Charging for Investigational Drugs Under an Investigational New Drug Application, 40872-40900 [E9-19004]

Agencies

• Food and Drug Administration
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 74, Number 155 (Thursday, August 13, 2009)]
[Rules and Regulations]
[Pages 40872-40900]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-19004]



[[Page 40871]]

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Part II





Department of Health and Human Services





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Food and Drug Administration



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21 CFR Part 312 and 316



Charging for Investigational Drugs Under and Investigational New Drug 
Application; Expanded Access to Investigational Drugs for Treatment 
Use; Final Rules

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

[[Page 40872]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 312

[Docket No. FDA-2006-N-0237] (formerly Docket No. 2006N-0061)
RIN 0910-AF13


Charging for Investigational Drugs Under an Investigational New 
Drug Application

AGENCY:  Food and Drug Administration, HHS.

ACTION:  Final rule.

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SUMMARY:  The Food and Drug Administration (FDA) is amending its 
investigational new drug application (IND) regulation concerning 
charging patients for investigational new drugs. This final rule 
revises the charging regulation to clarify the circumstances in which 
charging for an investigational drug in a clinical trial is 
appropriate, to set forth criteria for charging for an investigational 
drug for the different types of expanded access for treatment use 
described in the agency's final rule on expanded access for treatment 
use of investigational drugs published elsewhere in this issue of the 
Federal Register, and to clarify what costs can be recovered for an 
investigational drug. This final rule will permit charging for a 
broader range of uses than was explicitly permitted previously.

DATES:  This rule is effective October 13, 2009.

FOR FURTHER INFORMATION CONTACT:
    For the Center for Drug Evaluation and Research: Colleen L. 
Locicero, Center for Drug Evaluation and Research, Food and Drug 
Administration, 10903 New Hampshire Ave., Bldg. 22, rm. 4200, Silver 
Spring, MD 20993-0002, 301-796-2270.
    For the Center for Biologics Evaluation and Research: Stephen M. 
Ripley, Center for Biologics Evaluation and Research (HFM-17), Food and 
Drug Administration, 1401 Rockville Pike, Rockville, MD 20852-1448, 
301-827-6210.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Overview of the Final Rule, Including Changes to the Proposed 
Rule
    A. General Requirements for Charging
    B. Charging in Clinical Trials
    C. Charging for Expanded Access to Investigational Drugs for 
Treatment Use
    D. Recoverable Costs
III. Comments on the Proposed Rule
    A. Overview of Comments
    B. General Comments
    C. General Criteria for Charging
    1. Justification for the Amount To Be Charged
    2. Prior Written Authorization to Charge
    3. Withdrawal of Authorization to Charge
    4. Lack of Timeframe for FDA Response
    D. Charging in a Clinical Trial
    1. General Comments
    2. Charging for the Sponsor's Own Drug in a Clinical Trial
    3. Charging for an Approved Drug Obtained From Another Entity 
for Use as an Active Control or in Combination With Another Drug
    4. Charging for an Approved Drug Obtained From Another Entity in 
a Clinical Trial of the Drug
    5. Duration of Charging in a Clinical Trial
    E. Charging for Expanded Access to Investigational Drugs for 
Treatment Use
    1. General Comments
    2. Increasing Access
    3. Ethical Considerations
    4. Non-Interference With Drug Development
    5. Treatment INDs or Treatment Protocols
    6. 1-Year Authorization
    F. Costs Recoverable When Charging for an Investigational Drug
    1. Direct and Indirect Costs
    2. Recoverable Costs for Expanded Access Uses
    3. Supporting Documentation
    4. Authority to Set Pricing
    5. Confidentiality
    6. Effect on Payment Systems (CMS and Insurance)
    7. Collaboration With CMS and the National Cancer Institute
    G. Miscellaneous Comments
    1. Promotion
    2. Liability
    3. Product Labeling
    4. Analysis of Impact
IV. Legal Authority
V. Environmental Impact
VI. Analysis of Economic Impacts
    A. Objectives of the Final Rule
    B. The Need for the Final Rule
    C. Why Allow Charging?
    D. Baseline for the Analysis
    E. Nature of the Impact
    1. Charging in a Clinical Trial
    2. Charging for Expanded Access Uses Described Under Final 
Subpart I
    3. Costs Recoverable When Charging for an Investigational Drug
    4. Summary
    F. Benefits of the Final Rule
    G. Costs of the Final Rule
    H. Minimizing the Impact on Small Entities
    I. Alternatives
VII. Paperwork Reduction Act of 1995
VIII. Federalism

I. Background

    In the Federal Register of December 14, 2006 (71 FR 75168) 
(proposed rule), we proposed to amend our IND regulation concerning 
charging patients for investigational new drugs (former Sec.  312.7(d) 
(21 CFR 312.7(d))) and to add new Sec.  312.8 (charging for 
investigational drugs). Under FDA's previous Sec.  312.7(d), FDA could 
authorize charging for an investigational drug used in a clinical trial 
under an IND and for an investigational drug used in a treatment 
protocol or treatment IND:
     Former Sec.  312.7(d)(1) provided that a sponsor that 
wished to charge for an investigational drug in a clinical trial needed 
to provide a full written explanation of why charging was necessary for 
the sponsor to undertake or continue the clinical trial, e.g., why 
distribution of the drug to test subjects should not be considered part 
of the normal cost of doing business.
     Former Sec.  312.7(d)(2) described several conditions that 
needed to be met to charge for an investigational drug used under a 
treatment protocol or treatment IND.
     Former Sec.  312.7(d)(3) provided that a sponsor could not 
commercialize an investigational drug by charging a price larger than 
that necessary to recover costs of manufacture, research, development, 
and handling of the investigational drug.
     Former Sec.  312.7(d)(4) provided that FDA could withdraw 
authorization to charge if it determined that the conditions underlying 
the authorization were no longer being met.
    In the preamble to the proposed rule, we identified three principal 
reasons for revising the previous charging regulation (the 1987 
charging rule) (52 FR 19466, May 22, 1987).
    First, the provisions of the 1987 charging rule concerning charging 
for investigational drugs in a clinical trial needed to be revised to 
take into account circumstances that were not anticipated when that 
original rule was adopted in 1987. FDA expected that requests to charge 
in a clinical trial would be limited to requests to charge for the 
sponsor's drug being tested in the trial. In fact, the agency received 
few such requests.
    Far more common have been requests to charge for approved drugs in 
trials when the drugs needed to be obtained from another entity. These 
approved drugs may have been used in a trial of the sponsor's drug as 
an active control or in combination with the sponsor's drug. Even more 
common were requests to charge for approved drugs used in trials by a 
third party (not the holder of the approved application) that were 
intended to study new uses of the approved drug or to compare two 
drugs. FDA concluded that requests to charge for investigational drugs 
in these

