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Part II

Department ofHealth and HumanServicesFood and Drug Administration

21 CFR Part 312 and 316

Charging for Investigational Drugs Underand Investigational New Drug Application;Expanded Access to Investigational Drugsfor Treatment Use; Final Rules

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40872 Federal Register / Vol. 74, No. 155/ Thursday, August 13, 2009/ Rules and Regulations

DEPARTMENT OF HEALTH ANDHUMAN SERVICES

Food and Drug Administration

21 CFR Part 312

[Docket No. FDA2006N0237] (formerlyDocket No. 2006N0061)

RIN 0910AF13

Charging for Investigational DrugsUnder an Investigational New DrugApplication

AGENCY: Food and Drug Administration,HHS.ACTION: Final rule.

SUMMARY: The Food and DrugAdministration (FDA) is amending itsinvestigational new drug application(IND) regulation concerning chargingpatients for investigational new drugs.This final rule revises the charging

regulation to clarify the circumstancesin which charging for an investigationaldrug in a clinical trial is appropriate, toset forth criteria for charging for aninvestigational drug for the differenttypes of expanded access for treatmentuse described in the agencys final ruleon expanded access for treatment use ofinvestigational drugs publishedelsewhere in this issue of the FederalRegister, and to clarify what costs can

be recovered for an investigational drug.This final rule will permit charging fora broader range of uses than wasexplicitly permitted previously.DATES:

This rule is effective October 13,2009.FOR FURTHER INFORMATION CONTACT:

For the Center for Drug Evaluationand Research: Colleen L. Locicero,Center for Drug Evaluation andResearch, Food and DrugAdministration, 10903 NewHampshire Ave., Bldg. 22, rm. 4200,Silver Spring, MD 209930002,3017962270.

For the Center for BiologicsEvaluation and Research: StephenM. Ripley, Center for BiologicsEvaluation and Research (HFM17),Food and Drug Administration,

1401 Rockville Pike, Rockville, MD208521448, 3018276210.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. BackgroundII. Overview of the Final Rule, IncludingChanges to the Proposed Rule

A. General Requirements for ChargingB. Charging in Clinical TrialsC. Charging for Expanded Access to

Investigational Drugs for Treatment UseD. Recoverable Costs

III. Comments on the Proposed Rule

A. Overview of CommentsB. General CommentsC. General Criteria for Charging1. Justification for the Amount To Be

Charged

2. Prior Written Authorization to Charge3. Withdrawal of Authorization to Charge4. Lack of Timeframe for FDA ResponseD. Charging in a Clinical Trial

1. General Comments2. Charging for the Sponsors Own Drug in

a Clinical Trial3. Charging for an Approved Drug

Obtained From Another Entity for Use asan Active Control or in CombinationWith Another Drug

4. Charging for an Approved DrugObtained From Another Entity in aClinical Trial of the Drug

5. Duration of Charging in a Clinical TrialE. Charging for Expanded Access to

Investigational Drugs for Treatment Use1. General Comments2. Increasing Access3. Ethical Considerations4. Non-Interference With Drug

Development

5. Treatment INDs or Treatment Protocols6. 1-Year AuthorizationF. Costs Recoverable When Charging for an

Investigational Drug1. Direct and Indirect Costs2. Recoverable Costs for Expanded Access

Uses3. Supporting Documentation4. Authority to Set Pricing5. Confidentiality6. Effect on Payment Systems (CMS and

Insurance)

7. Collaboration With CMS and theNational Cancer Institute

G. Miscellaneous Comments1. Promotion2. Liability3. Product Labeling4. Analysis of Impact

IV. Legal AuthorityV. Environmental ImpactVI. Analysis of Economic Impacts

A. Objectives of the Final RuleB. The Need for the Final RuleC. Why Allow Charging?D. Baseline for the AnalysisE. Nature of the Impact1. Charging in a Clinical Trial2. Charging for Expanded Access Uses

Described Under Final Subpart I3. Costs Recoverable When Charging for an

Investigational Drug4. SummaryF. Benefits of the Final RuleG. Costs of the Final RuleH. Minimizing the Impact on Small

Entities

I. AlternativesVII. Paperwork Reduction Act of 1995VIII. Federalism

I. Background

In the Federal Register of December14, 2006 (71 FR 75168) (proposed rule),we proposed to amend our IND

regulation concerning charging patientsfor investigational new drugs (former 312.7(d) (21 CFR 312.7(d))) and to addnew 312.8 (charging for investigationaldrugs). Under FDAs previous 312.7(d), FDA could authorizecharging for an investigational drugused in a clinical trial under an IND andfor an investigational drug used in a

treatment protocol or treatment IND: Former 312.7(d)(1) provided that a

sponsor that wished to charge for aninvestigational drug in a clinical trialneeded to provide a full writtenexplanation of why charging wasnecessary for the sponsor to undertakeor continue the clinical trial, e.g., whydistribution of the drug to test subjectsshould not be considered part of thenormal cost of doing business.

Former 312.7(d)(2) describedseveral conditions that needed to be metto charge for an investigational drugused under a treatment protocol ortreatment IND.

Former 312.7(d)(3) provided that asponsor could not commercialize aninvestigational drug by charging a pricelarger than that necessary to recovercosts of manufacture, research,development, and handling of theinvestigational drug.

Former 312.7(d)(4) provided thatFDA could withdraw authorization tocharge if it determined that theconditions underlying the authorizationwere no longer being met.

In the preamble to the proposed rule,we identified three principal reasons forrevising the previous charging

regulation (the 1987 charging rule) (52FR 19466, May 22, 1987).

First, the provisions of the 1987charging rule concerning charging forinvestigational drugs in a clinical trialneeded to be revised to take intoaccount circumstances that were notanticipated when that original rule wasadopted in 1987. FDA expected thatrequests to charge in a clinical trialwould be limited to requests to chargefor the sponsors drug being tested inthe trial. In fact, the agency received fewsuch requests.

Far more common have been requests

to charge for approved drugs in trialswhen the drugs needed to be obtainedfrom another entity. These approveddrugs may have been used in a trial ofthe sponsors drug as an active controlor in combination with the sponsorsdrug. Even more common were requeststo charge for approved drugs used intrials by a third party (not the holder ofthe approved application) that wereintended to study new uses of theapproved drug or to compare two drugs.FDA concluded that requests to chargefor investigational drugs in these


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40873Federal Register / Vol. 74, No. 155/ Thursday, August 13, 2009/ Rules and Regulations

situations may be appropriate, but thatthe criteria for evaluation of suchrequests are different from those thatapply when the request to charge is forthe sponsors own drug being tested ina clinical trial. Accordingly, the agencyconcluded that the 1987 charging ruleneeded to be revised to provide criteriafor charging for approved drugs used in

clinical trials.Second, the provisions of the 1987

charging rule related to treatment useallowed charging patients forinvestigational drugs only when thosedrugs were provided under a treatmentIND or treatment protocol. Elsewhere inthis issue of the Federal Register, FDAis publishing a final rule that adds topart 312 (21 CFR part 312) a newsubpart I concerning Expanded Accessto Investigational Drugs for TreatmentUse (referred to in this document asthe expanded access final rule orsubpart I). The expanded access final

rule retains the treatment IND andtreatment protocol provisions in the1987 charging rule with minormodifications, and provides for twoadditional types of expanded access fortreatment use: Expanded access forindividual patients and expandedaccess for intermediate-size patientpopulations. The 1987 charging ruleneeded to be revised to provideauthority to charge for investigationaldrugs for these two new categories ofexpanded access.

Third, the 1987 charging rule neededto be revised to specify the types of

costs that can be recovered. Thelanguage of the 1987 charging rule wasnot very specific and did not providesufficient guidance to sponsors on thecosts that could be recovered. Moreover,

because of the justifications for chargingin a clinical trial differ from thejustifications for charging for expandedaccess use, the agency believed that thecosts appropriate for recovery wouldalso differ.

The reasons FDA believed the 1987charging rule needed to be revised aredescribed more fully in the sections II.B,C, and D of the preamble to theproposed rule (71 FR 75168 at 75170through 75171).

Accordingly, we proposed to removeparagraph (d) of former 312.7(paragraph (d) discussed charging forand commercialization ofinvestigational drugs). We proposed toadd new 312.8 containing thefollowing:

General requirements for chargingfor investigational drugs,

Specific requirements pertaining tocharging for investigational drugs in aclinical trial,

Requirements for charging forinvestigational drugs for treatment useunder proposed subpart I (described inthe proposed rule on expanded access toinvestigational drugs for treatment use(expanded access proposed rule) (71 FR75147, December 14, 2006)), and

Requirements for determining whatcosts can be recovered when charging

for an investigational drug.We received 40 comments on the

charging proposed rule, which weaddress in section III of this document.

