Measure to increase FDA funds through new company fees goes to Obama

A measure that would generate $6 billion in fees over five years for the Food and Drug Administration is headed to President Obama for his signature after passing the Senate on Tuesday, a rare moment of bipartisan cooperation in a divided Congress.

Although the FDA gets money from Congress each year, a big chunk of its budget comes from fees the agency negotiates with the makers of brand-name drugs and medical devices. The Senate bill, which passed 92 to 4, would renew those fee agreements but also, for the first time, require payments from companies that make generic drugs and from other firms in the industry.

Key lawmakers worked on the bill for more than a year, intent on gaining wide support in both chambers. If Congress had failed to act, the programs would have expired Sept. 30, potentially disrupting the approval process.

“We have taken an important step to improve American families’ access to lifesaving drugs and medical devices,” Sen. Tom Harkin (D-Iowa), who helped shepherd the bill through the Senate, said Tuesday. It passed the House on a voice vote earlier this month.

Scrapped from the bill’s final version were some controversial measures, including one that would have created an extensive system for tracking drug shipments and another that would have delayed an FDA proposal on the regulation of certain smartphone apps.

The bill now ensures the FDA five years of fees to fund some of its core operations.

Traditionally, the FDA has collected most of its fees from companies that make brand-name drugs, and it will continue to do so under this bill, starting with $693 million through next year. Medical-device manufacturers will kick in $595 million total through 2017. The funds will enable the agency to more quickly review those industries’ products.

Makers of generic drugs will pay about $300 million annually. In return, the FDA has committed to speed approval of generic drugs and more closely scrutinize imported generics.

Also paying for the first time: makers of “biosimilars,” which are cheaper versions of biologic drugs derived from human and animal materials. Biosimilars have yet to hit the U.S. market but may under Obama’s health-care plan, now under review by the Supreme Court.

The Congressional Budget Office projects that the legislation will reduce federal spending by $311 million over 10 years, mostly by helping generic drugs reach the market faster. That would slash federal drug expenditures for Medicare and similar programs.

The measure also tackles a variety of policy issues, including a surge in prescription-drug shortages that has led to rationing at some medical centers and forced patients to wait for treatment.

The bill enables the FDA to speed reviews of drugs needed to address shortages as well as inspections of production facilities. It also requires the makers of drugs that treat the most serious illnesses to notify the agency if they plan to discontinue a drug or expect manufacturing problems.

The measure puts an emphasis on speed. Drugs to treat serious illnesses would be put on a fast-track for review, and medical-device approvals would be streamlined.

To spur the innovation of potentially lifesaving antibiotics, the bill grants firms that produce such drugs an additional five years to market their product without generic competition. Similar rights are granted to drugmakers to develop products for children.

With 80 percent of the active ingredients in U.S. drugs coming from overseas, the bill also empowers the FDA to collect more information from foreign firms. It also raises the penalties for anyone who contaminates a drug or knowingly sells a counterfeit.

Dina ElBoghdady covers housing policy for The Washington Post.
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