Congress' Delay May Hurt Drugmakers

Drugmakers could soon see a required fee disappear because of Congress' failure to act. But instead of jumping for joy, pharmaceutical and biotech companies are shaking their heads in disbelief, since this is one fee they actually like to pay.

The Prescription Drug User Fee Act (PDUFA), which expands the size and speed of the FDA by requiring drugmakers to pay fees for their applications, is set to expire at the end of next month. The House and Senate have passed versions of bills reauthorizing the fee, but the final version has been stuck in a conference committee ever since I wrote "An Investor's Guide to the New PDUFA."

Most of the issues appear to surround the bill's new drug-safety provisions and the requirement for the drugmakers to put clinical-trial results into a public database. The other issue is that lawmakers on the conference committee seem to be distracted by other health-care-related legislation. With the lawmakers about to go on summer recess, it appears unlikely that the bill will get taken care of before next month.

While the lawmakers should have plenty of time to work out their differences next month, the delay hampers the FDA's ability to hire new staff, since there isn't any money in next year's budget for them without the PDUFA fees coming in. The delay could eventually trigger the FDA to send out layoff notices to staffers. If FDA staffers take the notices seriously and find new jobs, Congress' delay could adversely affect the approval of upcoming drugs.

In a worst-case scenario, senators could try to force the conference committee to include the approval of follow-on biologics. Since the House hasn't debated the issue yet, legislators from the lower house have been resistant to add it to the joint bill. A stalemate would spell disaster for the FDA.

If you're an investor in drug companies, now might be a good time to call your representatives and senators and ask them to get off their butts and reauthorize the PDUFA -- drugmakers' livelihood, and therefore your investment portfolio's value, is at stake.

Find out more about companies with drug approvals on the horizon -- grab a free 30-day trial of one of our market-beating newsletters. Biogen Idec is a pick of the Stock Advisor newsletter. BioMarin and Omrix are Rule Breakers recommendations. And Pfizer is a selection of the Inside Value team.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.