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PRESIDENT BILL CLINTON
VICE PRESIDENT AL GORE

APRIL 1995

 

 

 

LQBLIC HEALTH LIBRARY

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REINVEN TING
REGULATION OF DRUGS
AND MEDICAL DEVICES

President Bill Clinton
Vice President Al Gore

National Performance Review

April 1995

 

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M :7 3 3’5
OVERVIEW f ’ " .7

 

“Today, Americans don ’t have to worry about safety or
effectiveness when they buy [drugs and medical

devices ]—-from cough syrups to the latest antibiotics or
pacemakers. The Food and Drug Administration has
made American drugs and medical devices the envy of the
world and in demand all over the world. And we are going
to stick with the standards we have—the highest in the
world. But strong standards need not mean business as

usual in every area.”

President Clinton — March 16, 1995

Introduction

Reforming the Federal govemment’s regulatory processes, while maintaining critical public health
and safety standards, has been and will continue to be a top priority for the Clinton Administration.
Consistent with this commitment, President Clinton and Vice President Gore asked Health and
Human Services Secretary Donna Shalala to help them carefully examine the regulatory requirements
of the Food and Drug Administration (FDA).

As part of the Vice President’s reinventing government initiative, FDA has been reviewing its
regulatory processes to determine which requirements could be reduced or eliminated without
lowering health and safety standards. This report contains recommendations resulting from the initial
phase of the review of drug and medical device regulation.

 

Reinventing Drug and Medical Device Regulations

Background

FDA is the Agency within the Department of Health and Human Services charged with ensuring that
drugs, vaccines, and medical devices are safe and effective and that foods meet basic safety standards.
In carrying out these and other responsibilities, FDA annually oversees more than $1 trillion worth of
products, which account for 25 cents of every
dollar spent by American consumers.

Drug Review Times

 

FDA was created in 1906 to protect
Americans from unsafe foods and drugs. In
1976, FDA’s responsibilities were expanded
to include additional authority over medical
devices. During this Administration, FDA has 30 1992
taken significant initial steps to streamline the
regulatory process. These recent initiatives,
building on earlier reforms to ensure access
for patients to new drugs and to accelerate
approval of treatments for life-threatening
illnesses. have resulted in new products being
brought to market sooner; but more can be
done.

20

Months

Standard
1 0

    
 

A Record of Accomplishment Priority

FDA’S recent regulatory improvements
include: 0

New Applications

Shortening Review Times for New Drugs
and Devices

1) FDA now uses expert review panels to expedite the review of certain biotechnology products.
(For example, a joint committee of FDA experts oversaw the licensing in record time of the
drug interferon beta 1b to treat certain patients with multiple sclerosis.)

2) Under the Prescription Drug User Fee Act of 1992, drugs are now reviewed more quickly.
This law authorizes FDA to charge user fees for drug applications, and to use these additional
resources for the reviews of new drugs, vaccines, and biotechnology products.

 

2 Reinventing Drug and Medical Device Regulations

3)

4)

Already, review times for new chemical drugs have dropped from an average of 30 months in
1992 to 20 months in 1994.1 By 1997, FDA will be getting these products to market in a year
or less, as fast as or faster than anywhere else in the world, with no sacrifice in review quality.

Medical devices are benefiting from a number of new processes that speed up their review; for
example, devices that provide significant medical advances are now given priority review.

Animal drugs are now reviewed in a more efficient manner, resulting in a record number of 38
new drugs approved in 1994.

Eliminating Unnecessary Regulatory Burdens

1)

2)

3)

4)

FDA exempted 148 categories of low-risk medical devices from premarket review in
December 1994, relieving manufacturers from submitting applications to the Agency and
waiting for their approval.

FDA has helped to assure safe and high-quality mammography by using existing private
sector standards to certify mammography facilities, which are mostly small businesses.
Utilizing these standards allowed FDA to implement the requirements of the 1992 law quickly
and with minimum burden on accredited and certified facilities.

FDA has begun a joint program with the Customs Service to automate the entry of imported
products into the United States. The program allows an importer to notify FDA by computer
of import entries and receive prompt permission for the products to enter this country.

FDA has issued a proposed regulation to permit regulated companies to use electronic records
and signatures in place of paper. This will save industry substantial costs by simplifying
record-keeping and speeding the filing of applications and other regulatory documents.

As noted in the President’s State of the Union address and his recent announcement highlighting some
of the recommendations in this report, the Administration is committed to promoting results and not
rules. The reforms this report advocates will reduce paperwork, eliminate unnecessary regulation, and
thus get products to market more quickly. In so doing, they will strengthen the economy and maintain
the health and safety of Americans.

 

1The 1994 median review time for all new chemical drugs was 17.5 months: (the subset of drugs reviewed in 1994 under the user fee program was
reviewed in a median time of 13.5 months).

 

Reinventing Drug and Medical Device Regulations

Principles for Reforming FDA Regulation in Carrying out this Review

In carrying out its regulatory review, the Agency carefully considered the financial burdens that its
requirements impose on industry and consumers. It looked for ways to eliminate these burdens so that
its regulatory systems would not be a bar to bringing beneficial new products to market. In reforming
its procedures and requirements, FDA followed these principles:

0 Using performance standards, rather than command and control regulations, whenever
possible;

° Expediting product review without sacrificing the health and safety of the public;

- Eliminating unnecessary requirements that may have been appropriate once but are not now

necessary to public health; and

- Utilizing modern automated technology as a tool in streamlining internal Agency
management and as an aid to industry in meeting its regulatory requirements.

