[Senate Hearing 115-333]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 115-333

                   FDA USER FEE AGREEMENTS: IMPROVING
                     MEDICAL PRODUCT REGULATION AND
                    INNOVATION FOR PATIENTS, PART II

=======================================================================

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS

                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                                   ON

   EXAMINING FDA USER FEE AGREEMENTS, FOCUSING ON IMPROVING MEDICAL 
            PRODUCT REGULATIONS AND INNOVATION FOR PATIENTS

                               __________

                             APRIL 4, 2017

                               __________

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                                Pensions
                                
                                
 
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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                  LAMAR ALEXANDER, Tennessee, Chairman
                  
MICHAEL B. ENZI, Wyoming		PATTY MURRAY, Washington
RICHARD BURR, North Carolina		BERNARD SANDERS (I), Vermont
JOHNNY ISAKSON, Georgia			ROBERT P. CASEY, JR., Pennsylvania
RAND PAUL, Kentucky			AL FRANKEN, Minnesota
SUSAN M. COLLINS, Maine			MICHAEL F. BENNET, Colorado
BILL CASSIDY, M.D., Louisiana		SHELDON WHITEHOUSE, Rhode Island
TODD YOUNG, Indiana			TAMMY BALDWIN, Wisconsin
ORRIN G. HATCH, Utah			CHRISTOPHER S. MURPHY, Connecticut
PAT ROBERTS, Kansas			ELIZABETH WARREN, Massachusetts
LISA MURKOWSKI, Alaska			TIM KAINE, Virginia
TIM SCOTT, South Carolina		MAGGIE HASSAN, New Hampshire
                  
                  
 
               David P. Cleary, Republican Staff Director

         Lindsey Ward Seidman, Republican Deputy Staff Director

                  Evan Schatz, Minority Staff Director

              John Righter, Minority Deputy Staff Director

                                  (ii)

                            C O N T E N T S

                               __________

                               STATEMENTS

                         TUESDAY, APRIL 4, 2017

                                                                   Page

                           Committee Members

Alexander, Hon. Lamar, Chairman, Committee on Health, Education, 
  Labor, and Pensions, opening statement.........................     1
Murray, Hon. Patty, a U.S. Senator from the State of Washington, 
  opening statement..............................................     3
Scott, Hon. Tim, a U.S. Senator from the State of South Carolina.    37
Burr, Hon. Richard, a U.S. Senator from the State of North 
  Carolina.......................................................    40
Franken, Hon. Al, a U.S. Senator from the State of Minnesota.....    42
Hatch, Hon. Orrin G., a U.S. Senator from the State of Utah......    44
Warren, Hon. Elizabeth, a U.S. Senator from the State of 
  Massachusetts..................................................    46
Young, Hon. Todd, a U.S. Senator from the State of Indiana.......    47
Hassan, Hon. Margaret Wood, a U.S. Senator from the State of New 
  Hampshire......................................................    49
Kaine, Hon. Tim, a U.S. Senator from the State of Virginia.......    52
Casey, Hon. Robert P., Jr., a U.S. Senator from the State of 
  Pennsylvania...................................................    54
Cassidy, Hon. Bill, a U.S. Senator from the State of Louisiana...    56
Whitehouse, Hon. Sheldon, a U.S. Senator from the State of Rhode 
  Island.........................................................    57

                               Witnesses

Holcombe, Kay, Senior Vice President for Science Policy, 
  Biotechnology Innovation Organization, Washington, DC..........     6
    Prepared statement...........................................     7
Gaugh, David R., R.Ph., Senior Vice President of Sciences & 
  Regulatory Affairs, Association for Accessible Medicines, 
  Washington, DC.................................................    18
    Prepared statement...........................................    20
Whitaker, Scott, President and Chief Executive Officer, Advanced 
  Medical Technology Association, Washington, DC.................    25
    Prepared statement...........................................    26
Bens, Cynthia, Vice President of Public Policy, Alliance for 
  Aging Research, Washington, DC.................................    30
    Prepared statement...........................................    32

                          ADDITIONAL MATERIAL

Response to questions of Senator Cassidy by David R. Gaugh, R.Ph.    62
Response by Scott Whitaker to questions of:
    Senator Cassidy..............................................    64
    Senator Bennet...............................................    64
Response to question of Senator Whitehouse by Cynthia Bens.......    65

                                 (iii)

  

 
   FDA USER FEE AGREEMENTS: IMPROVING MEDICAL PRODUCT REGULATION AND 
                    INNOVATION FOR PATIENTS, PART II

                              ----------                              


                         TUESDAY, APRIL 4, 2017

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:02 a.m., in 
room SD-430, Dirksen Senate Office Building, Hon. Lamar 
Alexander, chairman of the committee, presiding.
    Present: Senators Alexander, Murray, Burr, Young, Scott, 
Hatch, Cassidy, Kaine, Casey, Franken, Bennet, Whitehouse, 
Murphy, Warren, and Hassan.

                 Opening Statement of Senator Alexander

    The Chairman. The Senate Committee on Health, Education, 
Labor, and Pensions will please come to order.
    This morning, we are holding a hearing on FDA User Fee 
Agreements: Improving Medical Product Regulation and Innovation 
For Patients, Part II. This is a bipartisan hearing. Senator 
Murray and I called the hearing together and invited the 
witnesses together. We'll each have an opening statement, 
Senator Murray and I, and then we'll introduce our panel of 
witnesses. After our witness testimony, Senators will each have 
5 minutes of questions.
    This is our second hearing on reauthorization of the Food 
and Drug Administration medical device and drug user fees. FDA 
is the agency responsible for making sure that patients benefit 
from the promising research driven by the 21st Century Cures 
Act, which this committee worked on last year in a bipartisan 
way, and which Majority Leader Senator McConnell called the 
most important piece of legislation last year.
    Two weeks ago, this committee heard from experts at the FDA 
who told us that a timely reauthorization of these user fee 
agreements is integral to helping patients and continuing 
implementation of the 21st Century Cures Act. I asked the 
witnesses at the last hearing what will happen if we do not 
reauthorize by the end of July, 20 days before the authority to 
collect user fees expires, and here is what they said. Dr. 
Janet Woodcock, head of FDA's drug center, agreed that cancer 
drugs would be delayed and said that patients developing 
resistance to existing cancer drugs might soon not have 
innovative ones approved soon enough to help them.
    Dr. Jeffrey Shuren, the head of the device center, said,

          ``We'd lose about a third of our people, and it's not 
        just that reviews will take longer, but the industry, 
        which now is starting to bring their innovative 
        technologies to the United States early, sometimes 
        first, as you heard with the artificial pancreas, 
        they're going elsewhere.''

    Dr. Marks, head of the biologics center, talked about how 
ongoing research would be slowed if FDA did not have the staff 
to provide feedback to companies and scientists. Dr. Marks 
said,

          ``We have literally hundreds of investigational new 
        drug applications that are a part of user fee programs. 
        The ability to hold meetings in a timely manner, the 
        ability to make sure those approvals happen in a timely 
        manner to get products to patients with medical needs 
        would be adversely impacted severely.''

    That is what the experts from FDA told us 2 weeks ago, and 
it is why I am committed to working with Ranking Member Murray 
and members of this committee to reauthorize these four 
different user fee agreements before the August recess. The 
user fee agreements and commitment letters, part of the 
agreements between FDA and industry that establish the agency's 
commitments in exchange for the fees Congress authorizes, have 
gone through an extensive process.
    In Congress, while we were working on the 21st Century 
Cures Act and after it was signed into law, the HELP Committee 
had 15 bipartisan briefings, some of which were with the Energy 
and Commerce Committees and the House of Representatives as 
well, to hear from the FDA and industry about the 
reauthorization. The first of those briefings was way back in 
2015. Outside of Congress, FDA posted meeting minutes after 
every negotiation and held public meetings before discussions 
began to hear feedback on the draft recommendations last fall.
    The panel today, representing the manufacturers of drugs 
and medical devices, and the patients who rely on the products 
they make, can speak to this process. Each of the industries 
represented here--prescription drug, generic drug, medical 
device, and biosimilar--agreed to increase the user fees going 
to FDA over the next 5 years. I am interested in hearing why 
this is a good agreement for you and for the companies you 
represent.
    Patients were involved in developing the commitment 
letters, and we have already begun receiving support from 
patient groups asking us to reauthorize the agreements 
expeditiously. For example, the National Organization of Rare 
Diseases and Friends of Cancer Research wrote to me and to 
Senator Murray, saying,

          ``The cancer and rare disease patient communities 
        rely on FDA to ensure that innovative, safe, and 
        effective treatments reach those in need. We thank the 
        HELP and Energy and Commerce Committees for moving 
        forward with these critical mechanisms and look forward 
        to their swift and unimpeded passage.''

    I also look forward to hearing from the Alliance for Aging 
Research today on how the user fees benefit patients as they 
age.
    After reviewing the recommendations from industry and the 
FDA, I believe these are good agreements for patients. I look 
forward to working with Senator Murray and our other committee 
members to approve these agreements here in committee and move 
them to the floor in a timely manner so patients and the agency 
and the industry can operate with certainty.
    Senator Murray.

                  Opening Statement of Senator Murray

    Senator Murray. Well, thank you very much, Chairman 
Alexander, and all of my colleagues.
    Thank you to all of our witnesses for joining us today.
    I am glad we are able to move forward with today's 
important discussion without the dark cloud of Trumpcare 
looming over us, at least for now. Millions of families spoke 
out clearly about how Trumpcare would have been an absolute 
disaster for them. It would have kicked millions off their 
healthcare, spiked premiums, gutted Medicaid, and I could go 
on.
    As Democrats on this committee made very clear, had 
Republicans jammed Trumpcare through the Senate without this 
committee holding a single hearing, it would have continued 
this committee's move into partisanship and gridlock, which 
started with a rushed nominations process, and put at grave 
risk our ability to work together on shared priorities. I'm 
very glad that Trumpcare was soundly rejected and that more and 
more Republicans are finally accepting what so many of us have 
been saying for years, that we should be working together to 
make healthcare more affordable, accessible, and higher quality 
because people are looking to us, particularly at this 
committee, to come together on real bipartisan solutions.
    The issue before us today, the FDA user fee 
reauthorizations, is a chief example of how we can work 
together to help patients and families. As we discuss the 
reauthorizations, I want to make my priorities very clear: 
upholding a high bar of safety and effectiveness to protect the 
public health and drive the development of innovative products, 
and ensuring FDA has the resources to carry out this important 
work.
    A critical part of this is maintaining FDA's gold standard 
of consumer safety and protection, a standard patients and 
families have come to trust around the world when making 
decisions about their health. I hope that's a goal all of us 
share. I'm glad that today, we will be able to ask key players 
from the industry about the ways you all can and must step up 
to the challenges, not only to make sure we develop lifesaving 
treatments, but also to make sure these treatments are safe and 
affordable for patients and families.
    The finalized user fee agreements for drugs, generics, 
biosimilars, and medical devices reflect thorough negotiation 
between FDA and these industries and incorporate input from 
patient and consumer groups. While Congress should be providing 
FDA with greater investments to support its critical work, the 
user fees paid by the industry are essential to supporting 
FDA's operation and mission. These fees help FDA meet the 
complex challenges of 21st century technology and the movement 
toward precision medicine. Especially in today's budget 
environment, the agreements help ensure the FDA can uphold its 
gold standard of approval while evaluating new drugs and 
devices efficiently.
    Moving forward with these agreements is absolutely 
necessary if Congress wants to advance safe, effective, and 
innovative medical products for patients and families across 
the country. Without these agreements, the agency would be 
unable to do its job effectively. I oppose efforts by the Trump 
administration to take unprecedented actions to alter these 
agreements or to undermine the important public health work of 
the agency.
    I am also concerned the administration is hampering FDA by 
depriving it of key staff and blocking its ability to issue the 
guidance and regulation needed to foster innovation. I was 
disturbed that the Trump administration went so far as to 
muzzle the FDA center directors that were before this committee 
to discuss the user fees 2 weeks ago from being able to discuss 
the crippling consequences of these dangerous proposals.
    Mr. Chairman, I am glad that you and I agree we need to 
move forward, because these agreements advance several 
significant priorities. For one, we have restructured the 
generic fees to help more small businesses compete in the 
market. We've also put a goal review date on all outstanding 
generic applications from the backlog and prioritized products 
that can have the biggest impact on cost for consumers.
    For biosimilars, we continue to build the program up and 
provide greater clarity and support for product developers. We 
have worked to increase accountability and reduce 
administrative burden across all the agreements, and these 
agreements advance many of the policies we passed as a part of 
the 21st Century Cures Act, like making sure patients' 
perspectives are considered in drug and device development and 
advancing the science on biomarkers.
    As I have talked about before, we must take additional 
steps to prioritize consumer safety and protection by 
increasing the post-market surveillance of medical devices. The 
medical device industry produces amazing innovations for 
patients, and I am proud to have a robust medical device sector 
in my home State of Washington.
    The National Evaluation System for Health Technology, known 
as NEST, is a project started by FDA and several healthcare 
industry partners to better harness information from 
registries, electronic health records, and medical claims to 
inform product development and safety. While I was pleased that 
some of the medical device user fees will support this system, 
I am very disappointed that the medical device industry has 
explicitly refused to support any post-market safety activities 
through fees. Patients and families in my home State of 
Washington and nationwide deserve to know the devices used in 
their care are safe and effective, and I'm going to continue 
fighting for this until we get meaningful safeguards in place 
so we can detect problems early.
    Critically, today's hearing is also an important 
opportunity to discuss the related larger issue of prescription 
drug affordability in our country. The astronomical cost of 
prescription drugs is a financial hardship for so many patients 
and families and communities, and we need to face up to the 
tough questions. We need to come together across the aisle to 
address a system that's not working, hurting patients and 
families, and adding to the increasing cost of our healthcare 
system.
    Mr. Chairman, while drug pricing is outside of the FDA's 
jurisdiction and the most robust solutions likely involve HHS 
and CMS, this is something this committee needs to address this 
Congress. While we work on the user fee reauthorizations, I 
will continue to work with my colleagues on both sides of the 
aisle on solutions to address this issue facing too many 
American families.
    These user fee agreements will accelerate implementation of 
the biosimilars pathway and improve the generic drug approval 
process. These steps will foster a robust drug marketplace that 
may help to bring down the price of some high-cost drugs. But 
let's be clear. Those tweaks alone will not solve the problem. 
More work is needed outside the FDA context and outside this 
committee's jurisdiction to address the root cause of high 
prices, and I will be speaking with you, Mr. Chairman, and 
Chairman Hatch about where we can address this issue as this 
and other related legislation moves forward in the weeks ahead.
    To conclude, as we all know, this committee has a strong 
tradition of bipartisan success in these user fee agreements. 
I'd like to keep it that way, and I'm hopeful we can move 
beyond the failed Trumpcare proposal and work together to build 
on the progress we have made in our healthcare system.
    I'm confident if we all join together toward the common 
goal of ensuring our healthcare system works for families and 
puts their needs first, we can make real progress, move toward 
a bipartisan discussion draft, and deliver results so many 
families are desperately waiting for. I've laid out some key 
principles I will be very focused on to protect and uphold the 
deep trust families place in the FDA, and, again, I look 
forward to a robust conversation with our witnesses on these 
priorities.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Murray.
    Each witness will have up to 5 minutes, and we would 
appreciate you summarizing your remarks in 5 minutes so we'll 
have more time for questions. Thank you for coming.
    The first witness today is Kay Holcombe. She is the senior 
vice president for science policy at the Biotechnology 
Innovation Organization. It's called BIO. BIO is the world's 
largest trade association representing biotechnology companies, 
academic institutions, and State biotechnology centers. She 
served as the lead negotiator for BIO in the Prescription Drug 
and Biosimilars User Fee negotiations with the FDA.
    Next we'll hear from David Gaugh, senior vice president of 
sciences and regulatory affairs at the Association of 
Accessible Medicines, AAM, formerly the Generic Pharmaceutical 
Association. AAM is the Nation's leading trade association for 
manufacturers and distributors of generic prescription drugs. 
Mr. Gaugh has been with the association since 2012, served as 
the lead negotiator in the Generic Drug User Fee negotiations. 
I look forward to hearing how this agreement will streamline 
approvals, enhance communications, and provide patients with 
timely access to safe and effective generic drugs.
    Third, Scott Whitaker, president and CEO of the Advanced 
Medical Technology Association, AdvaMed. It's the world's 
largest medical technology association representing companies 
producing medical devices, diagnostic products, and health 
information systems. Mr. Whitaker became President and CEO of 
AdvaMed last April, and he'll discuss the details of the 
Medical Device User Fees Agreements.
    And, finally, we will hear from Cynthia Bens, vice 
president of public policy at the Alliance for Aging Research. 
The Alliance is the leading nonprofit organization dedicated to 
accelerating the pace of scientific discoveries to improve the 
human experience of aging and health. Ms. Bens has been with 
the Alliance since 2006 and led the Alliance through the 
patient and consumer discussions.
    Thanks to each of you.
    Ms. Holcombe, let's begin with you.

 STATEMENT OF KAY HOLCOMBE, SENIOR VICE PRESIDENT FOR SCIENCE 
 POLICY, BIOTECHNOLOGY INNOVATION ORGANIZATION, WASHINGTON, DC

    Ms. Holcombe. Chairman Alexander, Senator Murray, and 
members of the committee, thank you for the invitation to BIO 
to participate in this hearing.
    Since the enactment nearly 25 years ago of PDUFA I, it has 
become clear that user fees are a critical adjunct to FDA's 
appropriations. They allow enhancements in review activities 
that result in faster availability of new products for 
patients. After this committee developed and Congress enacted 
the Biologics Price Competition and Innovation Act to establish 
a new pathway for biosimilars to enter the U.S. market, you 
also acted promptly to authorize user fees through the 
Biosimilars User Fee Act.
    BIO strongly supports the timely reauthorization of PDUFA 
and BsUFA. A delay, renegotiation, or failure to reauthorize 
these programs well in advance of their current September 30 
expiration date would have significant negative consequences 
for FDA, for fee payers, and, most importantly, for patients 
who need timely availability of safe and effective new drugs 
and biologics and biosimilar products.
    PDUFA changed the landscape of FDA review time. Today, FDA 
is among the most efficient of all global regulators, and the 
majority of new drugs are available to U.S. patients first in 
the world. This was achieved without in any way compromising 
FDA's gold standards of safety and effectiveness.
    Review times are just the tip of the iceberg and are not 
the reason that patients are waiting. Product development 
programs are complex, costly, and most do not succeed. The 
goals of PDUFA VI are focused on that issue, and we believe are 
transformative for drug development. They include activities to 
improve the efficiency of drug development through the use of 
modern tools.
    Some of the PDUFA VI goals reflect concepts also included 
in the 21st Century Cures Act: patient-focused drug 
development; qualification and use of biomarkers, including the 
use of biomarkers as surrogate endpoints; evaluating the use of 
innovative clinical trial designs and nontraditional 
statistics; real-world evidence for both safety signal 
determination, which is already done, and to augment clinical 
data in effectiveness determinations; and computer modeling to 
inform clinical trial design and to augment clinical data. In 
PDUFA VI, the evaluations of these new tools will be done in 
consultation with the public and with defined goals and 
reporting requirements.
    The progress of BsUFA will also continue. Under BsUFA, FDA 
has been able to advance biosimilars in the United States. 
Although there have only been four biosimilar products approved 
to date, there are now over 60 development programs to 20 
different biological reference products. Seminal to these 
efforts are the communication between biosimilar developers and 
the FDA through their product development meetings. In 
addition, FDA, under BsUFA II, will build in additional 
communication opportunities during the review process for 
biosimilars.
    In both PDUFA and BsUFA, significant steps will be taken to 
improve the financial management programs and to improve the 
hiring processes at FDA.
    In conclusion, I want to reiterate BIO's strong support for 
these PDUFA and BsUFA programs. They have served the public 
well, and they have worked in the best interest of patients.
    Thank you, Mr. Chairman.
    [The prepared statement of Ms. Holcombe follows:]
                   Prepared Statement of Kay Holcombe
                                summary
    BIO strongly supports the timely reauthorization of the 
Prescription Drug User Fee Act and Biosimilars User Fee Act programs 
(PDUFA VI and BsUFA II). A delay, re-negotiation, or failure to 
reauthorize the programs well in advance of their current expiration 
date, September 30, 2017, would have enormous negative consequences for 
FDA, for fee payers, and--most importantly--for patients who need 
timely availability of safe and effective new drugs and biologics and 
biosimilar products.
    History tells us that user fees work. Since its first enactment, 
PDUFA--the grandfather of them all--has changed the landscape of FDA 
review time, making FDA review efficiency the best in the world. Today, 
the majority of new drugs are available to U.S. patients first in the 
world.
    But review times are just the tip of the iceberg, and not the 
reason that ``patients are waiting.'' Product development programs are 
lengthy, complex, costly, and very high risk--most do not succeed. But 
experience shows that earlier and better communication between FDA and 
sponsors can improve the chance of success, and goals of both PDUFA and 
BsUFA focus on improving both formal and informal communication. 
Because biosimilars developers were entering a new pathway for FDA, 
BsUFA I included a series of Product Development meetings before 
application submission. These will continue. In addition, FDA will 
initiate, in BsUFA II, an approach to review that builds in additional 
opportunities for FDA-sponsor communication. This approach has existed 
in PDUFA since PDUFA V, and will continue. It has been determined by a 
third-party evaluator to be successful in increasing the numbers of 
first-cycle approvals. In addition to formal meeting opportunities, 
additional less formal but critical communication practices were 
initiated in PDUFA V and will be enhanced and evaluated in PDUFA VI.
    The goals of PDUFA VI also focus on making drug development more 
efficient using concepts additionally included in the 21st Century 
Cures Act--incorporating 21st century tools such as patient-focused 
drug development, biomarkers, innovative clinical trial design, non-
traditional statistics, real-world data, and computer modeling to 
augment clinical data.
    In both PDUFA VI and BsUFA II, steps will be taken to improve the 
financial management of the programs, in a transparent way, to ensure 
long-term viability of these crucially important programs. In addition, 
changes in hiring processes, incorporation of hiring goals in the goals 
letters and annual performance reports will give the public a line of 
sight into hiring of essential personnel, in the event problems occur, 
such as sequestration or hiring freezes, that will prevent FDA's 
achievement of its user fee goals. User fees paid by biosimilars and 
new drug and biologics developers fund the FDA staff who review 
applications and carry out the performance goals. If FDA is unable to 
make these hires, user fees cannot be spent. This is not good for fee 
payers, FDA, or patients waiting for approved therapies.
                                 ______
                                 
