDA-regulated drug 
products.
    GPhA has long-maintained that, in light of this increasing 
globalization and with nearly 40 percent of all the prescription drugs 
in the United States being imported, the FDA needs more resources to 
ensure adequate oversight of the Nation's drug supply.
    A 2010 Government Accountability Office (GAO) report found that FDA 
was able to conduct Good Manufacturing Practice, or GMP, inspections at 
only 11 percent of the foreign establishments in its database, compared 
to 40 percent of the domestic sites it inspected. According to the GAO, 
in the absence of a paradigm shift, it would take FDA 9 years to 
inspect all foreign facilities.
    That is why GDUFA takes the unprecedented step of holding all 
players contributing to the U.S. generic drug system, foreign or 
domestic, to the same inspection standards, and enhances FDA's ability 
to identify and require the registration of active pharmaceutical 
ingredient and finished dosage form manufacturers involved in each 
generic drug product sold in the United States. The program will 
significantly improve the resources the FDA has to do this important 
work, ensuring that it can be done with increasing speed, but without 
any sacrifice to today's high quality standards.
    It is paramount that, as we work to shape the future of our 
country's generic drug industry, we also work to bring the FDA into the 
21st century and ensure that the agency's authorities to achieve its 
mission in this global age are up to date.
    In many ways, this process is already underway. Perhaps the best 
and most immediate example rests with the other user fee program we 
will discuss today--for generic biologic drugs, or biosimilars.
                        biosimilar user fee act
    Biologic medicines are often the only lifesaving treatments for 
many of the most severe diseases encountered by patients today. In many 
respects, they represent the future of medicine. Their high price tag, 
however, can keep them out of reach for many patients. The cost of 
biologics is increasing annually at a faster pace than almost any other 
component in health care. As proven with chemical prescription drugs, 
competition from generic biologic drugs will be the most important 
factor in holding down the future costs of these lifesaving medicines.
    With the FDA still working to determine the process by which these 
products will be approved, GPhA continues to stress the importance of 
creating a workable regulatory mechanism that does not serve as a 
barrier to competition, but rather ensures the robust competition 
needed to lower costs and spur future innovation. If such a system is 
not put in place, it is our fear that the exponential growth of 
biologics over the next 10 to 20 years, without adequate generic 
alternatives, could bankrupt our health care system and the national 
economy. Moreover, the lack of lower-cost generic biologics will keep 
vital treatments away from the patients who need them most.
    Within our organization, we represent manufacturers who currently 
produce high-quality, safe and effective biosimilars approved in Europe 
and other regulated markets around the world. These member companies 
are dedicated to bringing the same level of access and affordability 
for these critical medicines to U.S. patients.
    During the biosimilar user fee negotiations, GPhA expressed its 
support for user fee funding to provide FDA with adequate resources to 
apply consistent regulatory standards to all biologics, and review new 
applications as they are filed. Both industry and patients will benefit 
from this user fee program by gaining a higher degree of certainty in 
the timeliness of application reviews.
    The proposed program creates a separate review platform for 
biosimilar sponsors, to be financed annually through $20 million of the 
funds appropriated to the FDA and supplemented by user fees equivalent 
to those under the Prescription Drug User Fee Act. A portion of the 
application fee paid during the biosimilar development phase will be 
used to support earlier resourcing for product reviews. Similar to 
GDUFA, the program also includes performance goals for the FDA, which 
calls for the agency, by the end of the program's fifth year, to review 
90 percent of the original biosimilar applications it receives within 
10 months of their submission.
    We applaud the FDA for recognizing the importance of biosimilars, 
and the need to apply state-of-the-art science in all agency activities 
governing the review and approval of these important drugs.
    Through both of these user fee agreements, the generic industry has 
truly stepped up to do our part to help ensure U.S. drug safety, 
establish a more level playing field among all participants in the U.S. 
pharmaceutical supply chain and significantly reduce the time needed to 
commercialize a generic drug.
    By designing the programs to spread fees across multiple 
stakeholders and sources to keep individual amounts as low as possible, 
the programs will help assure that American consumers continue to 
receive the significant cost savings from generics that, over the past 
dozen years, have provided more than $1 trillion in savings to the 
Nation's health care system.
additional measures are needed to ensure access to affordable medicines
    It is important to emphasize that the funding provided by both of 
these user agreements is in addition to, not a substitute for, 
congressional appropriations. And while the programs provide an 
excellent framework for industry to help support the growing global 
needs of FDA and speed the entry of generic drugs to market, they do 
not completely solve the problem. As the user fee legislation moves 
forward, we urge Congress to address additional areas--currently 
outside the scope of the user fee acts--that would further increase 
access to safe and effective generic medicines.
    For example, a concern related to Hatch-Waxman that warrants 
Congress' attention involves the law's ``Section viii'' process. Under 
a Federal court's interpretation of current law, brand-name drug 
manufacturers are able to block generic competition by providing the 
FDA with misleading and overbroad descriptions of their patents.
    While ``Section viii'' allows generic manufacturers to market their 
products for FDA-approved uses not covered by any patent, brand 
manufacturers have circumvented this process by changing their 
product's ``use code''--a description of the patent required to be 
filed by the FDA. Because the FDA is not institutionally equipped to 
question brands' use codes by reading their patents, the agency has had 
no choice but to deny the approval of generic competition in such 
cases. And the Federal Circuit held that there is no judicial remedy 
for the problem. Though the U.S. Supreme Court is now considering 
reversing that ruling, clarity of the legislative language is needed 
and would be beneficial even if the appellate ruling is overturned.
    Additionally, as noted previously, GPhA strongly supports the 
unprecedented steps taken in GDUFA to ensure that all contributors to 
the U.S. drug system, both foreign and domestic, are held to the same 
quality standard.
    GPhA further supports a ``risk-based'' model for inspections that 
prioritizes inspections according to a company's safety and compliance 
track record. This system would ensure that questionable or problematic 
facilities receive a comprehensive review and evaluation sooner, rather 
than later, or not at all as can be the case under the current system. 
Facilities with strong records of compliance and positive inspections 
would be placed further down on the inspection schedule, allowing the 
agency to prioritize its immediate attention on facilities that have 
never had an inspection or that have a history of compliance issues.
    GPhA recommends that Congress adopt a Federal drug tracking system 
with uniform standards across all States. Given that products are 
distributed throughout interstate commerce and across State lines, 
having multiple standards will be problematic. The challenge to 
implementation will be to ensure that the technology is reliable and 
feasible in light of numerous economic, technical and logistical 
factors, so that the end product delivers patient safety and does not 
result in increased costs to consumers and payers.
    As a member of the Pharmaceutical Distribution Security Alliance 
(PDSA), a multi-stakeholder group working to develop a national model 
for drug tracking, GPhA, in consensus with other supply chain partners, 
supports the RxTEC model, which will increase patient safety and help 
to achieve the goals we share with the FDA.
