FDA allows sponsors to spread out costs in revised IND charging guidance
Regulatory News | 23 August 2022 |
The US Food and Drug Administration (FDA) on Monday issued draft guidance providing advice to sponsors about when and how they can charge for an investigational new drug in a clinical trial or under expanded access. If finalized, the guidance would supersede a 2016 final guidance on the topic; it also addresses new stakeholder questions that have been asked of the agency since the final guidance was issued.
FDA first issued draft guidance on charging for investigational new drugs under an investigational new drug application (IND) in 2013 in response to stakeholder questions about a 2009 final rule that revised FDA’s regulations on when patients can be charged for an investigational treatment. FDA says it received additional questions from stakeholders since that guidance was finalized in 2016, and the newly issued draft guidance addresses those questions through several clarifications and three newly added questions related to cost recovery calculations.
Among the changes from the 2016 version, the new draft guidance offers additional recommendations on the need to submit a statement by an independent certified public accountant, as well as advice on the distribution of manufacturing, administrative or monitoring costs from the first year over the anticipated duration of an expanded access IND protocol to help spread out such costs for patients.
While both versions of the guidance require that the certified public accountants relied on for statements not be employed by the company seeking to charge for an investigational drug, the new draft guidance now clarifies that the accountant must also be “qualified to make the required determinations for charging.”
Under FDA’s charging regulations, sponsors may only recover “direct costs associated with making the drug available to the patient,” including costs related to manufacturing the drug at the site of drug delivery or costs to acquire the drug from another source, and direct costs to ship and handle the drug.
The agency also notes that for intermediate-size patient publication expanded access INDs or protocols, as well as treatment INDs or protocols, sponsors may recover costs associated with monitoring, IND reporting requirements and other administrative costs “directly associated with the expanded access use.” This extends costs paid by a sponsor to a third party to administer larger expanded access INDs and protocols. “FDA recommends that the sponsor disclose to the patients any relationship it may have with the third party. If any costs may be the responsibility of the patient, this information must be included with the informed consent document,” FDA explains in the new draft guidance.
Since the 2016 guidance was released, FDA received questions about whether sponsors can spread out the cost of their IND. In the new draft guidance, the agency addresses the issue by adding three more questions and answers on cost distribution. In general regulators say sponsors can spread out the cost of their IND over the span of the study, as costs are often highest in the first year.
FDA now offers further clarification that sponsors of expanded access INDs who seek to charge patients the same amount they are charged to obtain a drug from a third party do not need to submit a statement that an independent certified public accountant has reviewed and approved the cost calculation. FDA explains that when such amounts are the same, “there is no calculation of cost made by the sponsor for an independent certified publica accountant to approve.” However, FDA notes that the expanded access sponsor should include a copy of the receipt from the third party that provided the drug in their justification for the amount charged.
The draft guidance also lays out explicitly that sponsors can spread out the monitoring cost of their IND over the duration of the trial or protocol rather than the first year of the treatment to reduce the per patient cost difference those treated earlier in the trial versus those treated later.
“The costs associated with monitoring the program for an intermediate or treatment IND and other administrative startup costs may be higher in the first year and may be expected to decrease in subsequent years,” the agency writes. “If all the additional costs in the first year are charged to the patients who will be receiving the drug in the first year, they may have to pay a higher price for the drug compared to patients receiving it in subsequent years.”
However, FDA notes that cost amortization for such cost distribution plans should be based on standard accounting practices which are reviewed and approved by an independent certified public accountant.
“Regardless of whether an amortization plan is included in the request and approval to charge, the charging authorization still expires no later than 1 year from authorization and sponsors must still submit a request to reauthorize charging if they wish to continue charging after the expiration of the initial authorization period,” the agency adds.
Similarly, FDA says it is also okay to spread the cost of manufacturing the IND over the span of the trial or protocol since the cost in the first year may be disproportionately higher.
“If all the additional costs of setting up the manufacturing process in the first year are charged to the patients who will be receiving the drug in the first year, they may have to pay a higher price for the drug compared to patients receiving it in subsequent years,” the agency notes. “The sponsor may prefer to distribute one-time costs associated with setting up the manufacturing process among all patients who are expected to participate in the IND or protocol, rather than among first-year patients, to reduce the per patient cost difference between patients treated earlier and patients treated later.”