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situations may be appropriate, but that the criteria for evaluation of 
such requests are different from those that apply when the request to 
charge is for the sponsor's own drug being tested in a clinical trial. 
Accordingly, the agency concluded that the 1987 charging rule needed to 
be revised to provide criteria for charging for approved drugs used in 
clinical trials.
    Second, the provisions of the 1987 charging rule related to 
treatment use allowed charging patients for investigational drugs only 
when those drugs were provided under a treatment IND or treatment 
protocol. Elsewhere in this issue of the Federal Register, FDA is 
publishing a final rule that adds to part 312 (21 CFR part 312) a new 
subpart I concerning ``Expanded Access to Investigational Drugs for 
Treatment Use'' (referred to in this document as the ``expanded access 
final rule'' or ``subpart I''). The expanded access final rule retains 
the treatment IND and treatment protocol provisions in the 1987 
charging rule with minor modifications, and provides for two additional 
types of expanded access for treatment use: Expanded access for 
individual patients and expanded access for intermediate-size patient 
populations. The 1987 charging rule needed to be revised to provide 
authority to charge for investigational drugs for these two new 
categories of expanded access.
    Third, the 1987 charging rule needed to be revised to specify the 
types of costs that can be recovered. The language of the 1987 charging 
rule was not very specific and did not provide sufficient guidance to 
sponsors on the costs that could be recovered. Moreover, because of the 
justifications for charging in a clinical trial differ from the 
justifications for charging for expanded access use, the agency 
believed that the costs appropriate for recovery would also differ.
    The reasons FDA believed the 1987 charging rule needed to be 
revised are described more fully in the sections II.B, C, and D of the 
preamble to the proposed rule (71 FR 75168 at 75170 through 75171).
    Accordingly, we proposed to remove paragraph (d) of former Sec.  
312.7 (paragraph (d) discussed charging for and commercialization of 
investigational drugs). We proposed to add new Sec.  312.8 containing 
the following:
     General requirements for charging for investigational 
drugs,
     Specific requirements pertaining to charging for 
investigational drugs in a clinical trial,
     Requirements for charging for investigational drugs for 
treatment use under proposed subpart I (described in the proposed rule 
on expanded access to investigational drugs for treatment use (expanded 
access proposed rule) (71 FR 75147, December 14, 2006)), and
     Requirements for determining what costs can be recovered 
when charging for an investigational drug.
    We received 40 comments on the charging proposed rule, which we 
address in section III of this document.

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

    The final rule revises the charging regulation at Sec.  312.7(d) 
and adds new Sec.  312.8 to clarify the circumstances in which charging 
for an investigational drug in a clinical trial is appropriate, to set 
forth criteria for charging for an investigational drug for the 
different categories of expanded access for treatment use described in 
the expanded access final rule, and to clarify what costs can be 
recovered for an investigational drug. This final rule specifies the 
types of investigational uses of a drug in a clinical trial under part 
312 that require prior authorization to charge and provides criteria to 
authorize charging for each of the uses described in the expanded 
access final rule.

A. General Requirements for Charging

    New Sec.  312.8(a) describes the general requirements and 
conditions for charging for investigational new drugs. Except for 
sponsors charging for a drug obtained from another entity (as described 
below), a sponsor who wishes to charge for an investigational drug must 
do the following:
     Comply with the applicable requirements for the type of 
use for which charging is requested (either in a clinical trial or for 
expanded access) (Sec.  312.8(a)(1)),
     Provide justification that the amount to be charged 
reflects only those costs that are permitted to be recovered (Sec.  
312.8(a)(2)), and
     Obtain prior written authorization from FDA (Sec.  
312.8(a)(3)).
    Section 312.8(a)(4) provides that FDA will withdraw authorization 
to charge if it determines that charging is interfering with the 
development of a drug for marketing approval or that the criteria for 
the authorization are no longer being met.
    In response to comments, the final rule does not require sponsors 
who must obtain an approved drug from another entity for use in a 
clinical trial to obtain FDA approval to charge for the drug or be 
otherwise subject to the requirements in new Sec.  312.8.

B. Charging in Clinical Trials

    Section 312.8(b) of the final rule describes specific requirements 
pertaining to charging for an investigational drug in a clinical trial, 
including investigational use of the sponsor's approved drug. The cost 
of an investigational drug used in a clinical trial is an anticipated 
cost of drug development and should ordinarily be borne by the sponsor. 
Therefore, FDA believes that charging should be permitted only when 
three circumstances are present, as described in Sec.  312.8(b)(1) and 
as follows:
    First, charging should be allowed only to facilitate development of 
a promising new drug or indication that might not otherwise be 
developed, or to obtain important safety information that might not 
otherwise be obtained. The preamble to the 1987 charging rule made 
clear that there should be compelling justification for taking the 
unusual step of allowing charging for unproven therapy during its 
development, stating that ``cost recovery is justified in clinical 
trials only when necessary to further the study and development of 
promising drugs that might otherwise be lost to the medical 
armamentarium.'' (52 FR 19466 at 19472). FDA believes that philosophy 
should continue to apply to charging in a clinical trial in this final 
rule. Accordingly, Sec.  312.8(b)(1)(i) requires that a sponsor wishing 
to charge for its investigational drug in a clinical trial provide some 
evidence of potential clinical benefit that, if demonstrated in 
clinical investigations, would provide a significant advantage over 
available products in the diagnosis, treatment, mitigation, or 
prevention of a disease or condition. Products that are likely to meet 
this criterion are also likely to be eligible for fast track 
development programs and priority review (see FDA's guidance for 
industry on ``Fast Track Drug Development Programs--Designation, 
Development, and Application Review'' (January 2006), including the 
priority review policies for the Centers for Drug Evaluation and 
Research and Biologics Evaluation and Research in Appendix 3 of that 
guidance (available on the Internet at https://www.fda.gov/cder/guidance/index.htm)).
    Second, charging should be permitted only for a trial that is 
necessary for the development of the drug. Therefore, Sec.  
312.8(b)(1)(ii) requires that the sponsor demonstrate that the data to 
be obtained from the clinical trial would be essential to establishing 
that the drug is effective