    We believe this model will help prevent the introduction of 
counterfeit drugs, facilitate their identification, provide 
accountability for the movement of drugs by supply chain participants 
and improve the efficiency and effectiveness of recalls. Establishing a 
national uniform drug-tracking system, as opposed to a system based on 
a patchwork of State laws and regulations, is critical to achieving 
these goals.
                               conclusion
    In conclusion, Mr. Chairman, this truly is an historic time for 
GPhA. The user fee proposals are the culmination of months of 
negotiations between FDA and industry, and the final product as 
transmitted to Congress represents a careful balance among all the 
stakeholders involved. We respectfully urge the committee to approve 
GDUFA and BsUFA as negotiated by FDA and industry, without any changes 
to the underlying agreements. It is also vital that the agreements be 
approved in a timely manner so that patients, the FDA, and generic 
manufacturers can begin to see the many benefits of these agreements. 
Nothing is more important to our industry than ensuring patients have 
access to the lifesaving generic medications they require, and these 
historic agreements provide a critical step toward accomplishing this 
goal. Thank you and I would be happy to address any questions you may 
have.

    The Chairman. Thank you very much, Mr. Gaugh.
    Next, we have Dr. David Nexon, senior executive vice 
president for the Advanced Medical Technology Association, an 
association representing manufacturers of medical devices and 
diagnostics.
    We also thank the representatives of the Medical Device 
Manufacturers Association and the Medical Imaging Technology 
Association who have coordinated with Dr. Nexon regarding his 
testimony, so that it will reflect the full scope of the 
medical device industry.
    Quite frankly, it is rather a shock to my system to see Dr. 
Nexon sitting there rather than here. I started out way down 
there, Michael, down at that end and Dr. Nexon was our traffic 
cop back here, but he always treated me well, and I appreciate 
it very much.
    Dr. Nexon, welcome back to the committee on this side of 
the podium, I guess.

    STATEMENT OF DAVID NEXON, Ph.D., SENIOR EXECUTIVE VICE 
PRESIDENT, ADVANCED MEDICAL TECHNOLOGY ASSOCIATION, WASHINGTON, 
                               DC

    Mr. Nexon. Thank you very much, Mr. Chairman.
    It is quite a pleasure to be back with the HELP committee, 
although I must confess, as you pointed out, it feels a little 
strange to be on this side of the witness table.
    As many of you know, our industry has been a true American 
success story for patients and for the U.S. economy. America's 
medical technology industry truly leads the world, but our 
leadership is slipping.
    One key reason, and perhaps the most important reason that 
our leadership is slipping is the significant decline we have 
seen in FDA efficiency and consistency in recent years. I am 
pleased that the FDA leadership and Dr. Shuren have recognized 
the need to vigorously address the issues affecting the device 
center, and we heard from Dr. Shuren this morning about a 
number of steps that they are taking to turn the situation 
around.
    We believe that the new user fee agreement has the 
potential to be a significant additional step in the right 
direction. It is good for industry, it is good for FDA, and 
most of all, it is good for patients.
    The user fee agreement builds the conditions for success in 
a number of major ways. For the first time ever, this user fee 
agreement establishes average total time goals for FDA product 
review. All previous agreements have set their goals in terms 
of time on the FDA clock. But what matters to industry and 
patients are the actual days on the calendar that it takes to 
get a product from submission to final decision by FDA. By 
setting in place this new goal, efforts will be focused on the 
metric that is truly most important to everyone concerned.
    Second, the agreement also established improved goals for 
time on the FDA clock. These goals are a key management tool 
for FDA and they work in concert with the total time goal to 
produce better performance that either could achieve alone.
    Third, the agreement includes process standards that we 
anticipate will also improve the review process. These include 
meaningful presubmission interactions between FDA and 
companies. Agreements reached in these interactions will be 
binding unless, of course, new information arises that requires 
a change to protect the public health.
    A mandatory substantive interaction between FDA and the 
company midway through the review process is also included in 
the agreement. This will assure that both companies and the FDA 
identify any deficiencies in the application early so that they 
can be corrected promptly.
    The new procedure that we call ``no submission left 
behind,'' that Dr. Shuren also referenced, will be instituted 
so that if the FDA time target is missed, the company and the 
FDA will meet to work out a schedule for resolving the 
remaining issues so that the submission does not go to the 
bottom of the pile and not get looked at again.
    Fourth, the agreement provides for greater accountability. 
Greater accountability means that FDA's success under this 
agreement will be transparent to FDA, to FDA management, to 
industry, to patients, and to Congress and the Administration 
so that any problems that arise can be corrected promptly.
    Under the agreement, there will be quarterly and annual 
reporting on a wide variety of key metrics that both FDA and 
industry agree are important.
    In addition, the agreement requires an analysis of FDA's 
management of the review process by an independent consulting 
organization coupled with an FDA corrective action plan to 
address opportunities for improvement.
    Finally, to give FDA additional tools to meet the new 
goals, the agreement provides $595 million in user fees over 
the life of the agreement. Additional reviewers, lower manager 
to reviewer ratios, enhanced training, and other resources 
provided by the agreement will give FDA what it needs to 
improve performance.
    Overall, the agreement will allow FDA to hire approximately 
200 additional FTE's and the vast majority of these new FTE's 
will put in place where they are needed the most as additional 
reviewers. This coupled with the additional supervisors who are 
being hired this year should lead to more consistency and speed 
in the review process.
    Of course, and I want to emphasize this, no agreement no 
matter how good on paper is self-executing. Making it work as 
intended will require the full efforts of FDA's dedicated staff 
and managers. Our industry has committed to work with FDA in 
any way we can to make it a success. Continued oversight and 
interest from the Congress will also be critically important. 
Patients are really depending on all of us.
    Finally, I should note that a number of legislative 
proposals have been introduced with the goal of improving the 
FDA's operations. We are appreciative of the efforts by all 
members who seek to give the FDA the tools and structure it 
needs to succeed. At the same time, I do want to emphasize that 
we are strongly committed to the user fee agreement as 
negotiated and we do not support any proposals that would 
change the terms of the agreement or undermine its goals.
    Just as this new user fee agreement has the potential to 
help FDA move in a very positive direction for patients and 
industries, the view I have emphasized, Mr. Chairman, and as 
Ranking Member Enzi emphasized, failure to reauthorize this 
program in a timely way would really be catastrophic for the 
FDA, for industry, and for patients.
    I thank the committee for the opportunity to testify and we 
strongly support your efforts and urge the committee to do what 
it is we know you want to do, which is to promptly reauthorize 
this program, which is so critical to patients, to the FDA, and 
to our industry.
    Thank you very much.
    [The prepared statement of Mr. Nexon follows:]
                Prepared Statement of David Nexon, Ph.D.
     The U.S. medical technology industry is an American 
success story, directly employing more than 400,000 workers nationwide.
     Success in our industry comes only from innovation. We are 
very proud of our contributions to the U.S. economy and are even more 
proud of our contributions to improving patient care.
     FDA is a critical partner in our companies' efforts to 
bring safe and effective medical devices to patients. Without a strong, 
effective and efficient FDA, we cannot have a strong and competitive 
industry.
