Breaking Down the PDUFA
A look at the history, creation, and impact of the Prescription Drug User Fee Act.
Last week we talked about the drug development process and mapped out the timeline for taking a chemical compound from lab to pharmacy shelf. In that piece, I mentioned the PDUFA, an act which provided a special passage-way for drugs to gain faster approval through the FDA review process by charging pharmaceutical companies a fee. Today, we’re going to dive into the PDUFA and understand where it came from, why it was developed, and how it has impacted drug discovery and release in the U.S.
What is the PDUFA?
To me, the PDUFA sounds like the name I gave my stuffed dog back when I had approximately five teeth. The whimsical-sounding acronym stands for the Prescription Drug User Fee Act and was first passed on October 29, 1992. The legislation allows the FDA to collect fees from drug manufacturers in order to fund the new drug approval process. For fiscal year 2020, the PDUFA fees for a drug application requiring clinical data is $2,942,965, up 13.7% from 2019 (source). As an internal check to misuse of the funds, the FDA must meet certain performance benchmarks every year (i.e., act on 90% of priority NDAs within 6 months of filing time) in order to qualify to continue collecting these fees (source).
Where did the PDUFA come from?
The PDUFA arose out of frustration and aggravation with the egregiously slow drug review process in America. In the 1980s, the median review time for a drug application was about 29 months (source). It’s estimated that a delay in one month in a review’s completion can cost the drug sponsor about $10million (source).The FDA argued that it lacked the funds to process drug applications in a timely manner, and requested to assess fees from pharma companies in order to help facilitate hiring more personnel for the regulatory review process. This move was supported by both the FDA and the pharmaceutical industry.
In 1992, the FDA and industry got together to set target completion times for reviews, and also explicitly agreed that these fees would only supplement federal funding, rather than replace them. Since its first passage, the PDUFA has been reauthorized every 5 years and is now on its 6th iteration (PDUFA VI was reauthorized in 2017).
Money Makes the World Go ‘Round
Given that it’s been reauthorized consistently since 1992, you’ve likely concluded that the act has been successful in making stream-lining the drug approval process. And you’d be severely correct.
In 2002, the U.S. Accountability Office report found that PDUFA funds allowed the FDA to increase the number of new drug reviewers by 77% in the first eight years of the act; median approval time for non-priority new drugs halved in the same time, from 27 months to 14 months (source).
By decreasing the average time to approval for drugs, the PDUFA has also made the U.S. a much more attractive market to release drugs in. Previously, companies would opt against initially releasing drugs in the U.S. because the long process resulted in decreased revenue; with a decline in approval time, the U.S. became a more competitive market for pharma companies when considering first launch in America vs. other countries (i.e., Europe, LATAM, Asia, etc.). Since the enactment of PDUFA, the number of new drugs initially marketed in the U.S. increased from 8% to 50% (source). This has then enabled patients to access new therapies earlier.
Everyone’s a Critic…
As with any issue involving money, healthcare, the government, or all three, everyone’s got an opinion and not everyone likes what’s being done. Critics of the PDUFA cite two major concerns:
Existence of the PDUFA may undermine public trust in the FDA
This point alludes briefly to what I mentioned in last week’s piece: as a consumer, how do you feel knowing that pharma companies can pay the FDA for faster review? Although the PDUFA has been successful in speeding up drug review in America, it has done so by melding the private sector and public regulatory body through the suspicious means of money. Is the FDA truly operating as an independent body, and able to provide appropriate review of medications and biologics when industry money finances its operation? For context, in 2017, about 63% of the FDA’s budget came from PDUFA fees (source). On the other hand, the impact of the PDUFA on the FDA budget could also be regarded as a failure of our governmental budgeting scheme, and the U.S.’s inability to appropriately fund a crucial agent in the success of its citizens’ health. Are we really willing to risk the FDA losing a majority of its budget, and thus gravely jeopardizing the therapies we can access?
Pressure of meeting performance benchmarks resulting in a decrease in drug safety (source)
The FDA knows that the PDUFA is a critical piece of legislation for its continued operation. Entangled in that, however, is the pressure to meet performance benchmarks in order to keep getting approved for funding -- the FDA needs to show Congress and the industry that the money is being put to good use. Such high-pressure, however, can also generate haste and sloppiness when it comes to fully-assessing a drug’s safety profile. A few studies have reported the following:
Drugs approved by the FDA after the passage of PDUFA are more likely to be withdrawn from the market or receive a black box warning label than medications approved prior to its enactment (source).
Medication approval decisions made in the 2 months immediately preceding their PDUFA deadlines were significantly more likely to be withdrawn from the market for safety reasons, carry a subsequent black box warning, or have one or more dosage forms voluntarily discontinued by the manufacturer (source).
To date, no causal relationships have been established on this topic, but the issue is definitely worth considering as the FDA tries to “improve” on its benchmarks with each new iteration of the PDUFA.
The Future of PDUFA
The FDA heralds the PDUFA as one of its most successful acts to date, a completely understandable perspective given the law’s massive impact on its operation. For Congress, reauthorization of PDUFA is considered a “must-pass” bill because of the great improvements it’s brought about to U.S. drug approval.
For anyone interested in investing in biotech or pharma stocks, PDUFA dates are incredibly crucial as they give you rough timeline estimates of when to buy/sell holdings. As consumers, industry, and lawmakers grapple with the pros and cons of PDUFA on drug approval, we’ll need to look to September 2022 to see whether attitudes towards the act’s usefulness changes, especially in light of the weirdness happening in the current situation. While the public will continue to lament about the long timelines until we achieve a coronavirus vaccine, it’ll be incredibly interesting to see whether faster access to a vaccine is achieved through PDUFA, cutting regulatory corners on the drug development process discussed last week, or some other mechanism forthcoming. .