**White Paper**

**Prescription Drug User Fee Act (PDUFA):**

**Adding Resources and Improving Performance in FDA Review of New Drug
Applications**

**Executive Summary**

The Prescription Drug User Fee Act (PDUFA) program is the cornerstone of
modern FDA drug review. User fees currently fund about half of new drug
review costs. By providing needed funds, PDUFA ended slow and
unpredictable review and approval of new drug applications, while
keeping FDA's high standards.

PDUFA funds allowed FDA to accomplish a number of important goals. FDA
hired more review and support staff to speed review. The number of
full-time equivalent (FTE) staff devoted to the new drug review process
has nearly doubled, growing from 1,277 FTE in 1992 to 2,503 FTE in 2004.
FDA upgraded its data systems and gave industry guidance to help
minimize unnecessary trials and generally improve drug development. FDA
gave industry guidance on how to improve the quality of applications,
with the goal to reduce misunderstandings and the need for sponsors to
rework and resubmit applications. Finally, FDA improved procedures and
standards to make review more rigorous, consistent, and predictable.
\[Section 1\]

Taken together, all of these steps ensure that the time and effort
patients put into clinical trials provide useful data. They also lowered
drug development costs and shortened review times. For example, the
median approval time for priority new drug applications and biologics
license applications decreased from 13.2 months in 1993 to 6.4 months in
2003. Ultimately, these developments enabled FDA to ensure that needy
American patients get fast access to novel drugs---faster, in fact, than
citizens of other countries. Since the start of PDUFA, FDA has approved
over 1,000 new drugs and about 100 new biologics. Under the currently
authorized program (PDUFA 3) 50 percent of new drugs are launched first
in the United States, compared to only 8 percent in the years pre-PDUFA.

To get to these outcomes, PDUFA established goals acceptable to FDA and
new drug sponsors for both reviewing drugs and giving industry guidance
during drug development. These goals included the following. \[Section
3\]

-   Review standard and priority applications within specified time
    frames in a manner that balances the preservation of review process
    integrity with "fast as possible" patient access to needed
    treatments.

-   Quickly review sponsors' appeals to FDA decisions to place "holds"
    on conducting clinical trials.

-   Give early feedback, when requested, on certain types of clinical
    studies ("special protocol assessments") to promote rapid and
    cost-effective drug development.

-   Quickly respond to and schedule sponsor-requested meetings to
    promote rapid and cost-effective drug development.

-   Facilitate guidance development on good review practices.

-   Implement and evaluate pilot projects to test various alternatives
    for expediting drug review without sacrificing drug safety.

Additional goals specifically focused on preserving an appropriate
balance between drug efficacy and drug safety by funding safety-related
activities for the first 2 years of product marketing for most drugs,
and the first 3 years for potentially dangerous drugs. PDUFA fees also
enabled FDA to issue guidance for FDA and industry on how best to
assess, manage, and monitor drug risk. \[Sections 3.4-3.5\]

However, since the PDUFA program began, FDA's drug review workload
substantially increased. \[Section 4\]

-   Original drug and biologic applications submitted for review
    increased by over 50 percent between Fiscal Year (FY) 1993 and
    FY 2004. This increase occurred primarily for drug, as opposed to
    biologic, applications. Overall, most applications are for drugs.

-   Efficacy supplements submitted for review increased by more than 80
    percent between FY 1993 and FY 2004. As with original applications,
    most submissions are for drugs.

-   Chemistry, Manufacturing and Controls (CMC) supplements submitted
    for review doubled between FY1993 and FY2004. Biologic CMC
    submissions increased more than 4-fold.

-   Sponsor-requested meetings held since specific PDUFA goals were
    established increased by about one-third (FY1999-FY2004). FDA holds
    an average of 9 sponsor-requested meetings every business day.

-   Requests submitted for special clinical protocol reviews increased
    almost 5-fold between FY1999 and FY2004.

-   FDA responses to appeals from sponsors over "holds" on their
    clinical trials more than tripled between FY1998 and FY2004.

-   Serious adverse events drug sponsors reported sponsors to FDA
    increased almost 9-fold between 1992 and 2004. Americans received
    over 80 percent more prescriptions by the end of that time frame as
    they had at the beginning.

At the same time that workload has increased, FDA's capacity to deliver
timely and predictable performance is challenged by cost pressures,
budget constraints and the need to meet other important work mandates.
These challenges have been accompanied by flat to negative growth of
total appropriated funds to FDA. The challenges include: mandated
federal pay increases and earmarks for important non-PDUFA programs
including activities around generic drugs, blood safety, and influenza
vaccine; the costs of recruiting and retaining qualified expert
(marketable) reviewers; and normal market-driven increases in the cost
of facility upkeep and rent for necessary work space. \[Section 5\]

**Introduction**

The Prescription Drug User Fee Act (PDUFA), which authorizes FDA to
collect user fees amounting to a little more than half of total funding
for drug review, expires in September 2007. Without further legislation,
FDA would be unable to collect user fees for the new prescription drug
review program. This paper provides data and information on the scope
and current status of FDA's program to implement PDUFA, so as to inform
public discussions regarding PDUFA reauthorization.

PDUFA has had a significant role in modern drug review at FDA. It has
been a key to ending major problems with unpredictable and slow review
and approval of new drug applications. It has provided funds to
eliminate or even reversed the so-called "drug lag" attributed to
inadequate staff and computer resources. Americans now get access to
more new medicines faster than patients in other countries, while prior
to PDUFA, American patients waited for FDA to act long after new drugs
were available in Europe.

Reauthorization of PDUFA in 1997 (PDUFA 2) and 2002 (PDUFA 3)
established a precedent for a process to identify areas to consider
related to PDUFA 4 in 2007. FDA seeks public comment on the current
program, including views on what features should be retained and what
might be done to further strengthen and improve the program. On November
14, 2005, FDA will hold a public meeting on PDUFA
[[http://www.fda.gov/oc/meetings/pdufa111405.html]{.underline}](http://www.fda.gov/oc/meetings/pdufa111405.html)
and will at the same time open a public docket
[[http://www.fda.gov/OHRMS/DOCKETS/98fr/05-20875.htm]{.underline}](http://www.fda.gov/OHRMS/DOCKETS/98fr/05-20875.htm).
where people can submit written comments. In addition, per provisions of
the statute, the Secretary of DHHS will consult with the Committee on
Energy and Commerce of the House of Representatives, the Committee on
Health, Education, Labor, and Pensions of the Senate, appropriate
scientific and academic experts, health care professionals,
representatives of patient and consumer advocacy groups, and the
regulated industry. The Secretary will publish in the Federal Register
any recommendations after negotiations with the regulated industry and
will present the recommendations to the congressional committees. In
addition, the Secretary will publish a Federal Register notice including
department recommendations to Congress regarding PDUFA reauthorization.
Following that FR notice, FDA will hold another public meeting to hold a
meeting at which the public may present its views on those
recommendations; and will provide for a period of 30 days for the public
to provide written comments on those recommendations.

This white paper summarizes major factors behind establishment of the
program. The paper describes how the fees are collected and what they
pay for, and how the PDUFA program has evolved since its enactment in
1992. In addition, the paper describes progress to date, and current
challenges for the funding of drug review and achieving the related
public health aims.

-   Section 1 highlights major factors that resulted in the enactment of
    the Prescription Drug User Fee Act (PDUFA).

-   Section 2 outlines how the PDUFA user fees are structured and
    collected and summarizes the current level of fee collections.

-   Section 3 describes the scope of regulatory activities supported by
    PDUFA fees, and explains how these activities help to speed access
    to safe and effective new drugs.

-   Section 4 describes how the PDUFA program has evolved and how the
    associated review workload has grown since its first enactment in
    1992.

-   Section 5 concludes with a summary of key challenges for FDA related
    to PDUFA and new drug review.

1.  **Major Factors Resulting in Enactment of PDUFA in 1992**

Drug review at FDA prior to PDUFA entailed a variety of problems that
PDUFA alleviated. Before PDUFA, FDA's review process was understaffed,
unpredictable and slow. FDA lacked sufficient staff to perform timely
reviews, or develop procedures and standards to make the process more
rigorous, consistent and predictable. FDA lacked the funds to provide
computers to all FDA reviewers. At the same time, regulators in other
countries were able to review products faster. Access to new medicines
for U.S. patients lagged behind. For example, U.S. patients were not
getting access to new AIDS drugs as quickly as in other countries.
Chronic understaffing of drug review, and related delays in U.S. patient
access to new drugs led to the 1992 enactment of PDUFA.

PDUFA was established to increase FDA funding for human drug review and
to increase the speed and predictability of the review process. Under
PDUFA the U.S. pharmaceutical and biotechnology industries would pay
user fees and FDA would commit to develop a more standardized process
and faster, more predictable review timeframes. (Section 4 provides more
details on the performance goals related to these commitments.) PDUFA
provided FDA with added funds that enabled the agency to hire additional
reviewers and support staff and upgrade its information technology
systems to speed up the application review process for new drugs and
biological products without compromising FDA's high standards for
approval.

Since the beginning of the program, there has been a significant
improvement in FDA funding for the drug review program, including
significant investments in information technology. As shown in Figure
1.1, PDUFA has enabled the nominal funding for human drug review to
increase by over 225 percent from 1992 to 2004. Because Congressional
appropriations have grown at a much lower rate, user fees now represent
over half of all resources devoted to the review of human drugs.