Regulatory Reform Recommendations

FDA is proposing a number of reforms that reinvent how FDA regulates. The reforms included in this
report are estimated to save the drug and device industries $500 million per year in unnecessary
regulatory costs. These reforms will also let FDA better target its resources toward expediting market
access of new products:

0 Reducing or eliminating many of the FDA requirements for companies to get approval for
changes 1n their manufacturing facilities or processes for manufacturing drugs, biotechnology
drugs, and other biologics;

- Allowing manufacturers of biological drugs to get licenses for pilot facilities instead of
making them build full-scale plants. Manufacturers will still have to show they can meet

safety, purity, and potency standards;

° Permitting greater flexibility in the appearance of distributors’ names on biological product
containers, package labels, and labeling;

0 Eliminating outdated requirements for insulin and antibiotics and allowing a private standard-

 

4 Reinventing Drug and Medical Device Regulations

setting body to establish testing and quality standards (thus eliminating nearly 700 pages of
Federal regulations);

0 Excluding drug and biologic manufacturers from requirements for most environmental
assessments, which currently cost tens of thousands of dollars each time a new product is
developed yet provide no real benefit to the environment;

- Exempting nearly 125 additional categories of low—risk medical devices from premarket
review;
- Eliminating the “Reference List” by clarifying that market clearances of devices will not be

withheld unless FDA finds a reasonable relationship between the nature of current violations
and the application under review;

- Developing a pilot program for review of low-risk medical devices by outside review
organizations to determine if such a system could be developed permanently;

- Speeding the marketing of medical devices by seeking authority to charge industry user fees
for device reviews, and committing FDA to meet certain strict performance goals;

- Expanding opportunities to export drugs and medical devices to industrialized countries;

- Issuing a public statement clarifying how FDA determines the effectiveness of new drugs
and devices and that a single, multi-center study may support approval of a drug;

0 Harmonizing FDA’s drug and device testing requirements with those of other countries, thus
expediting worldwide marketing of new products by reducing duplicative testing;

- Expanding and standardizing the use of new information technologies for reviewing new
products and speeding up import entries.

Additional proposals for reforming the regulation of drugs and medical devices are being developed
and will be announced later. They will accompany recommendations related to the regulation of foods
and veterinary products.

 

Reinventing Drug and Medical Device Regulations 5

 

FDA’S PROPOSALS FOR REFORM

 

Drugs

New drugs must be approved by FDA prior to marketing. Under the provisions of the Federal Food,
Drug, and Cosmetic Act, they are tested first in animals, then in humans, and the data are submitted to
FDA scientists for review via a New Drug Application. Biologics include vaccines and blood
products, and drugs made using biotechnology. They are licensed under a different legal authority
from drugs, and are therefore subject to somewhat different requirements. Before marketing a new
biological product, the sponsor must submit for FDA’s approval a Product License Application,
which presents safety and efficacy data. The facility making the product must submit an
Establishment License Application demonstrating that the product can be accurately and safely
manufactured.

Although full marketing of drugs must await FDA review and approval, in recent years the Agency
has established ways for patients to gain early access to treatments for life-threatening diseases.

FDA also approves such changes as substituting different ingredients by reviewing a “supplement” to
the original application for approval.

This section of the report describes reforms in the regulation of biologics and drugs. The reforms
include: permitting biologics manufacturers to demonstrate their capability to make the product
without first building a full-scale production plant; changing biologics labeling requirements to
remove an impediment to flexible manufacturing, packaging, and distribution arrangements; allowing
manufacturing changes for both drugs and biologics to be made with less FDA prior approval;
eliminating certain manufacturing requirements concerning antibiotics and insulin; and eliminating
most environmental impact assessments for both biologics and drugs.

 

6 Reinventing Drug and Medical Device Regulations

Drugs and Biologics: Eliminating Many Requirements
For FDA Approval of Manufacturing Changes

Background: FDA regulations governing drugs and biologics require applicants to obtain FDA
approval before implementing many manufacturing changes for those products. To obtain approval,
manufacturers submit “supplemental” applications to FDA, of which the Agency receives several
thousand each year. These changes range from the addition or subtraction of an ingredient, to the use
of a different production facility or different equipment within the same facility, to changes in
packaging. Manufacturers must often wait six to twelve months to receive FDA approval, during
which time the manufacturers are prevented from making changes to the product or production
facility that they believe are more efficient or otherwise necessary.

Proposal and J ustification: FDA will reduce the number of changes that require pre-approval.
Described below are the procedures for implementing this new policy for drugs and biologics.

DRUGS

FDA’s Center for Drug Evaluation and Research (CDER), the Agency component responsible for
oversight of human drug products, is developing a guidance document for drugs in tablet and capsule
form (other than those for controlled release). This document, designed to ease pre-approval
requirements for certain manufacturing changes, would distinguish changes that are unlikely to have
any detectable impact on a drug product’s quality and performance from those that could have a
significant impact. Examples of changes unlikely to have an impact include the deletion of a color
from a product or changes from non—automated or non-mechanical equipment to automated or
mechanical equipment for moving ingredients. The proposed FDA guidance would ease the pre-
approval requirements for these and other manufacturing changes when the proposed manufacturing
change does not affect the drug’s quality or performance.

In all instances in which prior approval would no longer be required, FDA would still receive
notification of the manufacturing changes from the drug manufacturer, either when the change takes
effect or through annual reports on the drug application.

BI OLOGI C S

The Agency will create a reporting process tailored to the severity and complexity of the change. Less

 

Reinventing Drug and Medical Device Regulations 7

stringent reporting requirements will apply when the changes do not pose demonstrable effects on
product purity, potency, or safety — or when changes are readily amenable to on-site scrutiny during
routine inspection of the production facility. FDA will classify its oversight of manufacturing changes
for biologics as follows:

Category 1: Changes where no supplement submission will be required. The sponsor will generate
and retain all relevant data defining (and validating, if necessary) changes being made. The firm may
voluntarily notify the Agency of the changes and dates of implementation.

Examples: Changes in the supplier of components (such as stoppers, vials, seals) that meet established
specifications; changes which tighten existing specifications to provide greater assurance of product
purity and potency; relocation of equipment in appropriate areas within approved facilities.

Category [1: Changes for which the sponsor submits a standard supplement; unless the Agency
objects, the sponsor can automatically implement the change in 30 days.

Examples: Expansion of existing manufacturing support systems (such as heating, ventilation, and air
conditioning); modification of an approved manufacturing area which does not adversely affect
safety, purity, or potency of product (such as adding new interior partitions or walls to increase
control over the environment or replacing or adding new surfaces to enhance cleaning); replacement
of equipment with that of similar but not identical design and operating principle that does not change
the manufacturing process.

Category 11]: Changes requiring Agency approval prior to implementation.

Examples: Change in processing conditions (such as process time, process temperature, or filtration
process); change in dosage form (such as a change from a liquid to a powder); extension of dating
period; use of a previously unapproved manufacturing area or facility.

