[Federal Register Volume 71, Number 240 (Thursday, December 14, 2006)]
[Proposed Rules]
[Pages 75168-75181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-9685]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 312

[Docket No. 2006N-0061]
RIN 0910-AF13


Charging for Investigational Drugs

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: The Food and Drug Administration (FDA) is proposing to amend 
its investigational new drug application (IND) regulation concerning 
charging patients for investigational new drugs. FDA is proposing to 
revise the current charging regulation to clarify the circumstances in 
which charging for an investigational drug in a clinical trial is 
appropriate, to set forth criteria for charging for an investigational 
drug for the different types of expanded access for treatment use 
described in the agency's proposed rule on expanded access for 
treatment use of investigational drugs published elsewhere in this 
issue of the Federal Register, and to clarify what costs can be 
recovered for an investigational drug. The proposed rule is intended to 
permit charging for a broader range of investigational and expanded 
access uses than is explicitly permitted in current regulations.

DATES: Submit written or electronic comments by March 14, 2007. Submit 
written comments on the information collection requirements by January 
16, 2007.

ADDRESSES: You may submit comments, identified by Docket No. 2006N-0061 
and/or RIN number 0910-AF13, by any of the following methods:
Electronic Submissions
    Submit electronic comments in the following ways:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Agency Web site: http://www.fda.gov/dockets/ecomments. 
Follow the instructions for submitting comments on the agency Web site.
Written Submissions
    Submit written submissions in the following ways:
    <bullet> FAX: 301-827-6870.
    <bullet> Mail/Hand delivery/Courier [For paper, disk, or CD-ROM 
submissions]: Division of Dockets Management (HFA-305), Food and Drug 
Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.
    To ensure more timely processing of comments, FDA is no longer 
accepting comments submitted to the agency by e-mail. FDA encourages 
you to continue to submit electronic comments by using the Federal 
eRulemaking Portal or the agency Web site, as described in the 
Electronic Submissions portion of this paragraph.
    Instructions: All submissions received must include the agency name 
and Docket No(s). and Regulatory Information Number (RIN) (if a RIN 
number has been assigned) for this rulemaking. All comments received 
may be posted without change to http://www.fda.gov/ohrms/dockets/default.htm, including any personal information provided. For 
additional information on submitting comments, see the ``Comments'' 
heading of the SUPPLEMENTARY INFORMATION section of this document.
    Docket: For access to the docket to read background documents or

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comments received, go to http://www.fda.gov/ohrms/dockets/default.htm 
and insert the docket number(s), found in brackets in the heading of 
this document, into the ``Search'' box and follow the prompts and/or go 
to the Division of Dockets Management, 5630 Fishers Lane, rm. 1061, 
Rockville, MD 20852.
    The Office of Management and Budget (OMB) is still experiencing 
significant delays in the regular mail, including first class and 
express mail, and messenger deliveries are not being accepted. To 
ensure that comments on the information collection are received, OMB 
recommends that written comments be faxed to the Office of Information 
and Regulatory Affairs, OMB, Attn: Desk Officer for FDA, FAX: 202-395-
6974.

FOR FURTHER INFORMATION CONTACT:
    For the Center for Drug Evaluation and Research: Colleen L. 
Locicero, Center for Drug Evaluation and Research (HFD-101), Food and 
Drug Administration, 10903 New Hampshire Ave., Bldg. 22, rm. 4200, 
Silver Spring, MD 20993-0002, 301-796-2270.
    For the Center for Biologics Evaluation and Research: Steve Ripley, 
Center for Biologics Evaluation and Research (HFM-17), Food and Drug 
Administration, 1401 Rockville Pike, Rockville, MD 20852, 301-827-6210.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. The Current Regulation
II. Why the Current Charging Rule Needs to be Revised
    A. Overview
    B. Criteria for Charging in a Clinical Trial
    C. Charging for Expanded Access for Treatment Use
    D. Recoverable Costs
III. Description of the Proposed Rule
    A. General Requirements
    B. Clinical Trials
    C. Expanded Access for Treatment Use
    D. Recoverable Costs
IV. Legal Authority
V. Environmental Impact
VI. Analysis of Economic Impacts
    A. Objectives of the Proposed Action
    B. The Need for the Proposed Rule
    C. Why Allow Charging?
    D. Baseline for the Analysis
    E. Nature of the Impact
    F. Benefits of the Proposed Rule
    G. Costs of the Proposed Rule
    H. Minimizing the Impact on Small Entities
VII. Paperwork Reduction Act of 1995
VIII. Federalism
IX. Request for Comments

I. The Current Regulation

    FDA's current regulation on charging for an investigational drug is 
Sec.  312.7(d) (21 CFR 312.7(d)). Section 312.7(d) was first proposed 
in the Federal Register of June 9, 1983 (48 FR 26720), and reproposed 
March 19, 1987 (52 FR 8850) (the 1987 proposal). The final rule 
published in the Federal Register of May 22, 1987 (52 FR 19466) (the 
1987 final rule). Under Sec.  312.7(d), FDA may authorize charging for 
an investigational drug used in a clinical trial under an IND and for 
an investigational drug used in a treatment protocol or treatment IND.
    Section 312.7(d)(1) provides that a sponsor who wishes to charge 
for an investigational drug in a clinical trial must provide a full 
written explanation of why charging is necessary for the sponsor to 
undertake or continue the clinical trial, e.g., why distribution of the 
drug to test subjects should not be considered part of the normal cost 
of doing business.
    Section 312.7(d)(2) sets out the following four conditions that 
must be met to charge for an investigational drug used under a 
treatment protocol or treatment IND:
    <bullet> There must be adequate enrollment in the ongoing clinical 
investigations under the authorized IND;
    <bullet> Charging must not constitute commercial marketing of a new 
drug for which a marketing application has not been approved;
    <bullet> The drug must not be commercially promoted or advertised; 
and
    <bullet> The sponsor of the drug must be actively pursuing 
marketing approval with due diligence.
    Section 312.7(d)(2) also provides that to charge for an 
investigational drug used in a treatment IND or treatment protocol, the 
sponsor must submit an information amendment under Sec.  312.31 (21 CFR 
312.31) of the IND regulations. Authorization for charging goes into 
effect automatically 30 days after FDA receives the information 
amendment, unless the agency notifies the sponsor to the contrary.
    Section 312.7(d)(3) provides that a sponsor may not commercialize 
an investigational drug by charging a price larger than that necessary 
to recover costs of manufacture, research, development, and handling of 
the investigational drug.
    Section 312.7(d)(4) provides that FDA will withdraw authorization 
to charge if it determines that charging is interfering with the 
development of a drug for marketing approval or that the criteria for 
the authorization are no longer being met.

II. Why the Current Charging Rule Needs to be Revised

A. Overview

    There are three principal reasons for revising the current charging 
regulation.
    First, the provisions of the current charging regulation concerning 
charging for investigational drugs in a clinical trial need to be 
revised to take into account circumstances that were not anticipated 
when the original rule was adopted in 1987. FDA expected that requests 
to charge in a clinical trial would be limited to requests to charge 
for the sponsor's drug being tested in the trial. In fact, the agency 
has received few such requests. Far more common are requests to charge 
for approved drugs in trials when the drugs must be obtained from 
another company. The approved drug may be used in a trial of the 
sponsor's drug as an active control or in combination with the 
sponsor's drug. Even more common are requests to charge for approved 
drugs used in studies by a third party (not a manufacturer) that are 
intended to study new uses of the approved drug or to compare two 
drugs. FDA believes that requests to charge for investigational drugs 
in these situations may be appropriate, but that the criteria for 
evaluation of such requests are different from those that apply when 
the request to charge is for the sponsor's drug being tested in a 
clinical trial. Accordingly, the agency believes the current charging 
regulation needs to be revised to provide criteria for charging for 
approved drugs used in clinical trials.
    Second, the provisions of the current charging regulation related 
to treatment use provide for charging patients for investigational 
drugs only when those drugs are provided under a treatment IND or 
treatment protocol. Elsewhere in this issue of the Federal Register, 
FDA is proposing to add to part 312 (21 CFR part 312) new subpart I 
concerning ``Expanded Access to Investigational Drugs for Treatment 
Use.'' That proposed rule would retain the treatment IND and treatment 
protocol provisions in the current regulation with minor modifications, 
and provide for two additional categories of expanded access for 
treatment use--expanded access for individual patients and expanded 
access for intermediate size patient populations. The current charging 
rule needs to be revised to provide authority to charge for 
investigational drugs for these two new categories of expanded access 
for treatment use.
    Third, FDA believes the current charging regulation needs to be 
revised to specify the types of costs that can be

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recovered. The language of the current charging rule is not very 
specific and does not provide sufficient guidance to sponsors on the 
costs that can be recovered. Moreover, because of the different 
justifications for charging in a clinical trial and charging for 
treatment use, the agency believes that the costs appropriate for 
recovery also differ.
    The reasons why FDA believes the current charging regulation needs 
to be revised are described more fully in sections II.B, C, and D of 
this document.