    Chairman Alexander, Senator Murray, and members of the committee: 
BIO appreciates the opportunity to speak with you today about the 
reauthorization of the Prescription Drug User Fee Act (PDUFA) and the 
Biosimilars User Fee Act (BsUFA) programs. BIO strongly supports this 
fifth reauthorization of PDUFA and second reauthorization of BsUFA and 
urges timely congressional action on both.
    I am Kay Holcombe, senior vice president for science policy at BIO. 
BIO is the world's largest trade association representing biotechnology 
companies, academic institutions, State biotechnology centers, and 
related organizations across the United States and in more than 30 
other nations. While our membership includes most of the large 
biopharmaceutical companies, the vast majority of our members are small 
biotechnology companies working on cutting-edge R&D. They have small 
staffs, no marketed products, and no profits, and they are heavily 
reliant on private capital to fund their work. They take enormous risks 
every day to develop the next generation of biomedical breakthroughs 
for the millions of patients suffering from diseases for which there 
are no effective cures or treatments today. BIO is proud of their 
innovative spirit and their dedication to alleviating human suffering.
    All FDA stakeholders--the biopharmaceutical industry, patient and 
consumer advocates, health care providers, payers, and others in the 
healthcare system--recognize the importance of the user fee programs. 
Many of them recall the time before enactment of PDUFA I--the 
grandfather of FDA user fee programs--in 1992, when FDA review times 
were lengthy and a high percentage of new drugs were on the market 
outside the United States before American patients had access to them. 
That situation was changed by the willingness of Congress to work with 
FDA, industry, and others to determine if, and how, review times could 
be reduced significantly through providing for user fees to support the 
additional FDA staff needed to carry out more quickly the activities 
related to review of human drug applications.
    PDUFA I proved this could be done. By the end of the 5 years of 
that first PDUFA program, review times had dropped by as much as three-
fold. This significant improvement in review times has continued 
throughout the 24 years of PDUFA. Today, thanks to the resources PDUFA 
has provided FDA, U.S. patients are--in the vast majority of cases--the 
first in the world to have access to approved new drugs.
    The successes of PDUFA gave rise to user fee programs to achieve 
greater efficiency in the review of medical devices, generic drugs and 
biosimilars. In the history of biosimilars user fees, this committee 
features prominently. You developed and took the first congressional 
action on legislation that became the Biologics Price Competition and 
Innovation Act (BPCIA), which established the FDA biosimilars program. 
Recognizing the need for user fees to support that program, you began 
and executed the process that led to the Biosimilars User Fee Act 
(BsUFA). This young user fee program has been essential to ensuring 
that biosimilars would be developed and, although a small number of 
products has been approved, we believe the program is growing and will 
continue to grow.
    Modifications of both the PDUFA and BsUFA programs, negotiated by 
FDA and the biopharmaceutical industry with support and input from 
patient, consumer, and healthcare provider organizations and other 
stakeholders, are designed principally to improve efficiency, reduce 
administrative burdens, enhance program long-term sustainability, and 
ensure that 21'' century tools are used to the greatest advantage in 
the review of new drugs and biologics and of biosimilars--while 
maintaining the U.S. gold standard of safety and efficacy.
    The vision of these user fee agreements is also the vision of 21st 
Century Cures--patients come first. Key components of both BsUFA and 
PDUFA are designed to achieve the goal of ensuring that patients have 
new drugs and biologics as quickly as possible; that timely and 
efficient processes allow patients access to biosimilars, which expand 
their choices for treatment; and that focus on good communication 
between FDA and sponsors results in reduced development times, so unmet 
needs can be met as soon as possible.
                                PDUFA VI
                       overall goals for pdufa vi
    As BIO approached this reauthorization of PDUFA, we asked our 
member companies what they hoped to gain. We heard two themes: advance 
ways to reduce the time of drug development and ensure that PDUFA 
remains viable into the future. As to the former, our principal goals 
were to integrate the patient perspective in drug development; 
incorporate the use of innovative clinical trial designs, biomarkers as 
surrogate endpoints, and real-world evidence into acceptable approaches 
to drug development; and enhance some existing FDA processes, including 
the review of combination products that will be at the heart of 
personalized medicine. As to the viability of the PDUFA program, we 
sought to increase the transparency and accountability of PDUFA 
financial management and assure the long-term financial stability of 
the PDUFA program, including through a new time reporting system that 
would allow accurate capacity planning. Finally, but of primary 
importance, we sought to work with FDA to improve the agency's ability 
to attract, hire, and retain the numbers and kinds of employees it 
needs to do its job as efficiently and effectively as possible.
    making a difference for drug development = making a difference 
                              for patients
    In the beginning, the intention of prescription drug user fees was 
to improve the efficiency of FDA's review and reduce its time. That 
goal has been achieved. Today, the vast majority of new drugs are 
available to U.S. patients before they are available to patients 
anywhere else. FDA is the fastest and most efficient drug regulator in 
the world. Over the course of the four reauthorizations of PDUFA and as 
a result of user fees, we have seen review times drop dramatically from 
what they were before 1992. Other changes also have been supported by 
user fees: enhancement in the efficiency and effectiveness of FDA's 
communication with applicants; augmentation of the agency's ability to 
monitor and assure the safety of products both pre- and post-market, 
throughout product life cycles, including establishment and use of the 
Sentinel program; adoption of best practices for scientific review and 
communication across all the review divisions in the Centers for Drugs 
and Biologics; establishment and implementation of regulatory science 
programs to deal more effectively with emerging areas of product 
research and development, such as the use of biomarkers, 
pharmacogenomic data, and patient-reported outcomes; and multiple other 
goals to ensure timely, efficient review.
    While all of these goals were being achieved, review timelines were 
not negatively affected. FDA consistently has met or exceeded its 
established goals of completing the review of Priority applications in 
8 months (many such priority applications are completed in fewer than 8 
months) and of Standard applications in 12 months. These timelines are 
now the global gold standard for regulatory efficiency. Our U.S. 
economy has benefited from PDUFA, because drug and biologic applicants 
now have greater certainty of a reasonable timeline for completion of 
their applications, facilitating and encouraging investment in new 
biopharmaceutical R&D and increasing the number of good-paying jobs in 
the biopharmaceutical industry. Most importantly, though, patients have 
benefited. Before PDUFA, U.S. patients legitimately could say that 
their counterparts elsewhere in the world had new treatments available 
before they did. That largely is not the case anymore.
    FDA's application review time of fewer than 12 months pales by 
comparison to the 10 to 12 years on average that it takes to develop a 
drug--time before an application is submitted to the FDA. Development 
of new medicines is a long and rigorous process, and it has become more 
costly and complex over the past decade--partly because the science is 
harder, and partly because regulatory processes have not kept up with 
the advancing science.
    During the lengthy period of development, unmet medical needs 
remain unmet and patients wait.
    Over the course of four previous PDUFA reauthorizations, the 
question has been raised as to whether and how the sorts of 
efficiencies that reduced review times also might reduce drug 
development times. How can PDUFA resources be applied to address 
lengthy, expensive, and risky drug development times?
    PDUFA V, the program currently in place, was the first to include 
regulatory science initiatives--development of expertise in FDA to deal 
with cutting-edge technology and new ways of thinking about the studies 
and data associated with working toward approval of a new drug. PDUFA V 
provided funding for modest programs related to patient-focused drug 
development, the use of pharmacogenomics data, biomarkers as surrogate 
endpoints, patient-reported outcomes, and meta-analysis--some areas 
where additional expertise and resources could advance the science and 
the success rate. A key rationale for inclusion of those initiatives 
was that they are emerging areas in drug development that hold 
potential for reducing development times. Addressing drug development 
times would be a recurring theme entering this PDUFA reauthorization 
cycle.
    The question facing PDUFA VI stakeholders and FDA was the question 
that faced this committee as it embarked on 21st Century Cures: What 
more can be done to change the course of drug development and to reduce 
the time it takes to get to the goal of submitting an application to 
FDA?
    To tackle these questions, it was important to identify what new 
tools are available today that aid in drug development. Advances in 
biology have made miracles such as gene therapy more than a pipe dream 
or science fiction. Are there other advances that, if used to greater 
advantage, can accomplish the miraculous with respect to drug 
development?
    The authors of 21st Century Cures and the PDUFA VI agreement 
independently recognized some of the same new tools and developed Cures 
proposals and PDUFA VI commitments that would allow these tools to be 
used most effectively. In both cases, the goal was to ensure more 
timely availability of new drugs for patients by reducing the time and 
increasing the chance of success of drug development.
    PDUFA VI promises to transform drug development. We believe FDA can 
and will deliver on this promise, provided they continue to have the 
ability to hire the additional staff necessary to carry out the 
historic commitments of this agreement.
                 key drug development goals of pdufa vi
Integrating the Patient Voice in Drug Development and Regulatory 
        Decision Making
    One of the most important goals of PDUFA VI was building on the 
success of the PDUFA V Voice of the Patient program, in which public 
meetings brought FDA and patient representatives together so the agency 
and other stakeholders could hear how these patients perceived their 
condition, what they hoped for in terms of a ``benefit'' from a 
therapy, and how they viewed ``risk.'' Those meetings, and the reports 
produced from them, were a positive step forward in terms of bringing 
these patient perceptions into the FDA determination of the benefit-
risk calculus. Patients augmented that deliberation by adding the 
crucial patient perception dimension to an often largely mathematical 
and statistical evaluation. They also helped drug developers to 
understand better what patients viewed as their needs, so this could be 
taken into account when planning and executing a development program.
    The next step in this approach is to engage patients and other 
stakeholders in another public process that will result in guidance, 
developed by FDA through a step-wise approach, with stakeholder input.
    The goal of this process can be described as converting largely 
qualitative information to quantitative information that can have clear 
application to determining evaluating the benefits and risks of a new 
drug. First, guidance will be developed regarding how to collect 
evidence-based and representative patient information. Next will be 
guidance on processes and approaches to determine what is most 
important to patients in terms of the impacts of their disease and 
potential impact of new treatments. This will be followed by guidance 
on how to measure impacts in a way that will facilitate meaningful 
patient input into the design of clinical trials. This is particularly 
important in light of the cost and length of clinical trials, the 
difficulty of enrolling sufficient numbers of patients, and the risk of 
patient drop-out, which can compromise or even negate the trial 
results. Finally, FDA will revisit its existing guidance on patient-
reported outcomes and address incorporating clinical outcome 
assessments into endpoints.
    To accomplish these objectives, FDA will strengthen its staff 
capacity, including bringing on board experts in psychometrics and 
health outcomes research. These staff will be integrated into the 
review teams to ensure the engagement of patients and to consult with 
drug developers during their development programs.
    Ultimately, the goal of good data collection, representative 
sampling, and appropriate use of data is to be able to include 
information on the drug label that can be used by prescribers, 
patients, and caregivers. The drug label is the trusted source of 
information about the best and safest ways to use a drug. Reliable 
patient input belongs in that label, and this PDUFA VI agreement will 
help make that happen.
Enhancing Benefit-Risk Assessment
    FDA established a structured benefit-risk approach under PDUFA V. 
In PDUFA VI, implementation of this approach will be enhanced through 
one or more public meetings with and for stakeholders and through 
development and publication of guidance on the use of the benefit-risk 
framework throughout the drug life cycle. The incorporation of patient 
perspectives will be a key part of these activities. An independent 
third party will evaluate the implementation of the benefit-risk 
framework and whether it is being implemented consistently across the 
review divisions. The importance of this goal is three-fold: first, it 
solidifies and evaluates the use of the benefit-risk framework, which 
allows greater transparency for all stakeholders into FDA's thinking 
about how to measure the possible benefits of a potential new drug 
against its known risks; second, it emphasizes the importance of 
patient input into this crucial decision; and, third, it helps drug 
developers use the benefit-risk assessment as a marker and a tool in 
the course of the development of a drug and throughout its lifecycle.
Enhancing Communication between FDA and Drug Sponsors
    PDUFA VI builds on the enhanced communications program established 
under PDUFA V, which was intended to assure that sponsors could receive 
timely responses to inquiries that might be dealt with outside of the 
formal FDA-sponsor meeting process. Under PDUFA VI, a third party will 
evaluate how this program is proceeding, how such informal 
communications are handled across review divisions, and what best 
practices may be adopted. A public meeting will allow stakeholders an 
opportunity for discussion and input into the evaluator's findings.
Using Drug Development Tools, including Biomarkers
    In PDUFA VI, FDA is committed to enhancing biomarker qualification 
processes. A number of the PDUFA VI goals are synergistic with those of 
the provisions of 21st Century Cures. One of those goals is 
implementation of a pilot program to seek and incorporate the input of 
external experts to assist in biomarker qualification, to verify if the 
use of such outside experts can make the processes more timely and 
efficient. FDA also will augment its staff capacity to conduct 
qualification of drug development tools; hold a public workshop 
particularly aimed at discussing nomenclature, standards, and elements 
of a biomarker qualification plan; publish guidance; and publish and 
update lists of qualified biomarkers and of pending applications. 
Significantly, FDA will establish a process for holding dedicated 
meetings with sponsors to discuss the use of biomarkers as surrogate 
endpoints. This will be a new and additional opportunity for drug 
developers to discuss their development programs with FDA.
Using Real-World Evidence
    The Sentinel system, established by FDA in response to 
congressional direction, is the source of enormous amounts of data 
regarding the health care and health outcomes of tens of millions of 
patients covered by several private insurance plans. FDA uses the 
system to search for safety signals that may lead to further 
investigation regarding the safety of marketed drug products. The 
system is supported by a number of sources, including user fees. Under 
PDUFA VI, prescription drug user fees will provide $50 million to 
continue to support the operation and use of Sentinel. FDA will work, 
during the course of PDUFA VI, to ensure that stakeholders, including 
industry, are well-informed about how the agency is using the system 
and to seek additional ways to help others, beyond FDA, access this 
treasure trove of data while protecting all patient and drug-sponsor 
confidential information.
    In addition to the data available through Sentinel, there are 
multiple other sources of ``real-world evidence'' that currently are 
seen primarily as a potential source of drug safety information. Under 
PDUFA VI, FDA will hold a public meeting and, based on that input, 
develop pilot studies or related activities to determine other 
potential uses of such real-world data in regulatory decisionmaking. 
One possibility is that large databases might be used as a source of 
information that could augment other sponsor-developed data in 
applications for approval of a new indication for an already-approved 
drug. Another possible use is for the fulfillment of post-marketing 
requirements associated with newly marketed drugs.
    Data are everywhere. The question PDUFA VI will begin to answer is 
how such data can be harnessed and used effectively to advance, 
enhance, and reduce the time of drug development.
Improving the Review of Combination Products
    Combination products--which join two drugs, a drug and a biologic, 
or a drug or biologic and a medical device, commonly a diagnostic 
test--pose some unique challenges to developers. Streamlining and 
better assignment of roles and responsibilities at FDA could help 
address these challenges and advance these products, which many see as 
a wave of the future. For example, personalized medicine is highly 
dependent on identifying, often through a diagnostic test, patients who 
will benefit from a particular drug and those who are likely not to 
benefit, or who may be subject to greater risk. Such advancements will 
not only benefit patients, but also facilitate the broader move toward 
a more cost-effective healthcare system.
    The challenges that have been identified as slowing the review of 
such products include the decision as to which FDA Center has primary 
or lead responsibility, which Center has decisionmaking authority, and 
how to speed the work of the ``other'' Center that may not have a user 
fee goal impetus to make a particular application a priority. PDUFA VI 
will address these challenges in several ways. First, staff capacity 
and training will be increased in all three medical product Centers, 
the Centers for Drugs, Biologics, and Devices. PDUFA funds will be used 
for bringing staff on board in all three Centers. Second, performance 
goals will be established specific to combination products and will be 
phased-in over the course of the 5 years of PDUFA VI. Submission 
procedures and guidance related to unique features of combination 
products will be developed and published.
Using Innovative Clinical Trial Designs
    Clinical trials are the most costly and difficult parts of drug 
development, and their design, enrollment, and execution can add 
extraordinarily to the time of drug development. Many experts in trial 
design have argued that the ``traditional'' randomized, double-blind, 
controlled trial may not always be the most efficient or necessary 
approach. With new ways of thinking, and given new approaches to 
statistical analysis, are there better ways to conduct trials without 
losing their validity, their amenability to appropriate data analysis, 
and, thus, their contribution to the most appropriate regulatory 
decision?
    In PDUFA VI, FDA is committed to begin answering that question. 
First, additional FDA staff, particularly additional biostatisticians, 
and especially those with training and expertise in ``non-traditional'' 
statistical analysis, will be added. FDA will hold a public workshop on 
innovative trial design and will publish guidance on adaptive trials. 
Finally, and of particular significance for moving this idea forward, 
FDA will conduct a pilot program focused on innovative trial designs. 
This program will be voluntary--i.e., companies may opt in to the 
program and, in exchange for their participation, will be given two 
meetings with FDA to discuss the proposed trial design and its 
execution, to enhance the likelihood of success of the development 
program. Companies in the program will agree to allow FDA to discuss 
the trial design as a case study at a subsequent public workshop or in 
guidance (protecting all company-specific confidential information). 
Participation in the pilot program is voluntary, but the hope is that 
there will be strong participation, so the ability for others to learn 
from case studies will ``raise all boats,'' expand the use of 
innovative trials, and contribute to reducing the time and cost of 
clinical trials.
Using Model-Informed Drug Development (MIDD)
    Biological and statistical modeling can contribute greatly to a 
knowledge base that can advance drug development, reduce the time of 
development, and allow development to proceed even in cases where 
clinical data may be limited. FDA will explore the use of MIDD through 
both increasing its staff capabilities and establishing a voluntary 
pilot program similar to that for innovative clinical trial design. In 
addition, the agency will hold workshops to identify best practices for 
various types of modeling and publish guidances based on its findings 
through the workshops and in the pilot program. Modeling informs 
development, and is not intended as a complete substitute for clinical 
data. Part of the importance of this program is that it can determine 
how modeling can assist in moving forward a significant development 
program where clinical data are limited. Modeling or simulation would 
not be the only source of data in any program of human drug 
development.
Continuing and Enhancing Successful Programs
    PDUFA VI will continue and enhance its efforts related to the 
highly successful Breakthrough Therapy program, which has shown the 
power of enhanced communication between FDA and sponsors to speed drug 
development for exciting new products; augment its capacity and enhance 
its processes for reviewing applications for rare disease therapies, to 
continue its record of success in prioritizing these applications based 
on the high unmet medical need of patients with rare diseases; and 
continue to build on the successful New Molecular Entity (NME) review 
program, which has accomplished its goal of increasing the number of 
products approved after only one cycle of review. All of these programs 
are successful and are reducing the time of drug development.
           program sustainability and financial transparency
    PDUFA finances and personnel form the foundation that keeps the 
PDUFA program viable. Since 2002, the PDUFA program has grown at an 
average of 11 percent per year; this is unsustainable moving into the 
future. Changes that address the fee collection structure to increase 
predictability and efficiency and to reduce administrative costs for 
both FDA and companies will lead to a lower and more sustainable growth 
rate. These include reducing the volatility of fee collections, 
eliminating complicated collection and other financial mechanisms that 
are difficult to administer, improving predictability of annual total 
revenue collection, and reducing variation of collections year over 
year. Specifically, the PDUFA VI proposals would:

     limit the carryover balance levels, thus reducing possible 
over-collection of fees and the need for complicated administrative 
mechanisms to deal with such over-collections;
     eliminate supplement fees, which will further simplify fee 
collections;
     replace the current product and manufacturing fees with a 
new program fee that will constitute 80 percent of the annual fee 
collections; and
     reduce the percentage that application fees contribute to 
the total from the current 33 percent to 20 percent, thus mitigating 
the overall impact of this difficult-to-predict revenue source.

