Sequestration should not slow American access to new medications

Last year, following nearly two years of work between the medical device and pharmaceutical industries, the U.S. Food and Drug Administration (FDA), Congress, patient groups and others, the FDA Safety and Innovation Act (FDASIA) was developed and passed Congress with overwhelming and bipartisan support. FDASIA sailed through Congress with a 92-4 vote in the Senate, an unrecorded voice vote in the House and was signed into law by President Barack Obama.

The measure renewed FDA’s authority to collect industry user fees – checks written to the FDA when a company submits a new product for review – and provided for numerous improvements to FDA regulatory review processes, which had become increasingly unpredictable, uncertain and inefficient in recent years. Things had gotten so bad that many technologies invented and developed here in the United States were available three to five years sooner overseas than for patients here at home.  Indeed, as part of FDASIA the pharmaceutical and device industries agreed to pay increased user fees to facilitate the needed and agreed-upon FDA product review improvements.

Today, pharmaceutical and device companies in California and across the country are writing user fee checks to the FDA – in some cases amounting to more than a million dollars per application. Unfortunately, bureaucrats at the Office of Management and Budget (OMB) ruled in late 2012 that these fees are subject to sequestration – to the tune of nearly $85 million dollars this year alone. Pharmaceutical and medical device companies have willingly paid increased fees to the government so that new, life-saving medicines and technologies can get to patients in need faster. However, in a decision only faceless bureaucrats could make, that money is being locked away, making it impossible for the FDA to access and use the funds to implement the FDASIA law and make the review process more efficient.

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The pharmaceutical and device industry, FDA, Congress, patient groups and others spend two years working to come up with balanced solutions to improve and bolster the FDA regulatory review processes. To pay for the agreement, industry has agreed to pay increased fees every time a company submits a new product for FDA review.  Industry wins!  FDA wins!  Patients win! Until, that is, these bureaucrats decided to throw a wrench into the works.

The near certain result of user fee sequestration is that FDA will struggle to implement the numerous improvements called for in the new law. This will not only risk delays in the approval of new medicines and devices for patients, but it also further hurts a sector that has recently witnessed a significant downturn in venture capital investment needed to foster the thousands of small companies working on the most groundbreaking new technologies. In fact, a recent study from the National Venture Capital Association (NVCA) reports that more than 60 percent of surveyed VC’s identified the increasing cost and uncertainty in obtaining FDA approvals – the very problems targeted by FDASIA – as having the highest negative impact on venture investment.

Thankfully last week, in an effort led by Reps. Leonard Lance (R-N.J.), Anna G. Eshoo (D-Calif.), Doris Matsui (D-Calif.) and Mike Rogers (R-Mich.), the FDA “SOS” (Safety Over Sequestration) Act (H.R. 2725) was introduced in the House of Representatives. With bipartisan support, H.R. 2725 seeks to protect FDA user fees from any future across-the-board spending cuts due to sequestration. Companion legislation is anticipated in the Senate later this month and, if brought to the floor, the measure should sail through Congress, correcting OMB’s terrible decision and putting the FDASIA success story back on track. Congress should right this wrong and move forward in supporting and passing the FDA SOS Act.

Gillenwater is senior vice president, public policy at California Healthcare Institute (CHI). CHI represents more than 275 leading biotechnology, medical device, diagnostics, pharmaceutical companies, and public and private academic biomedical research organizations. CHI’s mission is to advance responsible public policies that foster medical innovation and promote scientific discovery.