B. Criteria for Charging in a Clinical Trial

    Generally, the costs of conducting a clinical trial are costs that 
the sponsor should bear. Conducting a clinical trial is part of the 
drug development process, and drug development is an ordinary business 
expense for a commercial sponsor. If the investigational drug proves 
successful in clinical trials, the sponsor will recoup its development 
costs by marketing the drug for its approved indication. Because 
research subjects who participate in a clinical trial are permitting 
themselves to be exposed to a drug that has not been proven to be 
effective and that may also pose safety risks, subjects generally 
should not be expected to pay for the drug. In fact, in return for 
their willingness to be exposed to an unapproved drug, subjects in 
clinical trials are usually compensated, rather than charged for the 
drug.
    The current regulation on charging requires a sponsor who wishes to 
charge for an investigational drug in a clinical trial to provide a 
full written explanation of why charging is necessary for the sponsor 
to undertake or continue the clinical trial (e.g., why distributing the 
study drug to test subjects should not be considered part of the normal 
cost of doing business). However, the regulation does not specify the 
criteria that FDA would use to evaluate the sponsor's explanation for 
why charging is necessary to undertake the trial or why the cost of a 
drug should not be considered part of the normal cost of doing 
business.
    The preambles to the reproposed and final rules, however, were more 
specific about the circumstances in which FDA believed charging for an 
investigational drug in a clinical trial might be appropriate. In the 
preamble to the 1987 reproposal, the agency stated that ``extremely 
high costs could warrant the sale of drugs used in clinical trials'' 
(52 FR 8850 at 8854). The agency indicated that allowing charging for 
very expensive drugs could be particularly advantageous by ``permitting 
small and fledgling companies to test products that are extremely 
expensive to produce * * *'' (52 FR 8850 at 8854). In the preamble to 
the 1987 final rule, the agency also stated that ``cost recovery is 
justified in clinical trials only when necessary to further the study 
and development of promising drugs that might otherwise be lost to the 
medical armamentarium'' (52 FR 19466 at 19474).
    Thus, the philosophy behind the current charging regulation was 
that authorizing charging in a clinical trial required an exceptional 
circumstance, including evidence that the drug might provide an 
advantage over available therapy and that the study for which charging 
is requested is necessary to further the development of the drug and 
could not be conducted without charging. FDA is now proposing to 
describe in regulation specific criteria for charging that are 
consistent with the policies articulated in the preambles to the 
reproposed and final rules. These criteria are described in greater 
detail in section III.B of this document.
    As discussed in section II.A of this document, FDA now believes 
that charging for an investigational drug in a clinical trial may also 
be appropriate when the clinical trial includes approved drugs that 
must be obtained from another company. The approved drug may be used in 
a trial of the sponsor's drug as an active control or in combination 
with the sponsor's drug. In another situation, an approved drug may 
need to be obtained from the marketer of that drug for use in studies 
by a third party (not the manufacturer) that are intended to study a 
new use for the approved drug or to compare two drugs. Thus, FDA is now 
proposing to revise the charging rule to include criteria that apply to 
these two situations when an approved drug is used in a clinical trial. 
These criteria are described in section III.B of this document.

C. Charging for Expanded Access for Treatment Use

    Charging for the cost of an investigational drug for expanded 
access for treatment use is a very different situation from charging 
for a drug in a clinical trial. Treatment use is not a necessary part 
of the drug development process and does not benefit the pharmaceutical 
companies by leading to systematic accumulation of data intended to 
support marketing authorization. Rather, treatment use is primarily 
intended to benefit very sick patients by permitting them to receive 
investigational drugs to treat their diseases and conditions, with 
collection of information about the drug being incident to the intent 
to treat. FDA wants to encourage sponsors to make investigational drugs 
available to seriously ill patients who lack satisfactory alternative 
treatment and might benefit from these drugs. However, making 
investigational drugs available for expanded access for treatment use 
is potentially costly, especially when many patients are involved. 
Therefore, the agency believes that sponsors should be permitted to 
charge patients for investigational drugs for expanded access for 
treatment use, provided that charging will not impede the progress of 
drug development.
    The current charging regulation in Sec.  312.7(d)(2) contains FDA's 
criteria for allowing a sponsor to charge for investigational drugs for 
treatment use under a treatment IND or treatment protocol in accordance 
with Sec. Sec.  312.34 and 312.35. Elsewhere in this issue of the 
Federal Register, FDA is proposing to add to part 312 new subpart I 
(Expanded Access to Investigational Drugs for Treatment Use), which 
would retain the treatment IND and protocol provisions in the current 
regulation with minor modifications, and provide for two additional 
categories of expanded access for treatment use that have not 
previously been described in regulation, (1) expanded access for 
individual patients and (2) expanded access for intermediate size 
patient populations. FDA is proposing to revise the current charging 
regulation to incorporate criteria to permit charging for these newly 
described categories of expanded access for treatment use. The criteria 
that must be met to charge for these uses are described in more detail 
in section III.C of this document.

D. Recoverable Costs

    FDA is also proposing to revise the regulation on charging to 
clearly describe the costs a sponsor can include in its cost recovery 
calculation for an investigational drug. Under the current charging 
regulation, a sponsor may not charge a price ``larger than that 
necessary to recover costs of manufacture, research, development, and 
handling of the investigational drug'' (Sec.  312.7(d)(3)). In FDA's 
experience, this provision has been prone to varied interpretations, 
sometimes resulting in unrealistic cost calculations. For example, some 
sponsors have interpreted the provision as allowing cost recovery for 
all possible costs associated with the research, development, 
manufacture, and handling of the drug from the inception of drug 
development. Some sponsors have also interpreted Sec.  312.7(d)(3) as 
permitting cost recovery for the entire

[[Page 75171]]

cost of facilities designed to produce the drug in quantities that 
would be adequate for the ultimate marketing of the drug. These 
interpretations typically result in a cost that cannot reasonably be 
recovered from the number of patients who will be receiving the 
investigational drug.
    FDA believes the current cost recovery provision was intended to 
permit a sponsor to recover the costs associated with providing an 
expensive drug product to study subjects in a clinical trial or making 
a drug product available for treatment use. FDA does not believe the 
intent was to allow a sponsor to recover the costs of research and 
development of a drug before it is marketed. The proposed rule is 
intended to clearly describe what costs may be recovered by a sponsor 
by providing criteria that are less susceptible to varied 
interpretations. These criteria are described in section III.D of this 
document.

III. Description of the Proposed Rule

    The proposed rule would remove paragraph (d) of current Sec.  312.7 
that discusses charging for and commercialization of investigational 
drugs. The proposed rule would create new Sec.  312.8 describing 
general requirements for charging for investigational drugs, specific 
requirements pertaining to charging for investigational drugs in a 
clinical trial, charging for investigational drugs for treatment use 
under proposed subpart I (described elsewhere in this issue of the 
Federal Register), and requirements for determining what costs can be 
recovered when charging for an investigational drug.

A. General Requirements

    Proposed Sec.  312.8(a) describes the following general 
requirements and conditions for charging for investigational new drugs. 
A sponsor who wishes to charge for an investigational drug must do the 
following:
    <bullet> Comply with the applicable requirements for the type of 
use for which charging is requested (either in a clinical trial or for 
treatment use) (proposed Sec.  312.8(a)(1)),
    <bullet> Provide justification that the amount to be charged 
reflects only those costs that are permitted to be recovered (proposed 
Sec.  312.8(a)(2)), and
    <bullet> Obtain prior written authorization from FDA (proposed 
Sec.  312.8(a)(3)).
    The requirement in the proposed rule to obtain prior written 
authorization from FDA to charge for any investigational drug would be 
a change from the provisions of the current charging regulation. At the 
present time, sponsors must obtain prior written approval from FDA to 
charge for an investigational drug in a clinical trial (Sec.  
312.7(d)(1)). On the other hand, authorization to charge for an 
investigational drug in a treatment protocol or treatment IND goes into 
effect automatically 30 days after receipt by FDA of an information 
amendment concerning charging, unless FDA notifies the sponsor to the 
contrary (Sec.  312.7(d)(2)). The proposal to require sponsors to 
obtain prior written authorization to charge for all types of expanded 
access is consistent with the agency's current practice of reviewing 
requests to charge for investigational drugs in treatment protocols or 
treatment INDs. The agency wants to review requests to charge for any 
type of expanded access to ensure that the criteria for charging have 
been met and that the amount to be charged does not exceed the costs 
permissible under the proposed rule.
    Proposed Sec.  312.8(a)(4) provides that FDA will withdraw 
authorization to charge if it determines that charging is interfering 
with the development of a drug for marketing approval or that the 
criteria for the authorization are no longer being met.

B. Clinical Trials

    Proposed Sec.  312.8(b) describes specific requirements pertaining 
to charging for an investigational drug in a clinical trial. This 
provision addresses three situations in which FDA may authorize 
charging for an investigational drug in a clinical trial, including 
investigational use of an approved drug.
    Proposed Sec.  312.8(b)(1) describes criteria for charging for the 
sponsor's own drug in a clinical trial. The cost of an investigational 
drug used in a clinical trial is an anticipated cost of drug 
development and should ordinarily be borne by the sponsor. Therefore, 
FDA believes that charging should be permitted only when three 
circumstances are present. First, charging should be allowed only to 
facilitate development of a promising new drug or indication that might 
not otherwise be developed, or to obtain important safety information 
that might not otherwise be obtained. Accordingly, the proposed rule 
provides that a sponsor wishing to charge for its investigational drug 
in a clinical trial must provide some evidence of potential clinical 
benefit that, if demonstrated in clinical investigations, would provide 
a significant advantage over available products in the diagnosis, 
treatment, mitigation, or prevention of a disease or condition 
(proposed Sec.  312.8(b)(1)(i)).
    Second, charging should be permitted only for a trial that is 
necessary for the development of the drug. Therefore, the sponsor must 
demonstrate that the data to be obtained from the clinical trial would 
be essential to establishing that the drug is effective or safe for the 
purpose of obtaining initial marketing approval of the drug, or that it 
would support a significant change in the labeling of the sponsor's 
approved drug (proposed Sec.  312.8(b)(1)(ii)). For example, the trial 
could be designed to provide data that would support approval of a new 
indication or generate important comparative safety information. The 
type of products that are likely to meet these two criteria are also 
likely to be eligible for fast track development programs and priority 
review (see FDA's guidance for industry on ``Fast Track Drug 
Development Programs--Designation, Development, and Application 
Review,'' including the priority review policies for the Centers for 
Drug Evaluation and Research and Biologics Evaluation and Research in 
appendix 3 (available on the Internet at http://www.fda.gov/cder/guidance/index.htm)).
    Third, charging must be necessary to the conduct of the clinical 
trial. Under proposed Sec.  312.8(b)(1)(iii), a sponsor would be 
required to demonstrate that clinical development of the drug could not 
be continued without charging because the cost of the drug is 
extraordinary. The cost of the drug may be extraordinary because of 
manufacturing complexity, scarcity of a natural resource, the large 
quantity of drug needed (e.g., due to the size or duration of the 
trial), or some combination of these or other extraordinary 
circumstances.
    Proposed Sec.  312.8(b)(2) describes criteria for charging for an 
approved drug that a sponsor must obtain from another entity for use as 
an active control or in combination with another drug in a clinical 
trial designed to evaluate the effectiveness or safety of the sponsor's 
investigational drug. In these situations, the study subjects typically 
must receive some therapy for their disease or condition because using 
a placebo control would be unethical. In addition, the subjects often 
would be treated with the approved drug in the course of medical 
practice if they were not participating in the clinical trial. 
Therefore, FDA believes the threshold for charging in this situation 
should be lower than the threshold for charging by a sponsor for the 
sponsor's own investigational drug. To charge for an approved drug in 
this situation, a