PDUFA has resulted in a significant increase in staffing, enabling FDA
to provide more guidance for industry during drug development and
improvements to the review process. As shown in Figure 1.2, the number
of full-time equivalent staff (FTEs) devoted to the new drug review
process nearly doubled between 1992 and 2004, increasing from 1,277 FTEs
in 1992 to 2,503 in 2004. The increased share of program support from
user fees means that currently more than half of all FTEs devoted to the
review of human drugs are now funded by user fee revenues.

FDA committed to certain performance goals on timeframes for the review
of new drug applications (NDAs) and biologics license applications
(BLAs). FDA has met or exceeded all PDUFA NDA and BLA review goals since
PDUFA's inception.

However, meeting review goals is not the only desired outcome. By
meeting the review goals, FDA has been able to dramatically reduce the
time to approval for new drugs and biologics and provide the American
public with access to these medical treatments more quickly.

Since the start of PDUFA, FDA has approved 1,010 new drug applications
and about 100 biologics licensing applications. These include 62 new
cancer drugs, 109 new drugs for metabolic and endocrine disorders, 96
new anti-infective drugs, 103 new drugs to treat neurologic and
psychiatric disorders and 73 new drugs to treat cardiovascular and renal
disease.

Between 1993 and 2003 the median approval time for priority NDAs and
BLAs decreased by over half \-- from 13.2 months in 1993 to 6.4 months
in 2003. Over this same time period the median approval time for
standard NDAs and BLAs decreased by over one third, from 22.1 months in
1993 to 13.8 months in 2003. Figure 1.3 shows the median approval times
for NDAs and BLAs by priority status for the PDUFA era, and depicts the
overall trend toward shorter times to new drug approval for both
priority and standard drug applications.

The reduction in median approval times has resulted from significant
improvements in FDA review process efficiencies, while holding to the
same high standard of evidence for drug safety and effectiveness. This
is evident in the data showing the percentage of applications approved
on the first cycle \[i.e., the first time they are submitted for FDA
review\] versus approved on a subsequent review cycle after they have
successfully addressed deficiencies identified by FDA in a previous
review. As shown in Figures 1.4 the percentage of priority applications
approved on first cycle has changed very little over the years, even as
the median approval times have declined.

![](media/image1.wmf)

The data for percentage of first versus later-cycle approvals for
standard drug applications also suggest that there is no trend toward
increasing approvals in the first cycle. However, as shown in Figure
1.5, the data do suggest that an increasing percentage of sponsors are
effectively addressing deficiencies identified in the first cycle, and
are able to obtain approval after the second cycle of review.

![](media/image2.wmf)

The combination of realistic time frames, management improvements, and
additional resources improved FDA's review performance for drugs and
biologics. Since the start of PDUFA, the so-called drug lag in America,
compared to other countries, has been reversed and the proportion of all
new drugs first marketed in the United States has increased
dramatically. Figure 1.6 shows the percent of new chemical entities
(NCEs)/new active substances (NASs) first launched in the United States:
pre-PDUFA period of 1980-1992, PDUFA 1 years 1993-1997, PDUFA 2 years
1998-2002 and PDUFA 3 2003-2004.

2.  **PDUFA Financing of New Drug Review**

The design of PDUFA user fees detailed in the provisions of the statute,
has contributed to the program's stability and success. This section
reports on the design and the current level of fee collections.

PDUFA fees are collected in three components: application fees,
establishment fees, and product fees. Each of the three types of fees
contributes one third of the total revenues in a fiscal year. An
application fee must be submitted when certain new drug applications
(NDAs) or biologic license applications (BLAs) are submitted. Product
and establishment fees are due annually on October 1. The total revenue
amounts derived from each of the categories---application fees, product
fees, and establishment fees---are set by the statute for each fiscal
year. The following schedule was included in PDUFA 3:

Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year

\`\`Type of Fee Revenue 2003 2004 2005 2006 2007

\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--

Application/Supplement\...\...\...\...\...\..... \$74,300,000
\$77,000,000 \$84,000,000 \$86,434,000 \$86,434,000

Establishment\...\...\...\...\...\...\...\...\..... \$74,300,000
\$77,000,000 \$84,000,000 \$86,433,000 \$86,433,000

Product\...\...\...\...\...\...\...\...\...\...\..... \$74,300,000
\$77,000,000 \$84,000,000 \$86,433,000 \$86,433,000

Total Fee Revenue\...\...\...\...\...\...\...\.... \$222,900,000
\$231,000,000 \$252,000,000 \$259,300,000 \$259,300,000

The increase in revenues each year was provided to give FDA sufficient
resources to meet the performance goals that are also agreed to over the
5 years of the program.

PDUFA authorizes adjustments in fees to account for cost inflation and
workload changes. The statutory amounts shown in the box above must be
adjusted for cumulative inflation since FY 2003 and for changes in drug
review workload in each fiscal year. PDUFA 3 authorizes FDA in each
fiscal year to set user fees so the total revenue that FDA receives from
each fee category approximates the statutory amounts, after the
adjustments for inflation and the workload. Those fees, with the
rational for their calculation, are published in the Federal Register
each year in early August before the beginning of the Fiscal year on
October 1. The fees for the first 4 years of PDUFA 3 are shown in the
table below.

  ----------------- ------------ -------------- -------------- --------------
                    **FY 2003**  **FY 2004**    **FY 2005**    **FY 2006**

  **Application     \$533,400    \$573,500      \$672,000      \$767,400
  Fee**                                                        

  **Establishment   \$209,900    \$226,800      \$262,200      \$264,000
  Fee**                                                        

  **Product Fee**   \$32,400     \$36,080       \$41,710       \$42,130
  ----------------- ------------ -------------- -------------- --------------

The fees for applications have risen faster than the other fees because
the estimate of the number of full applications fees that FDA will
receive, and that will produce the revenue expected, has gone down from
an estimated 139 in 2003 to an estimated 129 in 2006. (It should be
noted that about 25 percent of all applications received each year do
not pay fees because the applications are for fee-exempt orphan
products, or the fees are waived either because it is the first
application from an small business or it qualifies for one of the other
waiver provisions. The estimates of the numbers of fees that will be
received is based on a rolling average of the number of full application
fees received in the previous 5 fiscal years.)

PDUFA has provisions intended to ensure that the resources from user
fees are in addition to and not instead of Congressional appropriations
to support the process of human drug review. It imposes three legal
conditions on FDA's authority to collect the user fees.

1.  FDA\'s overall Salaries and Expenses Appropriation (excluding user
    fees) must meet or exceed FDA\'s overall FY 1997 Salaries and
    Expenses Appropriation (excluding user fees and adjusted for
    inflation).

2.  The amount of user fees collected in each year must be specified in
    Appropriation Acts.

3.  FDA may collect and spend user fees only in years when FDA also uses
    a specified minimum amount of appropriated funds for the review of
    human drug applications. The specified minimum is the amount FDA
    spent on the review of human drug applications from appropriations
    (exclusive of user fees) in FY 1997, adjusted for inflation.

So far, FDA has been able to meet these three conditions.

FDA administration of fee collections is designed to ensure both
efficiency and complete separation of fee collections from fee-supported
review activities. The collection of fees for applications is done
through Mellon Bank and coordinated by FDA's Office of Financial
Management in the FDA Office of Commissioner. The annual bills for
establishment fees and product fees are based on FDA's database of
listed products and active establishments, and fee monies are then
collected centrally by Mellon Bank. FDA drug reviewers and other staff
are generally unaware of whether and how much any individual company has
paid in user fees. The table below summarizes fee collections for the
most recently available Fiscal Years 2003 and 2004.

#### FDA Statement of User Fee Revenues by Fee Source *As of September 30, 2004*

  -------------------------------- -------------------- -------------------
  **Fee Category**                 **FY 2003**          **FY 2004**

  Fees Collected:                                       

  Product Fees                     \$76,852,785         \$76,453,520

  Establishment Fees               \$78,209,219         \$82,318,894

  Application Fees                 \$62,684,550         \$87,693,991

  **Total Fees Collected:**        **\$217,746,554**    **\$246,466,405**
  -------------------------------- -------------------- -------------------

FDA spends user fee revenues only on activities to support the "process
for the review of human drug applications"[^1], as defined in PDUFA 3.
Under PDUFA, fees collected and appropriated, but not spent by the end
of a fiscal year, continue to remain available for FDA to spend in
future fiscal years. In FY 2004, FDA obligated \$232,081,500 from user
fee revenues. Those costs were distributed as shown in the table below.
The amounts are based upon the obligations recorded as of the end of
each fiscal year. In the past, over 81 percent of amounts obligated are
expended within one year, and 96 percent within two years. Thus, annual
obligations represent an accurate measure of annual costs.

#### FDA Process for the Review of Human Drug Applications \-- Total Costs *As of September 30, 2004*

  ----------------------------------------------- ------------------- -------------------
  **FDA Component**                               **FY 2003**         **FY 2004**

  Center for Drug Evaluation and Research (CDER)  \$250,370,170       \$293,991,408

  Center for Biologics Evaluation and Research    \$110,132,866       \$91,905,443
  (CBER)                                                              

  Field Inspection and Investigation Costs (ORA)  \$19,098,382        \$19,646,087

  Agency General and Administrative Costs (OC)    \$29,840,492        \$31,313,598

                                                                      

  **Total Process Cost**                          **\$409,441,910**   **\$436,856,536**

  Amount from Appropriations                      \$\$209,287,410     \$\$204,775,036

  Amount from Fees                                \$200,154,500       \$232,081,500
  ----------------------------------------------- ------------------- -------------------

The costs for all components, except for CBER, rose in FY 2004. The
increased expenditures primarily reflect the additional personnel hired
by the organizations in FY 2004 and the mandatory pay raise for all
federal employees. The reason for the decrease in CBER and the increase
in CDER is because of the transfer of review responsibility for certain
therapeutic biologics from CBER to CDER in FY 2004. The methodology used
to develop the estimated full cost of human drug review is detailed in
Appendix D of the FY 2004 PDUFA Financial Report
[www.fda.gov/oc/pdufa/finreport2004/default.htm](http://www.fda.gov/oc/pdufa/finreport2004/default.htm).

