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Copyright © 2005
Hogan & Hartson L.L.P.
All rights reserved.
Pharmaceuticals and
Biotechnology
February 2005
FDA Drug Safety Reforms Take Shape

Introduction

Last week’s 3-day public advisory committee meeting on the safety of COX-2 inhibitors and related drugs
culminated a week in which FDA announced the latest in a series of drug safety reforms designed to
restore public confidence in the agency’s consumer protection role. As anticipated in the Hogan & Hartson
audio conference held just a month ago, these reforms were needed to respond to an unprecedented
level of criticism – from Congress, the medical community, an internal whistleblower, and the media – that
called into question FDA’s ability to oversee the safety of marketed drugs with the same vigor the agency
applies to approving new drugs. This memo summarizes those reforms and offers some initial
impressions on their likely significance to the pharmaceutical and biotechnology industries.

A broad spectrum of FDA’s critics called for establishment of an independent drug safety authority. The
agency’s initial response was to ask the Institute of Medicine to conduct a study and recommend
structural, organizational, or other changes. It quickly became clear that this would not be sufficient,
leading FDA to accelerate its timetable and announce four major reforms:

• Creation of a Drug Safety Oversight Board;
• Establishment of a “Drug Watch” web page;
• Increased funding for drug safety efforts; and
• Closer coordination with the Centers for Medicare and Medicaid Services.

The substance and possible impact of these reforms are summarized below.

Pharmaceuticals and Biotechnology | 2
FDA Proposals to Enhance Drug Safety

Drug Safety Oversight Board

The centerpiece of FDA’s reform package is creation of a Drug Safety Oversight Board (DSB) within the
agency, with responsibility for overseeing management of, and resolving disagreements over, broad drug
safety policies and specific drug safety issues. The FDA Commissioner would appoint the members of the
DSB, which would include representatives from FDA, other agencies within HHS (e.g., NIH, CDC), and
other departments (e.g., Veterans Affairs). In discharging its functions, the Board would meet with outside
medical experts and representatives of patient and consumer groups, but it would not have independent
authority; the DSB would report within FDA’s Center for Drug Evaluation and Research (CDER). Although
little if anything has been said about the scope of the DSB’s authority or activities, one agency official has
said FDA has no plans to change the basic rules regarding confidentiality of clinical data, which has been
an early concern of many companies.

Analysis: The DSB clearly is a response to calls for a stronger drug safety function that is independent
from the agency’s premarket review activities. The fact that the Board would exist within FDA, however, is
likely to leave some critics unsatisfied. FDA likely will tout the benefit of having the agency’s experts from
the drug approval side readily available to those responsible for drug safety. Although this is unlikely to
mollify the agency’s most vociferous critics, a DSB within FDA, if it is seen as capable of exercising
significant authority and acting independently, may be sufficient to stave off creation of a drug safety
organization outside the agency. At least in the near term, the Drug Safety Oversight Board is likely to
remain a key component of FDA’s drug reform strategy.

“Drug Watch” Web Page

FDA also announced that it would develop a new “Drug Watch” web page that would serve as a ready
mechanism for providing targeted drug safety information to the public. The agency’s goal is to increase
the transparency of its decision-making process, making emerging data and risk information available to
healthcare professionals and patients in a timely manner, thus allowing them to make better-informed
decisions about individual treatment options. The web page will also be the site at which FDA will post an
increased number of consumer-friendly information sheets to be written especially for healthcare
professionals and patients.

Analysis: The Drug Watch web page shows that, even while devoting more attention and effort to drug
safety, FDA is not abandoning the “risk management” philosophy it has developed over the past decade.
The agency will continue to seek the benefit of making a broad range of treatment options available for
doctors and patients, using labeling and other mechanisms to manage risks, with product withdrawals an
option of last resort. This approach was evident at last week’s public advisory committee meeting, where
the committee voted in favor of continued marketing of COX-2 inhibitors with certain restrictions, including
strong labeling and further testing. A key question going forward is whether data confidentiality obligations
will hamper FDA’s ability to meet its expressed goal of making more data publicly available.

Funding for Drug Safety

The Administration’s fiscal year 2006 proposed budget, released February 7, includes an increase of $5
million in appropriated funds and $1.5 million in user fees, to bolster CDER’s Office of Drug Safety (ODS).
This would permit hiring approximately 20 additional staff, which would represent a 24% increase in
staffing for ODS over fiscal year 2005 levels. The announced intent is for the new staff to permit ODS to
more rapidly survey, identify, and respond to potential safety concerns related to marketed drugs. Some of
the money would be used to allow FDA to obtain more data on health care and drug usage.

