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Senate Passes PDUFA V; Next Stop: President's Signature

By Mari Serebrov
Washington Editor

WASHINGTON – A week ahead of its self-imposed July 4 deadline, the Senate overwhelmingly passed the FDA Safety and Innovation Act (FDASIA) Tuesday, reauthorizing PDUFA for another five years. Now all the user-fee package needs is the president's signature so it can go into effect Oct. 1.

The Senate voted 92-4 to pass the bill, which creates new user fees for generics and biosimilars, increases the fees for drugs and devices and sets new performance goals. It also provides incentives for new antibiotics and makes two pediatric bills permanent. The House unanimously passed FDASIA last week. (See BioWorld Today, June 21, 2012.)

In comments on the Senate floor Tuesday, several senators praised the bill and the bipartisan effort to get it passed as soon as possible. But not all the comments were positive. Sen. Richard Burr (R-N.C.) took issue with rushing such a "crucial piece of legislation" through Congress. In the haste, he said, important provisions like a track-and-trace system for drugs were sacrificed.

While there are good provisions in PDUFA V, "more work needs to be done," Burr said. Several organizations, including the Government Accountability Office, have been critical of the FDA's lack of performance metrics. But FDASIA doesn't address the performance problems at the agency, he claimed.

The user-fee reauthorization will give the FDA an unprecedented level of user fees. With that, Burr said, there should be unprecedented transparency in the agency's reviews and accountability.

Sen. Tom Harkin (D-Iowa), who sponsored the bill, said it was not rushed. Had it been, it could not have gotten so much support in both the House and Senate, he added.

Earlier in the day, Sen. Joe Manchin (D-W.Va.) stressed the need for legislation to reschedule hydrocodone products from Schedule III to Schedule II controlled substances. The provision had been accepted as an amendment to the Senate PDUFA bill, but it was cut from the final bill that reconciled the Senate and House provisions after the Generic Pharmaceutical Association (GPhA) objected to it.

GPhA claimed the amendment would restrict access and increase prices to the pain drugs. (See BioWorld Today, May 24, 2012, May 29, 2012, and June 18, 2012.)

Calling hydrocodone abuse a problem of epidemic proportions that "touches everyone's life," Manchin said the public good should outweigh business plans geared on making money. Citing several reports, the senator noted that in 2010, there were more than 28,000 toxic exposures to hydrocodone, 23 million Americans have admitted to abusing the drug and 40 people die every day because of hydrocodone and similar drugs.

Fate of the JOBS Act in Hands of SEC

With the first deadline looming next week for the SEC to issue rules to implement part of the Jumpstart Our Business Startups (JOBS) Act, some experts are questioning whether the commission has the will to make it happen.

The act gave the SEC 90 days, or until July 4, to lift the ban on general solicitation for offerings under Rules 506 and 144A. The new rules should be pretty straightforward to draft as they simply would implement the new provision, Brian Cartwright, senior adviser to Patomak Global Partners LLC and former SEC general counsel, said in written testimony submitted for a House Oversight subcommittee hearing Tuesday on implementation of the JOBS Act.

Although the SEC had asked for 18 months to draft the rules on the crowdfunding provision included in the JOBS Act, those rules are due by Dec. 31. No deadline has been set for rules lifting the Regulation A ceiling to $50 million. (See BioWorld Insight, June 4, 2012.)

The congressional intent behind all those provisions will rise or fall on how the SEC implements them and whether the commission prioritizes that implementation, Cartwright said. He noted that the SEC wasn't totally supportive of the changes made by the act.

However, Congress may have to bear some culpability if the JOBS Act doesn't produce the job numbers and innovation that lawmakers hoped. For instance, the intent behind raising the Regulation A cap from $5 million was to make it a more attractive path for emerging growth companies, but Cartwright said, "Super Reg A," as passed, was "burdened with a new, more stringent liability standard than applies to other forms of private offerings."

That stringent standard will increase the costs and risks of Regulation A. And, unless a company is listed on an exchange, it will not be exempt from state securities laws under Regulation A. Cartwright said such risks will make Rule 506 offerings, which are preempted from state law and have a less stringent liability standard, more attractive.

"Moreover," he said, "Rule 506 offerings do not require filings with the SEC and do not subject the company to ongoing periodic disclosure requirements, something the SEC has discretion to impose in its Super Reg A rulemakings."

Because the new Regulation A is burdened by disadvantages, Cartwright urged the subcommittee to encourage the SEC to minimize those burdens and costs to the greatest extent possible in its rulemaking. Otherwise, the new Regulation A will be used as infrequently as the old one, he said.

Not all the onus is on the SEC or Congress. "The SEC is caught between the rock and the hard place, as the JOBS Act . . . asks it to promulgate rules quickly, while the D.C. Circuit stands ready to strike down precisely those rules that are quickly promulgated," John Coffee, a professor at the Columbia University Law School, said in his testimony to the subcommittee.

He referred to recent decisions by the U.S. Court of Appeals for the District of Columbia in which the appellate court "repeatedly indicated its willingness to substitute its judgment for that of the commission as to whether the costs of an SEC rule exceed its claimed benefits."

The D.C. Circuit also is willing to "invalidate SEC rules, which are in its judgment not based on sufficient empirical data," Coffee said, adding that "the level of data that is adequate is often more in the eye of the beholder than objectively clear."

FDA Rethinks Rule, Guidance

After receiving a single "significant adverse comment," the FDA rethought its final rule about doing away with Federal Register publication of many of its agreements and memoranda of understanding with other agencies and organizations. In a notice set for publication Tuesday, the agency said it is withdrawing the March 23 rule, which was intended as a cost- and time-saving measure.

The agency had reasoned that since the agreements and memoranda are posted on its website, publication in the Federal Register was redundant and unnecessary.

But Cook Group Inc., of Bloomington, Ind., said the FDA not only needs to continue publishing notices of all agreements and memoranda in the Federal Register, it needs to publish the complete texts of those agreements.

The Federal Register is "the one place where the public can go to learn of important government actions," Cook said in its comment, adding that, unlike the FDA's website, the Register has a standardized format, provides for traceability and serves as a historical record.

The FDA also rethought a guidance it issued two years ago on lupus. The agency is withdrawing the guidance, saying it "does not reflect FDA's current thinking on the development of medical products for the treatment of lupus nephritis."