3.  **Scope and Importance of PDUFA-Supported Work**

The activities encompassed in the PDUFA "process of human drug review,"
that are needed to improve drug development and speed patient access,
begin well before a product sponsor submits a new drug application for
FDA pre-market review. Although not often discussed, these other---often
FDA labor-intensive---activities are critical to improving the quality
of a sponsor's drug development and the quality of a submitted market
application. High-quality development is crucial to patient safety
during clinical trials and to ultimate approval of a safe and effective
product. Application quality is a decisive factor in drug review and
approval.

PDUFA funding has enabled increased review staffing to increase
FDA-sponsor interactions for scientific and regulatory consultation at a
number of critical milestones in drug development, as shown in Figure
3.1.

Figure 3.1

![](media/image3.png){width="5.670138888888889in"
height="3.4520833333333334in"}

This section of the paper provides more background information about FDA
activities from consultation in preclinical development through review
of submitted risk management plans and safety surveillance following new
drug approval. At the end of each subsection is a brief summary of
current requirements under PDUFA 3.

1.  **Preclinical Development**

For truly new therapies, sponsors often request a meeting with FDA to
discuss their preclinical findings and review their plans for clinical
development. During the preclinical phase of drug development, sponsors'
primary goal is to determine whether: 1) the product is reasonably safe
for initial use in humans and 2) it is sufficiently effective against a
disease target in chemical assay tests or in animal models to justify
the cost of commercial development. When a product is identified as a
viable candidate, the drug\'s sponsor then focuses on demonstrating its
effectiveness and on collecting the safety data and dosing information
necessary to establish that the product will not expose humans to
unreasonable risks when used in limited, early-stage clinical studies in
humans.

## 3.2 Clinical Development 

The clinical phase of product development (see Figure 3.1) extends from
a sponsor's initial submission of the Investigational New Drug
Application, to begin testing a new drug in humans (i.e., clinical
studies) to submission of a complete NDA)or BLA to FDA for marketing
approval.

The IND application must contain information in three broad areas:

-   Animal Pharmacology and Toxicology Studies---including sufficient
    data to permit FDA to assess whether the product and the proposed
    dose are reasonably safe for initial testing in humans. 

-   Manufacturing Information---including information on drug
    composition, stability and manufacturing quality controls, to permit
    FDA to assess whether the sponsor can adequately produce and supply
    consistent batches of the drug or biologic for use in the clinical
    trials.

-   Clinical Protocols and Investigator Information---including plans
    for the design and conduct of the proposed studies in humans.

-   Early-phase clinical studies evaluate the safety and tolerability of
    increasing doses of the drug, often in healthy volunteers, and
    proceed from single doses to multiple doses. Later-phase clinical
    studies involve patients with the disease or condition, and involve
    progressively larger numbers of people, often treated for longer
    periods.  Clinical protocols may also include parallel studies that
    focus on special populations, such as the elderly, as well as drug
    interactions, to determine when dosing adjustments are necessary to
    ensure drug safety.

-   Information on the qualifications of clinical investigators who will
    oversee the administration of the experimental compound is needed
    for FDA to assess whether the investigators are qualified to fulfill
    their clinical trial duties.  In addition, all investigators must
    make a commitment to obtain informed consent from the research
    subjects, to have the study reviewed by an institutional review
    board (IRB), and to adhere to the investigational new drug
    regulations.

Once the initial IND is submitted, the sponsor must wait 30 calendar
days before initiating any clinical trials.  During this time, FDA has
an opportunity to review the IND for safety and compliance (the
toxicology data and the clinical study protocol) to ensure that research
subjects will not be subjected to unreasonable risk. When reviewing
investigational new drug applications, FDA can decide whether it is
reasonably safe for the sponsor to move forward with testing the drug on
humans; if FDA concludes trials cannot proceed safely, it puts the IND
on [clinical hold]{.underline}.

***Under PDUFA, FDA's goal is to reply to a sponsor\'s complete response
to a [clinical hold]{.underline} within 30 days of the Agency\'s receipt
of the submission of such sponsor response, and do this for at least 90
percent of such submissions. Rapid resolution of safety issues that led
to clinical hold helps ensure patient safety while enabling access to
the experimental treatment.***

**3.2.1 FDA Oversight and Review of Clinical Trial Protocols During
Development**

Clinical trials conducted to obtain evidence of the safety and
effectiveness of a new drug are described in terms of three successive
phases. The table below provides a brief summary.

+---------------------+-------------------------+----------------------+
| **Summary of Three  |                         |                      |
| Phases of Drug      |                         |                      |
| Testing**           |                         |                      |
+---------------------+-------------------------+----------------------+
| [Phase              | [Phase 2]{.underline}   | [Phase               |
| 1]{.underline}      |                         | 3]{.underline}       |
|                     | Number of Patients: Up  |                      |
| Number of Patients: | to several hundred\     | Number of Patients:  |
| 20-100\             | Length: Several months  | Several hundred to   |
| Length: Several     | to 2 years\             | several thousand\    |
| months\             | Purpose: Dose-response  | Length: 1-4 years\   |
| Purpose: Mainly     | for safety and          | Purpose: Safety,     |
| safety              | effectiveness           | dosage,              |
|                     |                         | effectiveness        |
+---------------------+-------------------------+----------------------+

### Phase 1 Studies---begin if FDA does not impose a clinical hold. The focus is primarily on safety, with the goal of determining the relationship between dosing and the patient's systemic drug exposure; the drug\'s most frequent side effects and whether they are related to dose; and how the drug is metabolized and excreted. 

### Phase 2 Studies---begin if Phase 1 studies do not reveal unacceptable toxicity. The emphasis is primarily on effectiveness and collection of preliminary data on whether the drug works in people who have a certain disease, and the relationship between dose and effectiveness. For controlled trials, patients receiving the drug are compared with similar patients receiving a different treatment --- usually a placebo or a different drug. Safety continues to be evaluated, and short-term side effects are studied.

### 

### Phase 3 Studies---begins if preliminary evidence of effectiveness is shown during phase 2. The goal is to gather more information about safety and effectiveness, about effects on different populations, and about different dosages. Data are also gathered on how the drug interacts when used in combination with other drugs (drug-drug interactions). 

***Under PDUFA, FDA will evaluate specific questions about the sponsor's
[special study protocol designs]{.underline} for carcinogenicity,
stability and Phase 3 for clinical trials that will form the primary
basis of an efficacy claim.***

-   ***FDA will review scientific and regulatory requirements for which
    the sponsor seeks agreement.***

-   ***FDA's goal is to provide a succinct written response, within 45
    days of receipt of the protocol and specific questions, and do this
    for at least 90 percent of such submissions.***

This FDA review and written feedback ensures safer and more effective
study design for participating patients and increases likelihood that
resulting marketing application will meet regulatory requirements and
gain faster approval.

**3.2.2 Sponsor-Requested Meetings With FDA During Clinical
Development**

Sponsors usually request to meet with FDA during their product's
clinical development. The two most common meeting points are at the end
of phase 2 clinical trials and just before a new drug application (NDA)
or a biologic license application (BLA) is submitted to FDA for
marketing review.

### **End of Phase 2 Meeting**---in which sponsors seek FDA input on their Phase 3 clinical studies that are generally pivotal to FDA application review and market approval. Phase 3 studies are designed to demonstrate effectiveness in accordance with FDA written guidance or individually developed (e.g., drug or disease specific) study expectations, the duration of effect, and the populations that will be studied. The studies are also designed to provide adequate assessment of safety, including concerns raised by other members of the drug class or by phase 2 observations. 

### **Pre-NDA/BLA Meeting**---in which sponsors seek to discuss what FDA expects to see included in the submitted NDA or BLA application. The discussion between the FDA and the sponsor would generally address concerns raised during clinical studies and the limitations of those studies and planned risk management tools (labeling and others) to address known and potential risks. The discussion will include suggestions for phase 4 studies, if such studies are warranted. In addition, the meeting will consider any proposals for targeted post-approval surveillance, including attempts to quantify background rates of risks of concern and thresholds for actions. The intent of these discussions will be for FDA to get a better understanding of the safety issues associated with the particular drug and any proposed risk management plans, and to provide industry with feedback on these proposals so that they can be developed fully and included in the NDA submission, if needed. 

***Under PDUFA, FDA's goal is to notify the sponsor in writing, of the
date, time, place and FDA participants for a formal meeting within 14
calendar days of the sponsor's request. FDA's goal is to meet the
following timeframes for 90 percent of requested meetings:***

-   ***Scheduling Type A Meetings\-- which are necessary for an
    otherwise stalled drug development program to proceed, \-- within 30
    calendar days of FDA receipt of the meeting request.***

-   ***Scheduling Type B Meetings\--pre-IND, end of Phase 1, or end of
    Phase 2/pre-Phase 3, pre- NDA/BLA meeting--- within 60 calendar days
    of FDA receipt of the meeting request.***

-   ***Scheduling Type C Meetings---any other type\-- within 75 calendar
    days of receipt of the meeting request.***

Earlier consultation and feedback from FDA on the sponsor's development
program will improve the quality of development including safer and more
effective study design for patients and increases the likelihood that
resulting marketing application will meet regulatory requirements and
gain faster approval.

