Pharmacovigilance Fees?

Oct 17, 2012

Pharmacovigilance, Drug Safety and Regulatory Affairs Author & Expert

A new issue has arisen that is being much talked about in the European Union but less so in the US, namely fees for pharmacovigilance activities paid to the health agencies.

Until PDUFA arose 20 years ago there were basically no fees or taxes in the US (or elsewhere) required to be paid by pharmaceutical companies (sponsors, MA holders) to the FDA or other health agencies.  In the 1990s fees started being levied in the US and elsewhere related mainly to NDA/MA submission and maintenance.  Now, the idea of fees for “routine” and “non-routine” drug safety/pharmacovigilance (PV) work is being put in place.

Leading the charge is the European Union.  With the new 2010 requirements and the clarifications and release of final and draft Guidances in 2012, a new fee schedule has been proposed.  In September 2012 the EMA issued a concept paper for public consultation entitled “Introduction of Fees to be Charged by the EMA for Pharmacovigilance”. http://ec.europa.eu/health/human-use/pharmacovigilance/developments/index_en.htm

This document contained a lengthy justification for the proposed new fees.  Basically the document notes that in 2008 the EU decided that all costs related to PV activities are to be recouped through fees.  The fees proposed then covered PSUR assessment, post-authorisation safety studies and RMP assessments and were proposed to run from 6,100€ to 12,100€ (about $9,000 to $15,000) each. Note that there are already fees for pre-approval activities separate from the PV fees.

There is a long discussion on how the fees will be applied and whether smaller companies should pay less.  If manufacturers of the same product are able to work together and write a single PSUR covering the multiple manufacturers, the fee can be split among them (with an additional “administration fee”of 500€ per company).

Nonetheless, the proposed fees are as follows:

  • PSUR (PBRER) review of a product authorized for less than two years: 40,150€ (about $52,000)
  • PSUR (PBRER) review for a product authorized more than two years ago: 80,300€ (about $105,000)
  • A PV service fee of 1000€ ($1300) per product to cover various other PV functions such as literature review.
  • An assessment fee for PV referrals to the senior EMA committees which will run from 80,3000€ to 267,400 € ($105,000 to $345,000).

These fee proposals have prompted a hue and cry from the industry (including the generics industry from whom PSURs will no longer be required in most cases).  Even the UK government has protested to the EMA that these fees seem excessive (See: UK govt warns EU over pharma industry fee plans at http://www.pharmatimes.com/Article/12-09-25/UK_govt_warns_EU_over_pharma_industry_fee_plans.aspx

Other countries around the world are paying heed and are proposing or establishing fee schedules for PV review functions as a source of income.

In addition, there are fees for PV inspections (as well as other GXP inspections) done by health agencies.   The UK is a major player in this area.  There is a complicated (and almost amusing) fee schedule.  See: http://www.mhra.gov.uk/Howweregulate/Medicines/Licensingofmedicines/Feesformedicinesbloodestablishmentsandbloodbanks/Inspectionfees/index.htm

It reads in part:

The daily rate is £2583 (about $3300):

  • There is a minimum fee of one day.
  • The inspection daily rate is calculated against a standard 7 hour working day (excluding lunch breaks). Therefore the number of days spent on site for fees purposes will be calculated by dividing the number of hours on site by 7. Additional part days of less than 3.5 hours will be charged at half the daily rate and part days in excess of 3.5 hours will be charged at the full daily rate.
  • The daily rate fee includes pre-inspection preparation, travelling time, reporting of inspections and resolving issues. It also incorporates activities such as evaluation of compliance assessment report and other support functions and directly related overheads.
  • For inspections where two (or more) fully qualified inspectors undertake the inspection, the time on site for fees purposes will be the aggregated time for both inspectors. (Author’s note: I think this means that if two inspectors come the fee doubles, three the fee triples etc.).
  • For inspections attended by two or more inspectors, one or more of who is in training, only the cost of one inspector will be charged – the status of the inspectors should be made clear to the company at the start of the inspection.
  • There is also a fee for “Office Based Risk Assessments” of £1812 (about $2200).

This reads like the fare chart in a London or NYC taxi!

So let us now take a hypothetical large pharma company that has 200 products for which PSURs must be submitted.  A rough calculation of this company’s yearly fees to the EU/MHRA would be (in dollars):

30 PSURs for new products (< 2 years) = $1,560,000

170 PSURs for older products = $17,850,000

“PV Service” fee for each product  = $260,000

One PV inspection by 2 inspectors for 5 days = $33,000 plus travel

This approaches $20 million dollars.  This presumes no PV referrals.  The figure would likely be lower some years as not all old products have a PSUR every year (usually every 2.5 years – the new Union Reference List specifies the intervals by product); however, some of the newer products have two PSURs a year.  There are many other NDA/MA maintenance fees in the US, Europe, Australia and elsewhere.

Smaller companies will pay less.

Nevertheless, there are some possible conflicts and issues here:

  • The more PSURs received the greater the fee to the agency.  Will this induce more PSURs or shorter frequencies between PSURs as an income generator? Note that the new Union Reference List may be changed by the EMA at will altering the frequency/duration of PSURs.Does the agency make or lose money reviewing a PSUR?  Obviously, a PSUR for an old product with no clinical trials, few spontaneously reported cases and a few literature reports can be assessed quickly and inexpensively.  Paradoxically, a new product (lower cost PSUR review) that has a toxic safety profile given to a sick patient population may produce many many more SAEs and safety issues for review.  A blockbuster even moreso.  Yet this PSUR, which really does merit a thorough and detailed review is billed at the lower rate.
  • At what point is it worth closing or selling an MA or NDA to avoid these and other fees?
  • Will some companies decide not to submit an MA in the EU as the pricing may be too low to justify the expenses?  Will some companies delay submission until they can make money in some other market to subsidize the EU costs?
  • Will companies refuse to register products in countries where sales will be small, prices low and fees high?
  • As with many things now, harmonization is withering away.  The broad agreement in PV set by ICH that has held since the 1990s is ending.  However, each region or country justifies its own new non-harmonized policies in its own way.  Thus there will now be duplications in work and fees as revenue hungry governments will set review fees even though they do not have the staff or expertise to do serious or credible safety reviews.
  • The fees will increase over time.

So the question will then be, at what point does the entire fee structure prove to be a disincentive to companies (both large and small for different reasons) to study and market new drugs especially as de facto price controls limit revenue.  When will the golden goose be killed? The likely pain will be felt moreso at the smaller companies.  The big blockbuster companies will be able handle this.  The innovative ones less so.

In earlier times, user fees were aimed at smaller segments of the general population that use a particular service (e.g. people taking airplanes or driving on expressways, cigarette smokers etc.).  Now, interestingly, the user fees are being aimed not at the users (people taking medicine) but at the manufacturers supplying the service.  Theoreticians of tax policy will debate the virtues and sins of sales taxes, income taxes, user fees, excise taxes etc. as ways of enhancing or discouraging certain acts and making social policy (e.g. smoking cessation).  How this plays out in the pharma world remains to be seen.   But we should keep in mind Margaret Thatcher’s quote in quite different circumstances: “The trouble with Socialism is that at some point you run out of other people’s money.”