FDA’s Fiscal Year 2027 Budget is Chock-Full of Legislative Proposals – Especially on Hatch-Waxman and the BPCIA

Earlier this week, FDA released its Justification of Estimates for Appropriations Committees for the Agency’s Fiscal Year 2027 (“FY2027”) budget request.  Prior budget requests included a separate document titled “FDA Legislative Proposals” (see, e.g., here, here, here, and here; and our prior post here).  The FY2027 budget request incorporates them into the broader Justification of Estimates for Appropriations Committees document (Pages 16-27).  But that’s not the only difference this year compared to prior years.  For FY2027, FDA’s budget request includes a whopping 27(!!) legislative proposals.  Here’s the run-down:

1. Holding Firms Accountable Using Misleading Advertising to Drive Profits at the Expense of Consumers
2. Strengthening Oversight of Critical and Other Foods to Better Protect Infants and Children
3. Allow Companies Manufacturing Generic Medications Domestically to File Paragraph IV Certifications Earlier, Giving Exclusivity Rights to US Manufacturers
4. Ensure FDA Access to Industry Data to Strengthen Food Chemical Safety
5. Allow Disclosure of Certain Information in Complete Response Letters
6. Require Destruction of Imported Products that Pose a Significant Public Health Risk
7. Create Efficiencies for Review and Approval of Biosimilar Applications and Deem that Approved Biosimilars are Interchangeable
8. Increase Agency Flexibility Regarding the Convening of Advisory Committees and the Composition of Such Committees
9. Strengthen Enforcement Against Importation of Unauthorized Electronic Nicotine Delivery Systems (ENDS) and Other Illegal Tobacco Products
10. Mutual Recognition Authority for Bioresearch Monitoring Inspection
11. Collect Foreign Food Facility Registration Fees
12. Create an Additional Abbreviated Licensure Pathway for Biological Products
13. Explicitly Address Generic Drug-Device Combination Products
14. Clarify When Patent Information Must Be Submitted for a 30-Month Stay to Be Available
15. Creating Parity Between Nicotine and Nicotine Analog in Statute
16. Require Retention of Data and Records Supporting Marketed Medical Products and Marketed Medical Product Applications and to Address Fraudulent Data
17. Authorize the Disclosure and Use of Certain Information Related to Impurities in Drugs That Pose a Risk to Human and Animal Health
18. Postapproval Quality Updates
19. Modernizing the Requirements in BPCA and PREA for Agency Review of Pediatric Postmarket Safety Reporting
20. Share Food Safety Information with State, Local, Tribal, and Territorial Authorities
21. Disrupt the Flow of Problematic Imported Medical Devices
22. Clarify FDA’s Enforcement Authority Regarding Manufacturing Changes to Approved Drugs and Biological Products
23. Align the FD&C Act with Longstanding Timelines and Procedures Governing Application Reviews and Streamline Appeals When an application is Not Approvable
24. Provide Medical Assistance and Evacuation Insurance for Food and Drug Administration (FDA) Employees
25. Create a new Clinical Trial Notification Pathway to Serve as an Alternative to the Burdensome Existing Investigational New Drug Pathway to accelerate drug development timeline to Make America Healthy Again
26. Give FDA significant enforcement authorities, including civil monetary penalties and the authority to pull products off of market if active pharmaceutical ingredient source data is not reported.
27. Permanently authorize the rare pediatric disease priority review voucher program and related user fees.

Some of these proposals are of greater interest to this blogger than others, given my focus on the Hatch-Waxman Amendments and the Biologics Price Competition and Innovation Act (“BPCIA”).  To that end, lets take a closer look at certain FY2027 Legislative Proposals (the full legislative proposals are in italicized typeface below):

Allow Companies Manufacturing Generic Medications Domestically to File Paragraph IV Certifications Earlier, Giving Exclusivity Rights to US Manufacturers

This proposal would amend current law to allow domestic generic drug manufacturers to submit Abbreviated New Drug Applications earlier than foreign manufacturers in certain circumstances, which may help repatriate the U.S. pharmaceutical supply chain by making domestic generic drug manufacturers more likely to be eligible for 180-day exclusivity. The proposal would amend section 505(j)(5)(F)(ii) of the Federal Food, Drug, and Cosmetic Act (the Act) to allow generic companies based in the U.S. that currently manufacture a generic drug in the U.S. or are making investments in new domestic manufacturing facilities to substantially increase manufacturing capacity of a generic drug in the U.S., to file their application and paragraph IV certification(s) on the timeline currently codified in section 505(j)(5)(F)(ii) of the Act, and delay by one month when other companies can file their application and paragraph IV certification(s).

