Testimony of Dr. Diana Zuckerman, President of the National Center for Health Research House of Representatives Small Business Committee Hearing Stifling Innovation: Examining the Impacts of Regulatory Burdens on Small Businesses in Healthcare

May 8, 2024

Chairman Williams, Ranking Member Velazquez, and distinguished members of the Committee:

I am Dr. Diana Zuckerman and I am president of the National Center for Health Research, a public health think tank here in Washington.  I was trained as a post-doctoral fellow in epidemiology and public health at Yale Medical School, was on the faculty of Vassar and Yale, and a research director at Harvard before coming to Washington, working as a Congressional investigator on FDA issues at what’s now the House Committee on Oversight and Accountability, was in charge of health legislation at the Senate Veterans Affairs Committee, and also served in the White House Office of Science and Technology Policy.  While in my current position, I’ve served on the Medicare Evidence Development and Coverage Advisory Committee (MEDCAC); been a fellow at the University of Pennsylvania Center for Biomedical Ethics; and trained physicians, patient advocates, and journalists to understand medical research findings as well as FDA and CMS policies.  

Thank you for the opportunity to be here today to share the views of the National Center for Health Research.  Our center does not accept funding from any companies with a financial interest in our work.

As a scientist, a policy expert, and a cancer survivor, I look for common ground.  I respect the important work of the other panel members and this Committee, and I think we can all agree that we want small businesses to succeed and to provide the best possible products.  In medicine, let’s agree that we want innovation that is defined as better products and better treatments that have meaningful benefits to patients – living longer, spending less time in hospitals, and having a better quality of life.  

The FDA makes it very clear that it does not expect or require absolute certainty when it approves a drug or medical device.  I’ll start with 2 examples. 

A few weeks ago, a company named Amylyx reported that its one and only drug – Relyvrio– did not work.  FDA had granted approval to the drug to treat ALS, also known as Lou Gehrig’s disease, even though the company ignored FDA’s advice to complete their clinical trial before requesting approval. FDA scientists and Advisory Committee members warned that the evidence was weak and that the drug might not work at all, but FDA approved it anyway because ALS is a terrible disease and the agency wanted to be flexible since patients hoped that the drug might possibly work.  The drug cost $158,000 per patient per year even though it was a combination of two much less expensive ingredients (one is a dietary supplement sold on Amazon for a few dollars). Since the drug was intended to slow deterioration rather than improve health, it was not obvious to patients that the drug was not working. The company promised to continue studying the drug compared to placebo and eventually reported that patients taking the drug were no better than patients on placebo. Meanwhile, last year the company had $380 million in revenues and the two young men who co-founded the company paid themselves $7.4 million each. When Relyvrio was taken off the market, the stock dropped 80%, and 70% of the staff were let go.

Another example is Sarepta, a company that submitted its only product for FDA approval based on data for only 12 patients and no placebo group. Despite the lack of evidence that Exondys51 for Duchenne Muscular Dystrophy slowed the deadly disease, FDA granted accelerated approval in 2016 because as a small business Sarepta did not have the capital to continue the research unless they could start selling the drug.¹ The company promised a larger study would be completed in 2020, but it’s now 2024 and we’re still waiting for any credible evidence that it works. The price of the drug has increased from about $400,000 per patient per year to over $1 million per patient per year. Families went broke even paying the co-pays, so Medicaid has footed most of the bill.  

These examples show that the FDA is sometimes very helpful to small businesses, ignoring the agency’s own requirements to give companies a chance to succeed. Research shows that many large companies have also benefited from FDA “flexibility,” getting drugs or devices approved that have never been proven to be safe or effective. For example, our Center analyzed research on 18 unproven cancer drugs that had been approved based on short-term preliminary data such as tumor shrinkage, and we found that 4-8 years later 17 of the 18 cancer drugs had no clear evidence that patients lived longer or had a better quality of life.² 

In my written testimony I provided examples of the research evidence and the lower user fees that FDA charges for small medical device companies, and how Congress has passed user fee legislation that helps level the playing field for small companies. I’d be glad to answer any questions.

The bottom line is that we all want medical products to be safe and effective.  Small businesses will have the resources to meet the FDA’s evidence standards for many types of medical products, but not all. Some small businesses will not be able to raise the capital to provide the kind of evidence that patients and health professionals need, and that’s why many will partner with larger companies on novel medical products, or sell their companies to larger companies.

What’s the alternative? If the FDA reduces the burden on companies by not requiring them to provide clear evidence that a new product is safe and effective, that increases the burden on patients, families, and physicians because we must make life-changing and life-saving medical decisions without the facts we need to make the decisions that are best for us and our patients.

A study of hundreds of new drugs that FDA approved but required to do post-market studies to confirm that they were safe and effective found that more than two-thirds of those required studies were late, especially those for treatments for children for various treatments.³ These and similar studies indicate that the problems with confirming that new drugs are safe and effective are not unique to small companies but these problems can’t be solved by lowering regulatory standards. 

For drugs, the FDA usually requires at least one clinical trial that shows that the drug has benefits that outweigh the risks compared to placebo.  FDA does not require the new product to be better than older products that are already on the market, even if those older products are much less expensive.  And for numerous products, FDA doesn’t even require that the new product has meaningful health benefits, and instead only asks that there is evidence that the new drug probably will have health benefits.  In other words, FDA doesn’t require absolute certainty or even a high level of certainty, but rather a subjective judgment that there is a reasonable probability of benefit.