## 

## 3.3 FDA Filing and Review of Submitted Marketing Applications (NDA/BLA)

If a sponsor successfully completes the clinical development phase for a
new drug, the next step is to submit an NDA or BLA to FDA. Since 1938,
every new drug has been the subject of an approved NDA before it could
be sold in the United States. An NDA (or BLA) includes all animal and
human data and analyses of that data, as well as information about how
the drug behaves in the body and how it is manufactured. The data
gathered during the animal studies and human clinical trials of an IND
application become part of the NDA. Under law, no pertinent data may be
omitted.

When an NDA or BLA is submitted, FDA has 60 days to determine whether
the application is complete enough to file and be reviewed. The FDA can
refuse to file an application that is incomplete (e.g., required studies
are missing). Once the application is filed, the review schedule begins,
and FDA monitors the progress of the application over time. FDA expects
to review and act on at least 90 percent of NDAs for standard drugs and
biologics no later than 10 months after the applications were filed. The
review goal is 6 months for priority drugs and biologics. [^2]

The NDA/BLA submission should provide enough information to permit FDA
reviewers to reach the following critical decisions:

-   The drug has been shown to be effective for its proposed use or
    uses.

-   Safety has been assessed by all reasonably applicable methods to
    evaluate safety.

-   The drug is safe for its intended use, that is, the benefits of the
    drug outweigh the risks for the doses being proposed for approval.

-   The drug\'s proposed labeling (package insert) provides adequate
    directions for use.

-   The methods used in manufacturing the drug and the controls used to
    maintain the drug\'s quality are adequate to preserve the drug\'s
    identity, strength, quality, and purity.

Once an application is filed, an FDA review team --- medical doctors,
clinical pharmacologists, chemists, statisticians, microbiologists,
pharmacologists and other experts (see box below) --- evaluates whether
the studies the sponsor submitted show that the drug is effective for
its proposed use and has been shown, on the basis of an adequate safety
assessment, to have an adverse effect profile that allows a conclusion
that the drug is safe for its intended use at the doses proposed by the
sponsor. Because no drug is absolutely safe, \"safe\" in this sense
means that the benefits of the drug appear to outweigh its risks.

**Typical FDA Drug Review Team**

**Chemists** focus on how the drug is made and whether the manufacturing
process and packaging are adequate to ensure the identity, strength,
quality, and purity of the product.

**Pharmacologists and toxicologists** evaluate the effects of the drug
on laboratory animals in short-term and long-term studies.

**Physicians** evaluate the results of the clinical tests, including the
drug's adverse as well as therapeutic effects, and whether the proposed
labeling accurately reflects the effects of the drug.

**Clinical pharmacologists** evaluate the rate and extent to which the
drug's active ingredient is made available to the body and the way it is
distributed, metabolized and eliminated.

**Statisticians** evaluate the designs for each controlled study and the
analyses and conclusions for safety and effectiveness based on the study
data.

**Microbiologists** also participate in the review of anti-infective
drug products and of products that occur as solutions or as injectables.
For new biological products, the microbiologist may also be a product
specialist focusing on how the biologic is manufactured and packaged to
ensure potency and purity.

The review team analyzes study results and looks for possible problems
with the application, such as weaknesses in the study design or
analyses, and missing information that may be critical to determining
drug safety. Reviewers determine whether they agree with the sponsor\'s
results and conclusions, or whether they need any additional information
to make a decision. Just as critical as the assessment of observed side
effects is the determination of whether the safety assessment was of
adequate scope. Each reviewer prepares a written evaluation containing
conclusions and recommendations about the application. These evaluations
are then considered by team leaders, division directors, and office
directors, depending on the type of application.

In the course of its review, FDA may also call on advisory committees,
made up of outside experts who make recommendations to FDA. Whether an
advisory committee is called on depends on a number of things; for
example, whether a drug raises significant safety questions, whether it
is the first in its class, or is the first for a given indication.

If the drug presents a significant documented risk, and sometimes even
if the concerns about such risks are theoretical, the NDA submitted by
the sponsor may include proposed risk management tools, plans, and
protocols for further studies. Both the FDA pre-market review and
post-marketing surveillance staff are involved in the review of the risk
management plan. When such a plan is needed, the risk management plan
will be part of the overall safety and risk-benefit analysis. In some
cases, FDA may seek a commitment from the sponsor for the conduct of
specific studies after the drug is approved (phase 4 studies).

After a BLA is approved for a biological product, the product may also
be subject to official lot release. If the product is subject to
official release by FDA, the manufacturer submits samples of each lot of
product to FDA. In addition, FDA conducts laboratory research related to
the regulatory standards on the safety, purity, potency, and
effectiveness of biological products.

Under PDUFA, FDA commits to perform a complete application review and
will issue an action letter within a specified timeframe. The action
letter will either state that the product is approved for marketing, is
designated "not approvable, or the product is designated "approvable" if
the sponsor can address the deficiencies detailed in the action letter.
Sponsors receiving an approvable letter will often try to address the
deficiencies and will then resubmit their application.

***Under PDUFA FDA's goal is to review all filed original NDA/BLA
submissions within the following time frames:***

-   ***Review and act on 90 percent of priority applications within 6
    months.***

-   ***Review and act on 90 percent of standard applications within 10
    months.***

***For all NDA/BLA resubmissions,***

-   ***Review and act on 90 percent of Class 1 resubmissions within 2
    months.***

-   ***Review and act on 90 percent of Class 2 resubmissions within 6
    months.***

Rapid and complete review of new drug applications ensures rapid access
to new medicines shown to be safe and effective; with priority given to
products with greatest public health benefit. It also ensures complete
information for sponsors to do the additional work needed to show that
their product is safe and effective.

# Following approval of an original NDA or BLA, a sponsor may later submit an application to expand the disease indications included in the drug labeling. This application often includes additional clinical study data to support the proposed change in labeling, and is referred to as an Efficacy Supplement. FDA's review of Efficacy Supplements is very similar to the review of original NDAs and BLAs, and results in an action letter to the sponsor outlining FDA's decision. 

***Under PDUFA FDA's goal is to review all filed original Efficacy
Supplements within the following timeframes.***

-   ***Review and act on 90 percent of priority efficacy supplements
    within 6 months.***

-   ***Review and act on 90 percent of standard efficacy supplements
    within 10 months.***

Rapid and complete review of new drug applications ensures rapid access
to new medicines shown to be safe and effective; with priority given to
products with greatest public health benefit. It also ensures complete
information for sponsors to do the additional work needed to show that
their product is safe and effective.

After a new drug has been approved for marketing, the sponsor begins
mass production for commercial distribution of the product. The sponsor
also begins marketing activities including detailing to physicians[^3]
by the drug company sales force and direct advertising to health
professionals and often to consumers. The manufacturing and distribution
must comply with the methods approved as part of the NDA, and drug
promotion must also conform with and reflect the information in the
FDA-approved labeling for the new drug.

# 3.4 Post-Approval Safety Surveillance and Risk Management 

Because all possible side effects of a drug cannot be anticipated based
on preapproval studies involving only several hundred to several
thousand patients, FDA maintains a system of post-marketing surveillance
and risk assessment programs to identify adverse events that did not
appear during the drug approval process.

Knowledge about a product will always be limited to some extent at the
time of approval by factors in the product development process. For
example, rare side effects and long-term outcomes (both positive and
negative) may not be known when a product is approved because of the
relatively small size and limited duration of clinical studies. And
because of the populations not studied in clinical trials (e.g.,
pregnant patients, children, people with other diseases) or minimally
studied (e.g., geriatric patients), side effects may be discovered if
these groups are treated with a product after it goes on the market.
Even after a product has been on the market for a long time,
uncertainties remain. The [Adverse Event Reporting
System](http://www.fda.gov/cder/aers/default.htm) (AERS) provides FDA's
primary source of post-marketing safety data.

New information about a new drug will also emerge from additional
clinical trials, such as post-Marketing Commitments (PMCs, also known as
Phase 4 studies), and from reports in the literature. FDA uses all
available post-marketing safety information to investigate product
quality problems, to update drug labeling, and, on more rare occasions,
to reevaluate the approval or marketing decision to revise other aspects
of risk management plans.

**3.5 Estimated FTEs Devoted to Assuring Drug Safety**

Recent public attention to the issue of drug safety has included
questions about the extent of FDA oversight and the resources devoted to
this critical aspect of public health protection. The most readily
available numbers are usually budget figures for individual offices
within FDA but the work done by those offices represents only a subset
of the larger effort required to ensure drug safety.

To provide a more complete and accurate account of the full range of
critical drug safety-related activities, FDA recently conducted an
internal study, including extensive staff interviewing and analysis of
staff time reporting data across CDER. The results of this analysis,
based on FY 2004 data, suggest that CDER staff devote 50 percent of
their time to drug safety activities. This represents a level of effort
totaling about 1,093 full time equivalent (FTE) staff. These figures are
based on the agency's FY 2004 staffing.

How does this level of effort compare to the total staffing for work
performed in other FDA regulatory work? The table below provides a
summary based on FY 2004.

