PRESENTATION TO

1
Steven A. Grossman President

• PRESENTATION TO
• CBI Bio/Pharmaceutical
• Public Policy Congress
• July 15, 2008

For more information sgrossman_at_hpsgroup.com
2
Presentation Outline

• Day-to-Day FDA Issues
• Congress and FDA
• FDA and the Election/New Administration
• Long-term Issues and Opportunities

3

• Day-to-Day FDA Issues

4
Overall Status of FDA

• The beatings will continue until morale
  improves.
• Relentless attackHouse, Senate, media.
• Election will quiet this new hires ease internal
  pressures
• Hot topics heparin, food safety, DTC, funding,
  Ketek
• PDUFA deadlines being missed
• Over-caution, especially around safety, trial
  site integrity
• Manpower shortages, delays in hiring from new
  user fee funds
• New requirements, particularly implementation of
  REMS
• Janet Woodcock re-appointed CDER director (the
  virtues of a known quantity and a steady hand)
• Uncertainty around election/new Administration

5
The Janet Woodcock Factor

• Model for commitment to public service
• Experienced hands still in charge at FDA
• Widely viewed as thoughtful and fair
• No learning curve for the new CDER director
• Originator/advocate for Critical Path Initiative
• Proponent of Safety First
• Can implement change while maintaining work flow
• Will oversee PDUFA-driven hiring spree
• No public position CBER vs. CDER
  jurisdiction/priorities

6
PDUFA/Drug Safety

• Nine titles, varied provisions
• Major focus beefing up post-market safety
• Risk Evaluation and Mitigation Strategies (REMS)
• Phase 4 requirements can be made mandatory
• Review of prior Phase 4 commitments
• Post-market surveillance by FDA using CMS,
  insurer data
• Substantial civil penalties for FDCA violations
• Mandatory use of clinical trials registry
• New emphasis on science at FDA
• User fees increased substantially now cover drug
  safety
• Not in the final bill Follow-on Biologics, drug
  reimportation and DTC moratorium

7
Implementation of FDAAA

• Strong shift toward safety concerns over efficacy
• Statutory initiatives blended with administrative
  changes
• Transparency imbedded in the new approaches
• Woodcock approval standards have not changed
• Implementation of REMS/mandatory Phase 4s
• REMS replaces Risk-Maps, as of March 25
• First uses judicious unblocked drugs stalled at
  FDA for years
• Implementation initially slowing drug approval
  decisions
• Newly approved drugs to be re-reviewed at
  intervals
• Hot phase 4 priorities immunogenicity, patient
  registries, risk communication, validation of
  subset treatment options

8
Safety First Sentinel System

• Safety First--administrative changes to emphasize
  safety
• Office of Surveillance and Epidemiology (OSE) put
  on parity with Office of New Drugs (OND)
• Dispute resolution process put in place
• Expertise model, e.g. pharmacologists advise on
  pharmacology
• OSE to gain substantial new hires paid through
  PDUFA
• Sentinel System
• Newly announced collaboration to use CMS Medicare
  data for active drug surveillance
• Targeted first at a limited number of drugs and
  the frequency/incidence of certain associated
  adverse events

9
New Emphasis on Science

• Broad critique from FDA Science Board (December
  2007)
• Per FDAAA, new FDA Chief Scientist, Frank Torti
• 100-Day Plan for FDA science unveiled May 30
• Fellowship program, journal, professional
  opportunities
• Cross-center risk communications research team
• Deputy science directors created in each FDA
  center
• Key areas
• Genomic database access, biostatistics,
  biodefense/food risks, clinical trial design,
  ecology and environmental issues, software in
  medical devices, nanotechnology, medical imaging
  and combination products.

10
Critical Path Initiative

• Recognition that regulatory science is lagging
  will result in drugs that are safe, effective and
  not approvable
• Challenge of complex biology on clinical trial
  design, statistics, endpoints, approval standards
• Particular focus surrogate endpoints/biological
  markers
• Slow start conceptualization and funding
• Gaining momentum PDUFA funding
• Creation of Reagan-Udall Foundation to guide CPI
• McClellan/Board working to overcome dispute with
  critics regarding industry involvement/influence
  on agency

11
FDA Lacks Resources

• FDA mission needs resources Science Board, GAO,
  IOM
• User fees one-fourth of FDA, growing
• Commissioners first-ever professional judgment
  letter
• FDA seeking 1300 new employees now more in FY
  09
• most are unfilled vacancies or from new user fee
  dollars
• PDUFA crunch eases when new staff hired/trained
  (takes time)
• FY 08 supplemental FY 09 appropriations 300M
  to spend
• New Administrations challenges
• More forthright in identifying and prioritizing
  needs
• Assuring that new monies are well-spent
• Foreign expansion identifying/upscaling right
  IT systems

