DID - Aug. 1, 2007 Issue

Vol. 6 No. 150

House Debates Spending Levels in 2008 FDA Appropriations Bill

The House debated a bill July 31 that would provide $1.69 billion for the FDA for fiscal 2008 and faces a veto threat from the president because of its high spending levels. The House adjourned without voting on the bill and is expected to take it up first thing today.

The bill, H.R. 3161, includes a 5.5 percent increase overall from the president’s fiscal 2008 budget request, Rep. Rosa DeLauro (D-Conn.) said. The bill increases the FDA’s budget by nearly $62 million more than the president’s request, she added.

Rep. Jack Kingston (R-Ga.) warned of the veto threat. The administration “strongly opposes” the bill because it includes “an irresponsible and excessive level of spending and includes other objectionable provisions,” according to the Office of Management and Budget (OMB). The bill, which funds the Department of Agriculture and includes FDA spending, contains a nearly $1 billion increase over the president’s request, the office added.

The administration also opposes a provision in the bill that would bar the FDA from using appropriated funds to prevent individuals, wholesalers and pharmacists from importing FDA-approved prescription drugs, according to OMB. The bill lacks protections to ensure the imported drugs are safe and effective and will discourage innovation, OMB said.

In the House Appropriations Committee markup, Rep. Rodney Frelinghuysen (R-N.J.) introduced an amendment that would have allowed individuals to import 90-day supplies of prescription drugs, but the provision was rejected (DID, July 20).

The importation language is the same as in drafts of previous years’ appropriations bills, according to DeLauro. However, the language has never passed the full House.

The bill also includes an increase of $6.25 million to enhance the agency’s review of direct-to-consumer advertisements.

DeLauro defended the bill, calling it “a very strong and bipartisan, responsible” bill that protects public health and enhances oversight.

The Senate version of the bill, S.1859, is pending consideration by the full Senate. — Emily Ethridge


Manufacturers Should Submit Data Now for Emergency Use Authorizations

Emergency use authorizations (EUAs) for unapproved medical products or unapproved uses for them may not be issued until after the HHS secretary has declared a public emergency; however, the FDA “strongly encourages” companies with EUA product candidates to submit data before the determination of an emergency, according to a new guidance.

The guidance, issued last month, explains the FDA’s policies for authorizing the emergency use of unapproved products or unapproved uses of approved medical products during certain public emergencies, such as a heightened risk of attack on the public. The range of potential EUA products includes drugs, biologic products and devices.

The FDA commissioner may issue an EUA only if:

  • The declaration of emergency involves a biological, chemical, radiological or nuclear agent that can cause a serious or life-threatening disease or condition;
  • It is reasonable to believe that the product may be effective in diagnosing, treating or preventing such a disease or condition;
  • The known and potential benefits outweigh the known and potential risks of the product; and
  • There is no adequate, approved and available alternative to the product.

Companies with candidate products, particularly those at advanced stages of development, are advised to submit certain data to the appropriate FDA center now, as time for the submission and review of EUA requests may be severely limited during an emergency, the guidance says.

Pre-emergency activities may include discussions with the agency about a prospective product and the appropriate vehicle to use when submitting data, such as an investigational new drug application, investigational device exemption or master file.

If the FDA believes that a candidate product may meet the criteria for an EUA, the agency may share information on the product with an EUA working group to be established by the HHS secretary.

The exact type and amount of data needed to support an EUA may vary depending on the emergency and the nature of the candidate product, the guidance says. The agency recommends requests for EUA consideration include a summary of the scientific evidence on the product, including the adverse event profile, as well as data and other information on safety, effectiveness, risks and benefits and, to the extent available, alternatives.

A chart in the guidance summarizes the recommended data to support a request for consideration.

The guidance, “Emergency Use Authorization of Medical Products,” can be seen at www.fda.gov/oc/guidance/emergencyuse.html. — April Astor


Study: Generics Cost Twice as Much in Canada

A new study released this week shows that in 2006, prices for generic drugs in Canada were twice as high as in the U.S. But a spokesman for the Canadian Generic Pharmaceutical Association (CGPA) says the study is “an attempt to shift focus from the real costs of Canadian healthcare.”

The study, “Canada’s Drug Price Paradox 2007,” released July 31 by the Fraser Institute, “does not live up to any standards of a serious analysis” because data on Canadian and U.S. drug prices were obtained from different sources, CGPA’s Director of Public Affairs Jeff Connell told DID. “The methodology is not credible.”