     While the FDA has consistently maintained a strong record 
of assuring safety and effectiveness of the products it reviews, delays 
in product approval, inconsistency in the review process, and the 
resulting downstream effects on investment and innovation have 
undermined the competitiveness of our industry and harmed patient 
access to new treatments, diagnostics, and cures.
     We are pleased that after extensive negations, FDA and 
industry reached a user fee agreement that has the potential to help 
achieve meaningful change in FDA performance through groundbreaking 
accountability and transparency measures and enhanced FDA resources.
     This user fee agreement establishes average total time 
goals for FDA product review. Total time is the best indicator of 
whether FDA is consistent and efficient in its review and is providing 
sponsors with adequate information in advance of what data is needed 
for different types of products. These total time goals are shared 
performance goals, because industry also has an obligation to submit 
good applications to FDA.
     The agreement also establishes improved goals for time on 
the FDA clock and the improved FDA goals and the total time goals work 
together to encourage FDA to focus on a thorough but efficient review 
of all product submissions.
     The agreement includes process standards that we 
anticipate will improve the consistency and timeliness of the review 
process, including meaningful presubmission interactions, midway review 
interactions, and a new process for submissions that are outside the 
FDA time target.
     The agreement provides greater accountability to industry, 
patients and to Congress and the Administration, through regular 
reporting on key metrics and an outside analysis of FDA's management of 
the review process, coupled with an FDA corrective action plan to 
address opportunities for improvement.
     Last, to give FDA additional tools to meet the new goals, 
the agreement provides $595 million in user fees for 2013-17.
     Each of the provisions of this agreement has the potential 
to make a difference in improving FDA performance, but the whole is 
truly greater than the sum of its parts.
     We urge the committee to act promptly to reauthorize the 
MDUFA program and enact this agreement into law. Failure to act would 
not only jeopardize the critical improvements made by the new agreement 
but would have a devastating impact on our industry's ability to bring 
improved treatments and cures to patients.
                                 ______
                                 
    Thank you Chairman Harkin, Ranking Member Enzi, and members of the 
committee for the opportunity to testify today.
    My name is David Nexon, and I am senior executive vice president of 
the Advanced Medical Technology Association (AdvaMed). My testimony 
today on the MDUFA agreement is submitted on behalf of three of the 
medical technology industry associations who participated in the MDUFA 
negotiations--AdvaMed, MDMA, and MITA.
    I want to thank you for convening today's hearing, and for your 
interest in improving medical device regulation for patients and 
industry. Over the course of the last year, members of this committee 
have demonstrated their focus on improving the efficiency and 
effectiveness of FDA regulation, and your outreach to the agency and 
the policy proposals that have been introduced show your commitment to 
this important issue.
                  the u.s. medical technology industry
    The medical technology industry is an American success story. Our 
industry directly employs more than 400,000 workers nationwide. 
Typically, for every worker our industry directly employs, another four 
workers are employed by businesses supplying components and services to 
our industry and our employees, so that the total numbers generated by 
our industry exceeds 2 million.
    The jobs our industry provides are good jobs--the kinds of jobs 
that allow employees to live the American dream. Industry pay levels 
are 38 percent higher than average pay for all U.S. employment and 22 
percent higher than other manufacturing employment. While the number of 
manufacturing jobs was plummeting across the larger economy, even 
before the recent economic downturn, employment in our industry was 
expanding. Between 2005 and 2007, medical technology employment grew 
20.4 percent, adding 73,000 jobs. During the recession, between 2007 
and 2008, MedTech employment dropped 1.1 percent, compared to 4.4 
percent for manufacturing as a whole.
    Our industry is heavily skewed toward small companies--the kind of 
companies that begin with a doctor, and engineer, and an idea to 
improve patient care. Almost two-thirds of the 7,000 medical technology 
firms in the United States have fewer than 20 employees. A high 
proportion of the breakthrough products in our industry come from these 
small, often venture-capital funded companies.
    And whether the firm is large or small, success in our industry 
comes only from innovation--the creation of diagnostics, treatments and 
cures that extend and enhance lives. Our industry's investment in 
research and development is more than twice the national average. Our 
product life-cycle is only 18-24 months.
    Our industry is so competitive that price increases have averaged 
only one-quarter the rate of other medical goods and services and just 
one-half the general CPI for almost 20 years.
    With $33 billion in total exports in 2008, medical technology ranks 
eleventh among all manufacturing industries in gross exports. Notably, 
unlike virtually every other sector of U.S. manufacturing, medical 
technology has consistently enjoyed a favorable balance of trade. With 
the aging of both U.S. and foreign populations, the projected explosive 
growth of large middle-class populations demanding modern health care 
in developing countries like China and India, and the accelerating pace 
of biomedical discovery, the potential for growth of our industry is 
great.
    While we are very proud of our contributions to the U.S. economy, 
we are even more proud of our contributions to improving patient care. 
For patients, medical progress has been remarkable. Between 1980 and 
2000, medical progress added more than 3 years to life expectancy. The 
death rate from heart disease was cut in half; the death rate from 
stroke was cut by one-third, and the death rate from breast cancer was 
cut 20 percent.
              fda regulation of medical devices--mdufa-iii
    While we are making progress in improving patient care and see 
immense future opportunities to provide jobs and contribute to long-
term economic growth, we are also worried. Today, America is the world 
leader in medical technology. But there are warning signs. As a recent 
PriceWaterhouseCoopers report showed, our lead is slipping on a number 
of dimensions of competitiveness. And a key factor in our loss of 
competitiveness has been the decline in FDA's performance in ensuring 
timely patient access to safe and effective medical devices.
    Put simply, FDA is a critical partner in our companies' efforts to 
bring safe and effective medical devices to patients. Without a strong, 
effective, and efficient FDA, we cannot have a strong and competitive 
industry. The predictability, consistency and efficiency of FDA 
decisionmaking, as well as reasonable, risk-based standards of evidence 
to assure the safety and effectiveness of medical technology products, 
is essential to drive new innovations for patients and for the long-
term success of the medical device industry. While the FDA has 
consistently maintained a strong record of assuring the safety and 
effectiveness of the products it reviews, delays in product approval, 
inconsistency in the review process, and the resulting downstream 
effects on investment and innovation have undermined the 
competitiveness of our industry and harmed patient access to new 
treatments, diagnostics, and cures.
    I am pleased to be able to report that after extensive 
negotiations, the user fee agreement between FDA and industry has been 
reached and is now awaiting your action. We believe this agreement has 
the potential to help achieve meaningful change in FDA performance 
through groundbreaking accountability and transparency measures and 
enhanced FDA resources.
    The FDA leadership and Dr. Shuren have recognized the need to 
vigorously address the issues affecting the device center and are 
already taking a number of steps that we believe have the potential to 
bring significant improvements. The user fee agreement our industry 
representatives just concluded with the agency has the potential to be 
an additional step in the right direction. It is good for industry. It 
is good for FDA. And most of all, it is good for patients. We urge this 
committee and the Congress as a whole to act promptly to reauthorize 
the user fee program and enact this agreement into law. Failure to act 
would not only jeopardize the critical improvements made by the new 
agreement but would have a devastating impact on our industry's ability 
to bring improved treatments and cures to patients.