Impact: These changes will benefit industry by: (1) saving resources that would have been spent on
preparing supplemental applications; (2) permitting changes to occur without waiting for prior FDA
approval; and (3) encouraging certain manufacturing improvements. Under the new procedures, the
manufacturing site changes described above for drugs could be carried out—and the new site could
begin operating—in a matter of weeks, and with significant cost savings. And the new policy will
permit a drug manufacturer to change automated equipment without prior FDA approval, an
improvement that will make newer facilities and equipment available to manufacturers much more
quickly. Similar changes for biologics manufacturers will speed their ability to make changes in
production facilities or make other manufacturing improvements.

 

8 Reinventing Drug and Medical Device Regulations

FDA will also benefit from these changes. The Agency estimates that this reform will eliminate its
current review of more than 800 supplemental applications for drugs and 500 for biologics annuallyz.

Implementation and Timeline: For drugs, by the end of the year FDA will issue guidance for most
products sold in tablet form that will describe how these requirements will be relaxed. By the end of
1996, FDA will develop a similar guidance document for other dosage forms, including controlled
release drugs, liquids, and semi-solids.

For biologics, FDA will immediately issue a guidance document to implement the new three-category
plan. The document will identify the types of changes in manufacturing procedures and
establishments that may be carried out without prior approval. It will clarify which changes will not
require a supplement at all. Within nine months, in a second step, FDA will propose amending its
regulations to further reduce the instances requiring its approval before products may be marketed.
Likewise, the Agency will review its policy on lot release of some biologics (Le, a procedure
whereby the Agency approves each batch of biologics prior to distribution), to determine how those
burdens can be minimized as well.

 

2For biologics. approximately 25 percent of supplemental applications (250 a year) will fall into Category I, 25 percent (250) will fall into Category
II. and 50 percent (500) Will fall into Category III.

 

Reinventing Drug and Medical Device Regulations 9

New Policy to Permit Use of Small-Scale and Pilot Facilities
During Development of Biologics

Background: Lack of clarity about establishment licensure requirements has led some biologics
manufacturers to make major capital investments in full-scale manufacturing facilities before
initiating the large clinical trials necessary to demonstrate the safety and efficacy of their products.
Such investments can result in significant financial losses if the product is not ultimately brought to
market.

Proposal and Justification: FDA will specifically state that manufacturers may use pilot and
small-scale facilities to demonstrate safety and effectiveness and to support approval. Under this
reform, companies may immediately submit applications for clinical studies or approval of products
manufactured in small-scale or pilot facilities.

Although the manufacture of biologics warrants a high degree of quality control and regulatory
oversight, FDA believes that licensure of pilot and small-scale facilities provides industry with the
flexibility it needs without diminishing public health protection. As a result, FDA will issue product
and establishment licenses on the basis of demonstrated safety, purity, and potency of the product
manufactured in the pilot or small-scale facility. Moving to a full-scale facility will require only a
supplement to the manufacturer’s product/establishment license applications.

Impact: Of 1,500 active and pending investigational new drug applications (INDs) (the
manufacturer’s application to begin testing a drug product in humans) for biologics, 100 to 500
current applicants need to decide whether to construct new facilities. Under this reform, a significant
number of these companies may choose not to construct a new full-scale manufacturing facility.
Instead, they may decide to use a pilot or small-scale facility, with potentially great cost savings. It
has been estimated to cost $25 million to construct a biologics manufacturing facility, and about $15
million a year to operate it.

Implementation and Timeline: Companies may apply immediately for licensure of small-scale and
pilot facilities and their applications will be considered. FDA will issue a guidance document to
clarify its policy on licensing small-scale and pilot facilities within the next three months.

 

10 Reinventing Drug and Medical Device Regulations

Revision of Labeling Requirements for Biological Products

Background: Companies that develop a product sometimes find it advantageous to have their product
manufactured by another company. Many small start-up companies, such as many biotechnology
firms, prefer this option because they do not always have the manufacturing capabilities necessary to
produce commercial quantities of a drug. However, FDA’s current labeling regulations are a
disincentive to such arrangements: The manufacturer’s name must be displayed on the label more
prominently than that of the developer (which can be listed only as a selling agent or distributor).

Proposal and J ustification: FDA will allow the distributors’ and selling agents’ names to be
displayed prominently on biological product containers, package labels, and labeling. This change
will provide the biological products industry with the flexibility that it wants, and, at the same time,
maintain current label information on product manufacture and origin.

Impact: The change in labeling requirements will allow prominent display of the name of the
distributor or selling agent, thereby removing an impediment to flexible manufacturing, packaging
and distribution arrangements.

Implementation and Timeline: FDA will publish a proposal to revise its biologics labeling
regulations within six months.

 

Reinventing Drug and Medical Device Regulations 11

Antibiotic and Insulin Standards and Insulin Certification

Background: Section 506 of the Federal Food, Drug, and Cosmetic Act requires FDA to certify
individual batches of drugs containing insulin as meeting the standards of identity, strength, quality,
and purity that are described by FDA regulations.

Section 507 of the Act imposes similar requirements for antibiotic drugs. The regulatory
specifications for antibiotic drug products occupy almost 700 pages in the Code of Federal
Regulations.

Antibiotics and insulin are subject to more stringent requirements than those applied to other drug
products. For example, section 505 of the Act, which applies to most human drugs, does not require
FDA to certify individual batches of drug products or to issue product specifications prescribed in
regulations. Moreover, in some cases, the insulin and antibiotic regulations known as “monographs”
are outdated, reflect old technology or methodology, prescribe standards for products that are no
longer marketed, or conflict with the standards found in the United States Pharmacopeia (USP). The
USP, a compendium of standards of strength, quality, and purity for drug products, is published by the
United States Pharrnacopeial Convention, a private entity. Because the FDA can change its standards
for insulin and antibiotic products only by regulation, the USP standards are often more up to date.
The existence of conflicting standards can be confusing to the industry and to FDA staff who must
determine whether a particular product meets the correct specifications.

Proposal and Justification: FDA proposes to support the repeal of the certification requirement
for insulin. Congress enacted this statutory requirement decades ago, when insulin products were new
and manufacturing and testing technology was rudimentary. Since then, the Agency and industry alike
have become much more sophisticated and experienced with insulin manufacturing, so that certifying
each batch of insulin is no longer necessary. Moreover, only two firms currently market insulin in the
United States, and in the past 8 years FDA has found no failures in more than 500 batches of insulin
that it has tested for certification purposes.