+---------------------------------------------+------------------------+
| **FDA Program Area**                        | **FY 2004 Actual -     |
|                                             | Total FTEs**           |
+---------------------------------------------+------------------------+
| Center for Food and Applied Nutrition       | 910                    |
+---------------------------------------------+------------------------+
| Center for Drug Evaluation and Research     | 2,190                  |
|                                             |                        |
| *Level of Effort devoted to drug safety     | *1,093*                |
| activities*                                 |                        |
+---------------------------------------------+------------------------+
| Center for Biologics Evaluation and         | 797                    |
| Research                                    |                        |
+---------------------------------------------+------------------------+
| Center for Veterinary Medicine              | 349                    |
+---------------------------------------------+------------------------+
| Center for Devices and Radiologic Health    | 1,061                  |
+---------------------------------------------+------------------------+
| National Center for Toxicologic Research    | 207                    |
+---------------------------------------------+------------------------+
| Field Activities Program (Office of         | 3,872                  |
| Regulatory Affairs)                         |                        |
+---------------------------------------------+------------------------+
| Other Activities (including Office of       | 755                    |
| Commissioner)                               |                        |
+---------------------------------------------+------------------------+
| **TOTAL**                                   | **10,141**             |
+---------------------------------------------+------------------------+

PDUFA fee revenues enabled FDA to significantly increase the scientific
review staffing in almost every CDER office involved in assuring drug
safety. For example, since the beginning of PDUFA the additional funds
have enabled CDER to more than double its medical staff, growing from
166 medical officers in 1993 to 342 medical officers on staff in 2004.
This translates into significantly higher staffing to focus on drug
safety issues.

**3.5.1 Scope of Activities Included in CDER's Drug Safety Work**

In both premarket and postmarket phases, staff across CDER work to
assure the highest possible degree of drug safety. In total, NDA review
involves chemists, pharmacologists, toxicologists, physicians,
statisticians, epidemiologists, pharmacists, biologists,
microbiologists, project managers, health and social scientists. The
Office of New Drugs (OND) leads and coordinates this review. Postmarket
review requires similar varieties of FDA staff expertise found in
various CDER Offices.

**Safety Work in Specific CDER Offices.**

-   ***Office of New Drugs.*** About half of OND effort in reviewing
    truly new drugs is devoted to safety. The primary safety review
    goals are to: (1) identify side effects and their relationships to
    critical drug and patient population features; and (2) decide
    whether the sponsor has conducted sufficient types and numbers of
    safety studies. In addition, most labeling review focuses on
    communicating safety. OND also coordinates postmarket evaluation of
    new information, deciding whether to incorporate into labeling or
    take other steps when new problems arise.

```{=html}
<!-- -->
```
-   ***Office of Pharmacoepidemiology and Statistical Science***. OPaSS
    experts review the safety of marketed drugs, estimate the public
    health impact of drug safety signals, evaluate proposed and existing
    risk management programs, perform epidemiologic research and review,
    evaluate proposed brand names, labeling and packaging to minimize
    medication errors, review patient labeling, run the MedWatch adverse
    event reporting program, and perform other drug safety-related
    activities. They also provide expert consults on issues of premarket
    risk management. The CDER Office of Drug Safety \[ODS\] is included
    within OPaSS.

-   ***Office of Medical Policy.*** OMP confirms the truthfulness of the
    clinical trial data that support new and generic applications for
    marketing approval. It also gives sponsors expert consults on
    product labeling, and monitors and enforces drug company promotional
    materials and activities to ensure correct communication of risk
    information.

-   ***Office of Clinical Pharmacology and Biopharmaceutics.*** OCPB
    evaluates the clinical pharmacology and biopharmaceutics pieces of
    drug applications. Reviewers have a specific safety emphasis on
    drug-drug interactions and use in special populations (for example,
    women, children, and people with special health risks).

-   ***Office of Pharmaceutical Science.*** OPS ensures that drug
    manufacturers produce high quality products. It also ensures timely
    generic drug marketing approval. OPS also conducts research to
    develop improved methods to identify and lessen premarket and
    postmarket risks resulting from poor quality products.

-   ***Office of Compliance.*** OC staff inspect domestic and foreign
    manufacturing sites and assure, among other things, compliance with
    good manufacturing practice regulations, risk management plans, and
    adverse event reporting.

-   ***Office of CounterTerrorism and Pediatric Drug Development**.*
    OCTaP provides expertise on pediatric matters, including safety
    information. It also promotes the development and availability of
    medical countermeasures against biological, chemical, and nuclear
    threat agents.

-   ***Office of Executive Programs.*** OEP oversees and coordinates
    CDER activities. It assists scientific and technical staff in
    developing guidance, responding to congressional inquiries,
    preparing for high-profile advisory committee meetings, and
    connecting with relevant communities and the media.

+------------+-------------+------------+-------------+-------------+
| **Level of |             |            |             |             |
| Effort     |             |            |             |             |
| Devoted to |             |            |             |             |
| Drug       |             |            |             |             |
| Safety in  |             |            |             |             |
| 2004^1^**  |             |            |             |             |
+------------+-------------+------------+-------------+-------------+
| **Office** | Office      | **P        | **P         | **Total**   |
|            | Percent of  | remarket** | ostmarket** | **Office**  |
|            | Work Time   | Estimated  | Estimated   | Estimated\  |
|            |             | FTE        | FTE         | FTE         |
+------------+-------------+------------+-------------+-------------+
| **OND**    | 51%         | 275        | 77          | 352         |
+------------+-------------+------------+-------------+-------------+
| **OPaSS**  | 60%         | 32         | 93          | 126         |
+------------+-------------+------------+-------------+-------------+
| *          | \[100%\]    | \[9\]      | \[87\]      | \[96\]      |
| *\[ODS\]** |             |            |             |             |
+------------+-------------+------------+-------------+-------------+
| **OMP**    | 44%         | 6          | 29          | 36          |
+------------+-------------+------------+-------------+-------------+
| **OCPB**   | 44%         | 41         | 1           | 42          |
+------------+-------------+------------+-------------+-------------+
| **OPS**    | 51%         | 179        | 74          | 252         |
+------------+-------------+------------+-------------+-------------+
| **OC**     | 38%         | 13         | 30          | 43          |
+------------+-------------+------------+-------------+-------------+
| **OCTaP**  | 73%         | 22         | 13          | 35          |
+------------+-------------+------------+-------------+-------------+
| **OEP**    | 14%         | 4          | 4           | 8           |
+------------+-------------+------------+-------------+-------------+
| **M        | \--         | 128**^2^** | 71**^2^**   | 199**^2^**  |
| gt/Other** |             |            |             |             |
+------------+-------------+------------+-------------+-------------+
| **Total    | 50%         | 700        | 393         | 1,093       |
| CDER**     |             |            |             |             |
+------------+-------------+------------+-------------+-------------+
| ^1^ All    |             |            |             |             |
| estimates  |             |            |             |             |
| represent  |             |            |             |             |
| general    |             |            |             |             |
| levels of  |             |            |             |             |
| magnitude  |             |            |             |             |
| and are    |             |            |             |             |
| primarily  |             |            |             |             |
| for        |             |            |             |             |
| comparison |             |            |             |             |
| purposes.  |             |            |             |             |
|            |             |            |             |             |
| ^2^ To get |             |            |             |             |
| FTE        |             |            |             |             |
| estimates  |             |            |             |             |
| for        |             |            |             |             |
| "          |             |            |             |             |
| Mgt/Other" |             |            |             |             |
| we applied |             |            |             |             |
| overall    |             |            |             |             |
| CDER       |             |            |             |             |
| estimates  |             |            |             |             |
| of percent |             |            |             |             |
| safety     |             |            |             |             |
| activity   |             |            |             |             |
| work time  |             |            |             |             |
| to offices |             |            |             |             |
| and        |             |            |             |             |
| programs   |             |            |             |             |
| not        |             |            |             |             |
| included   |             |            |             |             |
| in the     |             |            |             |             |
| study.     |             |            |             |             |
+------------+-------------+------------+-------------+-------------+

**4.0 Evolution of FDA Performance Commitments Under PDUFA**

Since PDUFA enactment in 1992 (PDUFA 1), the law was amended and
extended in 1997 (PDUFA 2) and again in 2002 (PDUFA 3) with expiration
at the end of Fiscal Year 2007. Each successive 5-year enactment has
served to alter the emphasis and scope of the program, to further
improve and speed new drug development and regulatory review.

**4.1 Expansion of Performance Goals as Part of PDUFA Reauthorization**

As described in Section 2 of this paper, FDA funding and staffing levels
for drug review activities have significantly increased under PDUFA. At
the same time, the performance focus of the program has continued to
expand, as summarized in the Table 4.1 below.

> .