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sponsor must demonstrate that the trial is of adequate design to 
evaluate the safety or effectiveness of the sponsor's drug and that the 
drug is not being provided free of charge by its manufacturer (proposed 
Sec.  312.8(b)(2)(i) and (b)(2)(ii)).
    Proposed Sec.  312.8(b)(3) describes criteria for charging for an 
approved drug that must be obtained from another entity in a clinical 
trial designed to evaluate the approved drug (e.g., for another 
indication). This provision is primarily intended to enable sponsors 
who are not commercial entities in the business of drug development to 
study new uses of approved drugs that might not be of commercial 
interest to the drug's manufacturer or to conduct studies that provide 
additional information about a drug that might not otherwise be 
obtained. Typically, these sponsors are sponsor-investigators 
conducting relatively small trials at a single site. Such sponsors lack 
the resources of commercial sponsors and are not conducting the 
research for commercial purposes, so they will not be able to recover 
the cost of obtaining the approved drug by marketing the drug, for 
example, for a new indication. The agency believes these kinds of 
trials should be encouraged because they may yield important data about 
less commercially viable uses of a drug. Therefore, FDA believes the 
threshold for charging by a sponsor in this situation should be lower 
than the threshold for charging for the sponsor's own investigational 
drug. To charge for an approved drug in this situation, a sponsor must 
demonstrate that the clinical trial of the approved drug is of adequate 
design to evaluate the safety or effectiveness of a new indication, or 
provide important safety information related to an approved indication, 
and that the drug is not being provided free of charge by its 
manufacturer (proposed Sec.  312.8(b)(3)(i) and (b)(3)(ii)).
    Proposed Sec.  312.8(b)(4) provides that the authorization to 
charge for a drug in a clinical trial would ordinarily continue for the 
duration of the clinical trial because it is unlikely that the need for 
charging would change during the course of the trial. However, proposed 
Sec.  312.8(b)(4) gives FDA the discretion to specify a duration 
shorter than the length of the trial. FDA may specify a shorter 
duration if, for example, there is a particular concern that the 
authorization to charge has the potential to delay the development of a 
drug for marketing approval.

C. Expanded Access for Treatment Use

    Proposed Sec.  312.8(c) sets forth the criteria for charging for 
the three types of expanded access to investigational drugs for 
treatment use described in proposed subpart I of part 312 described 
elsewhere in this issue of the Federal Register. Proposed subpart I 
describes two types of treatment use (expanded access for individual 
patients and expanded access for intermediate size patient populations) 
not previously described in FDA's regulations and, therefore, not 
specifically contemplated by the existing charging regulation. The 
agency's principal concern with charging patients in expanded access 
settings for investigational drugs is that charging not interfere with 
the development of drugs for commercial marketing. Accordingly, 
proposed Sec.  312.8(c)(1) would require a sponsor wishing to charge 
for an investigational drug for any of the three types of expanded 
access under proposed subpart I to provide reasonable assurance that 
charging will not interfere with developing the drug for marketing 
approval.
    For the types of expanded access to investigational drugs described 
in proposed subpart I, FDA believes it is less likely that the limited 
numbers of patients who might obtain individual patient expanded access 
to an investigational drug (Sec.  312.305 of proposed subpart I) or 
intermediate size patient population expanded access (Sec.  312.310 of 
proposed subpart I) would impede development of a drug or indication. 
The potential to interfere with drug development is greatest for 
treatment use under a treatment IND or protocol (Sec.  312.320 of 
proposed subpart I). Treatment INDs or protocols can attract large 
numbers of patients and thus have the potential to significantly affect 
enrollment in the clinical trials needed to establish safety and 
effectiveness. Accordingly, proposed Sec.  312.8(c)(2) sets forth 
specific information that would be required to reasonably assure FDA 
that charging for an investigational drug under a treatment IND or 
protocol will not interfere with drug development. Sponsors would be 
required to provide evidence of sufficient enrollment in any ongoing 
clinical trials needed for marketing approval to reasonably assure FDA 
that the trials will be completed as planned (proposed Sec.  
312.8(c)(2)(i)). Sponsors would also be required to provide evidence of 
adequate progress in the development of the drug for marketing approval 
(proposed Sec.  312.8(c)(2)(ii)). Such evidence could include 
successful meetings with FDA before submission of a new drug 
application (NDA), submission of an NDA, or completion of other 
significant drug development milestones. Sponsors would also be 
required to submit information under their general investigational 
plans (Sec.  312.23(a)(3)(iv)) specifying the drug development 
milestones they plan to meet in the coming year (proposed Sec.  
312.8(c)(2)(iii)).
    Proposed Sec.  312.8(c)(3) specifies that the authorization to 
charge be limited to the number of patients authorized to receive the 
drug for treatment use, if there is a limitation. For example, the 
authorization to charge for an investigational drug under an individual 
patient expanded access submission would be limited to a single 
patient. Similarly, the authorization to charge under an intermediate 
size patient population expanded access submission would be limited to 
the number of patients permitted to receive the drug under that 
particular intermediate patient population expanded access IND or 
protocol.
    Proposed Sec.  312.8(c)(4) provides that FDA will ordinarily 
authorize charging for expanded access for treatment use under proposed 
subpart I to continue for 1 year from the time of FDA authorization. It 
also provides FDA the discretion to specify a shorter authorization. 
FDA proposes to limit the authorization to charge to a period of 1 year 
or less to permit the agency to periodically assess whether the 
criteria for charging continue to be met. FDA anticipates that it would 
exercise its discretion to specify a shorter duration when there is a 
particular concern that charging could interfere with drug development. 
Proposed Sec.  312.8(c)(4) provides that a sponsor may request that FDA 
reauthorize charging for additional periods.

D. Recoverable Costs

    Proposed Sec.  312.8(d) describes the kinds of costs that are 
recoverable when charging for an investigational drug in a clinical 
trial and for expanded access for treatment use under proposed subpart 
I. The purpose of permitting charging for an investigational drug in a 
clinical trial is to permit a sponsor to recover the costs of a drug 
when the drug is extraordinarily expensive. Thus, proposed Sec.  
312.8(d)(1) would limit cost recovery to the direct costs of making the 
investigational drug available in these situations. Indirect costs 
could not be recovered.
    Proposed Sec.  312.8(d)(1)(i) describes direct costs as costs 
incurred by a sponsor that can be specifically and exclusively 
attributed to providing the drug for the investigational use for which 
FDA has authorized cost recovery. Direct costs include costs per unit 
to manufacture the drug (e.g., raw

[[Page 75173]]

materials, labor, and nonreusable supplies and equipment used to 
manufacture the quantity of drug needed for the use for which charging 
is authorized) or costs to acquire the drug from another manufacturing 
source, and direct costs to ship and handle (e.g., store) the drug.
    Indirect costs are costs that are not attributable solely to making 
the drug available for the investigational use for which charging is 
requested. For example, expenditures for physical plant and equipment 
that are incurred primarily for the purpose of producing large 
quantities of the drug for commercial sale after approval, or for 
making the drug available for a variety of investigational uses, are 
not appropriate for cost recovery for these investigational uses 
because these are costs that would be incurred even if the clinical 
trial or expanded access use for which charging is authorized did not 
occur. Proposed Sec.  312.8(d)(1)(ii) states that indirect costs 
include costs incurred primarily to produce the drug for commercial 
sale (e.g., costs for facilities and equipment used to manufacture the 
supply of investigational drug, but that are primarily intended to 
produce large quantities of the drug for eventual commercial sale) and 
research and development, administrative, labor, or other costs that 
would be incurred even if the clinical trial or treatment use for which 
charging is authorized did not occur.
    Sponsors who provide investigational drugs for expanded access for 
treatment use for intermediate size patient populations and for 
treatment INDs and protocols incur costs in addition to the anticipated 
and ordinary costs of drug development. The purpose of permitting cost 
recovery for expanded access use is to encourage sponsors to make 
investigational drugs available for treatment use. Thus, proposed Sec.  
312.8(d)(2) would permit a sponsor to recover the costs of 
administering treatment use programs for intermediate size patient 
populations and for treatment INDs and protocols, as well as the direct 
costs of the drug. The proposed rule would not authorize sponsors to 
recover administrative costs associated with expanded access for 
individual patients because these costs would be so minor.
    Proposed Sec.  312.8(d)(2) provides that, in addition to the direct 
costs of the drug described in proposed Sec.  312.8(d)(1), a sponsor 
may recover the costs of monitoring the expanded access use, complying 
with IND reporting requirements, and other administrative costs 
directly associated with making a drug available for treatment use 
under Sec. Sec.  312.315 and 312.320 of proposed subpart I.
    Sponsors who provide investigational drugs for expanded access for 
treatment use for intermediate size patient populations and for 
treatment INDs and protocols incur costs in addition to the anticipated 
and ordinary costs of drug development. The purpose of permitting cost 
recovery for expanded access use is to encourage sponsors to make 
investigational drugs available for treatment use. Thus, proposed Sec.  
312.8(d)(2) would permit a sponsor to recover the costs of 
administering treatment use programs for intermediate size patient 
populations and for treatment INDs and protocols, as well as the direct 
costs of the drug. The proposed rule would not authorize sponsors to 
recover administrative costs associated with expanded access for 
individual patients because these costs would be so minor.
    Proposed Sec.  312.8(d)(3) provides that, to support its 
calculation for cost recovery, a sponsor must provide supporting 
documentation to show that the cost calculation is consistent with the 
relevant requirements in proposed Sec.  312.8(d). If such documentation 
relies on financial information or accounting methods beyond the 
expertise of FDA reviewers, FDA may request that a sponsor provide 
independent certification that its cost recovery calculation is 
consistent with the requirements of this section.