II. Overview of the Final Rule,Including Changes to the Proposed Rule

The final rule revises the chargingregulation at 312.7(d) and adds new 312.8 to clarify the circumstances inwhich charging for an investigationaldrug in a clinical trial is appropriate, toset forth criteria for charging for aninvestigational drug for the differentcategories of expanded access for

treatment use described in the expandedaccess final rule, and to clarify whatcosts can be recovered for aninvestigational drug. This final rulespecifies the types of investigationaluses of a drug in a clinical trial underpart 312 that require prior authorizationto charge and provides criteria toauthorize charging for each of the usesdescribed in the expanded access finalrule.

A. General Requirements for Charging

New 312.8(a) describes the generalrequirements and conditions for

charging for investigational new drugs.Except for sponsors charging for a drugobtained from another entity (asdescribed below), a sponsor who wishesto charge for an investigational drugmust do the following:

Comply with the applicablerequirements for the type of use forwhich charging is requested (either in aclinical trial or for expanded access)( 312.8(a)(1)),

Provide justification that theamount to be charged reflects only thosecosts that are permitted to be recovered( 312.8(a)(2)), and

Obtain prior written authorizationfrom FDA ( 312.8(a)(3)).

Section 312.8(a)(4) provides that FDAwill withdraw authorization to charge ifit determines that charging is interferingwith the development of a drug formarketing approval or that the criteriafor the authorization are no longer beingmet.

In response to comments, the finalrule does not require sponsors whomust obtain an approved drug fromanother entity for use in a clinical trialto obtain FDA approval to charge for the

drug or be otherwise subject to therequirements in new 312.8.

B. Charging in Clinical Trials

Section 312.8(b) of the final ruledescribes specific requirementspertaining to charging for aninvestigational drug in a clinical trial,including investigational use of the

sponsors approved drug. The cost of aninvestigational drug used in a clinicaltrial is an anticipated cost of drugdevelopment and should ordinarily be

borne by the sponsor. Therefore, FDAbelieves that charging should bepermitted only when threecircumstances are present, as describedin 312.8(b)(1) and as follows:

First, charging should be allowed onlyto facilitate development of a promisingnew drug or indication that might nototherwise be developed, or to obtainimportant safety information that mightnot otherwise be obtained. Thepreamble to the 1987 charging rulemade clear that there should becompelling justification for taking theunusual step of allowing charging forunproven therapy during itsdevelopment, stating that cost recoveryis justified in clinical trials only whennecessary to further the study anddevelopment of promising drugs thatmight otherwise be lost to the medicalarmamentarium. (52 FR 19466 at19472). FDA believes that philosophyshould continue to apply to charging ina clinical trial in this final rule.Accordingly, 312.8(b)(1)(i) requiresthat a sponsor wishing to charge for its

investigational drug in a clinical trialprovide some evidence of potentialclinical benefit that, if demonstrated inclinical investigations, would provide asignificant advantage over availableproducts in the diagnosis, treatment,mitigation, or prevention of a disease orcondition. Products that are likely tomeet this criterion are also likely to beeligible for fast track developmentprograms and priority review (see FDAsguidance for industry on Fast TrackDrug Development ProgramsDesignation, Development, andApplication Review (January 2006),

including the priority review policiesfor the Centers for Drug Evaluation andResearch and Biologics Evaluation andResearch in Appendix 3 of thatguidance (available on the Internet athttp://www.fda.gov/cder/guidance/index.htm)).

Second, charging should be permittedonly for a trial that is necessary for thedevelopment of the drug. Therefore, 312.8(b)(1)(ii) requires that the sponsordemonstrate that the data to be obtainedfrom the clinical trial would be essentialto establishing that the drug is effective

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or safe for the purpose of obtaininginitial marketing approval of the drug,or that it would support a significantchange in the labeling of the sponsorsapproved drug. For example, the trialcould be designed to provide data thatwould support approval of a newindication or generate importantcomparative safety information.

Third, charging must be necessary tothe conduct of the clinical trial. Under 312.8(b)(1)(iii), a sponsor is required todemonstrate that clinical developmentof the drug could not be continuedwithout charging because the cost of thedrug is extraordinary. The cost of thedrug may be extraordinary because ofmanufacturing complexity, scarcity of anatural resource, the large quantity ofdrug needed (e.g., due to the size orduration of the trial) or somecombination of these or othercircumstances. In response tocomments, this extraordinary cost

criterion for charging for the sponsorsdrug in a clinical trial has been revisedto clarify that the resources of anindividual sponsor are considered indetermining whether cost isextraordinary.

Section 312.8(b)(2) provides that theauthorization to charge for a drug in aclinical trial would ordinarily continuefor the duration of the clinical trial

because it is unlikely that the need forcharging would change during thecourse of the trial. However, 312.8(b)(2) gives FDA the discretion tospecify a duration shorter than the

length of the trial. FDA may specify ashorter duration if, for example, there isa particular concern that theauthorization to charge has the potentialto delay the development of a drug formarketing approval.

C. Charging for Expanded Access toInvestigational Drugs for Treatment Use

Section 312.8(c) sets forth the criteriafor charging for the three types ofexpanded access to investigationaldrugs for treatment use described insubpart I of part 312 (the expandedaccess final rule). Part 312, subpart I

describes two types of treatment use(expanded access for individual patientsand expanded access for intermediate-size patient populations) not previouslydescribed in FDAs regulations and,therefore, not specifically contemplated

by the 1987 charging rule. FDAs goal inpermitting charging for the treatmentuses described in subpart I is tofacilitate access to investigational drugsin situations in which a sponsor mightnot be able to provide a drug for suchuse absent charging, or to facilitate

broader access to an investigational drug

for treatment use than would bepossible absent charging.

The agencys principal concern withcharging patients in expanded accesssettings for investigational drugs is thatcharging not interfere with thedevelopment of drugs for commercialmarketing. Accordingly, 312.8(c)(1)requires a sponsor wishing to charge for

an investigational drug for any of thethree types of expanded access underpart 312, subpart I to provide reasonableassurance that charging will notinterfere with developing the drug formarketing approval.

For the types of expanded access toinvestigational drugs described inproposed subpart I, FDA believes it isless likely that the limited numbers ofpatients who might obtain individualpatient expanded access to aninvestigational drug ( 312.310) orintermediate-size patient populationexpanded access (312.315) wouldimpede development of a drug orindication. The potential to interferewith drug development is greatest fortreatment use under a treatment IND ortreatment protocol ( 312.320).Treatment INDs or treatment protocolscan attract large numbers of patients andthus have the potential to significantlyaffect enrollment in the clinical trialsneeded to establish safety andeffectiveness. Accordingly, 312.8(c)(2)sets forth specific information thatwould be required to reasonably assureFDA that charging for an investigationaldrug under a treatment IND or treatmentprotocol will not interfere with drug

development. Sponsors are required toprovide evidence of sufficientenrollment in any ongoing clinical trialsneeded for marketing approval toreasonably assure FDA that the trialswill be completed as planned( 312.8(c)(2)(i)). Sponsors are alsorequired to provide evidence ofadequate progress in the development ofthe drug for marketing approval( 312.8(c)(2)(ii)). Such evidence couldinclude successful meetings with FDA

before submission of a new drugapplication (NDA), submission of anNDA, or completion of other significant

drug development milestones. Sponsorsare also required to submit informationunder their general investigational plans( 312.23(a)(3)(iv)) specifying the drugdevelopment milestones they plan tomeet in the coming year( 312.8(c)(2)(iii)).

Section 312.8(c)(3) specifies that theauthorization to charge be limited to thenumber of patients authorized to receivethe drug for treatment use, if there is alimitation. For example, theauthorization to charge for aninvestigational drug under an individual

patient expanded access submission islimited to a single patient. Similarly, theauthorization to charge under anintermediate-size patient populationexpanded access submission is limitedto the number of patients permitted toreceive the drug under that particularintermediate-size patient populationexpanded access IND or protocol.

Section 312.8(c)(4) provides that FDAwill ordinarily authorize charging forexpanded access for treatment useunder part 312, subpart I to continue for1 year from the time of FDAauthorization and that FDA mayreauthorize charging for additionalperiods upon request. It also providesFDA the discretion to specify a shorterauthorization. The final rule limits theauthorization to charge to a period of 1year or less to permit the agency toperiodically assess whether the criteriafor charging continue to be met. FDAanticipates that it will exercise its

discretion to specify a shorter durationwhen there is a particular concern thatcharging could interfere with drugdevelopment.

D. Recoverable Costs

Section 312.8(d) describes the kindsof costs that are recoverable whencharging for an investigational drug in aclinical trial and for expanded access fortreatment use under part 312, subpart I.The purpose of permitting charging foran investigational drug in a clinical trialis to permit a sponsor to recover thecosts of making a drug available to studysubjects when those costs are

extraordinary. Thus, 312.8(d)(1) limitscost recovery to the direct costs ofmaking the investigational drugavailable in these situations. Indirectcosts can not be recovered.

