A draft agreement between industry and FDA that would assess user fees for "advisory review" of broadcast direct-to-consumer ads prior to initial public dissemination had its genesis in the Pharmaceutical Research & Manufacturers of America's DTC guiding principles.

According to a source familiar with the negotiations, FDA had informed industry that it requires additional resources to undertake the reviews triggered by PhRMA's recommendation that all broadcast ads be submitted for pre-review (¹ Also see "PhRMA DTC Principles Compliance To Get Independent Panel Review In 2007" - Pink Sheet, 8 August, 2005., p. 8).

In response, PhRMA proposed a user fee system to create additional funding for ad review.

The possible new funding mechanism, which is subject to HHS review and Congressional approval, is not expected to be technically a part of the fourth reauthorization of the Prescription Drug User Fee Act.

It is understood that the Biotechnology Industry Organization sought to make the mechanism a stand-alone program because many of the trade group's members do not run such ads.

The proposal will likely authorize $6.3 mil. per year in user fees over FY 2008-2012, for use by the Center for Drug Evaluation & Research's Division of Drug Marketing, Advertising & Communications, as well as for the Center for Biologics Evaluation & Research's Advertising & Promotional Labeling Branch.

The total is expected to be adjusted each year for workload and inflation; a sunset clause would terminate the program in 2012, unless renewed by Congress.

There is general agreement that FDA is in need of more funding for the review of such ads.

"They're just inundated with a lot of requests. And there's no question that additional staff...are needed to get things turned around in a reasonable time," consultant Louis Morris said in an interview with "The Pink Sheet."

The former acting director of DDMAC is currently president of Louis A. Morris & Associates.

Under the user fee proposal, each company will likely be required to notify FDA 90 days before the start of each fiscal year of the number of ads planned for submission in that year.

Fees would then be assessed on a pro rata basis with the maximum allowable fee per ad in FY 2008 likely to be capped at $83,000; in later years fees would be capped at no greater than 50% more than the previous year.

It is expected that companies would be required to pay fee totals by Oct. 1 of each fiscal year. Companies failing to pay by Nov. 1 would be subject to an additional 50% late charge. (Fee totals for the initial year will be doubled to establish a reserve fund.)

For each ad submitted in excess of the number notified prior to the beginning of the year, it is also likely that companies will be charged a 50% penalty.

It is expected that as part of the agreement, FDA will phase in a review deadline of 45 days for properly submitted ads. This would be a significant improvement over the current average response time which is around 75 days.

"Even if it's a longer [timeframe] than the industry would prefer...just knowing when something will be [reviewed] is a tremendous benefit to the industry in their ability to plan when materials may be disseminated," Morris said.

The agreement will likely include a mechanism whereby the program will be cancelled if there is inadequate participation.

The deal could also include a requirement that for each year of the program, FDA must submit separate performance and fiscal reports to both the House Energy & Commerce Committee and the Senate Health Committee.

The Washington Legal Foundation supports the potential system, provided that the program is voluntary.

"There has been a real problem of poor and incompetent oversight of direct-to-consumer advertising by FDA with much of the work product that it puts out being in clear violation of the First Amendment. So if extra resources can provide the competent work at FDA, that would be wonderful," Chief Counsel Richard Samp said.

WLF's "DDMAC Watch" program routinely sends letters to the agency critiquing its citations of ads, and the effort could be laying the ground work for a legal challenge of FDA's enforcement efforts (² Also see "FDA Ad Division Letter Surge Shows Focus On Prominence Of Risk Information" - Pink Sheet, 1 August, 2005., p. 7).

Despite WLF's misgivings about the agency's regulation of advertising, Samp suggested that even an obligatory user fee program would be acceptable, provided restrictions were imposed requiring that the funds generated by the program are used solely for DTC review.

The concern that user fees could make FDA beholden to industry has been raised with regard to the proposed system.

Morris noted that the agency has experience with funding ad review through user fees since, under the current PDUFA agreement, some user fee funding supports the pre-review of promotional materials following an approval.

Also, Morris offered that to the extent pre-review of ads is a service performed by FDA to benefit industry, user fees are a reasonable method of funding.

The consultant clarified that the arrangement could also serve as an advantage to FDA.

"With advisory opinions, they'd rather err on the side of being cautious....so FDA can be, I guess, as aggressive as it wants to be," Morris said.

This could prevent the dissemination of ads that would otherwise harm the public health and be difficult to correct.

"Another argument that can be made is that...this will free up more FDAers to engage in more compliance activities because now the industry is going to fund part of DDMAC. That's a possibility."

Morris quipped, however, "I don't think the industry is interested in funding FDA's issuance of warning letters."

The final proposed PDUFA language agreed to by PhRMA, BIO and FDA is expected to be released shortly.

-John Rancourt

User Fee Deal For Ad Review Funds Stems From PhRMA DTC Principles

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