    Increased financial transparency will provide a greater line of 
sight by Congress and the public into how PDUFA fees are collected and 
allocated and a more accurate picture of the costs associated with 
human drug review activities. This will be accomplished under PDUFA VI 
by improving resource management, changing the basis for calculating 
annual workload adjustments, and developing a 5-year financial plan and 
updating annually how the agency is executing against that plan. In 
both the development of the initial plan and throughout the remaining 
years of PDUFA VI, public input will be sought through public meetings 
and other mechanisms.
    Until PDUFA VI, PDUFA fees have been adjusted annually by applying 
an inflation factor, which is straightforward and understandable, and a 
workload adjustor, which is neither. More than one outside consultant 
has stated that, while there is a clear need to apply an adjustment 
factor to account for differing workloads year over year, the 
particular adjustment factor was not ideal but was the only possibility 
unless there was systemic change in the way workload was measured. That 
systemic change is coming in PDUFA VI.
    Beginning now, and through PDUFA VI, FDA will implement a new time 
reporting system, in which time and costs are measured on a continuous 
basis, rather than by sampling at pre-determined time periods 
throughout the year. This kind of system, used by multiple private 
sector organizations as well as in many government programs, provides 
significantly more accurate data on which to base workload 
calculations. FDA will be advised and assisted in establishing and 
executing the new system by an outside contractor with expertise in 
such systems. Progress toward this implementation and initiation of the 
new adjustment factor will be publicly available information, reported 
in the PDUFA annual Performance Report.
    These more accurate time and cost data will be a significant 
component of planning for future resource needs, which will contribute 
to the long-term sustainability of the PDUFA program. A capacity 
planning function will be established, which will allow FDA to assess 
in advance the number of staff resources that will be needed to assure 
a continuing efficient and effective human drug review program. This 
modernization of the time reporting system is under way, with a third-
party expert already working with the agency to determine the best 
approach to development and use of capacity planning.
                          personnel management
    Hiring and retaining the expert staff essential to carry out user-
fee-funded activities is critical for PDUFA VI to succeed. Without the 
necessary number and kinds of staff, FDA simply cannot meet the 
performance goals for which user fees are intended. Problems with FDA 
recruitment and hiring have existed for years, for a number of reasons, 
including cumbersome hiring processes and pay scales that generally are 
lower compared to similar positions in the private sector. The 21st 
Century Cures Act, in which this committee played a significant role, 
addressed some of the issues that have hindered FDA's ability to 
attract, hire, and bring on board the kinds of senior scientific and 
medical staff needed. Those provisions will make a significant positive 
impact. In addition, under PDUFA VI, FDA has committed to make changes 
in its internal personnel operations, including implementing a 
dedicated senior scientist recruiting function; increasing staff 
capacity to recruit and to process personnel actions in a timely way; 
and engaging independent contractors to assist in these functions, 
advise the agency in best human resources practices, and evaluate and 
report annually and publicly on hiring and retention progress.
    Many of these changes already are under way. For example, FDA has 
begun the process of hiring staff to replenish the long-under-staffed 
Office of New Drugs, responsible for the review of all drug and 
biologics applications. This hiring in fiscal year 2017 is funded from 
PDUFA V amounts in the carryover balance. The balance exists as a 
result of earlier sequestration and continuing resolutions, which 
prevented the timely allocation of some PDUFA V resources. The hiring 
of these staff will continue in the first several years of PDUFA VI, 
along with hiring of additional staff essential to carry out the new 
performance goals of PDUFA VI.
    The negotiated number of FTEs (full-time equivalents) necessary to 
carry out the goals of PDUFA VI is 230, hired over the years of the 
user fee agreement, fiscal year 2018 to 2022. These include medical 
reviewers, pharmacologists, pharmacists, chemists and other scientific 
experts, biostatisticians, financial managers, and other essential 
staff. For the first time, hiring goals are included in the PDUFA VI 
Performance Goals Letter, and FDA will report on its progress in 
meeting these hiring goals in each year's performance report, beginning 
in fiscal year 2018.
                                BsUFA II
                       overall goals for bsufa ii
    As we did to develop our approach for PDUFA VI, BIO worked with our 
members to define our overarching goals. First, we want to ensure that 
FDA will have the resources, including human resources, over the next 5 
years to accomplish the objectives of the BsUFA program, including 
timely and efficient review of biosimilars applications and further 
clarification and enhancement of the processes and tools the agency 
uses to regulate biosimilars. Second, as for PDUFA, we want to improve 
the transparency, financial accountability, and sustainability of the 
BsUFA program. We believe the BsUFA FDA-industry-stakeholder 
reauthorization proposal transmitted to Congress in December 2016 meets 
these two goals, and we strongly support its timely enactment.
               what has been accomplished during bsufa i?
    To inform our thinking, we looked at what FDA has accomplished in 
the first 4 years of the BsUFA program and reviewed the third-party 
assessment of the costs and workload associated with activities related 
to the review of biosimilar applications and the development of 
policies and procedures to implement the new biosimilars program.
    During just the first 3 years of BsUFA I, the time period examined 
by the independent third party, FDA held 127 biosimilar product 
development meetings with sponsors. As of 2015, there were 57 
biosimilars development programs under way--a number that has continued 
to increase.
    FDA has issued five final Guidance documents to assist sponsors and 
other stakeholders to understand some of the agency's thinking about 
how the new biosimilars pathway would work and about the agency's 
expectations regarding the kinds of studies and data that would be 
required for biosimilars approval. FDA also issued final Guidance on 
naming for biosimilars and innovator biological products. This was a 
particularly important document, because FDA needed to take an approach 
to biosimilars names that would provide clarity for prescribers and 
patients and assist pharmacovigilance, but not suggest, by virtue of a 
naming convention, that some products may raise safety or efficacy 
issues that do not exist.
    FDA also has issued an additional five Guidance documents that 
remain in draft, including the recent draft Guidance regarding FDA's 
views on determining interchangeability. BIO has urged FDA to lay out 
its thinking on interchangeability, so we are pleased that a draft is 
available for public comment. We hope the agency will finalize this 
draft as quickly as possible after the public comment period ends. Many 
stakeholders believe it is crucial for FDA to explicate its 
expectations for the data needed to determine that a biosimilar product 
is interchangeable with its reference biological product, which the 
statute defines as a biosimilar that can be substituted for, or 
switched with, the reference product with no adverse impact on any 
given patient's clinical outcome. Such a determination, many believe, 
may serve to encourage greater prescribing and use of biosimilars as 
the availability of biosimilar products increases, provided the 
determination is sufficiently rigorous.
    Beyond issuing these Guidance documents, FDA has committed 
substantial time and resources to make the pathway to approval for 
biosimilars viable and credible. Because of both the complexity of the 
products and the novelty of this category of ``highly similar'' or 
``interchangeable'' products, we recognize that these early years 
necessarily have been a time of learning and building within the 
agency. Although four new biosimilars approved since enactment of the 
BPCIA and the initiation of BsUFA may seem like a small number, we are 
confident that the program--and the availability of biosimilars--will 
grow as the agency builds expertise and capacity.
    In fact, as FDA has reported in its annual BsUFA Performance 
reports, and as an independent contractor also has documented, the 
number of meetings between FDA and sponsors planning or executing 
biosimilars development programs has increased substantially since the 
program began. As of October 2016, based on meetings between FDA and 
sponsors, there are 66 biosimilar development programs under way, to 
develop biosimilars to 20 different reference biological products. Of 
course we do not know what percentage of those programs will result in 
applications, or which applications will be approved. The numbers 
certainly demonstrate the upward trend for which supporters of 
biosimilars have hoped.
               what can be accomplished during bsufa ii?
    BIO worked with FDA and other industry organizations representing 
biosimilars developers and innovators, with input from many other 
stakeholders such as patient organizations and healthcare providers, to 
develop detailed proposals for continued progress and enhancements 
during BsUFA II. These proposals are encapsulated both in the 
legislative language proposed to this committee and in the Biosimilar 
Biological Product Authorization Performance Goals and Procedures for 
Fiscal Years 2018 through 2022. Among the commitments included in the 
BsUFA Goals Letter are the following.
Review Timelines
    First, FDA agrees to meet defined timelines for its reviews and 
decisions regarding biosimilars applications. Specifically, for 90 
percent of original applications, a decision will be made within 10 
months of the date on which the application is officially accepted for 
review by the agency. How well FDA does in meeting this timeframe, like 
others for re-submitted applications and supplements, will be reported 
annually and publicly by the agency. These goals mirror those of the 
PDUFA program.
Meeting Management
    FDA-sponsor meetings before an application is submitted have been a 
key part of BsUFA and an essential component of a concerted effort to 
stand up for this new program. These are formal opportunities for 
sponsors to discuss their development plans and approaches with the 
agency reviewers and receive technical assistance regarding ways to 
proceed that will give the development the highest chance of success. 
Under BsUFA I, there was agreement that user fees would be associated 
with these meetings; that will continue under BsUFA II. It is a long-
term goal we share with FDA that these Biosimilar Product Development 
meeting fees eventually will be phased out, based on the agency's 
ability to meet its annual target revenue for the BsUFA program, and to 
meet its performance goals, with fees assessed on biosimilars 
applications and products--as is the case in the PDUFA program. This 
will require a more significant increase in the number of applications 
and products than is expected over the next 5 years.
    Some enhancements to the formal meeting processes also are among 
the performance goals for BsUFA II. These have the purpose of ensuring 
that requirements for both FDA and sponsors, in terms of response 
times, meeting times, and documentation, are reasonable to allow for 
the best and most productive meetings and the most timely and useful 
advice for sponsors.
New Review Program
    A new approach to the review of biosimilars applications will be 
implemented during BsUFA II, modeled after the ``new NME'' program of 
PDUFA. The goal of this program is an increase in the number of first-
cycle approvals--saving time and money for sponsors and, importantly, 
making approved products available to patients as efficiently as 
possible. The program provides applicants with new opportunities, 
during the course of the review, to receive updates and advice from FDA 
about how the review is proceeding and what additional information 
might be needed. If there are questions or concerns, the applicant will 
have a chance and the time to respond--avoiding last-minute problems 
that cannot be resolved adequately in the time remaining before the 
BsUFA deadline.
    Based on an independent third-party review, the PDUFA new NME 
program has been highly successful in the view of both the FDA and 
sponsors. Importantly, this approach has achieved its intent to 
increase the number of first-cycle approvals. In short, this means 
there is a higher chance that an application entering FDA in month one 
will exit, approved, in month 12. The chance that the 12-month timeline 
will be extended, or that the application will need to be submitted for 
a second review cycle, is greatly reduced.
    The expectation for BsUFA Ills that results will mirror those that 
have been seen for new drug and new biological license applications. In 
other words, more and more productive communication between FDA and 
sponsors will lead to less overall time to product approval.
    Under the new program, the applicant is encouraged to meet with the 
FDA review team to discuss the content of the planned application in 
advance of the submission. Once the complete application (as agreed at 
the pre-submission meeting) is accepted for review by the agency (60 
days), a 10-month count-down begins. At approximately mid-cycle, FDA 
will arrange a mid-cycle meeting with the applicant--in most cases by 
telephone--during which appropriate review team members will update the 
status of the application and identify any concerns or questions, 
discuss the review team's thinking about possible post-market 
requirements, and provide the applicant with upcoming milestone dates 
such as advisory committee meetings. If an advisory committee is 
planned, it will be scheduled at least 2 months before the end of the 
10-month review time.
    A second, late-cycle meeting will be held no later than 12 days 
before any planned advisory committee meeting. At this meeting--usually 
a face-to-face meeting--FDA and the applicant will discuss any major 
deficiencies in the application, the agency's views on the submitted 
data and any additional data that may be needed, manufacturing issues, 
inspectional findings, any proposed post-market requirements, and any 
issues FDA plans to raise with the advisory committee. This timeframe 
will provide the applicant more than 2 months before the BsUFA goal 
date to work with FDA to resolve outstanding issues--a meaningfully 
longer time than frequently was the case previously. If there is no 
advisory committee planned, the late-cycle meeting will occur no later 
than 3 months before the BsUFA goal date.
    The establishment of this new review approach is significant for 
several reasons. First, it provides clear, guaranteed, important 
opportunities for applicants to know what is happening with their 
reviews--in a timely way that allows them to have meaningful input and 
an opportunity to address problems and concerns. Second, it provides 
timeframes for various steps in the review process that are publicly 
reportable through FDA's BsUFA annual Performance Reports. While we 
expect that this Program will be as relevant and helpful as it has been 
in PDUFA, it is critical that, given the inherent differences between 
the development and approval processes for new biological products and 
biosimilars, an independent third-party evaluation of this new 
biosimilars review program be undertaken. The Goals Letter lays out 
specific components of the evaluation. The evaluator will look not only 
at how the program is working and whether it is achieving its aim of 
more first-cycle approvals, but also at the question of whether and to 
what extent the earlier Biosimilar Product Development meetings, for 
which applicants also pay user fees, could have or should have 
identified issues that subsequently may be raised at a mid-cycle or 
late-cycle meeting during the review. The third-party evaluator will 
submit both an interim and a final assessment of the program, by the 
end of 2020 and by June 2022 respectively. These reports will be 
published for public comment, and public meetings will be held on each.
Guidance
    Stakeholders across the spectrum agree that timely and substantive 
guidance, particularly in this new program area and for this new 
approval pathway, is essential to the success of the program. The lack 
of Guidance leads to uncertainty and missteps that limit or delay the 
availability of new safe and effective products for patients. Guidance 
that remains in draft for lengthy periods of time has the same effect. 
Thus, it is important that goals be set under BsUFA II not only for the 
issuance of a new Guidance that explains FDA's perspectives in general, 
as well as with respect to specific biosimilars products or types of 
products, but also for the finalization of Guidance already issued in 
draft. Those goals are laid out clearly in the Goals Letter. While 
meeting these goals--a key publicly reportable user fee commitment--FDA 
also needs to ensure that the public has ample opportunity to comment 
on draft Guidance and that such public comment is taken into account in 
the finalization of any Guidance.
    In addition, the Goals Letter provides FDA's commitment to revise 
and update the Good Review Management Practices Guidance and general 
guidance relating to processes, procedures, and timelines for meetings 
between FDA and sponsors, both of which apply to NDAs and BLAs, to 
include and specifically reference biosimilars.
    Finally, the Goals Letter includes FDA's commitment to continuing 
to clarify the biosimilars review pathway and provide information 
important to sponsors of both biosimilars and innovator biological 
products. This includes, for example, revision or re-issuance of 
Guidance relating to the so-called ``transition'' products; 
harmonization of varying definitions of ``biological product;'' and 
updating of the ``Purple Book'' with information including the date of 
first licensure of potential reference biological products.
Program Sustainability and Financial Transparency
    BsUFA will benefit from the modernized time reporting and new 
capacity planning efforts that are also part of the PDUFA VI goals, as 
these changes are being implemented across the Centers for Biologics 
(CBER) and Drugs (CDER). By statute, FDA staff who conduct the 
activities related to the review of biosimilars applications are the 
same as those who review applications for approval of new drugs and new 
biological products. Therefore, modernized time reporting will be as 
useful for determining resource needs for BsUFA as for PDUFA. 
Modernized time reporting will provide data that are much more accurate 
than currently available about the time and resources required to 
complete the various tasks associated with application review. In 
addition, the modernized system will ensure accurate allocation of time 
and resources to BsUFA activities and to PDUFA activities.
    Having this information also will allow FDA, for the BsUFA as for 
the PDUFA program, to plan for the capacity necessary to meet the needs 
of future years.
    To assist in the development of a capacity planning function, an 
independent third party will evaluate various options and make 
recommendations regarding the best ways for FDA to assess its resource 
needs on an ongoing and forward-looking basis, for all CDER and CBER 
review-related activities. The specific tasks associated with the 
review of biosimilars applications will be built into this assessment. 
As with all other BsUFA and PDUFA reports and assessments by FDA or by 
independent contractors, this evaluation will be public, and public 
comment will be invited and taken into account.
    By the second quarter of 2018, FDA will publish an implementation 
plan for establishing and utilizing a capacity planning function and 
modernized time reporting, which will include biosimilars review 
activities specifically.
    These activities provide confidence to fee payers and other 
stakeholders that there is a sound basis on which target revenues and 
fee amounts are calculated. It has been especially difficult to predict 
the amount of funding needed for BsUFA, because this is a new-to-the-
U.S. industry without a history of development times or application 
submissions. This will change with time, but until then, the 
perspectives of experienced independent experts will be essential.
    FDA also will include BsUFA resource management in the scope of 
work for the contractor that will evaluate PDUFA resource management. 
This evaluation will include an assessment of how the BsUFA program is 
administered, how the user fee funds are allocated and used, and what 
changes might be made to improve the governance of the program.
    These activities, including the more accurate resource assessments 
that will be possible from modernized time reporting, will allow FDA to 
establish an independent BsUFA user fee structure. While elements of 
the PDUFA structure that enhance financial management will apply, BsUFA 
will have its own fees not necessarily based on PDUFA fees.
Personnel Management
    FDA's well-documented hiring difficulties are problems for BsUFA as 
for PDUFA. Neither of these programs can work without a strong, 
capable, and skilled FDA that can make timely and science-based 
decisions in the interest of patients and the public health. We 
appreciate this committee's efforts, working with the House Energy and 
Commerce Committee and many other Members of the House and Senate, to 
include changes in the 21st Century Cures Act that will greatly benefit 
FDA's hiring capabilities. These changes will provide FDA with some key 
authorities that it needs to attract the highly educated, experienced, 
and talented individuals we all want to see working on our applications 
for approval.
    Process improvements are under way already at FDA. Both the BsUFA 
II and the PDUFA VI agreements include a commitment that FDA will 
contract with third parties to help implement new processes and to 
evaluate on an ongoing basis the progress the agency is making. Because 
all the reviewers in the BsUFA program also are PDUFA reviewers, it is 
crucially important to the success of the biosimilars program for FDA 
to meet the significant hiring goals under PDUFA. Even more important 
is for the agency to put in place sustainable and durable processes and 
procedures, so this hiring is not merely a 5-year surge, but is a 
lasting approach that keeps FDA staffed at the level it requires to do 
its job.
    Importantly, all of the activities that will be and already are 
being undertaken to improve the hiring situation will be public. We all 
will be able to see the assessment of the third-party evaluator, 
consider any recommendations, and provide comments to FDA. We also will 
be able to see the numbers. We do not want FDA to fall behind its 
hiring goals, because we know that the user fee commitments we rely on 
cannot be met unless the people are there to meet them. Annual hiring 
goals are included in the BsUFA agreement as they are in the PDUFA 
agreement--and the public will be able to see in the annual Performance 
Reports whether these goals are being met. We want to see what is 
happening so we can work with this committee and FDA to help stop any 
downward trend. We believe we share this goal with stakeholders across 
the spectrum.
    In discussing FDA hiring, I also want to reiterate BIO's 
longstanding views on the potential negative consequences that arise 
from the sequester of user-fee funds or hiring freezes that can result 
in FDA's inability to fill vacancies and make new hires that are 
necessary for meeting its commitments under PDUFA and BsUFA--or, in 
general, for carrying out its crucial public health responsibilities. 
User fees paid by biosimilars applicants and by applicants for new drug 
and new biological product approvals support a significant number of 
FDA personnel. In particular, they support the staff identified to 
carry out the program performance goals. If FDA is unable to make these 
hires, user fees cannot be spent. This is a situation that is not good 
for fee payers, for FDA, or for patients who are waiting for approved 
therapies.
    To summarize our views on the financial and hiring enhancements of 
PDUFA VI and BsUFA: BIO believes they are on target and essential to 
ensure both the long-term viability of these important user fee 
programs and to ensure that FDA is able to hire, bring on board, and 
retain the expert staff who are crucial for the agency to meet its user 
fee goals and carry out its public health mission.
    BIO strongly supported and applauds the enactment of 21st Century 
Cures, as we strongly support the PDUFA VI and BsUFA II negotiated 
agreements. These efforts will make a difference for patients.
    BIO urges Congress to act swiftly to move the PDUFA VI and BsUFA II 
authorizations forward. These agreements, negotiated between FDA and 
the biopharmaceutical industry with input and support from multiple 
other stakeholders, positively advance our shared goal of making safe 
and effective treatments available to patients as efficiently and 
quickly as possible. We shortly will provide a letter expressing our 
strong support for timely enactment of the PDUFA and BsUFA 
reauthorizations.
    Thank you for the opportunity to present our views today. I am 
happy to answer any questions you may have.

    The Chairman. Thank you, Ms. Holcombe.
    Mr. Gaugh.

 STATEMENT OF DAVID R. GAUGH, R.Ph., SENIOR VICE PRESIDENT OF 
   SCIENCES & REGULATORY AFFAIRS, ASSOCIATION FOR ACCESSIBLE 
                   MEDICINES, WASHINGTON, DC

    Mr. Gaugh. Thank you, Mr. Chairman, Ranking Member Murray, 
and members of the committee. First, let me thank you for 
allowing me to participate in this very important hearing. I'm 
David Gaugh, senior vice president for sciences and regulatory 
affairs at the Association for Accessible Medicines, AAM. We 
represent the stakeholders in the generic industry.
    Generics represent over 89 percent of all prescriptions 
dispensed, but only 27 percent of the expenditures on those 
prescriptions. As such, generic drugs play an ever important 
role in bringing down the artificially high prices of drugs, 
thereby keeping medicines within reach for the American public.
    I'd like to begin by commending the committee for your 
continued focus on these important issues that we are going to 
discuss today. The generic industry's remarkable growth plays a 
vital role in the lives of the American public every day. This 
growth in the generic industry has also served to underscore 
the critically important role of the FDA. As I will highlight, 
the level of cooperation between industry and the FDA has never 
been greater.
    However, the agency remains underfunded, and the 
responsibility for ensuring access to safe, effective, and 
affordable medicines is a shared one for all of us. This is why 
the generic industry has agreed to provide the FDA with 
additional resources to address the ongoing challenges.
    I'm here to discuss AAM's conviction that the best way of 
achieving the goal of providing patients access to affordable 
generic alternatives is through the development of policies 
that promote robust competitive markets. These competitive 
markets are the best way to control drug costs, and GDUFA II 
will play a key role in achieving those goals.
    The priority of the generic industry in GDUFA II was to 
achieve a more effective and transparent generic review 
program. We believe that accomplishment will improve the rate 
of first-cycle approvals on the earliest legally eligible date 
through greater transparency and communications with the 
agency. Thus, both FDA and the generic industry benefit from 
sharing knowledge and experiences throughout the review.
    Our goal was not merely a faster review timeline, but a 
more effective review process. The fewer review cycles required 
to get to approval, the sooner patients and payers can 
experience the benefits of generic competition. We strongly 
believe that GDUFA II is well-positioned to achieve this goal.
    A few key areas within GDUFA that we think are important 
add-ons to what we've learned from GDUFA I and into the 
negotiation of GDUFA II is application metrics. FDA will now 
review and act on 90 percent of all ANDAs within 10 months for 
standard applications and within 8 months for priority 
applications. This includes the inspection components of that 
review process.
    There's also a bridging piece that we put in, or what we 
call No ANDA Left Behind. In GDUFA I, there were several 
products in the backlog in years one and two that did not get 
GDUFA goal dates. In GDUFA II, all those applications will have 
an effective GDUFA goal date assigned to them on October 1, 
2017, if they have not already been assigned.
    GDUFA II creates a pre-ANDA submission communication 
pathway for complex products. This is a first in GDUFA. This 
early engagement between industry and FDA will significantly 
contribute to the applicant's ability to improve the overall 
submission quality of ANDAs, which, in turn, will contribute to 
that first-cycle review process.
    The agreement includes increased transparency and 
communications between the FDA and ANDA applicants through 
liberal use of information requests, or IRs, and division 
review letters, DRLs. These enhancements are intended to 
decrease the number of review cycles and move them toward 
first-cycle review.
    GDUFA II includes several new performance and financial 
reporting requirements, which we thought were important, to 
ensure transparency and efficiencies are maintained. The new 
reporting requirements will allow Congress, industry, and FDA 
to better assess FDA's resource management planning and 
processes.
    The proposal supports small businesses this time, which was 
not in GDUFA I, by exempting them from a facility fee until the 
first ANDA in that facility is approved. The proposal also 
provides for tiering in the annual ANDA program fee based on 
small, medium, and large companies. The tiering is based on a 
total number of approved ANDAs for each company.
    With the many enhancements in GDUFA II and which they 
provide, AMA strongly supports the GDUFA II package, as it 
provides critical review processes to achieve our stated goals. 
I'd also like to point out that I was part of the industry's 
negotiating team for BsUFA II, and I've provided details of 
that agreement in my written testimony, and AAM strongly 
supports the BsUFA II package as well. However, it is important 
to emphasize that the funding provided by both GDUFA II and 
BsUFA II are an addition to and not a substitute for 
congressional appropriations.
    In conclusion, Mr. Chairman, the GDUFA and BsUFA user fee 
proposals are a culmination of months of negotiations between 
FDA and industry, and the final products as transmitted to 
Congress represent a careful balance between all stakeholders 
involved. We respectfully urge the committee to approve GDUFA 
and BsUFA as negotiated and agreed to between FDA and industry 
and without changes to the agreement.
    Thank you very much.
    [The prepared statement of Mr. Gaugh follows:]
              Prepared Statement of David R. Gaugh, R.Ph.
               Generic Drug User Fee Amendment (GDUFA) II
                                summary
    Under the program, FDA will receive over $2.6 billion during the 5 
years of supplemental funding through industry user fees in order to 
help the agency expedite access to low-cost generic drugs.
    To function most effectively, and to promote the goal of achieving 
first cycle approvals and approvals on the earliest legally eligible 
date, industry focused on increasing transparency and communication 
during the review process. Maximizing the effectiveness of the review 
process requires the cooperation of FDA and the generic drug industry, 
both of whom will benefit from sharing their knowledge and concerns 
throughout the review process. The fewer review cycles to approval, the 
sooner patients and payors can experience the benefits of generic 
competition.
    The key goals of GDUFA II remain:

    Safety--Ensure that industry participants, foreign or domestic, who 
participate in the U.S. generic drug system, are held to consistent 
quality standard.
    Access--Expedite the availability of low cost, quality generic 
drugs by bringing greater predictability to the review times for ANDAs, 
amendments and supplements.
    Transparency--Enhance FDA's ability to protect Americans in the 
complex global supply environment by requiring the identification of 
facilities involved in the manufacture of generic drugs, active 
pharmaceutical ingredients, and improving FDA's communications and 
feedback with industry in order to expedite product access.
                     overview of performance goals
    Application Metrics--FDA will review and act on 90 percent of 
complete electronic ANDAs within 10 months after the date of submission 
for standard applications and 8 months for priority applications. 
Priority status will be provided by FDA for submissions affirmatively 
identified as eligible for expedited review pursuant to current CDER 
Prioritization Policies.
    Bridging--Prior to the completion of GDUFA I all applications and 
supplements will be assigned a Target Action Date (TAD) by FDA. Upon 
implementation of GDUFA II (October 1, 2017), all GDUFA I TADs will be 
converted to official GDUFA II Goal Dates.
    Complex Products--GDUFA II creates an optional pre-ANDA submission 
communication process to provide clarifying regulatory expectations for 
prospective applicants early in product development. This will aid in 
the applicants ability to meet FDA's expectation earlier in the drug 
development phase in order for the applicant to submit a complete ANDA 
submission which would promote a more efficient and effective ANDA 
review process and reduce the number of review cycles required to 
obtain ANDA approval, for complex products.
    ANDA Review Transparency and Communications Enhancements--Increased 
transparency and communication between FDA and ANDA applicants 
throughout the review process through liberal use of Information 
Requests (IRs) and Division Review Letters (DRLs) to decrease the 
number of review cycles, post-CRL teleconferences with metrics, timely 
tentative approval conversion into full approval, and metric dispute 
resolution process.
    Reporting and Accountability--FDA will conduct increased financial 
and performance reporting to maximize transparency. Financial 
transparency and efficiency will be ensured by FDA's commitment to 
conduct activities to evaluate the financial administration of the 
GDUFA program to help identify areas to enhance operational and fiscal 
efficiency. Several key performance reporting requirements are also in 
place to ensure transparency and efficiencies are maintained with the 
type and level of reporting by quarter and annual.
                            overview of fees
    The additional user fee funding is an inflation-adjusted $493.6 
million annually for each of the 5 years of the program.
    The distributions of the fees are in two categories.

    (1) Per submission fee or one-time fee comprised of:

     ANDA application fee (33 percent).
     DMF application fee (5 percent).

    (2) Annual fee including the facility fee and the ANDA and API 
Program fees:

     The facility fee is divided into API-owned (7 percent) and 
ANDA-owned (20 percent) facilities, CMO-owned facilities (6 percent) 
are a subset of the ANDA facilities (offering an additional small 
business consideration).
     The Program fee is assessed for DMF and ANDA holders are 
at 7 percent and 35 percent respectively.
     Additionally, the ANDA program fee is tiered into small, 
medium, and large categories.

    Where Do We Stand on the Backlog?--GDUFA I required ``action'' on 
90 percent of the pre-GDUFA I (Pre-10/1/2012) workload, often called 
the backlog. FDA has met the goal and acted on more than 90 percent of 
the backlog to date.

     An action is categorized as one of the following: 
approval, tentative approval, refuse-to-receive, complete response, 
withdrawal or denial.

    GDUFA II has no submission left behind--all ANDAs and amendments 
will be given a review goal.

     Includes both new submissions and submissions from GDUFA I 
and pre-GDUFA I.
                                 ______
                                 
    Good morning Chairman Alexander, Ranking Member Murray, and members 
of the Committee on Health, Education, Labor, and Pensions. First, let 
me thank you for asking me to participate in this timely and important 
hearing.
    I am David Gaugh, senior vice president for Sciences and Regulatory 
Affairs at the Association for Accessible Medicines (AAM), formerly 
GPhA, and the Biosimilars Council (Council) and a licensed pharmacist. 
AAM represents the manufacturers and distributors of finished generic 
pharmaceuticals, bulk pharmaceutical chemicals, and the suppliers of 
other goods and services to the generic industry. Generics represent 
greater than 89 percent of all prescriptions dispensed in the United 
States, but only 27 percent of expenditures on prescription drugs.
    The Biosimilars Council, a division of AAM, works to ensure a 
positive regulatory and policy environment for biosimilar products, and 
educates the public and patients about the safety and effectiveness of 
biosimilars. We are deeply committed to accessible, affordable and high 
quality medicines.
                              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 drug 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 access to affordable generic medicines.
    As for the biosimilars industry, I have been engaged in this 
industry for over a decade and have seen American ingenuity take this 
science to new levels. Today we have a growing and thriving biosimilars 
industry--creating jobs and leading the world with our innovative 
science.
    This growth in both the generic and biosimilar industries has 
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, and it is our hope 
that this collaboration will continue throughout all of our 
interactions with the agency.
    However, the agency remains underfunded, and the responsibility of 
ensuring access to safe, effective and affordable medicines is a shared 
one with the entire pharmaceutical industry. That is why the generic 
and biosimilar industries have once again committed to provide the FDA 
with additional user fee resources to address the ongoing challenges 
caused by an increasingly global drug supply chain.
                       generic user fee amendment
    I am here to discuss AAM's conviction that the best way of 
achieving the goal of providing patients access to generic alternatives 
is through the development of policies that promote robust, competitive 
markets.
    Generic manufacturers make complex and highly confidential analysis 
when selecting which products to pursue. This analysis can include 
assessing the complexity in reverse engineering, the State of the 
intellectual property, the size of the market, the likely number of 
competitors, the product development and manufacturing capabilities and 
costs.
    Because of these complexities, AAM believes that the best way to 
control drug costs generally, is through policies that incentivize 
competition and the Generic Drug User Fee Amendment (GDUFA II) does 
just that.
    GDUFA II builds on the experiences--both the successes and 
shortcomings--of GDUFA I. The priority of the generic drug industry in 
the GDUFA II negotiations was to achieve a more effective and 
transparent generic drug review program. We believe that accomplishing 
this goal will improve the rate of first-cycle approvals on the 
earliest legally eligible date through greater transparency and 
communication during the review process. Greater communication and 
cooperation between FDA and generic drug sponsors benefits both parties 
by sharing knowledge and experiences throughout the review process. Our 
industry's goal was not merely a faster FDA review timeline, but a more 
effective review process--that enables more approvals during the first-
review cycle. Similar to the goals of the branded drug user fee 
program, PDUFA, reducing multiple FDA review cycles is a critical 
component of increasing access to affordable generic alternatives. The 
fewer review cycles required to get to approval, the sooner patients 
and payors can experience the benefits of generic drug competition. We 
strongly believe GDUFA II is well-positioned to achieve this goal.
    A few key areas of focus in GDUFA II include:

    Application Metrics--FDA will review and act on 90 percent of ANDAs 
within 10 months after the date of submission for standard applications 
and 8 months for priority applications. This includes the inspection 
components of the review process. Priority status will be provided by 
FDA for submissions affirmatively identified as eligible for expedited 
review pursuant to current CDER Prioritization Policies (MAPP 5240.3 
Rev. 2).\1\
---------------------------------------------------------------------------
    \1\ Center for Drug Evaluation and Research, MaPP 5240.3 Rev. 2, 
https://www.fda.gov/downloads/AboutFDA/CentersOffices/
OfficeofMedicalProductsandTobacco/CDER/Manualof
PoliciesProcedures/UCM407849.pdf.

