FDA offers new guidance on charging for investigational drugs

According to the 2009 rule “Charging for investigational drugs under an IND,” FDA may permit sponsors of investigational new drugs and other companies to charge for unapproved drug products, under certain circumstances, including that, among other requirements:

• a sponsor justifies the amount to be charged.
• the sponsors obtains prior written authorization from FDA to charge for the investigational drug.
• the charging is not interfering with the development of a drug for marketing approval.
• a sponsor who wishes to charge for its investigational drug:
  • provides evidence that the drug has a potential clinical benefit that, if demonstrated in the clinical investigations, would provide a “significant advantage” over available products in the diagnosis, treatment, mitigation, or prevention of a disease or condition),
  • demonstrates that the data to be obtained from the clinical trial would be “essential” to establishing that the drug is effective or safe for the purpose of obtaining initial approval of a drug, or would support a significant change in the labeling of an approved drug (e.g., new indication, inclusion of comparative safety information), and
  • demonstrates that the clinical trial could not be conducted without charging because the cost of the drug is extraordinary to the sponsor.
• a sponsor who wishes to charge for expanded access to an investigational drug for treatment use provides “reasonable assurance” that charging will not interfere with developing the drug for marketing approval. An expanded access program (EAP), also called “compassionate use,” is a potential pathway for patients an immediately life-threatening condition or serious disease or condition to gain access to an investigational medical product for treatment outside of clinical trials when no comparable or satisfactory alternative therapy options are available, as we recently described online here.

Since 2009, FDA has received a number of questions concerning its implementation of this “charging regulation,” and so it issued final guidance in 2016, providing recommendations in a Q&A format. Then, earlier this week, FDA issued a revised draft version of the guidance related to the same questions surrounding charging for clinical trials, for expanded access use, and cost recovery calculations.

Notable changes in the 2022 draft guidance include the following:

• Consistent with FDA’s recently stated priorities of increasing racial and ethnic diversity in clinical trials, which we last analyzed online here, the new draft guidance adds the recommendation that sponsors ensure that charging for drugs in clinical trials or expanded access use does not create barriers to access that may exacerbate disparities in clinical trial participants or expanded access patients.

• The new draft guidance clarifies that when the amount to be charged for a drug is simply the amount charged to the expanded access sponsor by a third party who provides the drug to the expanded access sponsor, such that there is no calculation of cost made by the sponsor for an independent certified public accountant to approve and to which the requirement under § 312.8(d)(3) applies, the expanded access sponsor should provide a copy of the receipt or invoice from the source that provided the drug to the expanded access sponsor to justify the amount to be charged for the drug.

• The revised draft guidance explicitly states that a sponsor of an intermediate or treatment IND or protocol seeking to charge for the investigational drug can distribute the costs associated with monitoring the program for the intermediate or treatment IND or protocol and other administrative “startup” costs over the expected duration of the IND or protocol, rather than in the first year of the treatment.

• Similarly, a sponsor of an expanded access IND or protocol seeking to charge for the investigational drug may distribute any higher manufacturing costs associated with manufacturing the drug in the first year compared to subsequent years, over the duration of the IND or protocol, rather than in the first year of the treatment, the revised draft guidance clarifies.

When finalized, the new revised draft guidance will replace the 2016 final guidance. FDA has invited comments on the draft guidance through October 24, 2022. If you may wish to comment, or have any questions or charging for investigational drugs, or on the IND or expanded access program generally, please contact either of the authors of this alert or the Hogan Lovells attorney with whom you generally work.

Authored by Heidi Gertner and Robert Church