12

• CONGRESS AND FDA

13
FDA Inspections Bill

• House Draft (April 17) Senate Draft (May 6)
• Intent was food safety reform this year Heparin,
  Ketek, counterfeits, globalization broadened
  scope of drafts
• Expands inspection authority and manpower
  agency-wide, funded by facility user fees on
  food, drugs, and devices
• Key requirements for drugs and device companies
• New registry of all drug and device facilities
  with a unique identifier
• Import registry restrict entry of imports
  lacking documentation
• Require verification of drug identity and purity
• Create strong new enforcement tools
• Require country-of-origin labels
• Prohibit false or misleading reporting to FDA

14
Rx Gift Disclosure Legislation

• Grassley-Kohl Physician Payments Sunshine Act, S.
  2029 introduced in 2007, based on oversight
  hearings
• In May, Lilly, PhRMA, AdvaMed, Merck, AZ endorsed
  revised legislation creating national, public
  registry
• New features pre-emption of state requirements,
  500 annual aggregate threshold, more exempted
  activities
• Grassley has not found a legislative vehicle to
  move revised bill this year
• Many companies starting voluntary reporting
• New PhRMA marketing code announced July 10

15
Federal Pre-Emption

• Does FDA approval pre-empt state law claims?
• Medical device PMAsyes
• Medical device 510(k)sno
• Pharmaceuticalsgenerally yes, but under Supreme
  Court review
• Industry/FDA/DOJwithout pre-emption, state
  courts second-guess FDAs decision on scientific
  merit
• Trial bar---state courts best tool for consumer
  protection force industry to prioritize safety
  and disclose risk
• Congress interested in preserving access to state
  courts for FDA claims HR 6381, Senate bill
  pending

16
Other Legislation

• Follow-on Biologics (bio-similars)
• Negotiations continuing, political calculation
  2008 vs. 2009
• Roadblock years of data exclusivity
• DTC restrictions
• Congressional sentiment negative toward DTC
• Re-importation
• Supported by next President (whoever it is)
• FY 2009 budget resolution anticipates 2009
  passage
• Patent Reform
• Senate deal collapsed in April little hope of
  compromise
• Issues assessing damages for infringement
  inequitable conduct, post-grant review
  provisions, two windows for challenges

17
Oversight and Investigations

• Democratic Congress vs. Republican President
• House oversight from 3 committees (Energy
  Commerce, Govt Oversight, Appropriations)
  Senate oversight from 3 committees (HELP,
  Finance, Appropriations)
• Drug/device safety (esp. heparin, counterfeiting)
• Food safety (imports, inadequate inspections,
  microbial contamination, source tracking)
• DTC (Lipitor, Vytorin, Procrit)
• Integrity of FDA, sponsors, trial sites (Ketek)
• Will ease toward election dynamic unpredictable
  if Democratic President/Democratic Congress in
  2009

18
FDA Appropriations

• FDA small agency 1.7B plus user fees
• FDA responsibilities far outstrip resources
• Ongoing crisis of problems, priorities
• Alliance for a Stronger FDA advocate for
  increased appropriations for agency
• FY 2007 90M FY 2008 145M
• FY 2008 emergency supplemental added 150M
• FY 2009 mark-ups in June/July FDA to have 300M
• Funding by omnibus bill or continuing resolution?
• Senate champion of cause House following

19
FDA Receives Less Funding than the Local School
District...

• FY07CR FY08 FY09
• Proposed
• Montgomery County (MD) 1.85B 1.98B
  2.11B
• Public Schools
• FDA (appropriated funds) 1.57B 1.72B
  (Presidents Request
  1.77B)
• http//www.montgomeryschoolsmd.org/departments/bud
  get/citizens/pdf/Citizens_BudgetFY09.pdf
• Alliance for a Stronger FDAFebruary 2008
  www.StrengthenFDA.org

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...Yet Its Reach is Global
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• Elections/New President

22
Pharmaceutical Industry No Good Choices for
President

• Obama For re-importation for generics. Not
  overtly hostile to pharmaceutical industry, but
  "Billy ad in PA primary implies that Tauzin
  heads PhRMA as quid-pro-quo for
  non-interference clause in Medicare Part D.
• McCain For re-importation for generics. Overtly
  hostile to pharmaceutical industry. Exchange in
  NH debate
• McCain Why shouldnt we be able to reimport
  drugs from Canada? Its because of the power of
  pharmaceutical companies
• Romney Dont turn the pharmaceutical companies
  into the big bad guys.
• McCain Well, they are.

23
Health ReformElection Year

• Both presidential candidates (Obama, McCain) have
  reform plans that exceed their ability to deliver
• Regardless of whose electedchanges in pieces
  improved child health insurance, attack on drug
  prices, payment reform, cost-cutting
• Four ex-Senators (Dole, Mitchell, Daschle, Baker)
  plan health reform proposals for new
  presidentpost-electionto move more systemic
  reform
• As with 1981, 1993, 2001...policy opportunities
  will be wide-open, untied to previous
  Administration

24
Working Without a Commissioner

• FDA is extraordinarily complex, every move has
  worldwide consequences, many unintended
• FDA had acting commissioner for half of Bush
  Administration...a worrisome trend
• Challenge to identify a new Commissioner, get
  him/her confirmed quickly, and help them get a
  team in place
• Six months would be a serious problem a year
  without a leadership team could be disastrous
• Not about competency of FDA civil service
  leadership
• Many decisions can't or won't be made without a
  permanent, confirmed Commissioner.