     Submissions containing patent certifications pursuant to 
21 CFR 314.94(a)(12);
     Submissions related to drug shortages;
     Submissions that are subject to special review programs 
such as the President's Emergency Plan for AIDS relief;
     Submissions related to public health emergencies;
     Submissions related to certain government purchasing 
programs;
     Submissions subject to statutory mandates or other legal 
requirements;
     Supplements for which expedited review is requested under 
21 CFR 314.70(b)(4); and
     Submission for ``sole-source'' drug products.

    Bridging (No ANDA Left Behind)--In GDUFA I, ANDA applications that 
were filed with the FDA prior to October 1, 2014, did not receive an 
official GDUFA I Goal Date. However, during early implementation phases 
of GDUFA I, the FDA agreed to assign Target Actions Dates (TADs) to 
those applications. These TADs would allow both the FDA and industry to 
better track the application status. During GDUFA II negotiations, it 
was agreed that ALL GDUFA I pending applications would be provided an 
official GDUFA II Goal Date. Therefore, prior to the completion of 
GDUFA I, all applications and supplements that have been assigned TADs 
by FDA will be converted to official GDUFA II Goal Dates. For all 
applications and supplements that were either (a) previously not 
assigned a TAD or (b) were previously assigned a TAD and the TAD was 
missed, at the time of GDUFA II commencement, these pending 
applications will be assigned a goal date by the FDA that shall not be 
later than July 31, 2018. This will provide for an official 
accountability for all pending application.
    Complex Products--The GDUFA II agreement creates a pre-ANDA 
submission communication pathway for a subset of generic drug 
applications, complex products. Like the Breakthrough Therapies program 
initiated for certain high priority branded drug application, earlier 
interaction between the applicant and FDA is expected to enhance 
industry's ability to understand and anticipate FDA's expectations 
during the critical research and development phase for complex 
products. With this new pathway, industry and FDA will be able to 
engage in product development, pre-submission, and mid-review cycle 
meetings for complex products. As captured in the commitment letter, 
industry will need to meet a high bar in order for FDA to grant a 
meeting request. The high bar was deliberately set to allow FDA to 
staff up in the earlier years, which is reflected in the metrics in 
GDUFA II. It is industry's belief that this early engagement between 
industry and FDA will significantly contribute to the applicant's 
ability to improve the overall submission quality of ANDA's, which in 
turn will contribute to first-cycle approvals.
    ANDA Review Transparency and Communications Enhancements--The 
agreement includes increased transparency and communication elements 
between FDA and ANDA applicants throughout the review process through 
liberal use of Information Requests (IRs) and Division Review Letters 
(DRLs). These enhancements are intended to decrease the number of 
review cycles from the 3-4 review cycles experienced today, and move 
them more toward first-cycle approvals. FDA should consider how it can 
further enhance communication with generic drug sponsors to improve on 
its 9 percent first-cycle approval rate.
    Reporting and Accountability--FDA will conduct increased financial 
and performance reporting to maximize transparency to Congress, 
industry and the public. The GDUFA II agreement includes several new 
performance and financial reporting requirements to ensure transparency 
and efficiencies are maintained. The new reporting requirements will 
allow Congress, generic drug sponsors and FDA to better assess FDA's 
resource management planning and processes to ensure the overall 
success of the GDUFA program. The quarterly and annual reporting 
requirements will also provide insight into the financial and 
performance efficiencies of the FDA, allowing for future program 
improvements and enhancements.
    Small Business Consideration--The GDUFA II agreement supports small 
business by exempting them from a facility fee until the first ANDA in 
that facility is approved. The proposal also provides for tiering of 
the annual ANDA program fees based on small, medium and large 
companies. This tiering is based on the total number of approved ANDAs 
for each company.
                        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.
    In October, the FDA reported that over 66 biosimilar programs were 
under review for development of 20 different biologic products. This 
was made possible by the BPCIA, and by BsUFA I user fee funding. We 
learned in BsUFA I, however, that the innovation involved in biosimilar 
development--the science of understanding what is in a biologic for 
comparison purposes--is complicated and involves many new skills that 
the industry and the FDA need to understand. This requires new staff 
and training to assure high quality and efficient review. Historic FDA 
staffing cannot meet these needs which depend far less on clinical 
data, and far more on new innovative scientific techniques that 
demonstrate that a biosimilar is highly similar to the reference 
product and has no clinically meaningful differences.
    In addition, even more innovation is underway to allow for approval 
of interchangeable biologics which can be shown to perform the same in 
any given patient and, when approved, substituted at the pharmacy like 
generic drugs. This innovation is what makes biosimilars competitive, 
affordable, safe and effective for patients.
    These innovations squarely depend on having the critical additional 
FDA resources funded by BsUFA II.
    Innovation was used to craft the BsUFA II commitment letter. We 
took a hard look at the first 5 years. Not only are new FDA resources 
needed, more efficient regulatory approaches that use funding more 
wisely are necessary to accelerate FDA review. Together we included 
innovations from BsUFA I and PDUFA to enhance the review process and to 
ensure regulatory clarity. The BsUFA II user fees are now tied to the 
level of resources needed and adjust with resource demand.
    Biosimilars provide a cost-saving alternative for patients. BsUFA 
II will support the foundations set in BsUFA I and provide FDA with 
adequate resources to apply consistent regulatory standards to all 
biosimilars, review new applications as they are filed, and develop 
important public policy positions. FDA, industry and patients will all 
benefit from the user fee program by gaining a higher degree of 
certainty in the timeliness of application reviews.
    BSUFA II includes several important enhancements:

    Review timelines--Industry agreed to shift review timelines from 
the current 10-month timeframe to 12 months in order to improve and 
increase opportunities for communications touch points between industry 
and FDA, striving for first-cycle review when possible.
    Additional Funding--Funding will focus on hiring additional staff 
for guidance development, reviewer training, and timely communication. 
BsUFA II will not be linked to PDUFA fee levels in order to create 
independent and predictable funding levels based on program needs and 
resource requirements.
    Draft Guidances--FDA also agreed to publish draft and final 
guidance documents on several critical, outstanding policy positions.
    Communications--Enhanced communication and meeting opportunities 
that eliminate unnecessary delays in development and review. The 
meeting deadlines were adjusted based on BsUFA I experience to allow 
for the most effective use of the meetings to accelerate program 
development. Initial Advisory meetings were accelerated, and Type 2 
meetings were extended to allow the Agency to have the time to provide 
complete answers and better guidance. At the same time an option for 
written advice was added which could accelerate in many situations the 
time to receipt of Type 2 meeting advice.
    Resource Capacity Planning--Using resource capacity planning to set 
budgets, staffing levels and fees. The use of capacity resource 
measurement and planning will help ensure that the level of funding is 
actually tied to the resources needed and will allow for adjustment of 
fees up and down as the number of programs fluctuate. This should make 
the review more efficient, avoid the opportunity cost of delays, and 
allow for adjustment of fee allocation to the kinds or resources 
actually needed by the Agency. For example, as the number of marketed 
products increase, the fees will increase and fees may be reduced on 
the pre-application development side.
    Program Review Models--Adopting the highly effective Program Review 
Model to increase first-cycle application approvals and training of 
review teams for greater effectiveness. The Program Review Model was 
tested in PDUFA and puts in place performance obligations, 
communication commitments, pre-filing meetings, mid-cycle communication 
and a late-cycle meeting. Experience shows that the enhanced 
communication conserves FDA resources and applicant resources and has 
enabled first-cycle approval more often than when it was not in place. 
This should accelerate approval of high quality applications.
    Dedicated Staff--The agreement makes commitments to dedicate 
staffing and to issue regulatory guidance to promote best practices and 
predictability.
    Education--The agreement expands biosimilar public education 
activities.
    Each improvement accelerates high quality development and review to 
help assure that patients have more timely access to life-saving, 
affordable, safe, and effective biosimilars.
                                summary
    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 patients continue to 
receive the significant cost savings from generics and biosimilars. It 
is also important to emphasize that the funding provided by both of 
these user agreements is in addition to, not a substitute for, 
congressional appropriations. Expenditure is contingent, as in the 
past, on a spending trigger tied to congressional appropriations.
                               conclusion
    In conclusion, Mr. Chairman, 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 and biosimilar manufacturers can begin to see their many 
benefits. Nothing is more important to our industries than ensuring 
patients have access to the safe, effective and affordable lifesaving 
medications they require, and these historic agreements provide a 
critical step toward accomplishing this goal. Thank you.

    The Chairman. Thank you, Mr. Gaugh.
    Mr. Whitaker, welcome.

  STATEMENT OF SCOTT WHITAKER, PRESIDENT AND CHIEF EXECUTIVE 
 OFFICER, ADVANCED MEDICAL TECHNOLOGY ASSOCIATION, WASHINGTON, 
                               DC

    Mr. Whitaker. Thank you, Chairman Alexander, Ranking Member 
Murray, and all the members of the committee for the 
opportunity to testify today on the Medical Device User Fee 
Agreement. My name is Scott Whitaker. I'm the president and CEO 
of AdvaMed. We're the leading trade association that works to 
advance new and innovative medical technologies in order to 
improve and save lives.
    Collectively, the medical device industry works every day 
to ensure patient access to lifesaving and life-enhancing 
devices and other advanced medical technologies. I'm very 
optimistic about what this industry can do for patients if the 
right policies are in place. I've been encouraged in recent 
years by the progress at FDA's center under Dr. Shuren's 
leadership. This progress combined with the provisions of the 
new user fee agreement and the work that was done by this 
committee on the 21st Century Cures Act promises to keep things 
heading in the right direction and strengthen the entire 
medical technology innovation ecosystem.
    The new MDUFA IV agreement lays the groundwork for further 
FDA performance improvements through five key areas: more 
ambitious goals, greater patient involvement, important process 
changes, and increased accountability, all supported by 
additional resources. I'd like to quickly describe these five 
areas for you.
    First, MDUFA IV goals for total time reviewing a product 
represents substantial improvement over the current 
performance. Measuring the total time from submission to an FDA 
decision to either make that technology available to patients 
or deny approval is the most meaningful measure of progress.
    For 510(k)'s, the total time goal for MDUFA IV will 
decrease by 13 percent, which returns the total time to 
historical norms. For PMA products, which are the most 
innovative, high-risk products, the total time to decision goal 
will be lowered by 25 percent.
    Second, as we all know, patients have a critical voice in 
product development and evaluation. The MDUFA IV agreement will 
have increased resources dedicated to supporting patient 
involvement in the medical device regulatory process.
    Third, the agreement includes process improvements that we 
anticipate will enhance the consistency and timeliness of the 
review process, independent of specific time goals. One example 
of a process improvement is that the agreement provides for 
meaningful pre-submission interactions between the FDA and the 
companies. Interactions between the sponsor of a medical device 
application and the FDA, prior to the formal submission of the 
product application, can provide really helpful guidance that 
aids the sponsor in ensuring their application contains all the 
necessary information.
    This pre-submission process was first put in place 5 years 
ago under MDUFA III and has benefited both the industry and the 
FDA. MDUFA IV builds on this agreement and the success of this 
program by adding specific time commitments tied to pre-
submission meetings, requiring FDA to provide written feedback 
to companies 5 days prior to that meeting. This provision will 
help ensure a much more constructive and productive meeting 
with the FDA.
    Fourth, the agreement provides greater accountability. 
Greater accountability means that FDA's successes under this 
agreement will be transparent to FDA, to their management, to 
industry, to patients, and to Congress and the administration 
so that any problems that arise can be corrected promptly. New 
reporting tools and two independent management reports will 
provide key data to track FDA's performance, highlight any 
failures to meet key goals, and provide a basis for corrective 
action.
    Finally, to give FDA additional tools to meet these goals, 
the agreement provides additional funds for the FDA. These 
resources will give FDA what it needs to continue to improve 
its performance.
    Each of these provisions of this agreement has the 
potential to make a difference in continuing to improve the 
FDA. But the whole is truly greater than the sum of its parts. 
Each of the elements of the agreement reinforces the other. Of 
course, no agreement, no matter how good it is on paper, is 
self-executing.
    Making it work as intended will require the full efforts of 
FDA's dedicated staff and their managers. Our industry is 
committed to working with FDA in a way that we can make it a 
success as well. Continued oversight and interest from Congress 
will also be critically important. Patients are depending on 
all of us. The MDUFA IV agreement is good for this industry, 
it's good for the FDA, and, most of all, we believe it's good 
for patients.
    I thank the committee for the opportunity to testify today 
and urge you to act promptly to reauthorize this important 
program.
    [The prepared statement of Mr. Whitaker follows:]
                  Prepared Statement of Scott Whitaker
                                summary
    AdvaMed strongly supports reauthorization of the medical device 
user fee program, or MDUFA. We believe we are on the right track at 
FDA's device center, and that recent progress combined with the device-
related provisions in 21st Century Cures, plus provisions of this new 
user fee agreement (MDUFA IV) promise to keep things heading in the 
right direction to strengthen the medtech innovation ecosystem.
    The MDUFA IV agreement is good for industry, good for FDA, and good 
for patients. We urge this committee and the Congress 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 innovative diagnostics, treatments and 
cures to patients.
    The user fee agreement builds the conditions for success in a 
number of major ways:

     The MDUFA IV goals for total time reviewing a product 
represent substantial improvements over current performance.
     The agreement will have increased resources dedicated to 
supporting patient involvement in the medical device regulatory 
process.
     The agreement includes process improvements that we 
anticipate will enhance the consistency and timeliness of the review 
process, independent of the specific time goals.
     The agreement provides for greater accountability.
     The agreement provides $999.5 million (fiscal year 2015 
dollars) in user fees for 2018-22. This is built off of a baseline of 
approximately $679 million from MDUFA III, along with an additional 
$228 million in new resources to improve the device review process. In 
addition, there are $92.5 million in one-time costs for items such as 
IT and infrastructure improvements. Collectively, the resources will 
give FDA what it needs to continue to improve performance.

    Each of the provisions of this agreement has the potential to make 
a difference in continuing to improve FDA performance. But the whole is 
truly greater than the sum of its parts. Each of the elements of the 
agreement reinforces the others.
    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 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.
    I thank the committee for the opportunity to testify and urge you 
to act promptly to reauthorize this program, which is so critical to 
our industry, to the FDA, and to patients.
                                 ______
                                 
    Thank you Chairman Alexander and Senator Murray and members of the 
committee for the opportunity to testify today.
    My name is Scott Whitaker, and I am the president and CEO of 
AdvaMed, the Advanced Medical Technology Association.
    I thank you for convening today's hearing, and for your interest in 
improving medical device regulation for patients and industry.
                  the u.s. medical technology industry
    AdvaMed's member companies produce the medical devices, diagnostic 
products, and digital health technologies that are transforming health 
care through earlier disease detection, less invasive procedures, and 
more effective treatments. Our members range from the largest to the 
smallest medical technology innovators and companies. Collectively, we 
are committed to ensuring patient access to life-saving and life-
enhancing devices and other advanced medical technologies.
    I am very optimistic about what this industry can do for patients 
if the right policies are in place. Fundamental advances in knowledge 
of human biology down to the molecular level and continued progress in 
a range of disciplines--computing, communications, materials science, 
physics and engineering--are fueling innovation, and the potential to 
save and improve patients' lives is almost limitless.
    Patient access to advanced medical technology improves outcomes, 
enhances care quality, and generates efficiencies and cost savings for 
the health care system. For example, between 1980 and 2010, advanced 
medical technology helped cut the number of days people spent in 
hospitals by more than half and added 5 years to U.S. life expectancy 
while reducing fatalities from heart disease and stroke by more than 
half.
    I've been encouraged by progress at FDA's device center in recent 
years, but the innovation ecosystem that supports our industry remains 
stressed. One key barometer of the health of our ecosystem is the level 
of investment in startup companies. Unfortunately, we have seen a sharp 
decline in the number of new medical technology startup companies each 
year, going from around 1,500 annually 30 years ago to around 600. 
Since the early 1990s venture capital (VC) investment in the industry 
has gone from about 13 percent of total VC dollars to about 4 percent 
in recent years. The time horizon for getting a new innovation from the 
bench to the bedside remains too long, and as a result investors are 
looking elsewhere.
              fda regulation of medical devices--mdufa iv
    We believe we are on the right track at FDA's device center, and 
that recent progress combined with the device-related provisions in 
21st Century Cures, plus provisions of this new user fee agreement 
promise to keep things heading in the right direction to strengthen the 
medtech innovation ecosystem.
    The ground-breaking process improvements that were built into the 
MDUFA III agreement, and the oversight done by this committee, have led 
to improvements in FDA's regulation of medical devices. FDA has brought 
down the total time it takes to receive a decision from FDA on a 
product submission, while still maintaining the strongest standards for 
evaluating safety and effectiveness. Opportunities for engagement 
between applicants and FDA throughout the device review process have 
increased, leading to fewer misunderstandings and false starts, and a 
better understanding of FDA data needs. As a result, the consistency 
and predictability of the FDA review process has shown improvement.
    Additionally, the MDUFA IV agreement follows in the same spirit of 
the recently enacted 21st Century Cures law, and I thank this committee 
for its hard work on that bill. Cures included a number of provisions 
that will improve the predictability and consistency of FDA's device 
review process, and these are improvements that ultimately lead to 
greater patient access to safe and innovative products. The MDUFA IV 
agreement picks up on this theme and includes complementary process 
improvements that will also lead to timelier patient access to safe and 
effective devices.
    Of course, there are many areas where FDA could further enhance the 
predictability and efficiency of its review process, and the new MDUFA 
IV agreement lays the groundwork for further FDA performance 
improvements through more ambitious goals, important process changes, 
and increased accountability, supported by additional resources.
    This agreement is good for industry. It is good for FDA. 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 innovative 
diagnostics, treatments and cures to patients.
    The user fee agreement builds the conditions for success in a 
number of major ways.
Significant Improvements for Total Review Time Goals
    Measuring the total time from submission to an FDA decision to 
either make that technology available to patients or deny approval is 
the most meaningful measure of the process. Total time goals were first 
included in MDUFA 5 years ago, and have been a meaningful measure for 
both industry and FDA. Building on the total time goal, this MDUFA IV 
agreement will continue to drive toward reducing the total time that is 
spent reviewing a submission.
    The MDUFA IV goals for total time reviewing a product represent 
substantial improvements over current performance. For 510(k) products, 
which are moderate-risk medical devices, the total time goal is 
currently 124 days. The MDUFA IV agreement lowers that goal to 108 days 
by the fifth year. This represents a 13 percent decrease, which returns 
the total time to historical norms.
    For PMA products, which are the most innovative and highest risk 
products, the total time to decision goal is currently 385 days. The 
MDUFA IV agreement lowers that goal to 290 days by the fifth year. This 
represents a 25 percent decrease.
    For the first time, the MDUFA IV agreement includes goals for de 
novo products, which are generally moderate risk products but brand new 
innovations, which FDA has never evaluated before.
Patient Input and Involvement in the Regulatory Process
    As we all know, patients have a critical voice in product 
development and evaluation. This MDUFA IV agreement will have increased 
resources dedicated to supporting patient involvement in the medical 
device regulatory process. FDA's device center has taken several steps 
to incorporate the patient perspective into the device review process, 
through efforts such as voluntary patient preference information and 
voluntary patient reported outcomes, and this agreement will continue 
to support that work.
Process Improvements
    Third, the agreement includes process improvements that we 
anticipate will enhance the consistency and timeliness of the review 
process, independent of the specific time goals.
    One such example is that the agreement provides for meaningful 
presubmission interactions between FDA and companies. Interactions 
between the sponsor of a medical device application and the FDA, prior 
to the formal submission of a product application, can provide helpful 
guidance that aids the sponsor in ensuring their application contains 
all necessary information. This presubmission process was first put 
into place 5 years ago, in MDUFA III, and has benefited both industry 
and the FDA. This MDUFA IV agreement builds upon this success by adding 
in a specific time commitment tied to pre-submission meetings. Under 
the MDUFA IV agreement, FDA will be required to provide meaningful, 
written feedback to companies at least 5 days prior to a presubmission 
meeting, ensuring that the meeting will be a productive one.
    Additionally, the agreement supports FDA's efforts to establish a 
National Evaluation System for Health Technologies, or the NEST. MDUFA 
funding will be used for a pilot to assess whether real-world evidence 
can be used to support premarket activities. This NEST pilot will 
determine the usability of real-world evidence for expanded indications 
for use, new clearances and approvals, and improved adverse event 
reporting.
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. New reporting tools and two independent management 
reports will provide key data to track FDA performance, highlight any 
failures to meet key goals, and provide the basis for corrective 
actions.
    One of these critical accountability measures involves process 
reforms for deficiency letters, or letters that applicants receive when 
their submission is found by FDA to be lacking needed information. 
Under this MDUFA IV agreement, all deficiency letters will include a 
statement of what information was provided in a submission and why it 
is not sufficient, including specific reference to the basis for the 
deficiency determination. Additionally, all deficiencies will undergo 
supervisory review by management prior to being issued. These 
provisions ensure that deficiency letters focus on real data needs and 
that FDA is clear on what data they require.
    In addition, the agreement provides for two analyses of FDA's 
management of the device review process. This review, or independent 
assessment, was a critical part of the MDUFA III agreement that helped 
lead to improvements in FDA performance. The MDUFA IV agreement 
continues this success by including funds for two additional 
independent reviews, one at the beginning of MDUFA IV and one at the 
end.
Enhanced Resources
    Finally, to give FDA additional tools to meet the new goals, the 
agreement provides $999.5 million (fiscal year 2015 dollars) in user 
fees for 2018-22. This is built off of a baseline of approximately $679 
million from MDUFA III, along with an additional $228 million in new 
resources to improve the device review process. In addition, there are 
$92.5 million in onetime costs for items such as IT and infrastructure 
improvements. Collectively, the resources will give FDA what it needs 
to continue to improve performance.
    Each of the provisions of this agreement has the potential to make 
a difference in continuing to improve FDA performance. But the whole is 
truly greater than the sum of its parts. Each of the elements of the 
agreement reinforces the others.
    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 
working 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 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 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 improve the 
consistency and transparency of FDA inspections of medical device 
facilities and to move to a risk-based system for device inspections. 
These common-sense proposals will ensure that FDA's inspections 
resources are best targeted to public health needs and that companies 
and FDA are working together.
    I appreciate the committee's work in considering these and other 
appropriate measures that enhance and compliment the underlying user 
fee agreement, and its focus on enactment of this legislative package 
as soon as possible.
    To reiterate, the MDUFA IV agreement is good for industry. It is 
good for FDA. Most of all, it is good for patients. We strongly support 
the vital improvements made by the new agreement and believe that a 
failure to act would have a destructive impact on our industry's 
ability to bring new, innovative treatments and cures to patients.
    I thank the committee for the opportunity to testify and urge you 
to act promptly to reauthorize this program, which is so critical to 
our industry, to the FDA, and to patients.

    The Chairman. Thank you, Mr. Whitaker.
    Ms. Bens.