Ohhhh. . . .  This is a nice idea, and somewhat similar to one idea that this blogger has promoted for years as a “Made in the USA” or “First Applicant Prime” generic drug incentive (though usually in the form of additional or separate exclusivity, which Congress should consider given how watered-down 180-day exclusivity has become).  Under this proposal, generic drug manufacturers who meet certain “America First” prerequisites would be the only ANDA applicants that can qualify for 180-day Paragraph IV exclusivity for some drug products by virtue of being allowed to submit on the so-called NCE-1 date, while other, “non-America First” ANDA applicants would need to wait a month (a new “NCE-1+1 month” scheme).

Create Efficiencies for Review and Approval of Biosimilar Applications and Deem that Approved Biosimilars are Interchangeable

This proposal would streamline the review and approval of biosimilars by amending section 351 of the Public Health Service (PHS) Act to no longer include a separate statutory standard for a determination of interchangeability and deem all approved biosimilars to be interchangeable with their respective reference products. A determination of interchangeability pertains to pharmacy substitution of an interchangeable biosimilar for its reference product without the intervention of the prescribing health care provider. The statutory distinction between biosimilar products and interchangeable biosimilar products has led to confusion and misunderstanding, including among patients and healthcare providers, about the safety and effectiveness of biosimilars and about whether interchangeable biosimilars are safer or more effective than other biosimilars. Both biosimilars and interchangeable biosimilars are just as safe and effective as their respective reference products and can be used in place of their respective reference products. This proposal would make the U.S. biosimilar program more consistent with current scientific understanding, as well as with the approach adopted by other major regulatory jurisdictions such as the European Union that permit interchangeability of biosimilars with their respective reference products upon approval, thus making the US biosimilar market more competitive with our European counterparts and lower costs for consumers. 

This proposal would also create a presumption that a comparative clinical study that includes the assessment of efficacy is unnecessary to support a demonstration of biosimilarity upon a prospective applicant’s written request, unless FDA provides a justification within an agreed-upon time period as to why such study is necessary or why additional scientific information is needed for the determination. This would further streamline biosimilar development programs, where scientifically appropriate, and provide additional clarity to prospective applicants about the type(s) of assessments that are necessary to support a determination of biosimilarity for specific biological products. 

This proposal would also amend the PHS Act to remove the requirement in section 351(k)(5)(B) that biosimilar applications specifically be reviewed by the review division responsible for the review and approval of the reference product application. This change will increase the efficiency of the review of biosimilar applications by allowing the FDA to concentrate all biosimilar reviews in a single review division that specializes in biosimilar review and licensure.

This legislative proposal would codify FDA’s evolved position on biosimilars—and interchangeable biosimilars in particular—since the March 23, 2010 enactment of the BPCIA.  We’ve seen the most dramatic change within the past year as FDA accelerates incremental policy changes that reduce testing requirements and effectively erases the distinction between “highly similar” and “interchangeable” biosimilar biological products.

In 2010, there was no then-currently scientific, regulatory, or medical consensus regarding the data needed to show that a proposed biosimilar can be expected to produce “the same clinical result as the reference product in any given patient”—the statutory standard for biological product interchangeability.  42 U.S.C. § 262(k)(4)(A).  As a result, FDA initially recommended dedicated switching studies to support interchangeability.  In addition, comparative efficacy studies were the norm to demonstrate biosimilarity for both “highly similar” and “interchangeable” biosimilars.

But given both the precision of current analytical methods and accumulating experience showing that the risk from reference product and interchangeable product switching is insignificant, FDA’s thinking has evolved.  Today, clinical switching studies are generally no longer needed to demonstrate interchangeability; nor are comparative efficacy studies the norm for demonstrating biosimilarity, but rather a comparative analytical assessment of certain attributes.  Thus, FDA’s  requirements for demonstrating biosimilarity and interchangeability are, for practical purposes, the same for both statutory categories of biosimilars (at least for therapeutic protein products), and the line between “highly similar” and “interchangeable” biosimilar biological products is blurred nearly beyond recognition outside of the outdated statutory bifurcation.

A version of this legislative proposal is already pending in Congress: The Biosimilar Red Tape Elimination Act (S. 1954 & H.R. 5526).