    The user fee agreement builds the conditions for success in a 
number of major ways.
                            total time goal
    For the first time ever, this user fee agreement establishes 
average total time goals for FDA product review. All previous 
agreements have set goals in terms of time on the FDA clock. When the 
FDA asks sponsors for additional information or data, the FDA clock 
stops. The result was that while FDA may have been meeting the goals 
for 510(k) submissions, the total time from submission to final 
decision increased 43 percent between the average for 2003-7 and 2010. 
Of course, what matters to companies and patients is not an artificial 
construct like time on the FDA clock, but the time it actually takes to 
get a decision from FDA.
    FDA, of course, often has legitimate questions about an application 
and it cannot control the amount of time it takes for a sponsor to 
respond to questions about any individual application. But all sponsors 
want to submit applications that meet FDA standards, and total time is 
the best indicator of whether FDA is consistent and efficient in its 
review and is providing sponsors with adequate information in advance 
of what data is needed for different types of products. We refer to 
this new standard as a shared performance goal, because industry also 
has an obligation to submit good applications. Additionally, FDA will 
have new authority to decline to begin review of an application that is 
obviously deficient when it is submitted.
    By setting in place this new goal, efforts will be focused on the 
metric that is truly most important to all concerned.
                         improved fda day goals
    Second, the agreement also establishes significantly improved goals 
for time on the FDA clock. For example, for PMAs receiving panel 
reviews--which tend to be the most innovative products. By the end of 
this new agreement, 90 percent of PMA products will receive a decision 
within 320 days. The improved FDA day goals and the total time goals 
work together to encourage FDA to focus on a thorough but efficient 
review of all product submissions.
                          process improvements
    Third, the agreement includes process standards that we anticipate 
will improve the consistency and timeliness of the review process 
independent of the specific time goals.
    The agreement provides for meaningful presubmission interactions 
between FDA and companies where agreements reached will not change, so 
that companies know what FDA expects and FDA is bound by its 
commitments, unless, of course, new information arises that requires a 
change to protect public health.
    Additionally, there will be a substantive interaction between FDA 
and the company midway through the review process. This will assure 
that both companies and FDA identify any deficiencies in the 
application early, so that they can be corrected promptly.
    A new procedure that we call ``no submission left behind'' will be 
instituted, so that if the FDA time target is missed, the company and 
the FDA will meet to work out a schedule for resolving remaining 
issues, so that the submission doesn't go to the bottom of the pile.
                         greater accountability
    Fourth, the agreement provides for greater accountability. Greater 
accountability means that FDA's success under this agreement will be 
transparent to FDA management, to industry, to patients, and to 
Congress and the Administration, so that any problems that arise can be 
corrected promptly. Under the agreement, there will be quarterly and 
annual reporting on key metrics, providing reliable and consistent 
tracking of new performance indicators that both FDA and industry have 
agreed are important.
    In addition, the agreement requires an analysis of FDA's management 
of the review process by an independent consulting organization, 
coupled with an FDA corrective action plan to address opportunities for 
improvement.
                         appropriate resources
    Finally, to give FDA additional tools to meet the new goals, the 
agreement provides $595 million in user fees for 2013-17. Additional 
reviewers, lower manager-to-reviewer ratios, enhanced training, and 
other resources provided by the agreement will give FDA what it needs 
to improve performance. Overall, the agreement will allow FDA to hire 
approximately 200 additional FTEs, the vast majority of which will be 
put into place where needed most--additional reviewers. This, coupled 
with additional supervisors who are being hired this year, should lead 
to move consistency in the review process.
    Each of the provisions of this agreement has the potential to make 
a difference in improving FDA performance. But the whole is truly 
greater than the sum of its parts. Each of the elements of the 
agreement reinforces the others. For example, as I noted above, the 
combination of total time goals and faster FDA time goals should result 
in greater improvements than either one would achieve separately.
    And, of course, no agreement, no matter how good on paper, is self-
executing. Making it work as intended will require the full efforts of 
FDA's dedicated staff and managers. Our industry is committed to work 
with FDA in any way we can to make it a success. Continued oversight 
and interest from the Congress will also be important. Patients are 
depending on all of us.
                               conclusion
    Finally, I should note that a number of legislative proposals have 
been introduced with the goal of improving the FDA's operations. We are 
appreciative of efforts by all Members who seek to give the FDA the 
tools and structure it needs to succeed. Legislative reforms that do 
not alter the substance of the negotiated agreement between FDA and 
industry and seek to improve consistency and predictability in the FDA 
device review process hold the potential to create a legislative 
reauthorization package that maximizes the opportunity for success at 
the agency, which should be the shared goal of all involved.
    For example, legislation has been proposed to streamline the de 
novo process by eliminating the statutory requirement that a sponsor 
receive a finding of ``not substantially equivalent'' before even 
beginning the de novo process. FDA itself has recognized that the 
current process is cumbersome, and FDA is looking at using its 
regulatory discretion to improve that process. However, statutory 
change may be the most effective way to address the problem, which will 
help FDA, industry, and ultimately patients.
    At the same time, I want to emphasize that we are strongly 
committed to the user fee agreement as negotiated and do not support 
any proposals that would change the terms of the agreement or undermine 
its goals.
    I thank the committee for the opportunity to testify and urge you 
to act promptly to reauthorize this program which is so critical to 
patients, to the FDA and to our industry.

    The Chairman. David, thank you very much, again and thank 
you for your 20 years of service to this committee too.
    Mr. Nexon. Thank you, Mr. Chairman.
    The Chairman. Next, we turn to Allan Coukell, the director 
of Medical Programs at The Pew Health Group. In his current 
role, he supervises programs related to pharmaceutical supply 
chain safety, antibiotic development and stewardship, and 
conflict of interest issues.
    Mr. Coukell, welcome to the committee. Please proceed.

 STATEMENT OF ALLAN COUKELL, B.SC.PHARM., DIRECTOR OF MEDICAL 
      PROGRAMS, THE PEW CHARITABLE TRUSTS, WASHINGTON, DC

    Mr. Coukell. Mr. Chairman and members of the committee, 
thank you for the opportunity to testify.
    My name is Allan Coukell and I direct medical programs for 
The Pew Health Group, which conducts research and analysis 
aimed at improving the safety and well-being of American 
consumers. As you mentioned, Pew has a number of initiatives 
related to drugs, medical devices, and FDA.
    Today, I would like to talk about how the user fee 
agreements can promote innovation and help to ensure the safety 
and effectiveness of medical products with the ultimate goal of 
improving health.
    Since 1992, PDUFA fees have given FDA significant and 
sustained resources that allow the agency to review new 
products quickly. Indeed, preliminary findings of a study that 
Pew has funded show that FDA reviews new drugs faster than its 
counterparts in the European Union and Canada.