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or safe for the purpose of obtaining initial marketing approval of the 
drug, or that it would support a significant change in the labeling of 
the sponsor's approved drug. For example, the trial could be designed 
to provide data that would support approval of a new indication or 
generate important comparative safety information.
    Third, charging must be necessary to the conduct of the clinical 
trial. Under Sec.  312.8(b)(1)(iii), a sponsor is required to 
demonstrate that clinical development of the drug could not be 
continued without charging because the cost of the drug is 
extraordinary. The cost of the drug may be extraordinary because of 
manufacturing complexity, scarcity of a natural resource, the large 
quantity of drug needed (e.g., due to the size or duration of the 
trial) or some combination of these or other circumstances. In response 
to comments, this extraordinary cost criterion for charging for the 
sponsor's drug in a clinical trial has been revised to clarify that the 
resources of an individual sponsor are considered in determining 
whether cost is extraordinary.
    Section 312.8(b)(2) provides that the authorization to charge for a 
drug in a clinical trial would ordinarily continue for the duration of 
the clinical trial because it is unlikely that the need for charging 
would change during the course of the trial. However, Sec.  312.8(b)(2) 
gives FDA the discretion to specify a duration shorter than the length 
of the trial. FDA may specify a shorter duration if, for example, there 
is a particular concern that the authorization to charge has the 
potential to delay the development of a drug for marketing approval.

C. Charging for Expanded Access to Investigational Drugs for Treatment 
Use

    Section 312.8(c) sets forth the criteria for charging for the three 
types of expanded access to investigational drugs for treatment use 
described in subpart I of part 312 (the expanded access final rule). 
Part 312, subpart I describes two types of treatment use (expanded 
access for individual patients and expanded access for intermediate-
size patient populations) not previously described in FDA's regulations 
and, therefore, not specifically contemplated by the 1987 charging 
rule. FDA's goal in permitting charging for the treatment uses 
described in subpart I is to facilitate access to investigational drugs 
in situations in which a sponsor might not be able to provide a drug 
for such use absent charging, or to facilitate broader access to an 
investigational drug for treatment use than would be possible absent 
charging.
    The agency's principal concern with charging patients in expanded 
access settings for investigational drugs is that charging not 
interfere with the development of drugs for commercial marketing. 
Accordingly, Sec.  312.8(c)(1) requires a sponsor wishing to charge for 
an investigational drug for any of the three types of expanded access 
under part 312, subpart I to provide reasonable assurance that charging 
will not interfere with developing the drug for marketing approval.
    For the types of expanded access to investigational drugs described 
in proposed subpart I, FDA believes it is less likely that the limited 
numbers of patients who might obtain individual patient expanded access 
to an investigational drug (Sec.  312.310) or intermediate-size patient 
population expanded access (Sec.  312.315) would impede development of 
a drug or indication. The potential to interfere with drug development 
is greatest for treatment use under a treatment IND or treatment 
protocol (Sec.  312.320). Treatment INDs or treatment protocols can 
attract large numbers of patients and thus have the potential to 
significantly affect enrollment in the clinical trials needed to 
establish safety and effectiveness. Accordingly, Sec.  312.8(c)(2) sets 
forth specific information that would be required to reasonably assure 
FDA that charging for an investigational drug under a treatment IND or 
treatment protocol will not interfere with drug development. Sponsors 
are required to provide evidence of sufficient enrollment in any 
ongoing clinical trials needed for marketing approval to reasonably 
assure FDA that the trials will be completed as planned (Sec.  
312.8(c)(2)(i)). Sponsors are also required to provide evidence of 
adequate progress in the development of the drug for marketing approval 
(Sec.  312.8(c)(2)(ii)). Such evidence could include successful 
meetings with FDA before submission of a new drug application (NDA), 
submission of an NDA, or completion of other significant drug 
development milestones. Sponsors are also required to submit 
information under their general investigational plans (Sec.  
312.23(a)(3)(iv)) specifying the drug development milestones they plan 
to meet in the coming year (Sec.  312.8(c)(2)(iii)).
    Section 312.8(c)(3) specifies that the authorization to charge be 
limited to the number of patients authorized to receive the drug for 
treatment use, if there is a limitation. For example, the authorization 
to charge for an investigational drug under an individual patient 
expanded access submission is limited to a single patient. Similarly, 
the authorization to charge under an intermediate-size patient 
population expanded access submission is limited to the number of 
patients permitted to receive the drug under that particular 
intermediate-size patient population expanded access IND or protocol.
    Section 312.8(c)(4) provides that FDA will ordinarily authorize 
charging for expanded access for treatment use under part 312, subpart 
I to continue for 1 year from the time of FDA authorization and that 
FDA may reauthorize charging for additional periods upon request. It 
also provides FDA the discretion to specify a shorter authorization. 
The final rule limits the authorization to charge to a period of 1 year 
or less to permit the agency to periodically assess whether the 
criteria for charging continue to be met. FDA anticipates that it will 
exercise its discretion to specify a shorter duration when there is a 
particular concern that charging could interfere with drug development.

