NCPA - National Center for Policy Analysis

Renewing the Prescription Drug User Fee Act

March 8, 2012

The entire biopharmaceutical industry is suffering a crisis of poor productivity in research and development (R&D), some of which is due to overregulation by government.  The pharmaceutical regulatory environment is broken and needs to be radically redesigned, says John R. Graham, director of health care studies at the Pacific Research Institute.

Proposed solutions include:

  • Stripping the U.S. Food and Drug Administration's (FDA) power to judge the "efficacy" of new medicines and limiting it to determining safety.
  • Increasing patients' ability to use investigational new medicines before being approved by the FDA.
  • Allow American patients to use medicines approved for use in Europe or other developed jurisdictions, if the FDA is too slow.

While these are great ideas, overemphasizing them could potentially make the situation worse because the federal law that largely determines the FDA's funding -- the Prescription Drug User Fee Act (PDUFA) -- must be reauthorized by this September.  These renewals have generally granted more money and power to the FDA, in exchange for promises of faster approval of new drugs (and medical devices) -- promises that were fulfilled initially but eventually slipped.

Some other critical happenings and cost-related developments occurring include:

  • Pharmaceutical R&D productivity (measured in dollars per New Medical Entity) shrunk by 20 percent from 2001 through 2007.
  • The average R&D cost of bringing a product to market from discovery to late stage jumped from $830 million in the 10-year period finishing in 2010 to $1,048 million in the decade finishing in 2011.

Unfortunately, while much of the responsibility for this can be laid at the door of the FDA, the PDUFA must be renewed by September or new drug approvals will stop.  Although PDUFA is far from ideal, there is no real opportunity to enact laws that significantly reduce the FDA's power this year.  Thus, a "clean" reauthorization of PDUFA for the next five years is the best choice available to patients and biopharmaceutical investors in 2012.

Source: John R. Graham, "Feed the Beast: Renewing the Prescription Drug User Fee Act (PDUFA)," Pacific Research Institute, February 2012.


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