    PDUFA also established an accelerated review process for 
drugs that offer major advances or provide treatment where no 
adequate therapy exists, and FDA devotes extra resources to 
reviewing those drugs.
    This issue is especially important to Pew's Antibiotics and 
Innovation Project, which is working to promote the development 
of new antibiotics needed to treat serious and life threatening 
bacterial infections.
    Of the last 11 new antibiotics approved, four received 
priority review and that meant faster approvals for drugs for 
pneumonia, serious skin infections, and for C. difficile 
diarrhea, which causes 14,000 U.S. deaths each year.
    The Medical Device User Fee Program is similarly important, 
and we are asking Congress to swiftly reauthorize it. The fees 
that FDA collects under MDUFA would add 200 new staff and 
nearly $600 million for the review of device applications, and 
these new funds are important.
    Pew recently commissioned an analysis of personnel at FDA 
showing that the Device Center has higher attrition rates than 
the centers for drugs and biologics, or the office of 
regulatory affairs. Nearly 10 percent of staff in CDRH left in 
fiscal year 2010, and the majority of device staff reported 
that they did not have sufficient resources to get their job 
done. To function effectively, CDRH must have adequate funding.
    But it is critical to remember that true innovation is not 
just about speed to market, but about developing products that 
are safer or more effective than existing drugs and devices. 
While more challenging to measure than review times, improving 
health is the ultimate goal of the FDA.
    User fees primarily support review of new products, but 
some funds are available to support drug safety activities. 
Five years ago, Congress created the Risk Mitigation Programs 
known as REMS to help FDA and manufacturers manage the risk of 
drugs. The current user fee agreement directs resources toward 
insuring the effectiveness of these important programs.
    The new Generic Drug User Fee Agreement also contains 
important safety provisions, and this landmark measure will 
enable FDA to inspect overseas generic drug plants more often. 
As Pew's Drug Safety Project has noted, 80 percent of the 
ingredients in our drug supply now comes from outside the 
United States, yet FDA domestic inspections occur nearly every 
2 years. And by way of contrast, inspections in China by the 
FDA occur, on average, every 17 years. Addressing this 
disparity will help protect patients from substandard drugs and 
even the playing field for U.S. manufacturers.
    GDUFA is an important step forward for safety, and PDUFA 
funds will help evaluate drug safety. Medical devices are 
different. In contrast with drugs, medical devices can come to 
market with limited or no clinical data, and that makes it 
especially important that we have a robust postmarket 
surveillance system. And we urge Congress to allow FDA to apply 
user fees to device safety initiatives, something not covered 
to a great extent under the proposed agreement.
    For example, PDUFA fees already support Sentinel for drug 
adverse events. PDUFA fees should be used to support the 
monitoring of devices in this program.
    In closing, I would like to mention some of the other 
crucial activities that user fees do not cover such as ongoing 
inspections for brand name drugs, for example, and regulation 
of food safety. As important as user fees are, they are not a 
substitute for adequate appropriated funding.
    The user fees, if they expire, would harm patients, public 
health, and the industry. We urge Congress to move quickly to 
pass these important bills and to ensure that FDA has continued 
sustained funding for its vital public health mission.
    Thank you, and I would welcome any questions.
    [The prepared statement of Mr. Coukell follows:]
            Prepared Statement of Allan Coukell, B.Sc.Pharm.
    Based on data, science, and non-partisan research, the Pew Health 
Group works to reduce risks to the health, safety, and well-being of 
American consumers. Pew applies a rigorous, analytical approach to 
improve public policy, inform the public, and stimulate civic life.
    The user fee agreements can promote innovation, and help to ensure 
the safety and effectiveness of medical products ultimately with the 
goal of improving health. These agreements fund critical activities of 
the Food and Drug Administration (FDA).
    Since 1992, user fee agreements have given FDA significant and 
sustained resources that allow the agency to review new products 
quickly. Preliminary findings of a study Pew has funded show that FDA 
reviews new drugs faster than its counterparts in the European Union 
and Canada.
    The fees FDA collects under MDUFA provide the agency with 
additional resources to review applications and add about 200 much-
needed staff members to the agency's Center for Devices and Radiologic 
Health (CDRH). Under the proposed agreement, the total fees collected 
over the 5-year period to 2017 are expected to reach $595 million. This 
will help create a more efficient center that is sufficiently resourced 
to better protect consumer safety and facilitate the introduction of 
innovative devices.
    Overall, the user fee programs have substantially sped up the 
review of new drug applications. Review times are important insofar as 
they speed patients' access to potentially important products. The user 
fee agreements make review times a performance metric. However, true 
innovation is not just about getting products to market faster; it is 
about developing products that are safer or more effective than 
existing drugs and devices. While more challenging to measure than 
review times, improving health is the ultimate goal of the FDA.
 the user fee agreements give fda more resources to ensure drug safety
    While user fees primarily support the review and approval of 
medical products, some funds are available to partially underwrite 
certain product safety activities. The Generic Drug User Fee agreement 
will enable FDA not only to review generic drug applications, but also 
to inspect overseas drug manufacturing facilities more regularly.
    Given the broad support for these agreements from Democrats, 
Republicans, the business community, and consumers, we urge Congress to 
move quickly to pass these important bills to ensure that FDA has 
continued, sustained funding to carry out and expand its important 
public health mission.
                                 ______
                                 
    Chairman Harkin, Ranking Member Enzi, and members of this 
committee, thank you for the opportunity to testify about the 
importance of the user fee agreement legislation to patients and public 
health.
    Based on data, science, and non-partisan research, the Pew Health 
Group works to reduce risks to the health, safety, and well-being of 
American consumers. Pew applies a rigorous, analytical approach to 
improve public policy, inform the public, and stimulate civic life.
    Today, I would like to talk about how the user fee agreements can 
promote innovation, and help to ensure the safety and effectiveness of 
medical products ultimately with the goal of improving health. These 
agreements fund critical activities of the Food and Drug Administration 
(FDA), the Federal public health agency that regulates important, life-
sustaining products, such as drugs, vaccines, medical devices, 
biologics, and food, as well as other products people use daily, 
including cosmetics, vitamins, and, most recently, tobacco.
               the user fee agreements promote innovation
    Since 1992, user fee agreements have given FDA significant and 
sustained resources that allow the agency to review new products 
quickly. Preliminary findings of a study Pew has funded show that FDA 
reviews new drugs faster than its counterparts in the European Union 
and Canada.
    The 1992 Prescription Drug User Fee Act also established an 
accelerated regulatory review process for drugs that offer major 
advances or provide treatment where no adequate therapy exists. FDA 
devotes extra time and resources to drugs with priority review status.