Section 312.8(d)(1)(i) describes directcosts as costs incurred by a sponsor thatcan be specifically and exclusivelyattributed to providing the drug for theinvestigational use for which FDA hasauthorized cost recovery. Direct costsinclude costs per unit to manufacturethe drug (e.g., raw materials, labor, andnonreusable supplies and equipmentused to manufacture the quantity of

drug needed for the use for whichcharging is authorized) or costs toacquire the drug from anothermanufacturing source, and direct coststo ship and handle (e.g., store) the drug.

Indirect costs are costs that are notattributable solely to making the drugavailable for the investigational use forwhich charging is requested (forexample, expenditures for physicalplant and equipment that are incurredprimarily for the purpose of producinglarge quantities of the drug forcommercial sale after approval, or for


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1Unless otherwise indicated, serious diseasesin this final rule refers to serious or immediatelylife-threatening diseases or conditions.

making the drug available for a varietyof investigational uses). Indirect costsare not appropriate for cost recovery forinvestigational uses because these costswould be incurred even if the clinicaltrial or expanded access use for whichcharging is authorized did not occur.Section 312.8(d)(1)(ii) states thatindirect costs include costs incurred

primarily to produce the drug forcommercial sale (e.g., costs for facilitiesand equipment used to manufacture thesupply of investigational drug, but thatare primarily intended to produce largequantities of the drug for eventualcommercial sale) and research anddevelopment, administrative, labor, orother costs that would be incurred evenif the clinical trial or treatment use forwhich charging is authorized did notoccur.

Sponsors who provide investigationaldrugs for expanded access for treatmentuse for intermediate-size patient

populations and for treatment INDs andtreatment protocols incur costs inaddition to the anticipated and ordinarycosts of drug development. The purposeof permitting cost recovery for expandedaccess use is to encourage sponsors tomake investigational drugs available fortreatment use. Thus, 312.8(d)(2)permits a sponsor to recover the costs ofadministering treatment use programsfor intermediate-size patientpopulations and for treatment INDs andtreatment protocols, as well as the directcosts of the drug. The final rule does notauthorize sponsors to recover

administrative costs associated withexpanded access for individual patientsbecause these costs would be so minor.Section 312.8(d)(2) provides that inaddition to the direct costs of the drugdescribed in 312.8(d)(1), a sponsormay recover the costs of monitoring theexpanded access use, complying withIND reporting requirements, and otheradministrative costs directly associatedwith making a drug available fortreatment use under 312.315 and312.320.

Section 312.8(d)(3) provides that, tosupport its calculation for cost recovery,a sponsor must provide supporting

documentation to show that the costcalculation is consistent with therelevant requirements in 312.8(d). Theproposed rule has been revised to statethat the documentation must beaccompanied by a statement that acertified public accountant hasreviewed and approved the calculations.

III. Comments on the Proposed Rule

A. Overview of Comments

The agency received 40 comments onthe proposed rule. Comments were

received from individuals (persons withserious diseases,1 persons with familymembers with serious diseases, andother interested persons), health careand consumer advocacy organizations,pharmaceutical and biotechnologycompanies, health insurance companies,trade organizations, a State government,an academic medical center, and a

venture capital company.Some comments from individuals

were supportive of the chargingregulation to the extent that it may makeit easier to develop drugs for seriousdiseases in some cases and makeinvestigational drugs more broadlyavailable for treatment use underexpanded access programs. Othercomments from individuals wereconcerned that charging, in the absenceof reimbursement for investigationaldrugs by health insurance companies,would limit enrollment in clinical trialsand expanded access programs to those

who can afford to pay for the drug.Health care and consumer advocacyorganizations were generally supportiveof the proposed rule. Some stated thatthe rule struck the appropriate balance

between facilitating development ofcostly therapies, including drugs for rarediseases, and increasing access toinvestigational drugs for treatment use.One advocacy organization expressedconcern about the effects of charging onequitable access across differenteconomic strata, arguing that the abilityto enroll in clinical trials and expandedaccess programs may be restricted towealthier individuals. One organizationwas skeptical of the agencys assertionthat facilitating charging forinvestigational drugs made availableunder expanded access programs wouldincrease access.

FDA believes this final rule willfacilitate development of some costlytherapies that might not have beendeveloped absent cost recovery and willencourage expanded access programs.FDA also acknowledges, however, thatthe rule has the potential to createcertain inequities. Issues related toequitable access are discussed in greaterdetail in responses to comments 36

through 39.The major concerns of pharmaceutical

and biotechnology companies and theirtrade organizations were therequirements pertaining to charging forapproved drugs being evaluated in aclinical trial under an IND. Thesecompanies were most concerned withthe requirements pertaining to chargingfor approved drugs that must be

obtained from another entity for use ina trial. An academic medical center wasvery supportive of FDAs efforts toclarify the charging requirementspertaining to approved drugs used in atrial under an IND. As discussed ingreater detail in responses to comments27 and 31, FDA has revised theproposed rule so that sponsors need not

obtain authorization from FDA to chargefor approved drugs obtained fromanother entity not affiliated with thesponsor.

The primary concern of healthinsurance companies and their tradeorganization was that the new chargingregulation may create pressure on third-party payers to reimburse, or lead tolegislation requiring them to reimburse,for investigational drugs.Reimbursement issues are discussed ingreater detail in comments 63 through65.

A major concern for a smallbiotechnology company, a venturecapital firm, and a State health agencywas the narrowing of the cost recoveryprovision in the proposed rule to permitrecovery of direct costs only for aninvestigational drug used in a clinicaltrial, and to specifically excluderecovery of substantial capitalexpenditures incurred for purposes oflarge-scale manufacturing and generalresearch and development costs. Thesecomments were concerned that thisnarrowing would make it more difficultfor entities with limited resources todevelop expensive new therapies. FDAcontinues to believe that these

expenditures are not appropriate forcost recovery during the development ofa new drug. These concerns arediscussed in greater detail in responsesto comments 1 and 46.

B. General Comments

(Comment 1) Two comments statedthat charging for investigational drugs totreat rare diseases or conditions (orphandrugs) should be subject to less stringentcriteria than charging for drugs to treatnon-orphan diseases. The commentsmaintained that drugs to treat orphandiseases are commonly developed by

small companies or not-for-profitentities that have limited or no abilityto raise money from capital markets.Therefore, less restrictive chargingcriteria are needed to permit theseentities to recover their developmentcosts.

(Response) FDA does not believethere is justification for different andless stringent cost recovery criteria forinvestigational drugs for orphandiseases than non-orphan diseases. Asstated in the preamble to the proposedrule, FDA does not believe that charging


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for an investigational drug in clinicalstudies intended to support approval ofthe drug is the appropriate mechanismto recoup research and developmentcosts beyond those costs directlyassociated with making the drugavailable under criteria described in thischarging rule (71 FR 75168 at 75171)(see response to comment 46 for further

discussion). FDA believes sponsorsintending to develop orphan productsshould pursue orphan productdesignation from FDA to assist withdevelopment and recovery ofinvestment (21 CFR part 316). Suchdesignation provides for tax credits forthe costs of clinical research associatedwith development of an orphan drugand 7 years of marketing exclusivityafter an orphan drug is approved. Inaddition, sponsors that obtain orphandesignation may be eligible to receivegrants from FDA of up to $350,000 peryear for 4 years to defray directly the

costs of clinical research (for moreinformation, see Office of OrphanProducts Development, http://www.fda.gov/orphan/index.htm).Moreover, orphan designation and grantfunds from FDA often provideincentives for additional investmentfrom other sources. This final rule isintended only to address the situation inwhich the cost of the drug itself is sohigh that a sponsor needs to recovercosts associated with making the drugavailable to be able to conduct orcontinue the trial.

(Comment 2) One commentmentioned that it is not clear if the rule

applies to both unapproved drugs andapproved drugs under investigation fornew indications.

(Response) The rule applies to bothunapproved drugs and, in certainsituations, approved drugs underinvestigation for new indications (seealso response to comment 4).

(Comment 3) One comment suggestedthat to improve the readability of theproposed rule, the rule should havedifferent provisions for company-sponsored expanded access programsthan for investigator-sponsoredexpanded access programs. The

comment also suggested that thereshould be different provisions for newmolecular entities than for approvedproducts being studied for newindications.

(Response) FDA does not believethere is a need for separate provisionsfor expanded access depending onwhether the sponsor of the IND is amanufacturer or a noncommercialsponsor such as an individualphysician. In either case, FDAs primaryconcern is whether the IND wouldsomehow interfere with drug

development, so the criteria would bethe same for both groups. We also donot believe that separate provisions areneeded regarding the amount charged

because, in both cases, the amountcharged would be limited to costs.

