1997 Winner
U.S. Department of Health & Human Services
Innovations in American Government Awards
Innovations in American Government Awards
The Food and Drug Administration (FDA) is responsible for commerce that represents roughly 25 cents out of every dollar of spending in the U.S. Perhaps the most important and controversial aspect of the FDA's regulatory responsibilities lie in its oversight of the prescription drug approval process, including traditional chemical compounds, vaccines, and the growingly important products of biotechnology. For most of the 20th century, FDA certification of safety and efficacy was required before any drug could be introduced, altered, or extended to new uses.
By the 1970s, a "drug lag" had developed. Approval times slowed and a lengthening wait list of new products awaited FDA clearance. By 1992, the median approval process extended to over two years, often with specific cases taking far longer. Drawing increasingly bitter criticism from drug companies and patient advocacy groups, the "drug lag" came to be seen as serious setback to the development and dissemination of new "breakthrough" medicines. 
User fees, monies paid by pharmaceutical companies to facilitate faster approval, were seen as a solution to this problem. In 1992, negotiations among industry, Congress, and the FDA and its parent department, Health and Human Services, created the Prescription Drug User Fee Act (PDUFA). The PDUFA system creates a basic bargain: user fees are exchanged for faster review.
Under the program, the FDA accepted performance goals of 12 months for the review of standard new drug applications and six months for priority applications. The FDA was required to meet these goals 55 percent of the time in 1994 and increase its performance to 95 percent of the time in 1997. The fees set under PDUFA and adjusted yearly for inflation are roughly $200,000 for a new product application and $13,000 per year while the product is on the market. The FDA, in the first three years of PDUFA's existence, received $330 million in supplemental funding from the fees, enabling an increase of over 600 employees to the FDA's full-time staff and comparable increases in equipment and facilities budgets. Further, to ensure that the deadlines were met, the FDA instituted several internal reforms including management reforms, formal tracking timelines, and intensive interaction with the drug companies at all levels. 
The results of the program were nothing short of astonishing. The FDA exceeded the final performance goals in the first year of performance tracking. Instead of 90 percent reviewed on time in 1997, the department managed to achieve an average of 95 percent on time in 1994. PDUFA also included a provision that if a drug company's approval application was found to be incomplete or in error, the FDA's clock would not start, and the application could be returned to the applying company. This creation of private accountability for the application resulted in the fact that fewer than 5 percent of applications are now returned.
The most important outcome of this program has been the accelerated expansion of the therapeutic options available to doctors and patients and consequently better medical outcomes, including reduced mortality rates. In 1997, The New York Times reported that "AIDS Deaths Drop[ped] 19% in the U.S., In Part from Newer Treatment," a treatment approved in less than one year. Other examples include Infanrix, a superior infant vaccine for diphtheria, tentanus, and whooping cough, which was approved for market in only 12 months. Another drug, Pulmozym, the first treatment for cystic fibrosis, is on the market after a nine-month review. In sum, the collaboration between the FDA and drug companies has improved the efficiency in delivery time of medicine, resulting in an improvement of public heath in the U.S.
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