Pharmaceuticals and Biotechnology | 3
Analysis: The proposed funding increase is modest in scope but highly symbolic in a budget year where
most agency programs across government received significant cuts. Symbolism aside, however, many in
Congress and elsewhere believe the proposed funding is not nearly enough to meet the agency’s needs.
Money remains tight, however, which means significant additional funding is unlikely. As a result, when
the Prescription Drug User Fee Act (PDUFA) is up for reauthorization in 2007, expect discussion of
including post-marketing drug safety activities among the activities funded by user fees.

FDA-CMS Collaboration

A less noticed, but potentially important, drug safety activity is contained in a January 13 HHS report
announcing greater coordination between FDA and the Centers for Medicare and Medicaid Services
(CMS). The agencies are to collaborate in a number of areas, including post-market surveillance activities.
As the new prescription drug benefit is implemented, CMS will have access to a growing body of
information on drug products, including safety data. FDA and CMS are already planning pilot projects this
year to collect safety information on several products.

Analysis: Increased collaboration with CMS gives FDA a significant opportunity to obtain drug safety-
related data, which helps FDA advance its data-based agenda. The fact that CMS is headed by former
FDA Commissioner Mark McClellan increases the likelihood that this will be a serious effort. Even as the
agencies coordinate their efforts, we may see CMS play a strong and somewhat independent role, too,
given Dr. McClellan’s interest in the area. One interesting question to be answered is the extent to which
HIPAA-related privacy issues will affect the sharing of information between the agencies.

Congressional Activity

Critics from Capitol Hill have seen the Administration’s reform package as only a partial step forward.
Senator Grassley (R-IA) continues to assert the need for a fully independent Office of Drug Safety,
although he now seems to concede that it ought to be within the FDA, not outside of it. Senator Dodd (D-
CT) has voiced a similar concern. Senator Kennedy (D-MA) has come out in favor of increased authority
for FDA to mandate Phase IV studies to address drug safety issues. Drug safety hearings are expected to
begin soon in both the Senate and the House, and the Senate HELP Committee has just announced
hearings for the first week of March. In the House, Rep. Markey (D-MA) has written a letter to the
Securities and Exchange Commission (SEC) urging the SEC to require companies to disclose in their
filings to that agency any failure to conduct post-marketing drug safety studies that were a “condition of
approval” for their drug product.

State and International Activity

Even as the focus on FDA and Congress becomes more intense, questions of how to best address drug
safety issues must be viewed in a broader context. A number of states have undertaken initiatives in such
areas as clinical data reporting that traditionally have been within the bailiwick of federal agencies.
Similarly, although FDA has long prided itself on setting the gold standard for drug regulation
internationally, an article in this week’s edition of Business Week suggests that the European Medicines
Agency (EMEA), long “the weak sister to [the] older, more powerful, and better-funded” FDA, now “has a
shot at taking a leadership role in improving drug safety and restoring badly shaken consumer trust.”
Legislation that goes into effect in November will give the EMEA authority that, in some areas of drug
safety, exceeds FDA’s. What happens in Europe may have an impact on both Congressional action and
what the Administration considers palatable.



Pharmaceuticals and Biotechnology | 4
Conclusion

Taken as a whole, the set of drug safety reforms put forth by the Administration represents a conscious
and coordinated effort, from the White House on down, to address a very visible public health issue that
has become a public perception issue, as well. The importance the Administration attaches to these
issues is demonstrated by the fact HHS Secretary Mike Leavitt announced the centerpiece of these
reforms within his first two weeks on the job, and made clear that drug safety is one of his priorities. Also,
by nominating Lester Crawford – who has been acting FDA Commissioner or deputy commissioner for the
past three years – to be FDA Commissioner, the White House has signaled both comfort with existing
policies (such as risk management) and confidence in its team to carry forward the agenda on drug safety.

Representing FDA’s blueprint for change, these reforms provide an “affirmative agenda” for the agency as
it heads into a series of Congressional oversight hearings this spring. It remains to be seen whether the
proposals will be sufficient to forestall legislative action, although the mere announcement of reforms is
not likely to be enough. It will matter greatly how the proposals are more fully developed and
implemented and, as noted above, what happens in other forums. At the moment, the agency is
confronted with the possibility of significant change – whether self-initiated or imposed by Congress –
and the announced reforms are the Administration’s attempt to seize the initiative as the debate begins.

For more information about the matters discussed in this Update, please contact the Hogan & Hartson
L.L.P. attorney with whom you work or any of the attorneys below. If you are interested in any
of our other publications, please see http://www.hhlaw.com/site/news.aspx



Robert P. Brady Washington, D.C.
rpbrady@hhlaw.com

202-637-6969

Joseph A. Levitt Washington, D.C.
jalevitt@hhlaw.com

202-637-5759

Philip Katz Washington, D.C.
pkatz@hhlaw.com

202-637-5632

Linda R. Horton Washington, D.C. and Brussels
lrhorton@hhlaw.com

202-637-5795
+ 32 2 505 0931

www.hhlaw.com



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