FDA also proposes to support the repeal of the statutory requirements for the FDA monographs that
are now issued for insulin and antibiotics. In the 1940’s, when Congress enacted those sections of the
Federal Food, Drug, and Cosmetic Act, detailed regulations setting forth standards and tests were
thought to be necessary to ensure the quality and the safety of these products. At that time, Congress
also expressly recognized, at least with respect to antibiotics, that a time would come when
manufacturing technology would overcome the need for such detailed regulation and that the
manufacturing controls used for chemically synthesized drugs would suffice for antibiotics as well.

 

12 Reinventing Drug and Medical Device Regulations

FDA also supports the repeal of the statutory provisions which provide for the certification of
antibiotic drugs. The ability to control antibiotic drug quality is also well-established. For example, a
GAO study published in 1981 reported that from 1977 through 1980, less than one percent of all
antibiotic products did not comply with monograph standards. FDA therefore concludes that the
additional controls are no longer necessary to ensure the safety and efficacy of antibiotic drug
products.

The Agency therefore proposes to regulate the approval of new insulin and antibiotic drug products,
and generic antibiotic drug products, much as it

 

does for other human drug products. Concerning

tests and methods of assay, the USP will maintain . . . .
the standards for insulin and antibiotics in the AHtlblOth and 1115111111

same way that it maintains such standards for Standards] Certificates

other drugs.

 

Impact: Under this reform, insulin manufacturers
would no longer be required to submit
applications and samples to obtain batch
certification. And because the insulin industry is
subject to certification fees under section 506 of
the Act, the change would eliminate those fees.

f

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fations

Food and Drugs

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Eliminating the statutory requirement for FDA to
issue antibiotic monographs that set forth product
standards, tests, and methods of assay for
particular drugs would benefit antibiotic drug
product manufacturers. This change would Eliminate 700 Pages
eliminate the confusion created by actual and
potential differences between FDA regulatory
standards and the USP.

37‘,
a2

 

 

 

 

 

Eliminating the regulations specifying insulin and antibiotic drug standards and tests will remove
nearly 700 pages from the Code of Federal Regulations.

Implementation and Timeline: The Administration will promptly propose legislation to repeal
section 506 of the Act (which pertains to insulin) and to repeal section 507 of the Act (which pertains
to antibiotic drug products). FDA would seek to have both insulin and antibiotic drug products
regulated under section 505 of the Act.

 

Reinventing Drug and Medical Device Regulations 13

Environmental Assessments for Human Drugs

Background: The National Environmental Policy Act (NEPA) requires all federal agencies,
including the FDA, to assess the environmental impact of their actions which may significantly affect
the quality of the human environment. A drug cannot be approved unless the manufacturer has
submitted an acceptable Environmental Assessment (EA). On the basis of FDA analysis of the EA,
the Agency can either issue a “finding of no significant impact” (FONSI), or decide that a full
environmental impact statement (EIS) must be prepared. Preparation of an EA is usually quite
expensive; yet, in virtually every case, FDA issues a FONSI.

Each year, the pharmaceutical industry submits approximately 50 to 60 full EAs and about 50
abbreviated EAs to CDER. Pharmaceutical firms also send 20 to 25 EAs annually to the Center for
Biologics Evaluation and Research (CBER), some in abbreviated form. It can take up to 6 months to
review an EA, obtain additional information from the firm to correct any deficiencies, and issue a
FONSI.

And yet, in recent years, FDA has identified only one product, Taxol, as presenting any potentially
significant environmental concerns. In the case of Taxol, the environmental impact was due to
harvesting of Pacific yew trees, an endangered species. In Taxol’s case, CDER incorporated by
reference the EIS prepared by the US. Forest Service to address the resource question; the
manufacturing process and use were addressed through the routine EA and were found to have no
significant impact.

Proposal and J ustification: FDA proposes to increase the number of categorical exclusions from
the EA and E15 requirements.

FDA proposes to reduce the number of EAs required to be submitted by industry and, consequently,
the number of FONSIs prepared by the Agency under NEPA by increasing the number of categorical
exclusions based upon little or no impact on the environment from the use of the drug. Based upon its
experience to date in reviewing environmental assessments, FDA believes that nearly all product
approvals will qualify for categorical exclusion. For example, virtually all drug approvals would
result in only minute releases of the drug into the environment as a result of human use and such
releases would not be environmentally significant. FDA procedures will provide for extraordinary
circumstances in which a normally excluded action may have a significant environmental impact—-
circumstances that would require at least an EA. Taxol is an example of such an extraordinary
circumstance.

Impact: These changes will substantially benefit industry and will improve regulatory efficiency

 

14 Reinventing Drug and Medical Device Regulations

without having any adverse impact on public health or the environment. Industry would save from
$40,000 to $150,000 on each EA.

Implementation and Timeline: These changes will be implemented by amending FDA regulations,
in consultation with the President’s Council on Environmental Quality (CEQ), to increase the number
of categorically excluded actions for which an BA or EIS is not required. New regulations will be
proposed in consultation with CEQ in six to nine months. Policy guidelines clarifying current
procedures will be published sooner.

 

Reinventing Drug and Medical Device Regulations 15

Medical Devices

There are three classes of medical devices. Class I devices, such as tongue depressors, are subject
only to general regulatory controls and receive little Agency oversight. Class 11 devices, such as infant
incubators, are subject to special controls, such as performance standards, to ensure their safe and
effective use. Class III devices, such as implantable pacemakers, are generally life-sustaining or life-
supporting, are implanted in the body, or present potential unreasonable risk of illness or injury.

New devices enter the market in one of two ways: (1) through a premarket notification process,
known as a “510(k)” because it is authorized under section 510(k) of the Federal Food, Drug, and
Cosmetic Act; and (2) through a more extensive premarket approval application (PMA).

Under the 510(k) process, FDA must determine whether a device is “substantially equivalent” to a
device that is already legally marketed. A manufacturer using the premarket notification process
informs FDA about the device and why any changes in its device can be made safely. (Some low-risk
devices have been exempted from premarket notification.) If FDA finds the device to be
“substantially equivalent,” the manufacturer may market the device and must then comply with good
manufacturing practice (GMP) requirements to ensure that the device is properly made. More than 90
percent of all devices enter the market under the premarket notification process. The more extensive
premarket approval application is targeted toward Class III devices.

The reforms below are: additional exemptions from premarket notification; elimination of the current
reference list program, which links GMP inspections to new device approvals, and its replacement by
a process that focuses on serious GMP problems and how they may be applicable to individual
premarket notification actions; a pilot program for external review of new devices; and, a user fee
program to speed device approvals.

