DTC User Fees: Will This Program Fly?

A new program to allow prescription drug advertisers to pay for a pre-review of TV spot by the Food & Drug Administration is struggling to get off the ground.

With about a week to go before the first critical deadline to create DTC user fees, FDA has gotten commitments from industry to submit 47 ads. That is about 20 short of the absolute minimum necessary to get the new review system up and running—and way short of the 150 ads used as the benchmark in creating the plan.

The new user fees were created by the FDA Amendments Act signed into law September 27. The program allows advertisers to buy a pre-review from the agency; sponsors are free to advertise without paying the fee, but if they want the agency’s feedback before the ad airs, then they have to participate.

The logistics of the program are a bit convoluted. Because the fee is voluntary, the agency first needs a commitment from sponsors to participate; then it calculates the fees and sends out invoices. Sponsors are supposed pay up front; they can change their minds later and pay a penalty to participate.

But if everyone waits, the entire program will shut down. The law stipulates that FDA must collect at least $11.25 million to get the program up and running by January 25. Since there is a cap set on the fee, that means FDA must get commitments from industry for 68 ads in order for the program to take off.

Time is tight. The program was designed with the hopes that everything would be in place ahead of the start of the fiscal year on October 1. That obviously went out the window when FDAAA--which includes groundbreaking drug safety provisions--took most of the summer to complete.

In October, FDA published a notice seeking commitments from sponsors by November 26. During a Food & Drug Law Institute meeting on FDAAA implementation November 16, Division of Drug Marketing Advertising & Communications director Tom Abrams provided an update.

First the good news: FDA is already doing the ad reviews and meeting the goal of responding within 45 days. Abrams says FDA has already gotten 12 ads under the program, and has provided feedback on 4. The agency is comfortable it will answer the next eight within 45 days as well.

But there is reason for concern. The agency has commitments for 47 ads so far, Abrams said. The division director is confident that sponsors are interested in making it happen; he said he understands that the challenge is getting sign off within corporations to make the commitment to participate.

But, he stressed, time is running out. FDA needs answers by November 26 so it can calculate the fee and collect the money.

WilmerHale attorney Scott Lassman, who helped negotiate the new user fee program on behalf of the Pharmaceutical Research & Manufacturers of America, underscored that concern. The new user fee “is in some jeopardy,” he told FDLI.

Assuming companies are able to turn around their commitment notices in time, there will still be some nervous weeks ahead, Lassman pointed out. That is because the deadline for FDA to collect the money is firm: January 25. It is not good enough for the agency to have commitments or even to have invoices out. The law says it must “receive” a total of $11.25 million by then -- or shut down the program.

Oh, and one other thing. Even if FDA does collect the money for the pre-reviews, it can’t actually spend it unless or until Congress passes an appropriations bill for the agency for 2008. FDA is currently operating under a continuing resolution—an issue that hangs over every aspect of implementing FDAAA.

There is a silver lining. As Lassman points out, lower than expected participation should mean faster reviews. Assuming FDA collects enough money to meet the January trigger point--and assuming Congress finishes an appropriation bill in some reasonable timeframe--FDA will be able to hire 27 new staffers just for TV ad reviews. The goals set in the program were based on having 150 ads to review; if the agency only has to review half that many, it should be able to do virtually all of them within 45 days.

The stakes are high, Lassman says. “This is industry’s opportunity to show a voluntary program works,” he told FDLI, noting that there was a big push in Congress for a blanket moratorium on ads for new drugs. Still, he acknowledged, “there are legitimate reasons to deliberate.”

The betting here is that industry will come forward and make it work. Why? Because the “voluntary” user fee program sure looks a lot better than the alternative. As we discussed in The RPM Report last month, the new law also gives FDA the authority to require pre-review of DTC ads whenever it chooses. And, more importantly, it gives FDA the power to impose fines on ads it deems violative.

Anyone who obtains a pre-review from FDA (and makes all the changes requested by the agency) is protected from fines. FDA can still change its mind about an ad, but it must give the sponsor a chance to change the ads before it can levy fines. So the pre-review is really a form of insurance, and one that looks relatively cheap.

So if you plan to run TV ads in 2008, it probably makes sense to get that notice in to FDA before heading out for the Thanksgiving holiday. It may seem odd to be thankful for the chance to pay more money to FDA, but given the alternatives that is probably the right spirit.

Now, who gets the wishbone?