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FDA’s Holiday Present from Congress: Bipartisan Reforms to the Accelerated Approval Framework, Long-Awaited Cosmetic Modernization, and Expansion of Certain Existing Programs
Tuesday, January 10, 2023

On December 29, 2022, President Biden signed into law the Consolidated Appropriations Act for 2023, colloquially referred to as the omnibus funding bill, that includes a similarly expansive and diverse piece of legislation called the Food and Drug Omnibus Reform Act (FDORA). This latest addition to the rich history of amendments to the Federal Food, Drug, and Cosmetic Act (FD&C Act) authorizes a variety of new and important changes to the laws governing therapeutic products and medical devices, clinical trials, and (in a much rarer occurrence) cosmetics and other personal care products. Many of the statutory changes had been requested by the Food and Drug Administration (FDA), whether formally via budget requests or more informally via its leadership. The agency also received an increase of $226 million (or 6.5%) in its congressional appropriation for fiscal year 2023 as compared to its funding level for fiscal year 2022, suggesting continued bipartisan support for its public health mission.  

FDORA enacts many of the amendments to the FD&C Act that were being shaped and negotiated earlier in 2022 as part of Congress’s reauthorization of the FDA’s human medical product user fee programs, which takes place every five years (see our prior post here). Certain weighty measures that remained controversial at the end of the 117th Congress – like regulatory reforms to diagnostic tests and dietary supplements – did not make it into the final bipartisan funding package.

This post summarizes some of the most significant changes made by Congress to the FD&C Act through the vehicle of the 2023 omnibus legislation.

Accelerated Approval Reforms

Agency leadership has been advocating for some time, both publicly and privately, for stronger authorities from Congress when it comes to accelerated approval of human drugs and biologics. In particular, although an accelerated approval is generally contingent on the sponsor’s diligent conduct of a confirmatory clinical trial to verify the product’s clinical benefits, the reality is that it often takes many years for the confirmatory trial to be completed. Sponsors also may be unwilling to remove their products from the market expeditiously even when the trial does not verify the purported clinical benefits.

FDA sought to mitigate potential risks to patients from ineffective drugs remaining on the market by requesting various updates to the FD&C Act language that authorizes the agency to grant accelerated marketing approval to certain products for serious or life-threatening diseases or conditions. Although not everything the agency requested made it into the final legislation, FDORA does amend the FD&C Act to:

  • allow FDA to require the sponsor to have its confirmatory clinical trial underway before accelerated approval is awarded;

  • require sponsors of products granted accelerated approval to submit progress reports on their post-approval studies to FDA every six months (until the mandated study is completed). The agency will also have to make the information from such progress reports publicly available on its website; 

  • give FDA the option of using expedited procedures to withdraw approval after the confirmatory trial fails to verify the product’s clinical benefit; and

  • require the agency to publish on its website “the rationale for why [a post-approval study] is not appropriate or necessary” whenever it decides not to require such a study upon granting accelerated approval; and

  • order the creation of an intra-agency Accelerated Approval Council, with members from many different FDA constituencies, to “ensure the consistent and appropriate use” of accelerated approval across the agency, including through direct engagement with product review teams that may include training and development of guidance. The Council is also expected to meet at least three times a year and to publish an annual report detailing its activities.

The enacted version of FDORA does not include previous congressional proposals to require specific labeling information regarding the nature of a drug’s accelerated approval and disclosing that studies are ongoing to verify clinical benefit.

Modernization of Federal Cosmetic Laws

Updating the federal oversight regime for cosmetics had been a bipartisan priority for several years and was a long time coming given the anemic nature of existing cosmetic provisions in the FD&C Act. Accordingly, the omnibus funding bill includes the Modernization of Cosmetics Regulation Act of 2022, or MOCRA, which we summarized separately here.

The majority of MOCRA’s amendments to the FD&C Act become effective one year after its enactment, which will be December 29, 2023, so members of the cosmetic industry (as well as entities that do business with them) have some time to consider their new obligations and to develop the necessary systems to ensure compliance. Affected entities should not delay, however, in the event that creating new policies and procedures and training the appropriate employees takes longer than anticipated. Failure to comply with the self-executing requirements of facility registration, product listing, and adverse event recordkeeping and reporting will become prohibited acts under the FD&C Act, subject to FDA’s typical enforcement authorities.  

Outside of MOCRA itself, the omnibus also included an anti-counterfeiting bill called the INFORM (Integrity, Notification, and Fairness in Online Retail Marketplaces) Consumers Act. Per the bill’s Senate co-sponsors, these new federal provisions require any “online retail marketplaces that include third-party sellers of consumer products to verify the identity of ‘high-volume third-party sellers,’ which will help deter the online sale of counterfeit goods by anonymous sellers and prevent organized retail crime rings from stealing items from stores to resell those items in bulk online.” Given the rampant, and increasing, prevalence of counterfeit cosmetics within U.S. streams of commerce, the INFORM Consumers Act had bipartisan backing and was also generally supported by cosmetic, personal care, and consumer health stakeholders.

Clinical Trial Diversity

In recent years, participants from all corners of the clinical research enterprise have converged on the critical need for racial, ethnic, gender, and social diversity in human clinical research. The ethical and scientific import of those goals are heightened when investigational medicines and devices are being tested for subsequent roll-out to the entire U.S. population. Although the agency has encouraged and, in some cases, requested that sponsors enroll more diverse patient populations in late-stage clinical trials of FDA-regulated products, it did not have authority to mandate such diversity. That has changed with the passage and enactment of FDORA.   