 

l6 Reinventing Drug and Medical Device Regulations

Medical Device Exemptions from Premarket Notification

Background: Currently, the Federal Food, Drug, and Cosmetic Act requires that manufacturers of
most medical devices submit information to FDA and receive FDA clearance before putting a device
on the market, even if the device has an extremely low risk. Review of low-risk devices is not
necessary to protectthe public health, places an unnecessary regulatory burden on device
manufacturers, and delays introduction of new devices.

FDA currently regulates about 1,700 types of medical devices. Of these, 441 categories of low-risk
devices (such as stethoscopes, hernia supports, and surgical microscopes) have already been exempted
from the requirement of premarket notification, including 148 exempted in December 1994.

Proposal and Justification: FDA will exempt up to an additional 125 medical device categories
from premarket notification requirements. As a result, about 570 categories, or one-third of all
categories of devices, will be exempt from premarket notification requirements.

Public health will not be compromised by the exemption of these devices from premarket review.
These devices will reach the market sooner and will remain subject to good manufacturing practice
requirements, which include regular factory inspections, record keeping and device problem
reporting. (Of course, continuation of an exemption is dependent upon a safe marketing history, and
exemptions can be revoked if safety problems are later identified; a review of whether these
exemptions should be continued, or others added, will be conducted in two years.)

Impact: The device industry will no longer have to prepare and submit—and the Agency will not
have to process and review—510(k) premarket notification submissions for the exempted device
categories. FDA receives about 700 submissions each year for devices in these 125 categories and
will be able to redirect the resources for the review of these products to more complex products.

Implementation and Timeline: FDA device advisory panel chairs are now reviewing the proposed
exemptions. The majority of the device categories are currently in Class II and, under the law, must be
reclassified to Class I before being exempted from FDA review. By June 1995, FDA will propose to
reclassify these devices from Class II to Class I and to exempt them from premarket notification
requirements.

 

Reinventing Drug and Medical Device Regulations 17

Elimination of the Reference List

Problem: Under a program known as the “Reference List,” FDA tracks medical device manufacturers
found by FDA field inspections to have serious GMP violations. GMP violations are flaws in the
manufacturing process that have the potential to affect the safety or efficacy of the product. If a firm
is on the list, FDA may defer authorization for the firm to market a new product under section 510(k)
of the FD&C Act.

The basis for placing a firm on the list has been an inspectional finding of serious GMP problems. In
issuing the manufacturer a warning letter about its GMP violations, FDA has advised the
manufacturer that the Agency may not give marketing clearance to pending applications until the
violations are corrected. A company is removed from the list only after FDA has re-inspected the firm
and found that all serious GMP violations have been corrected. This process can take up to 6 months.

Industry has criticized the list as not needed to protect the public health. Industry views the list as a
“blacklist” because it feels that the Agency does not make clear which firms are placed on the
Reference List or when they are removed from it. Moreover, because it takes time to re-inspect after
violations are found, manufacturers may be delayed in marketing their products.

Proposal and Justification: FDA will eliminate the Reference List and instead focus attention on
the appropriate linkage between serious GMP deficiencies and individual pending 510(k)
applications. FDA will also clarify that market clearances of Class I and 11 devices will not be
deferred unless FDA finds a reasonable relationship between the nature of the current GMP violations
and the application under review. A reasonable relationship will be found only if there are GMP
violations that are directly related to the product under review or if there are systemic violations that
are generally applicable. FDA will not defer 510(k) applications if no such reasonable relationship is
found.

Second, if market clearance of a 510(k) is deferred because of GMP violations, FDA will either
reinspect the firm within 60 days after being notified that corrective actions have been taken, or
clear the 510(k) application without a reinspection.

Finally, FDA will prepare clear written policies and procedures so that companies will know if they
have an outstanding GMP violation, will understand when their 510(k) applications may be held up
due to GMP violations, and will know the procedures to follow to correct the problems and obtain
marketing clearance.

 

18 Reinventing Drug and Medical Device Regulations

Impact: The proposed changes benefit industry by providing assurance that no market clearance will
be deferred unless a clear linkage between GMP violations and the device under review is found. In
addition, by clarifying FDA’s procedures, any industry fear of indiscriminate delay in the clearance of
a 510(k) application will be eliminated. Finally, the fixed time frame for reinspection benefits
manufacturers by removing uncertainty about when they will be able to market their products after
they correct GMP violations.

Implementation and Timeline: The Agency will implement these new policies and procedures by
publication of a notice in the Federal Register by May 1995. FDA will immediately review all
deferred applications to determine if the GMP violations are reasonably related to the pending
applications. Firms with GMP violations unrelated to the pending applications will have their
applications cleared unless there are other problems.

 

Reinventing Drug and Medical Device Regulations 19

Medical Device External Review Pilot Program

Background: Almost all medical devices enter the market by an application process in which the
manufacturer demonstrates that the device is “substantially equivalent” to a device already marketed.
The device industry contends that this process inhibits innovation and competitiveness because, due to
limited resources, FDA takes too long to review these applications. (A comprehensive assessment of
FDA’s device review resource needs, conducted by FDA and audited by the device industry,
documented an annual shortfall of about $24 million and more than 200 staff positions.)

Industry recommends that FDA adopt an approach similar to that used in the European Community,
in which device firms have their device applications reviewed by a third-party scientific organization
accredited by the government. Under this approach, a manufacturer pays a third-party organization for
its review, the third-party organization notifies the government of the results of its review, the device
is marketed without government review, and the government monitors the device after it is on the
market for subsequent safety problems. This concept has not been tried in the United States, so its
applicability in this country is unknown.

Proposal and Justification: FDA proposes to create a pilot program for external reviews of
devices. This pilot program will contain several key elements of the European model to test whether
that model is appropriate for the United States. The program will have the following elements:

- At least ten categories of devices, comprising at least 100-400 device applications annually,
will be identified for eligibility in the program;

- Those categories of devices will have a low to moderate risk profile, clear standards for
market clearance, and no requirement for clinical data as part of their application (e.g.,
applications which principally raise engineering issues);

- The outside reviewers will be accredited by FDA as capable of assessing the design,
performance, and safety of devices;

' The accredited review organization will be responsible for conducting the entire review of the
device application, producing a written review document, and making a recommendation to
FDA. The review will be checked by FDA, and the final decision will be made by FDA and
communicated to the company;

0 The program will be funded by the manufacturer’s payment to the reviewer for its services.

 

20 Reinventing Drug and Medical Device Regulations

Participation by manufacturers will be voluntary; and

o The accredited reviewing organization will be expected to demonstrate independence from
device manufacturers for whom it will be doing reviews and adherence to conflict of interest
standards.

