The FDA's Call for Cash

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As The Wall Street Journal reported last week, FDA commissioner Andrew von Eschenbach called for Congress to raise FDA funding in response to ever-increasing demands on the agency.

The von Eschenbach interview in the Journal echoes what I reported about the FDA back in December, when the agency released a downbeat report detailing its current state of affairs. The December report essentially asked Congress for more funding to help the FDA improve its food safety initiatives and hire more staff to help improve its drug review and safety monitoring processes.

The FDA usually doesn't reveal much about its internal goings-on, and there have been some interesting and sometimes inexplicable delays in the past several months at the FDA's Center for Drug Evaluation and Research (CDER), which is responsible for most drug approvals.

For example, Cardiome's (Nasdaq: CRME) Kynapid was widely praised by an FDA review team, and it was also the subject of a positive advisory panel hearing. The FDA's goal for making a decision on the drug was Jan. 19, but the FDA has yet to make a decision on the drug, and that's inexcusable. If it was going to reject the drug, it should have done so already; the delay could mean millions of dollars of lost sales for Cardiome.

In the past two weeks, CDER's anti-infective-drugs division also showed signs of workload strain when it canceled two advisory panels for antibiotic drugs from Theravance (Nasdaq: THRX) and Johnson & Johnson (NYSE: JNJ). No detailed reason was given for the cancellation, so we'll have to see if this is a positive or negative sign for these drugs, or just a reflection of extended FDA staff commitments.

The FDA already has the Prescription Drug User Fee Act (PDUFA) to help fund its drug review teams. If the current $1.178 million that drugmakers pay each time they have the FDA review one of their drugs isn't enough to keep up with the evolving regulatory environment, then one solution would be to raise the fees for drug classes that are more costly to review.

Then again, the FDA got a hefty 31% increase in its PDUFA New Drug Application fees for fiscal 2008, from the $896,200 that drugmakers were previously paying, and the agency expects to rake in $459 million in fee revenue for 2008, so it's hard to tell if the FDA's call for more cash is a money grab or an actual need.

Either way, if it speeds approvals along, investors should be happy.