  STATEMENT OF CYNTHIA BENS, VICE PRESIDENT OF PUBLIC POLICY, 
          ALLIANCE FOR AGING RESEARCH, WASHINGTON, DC

    Ms. Bens. Chairman Alexander, Ranking Member Murray, and 
distinguished members of the committee, it's really an honor 
for me to be here to speak to you about the prescription drug 
and medical device user fee programs.
    Right now, approximately 10 percent of the U.S. population 
is over the age of 80. This 80-plus age group will reach 30 
percent of the population by the middle of the century. Many 
older adults today are fortunate to experience better health as 
they age than previous generations.
    The truth is that most older adults still face significant 
periods of illness and disability later in their life. They 
develop one or more forms of cardiovascular disease, cancer, 
diabetes, bone and joint degeneration, muscle wasting, vision 
and hearing loss, neurological diseases, and incontinence.
    In our view, the need for innovative treatments and medical 
devices that respond to the physical declines people face with 
age has never been greater. We believe we will only realize the 
benefits of innovations if the FDA has access to the resources 
and expertise necessary to evaluate them, industry is certain 
that their products are going to be assessed in a timely 
manner, and patients are at the center of new product 
development.
    The PDUFA VI and MDUFA IV agreements contain critical 
commitments and funding for the FDA that will benefit patients. 
The agreements do this by strengthening the agency's workforce, 
expanding patient-focused clinical development activities, 
improving FDA's capacity to advance the use of innovative 
clinical trial designs, and harnessing the potential of real-
world evidence in regulatory decisionmaking.
    Without the necessary number and types of staff, the agency 
will not be able to reduce product review times and meet other 
ambitious performance goals for which the PDUFA VI and MDUFA IV 
resources are intended. The user fee agreements increase the 
number of staff dedicated to drug and device reviews and put 
much-needed resources into hiring and retention practices at 
the FDA.
    PDUFA V and MDUFA III laid a solid foundation for FDA to 
incorporate patient perspectives on the benefits and risks of 
medial products and their hopes for successful treatment into 
the regulatory process. PDUFA VI and MDUFA IV build on this 
foundation by allowing the FDA to add staff with clinical, 
statistical, psychometric, and health outcome skills. This 
staff will enhance FDA's capacity to guide the incorporation of 
patient-reported outcomes and other patient-focused measures 
into drug or device development.
    To complement the internal changes at the FDA, the PDUFA VI 
and MDUFA IV agreements lay out a clear process for building 
external capacity to develop patient-centered measures and 
gather patient-preference information. They do this through 
hosting several public meetings and developing guidance that 
will include patients, patient advocates, researchers, and 
industry.
    To advance innovation in clinical trials, the PDUFA VI 
agreement details an early consultation process between FDA 
senior leadership and industry on the use of new surrogate 
endpoints. The meetings will identify knowledge gaps that 
require attention and provide insights on the feasibility of 
using a surrogate as the basis for an approval.
    Currently, these conversations happen too late in the 
clinical trial process, and companies don't have the ability to 
change course. It can be costly, it can lead to discontinuation 
of trials, and trial failures, and patients are really the ones 
that suffer when these products don't make it through.
    PDUFA VI also greatly enhances FDA's ability to advance the 
future of drug development. In particular, the PDUFA VI 
agreement addresses model-informed drug development and complex 
design issues by providing the agency with additional staff and 
funding for meetings to guide FDA and industry's incorporation 
of innovative clinical trial methods.
    Modeling and simulations important to the early development 
of combination treatments for diseases such as Alzheimer's 
disease and adaptive clinical trials for employing advanced 
statistical methods are essential when you're testing these 
multidrug regimens. We're optimistic that combination therapy 
will be a successful part of Alzheimer's treatment in the 
future, and we believe that the PDUFA VI resources can help FDA 
work with industry and the patient community to make this a 
reality.
    The PDUFA VI and MDUFA IV agreements expand the use of 
real-world evidence to deepen our understanding of how products 
are working, to support the incremental progress of clinical 
development, and lead to optimal care. Older adults are often 
excluded from clinical studies because of their advanced age or 
the presence of co-morbidities, even though they may be the 
majority of users of these products.
    Data on medical products generated as part of the practice 
of medicine has really been critical in understanding how new 
treatments and devices are functioning in this population. 
MDUFA IV will establish a coordinating center for the National 
Evaluation System for Health Technology. The NEST coordinating 
committee will undertake pilot programs to explore the 
usability of real-world evidence for determining expanded 
indications and new device approvals as well as device 
malfunction reporting.
    In the future, we believe this system has the potential to 
decrease the number of standalone trials, increase enrollment 
efficiencies, and make patient follow-up less burdensome, and 
we look to the future of a time when more active surveillance 
of safety issues can be a part of NEST. PDUFA VI goes beyond 
the current use of real-world evidence for assessing post-
market safety and will allow FDA the ability to explore the use 
of this valuation information in assessing a product's 
efficacy.
    The PDUFA VI and MDUFA IV agreements will increase the 
efficiency of the regulatory process, reduce the time it takes 
to bring safe and effective medical products to market, and, 
most importantly, it puts patients at the heart of new product 
development. I'll close by reiterating our strong support for 
the successful reauthorization of these programs.
    Thank you for the opportunity to present our views today.
    [The prepared statement of Ms. Bens follows:]
                   Prepared Statement of Cynthia Bens
                                summary
    The Alliance for Aging Research is the leading non-profit 
organization dedicated to accelerating the pace of scientific 
discoveries and their application to improve the experience of aging 
and health.
    The Alliance participated in monthly patient/consumer stakeholder 
consultations with the FDA leading up to the release of negotiated 
agreements for PDUFA VI and MDUFA IV. The Alliance for Aging Research 
strongly supports these agreements.
    The U.S. population is aging rapidly and most older adults face 
significant periods of illness and disability later in life. For this 
reason, the need for innovative treatments and medical devices that 
respond to declines people face with age has never been greater. To 
foster innovation, FDA requires additional resources and expertise, 
drug and device reviews must be accelerated, and patients should at the 
center of product development address their most pressing needs.
    The Alliance believes that the PDUFA VI and MDUFA IV agreements 
will strengthen the agency's workforce to speed up review times, expand 
patient-focused medical products development activities, improve FDA's 
capacity to advance the use of innovative clinical trial designs, and 
harness the potential of real-world evidence in regulatory process.
    The Alliance urges timely reauthorization of the PDUFA and MDUFA 
programs because of the critical funding they provide for the FDA and 
commitments the agreements contain that will benefit patients.
                                 ______
                                 
    Chairman Alexander, Ranking Member Murray, and Distinguished 
Members of the committee: It is an honor and a privilege to speak with 
you today on behalf of the Alliance for Aging Research, about the 
reauthorization of the Food and Drug Administration's Prescription Drug 
User Fee Act (PDUFA) and Medical Device User Fee Act (MDUFA) programs.
    I am Cynthia Bens, vice president of public policy at the Alliance. 
The Alliance for Aging Research is the leading non-profit organization 
dedicated to accelerating the pace of scientific discoveries and their 
application to improve the experience of aging and health. We believe 
that advances in research help people live longer, happier, more 
productive lives and reduce health care costs over the long term.
    Most of us are keenly aware that our population is aging at an 
unprecedented rate. Ten thousand Baby Boomers are turning 65 each day. 
This is up from 6,000 per day just 6 years ago. People age 85 and older 
are the fastest growing segments of our population. Right now, 
approximately 10 percent of the U.S. population is age 80 or older. 
This 80+ age group will reach 30 percent of the U.S. population by 
2050.
    Many older adults today are fortunate to experience better health 
as they age than previous generations. The truth is that most older 
adults still face significant periods of illness and disability later 
in life, often from multiple chronic conditions that require complex 
care management. They develop one or more forms of cardiovascular 
disease, cancer, diabetes, bone and joint degeneration, muscle wasting, 
vision and hearing loss, neurological diseases, and incontinence.
    In our view, the need for innovative treatments and medical devices 
that help respond to the physical declines people face with age has 
never been greater. We believe that we will only realize the benefits 
of these innovations if the FDA has access to the resources and 
expertise necessary to evaluate them, industry is certain that their 
products will be assessed in a timely manner, and patients are at the 
center of new product development.
    For more than a decade, the Alliance for Aging Research has worked 
directly with the FDA, other patient advocates, researchers, and 
industry on ways to streamline the regulatory process for the benefit 
of older adults. We understand that user fees play an essential role in 
maintaining FDA review processes that efficiently deliver safe and 
effective medical products to patients who need them, and that is why 
we engage in the prescription drug and medical device user fee 
reauthorization processes.
         historical perspective on the pdufa and mdufa programs
    Prior to the last reauthorization of PDUFA and MDUFA, patient 
organizations were not allowed to engage in the negotiations between 
the FDA and industry. Thanks to your committee's leadership and the 
support of your colleagues in Congress, the Alliance for Aging Research 
and other groups were represented throughout the patient/consumer 
stakeholder consultation phase leading up to PDUFA V and MDUFA III. We 
had an opportunity to provide feedback to the FDA as negotiations were 
taking place and propose enhancements to be included in the final 
commitment letter that emerged from the negotiations.
    Engagement from the all stakeholders during the PDUFA V and MDUFA 
III negotiations resulted in final agreements that provided resources 
to strengthen review capacity at the Center for Drug Evaluation and 
Research (CDER) and the Center for Devices and Radiological Health 
(CDRH); advance regulatory science activities across medical product 
divisions within the FDA; and begin a movement toward more patient-
centered medical product development, both inside and outside of the 
agency.
    The Alliance for Aging Research was honored to offer patient 
perspectives to CDER and CRDH through monthly stakeholder consultations 
and public meetings held over the last year as the agency negotiated 
the PDUFA VI and MDUFA IV agreements. PDUFA VI and MDUFA IV contain 
critical commitments and funding for the FDA that we strongly support.
    We are thankful the reauthorization of the user fee agreements is a 
priority for this committee, and that patient benefit maintains a 
central role. We call your attention to the following sections of the 
agreements that provide additional resources for CDER and CDRH's 
workforce, expand patient-focused medical products development 
activities, improve FDA's capacity to advance the use of innovative 
clinical trial designs, and harness the potential of real-world 
evidence in regulatory decisionmaking. These provisions will enhance 
FDA's ability to evaluate safe and effective treatments in a manner 
that will be meaningful to patients.
                pdufa vi agreement benefits to patients
I. Strengthening CDER's Workforce
    The FDA lacks several tools that would allow it to maintain a 
robust hiring and retention function, which is why the Alliance for 
Aging Research pushed for a focus on hiring during PDUFA VI, and during 
the development of the 21st Century Cures Act. The 21st Century Cures 
Act took some positive steps to loosen restrictions on hiring for high-
level vacancies but we are pleased to see that industry is putting 
resources toward more general hiring and retention processes at FDA in 
the PDUFA VI agreement. There are several proposed enhancements under 
Section III of the PDUFA VI agreement to ensure CDER's workforce 
stability and establish first-ever goals for hiring.
    Section III of the PDUFA VI agreement improves CDER's hiring and 
staff retention practices. This is one of the most critical components 
of the agreement because the agency will only be successful if it has 
the best and the brightest people in its' workforce. To do this, CDER 
needs to compete on a level playing field with the private sector and 
other Federal agencies for highly skilled individuals.
    Section III-A. of the PDUFA VI agreement modernizes CDER's hiring 
system. Two highlights of this section are: (1) a commitment to 
implement a comprehensive online position classification system and (2) 
a transition away from time-limited individual position vacancy 
announcements. Shifting to common vacancy announcements--to be used by 
multiple offices for continuous posting--will provide the greatest 
opportunity for applicants with key scientific and technical expertise 
to apply for positions regularly needed across FDA's drug review 
programs.
    Section III-C. of the agreement establishes a dedicated unit with a 
continuous focus on hiring and staffing. This unit will help CDER keep 
pace with scientific and technologic advances by proactively reaching 
out to qualified candidates and competitively recruiting to fill 
vacancies. It will analyze compensation and other factors that affect 
retention of key staff on an annual basis. The PDUFA VI agreement also 
allows the agency to retain a qualified hiring contractor to augment 
CDER's existing hiring staff capacity. Employing this contractor will 
assist FDA in successfully meeting goals for recruitment of human drug 
review program staff.
    CDER was required to implement the Breakthrough Therapy Pathway 
during PDUFA V. This pathway was intended for new drugs that showed 
exceptional promise for effectively treating a disease or patient 
population with an unmet need. This Breakthrough Pathway has been more 
successful than was intended and resulted in patients having quicker 
access to truly innovative products for serious and life-threatening 
conditions. Unfortunately, this pathway has placed a strain on the 
agency because it is resource-intensive and did not come with 
additional funding under PDUFA V. PDUFA VI provides the addition of 
more than 30 staff to assist with this expedited pathway, which will 
help streamline approvals and ensure pathway integrity.
    PDUFA VI also makes critical changes to the FDA's communications 
with sponsors that will help expedite drug development. CDER will 
maintain dedicated staff to provide communications training to their 
medical product review divisions, to better facilitate responses to 
general questions from sponsors and ensure timely resolution of issues 
with specific new drug applications. PDUF VI fees will support an 
independent assessment of current communications practices and a public 
workshop to examine the results of this assessment.
II. Expanding Patient-Focused Drug Development
    The Alliance for Aging Research has been a strong advocate for the 
Patient-Focused Drug Development (PFDD) Initiative since the PDUFA V 
negotiations. At the urging of our Aging in Motion (AIM) coalition, a 
disease of aging called sarcopenia was selected for an FDA-led PFFD 
meeting. The meeting will be held later this week. The 27 PFDD meetings 
held by FDA on select diseases are providing FDA medical reviewers with 
a fuller understanding of patient and caregiver experiences with a 
disease and their hopes for successful treatment. The Alliance 
supported the continuation of FDA-led PFDD meetings as part of PDUFA VI 
and we are pleased that FDA will have the flexibility under Section J 
of the agreement to utilize user fee funds for disease-specific 
meetings, if they determine them to be useful.
    PDUFA VI will add staff with expertise in patient-focused methods 
to be embedded into the review divisions. It is anticipated that these 
individuals will provide clinical, statistical, psychometric and health 
outcomes skills to enhance FDA's capacity and guide the incorporation 
of patient-reported outcomes and other patient-focused measures into 
drug development programs.
    To compliment the internal changes at FDA in PFDD, the PDUFA VI 
agreement lays out a clear process for developing sequential guidance, 
with full participation from the patient advocacy community, industry 
and FDA on the collection of patient input leading to the development 
of patient-centered measures. We strongly support FDA's leadership in 
PFDD, because there is no one patient advocacy organization or company 
that can or should speak for all patients, and because the process is 
ultimately meant to inform improved medical product development within 
FDA's review divisions. The proposed public process in PDUFA VI 
maintains and clarifies FDA's role, while providing much-needed user 
fee funding for external capacity building. To help ensure that there 
is efficient use of patient group and industry resources when pursing 
the development of novel patient-focused drug development tools, CDER 
will create and maintain a repository of existing clinical outcome 
assessments, patient-focused meeting resources, and other patient-
focused efforts.
    Since PDUFA V, we have supported the dedication of user fees to 
develop a transparent and structured benefit-risk framework for drug 
evaluation. Understanding the components of FDA's benefit-risk 
assessment and how these components are applied in the context of 
regulatory decisionmaking continues to be of keen interest to industry 
and the patient advocacy community. PDUFA VI updates CDER's benefit-
risk implementation plan, calls for a public meeting and the addition 
of a draft guidance to enable more productive activities that capture 
patient experiences, and allows for the communication of those findings 
to CDER throughout the drug development process.
III. Advancing Innovative Clinical Trials
    In 2012 and 2013 the Alliance convened two impactful meetings on 
combination therapy development for Alzheimer's disease. These meetings 
highlighted that modeling and simulation will be important in the early 
development of drug-drug combinations and that adaptive clinical trials 
employing advanced statistical methods will be essential in testing any 
multi-drug regimen for Alzheimer's disease. We are optimistic that 
combination therapy will be a successful part of Alzheimer's disease 
treatment in the future. PDUFA VI greatly enhances CDER's ability to 
advance the future of drug development through the addition of staff 
with expertise in statistical modeling and innovative clinical trial 
designs. Section J of the PDUFA VI agreement addresses model-informed 
drug development and complex design review by providing CDER with 
additional staff and funding for public meetings to guide FDA's and 
industry's incorporation of innovative clinical trial methods.
    The Alliance for Aging Research has first-hand experience with the 
FDA's Drug Development Tool (DDT) Qualification Process. We 
participated in efforts to qualify multiple tools for use in clinical 
trials for Alzheimer's disease and we are currently pursuing 
qualification of two functional assessments to be used as endpoints in 
clinical trials for sarcopenic patients. We feel strongly that the DDT 
Qualification Process should continue because it provides a unique 
space for collaboration and resource pooling among multiple 
stakeholders, including patients, to advance patient-centered endpoints 
that are made available in the public domain. PDUFA VI expands base 
capacity within the qualification review team and provides them with 
funding to host a series of meetings resulting in guidance that will 
strengthen the DDT Qualification Process.
    The PDUFA VI agreement also details a process for early 
consultation with drug sponsors on the use of new surrogate endpoints 
in clinical trials. The meetings described in the agreement will allow 
companies to engage with FDA's senior leadership on the feasibility of 
using a surrogate endpoint that has not previously been used as the 
basis for an approval. Meetings like these will identify any knowledge 
gaps that require attention. While we do not yet have qualified 
biomarkers for use as surrogates to test drugs for many diseases of 
aging, we know that clinical trials utilizing surrogate endpoints will 
be increasingly important as drug development moves toward early 
intervention and prevention of age-related diseases. Establishing this 
dedicated process for meetings on surrogates between FDA and industry 
that can occur as early as end of Phase 1, is a priority for us.
IV. Harnessing the Potential of Real-World Evidence
    The PDUFA VI agreement enhanced the use of real-world evidence in 
regulatory decisionmaking. Data on medical products generated as part 
of the practice of medicine is already being successfully utilized for 
the purposes of assessing a product's safety in populations that are 
underrepresented in randomized controlled trials (RCTs). Older adults 
are often excluded from RCTs due to advanced age or presence of 
comorbidities, even though they are often most of the users for a given 
intervention. Real-world evidence has been critical in understanding 
how new treatments are performing in this population when they enter 
the post-market space. We support FDA's efforts under PDUFA VI to go 
beyond the current use of real-world evidence for assessing safety 
post-market and to explore how this valuable information can be used in 
assessing a product's efficacy. PDUFA VI fees will support multi-
stakeholder public workshops, methodology-development pilot programs 
and regulatory guidance. We believe that this represents a sound, 
comprehensive approach to harnessing the potential of real-world 
evidence for patients, product sponsors, and the agency.
                mdufa iv agreement benefits to patients
I. Supporting CDRH's Workforce
    Having expert CDRH staff to carry out user-fee-funded activities is 
paramount. Without the necessary number and types of staff, CDRH will 
not be able to meet the ambitious performance goals for which the MDUFA 
IV resources are intended. MDUFA IV provides CDRH with needed funding 
to hire across medical device review activities and cultivate existing 
staff. Specifically, Section III-B of the MDUFA IV agreement permits 
CDRH to apply user fees for the improvement of its scientific and 
regulatory review capacity. With these fees, CDRH intends to increase 
the retention rate of high-performing supervisors, reduce the ratio of 
review staff to supervisors, hire new device application reviewers, and 
utilize recruitment support to augment existing human resource 
services.
    The Alliance for Aging Research is supportive of Section IV-E of 
the MDUFA IV agreement that seeks to bolster the third-party review 
program within CDRH. We advocated for the use of MDUFA III fees for the 
third-party review program so that CDRH's staff would have more time to 
devote to higher-risk device applications. It is our understanding that 
third-party review continues to be valuable for lower risk devices, but 
the program requires improvements to make it more efficient. We are 
glad that CDRH continues to have the resources and flexibility to 
employ outside experts as needed under MDUFA IV and that there will be 
improvements made to the third-party review program to ensure its 
integrity.
    MDUFA IV will lead to significant reductions in the time it takes 
the FDA to review the most common types of medical device applications. 
This will not only benefit industry, but also accelerate patient 
access. Under MDUFA IV, the FDA has committed to reduce the days for 
review of 510(k) applications and for premarket approval (PMA) 
applications. FDA also set goals for reviewing de novo applications. 
The number of de novo requests has increased steadily since the pathway 
was created. The limited resources currently available to the agency 
for de novo requests have resulted in missed target dates for review in 
all but 40 percent of cases. Section II-E of the MDUFA IV agreement 
specifies that the agency set a goal of reviewing 70 percent of de novo 
requests on time by fiscal year 2020.
II. Expanding Patient-Centered Medical Device Development
    The Alliance for Aging Research applauds the FDA for fostering the 
use of patient preference information in the review and approval of 
medical devices. CDRH was a leader among regulators in aggressively 
pursuing a transparent and structured benefit-risk framework. 
Finalizing a benefit-risk guidance for devices was one of CDRH's first 
actions in MDUFA III implementation. The benefit-risk guidance, first 
issued by FDA in 2015, broadly defines the benefits they are interested 
in understanding. The type of benefit CDRH specifically calls out are 
not just a device's impact on clinical management of a disease and 
patient health, but also patient satisfaction, improvement in quality 
of life, improvement in function, reduction in lost function, reduction 
in probable mortality, and symptom relief. For diagnostics, benefit 
could be assessed on public health impact, the ability to identify a 
specific disease and potentially prevent its spread, predicting future 
disease onset, providing earlier diagnosis of diseases, or identifying 
patients more likely to respond to a given therapy.
    The benefit-risk guidance also laid out the ways in which CDRH 
assesses the magnitude of benefit, the probability of a patient 
experiencing benefit, and the duration of benefit. The guidance 
provides details, some examples, and a copy of the worksheet that 
reviewers use in their benefit-risk determinations.
    Benefit-risk calculation is discussed frequently but there is the 
potential for this type of exercise to be more tokenism than substance. 
CDRH got the substance of the patient experience right, and that is 
because they actively engaged with the patient advocacy community to 
best characterize disease severity and unmet need from the start.
    Of late, industry has begun including patient-centered endpoints in 
development programs, signaling a growing interest by industry to 
employ patient-reported outcomes in device trials with more regularity. 
FDA has responded by drawing patient representatives earlier into the 
device review process, developing a systematic benefit-risk framework 
for the evaluation of new devices, and creating a Patient Engagement 
Advisory Committee.
    Section IV-F of the MDUFA IV agreement details activities that CDRH 
will take to further advance patient input and involvement in the 
regulatory process. CDRH will develop scientific expertise and expand 
staff capacity to respond to device submissions containing publicly 
available, and validated, patient preference information or patient-
reported outcomes. This section also calls for public meetings to 
discuss approaches for incorporating patient-preference information and 
patient-reported outcomes as evidence in device submissions, as well as 
other methods of advancing patient engagement. CDRH will also explore 
ways to use patient input to inform clinical study design and reduce 
barriers to patient participation by facilitating recruitment and 
retention. The MDUFA IV agreement calls on the FDA to identify priority 
areas in which patient preference information could inform regulatory 
decisionmaking and requires publication of these priorities in the 
Federal Register.
III. Utilizing Real-World Evidence
    The Alliance sought the application of MDUFA IV resources to 
elevate CDRH's ability to further real-world evidence generation for 
the purposes of informing regulatory activities. We believe that the 
collection of data generated through routine clinical care can help 
broaden our understanding of how products are working in the real 
world, support the incremental process of medical device development, 
and lead to optimal care.
    Under Section IV-H of the MDUFA IV agreement, CDRH can utilize user 
fees to hire staff with expertise in the use of real-world evidence and 
establish a coordinating center for the National Evaluation System for 
health Technology (NEST). NEST will link health claims, electronic 
records, and registry data. In the future, these activities have the 
potential to decrease the number of stand-alone clinical trials, 
increase enrollment efficiencies, and make patient followup less 
burdensome.
    With MDUFA IV funds, the NEST Coordinating Committee will undertake 
a pilot program to explore the usability of real-world evidence for 
determining expanded indications for device use, new device approval, 
and device malfunction reporting. The NEST pilot program is 
particularly meaningful for our organization since older adults are not 
adequately represented in many clinical studies for devices.
    The Alliance for Aging Research requests one change to the MDUFA IV 
agreement. Section IV-H states that, ``Industry representation on the 
NEST governing board will make up at least 25 percent of the governing 
board membership.'' MDUFA IV generally references anticipated 
representation of the patient community on the NEST governing board. We 
believe that the enacting legislation should detail the composition of 
the remaining 75 percent of the governing board and include 
representatives of patient populations most likely to be affected by 
increased utilization of real-world evidence (e.g., the elderly, those 
with multiple chronic conditions, women, etc.). If patient preference 
is truly a priority for the FDA and industry, representation by patient 
representatives on the NEST governing board should be more clearly 
outlined.
                               conclusion
    As mentioned previously, the Alliance for Aging Research strongly 
supports the continuation of the prescription drug and medical device 
user fee programs through the negotiated PDUFA VI and MDUFA IV 
agreements. The Alliance advocates for increased overall funding of the 
FDA, with strong emphasis on finding the right balance between user 
fees and appropriated funding. We think that the size and scope of the 
proposed fees within the PDUFA VI and MDUFA IV agreements is 
appropriate and necessary to increase the efficiency of regulatory 
processes, reduce the time it takes to bring safe and effective medical 
products to market, and put patients at the heart of new product 
development.
    Despite the opportunities afforded by PDUFA VI and MDUFA IV, we are 
all in jeopardy if the FDA's budget authority remains flat or is 
significantly reduced in the coming fiscal year. As you are aware, not 
all FDA activities can be supported through user fees, nor should they 
be. Crucial safety and surveillance activities as well as oversight of 
over-the-counter medications and other products, currently fall outside 
of the user fee programs. While FDA appropriations are not under the 
jurisdiction of this committee, it is our hope that you will join us in 
calling for sufficient budget authority to maintain the overall health 
of this essential agency.
    Thank you for the opportunity to present our views today. The 
Alliance for Aging Research is grateful that the committee is making 
the reauthorization of the user fee programs a priority and we look 
forward to working with you on enacting legislation for these important 
programs.
    I am happy to answer any questions you may have.