Impact: The pilot program will allow FDA and the device industry to determine the feasibility of
third-party reviews of devices. It will answer questions such as whether private groups can conduct a
thorough, rapid review; whether such groups exist or will need to be created; whether safeguards
against improper influence of non-govemment reviewers can be established; and how much groups
will charge for these services.

Implementation and Timeline: The pilot program will begin early in the next fiscal year. The pilot
program will operate for two years, and during the second year FDA will evaluate its success and
potential for expansion and permanent continuation.

 

Reinventing Drug and Medical Device Regulations 21

Device User Fees

Background: Even if the medical device external review pilot program and other streamlining efforts
detailed in this report are successful in reducing resource demands upon FDA’s device program, the
Agency will still lack sufficient resources to ensure timely review of device applications. Each year,
FDA receives approximately 40 to 60 Premarket Approval Applications (PMAs), 400 PMA
supplements, and 6,000 premarket notification actions for marketing devices under section 510(k) of
the Federal Food, Drug, and Cosmetic Act. In fiscal year 1994, the average review times were about 2
years for PMAs, 1 year for PMA supplements, and 215 days for premarket notifications3. Compare
that to fiscal year 1990, when the average review times were 10 months for PMAs. 6 months for PMA
supplements, and 100 days for premarket notifications. These lengthy review times delay the
introduction of devices to the market. FDA can reduce these review times, without diminishing the
public health protections it provides, if it has adequate resources to review applications.

Proposal and Justification: FDA proposes to authorize user fees for applications. FDA will collect
fees for reviewing PMAs, PMA supplements and premarket notification actions — 510(k)s —- and
dedicate them to funding premarket review and related activities. In addition, FDA will commit to
specific performance goals.

FDA will agree to performance goals of (1) eliminating the backlog of applications within 24 months;
(2) completing a comprehensive, substantive review for 90 percent of PMAs in 180 days; and (3)
taking a final action on 95 percent of 510(k)s in 90 days. These performance goals were negotiated
with the industry as part of legislation proposed last year, and major segments of the device industry
supported them.

Impact: The proposed solution will address a major complaint about federal premarket review times
for devices. The device industry will benefit from increasingly faster review and approval times, will
be able to market new and innovative products faster, and will become more competitive in foreign
markets. Consumers inside and outside the United States will benefit from easier access to new and
improved products.

Implementation and Timeline: User fees will require statutory changes to the Federal Food, Drug,
and Cosmetic Act. The Administration has proposed these changes in the budget for fiscal year 1996.

 

3 However. premarket notifications. which have been the most controversial. were down to a median time of 98 days as of January 1995.

 

22 Reinventing Drug and Medical Device Regulations

Device user fees would account for $23,740,000 of the Agency’s budget for the entire fiscal year, and
the funds would include associated start-up costs and the hiring of over 200 staff people over the first
two years.

 

Reinventing Drug and Medical Device Regulations 23

Cross-Cutting

Several issues confronting FDA cut across product lines and affect both the pharmaceutical and
medical device industries. Two such issues involve exports. One of them is the different mandatory
requirements that the Agency must follow in approving exports of drugs and medical devices. The
other export issue stems from the varying standards for regulated health care products in the United
States and in many of its trading partners. FDA plans to case some of the current export restrictions.
Also, the Agency will intensify its efforts to bring into harmony international standards for health care
products, so that firms developing new products will have to deal with only one set of requirements.

Another issue raised by both the drug and device industries is whether FDA requires new products to
be shown to be superior, as opposed to equal, to products that are already on the market. An
upcoming policy statement will clarify the Agency position. FDA also proposes to take steps to
advance the development of an electronic information system to support the review processes, and to
implement the second phase of an automated system for the processing of imports.

 

24 Reinventing Drug and Medical Device Regulations

Drug and Device Exports

Background: Drugs and medical devices not approved for sale in the United States are now exported
under different statutory requirements.

Drugs may be exported only to the 21 developed countries listed in the statute if, among other things,
(1) the sponsor has an investigational new drug (IND) exemption in effect that permits testing in
humans, and (2) the drug is approved in the importing country.

Devices may be exported if FDA determines, based on information supplied by the exporting
company, that (1) export of the device does not harm public health and safety, and (2) the device is
approved for importation by the importing country.

Manufacturers have contended that these requirements place them at a competitive disadvantage and
that FDA review of exportation to foreign countries is both time-consuming and unnecessary.

Proposal and Justification: It is proposed to allow the export of drugs to any of the countries listed
in the statute without an IND. In addition, the Administration proposes to work with Congress on
changes in the current law based on an examination of whether to amend the present list of 21
countries, and whether to adopt other changes.

FDA proposes two new criteria for allowing devices not approved in the United States to be
exported for marketing abroad without prior FDA permission: (1) devices can be exported to
advanced industrialized countries (the list of which would be determined in consultations with
Congress) if the devices conform to the importing country’s laws; (2) devices can be exported to
countries not on the above-mentioned list if the exporter has an Investigational Device Exemption
(IDE) permitting testing on humans in the United States, the importing country has given FDA a letter
providing blanket import approval for [DE-type devices, and the device is in compliance with the
importing country’s laws.

This change from current procedures would significantly relax restrictions on exports to industrialized

countries. while leaving intact existing protections for countries that are not industrialized.

Impact: For drugs, companies will be able to export their products for marketing in the 21 developed
countries listed in current law, even if they do not have an IND in the United States.

 

Reinventing Drug and Medical Device Regulations 25

For devices, exports to the most significant markets—industrialized nations such as Japan and the
European Community—will be exempt from FDA’s oversight. The U.S. industry will be spared the
expense of developing and submitting export requests to FDA and would not need to await FDA
review, which now averages 16 days but can take as long as 150 days. Furthermore, a firm with an
approved IDE will be able to export the unapproved device to less developed countries which have
agreed to such importation, without going through FDA review, currently averaging 10 days. The
U.S. device industry believes that these changes will encourage firms to remain in the United States
rather than moving their operations abroad. FDA could redirect the resources used for the current
export approval program to more pressing public health matters.