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• Long-Term Issues
• and Opportunities

26
Balancing Safety with Patient Risk and Need

• FDA heading toward near-absolute safety standard
  costly for industry, not necessarily good for
  patients
• Severely-ill patients require more balanced, more
  individualistic and less paternalistic approach
• FDA standards varied/inconsistent on patient risk
  vs. access to potentially-useful therapy.
  Safety/risk/benefit trade-offs
• Obvious stage 4 cancer vs. gastric reflux
  disease
• Difficult 12 of patients get a clear and
  durable response 88 suffer beyond the
  parameters of their disease
• More difficult patients with non-life
  threatening debilitating conditions (e.g.
  blindness) may be willing to take more risks than
  patients with a life-threatening but manageable
  disease
• Subtle Alzheimer's patient/family willing to
  take great risks in early stage/intact fewer
  risks in late stage/mentally absent

27
Integrating New Science into Traditional
Clinical Paths

• Accepted means of proving safety and efficacy vs.
  new scientific knowledge (e.g. oncology,
  Alzheimers)
• end-points/methodologies (biological/surrogate/sta
  tistical)
• products that don't fit traditional paradigms
• challenges in the construction of real-world
  clinical trials 
• Disease symptomology vs.fundamental biological
  processes
• Late stage treatment vs. earlier interventions
• Critical Path for the future what about today?
• Study designs now products FDA will see
  2010-2015
• Where pathways are unclear clinical trial costs
  escalate, cutting edge science slows and RD may
  stop

28
Sifting Valuable Informationfrom Background
Noise

• Difficult, iterative process to turn data into
  intelligence
• More information may not produce better decisions
• FDA must absorb growing volume of sophisticated
  biological, clinical and disease information
• Medical knowledge growing faster than FDA
  expertise
• Not every cluster is medically or scientifically
  important
• Real world data sets uncontrolled variables
  inconsistent data collection questionable data
  accuracy
• FDA must absorb growing volume of global
  production, distribution, and medical use
  information
• Transactions/movement/uses mount faster than FDA
  can absorb
• FDA cannot guarantee world-wide food, drug,
  device safety
• Creation/use of IT systems for these tasks will
  be difficult

29
Managing Globalization

• FDA in China, India front-end of world-wide
  presence
• US inspection/quality control implemented
  globally? In tandem with Australia and EU?
  (limited success in past)
• 3B in counterfeit medicine seized in 2008
• 24 percent jump in 2007 illicit versions of 403
  different prescription drugs were confiscated in
  99 countries
• Primarily generic copies that violate patent
  laws and products that lack active chemical
  ingredients or contain improper dosages
• Lucrative opportunity for organized crime
• Reimportation tipping point to a system
  out-of-control?
• FDA will need hundreds of millions of s to
  implement?
• European experience with parallel
  tradeinstructive or not?
• EMEA increasingly concerned about China, India,
  counterfeits

30
Resisting Bias TowardNegative Decisions

• No heroes for approvals (Frances Kelsey syndrome)
• Global communications magnifies idiosyncratic and
  multivariate adverse events
• Congressional/media/trial bar scrutiny is
  remorseless
• Uncertainty inherent in all approval decisions
  e.g. doubling clinical trial size may only
  modestly increase ability to detect adverse
  events
• Thorough review of safety is appropriate and
  necessary, but pre-occupation is not always
  responsible or reasonable
• Will greater industry attention to safety data
  post-market commitments allow balanced FDA
  decisionmaking?

31
Staying Focused on Priorities

• FDAs responsibilities substantially exceed its
  resources
• Large gaps in inspections, safety, information
  technology
• Constant pressure from globalization
• Challenge from innovationhuman, microbial, viral
• Some mission creep inevitable
• Might new missions risk FDA focus and
  effectiveness?
• Tobacco
• Re-importation
• Comparative effectiveness/reimbursement wars
• Is it time to re-assess whether foods and medical
  products belong in the same agency?

32
Keeping the Best and the Brightest

• Public service cannot be allowed to go out of
  style
• FDA needs the resources and tools to do its job
• People cannot effectively do 3 or 4 jobs at a
  time
• Medical reviewers need time to refresh their
  knowledge
• Congressional oversight must be measured, not
  vitriolic
• Learning from mistakes is good second-guessing
  is bad
• Scientific/statistical decisions should be
  evidence-based
• Differing interpretations are to be expected
• Science should rule, but there have always been
  agency decisions where politics played a role
  (not new!)

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• A strong FDA benefits all Americans
• Patients, consumers, health professionals,
  industry
• ....and the whole world benefits, too.