Dan Gorenstein: Did you guys catch the Super Bowl? Man, that was exciting.

Super Bowl clip

DG: No no no. Not that Super Bowl…

Rep. Anna Eshoo: The Subcommittee on Health will now come to order…

DG: I’m talking about the FDA Super Bowl.

Eshoo: Our health subcommittee today is holding its first hearing on the FDA medical product user fee programs.

DG: Congress is kicking off a monthslong process to approve what are called “FDA user fees.”

These fees are paid by drug and medical device makers to the FDA and account for nearly half of the agency’s budget.

This legislation has to pass to keep the FDA running, which means it’s also a rare chance for lawmakers to take a run at other health care reforms.

Today, we go deep on FDA user fees — what they do, why they’re controversial and what other policies they could carry past the goal line.

From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein, and this is Tradeoffs.

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DG: Sarah, if you could just introduce yourself, your name, your title, and your favorite thing about the FDA user fee process.

Sarah Karlin-Smith: I’m Sarah Karlin-Smith. I’m a senior writer at the Pink Sheet. My favorite thing about the FDA user fee process, that’s an interesting question. Not that it’s not exciting.

DG: Sarah has been reporting on the FDA and drug industry for more than a decade, and this is her third time covering what some on Twitter like to call the FDA Super Bowl.

SKS: This is a must-pass bill for FDA because essentially if it doesn’t pass by the end of September 2022, FDA could end up having to lay off thousands of employees. Some parts of the agency are going to be out as much as 70% of their funding. And that’s where you get this Super Bowl analogy, because anybody who has any interest in reforming FDA or doing any other kind of health care policy legislation reform in Congress can use this process to try and make those reforms happen.

DG: Are you a Super Bowl fan?

SKS: So not a huge football person. I do play in a fantasy league every year, but I kind of play as the like, “I don’t know anything about football, so I’m going to see if I can beat you football people.”

DG: So I’m a big football guy.

And as I understand this process, there’s kind of two parts to these user fees, just like two halves in a football game.

You’ve got the user fees themselves and then the process of getting this measure through Congress.

So if you’re game, Sarah, I’d really like to run this interview through a Super Bowl style.

Is that alright?

SKS: Sure.

DG: Okay, in the pregame show, we said these “user fees” are paid by drug and medical device makers to the FDA.

Now that the game is underway here, Sarah, let’s start with the most simple play: How do these fees work and what do they actually fund?

SKS: So every time a drug company or medical device company submits an application to the FDA for review, they pay a lump sum fee. And that will go to support the people and any infrastructure at FDA working on reviewing these applications. For prescription drugs, that fee at this point is close to $2.5 million. When the user fees first started in 1992, the amount was like $100,000.

DG: Wow, that’s pretty wild.

Our producer Ryan Levi looked it up and those prescription drug fees added up to $1.1 billion last year.

And when you add in the other user fees from things like medical devices and generic drugs, they make up nearly half of the FDA’s $6 billion budget.

Sarah, why did Congress set this system up in the early ‘90s where FDA gets all this money from industry as opposed to federal tax dollars?

SKS: I mean, in general, it’s just congressional disinterest in funding FDA with more taxpayer money. And it has led to modernization of FDA, its technology. FDA has hired thousands more employees over the past 30 years. And I think industry has seen the benefits because what maybe used to take two, three years even longer for a drug to be approved, now you’re almost guaranteed your product to be reviewed in under a year. So I think it’s just ended up being pretty easy for them to rely on user fees.

DG: And the two sides have to renegotiate these fees every 5 years.

And this time around, they’ve been at it since fall of 2020. 

Sarah, take us onto the field and describe the process?

Is it like two linemen slugging it during the Super Bowl?

SFX: Hike! collision

SKS: So one thing that’s particularly frustrating to me as a journalist is that almost all of these meetings are held behind closed doors, and there are requirements to put out some amount of public meeting minutes. But particularly for the prescription drug meeting minutes, they’re often like three or four bullet points of kind of high level topics of what’s discussed. So it can be really hard to get a sense of what happened in those meetings, who was pushing for what, how much head-to-head tension there was. Which, I think, raises a lot of people’s eyebrows about the process that we just can’t get a good public picture. 