    This issue is particularly important to Pew's Antibiotics and 
Innovation Project, which is working to promote the development of new 
antibiotics needed to treat people suffering from serious and life-
threatening infections. Since 2000, FDA granted priority review to 4 of 
the 11 new antibiotics (linezolid, daptomycin, tigecycline and 
fidaxomicin) that it approved, quickly bringing much-needed treatments 
for pneumonia, serious skin infections, and Clostridium difficile-
associated diarrhea to market.\1\ According to the Centers for Disease 
Control and Prevention, Clostridium difficile, a bacterium that can 
cause life-threatening infections, sickened 339,000 hospital patients 
in 2009 and is responsible for 14,000 deaths per year.\2\
---------------------------------------------------------------------------
    \1\ http://www.accessdata.fda.gov/scripts/cder/drugsatfda/.
    \2\ Vital Signs: Preventing Clostridium difficile Infections. MMRW. 
March 9, 2012/61(09);157-62. http://www.cdc.gov/mmwr/preview/mmwrhtml/
mm6109a3.htm?s_cid=mm6109a3_w.
---------------------------------------------------------------------------
    In 2002, Congress established a user fee program for medical 
devices. We are asking that Congress swiftly reauthorize this program 
as well.
    The fees FDA collects under MDUFA provide the agency with 
additional resources to review applications and add about 200 much-
needed staff members to the agency's Center for Devices and Radiologic 
Health (CDRH). Under the proposed agreement, the total fees collected 
over the 5-year period to 2017 are expected to reach $595 million, a 
significant increase over the previous agreement. This will help create 
a more efficient center that is sufficiently resourced to better 
protect consumer safety and facilitate the introduction of innovative 
devices.
    The need for additional resources to boost the agency's capacity is 
especially important at CDRH. An analysis commissioned by the Pew 
Health Group examined CDRH, the Center for Biologics Evaluation and 
Research, Center for Drug Evaluation and Research and the Office of 
Regulatory Affairs. The report reveals that CDRH has the highest annual 
attrition rate of the four centers, with nearly 10 percent of the 
center's science, technology and engineering staff leaving in fiscal 
year 2010. Resource issues may help explain the high attrition rates; 
less than half of CDRH employees surveyed agreed that their workload is 
reasonable and even fewer reported having sufficient resources to get 
their job done. For it to function as efficiently and effectively as 
possible, CDRH must have adequate funding.
    Overall, the user fee programs have substantially sped up the 
review of new drug applications. In the decade after the first user fee 
agreement was passed, the median review time fell from 27.7 months to 
13.8 months. Review times for drugs given priority status have also 
fallen by half. Indeed, a standard review today is as fast as a 
priority review a decade ago (13.9 months).\3\
---------------------------------------------------------------------------
    \3\ http://www.fda.gov/forconsumers/byaudience/forpatientadvocates/
speedingaccesstoimport
antnewtherapies/ucm128291.htm#compare.
---------------------------------------------------------------------------
    Review times are important insofar as they speed patients' access 
to potentially important products. The user fee agreements make review 
times a performance metric. However, it is critical to remember that 
true innovation is not just about getting products to market faster; it 
is about developing products that are safer or more effective than 
existing drugs and devices. While more challenging to measure than 
review times, improving health is the ultimate goal of the FDA.
 the user fee agreements give fda more resources to ensure drug safety
    While user fees primarily support the review and approval of 
medical products, some funds are available to partially underwrite 
certain product safety activities. Five years ago, Congress created the 
risk evaluation and mitigation programs, known as REMS, as a new tool 
to help FDA and manufacturers manage the risks of drugs. The current 
user fee agreement directs resources toward ensuring the effectiveness 
of these important programs.
    The new generic drug user fee agreement also contains important 
safety provisions. This landmark measure will enable FDA not only to 
review generic drug applications, but also to inspect overseas drug 
manufacturing facilities more regularly. Eighty percent of the 
ingredients in our pharmaceuticals come from foreign suppliers.\4\ Yet, 
while FDA inspects American manufacturers every 2 years, it lacks the 
resources to conduct effective inspections of facilities in places such 
as China and India. In fact, FDA inspects overseas facilities on 
average every 9 years.\5\ Addressing this disparity will help protect 
patients from substandard drugs and will provide a level playing field 
for generic drug makers that manufacture their products and source 
their ingredients domestically.
---------------------------------------------------------------------------
    \4\ U.S. Government Accountability Office (March 1998). Food and 
Drug Administration: Improvements Needed in the Foreign Drug Inspection 
Program (Publication No. GAO/HEHS-98-21).
    \5\ U.S. Government Accountability Office (September 2010). Drug 
Safety: FDA Has Conducted More Foreign Inspections and Begun to Improve 
Its Information on Foreign Establishments, but More Progress Is Needed 
(Publication No. GAO-10-961).
---------------------------------------------------------------------------
    While GDUFA is a very important step forward in increasing drug 
safety, and PDUFA funds will help evaluate certain drug safety 
initiatives, we are disappointed that the draft MDUFA agreement does 
not allow FDA to apply user fees to fund some important medical device 
post-marketing surveillance activities. A robust post-market 
surveillance infrastructure is critical to ensure the safety of these 
products once they are on the market. Without adequate monitoring, it 
is difficult to identify devices on the marketplace with unexpected 
safety issues, which presents a threat to patient health. The user fee 
agreement should recognize that creating an effective post-marketing 
surveillance system is crucial to the willingness of the public and 
regulators to see devices come to market quickly, with less clinical 
data.
    As a result, we urge Congress to allow FDA to apply user fees to 
certain device safety initiatives. PDUFA already provides funding for 
the agency's Sentinel Initiative, a proactive system for tracking drug 
adverse events. We believe this program should be expanded to include 
medical devices as well.
    In closing, I would like to emphasize that as important as user 
fees are to the efficient function of FDA, they cannot be a substitute 
for adequate appropriated funding. User fees are not available for 
critical activities such as enforcing good manufacturing practices, 
most post-market safety activities, and for regulating non-drug 
products, such as food, which are not covered by user fee agreements. 
Furthermore, FDA is a public health agency that works to promote the 
health of all Americans. Because of the public interest in a well-
performing FDA, the agency should receive public funds and be 
accountable to the public, not just to the industries it regulates.
    If the user fee agreements expire, patients, public health, and 
industry will suffer. Given the broad support for these agreements from 
Democrats, Republicans, the business community, and consumers, we urge 
Congress to move quickly to pass these important bills to ensure that 
FDA has continued, sustained funding to carry out and expand its 
important public health mission.
    Thank you and I look forward to answering any questions.

    The Chairman. Thank you very much, Mr. Coukell.
    To all of you, again, thanks for your testimony. I will 
just take a few minutes here. I know time is progressing, but 
this is must-do legislation. We are going to have to get this 
done.
    Around here, when there is legislation that must get 
through, things start coming out of the woodwork as we say. 
People have to hang something on it. They have something 
vitally important, you know, that has got to be done, and since 
there is no other, we will try to hang it on this. I have 
already seen some of that happening when people know that this 
bill must pass and has good bipartisan support.
    I have heard from all of you and from FDA what would happen 
if we did not pass it in time. But what I want to know is, will 
your organization, each of you, I ask this of all of you, will 
your organization help ensure that controversial policy 
measures do not derail the user fee reauthorization package? 