    The Chairman. Thank you, Ms. Bens, and thanks to all of 
you. We'll now have a 5-minute round of questions, and I'll 
defer mine and go first to Senator Scott.

                       Statement of Senator Scott

    Senator Scott. Thank you, Mr. Chairman.
    Good morning to the panel. Thank you all for being here 
this morning.
    We've talked a lot about patient-centered healthcare 
delivery. It makes sense that in the drug development space, we 
want to make sure that there's room for patients' voices as 
well. I applaud the commitment to patient-focused drug 
development in PDUFA V. I was glad to see that 1 of the 20 
meetings held with the public focused on the sickle cell 
disease and having the input from the patients as well as the 
caregivers in this space.
    Their stories are very important for a number of reasons. 
They teach us about the disease and how it devastates not only 
the person but the family. They teach us a lot about the 
resiliency of kids and how they're able to maintain a positive 
attitude through hospitalization after hospitalization, after 
visits to the emergency room, so things that are a very 
important part of the conversation.
    Ms. Holcombe, what do you think the industry learned and 
could continue to learn from this type of patient input, and 
how can that shape in a tangible way the drug development 
process?
    Ms. Holcombe. Thank you, Senator, for that question. There 
is an important step that PDUFA VI will be taking that builds 
on all of the learnings of those meetings with patient 
organizations. One of the things that researchers learned and 
that FDA learned from those patients and those patient 
advocates was that sometimes the way we see their condition is 
not the way they see their condition.
    So the question really is, if we're developing a therapy 
for someone, shouldn't we try to understand as well as we can 
what the person needs and what that person wants? What are the 
symptoms that bother those patients most? What are the things 
that deter them from participating in clinical trials? Why 
don't they sign up for trials? Why don't they stay in trials 
when they get in trials to test new drugs?
    Learning those kinds of things, learning how to convert 
those compelling narratives from those patients into real data 
that can be used in the approval of a product, in the design of 
a trial, that will actually measure what is important to those 
patients will be a huge step forward in developing drugs that 
completely have the patient at the center of the concept.
    Senator Scott. Thank you for your answer. I will say that I 
know that in many ways, the African American community does not 
necessarily participate at high rates in drug testing. Your 
comments lend themselves to having more folks participate in 
that process as they understand and appreciate the necessity of 
it and as industry does exactly the same as well. Thank you for 
your answer.
    Startups have played a big role in bringing new and 
innovative therapies to market. These small companies are doing 
inspiring work and are dedicated to improving patients' lives 
more often than not with a really bare bone staff. I hope that 
we will continue to create an environment in our country where 
these startups can thrive, because they are, in fact, a part of 
what sets us apart.
    Once again, Ms. Holcombe, your organization represents a 
lot of these small companies. How important was the enhanced 
communication program established in PDUFA V for these smaller 
companies, and how will PDUFA VI build on this to give them the 
support they need?
    Ms. Holcombe. Well, the enhanced communication program was 
critical for these companies, because they are on kind of a 
short string, if you will. They have a limited amount of time 
and a limited amount of resources, and when they get hung up on 
some small but technically important question, they need to be 
able to get an answer quickly. Waiting for the process, even 
though it's a pretty efficient process, of an FDA formal 
meeting is just not feasible for them.
    The informal communications system allowed them to reach 
out to FDA on a less formal basis and get an answer that will 
allow them to proceed with their development program in a 
timely way. Those processes will continue under PDUFA VI, and, 
in addition, a third-party evaluator will come into the agency 
and look at how these processes are playing out across all of 
the review divisions and see whether there are best practices 
that make some of the divisions more responsive than others and 
try to then identify those best practices and disseminate them 
across the entire center.
    Senator Scott. Thank you, ma'am.
    Mr. Chairman, I'm out of time.
    The Chairman. Thank you, Senator Scott.
    Senator Murray.
    Senator Murray. Thank you very much. I hear from patients 
and families and doctors and hospitals and businesses in my 
home State of Washington all the time about the astronomical 
cost of drugs. Our work here today, obviously, on this 
committee is to advance the FDA user fee agreement to help 
support a robust and competitive market for safe and efficient 
drugs.
    We've got to do more to reign in costs. We're often told 
that families here in the United States pay more than citizens 
of other western countries for the same drugs because 
manufacturers need the high returns to invest in research and 
development, and I strongly support policies that promote 
investment in research and development. That's why I was proud 
to work with Senator Alexander and many of our colleagues here 
today on the 21st Century Cures Act.
    I'm concerned because a recent analysis by researchers at 
Sloan Kettering suggests the high price Americans pay for their 
prescriptions is far more than these companies need to cover 
the cost of their entire global R and D budgets. Given those 
findings, my question is simple.
    Ms. Holcombe, I'm going to ask you. Why can't drug 
companies just provide more transparency into how they set 
their prices?
    Ms. Holcombe. Thank you, Senator Murray. I don't exactly 
know how to answer that question, obviously. The problems that 
families face in our country of the high cost of healthcare, in 
general, are problems that we all need to work together to 
solve. Understanding how drug prices are set and what they end 
up being is complicated. Whether we can improve the 
transparency is something that we certainly, at BIO, would be 
very happy to look at in depth with you and talk about how this 
kind of thing could happen.
    It's important to realize that the price that a patient is 
paying at the pharmacy counter, for example, is not the price 
that is set by a drug company, but it is the price that the 
insurance plan that this individual has is allowing to happen. 
It's a system in which there are many players. We have to 
figure out together how to make that system work better for 
American families, and we at BIO, who represent companies that 
make important medications, as you point out, are very open to 
working with all the other members of that system, insurance 
companies, PBMs, and so forth, to figure out how we can do 
things better for American families.
    Senator Murray. Well, transparency is an important part of 
that, and I want to talk to you about that, on ways that we can 
improve that.
    During the development of 21st Century Cures, my fellow 
Democrats and I supported an amendment to improve post-market 
surveillance of medical devices so we could better understand 
their safety and their effectiveness.
    Ms. Bens, let me talk to you. While that amendment was not 
adopted, can you tell us briefly how much surveillance could 
have a positive impact on older Americans, many of whom count 
on medical devices both in the doctor's office and at home?
    Ms. Bens. Sure, absolutely. Thank you so much, Senator 
Murray, for that question.
    The FDA currently has the authority to issue two types of 
post-market studies. One is a post-market study that's 
conducted and decided on by the manufacturers at the point of 
product approval, and then the second type of study usually 
comes about once a product is on the market, and there is 
determined to be some sort of safety signal.
    The GAO actually released a report in 2015 that was looking 
at the progress that FDA was making in enforcing some of those 
post-market studies, both on the full post-market studies as 
well as post-market surveillance, and they found that at the 
time, most of those studies were making adequate progress. One 
of the major problems with the ones that weren't making 
progress was largely due to the fact that they were having 
trouble enrolling enough study participants to participate in 
those trials, and so it was delaying them.
    One of the things that we're supportive of is the 
establishment of NEST. The reason that we think it's really 
important is it is going to keep building on this 
infrastructure of making sure that there is linking between the 
electronic health records data and other types of claims, where 
you can be studying these products once they go onto the market 
for longer periods of time. Typical post-market studies have a 
3-year window, and we think that NEST will be able to provide 
in the future much more real-time assessments.
    Senator Murray. All right. I'm almost out of time.
    Mr. Whitaker, I want to ask you, because I'm really 
disappointed that the medical device industry has explicitly 
refused to fund its user fees to assess the safety of medical 
devices already on the market. The drug industry has supported 
FDA's post-market surveillance activities with user fees since, 
actually, 2007. Why does the device industry refuse to follow 
that lead?
    Mr. Whitaker. I don't believe, Senator Murray, we're 
opposed to post-market surveillance activity. The focus of this 
user fee agreement from the beginning was just on pre-market 
activities. We did not engage in a conversation with FDA about 
expanding it beyond its original remit. All of our conversation 
about MDUFA IV was reauthorizing the current agreement and 
increasing resources to help support FDA to meet the current 
goals that they had set. We didn't go beyond that in the scope 
of our internal conversations with them.
    Senator Murray. Mr. Chairman, let me just say that the 
issue of duodenoscopes medical devices in my home State of 
Washington led to a horrible situation, and I think the 
industry can do more to support medical device safety for 
consumers. And just as a note, 2 weeks ago, another outbreak of 
antibiotic resistant infections was traced back to the same 
devices that the company said were fixed after that outbreak in 
Washington, and I really believe we need to support more action 
and I want to work with you on that.
    The Chairman. Thank you, Senator Murray.
    Senator Burr.

                       Statement of Senator Burr

    Senator Burr. Thank you, Mr. Chairman.
    My first two questions are to Mr. Whitaker, Mr. Gaugh and 
Ms. Holcombe, and it's a yes or no question. In the past 4 
years, in the current years of the user fee agreement, has the 
FDA met 100 percent of their negotiated deliverables?
    Mr. Whitaker.
    Mr. Whitaker. I don't know the number. I don't know that 
it's 100 percent, but they've made tremendous progress.
    Senator Burr. Mr. Gaugh.
    Mr. Gaugh. I would have to say they have hit 100 percent of 
their negotiated metrics.
    Senator Burr. Ms. Holcombe.
    Ms. Holcombe. Yes. Under PDUFA, they have met 100 percent 
of their goals.
    Senator Burr. Would your industry be supportive of this 
committee requiring that FDA report to us specifics on their 
deliverables on a timeline on a regular basis?
    Mr. Whitaker.
    Mr. Whitaker. As a part of their reporting requirements, 
that seems reasonable to us.
    Senator Burr. Mr. Gaugh.
    Mr. Gaugh. Yes.
    Senator Burr. Ms. Holcombe.
    Ms. Holcombe. Yes.
    Senator Burr. Ms. Holcombe, how significantly different is 
what you negotiated both last time and in this one reflective 
of differences between the FDAMA 1997 statutory language?
    Ms. Holcombe. FDAMA was visionary, and this PDUFA VI 
agreement is keeping that vision in mind to transform the drug 
development process.
    Senator Burr. If FDA followed the statute of the law, would 
you have to negotiate this?
    Ms. Holcombe. I still think that FDA requires additional 
resources to carry out some of these activities.
    Senator Burr. FDAMA covered specifics about communication 
and timelines.
    Mr. Whitaker, let me go to you, because I'm going to go to 
your own testimony. You said MDUFA IV will reduce review times 
on 510(k) to historical norms. Explain to me why the device 
industry should pay $320 million increase in user fees to get 
back to your historical norms.
    Mr. Whitaker. Well, we think anything we can do to reduce 
the timelines to decision is important, and getting back to 
what it was in 2002 to 2005 would be progress for us.
    Senator Burr. Does that mean you negotiated a bad deal for 
the last 4 years?
    Mr. Whitaker. I don't think so. It means FDA needs to do a 
better job, and we're committed to helping them get there.
    Senator Burr. You can't answer the question that they got 
almost 100 percent, and you're getting back to historic norms 
with what you're negotiating in the next agreement, unless you 
negotiated a bad agreement before, or they would have been at 
historical norms then.
    Mr. Whitaker. The early part of MDUFA III, they were not 
doing as well as they are now. Over the course of the last 3 
years, we've seen significant trends downward in every major 
category, which, to us, is progress.
    Senator Burr. In fact, were they following the statute in 
1997, they would have probably made improvements on historical 
norms.
    Mr. Whitaker. That's probably correct.
    Senator Burr. Mr. Gaugh, you said that this was carefully 
negotiated for all companies. Correct?
    Mr. Gaugh. Yes.
    Senator Burr. The last agreement that has almost a year 
left on it--the FDA processed no backlog applications.
    Mr. Gaugh. They have processed some backlog applications.
    Senator Burr. The total number has not been reduced 
significantly. Correct?
    Mr. Gaugh. That is correct. There's about----
    Senator Burr. Did you negotiate a bad deal last time that 
didn't include all companies? If a company has got an unusually 
large number in backlogs, have you now covered them in the next 
negotiation where you didn't in the last one?
    Mr. Gaugh. I think we have. We think we have, yes, because 
we learned a lot from our first agreement, which was GDUFA I, 
and a lot that we didn't know then. We've learned over the 
course of action negotiating GDUFA II for the past 3\1/2\ 
years, and from those learnings have determined that we are not 
leaving any ANDA applications behind. All are being pulled 
forward into GDUFA II, and all will have a goal date, and that 
goal date will be either 10 months or 8 months, depending on 
the priority or the standard review.
    Senator Burr. Let me ask all three of you--last question. 
Would you be supportive if the committee designed some type of 
claw-back mechanism if, in fact, FDA does not meet their 
negotiated deliverables to the industry?
    Ms. Holcombe.
    Ms. Holcombe. I don't think we would be supportive of that, 
Senator, because most--the vast majority of the funds that are 
paid in user fees in PDUFA pay for staff at FDA, and a claw-
back could potentially have an impact that was adverse----
    Senator Burr. I didn't say I was going to claw back your 
money. I'm going to claw back our money.
    Ms. Holcombe. Oh, appropriated money.
    Senator Burr. We don't have to make as bad a deal as you 
guys have made.
    Mr. Gaugh.
    Mr. Gaugh. Yes, holding any industry accountable would make 
sense.
    Senator Burr. Mr. Whitaker.
    Mr. Whitaker. I agree. Holding industry accountable would 
make sense. We like the agreement as it is.
    Senator Burr. Well, let me say for the record that all the 
center heads sat at that table not long ago and said they 
wouldn't be opposed to us clawing back, either.
    I thank the chair.
    The Chairman. Thank you, Senator Burr.
    Senator Franken and then Senator Hatch.
    Senator Franken.

                      Statement of Senator Franken

    Senator Franken. Thank you, Mr. Chairman.
    I'm going to echo Senator Murray a bit here. I've been 
doing roundtables around my State on the cost of 
pharmaceuticals, and there's been no question that this is 
really affecting people, the spike that we've seen in the last 
few years. These are high launch prices. There are price 
increases on older drugs.
    Ms. Holcombe, you said this is complicated. Can you give me 
an explanation why this has happened in the last 3 years?
    Ms. Holcombe. Senator, I think what you're saying is what 
has happened in the last 3 years is that drug prices have 
increased at a rate or to an extent that is larger than 
increases in the total healthcare system, which is----
    Senator Franken. Well, yes, and also in the historic rate 
of pharmaceuticals. In other words, they were proceeding at a 
certain pace, and then there was a--I do sound effects with my 
questions--they went up. They spiked. What has caused that?
    Ms. Holcombe. We looked recently at the CMS data which just 
came out about 3 weeks ago. Those data do not indicate that 
drug prices have spiked. In fact, they indicate that there was 
a small spike in drug prices when the cure for hepatitis was 
launched and went into the marketplace and was very quickly 
adopted. Many more people than had been using drugs before were 
using that particular drug. Since that time, the increase in 
the cost of drugs parallels the increase in the cost of other 
services in the healthcare system.
    I think you're asking a bigger question, which is just the 
general question of why do drugs cost so much, and it's not a 
question that I can answer for a whole variety of reasons, 
including that I'm not at a drug company, so I'm not sure of 
how this is calculated.
    Senator Franken. I understand. It's just--we need the 
answers. I mean, you're not an average American walking around, 
and you should probably have a better perspective on this than 
most people. That's why we need more transparency. We need more 
transparency in the drug supply chain.
    You mentioned pharmacy benefit managers. They're a part of 
this. We have to look at deductibles and co-insurance, maybe 
looking at the value of a drug, the way that drug manufacturers 
offer discounts to customers, consumers, which encourages 
product loyalty, and then they--because they get these 
coupons--it costs the whole healthcare system more. Your 
organization will be part of this dialog, right, as we go 
forward?
    Ms. Holcombe. Yes, we are happy to be part of that dialog.
    Senator Franken. Can you commit that your organization and 
the companies that you represent will commit to doing 
everything they can to have transparency, to create 
transparency, so we can do whatever is possible to lower the 
cost to patients, out-of-pocket cost, and make these great 
drugs more affordable to patients?
    Ms. Holcombe. We will definitely commit to being part of 
the discussion about what can be done to make the system more 
transparent and to make the system work better for everyone.
    Senator Franken. When I say transparent--like on the 
research for--I hear industry say that the estimates of the 
cost of developing a drug may be as high as--they estimate like 
the average drug is $2.6 billion, and I'd like to see more 
transparency in that, because very often, we don't see what the 
NIH research did in creating the scientific knowledge that led 
up to some of the development of these drugs. We need to really 
look at this.
    Mr. Chairman, I would suggest--I know that this is on the 
user fee agreements today, and I'm sorry to get off on this. 
This is something that when I go around Minnesota, it is on the 
minds--and I'm sure it's in your State. I'm sure it's all over 
the States. You go around--this is freaking people out. It 
really is. I would hope that we could do a hearing on 
pharmaceuticals--on the cost of pharmaceuticals at some point.
    Thank you. Thank you for allowing me to go over my time.
    Thank you all.
    The Chairman. Thank you, Senator Franken.
    We'll go to Senator Hatch and then Senator Warren.

                       Statement of Senator Hatch

    Senator Hatch. Well, thank you, Mr. Chairman.
    I appreciate the testimony of all of you here today, and, 
Ms. Holcombe, I appreciate the opportunity to discuss the user 
fees and the potential for a change within the FDA. After 
reviewing the user fees, I was particularly pleased by the 
thoughtful additions to the breakthrough therapies and rare 
disease programs in PDUFA.
    Ms. Holcombe, could you please expand on the ways in which 
this agreement integrates rare disease experts into the review 
teams and what skill sets they can bring to the discussion that 
will promote a more complete perspective of rare drug 
approvals?
    Ms. Holcombe. Thank you, Senator. One of the key things 
that FDA will be doing under the PDUFA VI agreement will be 
integrating the rare disease program staff into the review of 
every application for a rare disease therapy. These rare 
disease program staff are people who work at FDA full-time on 
the topic of developing drugs and developing medical devices 
that are used for people with rare diseases. They do a lot of 
outreach into the rare disease community. They understand the 
patient needs.
    They understand the diseases, and because these diseases 
are quite small, often it is the case that the medical review 
staff in a review division may not have encountered this 
disease before and may not have a lot of knowledge. Bringing 
these knowledgeable people into that review so that everyone 
can understand how this disease is affecting patients is going 
to be a crucial advantage for patients.
    Senator Hatch. Well, thank you.
    Mr. Whitaker, in this era of digital healthcare and the 
proliferation of the Internet of Things, more and more of the 
medical devices approved by the FDA are networked and, 
therefore, at risk to being compromised by bad actors. The 
Nation's hospitals have been warned that our enemies abroad 
seek to exploit them because of their cybersecurity 
infrastructure. The security of medical devices is starting to 
make headlines for the potential of jeopardized patient safety 
and privacy, and these devices could serve as an entry point to 
cause greater harm to the hospital network.
    Mr. Whitaker, can you explain what the FDA is currently 
doing as they review pre-market applications to ensure that 
medical devices are secured in the best possible way? Do you 
believe or feel that the MDUFA IV agreement will better 
position the FDA and, in turn, the Nation's healthcare 
providers to have a greater understanding of the cybersecurity 
risk associated with any given network in medical devices?
    Mr. Whitaker. You raise a really important point. We work 
very closely as an industry with the FDA on broad policy 
parameters for cybersecurity. We recently unveiled our own 
AdvaMed medical technology group cybersecurity principles for 
our companies to follow in developing those. We work with the 
FDA both on the policy side and on the approval and product 
development side.
    Individual companies work directly with the FDA on each of 
those products to make sure that they're enhanced, secure as 
much as possible, and it's a very extensive process. This MDUFA 
agreement supports increased funding for cybersecurity 
activities and increased FTEs to make sure they're doing it in 
the right way.
    Senator Hatch. Well, thank you.
    Let me just ask this of all of you. Effective communication 
is essential to efforts to expedite drug development. We know 
that more productive communication leads to more efficient 
review and faster approval in the system. In the past, levels 
of communication with the applicants were different across 
centers and within different review divisions at the FDA.
    How do these user fee agreements buildupon previous 
attempts to enhance communications, and how do they equalize 
treatment across centers for those industries whose business 
decisions are impacted by inconsistent communication? If you 
could just go across the table, I'd appreciate it.
    Ms. Holcombe. Senator, one of the things that is in the 
goals of PDUFA VI is an evaluation by an outside third party of 
the communication practices across all of the centers in CDER 
and CBER, and the idea there is to have that outside third 
party determine what are the best practices, who's doing the 
best job and how are they doing it, and can you and how do you 
translate those practices across to be sure that we are 
minimizing inconsistencies across centers. It is, as you point 
out, crucially important for the development of new products to 
have this ongoing productive communication with FDA.
    Senator Hatch. Well, thank you.
    Mr. Gaugh.
    Mr. Gaugh. As I mentioned in my testimony, we learned a lot 
from GDUFA I that we didn't have, and communications was a big 
part of that. We built into GDUFA II information requests from 
the FDA to industry, division review letters from the industry. 
We also built in the complex products where we have pre-
development meetings, pre-filing meetings, and then mid-cycle 
meetings. All those communications are enhancements in GDUFA 
II.
    Mr. Whitaker. Similar to the others, there are two 
independent assessments in the MDUFA agreement that go both at 
the operations and the goals of the letter, but also to ensure 
that there's better communications between the centers hitting 
the outcomes that we've set forth.
    Ms. Bens. I would just add from the patient perspective 
that we don't need the independent assessment to show us that 
the different divisions at FDA really are being responsive to 
patient needs, and that's really a product of the fact that 
there was so much attention placed in PDUFA V on patient-
focused drug development. All the centers are incredibly 
responsive to organizations like ours, and we engage with them.
    Senator Hatch. Well, thanks to all of you. I really 
appreciate your testimony.
    Sorry I went over, Mr. Chairman.
    The Chairman. Thank you, Senator Hatch.
    Senator Warren.

                      Statement of Senator Warren

    Senator Warren. Thank you, Mr. Chairman and Ranking Member 
Murray.
    The FDA makes sure that devices we use and the drugs we 
take are safe and effective. The FDA makes sure that our blood 
supply is secure. The FDA makes sure that our food is safe to 
eat. The FDA makes sure that nutrition labels are accurate. In 
these and many, many other areas, the FDA is the cop on the 
beat, getting innovative and important products to market and 
at the same time trying to keep Americans safe.
    I don't understand why one of the first things that 
President Trump did when he took office was to start cutting 
the number of people at the FDA. A few weeks ago, I asked FDA 
officials about the Federal hiring freeze that the President 
has imposed on the agency. Those witnesses indicated that while 
some FDA positions had been granted exemptions, others had not.
    Ms. Holcombe, am I correct that the proposed prescription 
drug user fee arrangement funds about 230 new positions at FDA?
    Ms. Holcombe. Yes, Senator, 230 new positions over the 
course of the 5 years of PDUFA VI.
    Senator Warren. Right. Why does the FDA need those new 
positions?
    Ms. Holcombe. To carry out the goals of PDUFA VI and to 
continue to meet all of these goals that have been in place for 
almost 25 years to enhance drug development and to be sure that 
the review is efficient and----
    Senator Warren. So this is about expediting the review of 
drugs, basically.
    Ms. Holcombe. Yes.
    Senator Warren. Does it worry you that at the same time 
that we're trying to boost the number of staff implementing the 
FDA's mission that the President is trying to cut the number of 
FDA staff by preventing the agency from filling vacant 
positions and by enacting mid-year cuts?
    Ms. Holcombe. It worries me that a hiring freeze would 
prevent FDA from filling vacancies and hiring new positions 
that we believe, through our negotiations and our understanding 
of how many people it takes to change a light bulb, are needed 
to achieve the goals of PDUFA VI. It may be not 100 percent 
recognized that PDUFA fees pay for the staff who work on PDUFA 
activities.
    Senator Warren. Right.
    Ms. Holcombe. This is money that fee payers are paying into 
the agency. That money is paid in those fees by statute, so 
it's not like, well, we're not going to collect them anymore. 
We have to pay the fees. The fees are for hiring people. If 
people can't be hired, the fees can't be spent. That's not a 
good thing for anyone.
    Senator Warren. All right. But for very specific purposes, 
and that's why it is that I'm concerned about this. In addition 
to the hiring freeze, President Trump's budget blueprint calls 
for cutting congressional support by as much as a billion 
dollars for the FDA next year, and now President Trump says he 
wants to cut $40 million from the FDA's budget in the current 
year, which has only 5 months left in it.
    Ms. Bens, when drug and device companies negotiate user fee 
agreements with the FDA, they get to pick and choose what gets 
funded. Is that right?
    Ms. Bens. That's correct.
    Senator Warren. For instance, if they don't want to fund 
post-market surveillance programs to track how devices are 
performing once they've been implanted in patients, they can 
just refuse to let their fees go toward those activities. Is 
that right?
    Ms. Bens. For the purposes of the establishment of the NEST 
for post-market activities, that would be funded out of 
appropriations.
    Senator Warren. If appropriations is cut, then there's less 
money for that.
    Ms. Bens. Correct.
    Senator Warren. What about the FDA's public health work on 
issues like tobacco use or food safety or keeping the blood 
supply safe? Do the medical product user fee agreements fund 
that?
    Ms. Bens. Largely, they don't. Actually, budget authority 
appropriations still fund about 30 percent of the medical 
device review activities at the FDA and almost 50 percent of 
what's done for devices. A lot of activities that fall outside 
of the agreements would have to be sacrificed.
    Senator Warren. OK. President Trump seems to think that 
user fees are a substitute for Congress doing its job. He's 
wrong on this. They are a supplement, not a replacement, and if 
we take away FDA funding, the result will be a crippled agency, 
a cop that is severely underfunded and whose ability to enforce 
the law will be at the mercy of whatever the regulated 
companies do or don't want to see enforced. That's a recipe for 
disaster.
    The FDA needs the employees, and it needs the resources to 
be able to do its job.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Warren.
    Senator Young.