IV. Legal Authority

    FDA has the authority under the Federal Food, Drug, and Cosmetic 
Act (the act) to permit charging for an investigational new drug under 
the conditions set forth in this proposed rule. This proposed rule 
would clarify and slightly expand the charging scheme that is already 
in place. It is based on the agency's\1\ authority to issue regulations 
pertaining to the investigational use of drugs, section 505(i) of the 
act (21 U.S.C. 355(i)), its authority pertaining to expanded access to 
unapproved drugs for treatment use, section 561 of the act (21 U.S.C. 
360bbb), and its general grant of rulemaking authority for the 
efficient enforcement of the act, section 701(a) of the act (21 U.S.C. 
371(a)).
---------------------------------------------------------------------------

    \1\In light of section 903(d) of the act (21 U.S.C. 393(d)), and 
the Secretary of Health and Human Service's delegations to the 
Commissioner of Food and Drugs, statutory references to ``the 
Secretary'' in the discussion of legal authority have been changed 
to ``FDA'' or ``the agency.''
---------------------------------------------------------------------------

    Section 505(i) of the act directs the agency to issue regulations 
exempting from the operation of the new drug approval requirements 
drugs intended solely for investigational use by experts qualified by 
scientific training and expertise to investigate the safety and 
effectiveness of drugs. It is this authority that underlies FDA's IND 
regulations in part 312. The proposed rule would add to and clarify the 
existing IND regulations by revising the current charging regulation to 
explain the circumstances under which charging for an investigational 
drug is appropriate in a clinical trial and to clarify what costs can 
be recovered.
    Section 561 of the act, added by the Food and Drug Administration 
Modernization Act of 1997 (Public Law 105-115), provides additional 
authority for this proposed rule. One of that section's preconditions 
to providing an investigational drug for treatment use is that the 
sponsor submit a protocol consistent with regulations issued under 
section 505(i) of the act. (See section 561(b)(1)(4) and (c) of the 
act.) This rulemaking, proposed under section 505(i) of the act, sets 
out the circumstances under which charging for an investigational drug 
is appropriate for treatment use in an expanded access program as well 
as in a clinical trial and clarifies what costs can be recovered.
    Section 701(a) of the act gives FDA the authority to issue 
regulations for the efficient enforcement of the act. Further 
discussion of FDA's legal authority regarding charging can be found at 
52 FR 19466 at 19472 (May 22, 1987).

V. Environmental Impact

    The agency has determined, under 21 CFR 25.30(h), that this action 
is of a type that does not individually or cumulatively have a 
significant effect on the human environment. Therefore, neither an 
environmental assessment nor an environmental impact statement is 
required.

VI. Analysis of Economic Impacts

    FDA has examined the impacts of the proposed rule under Executive 
Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612), and 
the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). Executive 
Order 12866 directs agencies to assess all costs and benefits of 
available regulatory alternatives and, when regulation is necessary, to 
select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity). The agency believes that 
this proposed rule is not an economically significant regulatory action 
as defined by the Executive order.

[[Page 75174]]

    The Regulatory Flexibility Act requires agencies to analyze 
regulatory options that would minimize any significant impact of a rule 
on small entities. Currently, the agency does not believe that the 
proposed rule will have a significant economic impact on a substantial 
number of small entities. Nevertheless, we recognize our uncertainty 
regarding the number and size distribution of affected entities as well 
as the economic impact of the proposed rule on those entities. 
Therefore, the analysis presented below, along with other relevant 
sections of this document, constitutes the agency's initial regulatory 
flexibility analysis. The agency specifically requests detailed public 
comment regarding the number of affected small entities as well as the 
potential economic impact of the proposed rule on those entities.
    Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires 
that agencies prepare a written statement, which includes an assessment 
of anticipated costs and benefits, before proposing ``any rule that 
includes any Federal mandate that may result in an expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100,000,000 or more (adjusted annually for 
inflation) in any one year.'' The current threshold after adjustment 
for inflation is approximately $122 million, using the most current 
(2005) Implicit Price Deflator for the Gross Domestic Product. FDA does 
not expect this proposed rule to result in any one-year expenditure 
that would meet or exceed this amount.

A. Objectives of the Proposed Action

    FDA is proposing this action to clarify and expand on an existing 
regulation (in place since 1987) that permits sponsors to charge 
patients for investigational drugs. Currently, FDA may authorize 
charging for an investigational drug used in a clinical trial or under 
a treatment IND or treatment protocol. This proposed rule would expand 
the agency's authority to permit charging for investigational drugs in 
a number of other situations. In clinical trial settings, the proposed 
rule would add provisions that permit charging for another entity's 
approved drug--either for use as an active control, as combination 
therapy with its own drug, or to study new indications. The proposed 
rule would also add provisions that permit charging for investigational 
drugs for all of the various types of expanded access for treatment use 
described under proposed subpart I of part 312. Finally, the proposed 
rule describes more specifically the types of costs that could be 
recovered when charging for an investigational drug.

B. The Need for the Proposed Rule

    This proposed rule is needed for several reasons. The current 
charging regulation only provides for charging for a sponsor's own drug 
in a clinical trial. However, since the charging rule was adopted in 
1987, FDA has received requests to charge in a clinical trial for 
approved drugs that must be obtained from another company. In one 
situation, an approved drug is being used in a clinical trial as an 
active control or in combination with the sponsor's drug. In another 
situation, a third party who is not a manufacturer requests permission 
to charge for an approved drug that is being studied in the hope of 
discovering new uses for that drug. The proposed rule would authorize 
charging for approved drugs in these situations and provide criteria 
governing such requests to charge.
    The proposed rule is also needed to establish charging provisions 
for types of expanded access for treatment use other than the treatment 
IND or treatment protocol. Elsewhere in this issue of the Federal 
Register, FDA is proposing to amend part 312 of its regulations by 
adding subpart I concerning expanded access to investigational drugs 
for treatment use. In addition to the treatment IND or treatment 
protocol currently described in FDA regulations, the expanded access 
proposed rule would specifically authorize expanded access for 
individual patients, including in emergencies, and expanded access for 
intermediate size patient populations. The expanded access proposed 
rule is intended to improve access to investigational drugs for 
patients with serious or life-threatening conditions who have exhausted 
other therapeutic options and may benefit from such therapies. This 
proposed rule is necessary to establish provisions that would permit 
charging for investigational drugs for all of the types of expanded 
access use described under proposed subpart I.
    Finally, the proposed rule is needed to clarify and better explain 
the types of costs sponsors are permitted to recover through charging. 
The current regulatory language describing the costs a sponsor can 
recover when charging for an investigational drug has proven difficult 
to interpret and apply. Some sponsors have interpreted the language 
broadly to permit recovery of costs much greater than those directly 
attributable to providing the investigational drug for the approved 
treatment use. In addition, ambiguities in the current regulatory 
language may have caused inefficiencies leading some drug sponsors to 
devote more resources than necessary to the preparation and submission 
of charging requests.

C. Why Allow Charging?

    The expense of conducting a clinical trial is considered a normal 
cost of drug development that should be recovered through sales after 
marketing approval. However, in some clinical trial settings, a sponsor 
may incur extraordinary costs compared to typical drug development 
expenses. An extraordinary cost burden may arise because of unusually 
high manufacturing costs, the quantity of the drug required, the number 
of patients involved, the expected duration of treatment, or some 
combination of these factors. The agency believes that allowing cost 
recovery through charging may be appropriate in these instances, but 
only as a last resort source of funding to facilitate development of a 
promising new therapy that could not otherwise be developed.
    In some clinical trials, it may be necessary for a sponsor to 
obtain an approved drug from another entity. The approved drug may be 
used as an active control or in combination with the sponsor's drug in 
a clinical trial designed to evaluate the effectiveness or safety of 
the sponsor's investigational drug. In these situations, the study 
subjects typically must receive some therapy for their disease or 
condition because using a placebo control would be unethical. In 
addition, the subjects often would be treated with the approved drug in 
the course of medical practice if they were not participating in the 
clinical trial. Therefore, FDA believes the threshold for charging in 
this situation should be lower than the threshold for charging for the 
sponsor's own investigational drug.
    In other situations, an approved drug must be obtained by a third 
party (not the manufacturer) to study the drug in a clinical trial for 
a new indication or to obtain important safety information about an 
approved indication. Researchers conducting such clinical trials are 
primarily noncommercial entities who are not in the business of drug 
development. Typically, these sponsor-investigators conduct relatively 
small trials at a single site. Since such sponsors lack the resources 
of commercial sponsors and do not conduct the research for commercial 
purposes, they will not be able to recover the cost of obtaining the 
approved drug by marketing the drug, for example, for a new indication. 
The agency believes these kinds of trials should be encouraged because 
they may

[[Page 75175]]

yield important data about less commercially viable uses of a drug or 
additional drug safety information. Therefore, FDA believes the 
threshold for charging by a sponsor in this situation should be lower 
than the threshold for charging for the sponsor's own investigational 
drug.
    In contrast to clinical trials, granting expanded access to 
investigational drugs for treatment use primarily benefits individual 
patients and is not intended typically to generate data needed to 
support marketing approval. Thus, the costs to sponsors associated with 
making a drug available for expanded access are not considered typical 
drug development expenditures. For this reason, the agency believes 
that it is generally more appropriate to permit sponsors to charge for 
expanded access to investigational drugs for treatment use. Allowing 
charging in expanded access settings may also provide financial 
incentives for sponsors to make investigational drugs more widely 
available in these situations.