Based on changes made to theproposed rule, FDA also does not

believe there is any need to divide the

rule into requirements applicable tocharging for new molecular entities andrequirements applicable to charging forapproved drugs under investigation fornew uses. FDA has revised the proposedrule to eliminate the requirement that asponsor who obtains an approved drugfrom another source to use in a trial asan active control or in a trial intendedto obtain additional information aboutthe approved drug (e.g., to study a newindication, to study a safety endpoint)must obtain prior authorization tocharge for the approved drug when usedfor an investigational purpose (see

comments 27 and 31). FDA has retainedthe requirement that a sponsor obtainpermission to charge for its ownapproved drug in a trial of that drug. Inthis scenario, FDA believes the samecriteria as would apply to charging foran unapproved drug should apply.Therefore, a separate provision is notneeded.

(Comment 4) One comment statedthat the proposed rules restrictions oncharging should not apply to approveddrugs and that investigators and otherscharging for approved drugs should bepermitted to charge their usual amountsand to receive the customary insurance

reimbursement. The comment alsonoted that restricting charges forapproved drugs in clinical trials would

be administratively burdensome toinvestigators.

(Response) FDA agrees in part anddisagrees in part. FDA agrees that asponsor that is not the marketer of anapproved drug (i.e., is not the entity thatholds the approved application) shouldnot be required to obtain FDA approvalto charge for the drug when it is usedin a clinical trial for any purposee.g.,used for its approved indication as anactive control or in a trial of a new

indication for the drug (see comments27 and 31 discussing in greater detailthe revision to the final rule toaccommodate this change). Accordingly,the provisions in the proposed rulerequiring prior authorization to chargein these situations have been deletedfrom this final rule. However, FDA

believes a sponsor seeking to charge forits own approved drug in a trial of anew use or to obtain important safetyinformation about the drug should betreated differently. In these situations,the sponsor is ordinarily conducting the

trial to enhance or preserve thecommercial value of the drug.Therefore, as is the case with a requestto charge for a new molecular entity, thesponsor should be required to overcomethe presumption that the cost of thedrug is a normal cost of the business ofdrug development, a cost that shouldordinarily be borne by the sponsor of

the trial. Therefore, FDA believes thesponsor should be required to obtainprior authorization to charge and shouldmeet the same burden for charging forthe approved drug in a clinical trial asit would be required to meet forcharging for a new molecular entity.That is, the requirements in 312.8(b)(1)apply with equal force to charging forthe sponsors unapproved drug andcharging for the sponsors approveddrug in a trial of a new use or a trial thatcould otherwise result in an importantlabeling change. It is beyond the scopeof the regulation and FDAs authority to

regulate insurance reimbursement withrespect to clinical trials involvingapproved drugs.

C. General Criteria for Charging

Proposed 312.8(a) set forth thegeneral requirements and conditions forcharging for investigational drugs. Asponsor that wishes to charge for aninvestigational drug must:

Comply with the applicablerequirements for the type of use forwhich charging is requested (either in aclinical trial or for expanded access)(proposed 312.8(a)(1)),

Provide justification that the

amount to be charged reflects only thosecosts that are permitted to be recovered(proposed 312.8(a)(2)), and

Obtain prior written authorizationfrom FDA (proposed 312.8(a)(3)).

1. Justification for the Amount To BeCharged

(Comment 5) One comment asked thatthe following language be added at theend of 312.8(a)(2) and (c)(1) of theproposed rule: Any such charges foundto be recoverable costs as determinedunder [312.8(d)] shall be minimizedand/or terminated to the greatest degree

or at the earliest opportunity possibleconsistent with the criteria in this rule.If circumstances supporting chargingunder this rule are no longer met,charging shall terminate.

(Response) FDA does not believe it isnecessary to insert additional languageconcerning how long and how much tocharge because the language essentiallyrepeats the requirements that arealready in other parts of the rule.Section 312.8(b)(2) and (c)(4) of the finalrule specify how long it is permissibleto charge in a clinical trial and for an

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expanded access use, respectively.Section 312.8(a)(4) permits FDA towithdraw the authorization to charge atany time if it determines that chargingis interfering with the development of adrug for marketing approval or that thecriteria for the authorization areotherwise no longer being met. Section312.8(d) specifies what costs can be

recovered during whatever time periodcharging is authorized.

2. Prior Written Authorization to Charge

The requirement in the proposed ruleto obtain prior written authorizationfrom FDA to charge for anyinvestigational drug is a change from therequirements under the 1987 chargingrule. Under the 1987 charging rule, asponsor was required to obtain priorwritten authorization to charge for aninvestigational drug in a clinical trial( 312.7(d)(1)), but a sponsor of atreatment IND or a treatment protocolunder 312.34 was permitted tocommence charging 30 days afterreceipt by FDA of an informationamendment concerning charging, unlessFDA notified the sponsor to the contrary( 312.7(d)(2)).

(Comment 6) One comment requestedthat FDA retain the provision in the1987 charging rule ( 312.7(d)(2)) thatallowed authorization to charge for aninvestigational drug under a treatmentIND or treatment protocol to go intoeffect automatically 30 days after receipt

by FDA of the information amendment,unless the sponsor is notified to thecontrary by FDA ( 312.7(d)(2)), and

further, that FDA make this provisionapplicable to all expanded access uses.The comment argued that therequirement for prior authorizationwould result in delay in the availabilityof investigational drugs for expandedaccess uses. One comment requestedthat FDA add the following languageafter the provision requiring priorwritten authorization to charge for aninvestigational drug: Suchauthorization shall not be unreasonablywithheld. Two comments agreed withFDAs decision to require prior writtenauthorization from FDA to charge for

drugs obtained through expanded accessprograms.(Response) FDA does not agree that

charging for expanded access usesshould be permitted without priorwritten authorization to charge fromFDA. FDA believes it is important todetermine, in advance of any patient

being charged, that the criteria forcharging are met (in particular, therequirement that charging not interferewith drug development) and that theamount to be charged is consistent withthe cost recovery requirements.

FDA also does not believe that thisprovision will delay access toinvestigational therapies by patientswith serious diseases who lacktherapeutic alternatives. When there is apressing need for cost recovery to makean investigational therapy available,FDA will ordinarily be able to expeditereview of a charging request. For a new

IND, FDA anticipates that, in mostcases, it will be able to make a chargingdetermination at the same time it makesa determination on the underlyingexpanded access IND. When the need tocharge becomes evident after anexpanded access IND is ongoing, FDAanticipates that a sponsor would be ableto foresee the need to charge sufficientlyfar in advance of that need to be able tomake a charging submission and obtaina timely FDA determination.

FDA also does not believe it isnecessary to specify that theauthorization to charge shall not be

unreasonably withheld. TheAdministrative Procedure Act providesthat an agency decision may be set aside

by the courts if found to be arbitrary,capricious an abuse of discretion, orotherwise not in accordance with law(5 U.S.C. 706(2)(A)). The agency

believes this language provides theappropriate standard for FDAs decisionof whether to allow charging for aninvestigational drug.

3. Withdrawal of Authorization toCharge

Proposed 312.8(a)(4) specified that

FDA will withdraw the authorization tocharge if it determines that charging isinterfering with the development of adrug for marketing approval or that thecriteria for the authorization areotherwise no longer being met.

(Comment 7) One commentrecommended that the rule include anadditional requirement specifying thatFDA notify the sponsor of a proposal towithdraw authorization to charge andthat FDA provide the sponsor anopportunity to respond.

(Response) FDA expects in most cases

to provide reasonable notice beforewithdrawing an authorization to chargeto allow sponsors an opportunity toaddress the agencys concerns. We arenot amending the proposed rule asrequested, however, because the agency

believes we should have the flexibility,when warranted, to withdraw anauthorization to charge withoutproviding advance notice to thesponsor. Sponsors can request review ofFDAs withdrawal of an authorization tocharge using dispute resolutionprocesses.

4. Lack of Timeframe for FDA Response

(Comment 8) Two commentsrecommended that the final rule includea general timeframe for FDA to decidewhether to permit charging. One of thecomments recommended that FDAdecide all charging requests within 30 to60 days.

(Response) FDA does not believe itshould commit to a specified timeperiod for review that would apply toall charging requests. In many cases,FDA anticipates being able to make adetermination on a request to charge atthe same time it responds to theunderlying IND submission (when thesubmissions are made at the same time).However, in FDAs experience, chargingrequests can present challenging issuesthat require some discussion betweenFDA and the sponsor. Thus, it isdifficult to estimate reliably a timeperiod for making a charging requestdetermination that would apply

uniformly to all charging requests. Forthis reason, FDA is not prepared tocommit to a 30-day timeframe formaking charging requestdeterminations. FDA also does notforesee the need for a 60-day maximumreview time.

D. Charging in a Clinical Trial

Proposed 312.8(b) described specificrequirements pertaining to charging foran investigational drug in a clinicaltrial. This provision described criteriafor charging for an investigational drugin three situations:

Charging for the sponsors own drugin a clinical trial ( 312.8(b)(1)),

Charging for an approved drug thata sponsor must obtain from anotherentity for use as an active control or incombination with another drug in aclinical trial designed to evaluate thesafety and effectiveness of the sponsorsinvestigational drug (312.8(b)(2)), and

Charging for an approved drug thatmust be obtained from another entity ina clinical trial designed to evaluate theapproved drug (e.g., for anotherindication) ( 312.8(b)(3)).