The amended law will require the development and submission of a diversity action plan for each phase 3 clinical trial or any other “pivotal study” of a new drug or medical device. Actions plans must include the sponsor’s goals for enrollment, the underlying rationale for those goals, and an explanation of how the sponsor intends to meet them.

In addition to the requirements applicable to drug and device developers, FDA has also been directed by Congress to issue new guidance on diversity action plans and to host at least one public workshop to “solicit input from stakeholders on increasing the enrollment of historically underrepresented populations in clinical studies and encouraging clinical study participation that reflects the prevalence of the disease or condition among demographic subgroups.” The public workshop must be convened within one year of enactment, so it should take place sometime during calendar year 2023.

New Exemptions, Technical Amendments…and So Much More!

FDORA also includes an abundance of other changes to FDA’s governing statute. Among other updates, the recently enacted law:  

  • creates a new option for a qualified small business, defined as an entity that reported $1 million or less of gross receipts or sales in its most recent federal income tax return, to apply for a waiver of its annual device establishment registration fee. The authority for FDA to grant this waiver does not become effective until fiscal year 2025 (beginning October 1, 2024), but it is nonetheless expected to be a boon for eligible small businesses as the annual device establishment registration fee continues to increase on a year-over-year basis (for example, the current FY 2023 fee is $6,493 whereas for FY 2022 it was $5,672);

  • requires holders of approved biologics license applications to submit a one-time marketing status report to FDA within 180 days of FDORA’s enactment (i.e., by June 27, 2023) confirming the accuracy of information about their products listed in the Purple Book, and thereafter to promptly notify the agency whenever a licensed biological product is withdrawn from the market. These amendments mirror what was implemented in 2017 for approved human drugs as part of that year’s user fee package (see our prior post here);

  • extends the Qualified Infectious Disease Product program to therapeutic biological products, because previously only chemical entities approved via New Drug Applications were eligible for the incentives available under that program;

  • commands the agency to conduct therapeutic equivalence (TE) evaluations for drugs approved via the 505(b)(2) pathway when they are pharmaceutical equivalents of their respective listed drugs, and to make a TE determination by the time of approval or within six months after approval. Currently, FDA prioritizes TE determinations for traditional generic drugs, which can be substituted at the time of dispensing or administration under controlling state laws only when they have been deemed therapeutically equivalent to the prescribed product. In contrast to generic drug applicants, 505(b)(2) applicants have to petition for a TE evaluation after approval – and FDA often delays such an evaluation for months or even years, if it gets done at all. This new congressional directive for affirmative agency evaluation is intended to facilitate patient access to potentially lower-cost follow-on 505(b)(2) drug products that are determined to be therapeutically equivalent to a potentially higher-cost pioneer product that is relied upon by the 505(b)(2) applicant;       

  • mandates the creation of an Emerging Technology Program to “support the adoption of, and improve the development of, innovative approach to drug design and manufacturing,” as well as the establishment of National Centers of Excellence in Advanced and Continuous Pharmaceutical Manufacturing. The agency has been encouraging adoption of new manufacturing technologies for medical products for the past several years, such that these new congressional directives and grant authorities are expected to further accelerate those activities;

  • directs medical device developers of “cyber devices” – meaning devices that include software, connect to the internet, and contain any technological features that could be vulnerable to cybersecurity threats – to develop plans to “monitor, identify and address” cybersecurity vulnerabilities of marketed devices “in a reasonable time,” among other things, with such plans required to be submitted to FDA as part of every new product application for a cyber device (beginning 90 days after enactment of these amendments, or March 29, 2023);

  • codifies the elements of FDA’s “Communications with Payors” guidance that was finalized in 2018 and extends to medical devices the existing statutory language that allows the sharing of health care economic information about approved products with certain sophisticated entities (see 21 U.S.C. § 352(a)). The relevant section of the omnibus, entitled “Facilitating Exchange of Product Information Prior to Approval,” also explicitly creates a safe harbor for drug and device developers to discuss unapproved medical products, and unapproved uses of authorized products, with payors, formulary committees, and similar entities. Although FDA had provided guardrails for how to share information on unapproved products or uses with payors in its 2018 guidance (and had recognized in the policy document that those criteria would apply to devices as well as to drugs), many stakeholders remained hesitant to engage in such activities in the absence of clear statutory language to that effect. These important amendments to the FD&C Act strengthen the legal basis for such communications; they also expand upon changes made to the original health care economic information safe harbor in December 2016 as part of the 21st Century Cures Act (which we blogged about at the time here); and   

  • eliminates provisions in both the FD&C Act and the Public Health Service Act that required animal testing as part of the data submitted for new drug and biosimilar marketing applications, respectively, a legal reform that the advocacy group Animal Wellness Action called “the biggest policy development in Congressional history in the quest to replace animal testing with morally and scientifically superior non-animal methods.” Notably, the definition of “nonclinical test” added to the FD&C Act as part of this amendment references a slew of modern techniques such as cell-based assays, organ chips, and computer modeling.  

As this high-level overview shows, FDA has many new authorities to implement in the coming years, in some cases through notice-and-comment rulemaking but in many others through non-binding guidance for industry. It also has received numerous new directives from Congress to engage with certain stakeholders via meetings or guidance, and to make more information available to the public on its website or otherwise. Both industry and the agency have a lot of exciting and transformative work ahead of them as medical and consumer products advance further into the 21st century, and we’ll continue to monitor and report on key developments.

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