D. Baseline for the Analysis

    During the period 1997 through 2005, FDA received an average of 
2,046.6 INDs per year. During this same period, the agency received an 
annual average of 22.6 requests to charge patients for investigational 
drugs. Thus, only about 1.1 percent (0.011 = 22.6 / 2,046.6) of all 
INDs received by the agency on an annual basis were associated with 
charging requests. Similarly, FDA received an average of 1.1 treatment 
IND or treatment protocol charging requests per year during this 
period. Thus, requests to charge under treatment INDs or treatment 
protocols were associated with about 0.06 percent (0.0006 = 1.1 / 
2,046.6) of all INDs received by the agency each year. Finally, FDA 
received an average of 15.6 other charging requests per year during 
this period. These requests were to charge patients for expanded access 
to investigational drugs in situations other than individual patient or 
emergency INDs, and treatment INDs or treatment protocols. Such 
situations would generally include requests to charge for expanded 
access in intermediate-size patient populations and under clinical 
trials. Because the intermediate-size patient population IND or 
protocol is not currently established in regulation, a more precise 
distribution of other charging requests cannot be determined. 
Nevertheless, other charging requests were associated with about 0.76 
percent (0.0076 = 15.6 / 2,046.6) of all INDs received by the agency 
each year from 1997 through 2005. This information is summarized in 
table 1 below.

                                       Table 1. Baseline Data for Number of INDs and Charging Requests by Category
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Treatment IND/ or Protocol
               Category                       Total INDs         All Charging Requests                Requests                 Other Charging Requests
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number                                              2,046.6                      22.6                               1.1                          15.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percent of all INDs                                   100.0%                      1.1%                              0.06%                         0.76%
--------------------------------------------------------------------------------------------------------------------------------------------------------

    FDA also received an average of 659 individual patient and 
emergency INDs per year during the period 1997 through 2005. This 
number represents approximately 32.2 percent (0.322 = 659 / 2,046.6) of 
all INDs received by the agency each year. During this same period, FDA 
received an average of 7.1 charging requests for individual patient or 
emergency INDs or protocols per year. Thus, charging requests are 
associated with about 1.1 percent (0.0108 = 7.1 / 659) of all 
individual patient and emergency INDs or protocols received by the 
agency each year. This information is summarized in table 2 below.

 Table 2: Baseline Data for Number of Individual Patient/Emergency INDs
------------------------------------------------------------------------
                           Individual Patient or
        Category               Emergency INDs        Charging  Requests
------------------------------------------------------------------------
Number                    659.0                    7.1
------------------------------------------------------------------------
Percent                   100.0%                   1.1%
------------------------------------------------------------------------

E. Nature of the Impact

    The proposed rule would affect patients who lack effective 
therapeutic alternatives for serious and life-threatening conditions; 
sponsors who develop drugs to treat serious and life-threatening 
conditions; and FDA in determining whether to authorize charging for 
investigational drugs. By clarifying requirements and establishing the 
full range of situations in which it may be appropriate to charge for 
an investigational drug, the proposed rule would improve patient access 
by providing a financial incentive for sponsors to make promising 
therapies more widely available. Thus, this proposed rule should help 
to facilitate patient access to drugs that could not be provided 
without charging and permit sponsors to study drugs that might 
otherwise be too costly to develop.
    By describing in regulation the full range of situations in which 
charging for an investigational drug may be permitted, this proposed 
rule would likely increase the volume of charging requests somewhat. 
However, by clarifying the circumstances under which charging would be 
permitted and specifying the types of costs that sponsors could 
recover, this proposed rule should also make the process of obtaining 
authorization to charge more transparent and more efficient. Given the 
small percentage of all INDs that include charging requests, FDA 
believes that the impact of the proposed rule will not be significant.
    This proposed rule could also increase treatment expenses for some 
patients who obtain investigational drugs for which charging is 
permitted, or for third party payors if they choose to reimburse 
patients for some or all of the costs of such drugs. The agency 
believes that such costs would not be excessive and would be justified 
by the primary benefit of this proposed rule, making investigational 
drugs available for treatment use that could not otherwise be made 
available without charging. The potential impact of specific provisions 
of the proposed rule is discussed in greater detail in the following 
paragraphs.
1. Charging in a Clinical Trial
    a. Charging for a sponsor's drug in a clinical trial. The existing 
charging regulation has permitted charging for investigational drugs in 
clinical trials intended to support marketing approval since 1987. This 
proposed rule is intended only to clarify the situations in which 
charging for a sponsor's investigational drug in such a clinical trial 
is appropriate. Therefore, FDA does not expect this proposed rule to 
have a significant effect on the number of requests to charge for 
sponsors'

[[Page 75176]]

investigational drugs in clinical trials to support initial marketing 
approval.
    b. Charging for an approved drug in a clinical trial. As discussed 
in section II.A of this document, a major reason for revising the 
current charging regulation is to describe criteria for charging for 
approved drugs in clinical trials that are subject to part 312. These 
criteria are needed because the bulk of the requests to charge in the 
clinical trial setting have been requests to charge for approved drugs 
and the existing criteria do not readily apply to this situation.
    By explicitly acknowledging that charging for an approved drug in a 
clinical trial subject to part 312 is possible under appropriate 
circumstances, this proposed rule should increase awareness of this 
option and thus stimulate requests to charge. The extent to which the 
volume of such requests might increase is uncertain. FDA's experience 
is that sponsors are most likely to request to charge when the drug is 
quite expensive and that expense represents a substantial burden 
relative to the sponsor's resources. Because prescription drugs are 
becoming increasingly expensive, it is reasonable to expect that 
approved products used in clinical trials will become increasingly 
expensive as well. However, because charging may affect a sponsor's 
ability to enroll subjects in clinical trials in a timely manner, FDA 
believes that sponsors will continue to be reluctant to charge unless 
the cost is truly burdensome. Therefore, FDA does not anticipate a 
substantial increase in the number of these requests to charge.
2. Charging for Expanded Access for Treatment Uses Described Under 
Proposed Subpart I
    a. Expanded access for individual patients. FDA anticipates that 
there would be some increase in the number of requests to charge for 
investigational drugs for expanded access for individual patients. By 
establishing in regulation that it may be permissible to charge for an 
investigational drug for expanded access for individual patients, this 
proposed rule should increase awareness of the option to charge and 
thereby stimulate additional requests. In addition, as discussed in the 
preamble to the expanded access proposed rule, that rule is anticipated 
to initially increase the overall volume of expanded access for 
individual patients, which may also lead to some increase in the volume 
of requests to charge.
    For the period 1997 through 2005, FDA received an average of 7.1 
requests per year to charge for such use, or about 1.1 percent (0.011 = 
7.1 charging requests/659 single patient INDs per year) of all 
individual patient treatment use. The extent to which the volume of 
requests to charge for expanded access for individual patients would 
increase under the proposed rule is uncertain. Historically, sponsors 
have been willing to provide an investigational drug to an individual 
patient free of charge in most cases, presumably because the cost is 
not great. However, this willingness may be tempered somewhat if there 
is an increase in the volume of requests for expanded access for 
individual patients received by a particular sponsor, especially if the 
cost of the drug is relatively high. There may also be some increase in 
the number of requests to charge for expanded access for individual 
patients because the prevalence of costly drugs is increasing. At this 
time, FDA has no reasoned basis to project a percentage increase in the 
number of charging requests for expanded access to investigational 
drugs for individual patients. However, because the cost of providing a 
drug to a single patient is usually not a substantial burden for a 
sponsor, FDA believes that the number of requests to charge for 
individual patient expanded access would continue to represent a 
relatively small percentage of such use.
    b. Expanded access for intermediate size patient populations. By 
establishing in regulation that it is possible to charge for expanded 
access to an investigational drug for treatment use in an intermediate 
size patient population, the proposed rule should increase awareness 
that charging may be permitted for such uses, thereby stimulating 
requests to charge. Because access to expanded access for intermediate 
size patient populations has to date been authorized informally, FDA 
does not have records to indicate the number of times charging has been 
requested or permitted for this type of treatment use. If charging has 
been permitted in these situations, the authorizations would have been 
grouped with, and cannot be differentiated from, the authorizations to 
charge under clinical trials.
    FDA does not anticipate a significant number of charging requests 
for expanded access for intermediate size patient populations. 
Historically, sponsors have been willing to provide drugs free of 
charge to a limited number of patients for treatment use. As in the 
case of expanded access for individual patients, we expect this 
behavior would continue.
    c. Treatment INDs and treatment protocols. The agency's current 
regulations allowing charging for investigational drugs under a 
treatment IND or treatment protocol (in place since 1987) would be 
clarified, but not significantly altered, by the proposed rule. 
Therefore, the agency does not anticipate that the proposed rule would 
lead to a change in the number of requests to charge under treatment 
protocols or treatment INDs.
3. Costs Recoverable When Charging for an Investigational Drug
    Finally, the proposed rule clarifies and better explains the types 
of costs sponsors are permitted to recover through charging. In 
particular, sponsors would be limited to recovery of the direct or 
marginal costs associated with making an investigational drug available 
for the approved treatment use. Direct costs that would be recoverable 
under the proposed rule include per unit manufacturing costs and 
shipping and handling costs. In addition, the proposed rule would 
permit sponsors to recover the costs of monitoring an expanded access 
protocol, complying with IND reporting requirements, and other 
administrative costs directly associated with expanded access for an 
intermediate size patient population and for a treatment IND or 
protocol.
4. Summary
    The agency does not expect the number of requests to charge for a 
sponsor's drug in a clinical trial, or to charge for an investigational 
drug under a treatment IND or treatment protocol, to be affected 
because the proposed rule does not significantly change the existing 
regulation. The agency does expect some incremental impact from the 
proposed provisions that would allow charging for approved drugs in 
clinical trial and for expanded access for single patients and 
intermediate size patient populations. The agency believes the impact 
of these provisions would be limited for the reasons described 
previously in this document, but we are unable to estimate the 
quantitative impact because of a lack of reliable data. Thus, the 
following discussion describes, in general terms, the nature of the 
associated benefits and costs.

