FDA’s biosimilar program is expected to be starved for funding in its early years, although that is partially by design.

Biosimilar user fee revenue is not likely to be robust during the first few years because establishment, product and other fees, which produce a large portion of the revenue, will not grow until the industry expands.

“This is going to be an under-resourced program for the next few years regardless just because that’s how it is,” Janet Woodcock, director of the Center for Drug Evaluation and Research, said Sept. 12 during a biosimilars conference sponsored by FDA and the Drug Information Association. “That’ll cause, I think, some struggle, especially with allocation of resources amongst all their important activities that we do at FDA.”

The comment may have been a plea for patience as the user fee program launch nears. Agency capacity for meetings and reviews could be limited if funding does not support necessary hiring and regulation development right away.

FDA already has the authority to approve biosimilars. However, no 351(k) marketing applications have arrived at the agency, said Kathleen Uhl, deputy director of the CDER Office of Medical Policy.

The agency did recently approve a Teva Pharmaceutical Industries Ltd.’s tbo-filgrastim, a version of Amgen Inc.’s Neupogen (filgrastim), but it was not filed as a biosimilar application Also see "Teva’s G-CSF Product Clears FDA, Leaving Appeal Of Biosimilar Pathway Uncertain" - Pink Sheet, 3 September, 2012..

Sponsors have submitted 11 INDs and the FDA already likely has conducted more than 30 meetings with sponsors, Woodcock said.

Product development activities will help build the funding base for the program. Annual product development fee payments, paid by sponsors that reach the IND stage, should be the most popular funding source in its first few years. Marketing application and other fees likely will arrive later when products near approval.

Product development fees are a unique aspect of the biosimilar user fee program, designed to give the agency at least some funding before applications themselves start flowing. The development fee is 10% of the marketing application cost and charged each year the product is in that stage. FDA will subtract those payments from the price of the marketing application, once it is filed.

The total biosimilar fees will match prescription drug user fees. The product development fee was set at $195,880 and a marketing application requiring clinical data will cost about $1.96 million in FY 2013 Also see "FDA Sets Biosimilar Application Fees, But Is Silent On Volume Projections" - Pink Sheet, 31 July, 2012..

Bullet-Proof Applications Needed

Woodcock also expected FDA and sponsors to struggle early on with legal issues. She said there likely will be lawsuits, citizen petitions and other issues challenging the biosimilar law, in addition to skepticism in the clinical community about the products’ efficacy and safety, just as when small-molecule generic drugs debuted.

Those issues will place more focus on application quality. While there is widespread support for the FDA biosimilars program, to assure patients and physicians the products will be safe and effective, applications have to be scientifically sound and legally solid, she said.

“When we put out biosimilars, the case for them should be pretty scientifically bullet-proof, in other words, something that we should be able to defend in court,” Woodcock said.

FDA began outlining its biosimilars approach earlier this year when it issued three draft guidances. Industry is looking for more details, however Also see "Biosimilar Interchangeability: Stakeholders Want More FDA Guidance, Fewer Hurdles" - Pink Sheet, 30 April, 2012..

Continuing Resolution, Sequester Could Exaggerate Problem

Potentially compounding the biosimilar revenue problem is the continuing resolution proposed by House members to fund the government through the end of March.

Language does not appear to give FDA authority to spend some of the user fee revenue generated for the biosimilar and generic drug programs. The legislation does not allocate money for programs not funded in FY 2012. Both fees were created July 9.

Woodcock did not indicate the continuing resolution was a more significant problem than other pending agency revenue issues.

“It’s just another obstacle that developed,” she said after her speech.

The continuing resolution may allow FDA to collect and spend biosimilar product development, annual product and application reactivation fees ([A#14120911005]).

The generic drug user fee program suffers from the same problem. A one-time fee designed to help FDA reduce the backlog of pending applications likely can be collected and spent, other fees cannot.

Sponsors may not be required to pay some fees in the generic drug program temporarily if the existing continuing resolution is enacted, although they could be paid voluntarily.

Budget sequestration also is set to take effect Jan. 2 absent a congressional deal to avoid it.

FDA could face a 7.8% funding cut under sequestration, which is expected to include user fee revenue in addition to budget authority ([A#14120905004]).

The sequester could dramatically affect agency operations and may force layoffs Also see "How Do You Solve A Problem Like Sequestration?" - Pink Sheet, 3 September, 2012..

Biosimilars Program Will Be “Under-Resourced” In Early Years As Industry Grows

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