Obama’s FY2014 Budget Request Aims to Increase Foreign Manufacturer Inspections

By Zachary Brennan contact

- Last updated on GMT

Obama’s FY2014 Budget to Increase Foreign Manufacturer Inspections

Related tags: Generic drug, Food and drug administration, Fda

President Obama’s FY 2014 budget request of $4.7B for the US FDA would increase the agency’s ability to inspect foreign drug manufacturers and clinical trial sites.

The request is about $470M more than the US FDA received in the CR (continuing resolution) for 2013 and $821M more than it received in FY 2012. However, about 94% of the requested increase in the 2014 budget would be covered by industry user fees, the FDA says in a justification of its requested appropriations​.

The top line is that the FY2014 request uses pre-sequester numbers for its base and that’s a good thing – they could’ve used post-sequester numbers, which would’ve looked like they’re asking for a fortune​,” Steven Grossman of the Alliance for a Stronger FDA told In-Pharmatechnologist.com.

Budget authority appropriations for the agency, also known as taxpayer funding, would increase $51M over FY 2012 numbers if the President’s request is adopted, Grossman noted.

Foreign Inspections

Among the newly requested funding is an additional $10M for inspections in China, of which about $4.7M will go for nine new full-time employees at its office in the country. The agency anticipates that the added resources will lead to 120 additional inspections of Chinese drug manufacturers by 2016.

A total of 813 foreign drug manufacturing sites inspections in 62 countries were conducted in FY 2012 by the agency, which exceeded the total completed in FY 2011 by 86, according to the FDA. US-based inspectors completed 212, or 26 percent, of these inspections, while the agency's staff in India and China completed 59, or 7 percent.

The FDA previously requested an additional $10M​ in the 2013 CR for inspections in China, but agency spokeswoman Shelly Burgess told In-Pharmatechnologist.com that the FY 2014 funding request to increase inspections in China is in addition to that prior request.

In its request, the FDA highlights three cases where warning letters based on foreign inspections in 2012 issued to an active ingredient penicillin manufacturer in Poland, an API manufacturer in Mexico and a Chinese medical dressing manufacturer all resulted in preventing unsafe drug products from entering the US.

In addition, under the agency’s “New Drug Review” subprogram authorized by the FDA Safety and Innovation Act (FDASIA), FDA’s CDER (Center for Drug Evaluation and Research) will continue to inspect CROs and sponsors’ clinical trial sites.

Biologic Exclusivity

Effective in 2014, the proposal also looks to decrease the exclusivity period for brand-name biologics from 12 years to 7 years, as well as to “prohibit additional periods of exclusivity for brand biologics due to minor changes in product formulations, a practice often referred to as ever-greening​.”

The concept of “ever-greening,” however, can be a slippery slope as seen recently in India when the patent for Novartis’ cancer drug Gleevec was rejected under this policy.

HHS believes the five year change in biologic exclusivity will save its Medicare and Medicaid programs more than $3B over 10 years.

Manufacturer Drug Rebates under Medicare

Drug manufacturers will also be affected by changes that HHS​ (Department of Health and Human Services) is trying to make to the ACA (Affordable Care Act), also known as Obamacare.

The ACA aimed to close the Medicare Part D “doughnut hole” for senior citizens’ drug coverage by 2020 through drug manufacturer discounts and federal subsidies. However, HHS is now attempting to speed up that process and increase manufacturer discounts for brand name drugs from 50 to 75 percent in 2015, which means the “doughnut hole” would now close in 2015, five years earlier than expected.

Decrease in Generic Copayments

Meanwhile, HHS also is looking into a proposal to increase the use of generic drugs in US insurance programs. The proposal would lower what low-income beneficiaries have to pay for generic drugs by more than 15 percent beginning in 2014.

Brand drug co-payments for these same patients would also increase “to twice the level required under current law​,” although HHS Secretary Kathleen Sebelius “would have new authority to exclude therapeutic classes from this policy if therapeutic substitution is determined not to be clinically appropriate or a generic is not available​,” the agency says.

Related topics: Markets & Regulations, Regulations

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