Create an Additional Abbreviated Licensure Pathway for Biological Products

This proposal would amend section 351(a) of the Public Health Service Act (PHS Act) to create an abbreviated licensure pathway for biological products that are intended to differ from an FDA-approved biological product, but for which scientifically justified reliance on FDA’s previous determination of safety, purity, and potency for a biological product and/or on published literature would enable a more streamlined and efficient development program. The proposed abbreviated licensure pathway would be conceptually similar to the pathway for follow-on drug products in section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, which expressly allows an applicant to rely for approval on investigations that were not conducted by or for the applicant (and for which the applicant has not obtained a right of reference or use). Such an abbreviated licensure pathway would enhance biological product competition and innovation and enable more streamlined and efficient development programs while maintaining robust safety, purity, and potency standards.

This legislative proposal is another one of those “Ohhhh. . . .  This is a nice idea.”  It would, as stated above, create an “abbreviated licensure pathway. . . conceptually similar to the pathway for follow-on drug products in section 505(b)(2) of the [FDC Act], which expressly allows an applicant to rely for approval on investigations that were not conducted by or for the applicant (and for which the applicant has not obtained a right of reference or use),” and allow for “enhance[d] biological product competition and innovation.”  It is also an idea we’ve seen bandied about for a few years, as we noted in a May 2022 post.

Explicitly Address Generic Drug-Device Combination Products

This proposal would amend section 505(j) of the FD&C Act to explicitly address the submission and review of drug-device combination products submitted in abbreviated new drug applications (ANDAs), as well as drug products submitted in an ANDA that are used with a device. Currently, section 505(j) of the FD&C Act does not explicitly address ANDAs for drug-device combination products and generic drugs used with a device, and also states that FDA cannot require ANDAs to contain information beyond that set forth in this section. The lack of clarity in certain statutory provisions in this section – which was established nearly 40 years ago at a time when most products were simpler – may, in certain circumstances, make it difficult for companies to develop generic versions of these products and for FDA to efficiently approve ANDAs for these products. As a result, these products, which are often complex products such as autoinjectors and inhalers, can see delayed generic market entry. FDA seeks amendments to clarify, among other things, that FDA can request and review data for such applications, that certain differences between the device constituent parts of the reference listed drug (RLD) and the proposed generic are permissible, and that differences in labeling between the RLD and the proposed generic as a result of permissible differences in the device are also permissible. This proposal would help promote generic competition and reduce the time, uncertainty, and cost of drug development for combination products.

This legislative proposal is a repeat from prior years.  More than 40 years ago, the Hatch-Waxman Amendments created the conventional ANDA pathway to approval for generic drugs.  At that time in the early 1980s, most products were in simpler dosage forms (e.g., tablet and capsule).  Today, products are increasingly in much more complex and sophisticated forms, including drug-device combination products like auto-injectors and next-generation inhalers.

Drug-device combination products are difficult for generic drug manufacturers to develop and for FDA to efficiently approve ANDAs within the current statutory framework for generic drugs because the statute does not explicitly reference the data and information that FDA may consider in assessing these products.  Without explicit authority addressing drug-device combination products, it has been challenging for industry to know which types of data and information applicants can use to develop a generic version of a brand-name drug that utilizes these new technologies, and FDA historically has required significant more time to review and act on ANDAs for these products compared to drug products in conventional forms.  This has resulted in delayed patient access to more affordable versions of these important products.

Accordingly, this legislative proposal would amend the Hatch-Waxman Amendments to accommodate recent—and to anticipate future—advances in therapeutic product evolution and emerging technologies.  In particular, FDA would get explicit authority to assess data and information for generic drug-device combination products, including those combination products that feature a device with differences from the brand-name product.

Clarify When Patent Information Must Be Submitted for a 30-Month Stay to Be Available

This proposal would amend provisions in the Federal Food, Drug, and Cosmetic Act (FD&C Act) to clarify that a 30-month stay of approval of an abbreviated new drug application (ANDA), 505(b)(2) new drug application (NDA), or abbreviated new animal drug application (ANADA) is available only in connection with patents that are submitted by the holder of the brand drug application under section 505(c)(2) or 512(c)(3) of the FD&C Act before the ANDA, 505(b)(2) application, or ANADA is submitted. If a patent is submitted for listing in the Orange Book by the NDA holder before an ANDA or 505(b)(2) application is submitted and, in response to notice of a paragraph IV certification, the NDA holder or patent owner initiates a patent infringement action against the ANDA or 505(b)(2) applicant within 45 days of receiving the required notice, approval of the ANDA or 505(b)(2) application generally will be stayed for 30 months from the later of the date of receipt of the notice by any owner of the patent or the NDA holder or such shorter or longer time as the court might order. However, if a patent is submitted for listing in the Orange Book after an ANDA or 505(b)(2) application is submitted but before it is approved, the applicant for the pending ANDA or 505(b)(2) application generally must amend its application and provide an appropriate patent certification or statement to the newly listed patent, but no 30month stay will be available in this circumstance. 