D. Recoverable Costs

    Section 312.8(d) describes the kinds of costs that are recoverable 
when charging for an investigational drug in a clinical trial and for 
expanded access for treatment use under part 312, subpart I. The 
purpose of permitting charging for an investigational drug in a 
clinical trial is to permit a sponsor to recover the costs of making a 
drug available to study subjects when those costs are extraordinary. 
Thus, Sec.  312.8(d)(1) limits cost recovery to the direct costs of 
making the investigational drug available in these situations. Indirect 
costs can not be recovered.
    Section 312.8(d)(1)(i) describes direct costs as costs incurred by 
a sponsor that can be specifically and exclusively attributed to 
providing the drug for the investigational use for which FDA has 
authorized cost recovery. Direct costs include costs per unit to 
manufacture the drug (e.g., raw materials, labor, and nonreusable 
supplies and equipment used to manufacture the quantity of drug needed 
for the use for which charging is authorized) or costs to acquire the 
drug from another manufacturing source, and direct costs to ship and 
handle (e.g., store) the drug.
    Indirect costs are costs that are not attributable solely to making 
the drug available for the investigational use for which charging is 
requested (for example, expenditures for physical plant and equipment 
that are incurred primarily for the purpose of producing large 
quantities of the drug for commercial sale after approval, or for

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making the drug available for a variety of investigational uses). 
Indirect costs are not appropriate for cost recovery for 
investigational uses because these costs would be incurred even if the 
clinical trial or expanded access use for which charging is authorized 
did not occur. Section Sec.  312.8(d)(1)(ii) states that indirect costs 
include costs incurred primarily to produce the drug for commercial 
sale (e.g., costs for facilities and equipment used to manufacture the 
supply of investigational drug, but that are primarily intended to 
produce large quantities of the drug for eventual commercial sale) and 
research and development, administrative, labor, or other costs that 
would be incurred even if the clinical trial or treatment use for which 
charging is authorized did not occur.
    Sponsors who provide investigational drugs for expanded access for 
treatment use for intermediate-size patient populations and for 
treatment INDs and treatment protocols incur costs in addition to the 
anticipated and ordinary costs of drug development. The purpose of 
permitting cost recovery for expanded access use is to encourage 
sponsors to make investigational drugs available for treatment use. 
Thus, Sec.  312.8(d)(2) permits a sponsor to recover the costs of 
administering treatment use programs for intermediate-size patient 
populations and for treatment INDs and treatment protocols, as well as 
the direct costs of the drug. The final rule does not authorize 
sponsors to recover administrative costs associated with expanded 
access for individual patients because these costs would be so minor. 
Section 312.8(d)(2) provides that in addition to the direct costs of 
the drug described in Sec.  312.8(d)(1), a sponsor may recover the 
costs of monitoring the expanded access use, complying with IND 
reporting requirements, and other administrative costs directly 
associated with making a drug available for treatment use under 
Sec. Sec.  312.315 and 312.320.
    Section 312.8(d)(3) provides that, to support its calculation for 
cost recovery, a sponsor must provide supporting documentation to show 
that the cost calculation is consistent with the relevant requirements 
in Sec.  312.8(d). The proposed rule has been revised to state that the 
documentation must be accompanied by a statement that a certified 
public accountant has reviewed and approved the calculations.

III. Comments on the Proposed Rule

A. Overview of Comments

    The agency received 40 comments on the proposed rule. Comments were 
received from individuals (persons with serious diseases,\1\ persons 
with family members with serious diseases, and other interested 
persons), health care and consumer advocacy organizations, 
pharmaceutical and biotechnology companies, health insurance companies, 
trade organizations, a State government, an academic medical center, 
and a venture capital company.
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    \1\ Unless otherwise indicated, ``serious diseases'' in this 
final rule refers to serious or immediately life-threatening 
diseases or conditions.
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    Some comments from individuals were supportive of the charging 
regulation to the extent that it may make it easier to develop drugs 
for serious diseases in some cases and make investigational drugs more 
broadly available for treatment use under expanded access programs. 
Other comments from individuals were concerned that charging, in the 
absence of reimbursement for investigational drugs by health insurance 
companies, would limit enrollment in clinical trials and expanded 
access programs to those who can afford to pay for the drug.
    Health care and consumer advocacy organizations were generally 
supportive of the proposed rule. Some stated that the rule struck the 
appropriate balance between facilitating development of costly 
therapies, including drugs for rare diseases, and increasing access to 
investigational drugs for treatment use. One advocacy organization 
expressed concern about the effects of charging on equitable access 
across different economic strata, arguing that the ability to enroll in 
clinical trials and expanded access programs may be restricted to 
wealthier individuals. One organization was skeptical of the agency's 
assertion that facilitating charging for investigational drugs made 
available under expanded access programs would increase access.
    FDA believes this final rule will facilitate development of some 
costly therapies that might not have been developed absent cost 
recovery and will encourage expanded access programs. FDA also 
acknowledges, however, that the rule has the potential to create 
certain inequities. Issues related to equitable access are discussed in 
greater detail in responses to comments 36 through 39.
    The major concerns of pharmaceutical and biotechnology companies 
and their trade organizations were the requirements pertaining to 
charging for approved drugs being evaluated in a clinical trial under 
an IND. These companies were most concerned with the requirements 
pertaining to charging for approved drugs that must be obtained from 
another entity for use in a trial. An academic medical center was very 
supportive of FDA's efforts to clarify the charging requirements 
pertaining to approved drugs used in a trial under an IND. As discussed 
in greater detail in responses to comments 27 and 31, FDA has revised 
the proposed rule so that sponsors need not obtain authorization from 
FDA to charge for approved drugs obtained from another entity not 
affiliated with the sponsor.
    The primary concern of health insurance companies and their trade 
organization was that the new charging regulation may create pressure 
on third-party payers to reimburse, or lead to legislation requiring 
them to reimburse, for investigational drugs. Reimbursement issues are 
discussed in greater detail in comments 63 through 65.
    A major concern for a small biotechnology company, a venture 
capital firm, and a State health agency was the narrowing of the cost 
recovery provision in the proposed rule to permit recovery of direct 
costs only for an investigational drug used in a clinical trial, and to 
specifically exclude recovery of substantial capital expenditures 
incurred for purposes of large-scale manufacturing and general research 
and development costs. These comments were concerned that this 
narrowing would make it more difficult for entities with limited 
resources to develop expensive new therapies. FDA continues to believe 
that these expenditures are not appropriate for cost recovery during 
the development of a new drug. These concerns are discussed in greater 
detail in responses to comments 1 and 46.