+----------------------+------------------------+---------------------+
| **Table 4.1          |                        |                     |
| Expansion of FDA     |                        |                     |
| Performance          |                        |                     |
| Commitments Since    |                        |                     |
| Enactment of PDUFA** |                        |                     |
+----------------------+------------------------+---------------------+
| **PDUFA 1**          | **PDUFA 2**            | **PDUFA 3**         |
|                      |                        |                     |
| **Industry paid a    | **Industry paid a      | **Industry paid a   |
| fee**                | fee**                  | fee**               |
|                      |                        |                     |
| -   Per submitted    | -   Per submitted      | -   Per submitted   |
|     NDA/BLA, per     |     NDA/BLA, per       |     NDA/BLA, per    |
|     establishment,   |     establishment, and |     establishment,  |
|     and per product  |     per product        |     and per product |
|                      |                        |                     |
| **Goals by FY97**    | **Goals by FY02**      | **Goals by FY07**   |
|                      |                        |                     |
| -   **Backlog:**     | -   **Priority         | -   **Priority      |
|     Eliminate        |     reviews:** 90% in  |     reviews:** 90%  |
|                      |     6 months           |     in 6 months     |
| -   **Priority       |                        |                     |
|     Reviews:** 90%   | -   **Standard         | -   **Standard      |
|     in 6 months      |     reviews:** 90% in  |     reviews:** 90%  |
|                      |     10 months          |     in 10 months    |
| -   **Standard       |                        |                     |
|     Reviews:** 90%   | -   **Formal           | -   **Formal        |
|     in 12 months     |     Meetings**:        |     Meetings**:     |
|                      |     schedule 90%       |     schedule 90%    |
|                      |     within14 days;     |     within14 days;  |
|                      |     convene 90% within |     convene 90%     |
|                      |     30 /60/75 days     |     within 30       |
|                      |                        |     /60/75 days     |
|                      | -   **Clinical hold    |                     |
|                      |     response:** 90% in | -   **Clinical hold |
|                      |     30 days            |     response:** 90% |
|                      |                        |     in 30 days      |
|                      | -   **Special protocol |                     |
|                      |     evaluation:** 90%  | -   **Special       |
|                      |     in 45 days         |     protocol        |
|                      |                        |     evaluation:**   |
|                      | -   **Electronic       |     90% in 45 days  |
|                      |     Submissions:**     |                     |
|                      |     Able to receive by | -   **Electronic    |
|                      |     end of FY02        |     Submissions:**  |
|                      |                        |     Able to receive |
|                      |                        |     by end of FY02  |
|                      |                        |                     |
|                      |                        | ```{=html}          |
|                      |                        | <!-- -->            |
|                      |                        | ```                 |
|                      |                        | -   **Continuous    |
|                      |                        |     Marketing       |
|                      |                        |     Application**   |
|                      |                        |                     |
|                      |                        | -   **Pre- and      |
|                      |                        |     Peri- NDA/BLA   |
|                      |                        |     Risk            |
|                      |                        |     Management**    |
|                      |                        |     Plan Activities |
|                      |                        |                     |
|                      |                        | -   **Independent   |
|                      |                        |     Consultants**   |
|                      |                        |     for Clinical    |
|                      |                        |     Trials          |
|                      |                        |                     |
|                      |                        | -   **Good Review   |
|                      |                        |     Management      |
|                      |                        |     Principles      |
|                      |                        |     (GRMPs)** for   |
|                      |                        |     First Cycle     |
|                      |                        |     Review          |
|                      |                        |     Performance     |
|                      |                        |                     |
|                      |                        | -   **Improved      |
|                      |                        |     Performance     |
|                      |                        |     Management**    |
|                      |                        |                     |
|                      |                        | -   **Electronic    |
|                      |                        |     Applications &  |
|                      |                        |     Submissions**   |
+----------------------+------------------------+---------------------+

## 4.1.1 PDUFA 1: Speeding Up Application Review

During the first few years of PDUFA 1, FDA eliminated backlogs of
original applications and supplements that had formed in earlier years
when the program had fewer resources. Over the course of PDUFA 1, the
Agency committed to review and act on a progressively increasing
proportion of original NDAs, BLAs, and efficacy supplements within 12
months and resubmissions and manufacturing supplements within 6 months.
The Agency also committed to review and act on 90 percent of priority
NDAs, BLAs, and efficacy supplements (i.e., submissions for products
providing significant therapeutic gains) submitted in FY 1997 within 6
months. Over the course of PDUFA 1, FDA exceeded all of these
performance goals.

## 4.1.2 PDUFA 2: Speeding Up Drug Development and Maintaining Rapid Review

In 1997, Congress passed the Food and Drug Administration Modernization
Act of 1997 (FDAMA) and reauthorized PDUFA (PDUFA 2) for five more
years. Under the PDUFA 2 program, most review times were shortened and
the Agency met or exceeded nearly all its review goals. PDUFA 2 also set
new goals intended to improve communication between FDA and application
sponsors during the drug development process. These goals specified time
frames for scheduling formal meetings with industry sponsors during the
pre-clinical and clinical development phase, to review and address
specific issues relating to their product. The additional goals in PDUFA
2 included commitments to respond to a sponsor's response to a clinical
hold, and a commitment to review and assess special study protocols
proposed by sponsors.

## 4.1.3 PDUFA 3: Increasing FDA-Sponsor Interactions During Drug Development and Review and Risk Management After New Drug Approval

In 2002, Congress passed the Bioterrorism Act, which included an
extension of PDUFA (PDUFA 3) for five more years, FY 2003 through
FY 2007. For the first time, PDUFA 3 also authorized FDA to spend user
fee funds on certain aspects of post-market risk management. The review
performance and procedural goals associated with PDUFA 3 were similar to
those under PDUFA 2 for fiscal year 2002 performance levels, but the
PDUFA 3 program addressed drug safety issues and established several new
initiatives to improve application submissions and agency-sponsor
interactions during drug development and application review.

Under PDUFA 3 FDA created a guidance for review staff and industry on
good review management principles and practices (GRMPs) as they apply to
the first cycle review of NDAs, BLAs, and efficacy supplements. FDA
announced the guidance's availability in the Federal Register of March
31, 2005 (70 FR 16507). FDA also set a goal of testing whether providing
early review of selected applications and additional feedback and advice
to sponsors during drug development for selected products can shorten
drug development and review times.

PDUFA 3 includes two "continuous marketing application" (CMA) pilot
programs; CMA Pilot 1 provides for the review of a limited number of
pre-submitted portions of NDAs and BLAs. Under CMA Pilot 2, FDA and
applicants can enter into agreements to engage in frequent scientific
feedback and interactions during the investigational new drug phase of
product development. Both the first-cycle and CMA initiatives are
currently being evaluated to determine their impact on the effectiveness
and efficiency of FDA-sponsor communications, product development, and
regulatory review.  

In addition, the goals under PDUFA 3 also included new provisions, for
example, to develop guidance for industry on good risk assessment, risk
management, and pharmacovigilance practices, to fund outside expert
consultants to help evaluate and improve review management processes. In
PDUFA 3 FDA also agreed to centralize accountability and funding for all
PDUFA information technology initiatives and activities. Details of the
PDUFA 3 goal commitments can be found at
<http://www.fda.gov/oc/pdufa/PDUFAIIIGoals.html>.

2.  **Trends in FDA Drug Review Workload**

FDA has seen a significant increase in drug review workload both as a
result of increases in the volume of sponsor submissions for review, and
due to the review performance goals specified under the PDUFA
authorizing legislation.

This section summarizes trends in the workload of the PDUFA program.
These include FDA review and action on:

-   Original NDAs and BLAs

-   Efficacy Supplements

-   Chemical and Manufacturing Control Supplements

-   Sponsor-Requested Meetings

-   Sponsor-Requested Special Protocol Assessments

In general, the workload is driven by the technical complexity and
staffing requirements of the activities FDA must perform to address the
submissions and requests; the intensity of that effort, determined by
the deadlines imposed by the PDUFA performance goals; and the volume of
sponsor requests and submissions.

**4.2.1 Review of Original New Drug Application (NDA) and Biologics
Licensing Application (BLA) Submissions**

Review of NDA and BLA submissions requires an intensive
multidisciplinary review, as described in Section 3.3 Under PDUFA, FDA's
goal is to review and act on all filed original NDA/BLA submissions
within the following time frames: within 6 months for 90 percent of all
priority applications; and within 10 months for 90 percent of all
standard applications.

In addition, FDA 's goal is to review and act on 90 percent of all
NDA/BLA Class 1 resubmissions within 2 months, and 90 percent of all
Class 2 resubmissions within 6 months.

The following chart summarizes trends in the number of NDA and BLA
submissions during the PDUFA era. While the number of BLA submissions
has remained fairly constant during this time period, the number of NDA
submissions has increased from 96 filed in FY2002, at the end of PDUFA
2, to 128 in FY 2004. (As noted earlier, about 25 percent of all
applications received each year do not pay fees because the applications
are for fee-exempt orphan products, or the fees are waived either
because it is the first application from a small business or it
qualifies for one of the other waiver provisions.)

**4.2.2 Submissions of NDA and BLA Efficacy Supplements**

# As described earlier in Section 3.3, following approval of an original NDA or BLA, a sponsor may later submit an application to expand the disease indications included in the drug labeling. This application often includes additional clinical study data to support the proposed change in labeling, and is referred to as an Efficacy Supplement. FDA's review of Efficacy Supplements results in an action letter to the sponsor outlining FDA's decision. Under PDUFA, FDA's goal is to review and act on 90 percent of all filed original Efficacy Supplements: within 6 months for all priority efficacy supplements; and within 10 months for standard efficacy supplements. 

Trends in workload for Efficacy Supplements and Manufacturing
Supplements for both CDER and CBER are shown in the charts below. The
number of filed Efficacy Supplements for FDA review has increased by
more than 80 percent, from 100 submissions in FY 1993 to 184 submissions
in FY 2004.

**4.2.3 Submissions of Chemical and Manufacturing Control (CMC)
Supplements**

To obtain marketing approval, a sponsor must show not only that the
product is safe and effective, but can be manufactured in large
quantities while still retaining all of the qualities of the product
that was tested in smaller batches during clinical trials. The details
of manufacturing are described in the Chemistry and Manufacturing
Controls (CMC) section of the NDA. After product approval, sponsors
often continue to refine the manufacturing process. They must submit
these changes for FDA review, and await FDA prior approval before
implementing more significant changes proposed in CMC supplements.

FDA's goal is to review and act on 90 percent of Changes Being Effective
(CBE) CMC supplements within 6 months of receipt, and to review and act
on CMC supplements requiring prior approval within 4 months of receipt.
Figure 4.3 shows the trend in number of submissions of CMC supplements.
Since the start of PDUFA, the number of CMC supplements has
approximately doubled, from 1,247 submissions in FY 1993 to 2,481
submissions in FY 2004.