Current law is ambiguous with respect to whether patent information submitted as part of the NDA or New Animal Drug Application (NADA) before approval of the brand drug product can give rise to a 30-month stay of approval for an ANDA, 505(b)(2) application, or ANADA submitted after approval of the brand drug product and that relies upon the brand drug product if the ANDA, 505(b)(2) application, or ANADA is submitted before the NDA or NADA holder for the brand drug product has submitted patent information after approval for listing in the Orange Book (for NDAs) or Green Book (for NADAs). This proposal would address that ambiguity.

This legislative proposal appears to be intended to address an issue that was raised in litigation against FDA in early 2024 concerning a 505(b)(2) NDA new strength supplement for Epinephrine Injection, 30 mg/30 mL (1 mg/mL), and that could be raised again in other Hatch-Waxman litigation.  In that case, which the D.C. District Court ruled on on May 2024, FDA issued a Letter Decision explaining the following in footnote 5:

The Agency has identified examples in which FDA has recognized a 30-month stay for new strength supplements for abbreviated new drug applications (ANDAs) based on an infringement action brought for patents listed after the date the original ANDA was submitted. To the Agency’s knowledge, the 30-month stays for these new strength supplements for ANDAs have either expired or have otherwise been terminated by a court and thus are moot. In these examples, the Agency appears to have recognized a 30-month stay because a new strength supplement is referencing a new listed drug with separately listed patent(s) in the Orange Book. However, the Agency looked more closely at these issues in the context of NDA 205029/S-013 and reevaluated the statutory language at section 505(j)(5)(B)(iii) of the FD&C Act. Section 505(j)(5)(B)(iii) of the FD&C Act does not exclude new strength supplements from the provision that limits the availability of a 30-month stay to patents for which the NDA holder submitted information to FDA “before the date on which the application (excluding an amendment or supplement to the application) . . . was submitted” and largely mirrors the language at section 505(c)(3)(C) of the FD&C Act. As a result of this reevaluation, FDA intends to change its practice with respect to new strength supplements for ANDAs and bring it into conformity with the statutory text. Going forward, the result will be that a 30-month stay will not be available for new strength supplements for ANDAs for patents submitted after the original ANDA was submitted (even where those patents were submitted before the submission of the new strength supplement). Because it is not directly implicated by this decision, FDA has not yet completed its assessment of new strength amendments that may be implicated by this issue. If FDA identifies any example in which FDA erroneously determined that there is an active 30-month stay either in the context of a new strength supplement or new strength amendment, it will review its decision to ensure that it conforms with the statutory text.

. . . . And we will add in one honorable mention . . . .

Align the FD&C Act with Longstanding Timelines and Procedures Governing Application Reviews and Streamline Appeals When an application is Not Approvable

FDA proposes to amend the FD&C Act to codify longstanding timelines and procedures that are central to FDA’s review of new drug applications (NDAs) and abbreviated new drug applications (ANDAs). Specifically, FDA proposes to amend subsections 505(c) and (j) of the FD&C Act (21 U.S.C. 355(c) and (j)) to remove the 180-day timeframe to either approve the application or give the applicant notice of an opportunity for a hearing (NOOH) on whether the application is approvable. FDA proposes to reference the goals identified in commitment letters under the Prescription Drug User Fee Act (PDUFA) and Generic Drug User Fee Amendments (GDUFA). FDA also proposes to amend section 505(c) and (j) of the FD&C Act to expressly include (1) the filing and receipt determinations described in FDA’s regulations and (2) FDA’s longstanding complete response letter (CRL) procedures. FDA further proposes to enhance efficiency by replacing the hearing-related processes described in section 505(c) and (j) of the FD&C Act with an appeal process modeled after the expedited withdrawal procedures for accelerated approval described in section 506(c)(3)(B) of the FD&C Act. 

Let’s call this legislative proposal the “Anti-Vanda Proposal,” as it appears to be an effort to legislatively address some of the litigations filed by Vanda Pharmaceuticals, Inc.  As we previously posted, Vanda has been anything-but-shy about suing FDA about anything and everything.  This includes Vanda’s February 2024 Complaint effectively challenging FDA’s PDUFA performance goals given the 180-day statutory review clock for marketing applications.