1. General Comments

(Comment 9) Several comments statedthat permitting charging for theinvestigational drug in clinical trialswould make it even more difficult toenroll subjects into clinical trials and,therefore, could increase the time tocomplete trials and delay bringing newdrugs to market. Three comments statedthat charging could discourageenrollment by patients who lack theresources to pay for the investigationaldrug. One comment stated that chargingfor nonreimbursed, investigational


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therapies could discourage physiciansfrom recommending enrollment in trialsto their patients who are eligible.

(Response) As was the case with theprior charging rule, the provisionsconcerning charging for the sponsorsinvestigational drug in this final rule areintended to help sponsors developimportant new therapies that would be

very difficult or impossible to developabsent charging. In FDAs experience,sponsors have rarely found it necessaryto charge for such therapies in clinicaltrials to develop a drug for marketingapproval. FDA anticipates that chargingfor the sponsors drug in a clinical trialwill continue to be an unusualcircumstance. FDA recognizes thatcharging could make it difficult to enrollsubjects in clinical trials and may havea disproportionate impact on enrollmentof patients who cannot afford to pay forthe investigational drug. FDA expects,however, that sponsors will monitor

clinical trial accrual rates and takewhatever steps are necessary to ensurethat subjects are able to enroll. Forexample, in FDAs experience, sponsorswho have charged for an investigationaldrug in a clinical trial have madeprovision to enroll subjects unable topay.

(Comment 10) Two comments statedthat the financial burden for conductingclinical trials, including supplying theinvestigational drug, should be carried

by the sponsors, who stand to benefitfrom the drug if commercialized.

(Response) FDA agrees that, in most

circumstances, sponsors should bear thecosts of making an investigational drugavailable in a clinical trial. Thepreamble to the proposed rule stated:Generally, the costs of conducting aclinical trial are costs that the sponsorshould bear. Conducting a clinical trialis part of the drug development process,and drug development is an ordinary

business expense for a commercialsponsor (71 FR 75168 at 75170). Thepreamble to the proposed rule alsoclarified that the philosophy underlyingthe 1987 charging rulethat chargingfor an investigational drug in a clinicaltrial should be an exceptionalcircumstance and justified only whennecessary to further the study of apromising drug that might otherwise not

be developedwas intended to apply tothis charging rule (71 FR 75168 at75170).

(Comment 11) One comment statedthat FDA should include in the codifiedportion of the rule the language from thepreamble of the 1987 charging rule that:FDA * * * [presumes] that supplyinginvestigational drugs to subjectsparticipating in clinical trials without

charge is part of the normal cost ofdoing business.

(Response) FDA does not believe it isnecessary to include the suggestedlanguage in this final rule. The preambleto the proposed rule contained languagesimilar to the language in the preambleto the 1987 charging rule, stating that:Generally, the costs of conducting a

clinical trial are costs that the sponsorshould bear. Conducting a clinical trialis part of the drug development process,and drug development is an ordinary

business expense for a commercialsponsor (71 FR 75168 at 75170). Thusit is clear that FDA intends that thepresumption that the cost of aninvestigational drug should ordinarily

be borne by the sponsor and charging isjustified only in exceptionalcircumstances be carried forward to thisrule. That presumption is implicit in thestringent criteria in 312.8(b)(1) forallowing charging for a sponsors drug

in a clinical trial. FDA does not believeit is necessary to state the presumptionin the codified language.

(Comment 12) One comment statedthat FDA should consider working withpharmaceutical firms to develop betterways of funding clinical trials ofinvestigational drugs. The commentrecommended that FDA evaluatepractical ways the pharmaceuticalindustry can fund patient expenses forinvestigational drugs used in clinicalstudies and that one option would be forFDA to evaluate the viability ofestablishing a common patient poolfunded by pharmaceutical firms on a

voluntary or required basis.(Response) The agency believes that

the comment raises a valid concern.This charging rule is intended to allowa sponsor to recover its costs associatedwith making an investigational drugavailable to clinical trial subjects whenthe cost of the drug is so high that thestudy could not be conducted withoutcharging. The rule is not intended tohelp defray other costs associated withthe conduct of a trial. However, inFDAs experience, the drug cost isusually not the largest expenseassociated with clinical trials. Typically,

the costs of administering andmonitoring a clinical trial are muchgreater than the cost of the drug. Atpresent, FDA is focusing itscollaborative efforts with industry onimproving the efficiency of the clinicaltrial process through various CriticalPath programs (e.g., Clinical TrialTransformation Initiative, http://www.fda.gov/oc/initiatives/criticalpath/clinicaltrials.html). FDA encouragesefforts to develop alternativemechanisms to finance importantclinical research by private sector

interests or nonregulatory governmentalbodies, but believes such efforts wouldbe best administered by private sectorinterests or nonregulatory governmental

bodies.(Comment 13) One comment

recommended that the title of the rulebe changed from Charging forInvestigational Drugs to Charging for

Drugs Used in Clinical Trials becausethe rule also would permit sponsors tocharge for approved drugs, which, thecomment asserts, are not investigational.

(Response) FDA disagrees. The ruleaddresses charging for investigationaldrugs both in clinical trials and inexpanded access programs under newsubpart I. Because the recommendedtitle would seem to exclude expandedaccess uses, that title is too narrow.Moreover, the use of an approved drugin a trial of a new use is aninvestigational use and thus clearlycovered by the rule and its title. Seeresponse to comment 15 for discussionof a minor change to the sections title.

(Comment 14) Two comments statedthat permitting charging for aninvestigational drug in a clinical trial

because it might exclude economicallydisadvantaged persons from trialparticipationcould exacerbate existingproblems with underrepresentation ofeconomically disadvantaged andminorities in such trials, and thus maylimit generalizability of trial results.

(Response) FDA does not believe thatinability to participate in a clinical trial

because a subject cannot pay for thedrug will have a meaningful effect on

generalizability of trial results. Manyfactors affect participation in clinicaltrials, including geographic location,ability to qualify for the trial,demographic representation at trialsites, and an insufficient number of slotsfor all who might like to participate. Theeffects of charging on the nature of thetrial population would probably be oflimited significance relative to otherfactors that could affect generalizability.In addition, in FDAs experience,sponsors that charge subjects forinvestigational drug in a clinical trialtypically make provision for subjects

who are unable to pay for the drug, thusmitigating any potential effect ongeneralizability due tounderrepresentation of individuals fromlower economic strata.

(Comment 15) Two commentsrecommended that the rule include aprovision stating that the rule does notapply to clinical trials that are exemptfrom the requirement to have an IND.

(Response) FDA did not intend thatthe charging regulation apply to clinicaltrials that are exempt from the INDrequirements under 312.2(b). To make

http://www.fda.gov/oc/initiatives/criticalpath/clinicaltrials.htmlhttp://www.fda.gov/oc/initiatives/criticalpath/clinicaltrials.htmlhttp://www.fda.gov/oc/initiatives/criticalpath/clinicaltrials.htmlhttp://www.fda.gov/oc/initiatives/criticalpath/clinicaltrials.htmlhttp://www.fda.gov/oc/initiatives/criticalpath/clinicaltrials.htmlhttp://www.fda.gov/oc/initiatives/criticalpath/clinicaltrials.html

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this clearer, FDA has changed the titleof 312.8 to Charging forinvestigational drugs under an IND.

(Comment 16) Two comments statedthat permitting charging for unapproveddrugs in clinical trials has the potentialto adversely affect FDA resources.

(Response) As discussed in greaterdetail in section I of this document,

FDA believes it is important to providean option to charge for investigationaldrugs in certain circumstances and,also, that is it is important for FDA toregulate charging to preventcommercialization of unapproved drugsand unapproved indications. In FDAsyears of experience reviewing chargingrequests under the 1987 charging rule,such requests have been infrequent andthe resources required to conduct suchreviews did not have a negative effecton FDAs mission to ensure the safetyand effectiveness of new drugs. Theproposed rule expanded the scope of

INDs for which sponsors may seek costrecovery to include the three types ofexpanded access INDs under newsubpart I. However, in response tocomments, the final rule no longerrequires sponsors that must obtain anapproved drug from another entity toobtain FDA authorization to charge forthat approved drug. Thus, FDAanticipates only a modest increase inthe number of requests to charge due tothis final rule.

In addition, the cost calculation wasperhaps the most time-consumingaspect of preparing and reviewing

charging requests under the 1987charging rule. This final rule clarifiesand simplifies the scope of recoverablecosts. Thus, FDA anticipates that it willtypically take less time to prepare andreview a charging submission under thenew rule than under the 1987 chargingrule.