Sometimes we, here, need to count on all of you out there to 
make sure that we keep this intact and we keep controversial 
measures off of this.
    Will your organization help ensure that that does not 
happen? Dr. Wheadon.
    Dr. Wheadon. Certainly, Chairman Harkin. We completely 
agree with you. In fact, our original goal was a skinny PDUFA. 
We moved to a lean PDUFA. We now recognize we have a PDUFA that 
probably needs to go to Weight Watchers, but that having been 
said, we stand ready to work to ensure that those additions are 
kept to a minimum. And we will do our best to quickly 
facilitate any additions so that you can meet your timetable.
    The Chairman. Appreciate that.
    Miss Radcliffe.
    Ms. Radcliffe. BIO has been very committed to making sure 
that controversial policy matters do not derail the PDUFA 
reauthorization.
    As has been mentioned here earlier this morning, it is 
absolutely critical that PDUFA be reauthorized and well in 
advance of its expiration in September 2012 to avoid a 
reduction in force at the FDA. And even more, as I think was 
mentioned this morning, even the threat of a reduction in force 
at the FDA is extremely problematic for the agency, therefore 
for our sponsors, and therefore for patients.
    So, yes, we remain very much in agreement with you.
    The Chairman. Thank you.
    Mr. Gaugh.
    Mr. Gaugh. To answer your question, yes.
    The Chairman. Dr. Nexon.
    Mr. Nexon. Ditto.
    The Chairman. Ditto.
    Mr. Coukell. Mr. Chairman, thank you.
    I would like to thank you, the Ranking Member, and the 
members of the committee for moving quickly to reauthorize 
these important agreements. But also for the sustained 
bipartisan work that has gone into three additional discussion 
drafts that have been released or will be shortly on the drug 
supply chain, on incentivizing new antibiotics, and on medical 
device safety and innovation.
    I think a lot of work has gone into hashing those out and 
making sure they are not controversial, and it is our hope that 
those will move with the reauthorization.
    The Chairman. I appreciate all of that because this being a 
campaign year and a lot of campaigns out there from the top 
down, that I am concerned that things might try to interfere 
with the passage of this legislation, not for substantive 
reasons, but for political reasons.
    That is why we need the industry out there, all of you who 
have a stake in this, who have been involved in the drafting 
and the putting of this together, and recognizing how necessary 
it is that we pass it. That you will make sure that we have a 
bill that has broad consensus and that we do not get involved 
in controversial measures.
    Senator Bennet.
    Senator Bennet. Thank you, everybody, for all the work that 
you have done and for your testimony today.
    I hope, what I am about to raise, is not a controversial 
measure. It is a complicated measure at the least, and a little 
bit of a freighted questions, but I think it is an important 
question to have, particularly in the context of all the 
agreement that has been reached here.
    As all of you know, we have seen countless tragedies 
happen, tainted Heparin that made its way to patients killing 
over 100 Americans. Heat-sensitive insulin that was stolen and 
then redistributed to patients, millions of children's medicine 
pills recalled and taken off the shelves, counterfeit Avastin 
given to patients in need of chemotherapy, these issues really 
do demand Congress's attention. Everybody has been talking 
about having a uniform distribution system to increase the 
safety of drug distribution chain for years; some of you have 
talked about it for decades.
    I believe that we can address the concerns and needs of the 
regulated community, address concerns raised by pharmacists 
about costs and provide the FDA with authority it says it needs 
to implement a system effectively to protect the public health. 
All of these are legitimate concerns that need to be reflected.
    Pew has said before that they would like to see more effort 
applied to authenticating these products so people know what 
they believe they are taking corresponds to the actual products 
they ingest. Right now, we can learn more from a barcode on a 
gallon of milk than on a bottle of pills, pills that could be 
the difference between life and death. And that just does not 
seem right to people in Colorado, and I know other members of 
the committee feel the same.
    This is not an easy issue. Everybody has different and 
legitimate concerns here whether it is the cost of 
implementation, or whether it is really a meaningful system 
that benefits the public health.
    So my only question, this is the only one I am going to 
ask, is whether there is an interest in trying to work together 
to see if we can bridge this gap and create the kind of 
tracking system we need, so our constituents can have 
confidence in what they are ingesting.
    That is for the whole panel or anybody that would like to 
talk about it.
    Dr. Wheadon. Certainly, Senator Bennet. Our industry has 
stood ready and continues to stand ready to work with yourself, 
your staff, and the many other members that are very focused 
appropriately on this issue.
    In terms of a system such as track and trace or a barcode, 
it is important that whatever that system may be it is 
uniformly adopted. It involves a number of other entities 
beyond simply drug manufacturers, pharmacies, distribution 
system, what have you. But that system needs to be uniform and 
applicable across the entirety of the system.
    Ms. Radcliffe. I would echo what Dr. Wheadon has said. It 
is an issue that has been very important to BIO and its 
members, and we have worked hard with the stakeholder community 
to try and identify proposals that we all can stand behind.
    I think we have made a tremendous amount of progress and we 
certainly look forward to working on that more where there are 
still some areas of disagreement, because the patchwork quilt 
of requirements does not serve patients well, and it is 
difficult for our members to comply with. So we do think that 
that needs to be addressed.
    Mr. Gaugh. Yes, to answer your question, GPhA does support 
an alliance. And, in fact, is working with the PDSA, or the 
Pharmaceutical Distribution Security Alliance, across multiple 
stakeholders, and many of the stakeholders that you mentioned 
to create a system through a serialization process. As you 
said, bar coding on milk is known better and gives more 
information than it does, in some cases, on the 
pharmaceuticals.
    So the PDSA group is working on a nationwide process, not a 
State by State, but nationwide that would help resolve that and 
we do support it.
    Senator Bennet. Doctor, I will give you a pass unless you 
want to. No.
    Mr. Coukell. Senator, thank you for your leadership on this 
issue, and for your work with the Chairman and the Ranking 
Member.
    I think consumers are surprised when they learn that we do 
not now have a system that routinely checks to see if the drugs 
they are about to get are counterfeit. Nor do we have a system 
that is able to track the product as it moves through the 
system, and a robust national system would be far preferable to 
a patchwork of State laws.
    Senator Bennet. Thank you.
    The Chairman. I just want to say to my friend from Colorado 
that I do not consider that controversial at all. We do need a 
good tracking system all the way from the manufacturers 
overseas, as we have said, with better inspections of those, 
and a trace and track system that comes all the way down. I do 
not consider that controversial.
    I think most of the people here have said, and I agree with 
them, that we need a national system so that we do not have 
some hodgepodge of one State here, and one State there, and one 
State doing this. We need a national system of tracking.
    Senator Bennet. I appreciate that, Mr. Chairman. And I 
think if we have the chance here, because of the good work that 
is going on, to try to get through this so that we do not go 
another decade, and another decade after that.
    The Chairman. Absolutely.
    Senator Bennet. I think that would be really welcome.
    The Chairman. I look forward to working with you on that.
    Senator Bennet. Thank you, Mr. Chairman.
    The Chairman. Thanks.
    Senator Blumenthal.