Implementation and Timeline: Discussions with Congress on both drug and device legislation could
begin immediately. Permitting devices with an IDE to be exported without further FDA clearance to
countries which have provided prior agreement can be accomplished administratively by FDA, and
proposed regulations will be issued within 4 to 6 months.

 

26 Reinventing Drug and Medical Device Regulations

Effectiveness of Drugs and Devices

Background: The pharmaceutical and medical device industries have argued that FDA requires a
new drug or Class III (highest risk) device to be shown to be more effective for its intended use than
comparable therapies that are already approved for marketing. Representatives of these industries
believe FDA’s requirements for demonstrating efficacy present unreasonable difficulties in
developing new therapies and bringing them to market.

Proposal and Justification: FDA proposes to issue a public statement to respond to this concern.
The statement will make the following points:

Under the Federal Food, Drug, and Cosmetic Act, new drugs and Class III devices must be shown to
be safe and effective for their intended uses. In evaluating the safety of a new drug or Class III device,
the Agency weighs the demonstrated effectiveness of the product against its risks to determine
whether the benefits outweigh the risks. This weighing process also takes into account information
such as the seriousness and outcome of the disease, the presence and adequacy of existing treatments,
and adverse reaction data.

In evaluating effectiveness, as with safety, FDA reviews new drugs and Class III devices on their
merits. The Agency does not require new drugs and Class III devices to be more effective than
therapies for the same disease or condition that are already approved for marketing. In general, both
new drugs and Class III devices must be shown to be effective through evidence consisting of well
controlled investigations that provide a basis on which it can be concluded that the drug or Class III
device will have the effect it is represented to have.

For the majority of new drugs and Class III devices, i.e., new products intended to treat less serious
illness or provide relief from symptoms, a showing of effectiveness is usually based on a clinical trial
comparing the product to a placebo. Such a showing does not involve a comparison to any other
product.

In certain circumstances, however, it may be important to consider whether a new product is less
effective than available alternative therapies, when less effectiveness could present a danger to the
patient or to the public. For example, it is essential for public health protection that a new therapy be
as effective as alternatives that are already approved for marketing when:

1. the disease to be treated is life-threatening or capable of causing irreversible morbidity (e. g.,
stroke or heart attack); or

 

Reinventing Drug and Medical Device Regulations 27

2. the disease to be treated is a contagious illness that poses serious consequences to the health of
others (e.g., sexually transmitted disease).

It should be noted that new products are often developed for particular subpopulations who either do
not respond to or are not able to tolerate an existing approved therapy. FDA will generally approve for
use in such a subpopulation a product that is shown to have effectiveness in this group, regardless of
whether the product can be shown to be as effective in the broad target population as the alternative
therapy. This is because, in effect, there is no available alternative therapy for the subpopulation. For
example, a number of patients cannot tolerate a widely used therapy for an AIDS-related pneumonia.
FDA approved the drug atovaquone for use in these patients, even though it had been shown to be less
effective than the standard therapy when tested in a broad population.

Impact: Placing such a statement in the public record would clarify for sponsors of drugs and Class
III devices how FDA addresses and evaluates effectiveness in the context of overall review for
product approvability. This clarification should be helpful to product sponsors in the planning and
development of new products.

Implementation and Timeline: Within the next 3 months, FDA will publish a statement for
comment in the Federal Register.

Additional Effectiveness Issue:

Industry representatives also argue that the Food, Drug, and Cosmetic Act should not be read to
require multiple clinical studies when one pivotal study could suffice.

Clarification: FDA believes that a showing of effectiveness must be replicated to constitute an
adequate demonstration of effectiveness for a new product. While a second study may well be needed
to replicate results demonstrated in a first study, in some instances it is possible to replicate results
within one large, well—designed multi-center study. It should be emphasized that this approach can be
successful only when results are strong. A statistically marginal result, even in a very large study,
cannot provide convincing evidence of replication.

The biotechnology drug Pulmozyme was recently approved to treat cystic fibrosis on the basis of one
multi-center study with features that provided elements of replication. Similarly, the drug timolol was
approved to treat people after a heart attack following a demonstration of improved survival in a
single study. In that study, the favorable effect was seen in patients at several levels of severity at

 

28 Reinventing Drug and Medical Device Regulations

three different hospitals. A simple multi-center double-blind placebo-controlled trial led to prompt
approval of zidovudine for AIDS in 1987 when it was found that 16 deaths had occurred in the
placebo group, as opposed to one death in the group receiving the drug. FDA has also approved

vaccines, including a vaccine for hepatitis A, that have been studied for effectiveness in a single
controlled multi-center study.

 

Reinventing Drug and Medical Device Regulations

29

Harmonization of Standards

Background: Nations have differing requirements for approval of new drugs, biologics, medical
devices, and animal drugs. This results in multiple tests on animals and humans and different
applications for marketing approval. Nations also have differing standards for manufacturing practices
and regulatory inspections. There is a substantial need to harmonize standards wherever possible,
while retaining the United States’ high level of public health protection.

Proposal and Justification: Seek common international standards. FDA will work with other
countries, particularly the European Community, Japan, and North American Free Trade Agreement
(NAFTA) partners, to harmonize product testing and development standards with those of the United
States. Work has already begun on drug development and should be expanded to other areas of FDA
regulation.

In addition, where appropriate, FDA will adopt international standards developed by multilateral or
private—sector standards-development bodies.

Impact: Increased harmonization offers clear benefits for US. public health. It increases the safety
and quality of imports into the United States. It can also improve the safety and quality of products
sold in foreign countries and may help increase the availability of new products.

Harmonization benefits industry by replacing many different standards with one international
standard that industry must meet. In the long run, this brings cost savings to industry and enhanced
opportunities for export of US. goods, and may lessen the time needed to bring new products to
market.

Harmonization permits FDA to make more efficient use of its resources, as other countries share the
workload of developing new standards. Harmonization also may save future FDA resources by
enabling cooperation with other countries in the assessment of new products. (However, it should be
noted that a sizable up-front investment of FDA resources is needed to reach harmonization.)

Implementation and Timeline: FDA will build on and expand efforts to achieve international
harmonization by:

1. Launching work on new harmonization topics in the testing of human drugs, biologics, and

 

30 Reinventing Drug and Medical Device Regulations

devices related to clinical trials, biotechnology, medical terminology, and standards for the
electronic transfer of regulatory information. Harmonized standards will be issued as
guidelines for industry. Substantial progress on guideline development is expected within 2
years.

