FDA budget seeks biotech generics and user fees

WASHINGTON (Reuters) - New fees for the Food and Drug Administration to speed review of generic pharmaceuticals and new authority to approve copycat versions of some biotech drugs were proposed in President George W. Bush's budget on Monday.

The White House requested an FDA budget of $2.4 billion for the 2009 fiscal year starting in October, a 5.7 percent increase over last year's budget.

The proposal comes as the FDA faces heightened criticism for inadequate staffing, lax oversight of drug and food safety and out-of-date technology. Last week, lawmakers met to discuss a report by an independent board that concluded lives are at risk because the agency is so underfunded and behind in cutting edge science.

"It's pretty disappointing, especially in light of the overall unanimity of concern over food safety and drug safety," said Bill Hubbard, an advisor to the Alliance for a Stronger FDA, and former associate FDA commissioner from the early 1990s through 2005. The Alliance is made up of industry, and consumers and patient groups.

Hubbard said that because FDA's costs are more aligned with medical costs, which are rising faster than overall consumer inflation, "it's barely half of what FDA needs just to keep pace with inflation."

The Democrat-controlled Congress will likely alter much of the plan which is part of the Bush Administration's total $3.1 trillion budget package. Lawmakers will craft their own version in the coming months.

CHEAPER FORMS OF BIOLOGICS

The most surprising part of the FDA proposal, according to analysts, is proposed new authority to approve cheaper copies of most biotechnology drugs, or biologics. Biologic medicines are man-made forms of human proteins, making them more complex and difficult to reproduce than traditional pharmaceuticals.

Makers of generic drugs have been pushing for legislation to set a clear path for the FDA to approve cheaper copycat versions of biologics. A 1984 law set rules for copycats of traditional, chemical-based drugs but did not address biologics.

FDA officials said the agency will submit legislation to Congress to create new authority at some point in the future, but would not discuss timing or specifics.

Lehman Brothers analyst Tony Clapsis said the Administration's support for generic biologics is a boost to the cause, but that competing plans in the U.S. House of Representatives will likely prevent any changes this year.

"My view is they missed their opportunity last year," Clapsis said.

USER FEES

The spending plan includes $628 million in user fees paid by industry in exchange for the agency meeting targets in speeding review of new product proposals.

Brand drugmakers and medical device makers already pay the fees. The agency, in a repeat of a request last year, is seeking authority to collect about $17 million in fees from generic companies to do the same.

Lawmakers would need to pass separate legislation to allow the FDA to charge the generic drug fees.

The Generic Pharmaceutical Association, which represents generic makers like Barr Pharmaceuticals and Mylan Inc. has said it could agree to the fees provided the FDA enacts certain reforms to speed generics to market.

"Opposition from smaller industry players makes this provision an uphill battle with Congress," Citibank Washington analyst Paul Heldman said in an investor note.

The FDA regulates products ranging from pharmaceuticals and medical devices to food and cosmetics, representing about $1 trillion, or a quarter of every dollar spent in the United States.

(Reporting by Kim Dixon; editing by John Wallace and Tim Dobbyn)