DG: You think about conversations going on behind closed doors, and to kind of stick with our Super Bowl metaphor here for a second, it can almost feel like football teams are paying the refs. That’s the appearance, at least.

This is your third go round of the FDA’s Super Bowl. Is it your sense that this process on the whole is working and is useful? Or are you more skeptical that this arrangement has made the FDA too cozy with industry?

SKS: I’m probably somewhere a bit in the middle because, again, I do feel like in terms of the level of staffing and modernization of FDA as an agency, user fees are sort of indispensable to FDA. But I do think there have been some drug applications in particular where you do sort of wonder does FDA feel too much pressure to OK this product. 

And there’s one very prominent incident a number of years ago…

News clip: Serepta Therapeutics getting FDA approval for its Duchenne muscular dystrophy drug…

SKS: …where Janet Woodcock, who’s right now the acting FDA commissioner, and she was talking about, well, if we don’t approve this drug, for a rare disease that usually affects young boys spinal Duchenne muscular dystrophy, if we don’t approve this drug, which many people believe really hadn’t shown to have any benefit, this company is essentially going to collapse. And they’re not going to be able to keep working on any of their other promising products. And people pointed to that as very clear evidence that FDA was thinking more about the financial health of the company than whether it was in the best interest of these young men with a rare disease.

DG: And obviously it’s not just industry that wants faster approvals in a case like that.

You’ve got patient groups and lawmakers also leaning on the FDA to approve drugs.

But there are clearly a lot of folks worried about FDA relying on the companies it regulates to fund its work.

We’ve got time for just one play left in this half, so we’re gonna call a Hail Mary: Is there any talk right now of getting rid of user fees and replacing them with old fashioned tax dollars?

SKS: No. That’s probably one of the funniest…

There’s not that political will, I think, to even consider that at this point. I don’t see that happening any time soon, if ever.

SFX: Whistle

DG: And with that, the whistle blows, the first half is in the books.

When we come back, Congress puts on their pads and gets in the game. 

But first, a little halftime show courtesy of the greatest football team ever assembled: the 1985 Chicago Bears and the Super Bowl Shuffle.

MIDROLL

DG: Welcome back. 

The second half of our FDA Super Bowl is about to get underway. We’ve got our team captain and veteran of two previous FDA Super Bowls, Pink Sheet senior writer Sarah Karlin-Smith with us. 

And even though this would never happen in the NFL, the second half of the FDA Super Bowl is actually played on a completely different field, right, Sarah?

SKS: Right, so now the action is going to shift from conference rooms at FDA’s headquarters in Silver Spring, Maryland, to Washington DC, Capitol Hill hearing rooms. So now, Congress is in charge. This is their part of the show.

DG: Right, because after all that closed door negotiating, Sarah, the FDA and the industry have agreed to deals, and now Congress has to sign off on them.

What are the most interesting or important things in this year’s agreements to you?

SKS: Sure. So one, the FDA is going to expand its cell and gene therapy team. It’s an exciting new area of medical research and medical products being developed, but they need a lot more staff to keep up with the pace. And then the agreement is going to ask FDA to use more and help companies use more “real world evidence” in their applications. So this is data they might collect from a smartwatch, electronic health records. And basically, what companies want to be able to do is take this evidence and convince the FDA to expand the use of a drug to a new population or another use for which it’s not already approved without having to run really expensive clinical trial research.

DG: Got it.

And like you mentioned earlier, these agreements have to pass Congress.

So lawmakers are trying to toss in their own policy ideas, like fans jumping on a winning team’s bandwagon 

One is a bill known as “Cures 2.0” which would, in part, expand telehealth and establish a new federal agency to research cures for Alzheimer’s, diabetes and cancer.

The one we’ve heard about most is a bipartisan bill to prepare for the next pandemic.

Can you tell us, Sarah, about what specifically this bill would do if it did pass?