(Comment 17) One comment statedthat the rule should differentiate

between different phases of testing of anunapproved drug because thejustification for allowing recovery andthe supporting evidence will vary fordifferent clinical trials in differentphases of drug development.

(Response) FDA believes the criteriadescribed in 312.8(b)(1) concerningcharging for a sponsors drug providesufficient flexibility to evaluate requeststo charge for a drug in clinical trials indifferent phases of drug development(also see response to comment 19discussing the variable basis forassessing whether a drug has a potentialclinical benefit that would be asignificant advantage over availableproducts and response to comment 20discussing when a clinical trial would

be considered essential to establishingthat the drug is effective and safe).

2. Charging for the Sponsors Own Drugin a Clinical Trial

Proposed 312.8(b)(1) set forth threecriteria, in addition to the generalcriteria in 312.8(a), that needed to bemet to permit a sponsor to charge for its

own investigational drug in a clinicaltrial.

a. Significant advantage overavailable therapy. Section 312.8(b)(1)(i)of the proposed rule provided that asponsor who wishes to charge for itsinvestigational drug, includinginvestigational use of its approved drug,must provide evidence that the drug hasa potential clinical benefit that, ifdemonstrated in the clinicalinvestigations, would provide asignificant advantage over availableproducts in the diagnosis, treatment,mitigation, or prevention of a disease orcondition.

(Comment 18) One comment statedthat this criterion is not meaningful asit would apply to all drugs that areselected to be developed bypharmaceutical and biotechnologycompanies.

(Response) FDA does not agree thatall drugs selected to be developed formarketing offer a potential significantadvantage over available therapy.Companies often deliberately developdrugs that offer only modest advantagesover existing therapy or appear to besimilar to existing therapy. There may

be good commercial and clinical reasons

to pursue such development. Forexample, there is likely to be variationin response to a pharmacologicintervention, both in desired treatmenteffect and incidence of adverse effects,in different individuals. Thus, theavailability of similar therapies canprovide alternatives for those who haveinadequate responses to a drug orexperience an adverse reaction even if asignificant advantage has not beenclinically shown for any of thetherapies. This criterion is intended todistinguish those types of drugs fromthose for which there are preliminary

clinical data suggesting a significantadvantage in the therapy for a givendisease and for which the developmentprogram is geared toward establishingthat advantage.

(Comment 19) One comment asked forclarification about the type and degreeof evidence needed to show a significantadvantage, especially at the beginning oflarge phase 3 trials. Another commentrecommended that this criterionconcerning a significant advantage bereplaced with evidence of potentialadvantage over available therapy. The

comment stated that the significantadvantage standard would be likely toprevent a sponsor from charging for itsown drug because the standardpresumes that comparative studies have

been conducted against all the otherproducts.

(Response) The amount and type ofdata needed to demonstrate a potential

clinical benefit that would be asignificant advantage over existingtherapy will vary with the stage ofdevelopment. For a request to charge fora large phase 3 trial, ordinarily theclinical data developed in phase 2 willneed to confirm or be consistent with apotential significant advantage to satisfythis criterion. For a request to charge fora trial in an earlier phase ofdevelopment, more preliminary dataconsistent with a potential significantadvantage will suffice. FDA does notagree that comparative data will always

be necessary to demonstrate a potential

significant advantage over existingtherapy. The agency believes that theneed to provide comparative data is amatter of judgment. For example, theremay be noncomparative phase 2 dataand a plausible pharmacologic basis thatsuggest a significant advantage overexisting therapy, and the phase 3 trialfor which charging is requested may bea comparative design intended todemonstrate that advantage. Similarly,comparative data are not needed if thedrug is intended to treat a disease orsubpopulation with a disease, for whichthere is no satisfactory existing therapy(see also FDA guidance for industry

entitled Fast Track DevelopmentProgramsDesignation, Development,and Application Review (June 2006),especially section III.B.2, discussingdemonstrating a drugs potential atvarious stages of development).

FDA also does not agree that chargingfor an investigational drug in a clinicaltrial should be permitted on the basis ofonly a potential advantage over existingtherapy, without regard to thesignificance of the advantage. FDAcontinues to believe that, as wasarticulated in the preamble to theproposed rule (71 FR 75168 at 75171),

the cost of making a drug available tostudy subjects during developmentshould ordinarily be borne by thesponsor. Charging for drugs in thissituation should be reserved for theexceptional circumstance in which it isnecessary to continue development of adrug that offers a potential significantadvantage over existing therapy.

b. Essential to safety or effectiveness.Section 312.8(b)(1)(ii) of the proposedrule provided that a sponsor that wishesto charge for its investigational drug,including investigational use of its


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approved drug, must demonstrate thatthe data to be obtained from the clinicaltrial would be essential to establishingthat the drug is safe or effective for thepurpose of obtaining initial approval ofa drug, or would support a significantchange in the labeling of an approveddrug (e.g., new indication, inclusion ofcomparative safety information).

(Comment 20) One comment statedthat the criterion to show that dataobtained from the clinical trial areessential to show safety or effectivenessor make a significant labeling changewould make it unreasonably difficult fora sponsor to obtain authorization tocharge because it would require asponsor to show that all other trialcomponents of the developmentprogram have been identified andmarketing approval could not beobtained without completion of the trialfor which charging is requested. Thecomment recommended that, instead,

the criterion should be that the study isa phase 2 or 3 protocol that was not puton hold by FDA ( 312.42) or the trialwas agreed to by FDA through thespecial protocol assessment process (seeFDA guidance for industry entitledSpecial Protocol Assessment (May2002)). Another comment stated thatthis criterion is vague and overly broad

because, arguably, all clinical trialsconducted in a drug developmentprogram would be essential to showsafety and effectiveness.

(Response) FDA does not agree thatthis provision is too restrictive. Thephrase essential to establishing that the

drug is effective or safe for the purposeof obtaining initial approval of a drugis intended to limit chargingwhetherin comparative trials, trials of a new useof an approved drug, or other trialstothose trials that will generateeffectiveness or safety data on theendpoint or endpoints intended toestablish safety or effectiveness (e.g.,clinical outcome on the disease ofinterest), trials that would providedirect corroborative support for suchtrials, and trials that were necessaryprerequisites to the major safety andeffectiveness trials (e.g., essential to

refining the study design). Such trialswould include later phase (e.g., phase 2and 3) controlled clinical trialsevaluating the clinical endpoints thatwould establish safety and effectiveness(e.g., trials designed to demonstrate thedrugs the potential clinical advantage),

but could also include importantclinical pharmacology studies (e.g.,thorough QT prolongation studies, drug-drug interaction studies), safety studies,and other types of studies that wouldprovide essential corroboration for thedata from the major safety and

effectiveness trials, or aid in the designof those trials.

FDA does agree that its determination,pursuant to a special protocolassessment, that a phase 3 study designand protocol are adequate to provideeffectiveness data that would supportapproval of a marketing applicationwould, in most cases, mean that the

clinical trial is essential to establishingthat the drug is effective or safe for thepurpose of obtaining initial approval ofthe drug.

FDA does not agree that this provisionis overly broad. FDA acknowledges thatthe trials conducted as part of a clinicaldevelopment program typically build onone another. However, it is veryunlikely that all such trials would beconsidered essential because theyprovide the data on the endpoints thatestablish safety and effectiveness,essential corroboration for those data, orare essential prerequisites to the majorsafety and effectiveness studies (e.g.,

because they enable the design to berefined so that the data will supportapproval).

c. Extraordinary cost. Section312.8(b)(1)(iii) of the proposed ruleprovided that a sponsor that wishes tocharge for its investigational drug,including investigational use of itsapproved drug, must demonstrate thatthe clinical trial could not be conductedwithout charging because the cost of thedrug is extraordinary. The proposed rulestated that the cost may be extraordinarydue to manufacturing complexity,scarcity of a natural resource, the large

quantity of drug needed (e.g., due to thesize or duration of the trial), or somecombination of these or otherextraordinary circumstances.

(Comment 21) Several comments hadsignificant concerns about theextraordinary cost criterion. Twocomments maintained that thisprovision is too vague and subjective fora regulatory requirement. They arguedthat whether a cost is extraordinarydepends to a certain extent on theresources and perspective of thesponsor, i.e., what may be anextraordinary cost for a small company

with limited resources may not be so fora larger company with more resources.One of these comments requestedadditional guidance, either in the rule orin a separate guidance document, on themeaning of extraordinary cost. Twocomments stated that this requirementis more stringent than the 1987 chargingrule, which requires only that thesponsor provide a written explanationfor why charging is necessary for thesponsor to undertake or continue thetrial. These comments recommendedthat FDA delete the extraordinary cost

criterion and replace it with therequirement from previous 312.7(d)(1)requiring a full written explanation ofthe reasons charging is necessary for thesponsor to undertake or continue theclinical trial or expanded access. Onecomment requested that FDA clarifyhow extraordinary cost is to bedetermined for a large company with

numerous corporate affiliates, each withseparate budgets.