For medical devices, the standards are even less rigorous:  the FDA standard is a
“reasonable assurance of safety” and a “reasonable assurance of effectiveness.”  Approximately 98% of new devices are cleared for market without any clinical trials and without any clear evidence of safety or effectiveness, as long as the FDA considers the new device to be “substantially equivalent” to a device legally on the market.  And the agency’s definition of substantial equivalence does not require the new device – even an implanted life-saving device – to be made of the same materials, be the same shape, or have the same mechanism of action.  For example, the robotic surgery systems that are widely used today were allowed on the market as substantially equivalent to traditional scalpels and other surgical tools, even though the robotic systems are in other ways very different from those tools.

What about the other 2% of medical devices – the highest risk devices that require clinical trials?  High risk devices that can either save a life or cause a death — such as an artificial heart — are only required to submit one clinical trial (rather than 2 that are traditionally required for drugs) and these studies are very rarely randomized double-blind clinical trials, even though that is considered the gold standard for testing the benefits of medical products. And yet, a recent study of a national random sample of physicians found that most believed that FDA approval decisions should be based on 2 randomized double blind clinical trials and many did not realize that the FDA often did not require that evidence.⁴

FDA Has Reduced Regulatory Burdens on Small Businesses

Given the implications for the health of all of us when we are  patients, and for the health of our friends and loved ones, I am comfortable with the FDA being careful not to unduly burden small businesses, but I want to be able to trust that the medical products – drugs and devices – made by small businesses are just as safe and effective as those made by the largest companies.  If they aren’t, any benefits to a small business will be short-lived, as they were with Relyvrio.

There are some specific FDA policies that help reduce regulatory burdens on small businesses. User fee legislation is negotiated by FDA and industry every 5 years and then passed by Congress. The negotiations are behind closed doors but reportedly focus on the fees that companies must pay the FDA when they submit applications to the FDA average timeline for FDA reviews.  In addition, user fee legislation has an important benefit for small businesses – it requires the FDA to regularly meet with industry staff throughout the application process to answer the applicants’ questions and help ensure that the applicant has the information necessary for a successful application.  Such meetings are required regardless of the size of the company, and that helps to level the playing field for smaller companies and start-ups that otherwise would not have access to that level of specific advice about their application materials. 

User fees also provide lower fees and waivers for small businesses.  Device companies must pay a registration fee of $7,653, but the FDA waives all user fees for small businesses with revenues below $30 million when they submit their first medical device application.  Equally important, the user fee for most device applications submitted by businesses with revenues below $100 million only cost $5,800 this year, since that is the price that medical device companies negotiated with the FDA and Congress passed in MDUFA, the medical device user fee legislation.  Here are FDA’s device user fees for different types of applications in FY 2024 taken directly from www.FDA.gov:

Application Type	Standard Fee	Small Business Fee†
510(k)‡	$21,760	$5,440
513(g)	$6,528	$3,264
PMA, PDP, PMR, BLA	$483,560	$120,890
De Novo Classification Request	$145,068	$36,267
Panel-track Supplement	$386,848	$96,712
180-Day Supplement	$72,534	$18,134
Real-Time Supplement	$33,849	$8,462
BLA Efficacy Supplement	$483,560	$120,890
30-Day Notice	$7,737	$3,869
Annual Fee for Periodic Reporting on a Class III device (PMAs,PDPs, and PMRs)	$16,925	$4,231

 

Drug user fees are much higher because applications are much more complex and require more staff resources.  However, FDA allows waivers for small businesses, defined as “an entity that has fewer than 500 employees, including employees of affiliates, and that does not have a drug product that has been approved under a human drug application and introduced or delivered for introduction into interstate commerce.” Similarly, FDA may grant a fee waiver for applications meeting small business applications for biologics.

Conclusions

Good evidence for medical products requires resources. Small businesses will have the resources to meet the FDA’s evidence standards for many types of medical products, but if we want these products to be safe and effective enough to help patients, some small businesses will not be able to raise the capital to provide the kind of evidence that patients and health professionals need to make informed decisions.  That is the reason why small businesses often partner with larger companies on novel medical products.  However, when the FDA reduces the burden on companies to provide clear evidence that a product is safe and effective, that increases the burden on patients and physicians to make life-changing and life-saving medical decisions without the facts they need to make the decisions that are best for them.

References: 

[1] Bendicksen, L., Zuckerman, D. M., Avorn, J., Phillips, S., & Kesselheim, A. S. (2023). The Regulatory Repercussions of Approving Muscular Dystrophy Medications on the Basis of Limited Evidence. Annals of Internal Medicine, 176(9), 1251–1256. https://doi.org/10.7326/M23-1073

[2] Rupp, T., & Zuckerman, D. (2017). Quality of Life, Overall Survival, and Costs of Cancer Drugs Approved Based on Surrogate Endpoints. JAMA Internal Medicine, 177(2), 276–277. https://doi.org/10.1001/jamainternmed.2016.7761

[3] Brown, B. L., Mitra-Majumdar, M., Darrow, J. J., Moneer, O., Pham, C., Avorn, J., & Kesselheim, A. S. (2022). Fulfillment of Postmarket Commitments and Requirements for New Drugs Approved by the FDA, 2013-2016. JAMA Internal Medicine, 182(11), 1223–1226. Advance online publication. https://doi.org/10.1001/jamainternmed.2022.4226

[4] Kesselheim, A. S., Woloshin, S., Lu, Z., Tessema, F. A., Ross, K. M., & Schwartz, L. M. (2019). Physicians’ Perspectives on FDA Approval Standards and Off-label Drug Marketing. JAMA Internal Medicine, 179(5), 707–709. https://doi.org/10.1001/jamainternmed.2018.8121

 

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