    Senator Blumenthal. Thank you, Mr. Chairman.
    I want to thank you and our Ranking Member, but 
particularly you for your leadership in this whole area. A 
difficult and certainly challenging one, particularly in this 
political climate.
    Mr. Coukell, if you could comment on one specific area that 
you have mentioned, the development of new antibiotics, why it 
is so critical, and why it should be part of this bill. As you 
know, Senator Corker and I have introduced a separate measure, 
which is largely incorporated in this bill, and your 
organization has been absolutely instrumental and enormously 
helpful and constructive in this effort.
    I thank you and I invite you to comment on the need for 
this measure.
    Mr. Coukell. Thank you, Senator. And thank you and Senator 
Corker for your work on the GAIN Act, which you referenced.
    As you know well, antibiotics are unlike other drugs in a 
couple of ways. A drug for high blood pressure will always be 
as effective as it is today, but antibiotics will lose 
effectiveness over time because the bugs will develop 
resistance.
    Dr. Woodcock, this morning, talked about the declining 
pipeline for new drugs. That is especially acute in 
antibiotics, and we have more and more resistant infections 
emerging, and they tend to be small market drugs. We absolutely 
agree with you that we need incentives to make this an 
attractive play for companies to invest, so that we have a 
continued flow of new antibiotics.
    Senator Blumenthal. Thank you.
    I want to ask a question for any member of the panel who 
wants to comment on what you think can and should be done to 
address the problem of drug shortages in this country. You 
probably heard some of my comments earlier, and I could expand 
on them now, but I think you got the drift of what my thinking 
is, and invite you to comment.
    Mr. Gaugh. From the GPhA perspective, we have been working 
with the FDA on the drug shortage situation from a company, and 
an FDA. As I said in my testimony, the FDA and the generic 
industry has never been more collaborative than they are today.
    We are, at GPhA, working on a system called Accelerated 
Recovery Initiative, ARI. In fact, we have a meeting with the 
FDA next week to discuss that model and how that can help 
resolve some of the drug shortage issues that are occurring 
today.
    Senator Blumenthal. How would that happen?
    Mr. Gaugh. It would work with the FDA, with the 
manufacturers, through an independent third party, which would 
help, we hope, at an even earlier pace to identify a drug 
shortage that is occurring or about to occur. And then through 
the independent third party and the FDA working with the 
manufacturers separately to try to resolve the drug shortage as 
it is happening, to make it a less lengthy drug shortage, or 
maybe even to prevent it from happening.
    Senator Blumenthal. What about preventing it from 
happening? What can be done, for example, methotrexate, Doxil, 
or the anesthesiology medicines?
    This problem really is one, as I do not need to tell 
anybody on the panel, or anybody in this room, of huge urgency 
and immediacy to anybody who goes to a hospital each day, 
anybody who talks to a doctor who treats patients. This is very 
much on their minds, to say the least.
    And I wonder whether the people in organizations like yours 
share this sense of urgency?
    Mr. Gaugh. Our hope and belief would be that the ARI can be 
a more proactive solution to drug shortages. In today's 
environment, it is pretty much a reactive. When the drug 
company contacts the FDA, the FDA then goes into action to 
resolve the situation. So it is a reactive. As you said, 
methotrexate was one of those reactive situations.
    So the ARI is our hope and our belief that working together 
with the FDA and through an independent third party, we can 
identify these at an earlier stage and help prevent them from 
even occurring.
    Senator Blumenthal. Before I conclude, anybody else on the 
panel have any comments on this issue?
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Blumenthal.
    Again, I thank all the panel for being here, and I thank 
Dr. Woodcock and Dr. Shuren for remaining here for the duration 
of this.
    I request the record be kept open for 10 days for other 
questions or submissions.
    Again, I look forward to working with all of you to get 
this legislation through in a timely manner this year.
    With that, the committee will stand adjourned.
    [Additional Material follows.]

                          ADDITIONAL MATERIAL

           Prepared Statement of Senator Robert P. Casey, Jr.

    Thank you to the panelists for your remarks today. I'd also 
like to thank Chairman Harkin and Ranking Member Enzi for your 
leadership in guiding this committee toward several substantial 
and thoughtful bipartisan agreements on a variety of issues of 
critical import to American patients. I am glad to have had the 
opportunity to help to shape several of the agreements, and I 
look forward to working with you to ensure they are included in 
the upcoming Food and Drug Administration (FDA) Reauthorization 
package to be considered by this committee.
    I am proud to come from a State with a strong history of 
leadership in medical discovery. During the past year, I have 
been meeting with and working with many Pennsylvanians to bring 
forward and support new proposals that will enhance rewards for 
biomedical research and strengthen FDA's ability to protect 
patient safety and at the same time improve access to medical 
breakthroughs. I was glad to have played a role in helping to 
advance bipartisan agreements in the HELP Committee to 
modernize and strengthen the FDA's ability to respond, and pro-
actively address, significant public health threats such as the 
unprecedented growth in prescription drug shortages, the surge 
of antibiotic-resistant ``super bugs,'' and gaps in the current 
FDA approval pathway with respect to novel low-to-moderate risk 
medical devices.
    Guaranteeing the safety and effectiveness of medical 
products is a task of paramount importance to the American 
public. It is also a responsibility that carries with it the 
need to work diligently with critical health care industries, 
such as pharmaceutical companies and medical device makers, to 
drive progress in biomedical medicine and regulatory science 
and help shepherd significant new cures and treatments to 
patients with unmet medical needs.
    Currently, the growing manufacturing, sourcing and rapid 
dispersion of medical products from outside the United States 
to the medicine cabinets and hospital beds of American patients 
is a cause of great concern. Federal laws regulating such 
activity have not been updated in decades and FDA is left 
relying upon statutes from a time when the vast majority of 
medicines were discovered, developed and distributed within the 
United States. We cannot allow this to continue as the status 
quo. Recent cases such as the counterfeit of Avastin and 
Heparin showcase the life-threatening failings of our current 
system.
    It is crucial that, during this reauthorization, we update 
our regulatory oversight and infrastructure at the FDA, and 
give the FDA the appropriate authority and resources, so that 
it can ensure that all products that reach American patients--
regardless of where they are made, or who distributes them--are 
safe and effective. That is the public's expectation, and that 
should serve as our North Star. In addition, I think that we 
must not lose focus on the fact that, at the end of the day, 
patients are depending on the FDA to not just review and 
approve new products, but help to facilitate progress in 
science and medicine that will lead to life-saving discoveries.
    Historically, the FDA has done an outstanding job in 
achieving all of these goals, but there is more work that 
remains to be done. The onus rests on Congress to help provide 
FDA with the guidance and wherewithal to meet the needs of an 
increasingly diverse and aging population, and overcome the 
unique challenges presented by our 21st century global economy.
    Chairman Harkin and Ranking Member Enzi, I look forward to 
working with you, and others on this committee, towards these 
shared goals.

    [Whereupon, at 12:24 p.m., the hearing was adjourned.]



                              