(Response) In the proposed rule, FDAattempted to describe the concept ofextraordinary cost in a way that wouldmake the determination independent ofthe relative resources of a sponsor. FDAperceived that this approach would befairer than an approach based onsponsor resources, arguably making costrecovery equally accessible to allsponsors. FDA continues to believe thatthere are potential scenarios in which adrug cost would be so great that itwould be considered extraordinary for

any sponsor no matter how great asponsors resources. And FDA believesthat the parameters set forth in the finalrulethat the cost may be extraordinarydue to manufacturing complexity,scarcity of a natural resource, the largequantity of drug needed (e.g., due to thesize or duration of the trial), or somecombination of these or otherextraordinary circumstancesprovide afunctional objective test for whether acost is extraordinary.

However, FDA also acknowledgesthat, as a practical matter, whether adrug cost is extraordinary in any given

case will often be a function of theresources of a given sponsor. FDAbelieves that the rule should reflect thereality that a sponsor seeking costrecovery for a drug used in a clinicaltrial will more often be a sponsor withrelatively fewer resources compared tothe larger, established pharmaceuticaland biotechnology companies.Accordingly, FDA has revised theextraordinary cost criterion in 312.8(b)(1)(iii) to clarify that a sponsorcan demonstrate a cost is extraordinaryrelative to the resources available to thatsponsor. This revision is also responsiveto the comments suggesting that weretain the requirement in the previousregulation that a sponsor provide awritten explanation of why charging isnecessary to conduct the study. Thesponsor would be able to provide suchan explanation to demonstrate that thecost is extraordinary for that sponsor.

(Comment 22) One comment statedthat extraordinary cost is not ameaningful distinguishing criterion inthe current environment as, arguably,most new therapies have extraordinarycosts.


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rule should not distinguish between anapproved drug obtained from anotherentity and an approved drug that is thesponsors own drug and charging should

be permitted for both. Another commentnoted that the rationale that trialsubjects should not be charged forexposing themselves to the risks of anunproven drug does not apply to

approved drugs used for a medicallyaccepted purpose. One comment statedthat pharmaceutical companies seldomcharge patients for the cost of anapproved drug used in a clinical trial.Two comments stated that theinvestigator commonly buys approveddrugs and bills the patients healthinsurance or the investigator writes aprescription for the patient, who fillsthe prescription at a pharmacy that billsthe patients insurance.

Several comments also raisedconcerns that the charging regulationmight interfere with routine

reimbursement by third-party payers forapproved drugs used for their approvedindications in clinical trials. Somecomments stated that, when approveddrugs used as comparators are chargedfor in a clinical trial, they are ordinarilydispensed through the normaldistribution channeleither aninpatient or outpatient pharmacyandthird-party payers routinely reimbursefor such uses. One comment asked FDAto clarify that the proposed rule doesnot apply to a situation in which thesponsor is not involved in directlysupplying approved drugs used ascomparators or in combination and does

not incur direct acquisition or handlingcosts that it then seeks to pass on to trialsubjects, such as when the drug isdispensed from a pharmacy.

One comment stated that requiringsponsors to seek authorization to chargein cases in which the sponsor is notdirectly acquiring an approved drugfrom another entity, such as cases inwhich the approved drug is obtained orprescribed by investigators and subjectsare billed by the investigator orpharmacy, would dramatically alterexisting practice without benefiting trialsubjects. The comment stated that a

large number of clinical studies wouldneed to be submitted for FDA review,dramatically increasing theadministrative burden on FDA to reviewcharging requests for affected trials andon sponsors in making submissions.

(Response) The agency agrees thatrequiring sponsors to obtainauthorization to charge for approveddrugs obtained from another entity foruse as active controls or in combinationwith another drug, or for other uses isnot necessary. We recognize that one ofthe major rationales for limiting

chargingthat the safety andeffectiveness of the drug is unprovenis often not present in this situation.Moreover, FDA believes there wouldalmost never be a basis to deny a requestto charge for an approved drug for useas active control or in combination withanother drug under the criteria in theproposed rule. FDA also acknowledges

the potential for significantadministrative burdens associated withcomplying with the proposed chargingrequirements if, as the comments stated,the current practice in many cases issimply to have the approved drugdispensed from a pharmacy and havepatients or third parties pay the usualcost for the drug. Moreover, FDA doesnot want to impose a regulatoryrequirement that might somehowinterfere with the way in which drugcosts are reimbursed by third-partypayers. Accordingly, in the final rule,FDA has revised proposed 312.8(a)

and deleted proposed 312.8(a)(2) and(a)(3), to clarify that a sponsor need notobtain authorization to charge for anapproved drug used for an approvedindication in a clinical trial done underan IND.

(Comment 28) Three comments statedthat approved drugs used as activecontrols or in combination with anotherdrug are not investigational becausethey are approved and are not beinginvestigated in the clinical trial.

(Response) FDA disagrees. When anapproved drug is used as an activecontrol or in combination with anotherdrug (e.g., as standard therapy in a study

comparing standard therapy to standardtherapy plus a new investigationaltherapy), the treatment effect of theactive control or the standard therapy is

being measured and compared to thenew therapy. Therefore, the approveddrug is part of the clinical investigation,and hence an investigational drug forpurposes of part 312. Notwithstandingthat such use is subject to part 312, FDAhas revised the proposed charging ruleso that sponsors are no longer requiredto obtain authorization to charge forapproved drugs obtained from anotherentity for use as active controls or in

combination with another therapy (asdiscussed in the preceding commentresponse).

(Comment 29) One comment arguedthat sponsors should be able to chargefor approved drugs without FDAauthorization when used in clinicaltrials for medically accepted uses,which the comment defined as usessupported by a recognized compendiumsuch as U.S. Pharmacopeia DrugInformation (USP DI).

(Response) As discussed in theresponses to comments 27 and 31, FDA

has revised the proposed rule to removethe requirement that a sponsor obtainprior approval to charge for an approveddrug that the sponsor must obtain fromanother source for use as an activecontrol or in combination with anotherdrug, or in a trial evaluating theapproved drug for a new use or to obtainimportant safety information. However,

the final rule retains the requirementthat a sponsor studying its ownapproved drug for a new indication orto support another type of significantlabeling change must obtain approval tocharge for the drug in the study. FDAdoes not agree that whether the use ofthe drug is medically accepted by arecognized compendium should be adistinguishing criterion for determiningwhether the sponsor should be requiredto obtain authorization to charge for itsdrug in that situation.

(Comment 30) One comment askedhow a trial blind could be maintained

if there is charging for a competitorsproduct used as an active control, butnot for the sponsors investigationaldrug.

(Response) We note that the final ruleremoves the requirement of theproposed rule that sponsors seek FDAauthorization to charge for acompetitors product used as an activecontrol. In general, FDA believes thatmaintaining the trial blind is theresponsibility of the sponsor.

4. Charging for an Approved DrugObtained From Another Entity in aClinical Trial of the Drug

Proposed 312.8(b)(3) provided that,for a sponsor to charge for an approveddrug obtained from another source in aclinical trial to evaluate that drug, itmust:

Demonstrate that the clinical trial isadequately designed to evaluate thesafety or effectiveness of a newindication or to provide importantsafety information related to anapproved indication and

Demonstrate that the holder of theapproved application is not providingthe drug to the sponsor free of charge.

(Comment 31) Two comments stated

that the requirement that a sponsorseeking to charge for an approved drugobtained from another source mustdemonstrate that the trial design isadequate to evaluate the effectiveness ofthe new indication is unnecessary

because it essentially duplicates what asponsor is required to demonstrate to beallowed to proceed with the trial underthe IND review process. The commentsargue that the fact that FDA has notplaced the trial on clinical hold( 312.42) should be enough evidencethat FDA considers the trial of adequate


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design. One comment stated thatwhether the drug is available withoutcharge does not require FDA review.One comment asked FDA to clarify whatconstitutes sufficient evidence that thesponsor charging for a drug has notreceived the drug free of charge.Another comment suggested thatadditional criteria be added as a

safeguard to ensure that drug is notbeing made available free of charge,such as representation by the sponsorthat the manufacturer is not funding orsupporting the trial in any way.

(Response) FDA acknowledges thatthe proposed criteria for obtainingauthorization to charge for an approveddrug that the sponsor must obtain fromanother entity in a trial of a new use ofthat drug, or to obtain important newsafety information, do not present asignificant barrier to obtaining costrecovery. FDA intended to present arelatively low barrier to encourage the

kinds of trials that might not be ofcommercial interest to the drugmanufacturer or to otherwise encouragetrials that would further elucidate thecharacteristics of approved drugs. FDAagrees that, for phase 2 and 3 trials, thefact that the trial has not been placed onclinical hold would ordinarily besufficient to satisfy the criterion that thetrial is adequately designed to evaluatethe unapproved drug for a newindication. FDA also acknowledges thatit intended to rely primarily on therepresentations of the sponsor forassurance that the drug was not beingmade available free of charge.