Accelerating work on harmonizing drug Good Manufacturing Practices, Good Laboratory
Practices, and Good Clinical Practices standards and inspections. A number of proposals for
harmonized guidelines should be completed within 2 years; however, harmonization of
inspections will probably take longer.

Beginning an initiative to harmonize registration requirements for animal drugs. The first
proposal for harmonized guidelines should be completed within 3 years.

Initiating work towards more harmonization with our NAFI‘A partners. Such harmonization
efforts should become part of the work plans of existing technical working groups formed
under the Canada/US. Free Trade Agreement.

 

Reinventing Drug and Medical Device Regulations

31

Submission Management and Review Tracking (SMART) Program

Background: The current premarket review processes (preparation, handling, and storage of
information related to product applications) are paper intensive with limited electronic means of
accessing, sharing, or archiving product-related information within the Agency. Many applications
consist of hundreds of volumes of detailed scientific information. The regulated industry is similarly
affected by the need to generate an overwhelming amount of paper.

The Prescription Drug User Fee Act of 1992 (PDUFA) mandates significant reductions in the time
required to review new drug applications. PDUFA funds the hiring of additional review staff to
accomplish these goals. However, one of the longer term objectives is to improve the efficiency of the
review process and to begin addressing ways to improve regulated industry’s data handling
efficiencies as well. FDA has begun to develop a comprehensive, standardized information
management system (SMART) to support the review processes.

Proposal and Justification: FDA proposes to proceed with the development of SMART by
pursuing a series of information systems pilot projects which will directly support FDA ’s meeting
the near-term PDUFA goals. The Agency is already putting in place a system to identify, evaluate,
and prioritize these pilots. A longer term SMART strategic plan has been developed that articulates
how these pilots will serve as building blocks toward integrated drug development/review information
management.

The pilots will focus on upgrading and interconnecting the hardware and software on the reviewer’s
desk; establishing standards; developing applications which will directly support the receipt, review,
tracking, and archiving of industry submissions; and provide analytical tools to support the review
process. This proposed approach will provide the most immediate benefit to shortened review times
and will be funded with PDUFA fees.

Impact: The drug and biotechnology industries will continue to see progress in meeting the PDUFA
review time goals. Through information systems design, the review processes will be clarified and
managed for greater consistency, better documentation, and improved efficiencies. As standards are
developed and implemented, the regulated industry will achieve greater internal efficiencies in its
development and formatting of regulatory submissions and significant savings on paper record
generation, handling, storage, and retrieval.

 

32 Reinventing Drug and Medical Device Regulations

Implementation and Timeline: Over the next 12 to 24 months, FDA’s drug review programs will
complete the upgrade of reviewer hardware and software and networking capability, and develop and
implement a number of automated applications (e. g., electronic Establishment Licensing
Applications, electronic lot release testing, gene therapy patient registry, pre—approval inspections,
and other pilots). The program offices will also begin selecting and implementing electronic data

interchange standards which are acceptable to the regulated industry and to regulatory authorities in
Europe and Japan.

 

Reinventing Drug and Medical Device Regulations 33

Operational and Administrative System for Import Support (OASIS)

Background: FDA is responsible for ensuring that the imported products it regulates meet the same
safety, efficacy, and quality standards as products produced domestically. Importers must have FDA
clearance for each shipment before it can enter the United States. The number of imported shipments
of FDA-related products has doubled in the 19905 to more than 2 million per year.

FDA’s traditional process for clearing import shipments has required that importers prepare and
submit a prescribed form, with invoices and any other documentation attached, for each shipment.
FDA staff reviews the documentation, decides whether to admit the shipment in the country, and
sends a paper response back to the importer. This paper process often takes days to complete, and
delays in clearing shipments are a serious problem for importers. Reductions in government resources
and increasing workload make it clear that FDA’s traditional paper system for clearing imports must
be improved. Automation of the process is essential.

Proposal and J ustification: FDA has begun developing a phased information systems initiative to
support automation of the import clearance process. Phase I was implemented nationwide in 1994. It
operates in conjunction with the Customs Service, with which import brokers are already on line.

The new FDA system enables the import broker to enter additional FDA-specific data, which pass
through a screening process that recognizes what the product is, country of origin, producer, and
shipper. FDA has developed a set of decision criteria based on its experience with import risks and
surveillance-sampling techniques to determine whether the shipment is admissible, or whether FDA
needs to look at it more closely.

Within minutes, the broker receives a return message, advising either that FDA has cleared the
shipment or that further examination testing is needed. Shipments in which FDA has no further
interest can move immediately into commercial channels.

FDA will proceed with implementing Phase II of the Operational and Administrative System for
Import Support (OASIS). Whereas Phase I automated the initial submission and screening of import
data from import brokers, Phase II will automate FDA’s internal handling of those import transactions
requiring FDA review beyond the initial screening. The Phase II system will provide automated links
between FDA laboratories and inspection and compliance units.

FDA will achieve national uniformity in tracking and enforcement of suspect products and a more
rapid final response to brokers on import disposition. In addition, full implementation of the OASIS

 

34 Reinventing Drug and Medical Device Regulations

system will permit electronic links with other FDA data bases that must be accessed during the import
entry review process. For example, FDA must confirm that an imported drug has an effective NDA or
an IND, that medical devices are approved and have been properly registered, and that manufacturers
of low-acid canned foods have registered.

Impact: In February 1995, 67 percent of all shipments processed in FDA’s electronic system received
final clearance within minutes. Import brokers need not prepare and submit to FDA any paperwork
for these shipments that are cleared electronically. Importers’ costs for holding up shipments awaiting
FDA clearance are reduced markedly. Perishable shipments no longer risk spoilage from clearance
delays.

The American consumer is the major beneficiary. The freeing up of FDA resources that would have
been required to handle and review the paperwork submitted by importers for all shipments allows the
Agency to focus its attention on those shipments that may not conform to required standards.
Implementation of the full OASIS system will speed the clearance of the one-third of shipments that
require some form of FDA detailed review. FDA can target its resources on those import shipments
that are suspected of not meeting quality requirements.

Implementation and Timeline: The full system will take several more years to complete, assuming
funding is available. FDA is seeking user fees, to be paid by the importers, to fund full development
and implementation of the OASIS system.

 

Reinventing Drug and Medical Device Regulations 35

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