F. Benefits of the Proposed Rule

    Because FDA currently has no data that would allow us to predict 
the quantitative impact of the proposed rule, it is not possible to 
accurately quantify the magnitude of any expected incremental benefits 
at this time. We would expect the number of requests to charge for 
investigational drugs for expanded access use to increase somewhat. 
However, the number of additional patients that would gain

[[Page 75177]]

access to investigational drugs as a result and the extent to which 
these patients would benefit from such access are highly uncertain.
    Establishing in regulation all of the situations in which charging 
is permissible and clearly specifying the types of costs that are 
eligible for recovery would ease the administrative burdens associated 
with obtaining authorization to charge and could improve patient access 
to investigational drugs for treatment use. Private benefits would 
accrue to individual patients receiving the drugs, whereas social 
benefits would accrue if society also values these individual patient 
benefits. Because the overall impact of the proposed rule is not 
expected to be significant, the potential for any new regulatory 
benefits is somewhat limited.
    In formulating the proposed rule, FDA considered the interests of 
patients, drug sponsors, and the general public. Concerning charging 
for investigational drugs in expanded access settings, the agency 
concluded that seriously ill patients could often benefit from 
increased access to investigational drugs that have not yet been 
approved for marketing. On the other hand, greater patient access to 
investigational drugs outside of the clinical trial setting could have 
the potential to delay approvals of drugs to treat serious and life-
threatening conditions (e.g., by reducing incentives for potential 
subjects to enroll in clinical trials). If allowing charging were to 
adversely affect the drug approval process, the general population 
would experience diminished social benefits due to the reduced or 
delayed availability of new therapies approved for marketing by FDA.
    The proposed rule would address this tension by allowing sponsors 
to charge for investigational drugs in expanded access settings as long 
as the sponsor provides reasonable assurance that charging will not 
interfere with development of the drug for marketing approval. In this 
way, the proposed rule would effectively address the interests of those 
patient populations that would benefit from having greater access to 
investigational drugs and the broader interests of society in having 
safe and effective therapies approved for marketing and widely 
available.
    The proposed rule would limit sponsors to recovery of the direct or 
marginal costs associated with making the drug available. Direct costs 
that are recoverable under the proposed rule include per unit 
manufacturing costs and shipping and handling costs. Indirect or fixed 
costs incurred for joint or common objectives and physical plant and 
equipment expenditures for producing marketable quantities of the drug 
would be specifically excluded under the cost recovery provisions of 
the proposed rule. The agency believes that these cost recovery 
provisions would prevent sponsors from inappropriately shifting the 
normal financial risks associated with new drug development onto 
patients when they charge for drugs in clinical trial settings. For 
expanded access use, the limitation to direct cost recovery would also 
ensure that drug development costs that properly belong to sponsors are 
not shifted to patients.

G. Costs of the Proposed Rule

    Although the proposed rule largely clarifies current agency 
practice, some additional paperwork costs would be incurred to the 
extent that the rule increases the total number of sponsor requests to 
charge patients for investigational drugs. The information requirements 
associated with the proposed rule are not expected to impose a 
significant burden. Drug sponsors who wish to charge for 
investigational drugs would need to review the rule to become familiar 
with its provisions and to gather the evidence and information 
necessary to support charging requests. Because of the lack of data 
described previously in this document, we are unable to generate 
quantitative estimates of compliance costs at this time. The agency 
expects that any incremental cost burdens would likely be small and 
widely dispersed among affected entities for a number of reasons.
    First, regulations covering charging for investigational drugs in 
clinical trials and under treatment INDs or treatment protocols have 
been in place since 1987. As a result, the primary incremental impact 
of the proposed rule would be limited to the new charging provisions 
for the following: (1) Clinical trials using approved drugs and (2) the 
new mechanisms for expanded access for treatment use described under 
proposed subpart I of part 312. Second, the agency does not expect that 
these proposed charging provisions would lead to a large increase in 
the total number of charging requests. Because it is not usually 
extraordinarily expensive to make an investigational drug available to 
a single patient or a limited number of patients, the agency does not 
anticipate that the number of charging requests for expanded access to 
investigational drugs for single patients or intermediate size patient 
populations would increase substantially. Finally, requests to charge 
are relatively infrequent and the expense necessary to prepare a 
charging request would ordinarily be small compared to the overall cost 
of preparing the expanded access submission.
    The agency estimates that, on average, 48 hours would be needed to 
prepare a request to charge under the proposed rule. This estimate is 
based on FDA's experience in reviewing charging requests under the 1987 
regulation and on a projection of the increased paperwork burden 
associated with the proposed rule.
    FDA believes that 80 percent, or about 38 hours, of this burden 
would be associated with establishing that the amount proposed to be 
charged is limited to the direct costs of making the drug available. 
The agency believes that the cost justification portion of the charging 
request would need to be performed by a cost accountant qualified to 
assess the direct costs of charging. Information available on the 
Internet indicates that median total compensation for a Cost Accountant 
IV (senior level) was approximately $102,000 per year in 2004 or about 
$49 per hour ($102,138/2,080 hours).\2\ Thus the cost associated with 
certifying the amount to be charged is expected to be about $1,900 ($49 
per hour x 38 hours) per charging request.
---------------------------------------------------------------------------

    \2\See http://swz.salary.com/salarywizard/layoutscripts/swzl_newsearch.asp, last viewed 7/6/05. (FDA has verified the Web site 
address, but we are not responsible for subsequent changes to the 
Web site after this document publishes in the Federal Register.)
---------------------------------------------------------------------------

    The remaining burden--20 percent or about 10 hours--for the 
preparation of a charging request would consist of a brief 
demonstration that the criteria for charging that are not related to 
the amount to be charged have been met. When the request is to charge 
for a drug used in a clinical trial, this information would ordinarily 
be available as part of the normal drug development process. When the 
request is to charge for a drug for expanded access, the primary 
criterion is to show that charging will not interfere with development 
of the drug for marketing. FDA believes that preparation of this 
portion of the charging request would likely be performed by a mid-
level regulatory affairs person. Information available on the Internet 
indicates that the total median compensation for a Regulatory Affairs 
Specialist II (intermediate level) was approximately $80,000 or about 
$39 per hour in 2004 ($80,288/2,080 hours).\3\ Thus, the cost to 
demonstrate

[[Page 75178]]

that a charging request meets appropriate criteria is about $400 (10 
hours x $39 per hour) per charging request.
---------------------------------------------------------------------------

    \3\See http://swz.salary.com/salarywizard/layoutscripts/swzl_newsearch.asp, last viewed 7/6/05. (FDA has verified the Web site 
address, but we are not responsible for subsequent changes to the 
Web site after this document publishes in the Federal Register.)
---------------------------------------------------------------------------

    Based on the figures presented previously in this document, FDA 
estimates the cost to prepare and submit a charging request would thus 
be about $2,300 ($1,900 + $400). We also believe that the total costs 
associated with this proposed rule will be widely dispersed among 
affected entities because charging requests are rare, and thus, a 
particular sponsor would be expected to submit such a request very 
infrequently.
    A significant concern with the proposed rule relates to the 
potential effect on access to investigational therapies for 
economically disadvantaged individuals and the uninsured. Allowing 
sponsors to charge could impose a significant financial burden on many 
seriously ill individuals who lack therapeutic alternatives and could 
preclude access by some needy patients. However, in the past, many 
companies that have provided investigational drugs for treatment use 
have often included assistance programs to cover the costs for those 
who could not otherwise afford them. FDA expects this practice would 
continue.