B. General Comments

    (Comment 1) Two comments stated that charging for investigational 
drugs to treat rare diseases or conditions (orphan drugs) should be 
subject to less stringent criteria than charging for drugs to treat 
non-orphan diseases. The comments maintained that drugs to treat orphan 
diseases are commonly developed by small companies or not-for-profit 
entities that have limited or no ability to raise money from capital 
markets. Therefore, less restrictive charging criteria are needed to 
permit these entities to recover their development costs.
    (Response) FDA does not believe there is justification for 
different and less stringent cost recovery criteria for investigational 
drugs for orphan diseases than non-orphan diseases. As stated in the 
preamble to the proposed rule, FDA does not believe that charging

[[Page 40876]]

for an investigational drug in clinical studies intended to support 
approval of the drug is the appropriate mechanism to recoup research 
and development costs beyond those costs directly associated with 
making the drug available under criteria described in this charging 
rule (71 FR 75168 at 75171) (see response to comment 46 for further 
discussion). FDA believes sponsors intending to develop orphan products 
should pursue orphan product designation from FDA to assist with 
development and recovery of investment (21 CFR part 316). Such 
designation provides for tax credits for the costs of clinical research 
associated with development of an orphan drug and 7 years of marketing 
exclusivity after an orphan drug is approved. In addition, sponsors 
that obtain orphan designation may be eligible to receive grants from 
FDA of up to $350,000 per year for 4 years to defray directly the costs 
of clinical research (for more information, see Office of Orphan 
Products Development, https://www.fda.gov/orphan/index.htm). Moreover, 
orphan designation and grant funds from FDA often provide incentives 
for additional investment from other sources. This final rule is 
intended only to address the situation in which the cost of the drug 
itself is so high that a sponsor needs to recover costs associated with 
making the drug available to be able to conduct or continue the trial.
    (Comment 2) One comment mentioned that it is not clear if the rule 
applies to both unapproved drugs and approved drugs under investigation 
for new indications.
    (Response) The rule applies to both unapproved drugs and, in 
certain situations, approved drugs under investigation for new 
indications (see also response to comment 4).
    (Comment 3) One comment suggested that to improve the readability 
of the proposed rule, the rule should have different provisions for 
company-sponsored expanded access programs than for investigator-
sponsored expanded access programs. The comment also suggested that 
there should be different provisions for new molecular entities than 
for approved products being studied for new indications.
    (Response) FDA does not believe there is a need for separate 
provisions for expanded access depending on whether the sponsor of the 
IND is a manufacturer or a noncommercial sponsor such as an individual 
physician. In either case, FDA's primary concern is whether the IND 
would somehow interfere with drug development, so the criteria would be 
the same for both groups. We also do not believe that separate 
provisions are needed regarding the amount charged because, in both 
cases, the amount charged would be limited to costs.
    Based on changes made to the proposed rule, FDA also does not 
believe there is any need to divide the rule into requirements 
applicable to charging for new molecular entities and requirements 
applicable to charging for approved drugs under investigation for new 
uses. FDA has revised the proposed rule to eliminate the requirement 
that a sponsor who obtains an approved drug from another source to use 
in a trial as an active control or in a trial intended to obtain 
additional information about the approved drug (e.g., to study a new 
indication, to study a safety endpoint) must obtain prior authorization 
to charge for the approved drug when used for an investigational 
purpose (see comments 27 and 31). FDA has retained the requirement that 
a sponsor obtain permission to charge for its own approved drug in a 
trial of that drug. In this scenario, FDA believes the same criteria as 
would apply to charging for an unapproved drug should apply. Therefore, 
a separate provision is not needed.
    (Comment 4) One comment stated that the proposed rule's 
restrictions on charging should not apply to approved drugs and that 
investigators and others charging for approved drugs should be 
permitted to charge their usual amounts and to receive the customary 
insurance reimbursement. The comment also noted that restricting 
charges for approved drugs in clinical trials would be administratively 
burdensome to investigators.
    (Response) FDA agrees in part and disagrees in part. FDA agrees 
that a sponsor that is not the marketer of an approved drug (i.e., is 
not the entity that holds the approved application) should not be 
required to obtain FDA approval to charge for the drug when it is used 
in a clinical trial for any purpose--e.g., used for its approved 
indication as an active control or in a trial of a new indication for 
the drug (see comments 27 and 31 discussing in greater detail the 
revision to the final rule to accommodate this change). Accordingly, 
the provisions in the proposed rule requiring prior authorization to 
charge in these situations have been deleted from this final rule. 
However, FDA believes a sponsor seeking to charge for its own approved 
drug in a trial of a new use or to obtain important safety information 
about the drug should be treated differently. In these situations, the 
sponsor is ordinarily conducting the trial to enhance or preserve the 
commercial value of the drug. Therefore, as is the case with a request 
to charge for a new molecular entity, the sponsor should be required to 
overcome the presumption that the cost of the drug is a normal cost of 
the business of drug development, a cost that should ordinarily be 
borne by the sponsor of the trial. Therefore, FDA believes the sponsor 
should be required to obtain prior authorization to charge and should 
meet the same burden for charging for the approved drug in a clinical 
trial as it would be required to meet for charging for a new molecular 
entity. That is, the requirements in Sec.  312.8(b)(1) apply with equal 
force to charging for the sponsor's unapproved drug and charging for 
the sponsor's approved drug in a trial of a new use or a trial that 
could otherwise result in an important labeling change. It is beyond 
the scope of the regulation and FDA's authority to regulate insurance 
reimbursement with respect to clinical trials involving approved drugs.

C. General Criteria for Charging

    Proposed Sec.  312.8(a) set forth the general requirements and 
conditions for charging for investigational drugs. A sponsor that 
wishes to charge for an investigational drug must:
     Comply with the applicable requirements for the type of 
use for which charging is requested (either in a clinical trial or for 
expanded access) (proposed Sec.  312.8(a)(1)),
     Provide justification that the amount to be charged 
reflects only those costs that are permitted to be recovered (proposed 
Sec.  312.8(a)(2)), and
     Obtain prior written authorization from FDA (proposed 
Sec.  312.8(a)(3)).
1. Justification for the Amount To Be Charged
    (Comment 5) One comment asked that the following language be added 
at the end of Sec.  312.8(a)(2) and (c)(1) of the proposed rule: ``Any 
such charges found to be recoverable costs as determined under [Sec.  
312.8(d)] shall be minimized and/or terminated to the greatest degree 
or at the earliest opportunity possible consistent with the criteria in 
this rule. If circumstances supporting charging under this rule are no 
longer met, charging shall terminate.''
    (Response) FDA does not believe it is necessary to insert 
additional language concerning how long and how much to charge because 
the language essentially repeats the requirements that are already in 
other parts of the rule. Section 312.8(b)(2) and (c)(4) of the final 
rule specify how long it is permissible to charge in a clinical trial 
and for an