Study authors wrote that they purchased the Canadian data from IMS Health Canada, but that for the U.S. “there is no publicly accessible source of data on final retail-consumer purchases for the entire market like that used by IMS Health in Canada to estimate sales volumes and spending.” Instead the authors used the 2006 Red Book, and retail pharmacy data from Costco and Walgreens.

The authors found that Canadian prices for generic prescription drugs were on average 115 percent higher than U.S. prices, and that Canadian prices for brand drugs were on average 51 percent lower than U.S. prices.

“These new findings show that prices for generic drugs in Canada have increased relative to the U.S., while prices for brand-name drugs have decreased,” study co-author Brett Skinner, the Fraser Institute’s director of health, pharmaceutical and insurance policy research, said.

According to the authors, “misguided” federal and provincial government prescription reimbursement programs are to blame for the high prices. “Canadians pay more for generic drugs because government policies shield generic drug companies and pharmacy retailers from normal market forces that would naturally reduce prices,” Skinner said.

Last year such policies cost Canadians between $2.5 billion and $6.6 billion in unnecessary spending, according to the study. But Connell asserts this estimate is “not credible” because “the entire generic market in Canada on an annual basis according to IMS is 3.2 billion.”

“It doesn’t add up,” Connell said. “It’s mathematically not possible when you look at the overall market.”

The study partly blames large generic companies that “exploit” the reimbursement system by offering bundled rebates to retailers, often resulting in “virtual monopolies.” Connell refuted indications of anti-competitive behavior among Canadian generic firms. “We have up to 15 companies going after sales, especially with the larger molecules going off patent,” he said. “It’s very competitive.”

The study authors also fault the government for forcing generic substitution, saying it creates a situation where generic companies no longer have to compete on prices. However, the study found that in 2006, 44 percent of the total prescriptions dispensed in Canada were for generics, while 56 percent were for brand drugs. In the U.S., 63 percent of prescriptions were for generics and 37 percent were for brand drugs.

“Despite government efforts to force generic use in Canada, the evidence shows that Americans substitute generics for brand name drugs at much higher rates than Canadians,” Skinner said. He added that if the government “repealed policies that distort the market for prescription drugs,” it would lead to lower prices and greater generic usage.

“If there is a grain of truth to the study,” Connell said, “it is that prices in Canada for all pharmaceutical products — generic and brand — tend to be more static because there are large government-funded prescription drug benefit plans that set reimbursement prices to pharmacies.”

In the U.S. on the other hand, generic drug prices fluctuate more due to factors such as the six-month generic exclusivity period, he added.

The study is available at www.fraserinstitute.ca/admin/books/files/CanDrugPriceParadox2007.pdf. — Breda Lund


J&J Announces 3 to 4 Percent Work Force Reduction

Johnson & Johnson (J&J) is the latest pharmaceutical manufacturer to announce a large restructuring initiative in the face of generic competition, as it plans to reduce its global work force by 3 to 4 percent, the company said July 31.

AstraZeneca recently announced that it would layoff 7,600 employees as a result of acquisition costs related to its purchase of MedImmune (DID, July 23). The company previously said it would terminate 3,000 jobs by 2010 to help with anticipated losses from generic competition.

J&J currently employs approximately 120,500 employees worldwide, the company said, making the estimated job cuts between 3,615 and 4,820 employees. The firm will also close an unspecified number of facilities; the restructuring is expected to save $1.3 billion to $1.6 billion in pre-tax costs, J&J said.

“Cost savings will be achieved primarily in the pharmaceutical segment, which faces significant patent expirations over the next few years, and in the Cordis franchise, which competes in the drug-eluting stent market,” J&J said.

The firm will face generic competition for several of its best-selling products in the next couple of years, including competition in 2008 for its antipsychotic drug Risperdal (risperidone). The Risperdal franchise, which includes the injectable formulation Risperdal Consta, had sales of $4.18 billion in 2006. The product does not lose patent protection until 2014 (DID, April 19).

J&J’s epilepsy treatment Topamax (topiramate) will also lose patent protection next year. The medication had sales of $472 million during the second quarter of 2007.

Outside of generic competition, J&J said that the sudden drop in the drug-eluting stent market due to safety concerns, as well as safety issues related to the use of erythropoiesis-stimulating agents (ESAs), also contributed to its restructuring decision.

The Centers for Medicare & Medicaid Services (CMS) recently issued its final coverage determination for ESAs in the cancer setting. The revised determination, which is not as strict as the CMS’ original proposal, imposes reimbursement restrictions for the products that will likely reduce ESA sales (DID, July 31).