SKS: So a few things it would do, it would try and look back at the COVID pandemic and figure out what mistakes were made and what could be improved. Another major component is shoring up the country’s national stockpile of things like medicines that we might think we need in a pandemic. Another interesting thing is they really want to work to improve the country’s public health IT infrastructure. That was one thing that the U.S. has really lacked during COVID that other countries have done much better at. 

DG: There’s been a lot of talk from academics and lawmakers about the FDA’s accelerated approval process, where a drug can get approved, as you know, quicker than normal if it meets an unmet clinical need, like treating a disease where there’s no treatment.

This is how the controversial Alzheimer’s drug aducanumab or Aduhelm got approved.

And this process is controversial because while the data used to prove these drugs is promising, there’s no guarantee it’s going to meaningfully treat the condition.

Before we get into whether we could see changes to this process, can you just give just some context, like why do accelerated approvals even exist? 

SKS: So the idea behind accelerated approval was if you could show something was likely to lead to that kind of greater benefit down the line, you could get get it cleared, get it out there to people and then on the back end prove that your hypothesis was correct.

DG: It’s almost like, hey, if people are out there suffering and dying and we have a product that may in fact work, we’re not 100% sure, but let’s get that to people so they don’t die. Let’s not wait for the perfect study to come out.

SKS: Right, because that perfect study may take 10 years or longer. And by that point, you have a whole generation of people dead from the disease that could have lived.

DG: So that makes perfect sense. So today in 2022, what’s the tension around this thinking, this way of approving drugs?

SKS: One big tension is that over the years, companies have not been great about the follow through, so they often are incredibly slow to approve that, to complete those follow up studies that show whether the drug ultimately holds that promise or not. FDA actually hasn’t been that great at holding them accountable, either.

DG: And so now we get the Alzheimer’s drug aducanumab, which ends up being priced really high. It’s got questionable effect. And so there’s a lot of scrutiny on this process at the same time as this FDA Super Bowl.

Sarah, do you think we could see some meaningful changes to accelerated approvals during this user fee legislation?

SKS: I wouldn’t give it like super great odds. They’re definitely lawmakers really frustrated with this decision. On the other hand, accelerated approval is a really popular program. I could see more tweaks around the edges, perhaps to make it easier for FDA to pull products from the market when companies aren’t fulfilling their backend commitments of accelerated approval. I don’t think Congress has any interest in really getting rid of the program or really crushing it in some devastating way.

DG: And finally, just like Super Bowl tickets, prescription drug prices are very high.

Democrats want to let Medicare negotiate some drug prices to bring them down.

Do you think we could see that idea jump from the stalled Build Back Better Act to this user fee bill?

SKS: That I might almost call like a poison pill, it’s a common phrase in D.C. I think that’s too partisan to fly here. In a big legislative package, there maybe be things that clearly Republicans wanted and that Democrats didn’t and vice versa. I’m not sure there’s a good way for Democrats to push their drug pricing reform into a user fee bill. So I think if drug pricing is going to clear this Congress, it’s going to go through a different path. I don’t think it’s going to go through user fees.

DG: OK, game is just about over here. For people who are watching this FDA Super Bowl at this point, Sarah, what would you suggest they keep an eye out for as this game sort of winds down. What’s next?

SKS So this is gonna show I know a little bit of something about football. You know in football, you see the clock with like two minutes left in the fourth quarter, and it’s actually like a half an hour? You might be saying, we’re at the end of this process here. We’re at the beginning of the end. This basically has to be done by the end of September 2022. That is light years away in terms of the way Congress functions and works. Something could change dramatically in terms of a drug that gets approved and really shift focus of what Congress is thinking about here. So there’s just going to be a lot of twists and turns, I think until we get to the final bill and there’s just going to be a lot to watch.

DG: Sarah Karlin-Smith, the clear MVP of the game. Thank you very much for talking to us on Tradeoffs.

SKS: Thank you, guys, so much for having me.

DG: I’m Dan Gorenstein, and I’m going to Disneyworld!

Just kidding. This is Tradeoffs.