[[Page 40877]]

expanded access use, respectively. Section 312.8(a)(4) permits FDA to 
withdraw the authorization to charge at any time if it determines that 
charging is interfering with the development of a drug for marketing 
approval or that the criteria for the authorization are otherwise no 
longer being met. Section 312.8(d) specifies what costs can be 
recovered during whatever time period charging is authorized.
2. Prior Written Authorization to Charge
    The requirement in the proposed rule to obtain prior written 
authorization from FDA to charge for any investigational drug is a 
change from the requirements under the 1987 charging rule. Under the 
1987 charging rule, a sponsor was required to obtain prior written 
authorization to charge for an investigational drug in a clinical trial 
(Sec.  312.7(d)(1)), but a sponsor of a treatment IND or a treatment 
protocol under Sec.  312.34 was permitted to commence charging 30 days 
after receipt by FDA of an information amendment concerning charging, 
unless FDA notified the sponsor to the contrary (Sec.  312.7(d)(2)).
    (Comment 6) One comment requested that FDA retain the provision in 
the 1987 charging rule (Sec.  312.7(d)(2)) that allowed authorization 
to charge for an investigational drug under a treatment IND or 
treatment protocol to go into effect automatically 30 days after 
receipt by FDA of the information amendment, unless the sponsor is 
notified to the contrary by FDA (Sec.  312.7(d)(2)), and further, that 
FDA make this provision applicable to all expanded access uses. The 
comment argued that the requirement for prior authorization would 
result in delay in the availability of investigational drugs for 
expanded access uses. One comment requested that FDA add the following 
language after the provision requiring prior written authorization to 
charge for an investigational drug: ``Such authorization shall not be 
unreasonably withheld.'' Two comments agreed with FDA's decision to 
require prior written authorization from FDA to charge for drugs 
obtained through expanded access programs.
    (Response) FDA does not agree that charging for expanded access 
uses should be permitted without prior written authorization to charge 
from FDA. FDA believes it is important to determine, in advance of any 
patient being charged, that the criteria for charging are met (in 
particular, the requirement that charging not interfere with drug 
development) and that the amount to be charged is consistent with the 
cost recovery requirements.
    FDA also does not believe that this provision will delay access to 
investigational therapies by patients with serious diseases who lack 
therapeutic alternatives. When there is a pressing need for cost 
recovery to make an investigational therapy available, FDA will 
ordinarily be able to expedite review of a charging request. For a new 
IND, FDA anticipates that, in most cases, it will be able to make a 
charging determination at the same time it makes a determination on the 
underlying expanded access IND. When the need to charge becomes evident 
after an expanded access IND is ongoing, FDA anticipates that a sponsor 
would be able to foresee the need to charge sufficiently far in advance 
of that need to be able to make a charging submission and obtain a 
timely FDA determination.
    FDA also does not believe it is necessary to specify that the 
authorization to charge ``shall not be unreasonably withheld.'' The 
Administrative Procedure Act provides that an agency decision may be 
set aside by the courts if found to be ``arbitrary, capricious an abuse 
of discretion, or otherwise not in accordance with law'' (5 U.S.C. 
706(2)(A)). The agency believes this language provides the appropriate 
standard for FDA's decision of whether to allow charging for an 
investigational drug.
3. Withdrawal of Authorization to Charge
    Proposed Sec.  312.8(a)(4) specified that FDA will withdraw the 
authorization to charge if it determines that charging is interfering 
with the development of a drug for marketing approval or that the 
criteria for the authorization are otherwise no longer being met.
    (Comment 7) One comment recommended that the rule include an 
additional requirement specifying that FDA notify the sponsor of a 
proposal to withdraw authorization to charge and that FDA provide the 
sponsor an opportunity to respond.
    (Response) FDA expects in most cases to provide reasonable notice 
before withdrawing an authorization to charge to allow sponsors an 
opportunity to address the agency's concerns. We are not amending the 
proposed rule as requested, however, because the agency believes we 
should have the flexibility, when warranted, to withdraw an 
authorization to charge without providing advance notice to the 
sponsor. Sponsors can request review of FDA's withdrawal of an 
authorization to charge using dispute resolution processes.
4. Lack of Timeframe for FDA Response
    (Comment 8) Two comments recommended that the final rule include a 
general timeframe for FDA to decide whether to permit charging. One of 
the comments recommended that FDA decide all charging requests within 
30 to 60 days.
    (Response) FDA does not believe it should commit to a specified 
time period for review that would apply to all charging requests. In 
many cases, FDA anticipates being able to make a determination on a 
request to charge at the same time it responds to the underlying IND 
submission (when the submissions are made at the same time). However, 
in FDA's experience, charging requests can present challenging issues 
that require some discussion between FDA and the sponsor. Thus, it is 
difficult to estimate reliably a time period for making a charging 
request determination that would apply uniformly to all charging 
requests. For this reason, FDA is not prepared to commit to a 30-day 
timeframe for making charging request determinations. FDA also does not 
foresee the need for a 60-day maximum review time.