Sales for J&J’s ESA Procrit (epoetin alfa) fell 7 percent to $979 million during the second quarter of 2007, compared with the same period last year. — Christopher Hollis


Schwetz Retires From Helm of OHRP

Bernard Schwetz announced his retirement as director of the Office of Human Research Protections (OHRP), which takes effect Sept. 30, at the July 30-31 meeting of the Secretary’s Advisory Committee on Human Research Protections (SACHRP). No replacement has yet been announced for Schwetz, who has worked for HHS for 25 years.

At the meeting where Schwetz announced his retirement, SACHRP voted unanimously to ask HHS’ legal department to address the “black hole” of confusion surrounding the issue of whether, and under what conditions, a patient’s legally authorized representative (LAR) may give informed consent for him or her to participate in a research study, when the patient is unable to do so himself or herself.

Although some states have laws dealing with what decisions an LAR may make for a patient in life-threatening or end-of-life situations, most states lack any law that would address the use of LARs in research, David Strauss, co-chair of the SACHRP Subcommittee on Inclusion of Individuals with Impaired Decision-Making in Research, said.

“We all know that research in 2007 is not a local or institutional affair. It is a multicenter, multistate affair,” Strauss said. “The variability [of LAR laws] from state to state is a problem for research involving the decisionally impaired.”

The few states that do have a law addressing LARs in research are inconsistent, Strauss said. For example, the California law on the subject, which is often cited as a model, does not even address the crucial question of acceptable risk in research. An examination of policies on the LAR issue at California institutions found that they are inconsistent, he added.

SACHRP members spoke about the possibility of drafting a federal rule on LARs in research. SACHRP Chair Samuel Tilden suggested that institutions applying for federal research funding be required to have an LAR policy, and be turned down for funding if they do not. This could lead large, politically influential state universities to lobby their state legislatures to pass the needed legislation, he said. — Martin Gidron


Committee Defines When Informed Consent May Be Waived

The Office of Human Research Protections (OHRP) should develop guidance for the institutional review boards (IRBs) that oversee research studies on human subjects to help them decide when to grant requests to alter or waive informed consent requirements, the Secretary’s Advisory Committee on Human Research Protections (SACHRP) recommended at its July 30-31 meeting.

HHS regulations allow such informed consent waivers or alterations for certain minimal risk studies that could not be practicably carried out otherwise, so that the interests of subjects can be balanced with society’s interests in research. This applies only to studies that are federally funded or otherwise under the purview of OHRP. FDA-regulated (industry-sponsored) trials are not eligible, nor should these waivers be confused with the waivers of informed consent that may be granted under either FDA or OHRP rules for certain types of emergency research, SACHRP stressed.

New OHRP guidance is needed because at present, IRBs may be inappropriately granting informed consent waivers due to uncertainty in applying the criteria and inconsistency in reviewing the research, according to SACHRP’s Subpart A Subcommittee. This subcommittee, which deals with the application of the Federal Policy for the Protection of Human Subjects (the Common Rule), drafted the recommendations that the full committee approved. The subcommittee added that IRBs may not be granting informed consent waivers in some cases when they could.

SACHRP said the proposed OHRP guidance should state that IRBs should not grant informed consent waivers just because investigators say it would be impracticable to get informed consent. Rather, such waivers should only be granted if requiring informed consent would make it impracticable to do the study.

For example, the committee said, the scientific validity of a very large epidemiological trial might be compromised if the researchers were only allowed to access patients’ samples, records or data with consent. In other studies, the subjects whose records researchers need to access are no longer being tracked and may be lost to follow-up, making informed consent impossible to get and fatally compromising the study. In other studies, disclosing the study’s purpose to the subjects as part of the informed consent process might bias them so that the research results would not be useful.

It might also be appropriate for an IRB to grant an informed consent waiver for a study in which getting informed consent would pose conflicting ethical problems, such as creating additional threats to patient privacy or inflicting psychological, social or other harm, SACHRP said.

IRBs should consider the following additional factors when investigators request an informed consent waiver or alteration, SACHRP agreed that:

  • The definition of “minimal risk” SACHRP approved at its March 29 meeting, which states that “study risks are estimated relative to the circumstances of the subject group, [and] these risks are then compared to a fixed threshold — the risks encountered in daily life” (DID, March 30);
  • Whether federal, state or local laws might bar the waiver;
  • Whether the subject population in the proposed study would object if it knew of the waiver or its intent;
  • Whether the waiver is likely to have adverse consequences for this population’s welfare and general well-being; and

When it would be appropriate for investigators to provide subjects with additional pertinent information on a study in which they have participated, for which the informed consent requirements were waived. — Martin Gidron

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