**4.2.4 Sponsor-Requested Meetings with FDA**

An industry sponsor can improve the quality of its drug development and
related new drug application by early and more frequent consultation
with FDA during drug development. For example, the sponsor can ask FDA
to review its proposed clinical study designs including the starting
doses for clinical trials, the type of patient population that would be
enrolled and the clinical outcomes that the sponsor plans to collect
during the trials, as a basis for demonstrating safety and
effectiveness.

By consulting early with FDA, before investing substantial sums to
conduct the clinical trials, sponsors can find out if FDA thinks their
proposed design will meet (or exceed) what is necessary to demonstrate
safety and effectiveness. By checking early, and revising the protocol
before running the trials, sponsors can better serve participating
patients and also avoid the delay and expense of conducting trials that
FDA later finds are deficient and need to be augmented with additional
studies.

With the increasing cost of drug development [^4] and thinning pipeline
of new drugs [^5] more and more companies are seeking this early advice
from FDA. When the sponsor requests a meeting they must also submit a
background package on the specific product and application issues they
wish to discuss in the meeting. Under PDUFA, FDA's goal is to schedule a
formal meeting within 14 calendar days of the sponsor's request. In
addition, FDA agreed to the following goals for scheduling 90 percent of
requested meetings:

-   Type A Meetings---which are necessary for an otherwise stalled drug
    development program to proceed---within 30 calendar days of FDA
    receipt of the meeting request;

-   Type B Meetings---pre-IND, end of Phase 1, or end of Phase
    2/pre-Phase 3, pre-NDA/BLA meeting--- within 60 calendar days of FDA
    receipt of the meeting request; and

-   Type C Meetings---any other type---within 75 calendar days of
    receipt of the meeting request.

These formal meetings with sponsors typically involve the following
tasks for FDA:

-   In-depth review of the sponsor's package by all appropriate members
    of the review team and management chain. Identification of
    scientific and regulatory issues that need to be addressed in
    addition to those identified by the sponsor. Clarifying with the
    sponsor the contents of the package. Review of prior submissions
    relevant to the application, medical literature, relevant guidance
    documents, etc.

-   Compilation of the list of issues for discussion.

-   Preparation for and conduct of an FDA-internal pre-meeting.
    Following up on action items generated in that meeting with review
    team members and the sponsor.

-   Handling of logistics associated with the formal meeting, including
    scheduling, distributing background materials and agenda
    preparation.

-   Formal meetings with the sponsor.

-   Preparation and review of formal meeting minutes.

These meetings with sponsors are important to improving drug quality,
but they also impose a significant additional work burden on FDA.
Meetings typically require the involvement of 15 FDA staff, and the
total level of effort varies from an estimated 120 to 540 staff hours,
depending on the number and complexity of issues to be discussed in the
meeting. Figure 4.4 shows the trend in the number of industry-requested
meetings held each year since the PDUFA performance commitments were
established. The number has risen from 1,555 in FY 1999 to 2,132
meetings in FY 2004. The current level of annual meetings translates
into an average of 9 industry-requested meetings per business day.

**4.2.5 Sponsor-Requested Special Protocol Assessments**

Special protocol assessments provide sponsors with another valuable
opportunity for early FDA feedback and advice, to improve drug
development, and increase the likelihood that the submitted new drug
application will include sufficient evidence of safety and effectiveness
to be approved on the first 'cycle' of review. Beginning with PDUFA 2,
FDA committed to evaluate certain protocols and specific issues
submitted by sponsors, to assess whether the design is adequate to meet
scientific and regulatory requirements identified by the sponsor.

In requesting FDA's evaluation, the sponsor must submit a limited number
of specific questions about the protocol design and scientific and
regulatory requirements for which they seek agreement. For example, the
sponsor may submit questions about whether the dose range in the
carcinogenicity study is adequate, considering the intended clinical
dosage; or whether the proposed clinical endpoints are adequate to
support a specific efficacy claim.

Within 45 days of receiving the protocol and specific questions, FDA
will provide a written response to the sponsor that includes a succinct
assessment of the protocol and answers to the questions posed by the
sponsor. If FDA does not agree that the protocol design, execution
plans, and data analyses are adequate to achieve the goals of the
sponsor, the reasons for the disagreement will be explained in the
response.

Protocols that qualify for this program include: carcinogenicity
protocols, stability protocols, and Phase 3 protocols for clinical
trials that will form the primary basis of an efficacy claim. In order
for Phase 3 protocols to qualify for this comprehensive protocol
assessment, the sponsor must have had an end of Phase 2/pre-Phase 3
meeting with the relevant FDA review division so that the division is
aware of the developmental context in which the protocol is being
reviewed and the questions being answered.

If a protocol is reviewed under this process and agreement with FDA is
reached on design, execution, and analyses and if the results of the
trial conducted under the protocol substantiate the hypothesis of the
protocol, FDA agrees that the data from the protocol can be used as part
of the primary basis for approval of the product. The fundamental point
here is that having agreed to the design, execution, and analyses
proposed in protocols reviewed under this process, FDA will not later
alter its perspective on the issues of design, execution, or analyses
unless public health concerns unrecognized at the time of protocol
assessment under this process are evident.

Written special protocol evaluations provides extremely valuable
information for sponsors, significantly reducing regulatory uncertainty
and business risks in the subsequent drug development. However, the high
complexity and short deadlines associated with special protocol
assessment impose a significant work burden on FDA, comparable to or
greater than the level of effort required to conduct sponsor-requested
meetings.

Figure 4.5 shows the trend in the number of sponsor-requested special
protocol assessments. It shows the total number (CDER and CBER) of
Special Protocol Assessment Receipts for each fiscal year 1999 through
2004. The number has increased by nearly 400 percent, from 71 to 346 per
fiscal year during this period.

**4.2.6 Complete Response to Commercial IND Clinical Holds Received**

Under PDUFA, FDA's goal is to reply to a sponsor\'s complete response to
a clinical hold within 30 days of the Agency\'s receipt of the sponsor's
response, and do this for at least 90 percent of such submissions. As
noted in earlier discussion, rapid resolution of safety issues that led
to clinical hold helps ensure patient safety while enabling access to
the experimental treatment. Figure 4.6 shows the total number (CDER and
CBER) of Complete Response to Commercial IND Clinical Holds Received
(Clinical Holds) for each fiscal year 1999 through 2004. The number of
Clinical Holds increased by over 200 percent (from 42 to 135 per fiscal
year) over this period.

5.0 **Current Challenges for PDUFA and New Drug Review**

This section describes some key resource challenges for FDA's capacity
for new drug review and also for surveillance to ensure safety and
effectiveness in the use of new drugs. PDUFA has been successful in
making the drug review process better-staffed, more rigorous and more
predictable and FDA's overall review times have been cut in half. FDA's
review workload has grown very significantly, particularly during the
years of PDUFA 2 and 3, with the addition of goals for sponsor-requested
meetings and special protocol assessments. Starting in PDUFA 3, industry
paid substantially higher fees that helped cover the costs associated
with these significantly increased but highly-valued FDA activities.
However, the workload levels have continued to grow, outpacing the
workload adjustment of fees.

At the same time, FDA PDUFA payroll costs have far outpaced the increase
in the PDUFA appropriations trigger amount and overall appropriations
for drug review have been less than envisioned when PDUFA 3 was enacted.
Appropriations for drug and biologics programs have actually declined
since 2003, while FDA's payroll costs, the largest cost for the
programs, goes up each year by 4 to 5 percent. If this trend continues
FDA is uncertain about its continued ability to satisfy the PDUFA
Appropriations trigger, a pre-condition for FDA's authority to collect
user fees.

1.  **Challenges Related to Rising Costs**

Over the past several years, the decline in appropriated dollars to
cover the increased cost of on-board drug review "process" staff and to
cover the cost of required non-payroll expenses (e.g., facilities and
rent) has required that more user fee dollars be used to cover those
costs. As a consequence, fewer fee dollars have been available to hire
the additional staff envisioned when PDUFA 3 was enacted.

Figures 5.1 and 5.2 show overall budget trends for CBER and CDER, in
nominal dollars (not adjusted for inflation) for fiscal years 2001
through 2005. Appropriated funds available to cover PDUFA costs have
declined because total CDER and CBER budget authority has remained
relatively flat or gone down, while payroll costs increase at 5 to 8
percent each year (as table 5.1 shows) and non-PDUFA program mandates
and budget earmarks have increased. For example, CBER has received
earmarks for blood safety and influenza vaccine-related activities, in
addition to mandates for work in counterterrorism, tissue safety and
gene therapy tracking.

During fiscal years 2001 through 2005, CDER has receiving increased
earmarks for FDA generic drug activities growing from \$150,000 for
generic drug education in FY 2001 to an earmark of \$56 million for
generic drug review in FY 2005, and mandates to increase the
availability of medical countermeasures, pediatric drug labeling and
address other important public health issues. The lack of growth in
appropriated dollars for PDUFA has meant that appropriated dollars have
not kept up with increasing payroll and non-payroll costs of the
program, due to mandatory federal pay increases and the additional cost
of recruiting and retaining physician disease specialists,
pharmacologists, and other highly marketable senior scientific and
health care professionals needed to perform regulatory review.

Table 5.1 below illustrates the trend in cost growth, showing payroll
cost growth for CDER, the FDA product center responsible for performing
approximately 90 percent of the PDUFA review work. Since 1992, the total
number of center staff has grown by about 55 percent, and the average
salary has more than doubled.

