Getting a drug all the way to approval is no easy feat — for pharmaceutical companies or for regulators.
And a few decades ago, the drug approval process was positively glacial. The Food and Drug Administration (FDA) simply did not have the resources to efficiently review all the applications coming in.
In response, in 1992, the Prescription Drug User Fee Act (PDUFA) was passed, making it the law for pharmaceutical companies to directly pay the FDA to review their applications for drug approvals. That way the FDA has more resources to conduct rigorous and timely reviews, pharma companies get products through the regulatory pipeline faster, and patients get new drugs more quickly. Win-win-win, right?
That’s one way to look at it. But others have argued that PDUFA “puts the FDA in the pockets of the drug industry,” as Jessica Wapner explained on her PLOS blog a few years ago. “In the same way that doctors are accused of subjecting themselves to bias when they receive consulting or speaker fees from a drug company, so has the FDA been accused of kowtowing to the pharmaceutical industry, approving drugs that maybe shouldn’t be approved for one reason or another.”
One reason PDUFA has been somewhat controversial is that its impact has been enormous. Wapner notes that the part of the FDA that does approvals functions almost like a private company, since “its budget [is] mainly covered by PDUFA fees, rather than taxpayer dollars.”
So how much money have pharma companies paid the FDA?
For a report published on August 15, healthcare consulting firm Avalere Health did the maths on how much pharma companies have actually paid the FDA through PDFUA, adding up the wide variety of fees collected for different types of applications. (For a prescription drug application with clinical data, for example, the fee in 2016 is $2,038,100.)
The report found that since PDUFA was passed in 1992, pharma companies have contributed $7.67 billion to the federal agency.
“User fees are increasingly central to the funding of the drug, biologic and device review programs, and in some cases these fees account for a larger proportion of the FDA budget than congressionally appropriated monies,” Avalere said in the report. “For example, user fees account for 68 per cent of the FDA’s review budget for prescription drugs, while 58 per cent of the review budget for generic drugs comes from user fees.”
And the fees charged each year by the FDA have risen sharply since the law was first implemented, the report found (though they’re dropping in 2017):
Courtesy Avalere Health
Not all of the money that’s collected is being put to use, Avalere noted. If it were, the analysts suggested, more drugs could be approved a lot more efficiently, making them available to patients who might need them. The report cited $300 million in user fees that hadn’t been spent.
“The significant unspent funds left over from user fee programs suggest that FDA could do more to accelerate product reviews,” Avalere manager Jay Jackson said in the report. The FDA has also decreased the fees next year to balance out that leftover money.
PDFUA, which has to be renewed every five years, is set to expire again in 2017.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.