H. Minimizing the Impact on Small Entities

    The agency does not believe that the proposed rule will have a 
significant economic impact on a substantial number of small entities. 
Nevertheless, we recognize our uncertainty regarding the number and 
size distribution of affected entities as well as the economic impact 
of the proposed rule on those entities. The agency specifically 
requests detailed public comment regarding the number of affected small 
entities as well as the potential economic impact of the proposed rule 
on those entities.
    According to agency records, the majority of treatment INDs and 
treatment protocols (approximately 92 percent) are submitted by 
commercial sponsors and government agencies that are not likely to meet 
Small Business Administration (SBA) criteria defining a small entity in 
the relevant industry sector. Thus, the agency believes that the vast 
majority of requests to charge under expanded access submissions would 
not be submitted by small entities. Most single patient INDs are for 
treatment use and are submitted by individual physicians, and these 
entities would be classified as small entities. However, for reasons 
discussed previously, we do not anticipate that the volume of requests 
to charge for individual patient expanded access would increase 
substantially. Because expanded access for intermediate size patient 
populations is not currently tracked by the agency, no data exist that 
would allow the agency to identify either the number of sponsors in 
this category or the number that would qualify as small entities. FDA 
believes that requests to charge for investigational drugs in clinical 
trials of a sponsor's drug, whether the drug charged for is the 
sponsor's own drug or is an approved drug used for combination therapy 
or as an active control, would generally be submitted by large 
commercial drug sponsors. Requests to charge for an approved drug that 
is being studied for a new use would likely come from researchers or 
research organizations that meet the SBA standards for small business. 
In sum, the agency believes that some entities submitting charging 
requests would meet SBA small businesses criteria. However, because 
this determination is uncertain, the agency specifically requests 
detailed public comment regarding the number and size distribution of 
entities that would be affected by the proposed rule, as well as the 
economic impact of the rule on those entities. As discussed in section 
V.E of this document, the agency expects that any incremental burden 
associated with the proposed rule would be small and widely dispersed 
among affected entities.
    FDA considered several alternatives to the proposed rule. Each is 
discussed in the following paragraphs:
    <bullet> Do not revise the current charging rule.
    FDA considered and rejected this alternative because the current 
charging rule does not address all of the types of requests to charge 
for drugs in clinical trials received by the agency. Furthermore, the 
current charging rule does not address all of the types of expanded 
access to investigational drugs for treatment use specified under 
proposed subpart I of part 312.
    <bullet> Do not permit charging for approved drugs in clinical 
trials.
    FDA considered this alternative. However, requests to charge for 
investigational drugs in a clinical trial would then be limited to 
requests to charge for the sponsor's drug that was being tested in the 
trial. In fact, the agency has received few such requests. Far more 
common are requests to charge for approved drugs in trials when the 
drugs must be obtained from another company. The approved drug may be 
used in a trial of the sponsor's drug as an active control or in 
combination with the sponsor's drug. Even more common are requests to 
charge for approved drugs used in studies by a third party (e.g., not 
the manufacturer) that are intended to evaluate the approved drug, for 
example, to discover a new use. FDA believes that requests to charge 
for investigational drugs in these situations may be appropriate; thus 
the agency believes the current charging rule should be revised to 
specifically contemplate such requests and to provide criteria 
applicable to such requests.
    <bullet> Do not permit charging for expanded access for individual 
patients or for intermediate size patient populations.
    FDA considered not revising the current regulation concerning 
charging for treatment use and thus permitting charging only for 
treatment INDs and treatment protocols. However, elsewhere in this 
issue of the Federal Register, the agency is proposing to amend its 
regulations concerning the treatment use of investigational drugs to 
specifically authorize expanded access for individual patients and for 
intermediate size patient populations. The purpose of that proposal is 
to expand access to investigational drugs. In some situations, 
permitting sponsors to charge for investigational drugs to be used by 
individual patients or by intermediate size patient populations may be 
the only way that such patients can receive access to these therapies 
because sponsors may not be willing to provide the drugs free of 
charge. Thus, consistent with the philosophy of the expanded access 
rule, the agency decided to propose to permit charging for 
investigational drugs in all expanded access settings to improve access 
to investigational drugs for patients with serious or life-threatening 
diseases or conditions who lack other therapeutic options and who may 
benefit from such therapies.

VII. Paperwork Reduction Act of 1995

    This proposed rule contains collections of information that are 
subject to review by OMB under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3520). ``Collection of information'' includes any request 
or requirement that persons obtain, maintain, retain, or report 
information to the agency, or disclose information to a third party or 
to the public (44 U.S.C. 3502(3) and 5 CFR 1320.3(c)). The title, 
description, and respondent description of the information collection 
are shown in the following paragraphs, with an

[[Page 75179]]

estimate of the annual reporting burden. Included in the estimate is 
the time for reviewing instructions, gathering and maintaining the data 
needed, and completing and reviewing the collection of information.
    FDA invites comments on the following topics: (1) Whether the 
proposed collection of information is necessary for proper performance 
of FDA's functions, including whether the information will have 
practical utility; (2) the accuracy of FDA's estimate of the burden of 
the proposed collection of information, including the validity of the 
methodology and assumptions used; (3) ways to enhance the quality, 
utility, and clarity of the information to be collected; and (4) ways 
to minimize the burden of the collection of information on respondents, 
including through the use of automated collection techniques, when 
appropriate, and other forms of information technology.
    Title: Charging for Investigational Drugs
    Description: The proposed rule describes the types of 
investigational uses for which a sponsor may be able to charge, 
including uses for which charging was not previously expressly 
permitted, and the criteria for allowing charging for the identified 
investigational uses. The proposed rule authorizes sponsors to request 
to charge for investigational drugs used in clinical trials and for 
investigational drugs for expanded access for treatment use. The 
proposed rule also describes the types of costs that can be recovered 
when charging for an investigational drug.
    Section 312.8(a)(1) of the proposed rule provides that a sponsor 
who wishes to charge for an investigational drug must meet the criteria 
applicable to the specific sections of the proposal relating to 
charging in a clinical trial or charging for expanded access.
    Section 312.8(b) of the proposed rule describes the criteria for 
charging in a clinical trial in three situations.
    Proposed Sec.  312.8(b)(1) describes criteria for charging for the 
sponsor's own drug in a clinical trial. To charge in this situation, 
the sponsor must show the following three things. The sponsor must:
    <bullet> Provide evidence that the drug has a potential clinical 
benefit that, if demonstrated in the clinical investigations, would 
provide a significant advantage over available products in the 
diagnosis, treatment, mitigation, or prevention of a disease or 
condition;
    <bullet> Demonstrate that the data to be obtained from the clinical 
trial would be essential to establishing that the drug is effective or 
safe for the purpose of obtaining initial approval of a drug, or would 
support a significant change in the labeling of an approved drug (e.g., 
new indication, inclusion of comparative safety information); and
    <bullet> Demonstrate that the clinical trial could not be conducted 
without charging because the cost of the drug is extraordinary. The 
cost may be extraordinary due to manufacturing complexity, scarcity of 
a natural resource, the large quantity of drug needed (e.g., due to the 
size or duration of the trial), or some combination of these or other 
extraordinary circumstances.
    Proposed Sec.  312.8(b)(2) describes criteria for charging for an 
approved drug that a sponsor must obtain from another entity for use as 
an active control or in combination with another drug in a clinical 
trial designed to evaluate the effectiveness or safety of the sponsor's 
investigational drug. To charge for an approved drug in this situation, 
a sponsor must demonstrate that the trial is of adequate design to 
evaluate the safety or effectiveness of the sponsor's drug and that the 
drug is not being provided free of charge by its manufacturer.
    Proposed Sec.  312.8(b)(3) describes criteria for charging for an 
approved drug that must be obtained from another entity in a clinical 
trial designed to evaluate the approved drug (e.g., for another 
indication). To charge for an approved drug in this situation, a 
sponsor must demonstrate that the clinical trial of the approved drug 
is of adequate design to evaluate the safety or effectiveness of a new 
indication or provide important safety information related to an 
approved indication and that the drug is not being provided free of 
charge by its manufacturer.
    Proposed Sec.  312.8(c) describes criteria for charging for an 
investigational drug for in an expanded access setting. The general 
criterion to charge for expanded access for treatment use is that the 
sponsor provide reasonable assurance that charging will not interfere 
with developing the drug for marketing approval.
    For treatment use under a treatment IND or treatment protocol, the 
sponsor must also provide the following:
    <bullet> Evidence of sufficient enrollment in any ongoing clinical 
trial(s) needed for marketing approval to reasonably assure FDA that 
the trial(s) will be successfully completed as planned;
    <bullet> Evidence of adequate progress in the development of the 
drug for marketing approval; and
    <bullet> Information submitted under its general investigational 
plan (Sec.  312.23(a)(3)(iv)) specifying the drug development 
milestones the sponsor plans to meet in the next year.
    Section 312.8(a)(2) of the proposed rule provides that a sponsor 
who wishes to charge for an investigational drug must justify the 
amount to be charged.
    Section 312.8(d) of the proposed rule describes more specifically 
the costs that are potentially recoverable. Proposed Sec.  312.8(d)(1) 
provides that a sponsor may recover only the direct costs of making the 
investigational drug available. Proposed Sec.  312.8(d)(1)(i) defines 
direct costs as costs incurred by a sponsor that can be specifically 
and exclusively attributed to providing the drug for the 
investigational use for which FDA has authorized cost recovery. Direct 
costs include costs per unit to manufacture the drug (e.g., raw 
materials, labor, and nonreusable supplies and equipment used to 
manufacture the quantity of drug needed for the use for which charging 
is authorized) or costs to acquire the drug from another manufacturing 
source, and direct costs to ship and handle (e.g., store) the drug.
    Proposed Sec.  312.8(d)(1)(ii) states that indirect costs include 
costs that are incurred primarily to produce the drug for commercial 
sale. Such costs include, e.g., costs for facilities and equipment that 
are used to manufacture the supply of investigational drug, but that 
are primarily intended to produce large quantities of drug for eventual 
commercial sale and research and development, administrative, labor, or 
other costs that would be incurred even if the clinical trial or 
expanded access for which charging is authorized did not occur.
    Proposed Sec.  312.8(d)(2) provides that when the sponsor is 
charging for making the drug available for expanded access for an 
intermediate size patient population or for a treatment IND or protocol 
under subpart I, the sponsor may also recover the costs of monitoring 
the protocol, complying with IND reporting requirements, and other 
administrative costs directly associated with the expanded access in 
addition to the sponsor's direct costs.
    Description of Respondents: Licensed physicians and manufacturers, 
including small business manufacturers.
    Estimates of Reporting Burden
    Table 1 of this document presents the estimated annualized 
reporting burden for the total number of charging requests. The 
estimates in the table have been derived in the following manner. 
Between 1999 and 2003, FDA received approximately 25 requests to charge 
for investigational drugs annually. FDA estimates that there will be a 
25 to 50 percent increase in requests to charge if