                       Statement of Senator Young

    Senator Young. Thank you, Mr. Chairman.
    The FDA's Sentinel initiative was expected to transform 
patient safety by using claims data and other real-world health 
information to find drug safety issues. However, as the Journal 
of the American Medical Association points out, only a handful 
of FDA safety actions have resulted from Sentinel, and use and 
awareness of the system within the FDA is generally low. 
Despite years of investment, Sentinel has not yet become the 
active drug safety surveillance system that we envisioned.
    Ms. Holcombe, how can PDUFA VI, that agreement, improve 
upon Sentinel, given the issues raised?
    Ms. Holcombe. Thank you, Senator. Under PDUFA VI, Sentinel 
will be expanded, and it will be integrated with the entire set 
of drug safety system initiatives at FDA. There will be 
additional training; there will be additional staff brought on 
board at FDA; and FDA will be interacting more proactively with 
the outside community, including drug developers, patient 
groups, and others, about its use of Sentinel and how it's 
using it.
    In the beginning, Sentinel was a pilot program. It has now 
expanded to its full capacity and will continue to expand 
during PDUFA VI. Under PDUFA VI, additional user fees are being 
paid by our industry to the tune of $50 million for this 
expansion of Sentinel, because, as you suggest, it is a 
significant, huge source of drug safety information and needs 
to be expanded and used effectively.
    Senator Young. Thank you.
    Mr. Whitaker, Ms. Bens, Indiana is not only a major 
pharmaceutical producer, but also a major producer of medical 
devices. Building on that last question, did you insist that 
the FDA use lessons learned from Sentinel before funding the 
NEST program?
    Mr. Whitaker. It was part of our conversations as well, 
connecting those. We feel like--we support the NEST program and 
the activities around real-world evidence, particularly to help 
in the pre-market activities, but, eventually, more 
information. We believe there are lessons from Sentinel that 
can be carried over, and we did encourage them to reflect back 
on that.
    Senator Young. Any particular lessons you want to hit on?
    Ms. Bens. I'd say one of the most important things--in the 
early days of the Sentinel initiative, you had to send queries 
into the system to get information back about different safety 
signals, so you had to know what question you wanted an answer 
to. With NEST, because it's going to be incorporated into the 
whole healthcare delivery system, it's going to provide in the 
end more real-time information. It's a more active system, and 
I think that that's one of the major benefits of moving in that 
direction.
    Senator Young. Thank you.
    Ms. Holcombe, Ms. Bens, Mr. Whitaker, are there particular 
metrics that should be put in place that perhaps you already 
have in mind to implement so that we will know whether or not 
the resources dedicated are actually successful in improving 
NEST and improving the Sentinel initiative and so forth? How do 
we measure success moving forward?
    Mr. Whitaker. Broadly, in the entire agreement, there are a 
whole series of reporting requirements from the FDA to Congress 
and to us as well that go to whether or not they're meeting the 
intended purpose of each of the provisions that are included, 
and I assume that applies to NEST as well. Whether it's time 
for decision or approval times or process improvements, all 
that should be reported back, I believe, on a quarterly basis 
to Congress and the industry so we can assess whether or not 
it's effective and working.
    Ms. Holcombe. One of the key things about Sentinel is that 
because of the size of the database, it is, as Ms. Bens 
suggested, extremely difficult to use. It's complicated. You 
have to develop a question. You have to know how to ask the 
question. It was always envisioned--from the very beginning of 
Sentinel, Congress envisioned that this would be a national 
resource.
    One of the important components of PDUFA VI is for FDA to 
encourage the data partners of Sentinel to work with outside 
people so that other people can query this massive database. 
Those processes to allow other people to query this database 
are being developed now, and FDA is very supportive of them. At 
the end of this 5 years, it will be really great to look back 
and see how that has progressed.
    Senator Young. Very good. One final question, Ms. Holcombe. 
In a previous user fee hearing, we heard from FDA about its 
plans to incorporate more real-world evidence in regulatory 
decisionmaking related to safety and efficacy. What additional 
clarity needs to be provided to sponsors or challenges need to 
be addressed in order for real-world evidence to be effectively 
incorporated into the regulatory decisionmaking process?
    Ms. Holcombe. Sponsors need to understand the extent to 
which this real-world evidence can be converted into the kind 
of substantial evidence of safety and effectiveness that FDA 
requires. For example, we do know that real-world evidence 
often is the source of safety information. We need to do it the 
right way and so forth. The question is can we use--can we tap 
these massive data resources? Can we tap people's Apple watch? 
There's a lot of information out there. Can we tap that to 
learn about how drugs are working, in other words, about their 
effectiveness, so that those data could add to clinical 
evidence for, say, a new indication for a drug?
    One of the things that is going to happen under PDUFA VI is 
there is going to be a workshop, a series of public meetings, 
and then a pilot program at FDA where outside experts are going 
to help see whether we can use these data in these different 
ways.
    Senator Young. Fascinating times. Population health data to 
inform some of the work you do. Thank you.
    The Chairman. Thank you, Senator Young.
    Senator Hassan.

                      Statement of Senator Hassan

    Senator Hassan. Thank you, Mr. Chair and Ranking Member 
Murray.
    Good morning to the panel. Thank you all very much for 
being here.
    Because there's been some discussion of it already, I don't 
want to belabor the issue of drug pricing transparency, but I 
will add my voice here. I just got back from my home State, 
where I heard from a constituent whose cancer treatment, if he 
chose the most up-to-date treatment recommended by his doctor, 
would cost him $34,000 out-of-pocket after his Medicare cost 
for the year. It's just something he can't afford.
    As a former Governor, I can tell you what pharmaceutical 
prices did to my State budget. To the people I hear from, whose 
young children are having sudden new allergic reactions and 
have to pay $600 for an Epipen, the average cost increase 
doesn't matter to them when you're not part of the average, 
right?
    I am concerned that--Ms. Holcombe, in your testimony, you 
talk about the importance of transparency in the FDA 
expenditures with the user fees. I agree that that's very 
important. I also think Americans need to understand, and the 
industry needs to disclose, research and development cost, 
marketing cost, manufacturing cost so that we can have a common 
understanding of what really is driving the pharmaceuticals and 
address it.
    I know you all want to work on that, but I just wanted to 
let you know that I'm with a lot of these folks. I'm hearing 
about this every day from constituents, and it really is 
impacting their livelihoods, their lives, their futures in 
really impactful ways.
    Having said that, I want to move on to a question for Mr. 
Gaugh about something else I hear a great deal about. In New 
Hampshire, the opioid epidemic continues to devastate our 
State. One of the important tools used to help address the 
epidemic is the risk evaluation mitigation strategy, or REMS, 
for opioids. REMS helps to try to minimize the risk associated 
with these medications. I would argue that we need stronger 
REMS for opioids, and I'm hopeful that the FDA will strengthen 
the REMS for extended release and long-acting opioids when they 
update it.
    Currently, for extended release and long-acting opioids, 
the REMS requires opioid manufacturers to make training on 
proper prescribing practices available to healthcare providers 
who prescribe these products. The FDA reports that around 
66,880 providers had completed the training as of February 
2016. The goal for 2017 is to have 192,000 providers trained. 
It looks like the FDA is on track to fall well short of that 
target.
    There are about 320,000 active prescribers of extended 
release and long-acting opioids. That means only about 21 
percent of active prescribers have gotten training. We have, 
clearly, a long way to go.
    Dr. Gaugh, drug makers in your industry who manufacture 
extended release and long-acting opioids are required to make 
this training available to prescribers. Aside from meeting the 
minimum in actually making it available, I'd like to understand 
if your industry is taking proactive steps to increase the 
number of providers who are trained on proper prescribing of 
these products.
    Mr. Gaugh. Thank you, Senator. Yes, besides the companies 
themselves doing this, we have just recently at AAM launched a 
program that will reach out to all schools, so 0 to 12, and 
then universities as well, to educate the American public and 
the patients who are also using these medications, but, in 
addition to that, to educate the prescribers as well. We've 
just launched that about 3 months ago.
    Senator Hassan. Thank you. In addition to wanting to make 
sure that we are addressing the high price of pharmaceuticals 
and devices as well, I also understand how important the 
products are to people's health. My son has about 10 
medications and a medical device, and they have increased his 
quality of life enormously. So I am very grateful.
    Because I know what a difference your products make, I 
recognize that a sustained, robust investment in biomedical 
research at the NIH is critical to developing new treatments 
and improving the lives of patients. Research funded by the NIH 
saves lives. It also generates economic activity. For example, 
last fiscal year, projects in my State of New Hampshire 
received $99 million in awards from the NIH, generating close 
to $239 million in new economic activity.
    Ms. Holcombe, perhaps you could start by just commenting a 
little bit, because I know BIO represents biotech companies, 
academic institutions, and State biotech centers, and Federal 
investments in research at NIH are important to your industry 
and help drive innovation. The President's budget has proposed 
a 20 percent cut to the NIH budget. How would a 20 percent cut 
to NIH impact the patients served by your members?
    Ms. Holcombe. The impact would be disastrous. We agree with 
you completely about the importance of NIH research. It forms 
the basic building block on which we do our work. We develop 
the products, but we have to have this basic understanding of 
the disease first. NIH is the flagship of American science, and 
we think cutting its budget by that significant amount is not a 
good idea.
    Senator Hassan. Thank you very much.
    Thank you, Mr. Chair, for letting me go over.
    The Chairman. Thank you, Senator Hassan.
    I'm going to go ahead with my questions. On a more hopeful 
note, the Appropriations Committee, thanks to the work of 
Senator Murray and Senator Blunt last year, recommended a $2 
billion increase in National Institutes of Health funding, 
which was approved. They've recommended a second one, which, if 
we do our jobs properly, we might be able to approve by the end 
of this month, April. The 21st Century Cures legislation added 
another $5 billion. That's the path that many of us hope that 
we will be able to follow for the National Institutes of 
Health.
    Let me get down to some brass tacks here. Senator Murray 
and I observed and you've observed that, typically, this is a 
bipartisan proceeding. There's been an enormous amount of work 
gone into this, many briefings, going back to 2015, a lot of 
good faith negotiation and discussion. You've done your job on 
time. Now it's up to us to do our job on time.
    On time means, for example--and this isn't set yet--but if 
we were to finish our work in committee in April, which is this 
month, and take it to the floor of the Senate next month, which 
is May, that would leave time for the House to act and for 
there to be a conference, if necessary, by the end of July. We 
have to finish by the end of July in order to avoid expiration 
of the agreements on October 1. In other words, we have to 
finish before our home work period begins in August.
    What would be the consequences, from your point of view--we 
heard last week from FDA, but what would be the consequences 
from your point of view if Congress fails to act by the end of 
July to reauthorize these agreements?
    Let's start with you, Ms. Holcombe.
    Ms. Holcombe. It would be awful, and the reason----
    The Chairman. In what way?
    Ms. Holcombe [continuing]. The reason is that there is a 
kind of moment in time, according to government personnel 
rules, where if FDA does not see that this reauthorization is 
moving forward and predictably will be achieved by the end of 
September, they will have to notify their staff that their jobs 
may be in jeopardy.
    The Chairman. Would you assume that moment would be reached 
if Congress hasn't acted by August the 1st?
    Ms. Holcombe. Yes. I am assuming that it is sometime in 
that timeframe, yes.
    The Chairman. Mr. Gaugh.
    Mr. Gaugh. It would be devastating to the generic industry 
if this was not to pass.
    The Chairman. In what way?
    Mr. Gaugh. If you go back to appropriations--and Senator 
Warren made that comment--in the generic industry, 
appropriations pay for about 320 FTEs at the agency to work on 
generic drugs. The user fees that we put in place will increase 
that by about 1,500 FTEs, taking the total up to about 1,830 
FTEs. That's what we believe is needed to get the approvals at 
the level that we need them and to get the backlog reduced, No. 
1, and to start hitting that 10- and 8-month metric.
    The Chairman. Would you agree the end of July sounds like 
the point before which we have to finish our work?
    Mr. Gaugh. Yes. Dr. Woodcock has already stated that at the 
end of July, first of August, if it's not passed, she'll have 
to start working on that furloughing process, whatever that 
might be.
    The Chairman. Mr. Whitaker.
    Mr. Whitaker. We have the same concerns, and I think the 
timeline you outlined is right. I would associate myself with 
the remarks of Dr. Shuren. If he suggests that a third of the 
workforce would be lost, that's a huge hit to our industry. 
Broadly, it creates tremendous uncertainty for our industry, 
and, in many ways, uncertainty is really the enemy of 
innovation. When you get hit with that uncertainty, it freezes 
companies. We would want to move this as quickly as we can. I 
think the timeline you've outlined is right.
    The Chairman. Ms. Bens, from a patient's point of view?
    Ms. Bens. I would say that the impact is probably going to 
happen sooner than the summer, because we tend to focus on the 
morale of employees at the agency, which is something that is 
not always talked about. These are really dedicated Federal 
employees, and when we interact with them, they just want to do 
their job to keep people safe and to get drugs to market that 
are going to benefit them. When they hear that their jobs are 
in jeopardy and potentially at risk, it makes anyone's position 
feel almost inadequate. I would just continue the momentum as 
quickly as you can, because it's going to be beneficial to not 
just the direct impact that user fees are going to have, but 
also to keep morale high.
    The Chairman. Thank you, Ms. Bens.
    Senator Kaine.

                       Statement of Senator Kaine

    Senator Kaine. Thank you, Mr. Chair.
    I want to echo--first, thanks for being here today--the 
comments of my colleagues on both pricing issues and Senator 
Warren's comments on the possible consequences of a hiring 
freeze, and I want to return to Senator Hassan's questions 
about the budget.
    I appreciate the chair's comments about what the 
appropriators are likely to do or hope to do, and I hope that 
that's the case. I would like to ask the other witnesses--Ms. 
Haycombe was asked about the potential effects of a $6 billion 
cut in NIH to medical innovation. Many of the products that the 
FDA approves begin with or are connected to some NIH funding. 
Do you share her view that a budget cut of that magnitude to 
the NIH would be devastating to medical innovation?
    Mr. Whitaker. Yes, I share that view. It's a really hard 
hit to us. It would be a negative impact across the board on 
the entire industry, and at the end of the day, patients will 
be hit by that, and that's the concerning part. I will go back 
to what the Chairman said. It's encouraging, however, that the 
direction the Chairman is taking, that Congress is taking not 
to support that level of cuts makes us feel much better about 
the prospects of the next year or two.
    Senator Kaine. I'm sorry, Ms. Holcombe. I said Ms. 
Haycombe. It's Ms. Holcombe. Excuse me.
    Mr. Gaugh or Ms. Bens.
    Mr. Gaugh. Very important, because the innovative drugs of 
today are the generic drugs of tomorrow. If those are 
devastated in any way, that would also devastate the generic 
side of the business as well.
    Senator Kaine. Ms. Bens.
    Ms. Bens. I'll just highlight an example. One of the areas 
that we work with the FDA on is trying to accelerate the 
clinical trial process for Alzheimer's disease. About 2 years 
ago, FDA released a report talking specifically about 
challenges with Alzheimer's disease development, and all of the 
areas that they identified were related to a lack of 
understanding about the disease process and other areas where 
basic science and NIH research can really help fill the gap. 
This is now the time that we really should be investing and 
filling those research gaps to get at better treatments.
    Senator Kaine. Ms. Bens, let me stay with you. You 
discussed the importance of patient interaction with the 
agency. How do the user fees that have been negotiated in the 
agreements that are on the table now--how do they improve the 
process of patient interaction with the agency?
    Ms. Bens. Absolutely. One of the major things that came out 
of the last user fee reauthorization was a series of meetings 
where you could incorporate patient perspectives into the drug 
development process to get FDA to really understand about a 
disease. What the next user fee agreement is going to do is 
allow groups like ours to really learn how you can take that 
information about what patients are experiencing and develop 
endpoints for clinical trials.
    This is something that's new for organizations, but we're 
actually working in this area for one particular disease. We're 
working directly with the FDA to take patient information to 
develop an endpoint that can be used by companies or anyone 
looking to develop a drug for a specific treatment. We're 
really excited about it, and PDUFA VI will help with that.
    Senator Kaine. That's great. I was on the Aging Committee 
in the last Congress and was lucky to get drafted to be on HELP 
in this Congress. In the Aging Committee, we spent a lot of 
time shining a spotlight on the particular problem of spiked 
pharmaceutical prices in rare diseases--orphaned diseases and 
orphaned drugs--and there was sort of a business model that was 
not reflective of the industry, generally, but a business model 
of kind of patients as hostages.
    If there's a disease that's relatively rare, and there may 
only be one drug that could treat the disease, companies that 
weren't really health companies at all--they tend to be more 
hedge funds--would buy this particular drug and then 
dramatically jack the prices up. It just points out the 
challenge of rare diseases, diseases where the number of people 
who have the condition are so small that they can be an 
obstacle to the development of multiple treatments and 
development of competition.
    Could you elaborate on the provisions of PDUFA VI and how 
they might impact the rare disease community and the 
development of orphan and breakthrough drugs? Because that is 
of significance, even if a particular rare disease may only 
affect tens of thousands. I think 25 million to 30 million 
Americans, in total, are affected by rare diseases. Talk about 
PDUFA VI and how it would help us deal with this problem.
    Ms. Holcombe. One of the things that will be done under 
PDUFA VI, Senator, is that experts at the FDA who are currently 
in the rare disease program--and these are people who are 
medical professionals as well as other kinds of staff at FDA 
who understand rare diseases--interact frequently with the 
community and are up to speed on the nature of the disease. 
Those people will be integrated into the review of every rare 
disease product application.
    That will help enormously, because, quite often, what slows 
down this review is a lack of understanding of what this 
disease is, because if it only affects a few--tens of thousands 
of people--the chances are that the vast majority of doctors 
have never seen a person with this disease. They don't have 
this deep understanding of what the needs are. How does this 
disease affect the patient, and what kind of product attributes 
are going to serve best that population of patients?
    The Chairman. Thank you, Senator Kaine.
    Senator Cassidy.
    Senator Cassidy. Do we have another Democrat to go and I 
can collect myself?
    The Chairman. Senator Casey.

                       Statement of Senator Casey

    Senator Casey. Thank you, Mr. Chairman.
    I want to incorporate by reference much of what's been said 
already with regard to the hiring freeze and NIH investment. I 
couldn't agree more with the sentiments that I think are 
bipartisan. I won't ask a hiring freeze question because that's 
been covered. I may ask one for the record to amplify some of 
these concerns we have.
    I wanted to focus on biosecurity. We've seen just in the 
last couple of years, whether it's Ebola or Zika or any other 
threat, how important this area of the law is. We know that the 
Pandemic and All Hazards Preparedness Reauthorization Act of a 
couple of years ago, 2013, contains important provisions to 
both modernize diagnostic and treatment capabilities. And just 
for the purposes of this question, putting aside the FDA's 
emergency use authorization, I want to explore how the proposed 
user fee agreements will accelerate innovations in drugs and 
devices that can be used to address these public health 
emergencies.
    Mr. Whitaker, I'll start with you. Can you comment on how 
these user fee agreements, the proposals, advance the 
development and approval of diagnostic devices and novel 
treatments?
    Mr. Whitaker. I mentioned this earlier, and let me just 
step back and say from our perspective, a user fee agreement 
and a well functioning FDA hits right at that point. If you 
have a clear, a transparent, and a predictable process to get--
whether it's medical devices or diagnostics--to the market, it 
makes the whole system function better. The premise of this 
entire agreement is around making it more clear and more 
transparent.
    Part of what we focused on was driving down the time to 
decision goal so that those products would get to patients 
sooner, and our focus will continue to be on that with the FDA, 
and also helping small companies who have new and emerging 
technologies, many of which may be in this space, get through 
the process sooner as well at a lower cost. Much of that is 
captured in this agreement, and it hits directly and somewhat 
indirectly at your question.
    Senator Casey. Thank you.
    Ms. Holcombe, the same question.
    Ms. Holcombe. There are some key initiatives under PDUFA VI 
that will have a direct impact on those kinds of products, 
Senator. One of them is the increase in the number of staff 
that will be devoted to the review of what are called 
breakthrough therapies, and breakthrough therapies are defined 
as drugs that have a high unmet medical need or, in this case, 
a high unmet public health need, and the breakthrough therapy 
program will definitely benefit these kinds of products.
    In addition, FDA is maintaining its goals of a 6-month 
review after an application is accepted for a priority drug. 
This is separate and apart from the emergency procedures, but 
this is in sort of the normal course of events, that FDA 
identifies a drug as being a high-priority to get this drug out 
onto the market as quickly as possible, and these drugs will 
fall into that category as well.
    Senator Casey. Thank you.
    Mr. Gaugh or Ms. Bens, anything on this you want to add?
    [No verbal response.]
    Senator Casey. I wanted to move as well--I know I have a 
little more than a minute, and I might defer most of this for a 
written question. With regard to medical device safety, the 
National Cardiovascular Data Registry detected a potential 
safety problem that was highlighted in a New England Journal of 
Medicine report. They highlighted a safety problem in the 
device used in cardiac procedures. The registry was able to 
identify the safety alerts within 12 months, yet some 
healthcare sectors are less accustomed to using data systems to 
monitor device safety after approval.
    Mr. Whitaker, I'll start with you again. How does the 
medical device industry plan to support efforts to collect 
meaningful data from patients to inform the safety profile of 
medical devices?
    Mr. Whitaker. This agreement--we fund two specific things. 
One is the patient engagement component of that, which is a 
direct component of our user fees to support patient 
engagement, and second is the NEST program, where you'll get 
that evaluation system set up. This agreement has $30 million 
dedicated specifically for that, which includes funding for the 
coordinating center and also additional FTEs at FDA to help 
support those efforts.
    Senator Casey. Thanks very much, Mr. Chairman.
    The Chairman. Thank you, Senator Casey.
    Senator Cassidy.

                      Statement of Senator Cassidy

    Senator Cassidy. Mr. Whitaker--I feel like Saint Paul 
seeing through a glass darkly, so what I'm about to speak of, 
I'm not sure I entirely understand, but I'm kind of groping 
toward my understanding. I get a sense that in these complex 
drugs in which a device is needed to deliver a drug that 
sometimes even after the drug is off patent--think Epipen--that 
minor modifications of the delivery device serve to evergreen 
the product, that the minor modification of the device then 
becomes a reference at which point the generic has to catch up 
with the delivery device. Even though epinephrine has been 
around for decades, nonetheless, there's an evergreening of the 
product. Are we in agreement so far?
    Mr. Whitaker. I think so.
    Senator Cassidy. I guess my question is--that seems 
inherently biased against the consumer. If you were corrected 
by your assistant, I'll accept the correction.
    Mr. Whitaker. No, I was asking--this is, in many ways, not 
necessarily a medical device issue, but more of a drug product 
issue.
    Senator Cassidy. If we're speaking of epinephrine, 
epinephrine is truly a--it's been around forever. I guess my 
question is how do we, as policymakers, encourage FDA through 
this process to not reward incumbent industry when, again, 
something which is not paradigm shifting but rather minor 
modifications serves to evergreen a product. That's a question.
    Mr. Whitaker. I don't know that I can answer that today.
    Senator Cassidy. That's a bad sign.
    Mr. Whitaker. In the case of Epipen, right, that's not a 
product that comes from one of the companies that we represent, 
and----
    Senator Cassidy. But speaking conceptually.
    Mr. Whitaker. Conceptually, I guess I would defer to the 
pharmaceutical or the biotech and the generics industry to talk 
about it more specifically as a combination product, which is 
essentially, I believe, what it is.
    Senator Cassidy. OK. Anybody have a comment?
    Ms. Holcombe. One of the things that is included in PDUFA 
VI, Senator, are some commitments by FDA to improve their 
processes for the review and approval of combination products, 
and if it is the case that the drug part of a combination 
product cannot be approved because it is being--the approval is 
being held up by the device part of the combination product, 
this is a process issue. It may be a design issue in the 
medical device as well, but I think one of the things that----
    Senator Cassidy. Can I ask you on that--because, again, my 
understanding is that if there's a modification of the device, 
the modified device now becomes a reference product, which 
means it becomes a moving target for the generic manufacturer 
to reproduce. Is that a fair statement?
    Ms. Holcombe. That definitely can be the case, yes.
    Senator Cassidy. In which case is it wise policy, then, for 
us to make the--not the new and improved, but rather the 
original device as the reference point, and that the new and 
improved has to work, but that the generic manufacturer could 
make the original--if you will, whatever is the standard by 
which a generic is judged always lags by one, the new and 
improved. Do you follow that?
    Ms. Holcombe. I think I follow your question, and the 
answer is I don't exactly know the answer because we have to 
understand the reason for the change in the delivery device.
    Senator Cassidy. We know that there are devices which are 
paradigm shifting, and we know there's devices which are merely 
minor modifications. I'm not sure I'm going to accept what you 
just said, because sometimes we do know it's a minor 
modification and, demonstrably, it evergreens.
    Ms. Holcombe. It's possible that that could happen. I 
believe that is the case in this particular situation. I don't 
know the answer to the question of whether FDA should allow the 
generic to cite the original--quote, unquote, ``original'' 
reference, which is the drug in the original delivery device, 
whether that is even possible under the statute.
    Senator Cassidy. The question is we have to investigate 
that to see if that's possible.
    Ms. Holcombe. Yes. The second thing is if it is legally 
possible, then the process changes that are going to take place 
with looking at how combination products are evaluated across 
the board are going to be helpful, because this conversation is 
going to happen at FDA. Why don't we just let them put the 
epinephrine in this other pen? That conversation can happen, 
and there might be a completely 100 percent good reason that 
that can't happen.
    Senator Cassidy. We should force the conversation because 
we can imagine----
    Ms. Holcombe. Yes.
    Senator Cassidy [continuing]. Sometimes it would.
    Ms. Holcombe. Yes.
    Senator Cassidy. I am over. I yield back. Thank you.
    The Chairman. Thank you, Senator Cassidy.
    Senator Whitehouse.

