President Bush Proposes FY2009 FDA Budget; Follow-On Biologics and New User Fee Legislation on Tap for 2008, as Well as Plans to Resurrect FDAAA DTC TV Ad User Fee Program

February 5, 2008

On February 4, 2008, FDA announced that the Bush Administration is requesting nearly $2.4 billion ($1.77 billion in budget authority and $628 million in user fees) for the Agency as part of the Fiscal Year 2009 budget.  Of particular interest in the proposed FY2009 budget are several proposals related to follow-on biologics, new user fees, and resurrecting the Direct-To-Consumer (“DTC”) television ad user fee program created by the FDA Amendments Act (“FDAAA”).

Follow-On Biologics

The coming year will likely see a significant push to pass legislation creating follow-on biologics (also referred to as “generic biologics”).  According to the budget proposal:

For FY 2009, the Administration will seek new statutory authority to allow FDA to approve abbreviated applications for certain biologic products licensed under the Public Health Service Act (PHS Act). . . .  The legislative proposal will include necessary provisions to ensure the safety and effectiveness of these biologic products for patients. The proposal will include a predictable and public guidance process for licensing follow-on protein products under the PHS Act. The proposal will prescribe the type of data required for FDA to review applications for follow-on protein products and will require labeling for the safety concerns related to the interchangeability of these products. In addition, the proposal will include adequate intellectual property protections to preserve continued robust research into new and innovative life-saving medications. The Budget proposes a new authority for FDA to approve follow-on protein products through a new regulatory pathway that protects patient safety, promotes innovation, and includes a financing structure to cover the costs of this activity through user fees.

In 2007, the U.S. Senate Health, Education, Labor, and Pensions Committee voted on legislation approving amendments to the Public Health Service Act to add § 351(k) to provide for an approval pathway for “biosimilar” and “interchangeable” biologics that rely, in part, on FDA’s previous licensure of an innovator’s product.  At the time, it was thought that such legislation might be included in the U.S. Senate’s version of FDAAA.  Support for the bill fell apart, however, due to differences of opinion over the length of exclusivity for innovator products.  (See FDA Law blog post here).  In addition, the Bush Administration objected to including follow-on biologic provisions in FDAAA. 

We understand that the Biotechnology Industry Organization (“BIO”) is vigorously lobbying Congress on draft legislation.  Information on BIO’s position is available here.

New User Fees

President Bush’s FY2008 budget request included a proposal with draft performance goals to create a generic drug user fee program.  The FY2009 request includes a similar proposal, but without draft performance goals.  The program, which the Administration will formally introduce in draft legislation later this year, includes estimated FY2009 spending of $16.6 million.

The Bush Administration’s FY2009 budget proposal also includes new user fee programs for activities that are currently funded through discretionary appropriations, including:

  • Reinspection user fees to require FDA-inspected establishments to pay the full costs of reinspections and follow-up work when the establishment fails to meet current Good Manufacturing Practices and other FDA requirements; and

DTC TV Ad User Fee Program

FDA’s FY2009 budget proposal states that the Bush Administration plans to resurrect the DTC television ad user fee program added to the Prescription Drug User Fee Act (“PDUFA”) by FDAAA.  We previously reported that the new user fee program would not launch due to inadequate congressional funding, notwithstanding significant industry interest in the program.  As a result, FDA did not send out invoices, and the 120-day trigger in FDAAA for collecting adequate funding from industry participants was not met.   Nevertheless, “[t]he budget for FY 2009 contains user fees to support the review of direct to consumer television advertisements, as authorized by PDUFA.  The Administration will work with Congress to modify the 120-day requirement in FDAAA to ensure that FDA can operate the DTC-TV program in FY 2009.”

By Kurt R. Karst