In light of these comments, FDA nowrecognizes that, based on the criteria inthe proposed rule, there would seldom

be a basis to deny a request to charge foran approved drug that a sponsor mustobtain from another source to study anew use or to obtain important newsafety information. FDA also recognizesthat the cost recovery calculation forthis type of use would usually be verystraightforwardordinarily, thesponsors acquisition cost if the sponsorpurchases the drug directly or the costof the drug when dispensed from apharmacy. Therefore, FDA concludes

that to require submission of a requestto charge for an approved drug obtainedfrom another source would often be aneedless administrative burden for thesponsor and FDA. Accordingly, we havedecided not to finalize proposed 312.8(b)(3) in this final rule.

(Comment 32) One comment statedthat the ability to charge for aninvestigational drug obtained fromanother entity for use in a clinical trialof the drug should be limited tononprofit organizations. The commentfurther recommended that the

organization be required to demonstratethat it sought grant funds for the trialand any denial of such funds was notdue to lack of merit in the research plan.

(Response) FDA does not agree thatthe ability to charge for an approveddrug obtained from another entityshould be limited to nonprofit

organizations. As discussed in theprevious response, FDA has removedfrom this final rule the proposedrequirement that a sponsor obtain priorapproval to charge for an approved drugobtained from another entity for use ina trial of the approved drug. Thus, anytype of sponsor can charge for suchdrugs without obtaining authorizationfrom FDA.

FDA hopes that sponsors that mustobtain a drug from another entity wouldordinarily explore all reasonablefinancing options (e.g., grants fromvarious sources, funding from the drugmanufacturer, a drug supply from thedrug manufacturer) before seeking tocharge trial subjects for the drug.However, FDA does not believe that itis necessary to specify in regulation thata sponsor exhaust all availablealternative financing options beforecharging for the study drug.

5. Duration of Charging in a ClinicalTrial

(Comment 33) One commentinterpreted the provision stating that theauthorization to charge for a drug in a

clinical trial will usually last for theduration of the trial, unless FDAspecifies a shorter period, to mean thatFDAs approval of the IND (after 30days) constitutes authorization to chargefor an approved drug in a trial of a newindication for the drug as long as theprotocol states that the sponsor orinvestigators may charge for the drug.

(Response) FDA disagrees with thisinterpretation. Section 312.8(a)(3),which applies to all requests to charge,requires that a sponsor obtain priorwritten authorization from FDA tocharge for an investigational drug. A

sponsor must specifically request tocharge under the applicable paragraphin 312.8 and obtain authorization tocharge pursuant to that request before itcan charge for a trial drug. No provisionin this final rule should be construed tomean that FDAs failure to place aprotocol on clinical hold constitutesimplicit authorization to charge for aninvestigational drug, notwithstandingthat the protocol contains a provisionstating that the sponsor intends tocharge.

E. Charging for Expanded Access toInvestigational Drugs for Treatment Use

Proposed 312.8(c) set forth criteriafor charging for the three types ofexpanded access to investigationaldrugs for treatment use described innew subpart I of part 312individualpatient INDs, intermediate-size patient

population INDs, and treatment INDs(see the expanded access final rulepublished elsewhere in this issue of theFederal Register). FDAs primaryconcern with charging patients inexpanded access settings is thatcharging not interfere with thedevelopment of investigational drugs forcommercial marketing. Therefore, underproposed 312.8(c)(1), a sponsorseeking to charge for expanded accessuse must provide reasonable assurancethat charging will not interfere withdeveloping the drug for marketingapproval. To provide such assurance fora treatment IND or protocol under

312.320, a sponsor must includeevidence of sufficient enrollment in anyongoing clinical trial(s) needed formarketing approval to reasonably assureFDA that the trials will be successfullycompleted as planned (312.8(c)(2)(i));evidence of adequate progress in thedevelopment of the drug for marketingapproval (312.8(c)(2)(ii)); andinformation submitted under asponsors general investigational planspecifying the drug developmentmilestones the sponsor plans to meet inthe next year (312.8(c)(2)(iii)).

Proposed 312.8(c)(3) provided that

the authorization to charge for anexpanded access use is limited to thenumber of patients authorized to receivethe drug under the treatment useprotocol or IND, if there is a limitation.

Proposed 312.8(c)(4) provided thatthe authorization to charge for expandedaccess may continue for 1 year from thetime of FDA authorization and thatsponsors may request that FDAreauthorize charging for additional timeperiods.

1. General Comments

(Comment 34) One comment objected

to the idea that sponsors could onlycharge for expanded access if the costwas extraordinary.

(Response) FDA believes thiscomment misread the proposed rule.The cost of an investigational drug neednot be extraordinary for a sponsor to beable to charge for the drug under anexpanded access IND or protocol insubpart I. That extraordinary costcriterion in the proposed 312.8(b)(1)(iii) applied only tocharging for a sponsors investigationaldrug in a clinical trial of that drug under


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proposed 312.8(b)(1). Moreover, thiscriterion has now been eliminated in thefinal rule (see comments 21 through 26).

(Comment 35) One comment statedthat there is a conflict between theproposed rule on charging and theproposed rule on expanded access

because the charging rule would notpermit charging for expanded access for

individual patients or intermediate-sizepatient populations if there were noongoing or planned clinical trial thatwould support marketing approval. Onecomment asked that charging forindividual patient expanded access bepermitted. The comment also stated thatit was not clear if charging waspermitted for intermediate-size patientpopulation expanded access. Onecomment stated that sponsors should bepermitted to charge for investigationaldrugs for all types of expanded accessprograms, provided that charging willnot impede drug development.

(Response) FDA believes thesecomments misread the proposed rule.Proposed 312.8(c)(1) stated that asponsor who wishes to charge for aninvestigational drug for any treatmentuse under subpart I of part 312 mustprovide reasonable assurance thatcharging will not interfere withdeveloping the drug for marketingapproval. Moreover, the preamble to theproposed rule specifically stated thatone of the major reasons that FDA wasrevising the 1987 charging rule was toprovide authority to charge forinvestigational drugs under the two newcategories of expanded access for

treatment useindividual patient andintermediate-size population expandedaccess INDs (71 FR 75168 at 75169through 75170). For expanded accessunder a treatment IND or treatmentprotocol, the proposed rule stated thatsuch assurance must also include thespecific types of evidence in 312.8(c)(2), including evidence ofsufficient enrollment in any ongoingclinical trials needed for marketingapproval. However, the specific types ofevidence identified apply only torequests to charge for expanded accessuse under new 312.320 (treatment IND

or treatment protocol) (see 312.8(c)(2)).Because individual patient INDs (new 312.310) and intermediate-size patientpopulation INDs can occur earlier indrug development and typically involvemuch smaller numbers of patients, FDAdid not think it would be helpful tospecify in the rule how to providereasonable assurance that charging willnot interfere with developing the drugfor marketing approval for those types ofexpanded access program. To clarifythat the evidentiary requirements applyonly to treatment INDs or treatment

protocols, we have revised 312.8(c)(2)to describe 312.320 as coveringtreatment INDs and treatment protocols,rather than merely citing to the sectionas the proposed rules had done.

2. Increasing Access

In the preamble to the proposed rule,FDA identified the costs associated with

making investigational drugs availablefor treatment use under expandedaccess programs as a potential obstacleto the availability of such drugs (sectionII.C of the proposed rule). By facilitatingcharging for such use, FDA stated thatit hoped there would be greater accessto investigational drugs (section VI.E ofthe proposed rule).

(Comment 36) Several commentsexpressed concerns about theimplications of permitting charging forinvestigational drugs for treatment useunder expanded access programs onhow such drugs are allocated. Somecomments stated that the proposed rulemay not increase expanded access

because third-party payers are not likelyto reimburse for investigationaltherapies, thus depriving patients notable to afford such drugs. One commentadded that neither patients nor insurersshould pay for investigational drugs ortreatments and that the proposed rulewill significantly exacerbate the currentproblems of access to, and affordabilityof, health care. Another comment statedthat, although the poor may qualify forcompany-sponsored assistance to payfor investigational drugs, middle-classpatients may not be eligible for such

programs yet still be unable to affordsuch drugs. Two comments stated thatpermitting charging only for direct costsmay not increase access because it willnot provide enough financial incentivefor companies to offer access. Onecomment agreed that permittingcharging for investigational drugs madeavailable under expanded accessprograms will result in greater access toinvestigational drugs.

(Response) FDA recognizes thatpermitting cost recovery for expandedaccess to investigational drugs fortreatment use will not remove all

barriers to access. The agency shares theconcerns about equitable access to suchdrugs among patients with varyingfinancial resources. FDAs goal, withthis cost recovery provision, is to enablewilling sponsors to make a drugavailable that could not otherwise bemade available or to make a drug morewidely available than would be possibleabsent cost recovery, thus potentially

benefiting more individuals than would

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