                    Statement of Senator Whitehouse

    Senator Whitehouse. Thank you, Chairman.
    One of the things about being the final Senator is that 
many of my questions have already been asked and answered. Let 
me just make clear to all of you that the value of U.S. 
taxpayer expenditures at the National Institutes of Health for 
medical research is very great and should not be cut. Is that a 
unanimous view?
    [A chorus of yeses.]
    Senator Whitehouse. Yes, it is. OK. By the way, I 
appreciate very much the Chairman's comments in that regard. 
Particularly, with all the turbulence in Washington right now, 
for the Senate to act in a responsible way based on the 
appropriations that were passed last year and move through 
April without the drama of a government shutdown would be an 
important thing for us to achieve, and I think the people of 
the country would be grateful to not have that particular drama 
play itself out.
    On a smaller scale, the witnesses have said that a failure 
to reauthorize would be awful and devastating.
    Ms. Holcombe, the number that you gave of 230 FTEs lost--
that's related to the President's proposed hiring freeze, 
correct?
    Ms. Holcombe. It would be.
    Senator Whitehouse. So there would be a different number 
related to a failure to reauthorize?
    Ms. Holcombe. No, that's--it would be the same number.
    Senator Whitehouse. It would be the same number.
    Ms. Holcombe. Right.
    Senator Whitehouse. Do you have an across-the-agency 
estimate for how many RIF notices would go out if we fail to 
reauthorize timely?
    Ms. Holcombe. A RIF notice or an announcement that there 
would be a RIF notice would go out to every employee who is 
funded by user fees.
    Senator Whitehouse. That is roughly how many?
    Ms. Holcombe. It's over 1,000 people in new drugs and more 
people in generic drugs and more people in devices.
    Senator Whitehouse. Do you know the number, Mr. Gaugh?
    Mr. Gaugh. Over 1,500 in the generic space.
    Senator Whitehouse. We're up to 2,500.
    Mr. Whitaker, roughly?
    Mr. Whitaker. Two hundred and seventy employees under MDUFA 
III, adding another 217 on top of that.
    Senator Whitehouse. So another 500, roughly?
    Mr. Whitaker. Yes, 500-plus.
    Senator Whitehouse. You get a pretty big number, a pretty 
big hit to the agency. I have two concerns about the degree to 
which this agency relies on funding by the industry that it 
regulates. One is fairly technical, and that is that the PDUFA 
fees support the prescription drug program, the medical device 
user fee agreements, MDUFA, support the medical devices, and 
we're seeing great growth in the combined drug device product 
area.
    We've had trouble, although we've been told by both the 
drug and the medical device leads at FDA that there should be a 
third lane. We've had trouble getting anybody to try to design 
one that we could pass, and so the 21st Century Cures Act 
basically said to FDA, ``Please try harder.'' It's not where we 
should best be, but it's where we are.
    I worry that having the prescription drug industry fund 
through PDUFA and the medical device industry fund through 
MDUFA and nobody having a vested interest in the combined 
products could lead to a loss of interest in moving the 
combined product effort forward. What are your thoughts about 
that?
    Ms. Holcombe. I wanted to point out how generous the PDUFA 
agreement is to the medical device center for that very reason, 
because there are these difficulties in getting everything to 
happen at the same time, the device approved, the drug 
approved, and the product going out there for personalized 
medicine uses. Under PDUFA VI, there will be staff at the 
medical device center who are funded by prescription drug user 
fees so that the medical device center will have enough 
resources to be able to deal with these combination products.
    Senator Whitehouse. The other concern is that there are 
drugs--and opioids are an obvious example of this--where the 
issue of them being taken--safe when taken as directed doesn't 
really address the public health problem related to them 
because of the danger of unauthorized use. We tried for a long 
time to try to put more pressure on the medical side to be more 
diligent about how opioids are prescribed. I can remember my 
daughter bringing home 40 Vicodin after her wisdom teeth were 
out. I think she got through three of them, and then that was 
it. We worked on that a lot in the CARA bill.
    My concern is--and I guess this will be to the generic and 
pharmaceutical representatives here. Are you comfortable that 
FDA should look, where that is a concern, to those areas of 
unauthorized use, and do you see the PDUFA funding as a way to 
steer FDA away from considering those concerns?
    Ms. Holcombe. I'm not sure I understand your question 
completely. I don't think that the PDUFA funds would steer FDA 
away from those concerns, no. I think FDA, under PDUFA, is 
getting resources to allow them to review drugs and approve 
drugs that are safe and effective, and part of the safety of a 
drug is that, as you point out, it can be used safely so long 
as its used within its label. FDA also looks at whether it can 
be used safely if it's used outside the label. I don't think 
we're trying in any way, and I don't think we do with PDUFA 
funds, steer them away from that for opioids.
    Senator Whitehouse. Thank you.
    Mr. Gaugh. I would echo the same thing for the GDUFA funds. 
They're not steered away. One more thing--and you might have 
stepped out of the room--AAM has launched a campaign for 
education of both the users and the prescribers about 2 to 3 
months ago, and so that will go forward, and it's a multiyear 
campaign.
    Senator Whitehouse. I appreciate that. Thank you.
    Thank you, Chairman.
    The Chairman. Thank you, Senator Whitehouse.
    Senator Murray, do you have additional comments?
    Senator Murray. I do have one question. I've made it a 
priority to make sure women and minorities and older Americans 
are included in clinical trials so that we really understand 
how diseases impact those specific populations and make sure 
that any new treatments are actually working for them. I was 
very proud to work with a number of Senators here on provisions 
in the 21st Century Cures Act to require greater efforts by 
federally funded researchers to address the challenge.
    Recently released data from FDA regarding industry trials 
shows that many drugs are still being tested predominantly in 
white men, even those intended to treat conditions that can 
have a disproportionate impact on women or minorities. In this 
era of precision medicine, it's really unacceptable not to know 
how these products actually work on the patients who need them.
    Ms. Holcombe, I just wanted to ask you how are your member 
companies working to address those disparities, and how could 
using real-world evidence like that from registries and 
electronic health records help further that work?
    Ms. Holcombe. In addition to using real-world evidence and 
electronic health records, there's an important component of 
PDUFA VI that potentially will have a positive impact on this. 
It is extremely difficult to enroll clinical trials and we 
don't know all the reasons for that. Companies tend to enroll 
what they can and how they can.
    One of the things that PDUFA VI is going to look at is 
innovative, new ways of designing clinical trials. One of the 
reasons that that could be helpful is that--for example, let's 
take the innovative design called the adaptive clinical trial.
    This is a design where instead of just setting the 
endpoints at the very beginning and the people and who's going 
to be in what group and everything stays the same until the 
end, unveil the data, yes, it worked, no, it didn't--instead of 
doing it that way, what you do is you take a look part of the 
way through, and you can see, possibly, that there are some 
people who are responding to the drug and some people who are 
not responding to the drug, and then you can re-tailor the rest 
of the study according to those findings.
    In the case of a drug that is working effectively in women, 
for example, but you have an insufficient number of women 
enrolled in a trial, if you design the trial so that you could 
find this out earlier on instead of going for 3 years until the 
end, then would that help you, and could you--and we have to 
use different kinds of statistics and all this, all of which 
you know--to analyze those data. That's something that seems to 
me might potentially be helpful.
    I also agree with you that looking at real-world 
information, whether it's claims data or whether it's 
electronic health records, to determine how drugs are working 
in the real world setting, where doctors are giving care to 
real people, is a huge source of information that is largely 
untapped.
    Senator Murray. Thank you very much, Mr. Chairman, for this 
hearing. We've heard a lot, but I think it's really important 
that we all remember in this process that we've got to put 
patients and families first, and the gold standard of FDA is a 
high standard, but it's one that we need to maintain.
    I'm going to keep talking to you about post-market 
surveillance on medical devices--that's so critical to me--and, 
as you heard from my side, prescription drug prices. We 
understand FDA user fees is an issue, but that's one that our 
side continues to be extremely worried about.
    The Chairman. Thank you, Senator Murray, and thank you for 
joining with me in calling the hearing and inviting the 
witnesses.
    You did a terrific job today. It's very helpful to us. I 
thank you for the enormous amount of time you spent over the 
last several months getting the user fees ready for us. Now 
it's up to us to do our job and to do it in a timely way.
    I'll make these observations. Tomorrow, we'll meet again, 
this committee, at 10 a.m. to hear from Dr. Scott Gottlieb, the 
nominee for the Commissioner of the Food and Drug 
Administration. It'll be an opportunity for me to ask him--I 
guess others may, too--about the hiring freeze at FDA.
    I asked Dr. Califf what his top priority was from FDA's 
point of view for the 21st Century Cures Act. He said the 
ability to hire and pay personnel so that they could properly 
review the applications that come to the FDA, and we approved 
that by a wide margin.
    Should Dr. Gottlieb be confirmed, which I hope he is, one 
of his first orders of business should be to review with the 
new administration the importance of allowing the FDA to take 
advantage of the new authority it has to hire the people it 
needs and pay them what it needs so that we can get these 
lifesaving drugs and devices through the system and into 
medicine cabinets and into doctors' offices all over the 
country.
    Second, as far as the President's National Institutes of 
Health number, it is reassuring to remember that Presidents' 
budgets don't normally end up being in law. I remember last 
year, President Obama recommended cutting the National 
Institutes of Health discretionary funding by $1.1 billion. 
Congress increased it by $2 billion and even added one-time 
funding in the Cures bill, which we hope we can approve this 
month.
    Congress has a pretty firm attitude on the National 
Institutes of Health funding. It's a top priority for us this 
year, and I believe it will be next year, and Senator Murray 
working with Senator Blunt deserves much of the credit for 
what's happened in the last couple of years on that.
    The hearing record will remain open for 10 days. Members 
may submit additional information for the record within that 
time if they would like.
    Thank you for being here today. The committee will stand 
adjourned.

                          ADDITIONAL MATERIAL

   Response by David R. Gaugh, R.Ph. to Questions of Senator Cassidy
    Question 1a. How many ANDAs filed prior to October 1, 2012 (GDUFA 
start date) for non-biologic complex generics are currently awaiting 
approval?
    Answer 1a. It is unclear how many complex products are currently 
under review. That information is not shared with industry.

    Question 1b. Is there a transparent way for generic manufacturers 
to identify where a lack of competition exists?
    Answer 1b. Generic manufacturers have various methods and means of 
determining market opportunities. There are resources that are publicly 
available, such as the Orange Book, and other resources that are 
privately available to assess market share and market opportunities. 
There is no single method that can be used to make the determination of 
whether or not to invest in years of product development research. Such 
a decision is influenced by a range of factors, including the cost of 
marketing, uncertainty of a timely FDA approval, projected market 
share, and potential future mergers and acquisitions that may impact 
the overall company's portfolio--each of which play an intricate role 
in a company's decision to invest or not invest in a particular 
product.

    Question 1c. How many of those applications would you anticipate 
receiving final approval in 2017?
    Answer 1c. Because specific pending applications are only known to 
FDA, and the filing company, AAM is not privileged to these details. 
Therefore, we are not able to provide a response to this question. It 
is industry's hope that with GDUFA, FDA will be able to work toward an 
action that result in a final approval in a more consistent and timely 
manner to improve patient access to affordable medicines.

    Question 2. Do you agree that lack of engagement and collaboration 
between the FDA and the applicant during the review phase for complex 
generic approvals contributes to lengthy and delayed reviews? If the 
FDA outlined how it will test these important products for 
bioequivalence, could we increase competition? Additionally, if the FDA 
was up front with generic manufacturers in this way, would we see more 
timely approval and availability of generics for complex products, and 
greater review efficiency at the FDA (products being approved in fewer 
than the current average of 4)?
    Answer 2. Greater communication and cooperation between FDA and 
generic drug sponsors benefits both parties. Greater communication and 
transparency earlier on during the research and development process 
will increase the sponsors' understanding of FDA's expectations. For 
instance, having bioequivalence guidances for products shortly after an 
NDA is approved will provide clarity to the FDA expectations to ensure 
ANDA sponsors meet the quality standard requirements for approval. The 
increase in understanding will increase the quality of the submission. 
This, in turn, will only contribute to the improved timelines of the 
review and approval process for ANDAs. Industry's goal in GDUFA is not 
merely for faster FDA review timelines, but rather a more effective and 
consistent review process which will eliminate duplicative work and 
increase first-cycle approvals.

    Question 3. In 2016 FDA issued a draft guidance to implement 
section 7002 of the Biologics Price Competition and Innovation Act of 
2009 (``BPCIA''), which provides that biologic products approved under 
section 505 of the Food, Drug, and Cosmetic Act (``FDCA'') shall be 
deemed to be licensed under the Public Health Service Act on March 23, 
2020. The draft guidance states that FDA will not approve an 
application submitted under section 505 for an impacted product, like 
insulin, which is pending on March 23, 2020; rather such applications 
will need to be withdrawn and resubmitted as a biologics application. 
Do you agree that the effective outcome of FDA's draft guidance will 
result in a dead zone during which development, review and approval 
activities will come to a standstill for potentially a period of 
several months to years for products like generic insulin? Do you 
agree, as is stated in the draft guidance, that the guidance will have 
a ``significant impact'' on product development, inhibit competition, 
delay product approvals and thereby increase health-
care costs?
    Answer 3. AAM requested FDA\1\ amend its proposed policy regarding 
pending applications because it erects unnecessary roadblocks to the 
development of transitional biologics, significantly delaying the 
approval and availability of lower cost, safe and effective biological 
products for patients in need. As FDA acknowledges, its proposal could 
have a ``significant impact'' on ongoing development programs for 
important transitional biologics, such as insulin and human growth 
hormone. FDA's proposed policy regarding pending applications will 
impede the timely approval of competing products in several ways. 
First, FDA's proposed policy will interrupt ongoing review activities 
for pending applications in a manner that will be highly disruptive and 
cause unnecessary delays. Second, FDA's proposed policy will force 
sponsors who are ready to submit applications for lower cost biologics 
prior to March 23, 2020 to delay their submissions until after March 
23, 2020. This will significantly delay the review, approval and 
availability of more affordable biological products that compete with 
expensive brand name biologics.
---------------------------------------------------------------------------
    \1\ GPhA & Biosimilars Council comments on Docket No. FDA-2015-D-
4750; Implementation of the ``Deemed to be a License'' Provision of the 
Biologics Price Competition and Innovation Act of 2009. May 13, 2016.
---------------------------------------------------------------------------
    The delays caused by this regulatory ``dead zone'' will not only 
have a significant impact on ongoing biosimilar development plans, but 
also will have a major negative impact on the U.S. healthcare system. 
For example, in the insulin market, FDA's proposed policy could result 
in $6.65 billion potential lost savings per year to the U.S. healthcare 
system.
    Sanofi's Lantus and Lantus Solostar products are daily, chronic use 
medications widely prescribed to a growing population diagnosed with 
diabetes. In the year ending in October 2015, Sanofi Aventis realized 
almost $9 billion in sales--much of which was borne by State and 
Federal drug purchase and insurance programs--and the price is 
skyrocketing. According to a recent article in the Philadelphia 
Inquirer, the price of Lantus rose 22.7 percent in just 1 year, from 
2014 to 2015. This increase was on top of two other significant price 
increases in 2013. A biosimilar or interchangeable insulin product 
approved to compete with the Lantus products alone could result in 
$18.3 million in daily savings to the U.S. healthcare system.
    FDA's proposed policy thus has the potential to add billions of 
dollars of unnecessary costs to the U.S. healthcare system, with no 
countervailing public health benefit for patients. The only 
beneficiaries of FDA's proposal will be the sponsors of brand name 
transitional biologics, who will continue to reap monopoly profits 
during the unnecessary delays caused by FDA's proposed policy. This 
runs counter to one of the main objectives of the BPCIA, which is to 
increase patient access to safe, effective and affordable biosimilar 
and interchangeable biological products.

    Question 4. Penetration of small molecule generics took decades--
the Hatch Waxman Act was passed in 1984, but as recently as 2004, 
barely more than half of all prescriptions were filled as generics. 
While these products can drive patient outcomes, patients pay about 30 
percent coinsurance and costs to Medicare are substantial--the 20 most 
expensive drugs accounted for 92 percent of Part B spending in 2013. We 
have a second shot at this transition.
    Mr. Gaugh, as these innovative therapies lose patent protection, 
how can we expedite the shift toward lower cost biosimilars that could 
reduce patient cost sharing? Where are your education programs for 
patients and providers facing challenges?
    Answer 4. Provider education is critical to allow for confidence in 
the safety and efficacy of biosimilar products. The issue was discussed 
at length during the BsUFA II negotiations, and the FDA agreed with AAM 
and the Biosimilars Council on the importance of continued outreach. 
The Agency's creation of the dedicated ``Biosimilars Unit'' will allow 
for increased education and outreach functions to patient and provider 
organizations. We look forward to continued efforts to amplify and 
assist the Agency in these efforts. In addition, Members of Congress, 
the agency, and industry must also address the continued concerns with 
biosimilar sponsors' ability or inability to obtain sufficient 
quantities of a biologic to perform the required tests and analysis to 
ensure the performance of the biosimilar product will meet the 
stringent FDA safety and efficacy requirements for biologics. There 
continues to be significant abuse of the REMS with ETASU and other, 
voluntary, restricted distribution programs. As such, biosimilar 
companies are often unable to acquire the samples they need to develop 
and test biosimilars.
      Response by Scott Whitaker to Questions of Senator Cassidy 
                           and Senator Bennet
                            senator cassidy
    Question 1. The literature often speaks of the activated patient--
one engaged in their own health care. Ideally, each patient would be 
engaged in their own health care decisions, and would choose the most 
efficient expenditure of their health care dollar. However, in health 
care, a given patient may have a plethora of options from which to 
choose--this can be very true in the device space.
    Patients are seeing an increasingly crowded field of devices. 
However, it is very difficult for a typical patient to find the device 
that would produce the best value for somebody with similar health 
status. As a provider for 30 years, I can tell you that providers are 
in the same boat--data on outcomes for medical products and services 
certainly exist, but are not readily consumable.
    For drugs, the FDA uses a rating system to differentiate between 
drugs that provide a substantial improvement over current standards of 
care--priority rated drugs--and those that bat par with existing 
options. While there is little reward for those more substantive 
improvements today, this priority rating system has been well developed 
between patient groups, clinical experts, industry, and the FDA--and 
serves as a clear signal to the market and to patients.
    Mr. Whitaker, could a parallel effort by the FDA in the device 
space help us identify those devices which show big steps forward in 
patient outcomes? Given the nature of FDA regulation of devices, 
perhaps this could be done some time after market introduction, based 
upon real world evidence?
    Answer 1. AdvaMed has prioritized strategies for assessing and 
promoting the value of medical technologies and diagnostic tests for a 
wide range of stakeholders, including patients, providers, payers and 
the overall health care system. To that end, we have developed a 
comprehensive approach, or framework, for assessing the value of 
devices and tests that takes into account not just the clinical impact 
of the device, but also non-clinical patient benefits, care delivery 
revenue and cost impact (such as improved efficiency), and the impact 
on society as a whole. Our framework is intended to drive that 
discussion of how to determine a medical technology's value and what 
evidence is appropriate to support that value assessment.

    Question 2. Currently, FDA is trying to incorporate more real world 
evidence into its processes. Multiple GAO reports suggest Sentinel (for 
drug postmarket surveillance) data is poor quality--doesn't give us 
reliable information on outcomes.
    Breakthrough drugs are approved based on early evidence of clinical 
superiority. This type of approval relies on quality postmarket data to 
validate the drug's early market entry. Is the FDA's inefficiency 
handling postmarket data hindering patient access to breakthrough drugs 
that can deliver substantial improvements in patient care? Could other 
sources of real world data buttress innovators' ability to validate 
their therapy's effectiveness?
    Mr. Whitaker, we need to make available real world data to allow 
academia, pharma, payers to find the metric of value that is most 
appropriate, how will NEST (for devices) be any more useful? The EU is 
also moving toward a post-market focused approval process for devices. 
What lessons has industry learned from working with EU regulators to 
ensure we are collecting useful information with the NEST system?
    Answer 2. We appreciate the question and agree with your point that 
quality of data is critical. As you note, FDA is exploring 
opportunities to incorporate real world evidence into its processes, 
including the device review and post-market surveillance processes. FDA 
has provided initial seed funding for the NEST Coordinating Center, or 
the National Evaluation System for health Technologies. The NEST is in 
its initial stage of development, and just recently hired an executive 
director. AdvaMed appreciates that the NEST Coordinating Council, which 
will provide strategic direction on the entity's operations, includes 
representatives from the medical device industry. We look forward to 
engaging in robust conversations at the NEST Coordinating Council, with 
Congress, and with other stakeholders to ensure that data collected by 
the NEST is of good quality and yields meaningful information for FDA, 
manufacturers, and other stakeholders.
                             senator bennet
    Question. I have been working with Senator Isakson on updating the 
medical device inspection process so FDA resources can be efficiently 
used to address and remediate safety concerns.
    Can you identify other steps we can take to ensure the safety of 
medical devices once they are approved and on the market?
    Answer. Thank you for your work on S. 404. We appreciate your 
leadership in bringing more transparency and predictability to the 
medical device inspections process. Your bill would ensure that 
patients are best served by FDA by instituting a more efficient 
inspections process that focuses FDA's resources on the greatest public 
health needs. This improvement to the medical device inspections 
process, coupled with FDA's already existing broad authorities in the 
post-market space, ensures that patients have timely access to safe and 
effective medical devices.
       Response by Cynthia Bens to Question of Senator Whitehouse
    Question. Regulatory capture has been a concern within regulated 
industries since Woodrow Wilson. In the case of the FDA, industry is 
not only regulated by the agency, but is also its funder. According to 
the Congressional Research Service, when the prescription drug user fee 
agreement was first authorized, user fees funded 10 percent of the 
Human Drug Program's activities. In 2016, it was nearly 65 percent. The 
medical device user fees covered 16 percent of the device center's 
costs in 2006, compared with 35 percent in 2015.
    As the size of the user fee agreements grows to support an 
increasing percentage of the FDA's review activities, what are the 
warning signs Congress should look for as evidence of possible 
regulatory capture?
    Answer. Senator Whitehouse, thank you for your question and your 
concern about the potential for regulatory capture at the Food and Drug 
Administration (FDA). As a non-profit organization dedicated to 
improving the health and well-being of older Americans, the Alliance 
for Aging Research has consistently advocated for levels of funding 
that allow the FDA to carry out its mission while emphasizing the need 
to strike a balance between appropriations and user fees.
    As you stated, user fees support more than half of human drug 
review activities and over one-third of device review activities at the 
FDA. While these are significant portions of the FDA's budget, the 
agency has capably carried out non-user fee-funded activities in a 
timely manner and responded to public health emergencies when they 
occurred. Congress should remain attentive to funding imbalances that 
could render the agency incapable of filling positions supporting non-
user fee-funded activities or lead to an overemphasis on aggressively 
meeting medical product review times at the expense of other regulatory 
initiatives.
    If future user fee reauthorizations continue on their current 
trajectory and the FDA also receives stable increases in appropriated 
funding for activities outside the scope of the negotiated agreements, 
I do not believe regulatory capture is imminent. However, if the FDA 
does not receive steady increases in budget authority and proposals 
like the fiscal year 2018 Trump Administration Budget Blueprint are 
adopted, I fear the pendulum could swing in the opposite direction.

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