D. Charging in a Clinical Trial

    Proposed Sec.  312.8(b) described specific requirements pertaining 
to charging for an investigational drug in a clinical trial. This 
provision described criteria for charging for an investigational drug 
in three situations:
     Charging for the sponsor's own drug in a clinical trial 
(Sec.  312.8(b)(1)),
     Charging for an approved drug that a sponsor must obtain 
from another entity for use as an active control or in combination with 
another drug in a clinical trial designed to evaluate the safety and 
effectiveness of the sponsor's investigational drug (Sec.  
312.8(b)(2)), and
     Charging for an approved drug that must be obtained from 
another entity in a clinical trial designed to evaluate the approved 
drug (e.g., for another indication) (Sec.  312.8(b)(3)).
1. General Comments
    (Comment 9) Several comments stated that permitting charging for 
the investigational drug in clinical trials would make it even more 
difficult to enroll subjects into clinical trials and, therefore, could 
increase the time to complete trials and delay bringing new drugs to 
market. Three comments stated that charging could discourage enrollment 
by patients who lack the resources to pay for the investigational drug. 
One comment stated that charging for nonreimbursed, investigational

[[Page 40878]]

therapies could discourage physicians from recommending enrollment in 
trials to their patients who are eligible.
    (Response) As was the case with the prior charging rule, the 
provisions concerning charging for the sponsor's investigational drug 
in this final rule are intended to help sponsors develop important new 
therapies that would be very difficult or impossible to develop absent 
charging. In FDA's experience, sponsors have rarely found it necessary 
to charge for such therapies in clinical trials to develop a drug for 
marketing approval. FDA anticipates that charging for the sponsor's 
drug in a clinical trial will continue to be an unusual circumstance. 
FDA recognizes that charging could make it difficult to enroll subjects 
in clinical trials and may have a disproportionate impact on enrollment 
of patients who cannot afford to pay for the investigational drug. FDA 
expects, however, that sponsors will monitor clinical trial accrual 
rates and take whatever steps are necessary to ensure that subjects are 
able to enroll. For example, in FDA's experience, sponsors who have 
charged for an investigational drug in a clinical trial have made 
provision to enroll subjects unable to pay.
    (Comment 10) Two comments stated that the financial burden for 
conducting clinical trials, including supplying the investigational 
drug, should be carried by the sponsors, who stand to benefit from the 
drug if commercialized.
    (Response) FDA agrees that, in most circumstances, sponsors should 
bear the costs of making an investigational drug available in a 
clinical trial. The preamble to the proposed rule stated: ``Generally, 
the costs of conducting a clinical trial are costs that the sponsor 
should bear. Conducting a clinical trial is part of the drug 
development process, and drug development is an ordinary business 
expense for a commercial sponsor'' (71 FR 75168 at 75170). The preamble 
to the proposed rule also clarified that the philosophy underlying the 
1987 charging rule--that charging for an investigational drug in a 
clinical trial should be an exceptional circumstance and justified only 
when necessary to further the study of a promising drug that might 
otherwise not be developed--was intended to apply to this charging rule 
(71 FR 75168 at 75170).
    (Comment 11) One comment stated that FDA should include in the 
codified portion of the rule the language from the preamble of the 1987 
charging rule that: ``FDA * * * [presumes] that supplying 
investigational drugs to subjects participating in clinical trials 
without charge is part of the normal cost of doing business.''
    (Response) FDA does not believe it is necessary to include the 
suggested language in this final rule. The preamble to the proposed 
rule contained language similar to the language in the preamble to the 
1987 charging rule, stating that: ``Generally, the costs of conducting 
a clinical trial are costs that the sponsor should bear. Conducting a 
clinical trial is part of the drug development process, and drug 
development is an ordinary business expense for a commercial sponsor'' 
(71 FR 75168 at 75170). Thus it is clear that FDA intends that the 
presumption that the cost of an investigational drug should ordinarily 
be borne by the sponsor and charging is justified only in exceptional 
circumstances be carried forward to this rule. That presumption is 
implicit in the stringent criteria in Sec.  312.8(b)(1) for allowing 
charging for a sponsor's drug in a clinical trial. FDA does not believe 
it is necessary to state the presumption in the codified language.
    (Comment 12) One comment stated that FDA should consider working 
with pharmaceutical firms to develop better ways of funding clinical 
trials of investigational drugs. The comment recommended that FDA 
evaluate practical ways the pharmaceutical industry can fund patient 
expenses for investigational drugs used in clinical studies and that 
one option would be for FDA to evaluate the viability of establishing a 
common patient pool funded 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 allow a sponsor to recover 
its costs associated with making an investigational drug available to 
clinical trial subjects when the cost of the drug is so high that the 
study could not be conducted without charging. The rule is not intended 
to help defray other costs associated with the conduct of a trial. 
However, in FDA's experience, the drug cost is usually not the largest 
expense associated with clinical trials. Typically, the costs of 
administering and monitoring a clinical trial are much greater than the 
cost of the drug. At present, FDA is focusing its collaborative efforts 
with industry on improving the efficiency of the clinical trial process 
through various Critical Path programs (e.g., Clinical Trial 
Transformation Initiative, https://www.fda.gov/oc/initiatives/criticalpath/clinicaltrials.html). FDA encourages efforts to develop 
alternative mechanisms to finance important clinical research by 
private sector interests or nonregulatory governmental bodies, but 
believes such efforts would be best administered by private sector 
interests or nonregulatory governmental bodies.
    (Comment 13) One comment recommended that the title of the rule be 
changed from ``Charging for Investigational Drugs'' to ``Charging for 
Drugs Used in Clinical Trials'' because the rule also would permit 
sponsors to charge for approved drugs, which, the comment asserts, are 
not investigational.
    (Response) FDA disagrees. The rule addresses charging for 
investigational drugs both in clinical trials and in expanded access 
programs under new subpart I. Because the recommended title would seem 
to exclude expanded access uses, that title is too narrow. Moreover, 
the use of an approved drug in a trial of a new use is an 
investigational use and thus clearly covered by the rule and its title. 
See response to comment 15 for discussion of a minor change to the 
section's title.
    (Comment 14) Two comments stated that permitting charging for an 
investigational drug in a clinical trial--because it might exclude 
economically disadvantaged persons from trial participation--could 
exacerbate existing problems with underrepresentation of economically 
disadvantaged and minorities in such trials, and thus may limit 
generalizability of trial results.
    (Response) FDA does not believe that inability to participate in a 
clinical trial because a subject cannot pay for the drug will have a 
meaningful effect on generalizability of trial results. Many factors 
affect participation in clinical trials, including geographic location, 
ability to qualify for the trial, demographic representation at trial 
sites, and an insufficient number of slots for all who might like to 
participate. The effects of charging on the nature of the trial 
population would probably be of limited significance relative to other 
factors that could affect generalizability. In addition, in FDA's 
experience, sponsors that charge subjects for investigational drug in a 
clinical trial typically make provision for subjects who are unable to 
pay for the drug, thus mitigating any potential effect on 
generalizability due to underrepresentation of individuals from lower 
economic strata.
    (Comment 15) Two comments recommended that the rule include a 
provision stating that the rule does not apply to clinical trials that 
are exempt from the requirement to have an IND.
    (Response) FDA did not intend that the charging regulation apply to 
clinical trials that are exempt from the IND requirements under Sec.  
312.2(b). To make