  --------------------- --------------------------- ---------------------
  **Table 5.1 CDER Past                             
  and Projected Average                             
  Salary and Benefits                               
  Cost and FTE**                                    

  **Fiscal Year**       **Average Salary and        **FTE Supported**
                        Benefits**                  

  FY1992                \$61,813                    1407

  FY1993                \$65,287                    1399

  FY1994                \$68,788                    1473

  FY1995                \$71,412                    1547

  FY1996                \$75,333                    1609

  FY1997                \$78,371                    1676

  FY1998                \$82,924                    1647

  FY1999                \$87,208                    1691

  FY2000                \$92,238                    1781

  FY2001                \$97,710                    1792

  FY2002                \$105,171                   1788

  FY2003                \$111,462                   1912

  FY2004                \$120,765                   2124

  FY2005                \$126,700 \*                2170\*

  FY2006                \$133,000 \*                2200\*

  FY2007                \$139,700 \*                2210\*
  --------------------- --------------------------- ---------------------

> *\* Figures are estimates; FY05-07 final data not yet available*

At the beginning of PDUFA 3, FDA projected a constant share of
appropriated funds, assuming these funds would grow at a rate that would
continue to support 1277 of the FTE devoted to the review of human drug
applications. But appropriations available for drug review have gone
down while pay costs have gone up. Given the limited availability of
appropriated funds, fee revenues have had to be used to offset cost
increases at current staffing levels. The result is that FDA has been
able to hire fewer additional scientific review staff to address the
increasing review workload than anticipated. Figure 5.3 depicts the
trend in planned versus actual FTE paid from appropriated funds versus
fee collections.

**Figure 5.3 PDUFA FTE Paid for by Planned vs. Actual Appropriations and
Fee Funds**

![](media/image4.wmf)

Because additional fee dollars have been applied toward the increased
cost of current FTEs, fewer fee dollars have been available to hire the
number of additional review staff planned under PDUFA 3, to address the
underfunded workload increases of PDUFA 2, particularly related to
industry-requested meetings and protocol assessments. In both of these
areas workload grew further during PDUFA 3.

Although the current law provides for fee adjustments based on increases
in review workload, the workload adjuster, as currently specified, fails
to capture the most labor-intensive and fastest growing component of
work. The current workload adjuster is based on the weighted average of
the change in the total number of:

-   Human drug applications (NDA/BLAs)

-   Efficacy supplments (ES)

-   Manufacturing supplements (CMC) and

-   Commercial investigational new drug (IND) applications.

Figures 4.1 through 4.3 in Section 4 show steady but moderate growth in
the 3 submission types that translate directly into PDUFA goal-driven
work. By contrast, growth in the number of industry-requested meetings
and special protocol assessments, which occur during the IND phase, are
not correlated with, nor captured by the volume of commercial IND
submissions. Figure 5.4 shows the trend in commercial INDs submittted to
CDER versus the number of industry-requested meetings conducted by CDER.
This graph illustrates FDA's finding that the number of submitted
commercial INDs is a poor proxy for PDUFA IND-phase workload.

![](media/image5.wmf){width="5.125196850393701in"
height="2.7118110236220474in"}

**5.2 Challenges Related to Post-Market Surveillance**

PDUFA 3 gave FDA new authority to allocate user fee funds to support
post-marketing safety-related activities. For drugs and biologics
approved on or after October 1, 2002, PDUFA 3 allows FDA to spend user
fees to monitor the safety of products during their first two years on
the market, three years for potentially dangerous medications.

Knowledge about a product will always be limited to some extent at the
time of approval by factors in the product development process. And
because of the populations not studied in clinical trials or minimally
studied, side effects may be discovered if these groups are treated with
a product after it goes on the market. The [Adverse Event Reporting
System](http://www.fda.gov/cder/aers/default.htm) (AERS) provides FDA's
primary source of post-marketing safety data.

**Figure 5.5**

![](media/image6.wmf){width="5.929861111111111in"
height="2.698611111111111in"}

Manufacturers are required to report serious drug adverse effects to FDA
within 15 days of their receipt of that report, typically from a health
care provider. Figure 5.5 below shows the trend in those reports.
Manufacturer 15-day reports have grown almost 9-fold from 1992 to 2004.
Increases in reports may in part be the result of the increasing use of
drugs, increasing patient opportunities for benefits and also increasing
the exposure to risks. The number of prescriptions dispensed to US
patients has grown from 1.9 billion in 1992 to 3.5 billion in calendar
year 2004.[^6]

FDA currently has a limited capacity to receive timely information on
adverse events, and to analyze that data. For example, over 100 thousand
manufacturers' 15-day reports are currently received on paper forms that
must be hand-entered into FDA's electronic database. FDA needs a
stronger capacity to receive timely, complete and high-quality
information about patients' adverse experiences with new products, a
stronger ability to quickly and accurately analyze new safety findings,
and effective methods of communicating new information to patients and
health care providers. These improvements require additional resources.

The budget pressures and reduced ability to spend new fees for additive
capabilities, as described above, have also limited FDA's ability to
significantly increase the resources available for post-market
surveillance, analysis and risk management. The restriction of PDUFA
funding support to products approved on or after October 2002 has also
meant that fee funds could not be used to support further investigation
of safety issues related to products approved within the past five to
ten years, such as COX-2 and SSRI drugs that have received more recent
public attention. The limited availability of fee funds and limited
ability to apply them to post-market surveillance work has limited FDA's
ability to address the surveillance capacity issues via PDUFA.

**5.3 Direct-to-Consumer Advertising (DTCA) of Prescription Drugs**

Industry sponsors are not required to submit Direct-to-Consumer
Advertising (DTCA) materials for FDA review prior to using the materials
in their promotion and this review is not part of the PDUFA "process for
the review of human drugs". It is linked, however, to fundamental
aspects of new drug review and it also presents the prospect of a
mushrooming review workload.

A fundamental part of NDA review is the review of information that the
sponsor wishes to include in the drug label, which includes the disease
indication, patient population for which the drug would be approved and
key safety information. FDA only approves labeling supported by
scientific evidence of safety and effectiveness presented in the NDA,
and any subsequent market promotion, including any direct-to-consumer
advertising, must be consistent with the FDA-approved drug label and FDA
regulations.

DTCA has been found beneficial to some consumers. Researchers found that
of those consumers prompted by DTCA to have a physician visit to discuss
treatment or seek medical advice, about 25 percent had a new diagnosis,
and 43 percent of those new diagnoses were for "high priority"
conditions based on federal government criteria. Some of the new
diagnoses that were discovered as a result of these visits were often
under diagnosed and under treated. The most common new diagnoses were
allergies, high cholesterol, arthritis, hypertension, diabetes and
depression[^7]. Many surveyed physicians think DTCA encourages patients
to seek treatments they don't need, but many also think DTCA helps
educate and inform patients about disease conditions and treatments
available to them[^8].

Industry believes that DTCA benefits public health, and the
Pharmaceutical Research and Manufacturing Association (PhRMA) has stated
that DTCA "fosters an informed conversation about health, disease, and
treatments between patients and their health practitioners." However,
responding to some public concerns about DTCA and its potential impact
on increased drug use, on August 2, 2005, PhRMA announced its Guiding
Principles for Direct to Consumer Advertisements About Prescription
Medicines. Principle number 8 states: "Companies should submit all new
DTC television advertisements to the FDA before releasing these
advertisements for broadcast."

Figure 5.6 shows recent trends in the numbers of broadcast drug
advertisements disseminated without FDA review, versus the number
proposed and submitted to FDA for review prior to dissemination. In
2004, DDMAC reviewed 142 proposed broadcast ads, with the 4 full-time
staff available to perform these reviews. Although FDA review of all
materials would ensure alignment with the approved labeling and a fair
balance of information on benefits and risks, current FDA resourcing for
this work would probably result in delayed reviews if all companies were
to submit their ads. Such delays would likely affect companies' ability
to meet their marketing timelines, and discourage them from submitting
the materials for prior FDA review.

[^1]: Discussion of the PDUFA definition of the "process of review of
    human drug applications" can be found at
    <http://www.fda.gov/oc/pdufa/finreport2004/appendixC.html>

[^2]: Applications for drugs similar to those already marketed are
    designated as "standard," while "priority" applications represent
    drugs offering significant advances over existing treatments.

[^3]: "Detailing" is a marketing practice conducted by pharmaceutical
    companies whereby sales representatives visit physicians' offices,
    explain the features of their company's drug products, and
    distribute advertising materials and product samples.

[^4]: DiMasi, Joseph A., Hansen, Ronald W., and Grabowski, Henry G.,
    \"The Price of Innovation: New Estimates of Drug Development
    Costs,\" *Journal of Health Economics*, 22(2), March 2003, Pages
    151-185.

[^5]: "Does Lack of Launches Spell End of Expansion?", *Scrip Magazine*,
    February 2005, pp. 24-25

[^6]: *Prescription Drug Trends: A Chartbook*, Kaiser Family Foundation,
    2000 and [www.imshealth.com](http://www.imshealth.com/)

[^7]: J.S. Weissman, D. Blumenthal, A.J. Silk, K. Zapert, M. Newman, and
    R. Leitman, "Consumers' Reports on the Health Effects of
    Direct-to-Consumer Drug Advertising", *Health Affairs Web
    Exclusive*, February 26, 2003

[^8]: J.S. Weissman, D. Blumenthal, A.J. Silk, M. Newman, K. Zapert, R.
    Leitman and S. Feibelmann, "Physicians Report on Patient Encounters
    Involving Direct-to-Consumer Advertising", *Health Affairs Web
    Exclusive*, April 28, 2004