[[Page 75180]]

the proposed rule is finalized. These requests are expected to be 
requests to charge for expanded access for single patients and 
intermediate size patient populations and for approved drugs in 
clinical trials. Accordingly, table 1 of this document gives the total 
annual responses as 38 (25 x 1.50 = 37.5). FDA's experience has been 
that, in general, a single sponsor does not make multiple requests to 
charge for investigational drugs in the same year. However, the agency 
anticipates that multiple requests may increase somewhat if, as we 
expect, the number of individual patient treatment uses increases. 
Thus, we have assumed that the number of annual respondents will be 35.
    FDA believes the largest portion of the paperwork burden associated 
with the proposed rule would be to justify the request to charge by 
showing that the amount proposed to be charged is limited to the direct 
costs of making the drug available (proposed Sec.  312.8(d)(1)). When 
the sponsor requests to charge for making the drug available for 
expanded access by an intermediate size patient population or through a 
treatment IND or treatment protocol, the sponsor may also recover the 
costs of monitoring the treatment use protocol, complying with IND 
reporting requirements, and other administrative costs directly 
associated with the expanded access (proposed Sec.  312.8(d)(2)). The 
sponsor would also need to support its suggested charge for these 
expenses.
    The remaining portion of the paperwork burden associated with the 
proposed rule would be to show that the criteria applicable to the 
specific type of charging request (i.e., the type of clinical trial 
(proposed Sec.  312.8(b)) or type of expanded access (proposed Sec.  
312.8(c))) have been met.
    FDA estimates the average number of hours needed to prepare a 
request to charge for an investigational drug under the proposed rule 
as 48. This estimate is based on FDA's experience in reviewing charging 
requests in the past and on a projection of the increased paperwork 
burden associated with the proposed rule.

                                                     Table 1.--Estimated Annual Reporting Burden\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              No. of         No. of Responses       Total Annual        Hours Per
                    21 CFR Section                         Respondents        per Respondent         Responses           Response         Total Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
312.8                                                                  35                  1.08                 38                 48              1,824
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\There are no capital costs or operating and maintenance costs associated with this collection of information.

VIII. Federalism

    FDA has analyzed this proposed rule in accordance with the 
principles set forth in Executive Order 13132. FDA has determined that 
the rule does not contain policies that have substantial direct effects 
on the States, on the relationship between the National Government and 
the States, or on the distribution of power and responsibilities among 
the various levels of government. Accordingly, the agency has concluded 
that the rule does not contain policies that have federalism 
implications as defined in the Executive order and, consequently, a 
federalism summary impact statement is not required.

IX. Request for Comments

    Interested persons may submit to the Division of Dockets Management 
(see ADDRESSES) written or electronic comments regarding this document. 
Submit a single copy of electronic comments or two paper copies of any 
mailed comments, except that individuals may submit one paper copy. 
Comments are to be identified with the docket number found in brackets 
in the heading of this document. Received comments may be seen in the 
Division of Dockets Management between 9 a.m. and 4 p.m., Monday 
through Friday.

List of Subjects in 21 CFR Part 312

    Drugs, Exports, Imports, Investigations, Labeling, Medical 
research, Reporting and recordkeeping requirements, Safety.
    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, it is 
proposed that 21 CFR part 312 be amended as follows:

PART 312--INVESTIGATIONAL NEW DRUG APPLICATION

    1. The authority citation for 21 CFR part 312 continues to read as 
follows:

    Authority: 21 U.S.C. 321, 331, 351, 352, 353, 355, 356, 371, 
381, 382, 383, 393; 42 U.S.C. 262.


Sec.  312.7  [Amended]

    2. Section 312.7 is amended by removing paragraph (d) and by 
revising the section heading to read as follows:


Sec.  312.7  Promotion of investigational drugs.

* * * * *
    3. Section 312.8 is added to subpart A to read as follows:


Sec.  312.8  Charging for investigational drugs.

    (a) General criteria for charging. (1) A sponsor must meet the 
applicable requirements in paragraph (b) of this section for charging 
in a clinical trial or paragraph (c) of this section for charging for 
expanded access to an investigational drug treatment use under subpart 
I of this part.
    (2) A sponsor must justify the amount to be charged in accordance 
with paragraph (d) of this section.
    (3) A sponsor must obtain prior written authorization from FDA to 
charge for an investigational drug.
    (4) FDA will withdraw authorization to charge if it determines that 
charging is interfering with the development of a drug for marketing 
approval or that the criteria for the authorization are no longer being 
met.
    (b) Charging in a clinical trial--(1) Charging for a sponsor's 
drug. A sponsor who wishes to charge for its investigational drug, 
including investigational use of its approved drug, must:
    (i) Provide evidence that the drug has a potential clinical benefit 
that, if demonstrated in the clinical investigations, would provide a 
significant advantage over available products in the diagnosis, 
treatment, mitigation, or prevention of a disease or condition;
    (ii) Demonstrate that the data to be obtained from the clinical 
trial would be essential to establishing that the drug is effective or 
safe for the purpose of obtaining initial approval of a drug, or would 
support a significant change in the labeling of an approved drug (e.g., 
new indication, inclusion of comparative safety information); and
    (iii) Demonstrate that the clinical trial could not be conducted 
without charging because the cost of the drug is extraordinary. The 
cost may be extraordinary due to manufacturing complexity, scarcity of 
a natural resource, the large quantity of drug needed (e.g., due to the 
size or duration of the trial), or some combination of these or other 
extraordinary circumstances.

[[Page 75181]]

    (2) Charging for an approved drug obtained from another entity for 
use as an active control or in combination with another drug. A sponsor 
who wishes to charge for an approved drug that it must obtain from 
another entity for use as an active control or in combination with its 
investigational drug in a clinical trial of the sponsor's 
investigational drug must:
    (i) Demonstrate that the clinical trial is adequately designed to 
evaluate the safety or effectiveness of the sponsor's drug; and
    (ii) Demonstrate that the holder of the approved application is not 
providing the drug to the sponsor free of charge.
    (3) Charging for an approved drug obtained from another entity in a 
clinical trial of that drug. A sponsor who wishes to charge for an 
approved drug that it must obtain from another source for use in a 
clinical trial intended to evaluate the acquired drug must:
    (i) Demonstrate that the clinical trial is adequately designed to 
evaluate the safety or effectiveness of a new indication or to provide 
important safety information related to an approved indication; and
    (ii) Demonstrate that the holder of the approved application is not 
providing the drug to the sponsor free of charge.
    (4) Duration of charging in a clinical trial. Unless FDA specifies 
a shorter period, charging may continue for the length of the clinical 
trial.
    (c) Charging for expanded access to investigational drug for 
treatment use. (1) A sponsor who wishes to charge for expanded access 
to an investigational drug for treatment use under subpart I of this 
part must provide reasonable assurance that charging will not interfere 
with developing the drug for marketing approval.
    (2) For expanded access under Sec.  312.320, such assurance must 
include:
    (i) Evidence of sufficient enrollment in any ongoing clinical 
trial(s) needed for marketing approval to reasonably assure FDA that 
the trial(s) will be successfully completed as planned;
    (ii) Evidence of adequate progress in the development of the drug 
for marketing approval; and
    (iii) Information submitted under the general investigational plan 
(Sec.  312.23(a)(3)(iv)) specifying the drug development milestones the 
sponsor plans to meet in the next year.
    (3) The authorization to charge is limited to the number of 
patients authorized to receive the drug under the treatment use, if 
there is a limitation.
    (4) Unless FDA specifies a shorter period, charging for expanded 
access to an investigational drug for treatment use under subpart I of 
this part may continue for one year from the time of FDA authorization. 
A sponsor may request that FDA reauthorize charging for additional 
periods.
    (d) Costs recoverable when charging for an investigational drug. 
(1) A sponsor may recover only the direct costs of making the 
investigational drug available.
    (i) Direct costs are costs incurred by a sponsor that can be 
specifically and exclusively attributed to providing the drug for the 
investigational use for which FDA has authorized cost recovery. Direct 
costs include costs per unit to manufacture the drug (e.g., raw 
materials, labor, and nonreusable supplies and equipment used to 
manufacture the quantity of drug needed for the use for which charging 
is authorized) or costs to acquire the drug from another manufacturing 
source, and direct costs to ship and handle (e.g., store) the drug.
    (ii) Indirect costs include costs incurred primarily to produce the 
drug for commercial sale (e.g., costs for facilities and equipment used 
to manufacture the supply of investigational drug, but that are 
primarily intended to produce large quantities of drug for eventual 
commercial sale) and research and development, administrative, labor, 
or other costs that would be incurred even if the clinical trial or 
treatment use for which charging is authorized did not occur.
    (2) For expanded access to an investigational drug for treatment 
use under Sec. Sec.  312.315 and 312.320, in addition to the direct 
costs described in paragraph (d)(1)(i) of this section, a sponsor may 
recover the costs of monitoring the expanded access IND or protocol, 
complying with IND reporting requirements, and other administrative 
costs directly associated with the expanded access.
    (3) To support its calculation for cost recovery, a sponsor must 
provide supporting documentation to show that the calculation is 
consistent with the requirements of paragraphs (d)(1) and, if 
applicable, (d)(2) of this section.

    Dated: December 6, 2006.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. 06-9685 Filed 12-11-06; 10:01 am]
BILLING CODE 4160-01-S