FDA
FDA first issued draft guidance on charging for investigational new drugs under an investigational new drug application (IND) in 2013 in response to stakeholder questions about a 2009 final rule that revised FDA’s regulations on when patients can be charged for an investigational treatment. FDA says it received additional questions from stakeholders since that guidance was finalized in 2016, and the newly issued draft guidance addresses those questions through several clarifications and three newly added questions related to cost recovery calculations.
Among the changes from the 2016 version, the new draft guidance offers additional recommendations on the need to submit a statement by an independent certified public accountant, as well as advice on the distribution of manufacturing, administrative or monitoring costs from the first year over the anticipated duration of an expanded access IND protocol to help spread out such costs for patients.
While both versions of the guidance require that the certified public accountants relied on for statements not be employed by the company seeking to charge for an investigational drug, the new draft guidance now clarifies that the accountant must also be “qualified to make the required determinations for charging.”
Under FDA’s charging regulations, sponsors may only recover “direct costs associated with making the drug available to the patient,” including costs related to manufacturing the drug at the site of drug delivery or costs to acquire the drug from another source, and direct costs to ship and handle the drug.
The agency also notes that for intermediate-size patient publication expanded access INDs or protocols, as well as treatment INDs or protocols, sponsors may recover costs associated with monitoring, IND reporting requirements and other administrative costs “directly associated with the expanded access use.” This extends costs paid by a sponsor to a third party to administer larger expanded access INDs and protocols. “FDA recommends that the sponsor disclose to the patients any relationship it may have with the third party. If any costs may be the responsibility of the patient, this information must be included with the informed consent document,” FDA explains in the new draft guidance.
Since the 2016 guidance was released, FDA received questions about whether sponsors can spread out the cost of their IND. In the new draft guidance, the agency addresses the issue by adding three more questions and answers on cost distribution. In general regulators say sponsors can spread out the cost of their IND over the span of the study, as costs are often highest in the first year.
FDA now offers further clarification that sponsors of expanded access INDs who seek to charge patients the same amount they are charged to obtain a drug from a third party do not need to submit a statement that an independent certified public accountant has reviewed and approved the cost calculation. FDA explains that when such amounts are the same, “there is no calculation of cost made by the sponsor for an independent certified publica accountant to approve.” However, FDA notes that the expanded access sponsor should include a copy of the receipt from the third party that provided the drug in their justification for the amount charged.
The draft guidance also lays out explicitly that sponsors can spread out the monitoring cost of their IND over the duration of the trial or protocol rather than the first year of the treatment to reduce the per patient cost difference those treated earlier in the trial versus those treated later.
“The costs associated with monitoring the program for an intermediate or treatment IND and other administrative startup costs may be higher in the first year and may be expected to decrease in subsequent years,” the agency writes. “If all the additional costs in the first year are charged to the patients who will be receiving the drug in the first year, they may have to pay a higher price for the drug compared to patients receiving it in subsequent years.”
However, FDA notes that cost amortization for such cost distribution plans should be based on standard accounting practices which are reviewed and approved by an independent certified public accountant.
“Regardless of whether an amortization plan is included in the request and approval to charge, the charging authorization still expires no later than 1 year from authorization and sponsors must still submit a request to reauthorize charging if they wish to continue charging after the expiration of the initial authorization period,” the agency adds.
Similarly, FDA says it is also okay to spread the cost of manufacturing the IND over the span of the trial or protocol since the cost in the first year may be disproportionately higher.
“If all the additional costs of setting up the manufacturing process in the first year are charged to the patients who will be receiving the drug in the first year, they may have to pay a higher price for the drug compared to patients receiving it in subsequent years,” the agency notes. “The sponsor may prefer to distribute one-time costs associated with setting up the manufacturing process among all patients who are expected to participate in the IND or protocol, rather than among first-year patients, to reduce the per patient cost difference between patients treated earlier and patients treated later.”
FDA
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