[[Page 40879]]

this clearer, FDA has changed the title of Sec.  312.8 to ``Charging 
for investigational drugs under an IND.''
    (Comment 16) Two comments stated that permitting charging for 
unapproved drugs in clinical trials has the potential to adversely 
affect FDA resources.
    (Response) As discussed in greater detail in section I of this 
document, FDA believes it is important to provide an option to charge 
for investigational drugs in certain circumstances and, also, that is 
it is important for FDA to regulate charging to prevent 
commercialization of unapproved drugs and unapproved indications. In 
FDA's years of experience reviewing charging requests under the 1987 
charging rule, such requests have been infrequent and the resources 
required to conduct such reviews did not have a negative effect on 
FDA's mission to ensure the safety and effectiveness of new drugs. The 
proposed rule expanded the scope of INDs for which sponsors may seek 
cost recovery to include the three types of expanded access INDs under 
new subpart I. However, in response to comments, the final rule no 
longer requires sponsors that must obtain an approved drug from another 
entity to obtain FDA authorization to charge for that approved drug. 
Thus, FDA anticipates only a modest increase in the number of requests 
to charge due to this final rule.
    In addition, the cost calculation was perhaps the most time-
consuming aspect of preparing and reviewing charging requests under the 
1987 charging rule. This final rule clarifies and simplifies the scope 
of recoverable costs. Thus, FDA anticipates that it will typically take 
less time to prepare and review a charging submission under the new 
rule than under the 1987 charging rule.
    (Comment 17) One comment stated that the rule should differentiate 
between different phases of testing of an unapproved drug because the 
justification for allowing recovery and the supporting evidence will 
vary for different clinical trials in different phases of drug 
development.
    (Response) FDA believes the criteria described in Sec.  312.8(b)(1) 
concerning charging for a sponsor's drug provide sufficient flexibility 
to evaluate requests to charge for a drug in clinical trials in 
different phases of drug development (also see response to comment 19 
discussing the variable basis for assessing whether a drug has a 
potential clinical benefit that would be a significant advantage over 
available products and response to comment 20 discussing when a 
clinical trial would be considered essential to establishing that the 
drug is effective and safe).
2. Charging for the Sponsor's Own Drug in a Clinical Trial
    Proposed Sec.  312.8(b)(1) set forth three criteria, in addition to 
the general criteria in Sec.  312.8(a), that needed to be met to permit 
a sponsor to charge for its own investigational drug in a clinical 
trial.
    a. Significant advantage over available therapy. Section 
312.8(b)(1)(i) of the proposed rule provided that a sponsor who wishes 
to charge for its investigational drug, including investigational use 
of its approved drug, must provide 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.
    (Comment 18) One comment stated that this criterion is not 
meaningful as it would apply to all drugs that are selected to be 
developed by pharmaceutical and biotechnology companies.
    (Response) FDA does not agree that all drugs selected to be 
developed for marketing offer a potential significant advantage over 
available therapy. Companies often deliberately develop drugs that 
offer only modest advantages over existing therapy or appear to be 
similar to existing therapy. There may be good commercial and clinical 
reasons to pursue such development. For example, there is likely to be 
variation in response to a pharmacologic intervention, both in desired 
treatment effect and incidence of adverse effects, in different 
individuals. Thus, the availability of similar therapies can provide 
alternatives for those who have inadequate responses to a drug or 
experience an adverse reaction even if a significant advantage has not 
been clinically shown for any of the therapies. This criterion is 
intended to distinguish those types of drugs from those for which there 
are preliminary clinical data suggesting a significant advantage in the 
therapy for a given disease and for which the development program is 
geared toward establishing that advantage.
    (Comment 19) One comment asked for clarification about the type and 
degree of evidence needed to show a significant advantage, especially 
at the beginning of large phase 3 trials. Another comment recommended 
that this criterion concerning a significant advantage be replaced with 
``evidence of potential advantage over available therapy.'' The comment 
stated that the significant advantage standard would be likely to 
prevent a sponsor from charging for its own drug because the standard 
presumes that comparative studies have been conducted against all the 
other products.
    (Response) The amount and type of data needed to demonstrate a 
potential clinical benefit that would be a significant advantage over 
existing therapy will vary with the stage of development. For a request 
to charge for a large phase 3 trial, ordinarily the clinical data 
developed in phase 2 will need to confirm or be consistent with a 
potential significant advantage to satisfy this criterion. For a 
request to charge for a trial in an earlier phase of development, more 
preliminary data consistent with a potential significant advantage will 
suffice. FDA does not agree that comparative data will always be 
necessary to demonstrate a potential significant advantage over 
existing therapy. The agency believes that the need to provide 
comparative data is a matter of judgment. For example, there may be 
noncomparative phase 2 data and a plausible pharmacologic basis that 
suggest a significant advantage over existing therapy, and the phase 3 
trial for which charging is requested may be a comparative design 
intended to demonstrate that advantage. Similarly, comparative data are 
not needed if the drug is intended to treat a disease or subpopulation 
with a disease, for which there is no satisfactory existing therapy 
(see also FDA guidance for industry entitled ``Fast Track Development 
Programs--Designation, Development, and Application Review'' (June 
2006), especially section III.B.2, discussing demonstrating a drug's 
potential at various stages of development).
    FDA also does not agree that charging for an investigational drug 
in a clinical trial should be permitted on the basis of only a 
potential advantage over existing therapy, without regard to the 
significance of the advantage. FDA continues to believe that, as was 
articulated in the preamble to the proposed rule (71 FR 75168 at 
75171), the cost of making a drug available to study subjects during 
development should ordinarily be borne by the sponsor. Charging for 
drugs in this situation should be reserved for the exceptional 
circumstance in which it is necessary to continue development of a drug 
that offers a potential significant advantage over existing therapy.
    b. Essential to safety or effectiveness. Section 312.8(b)(1)(ii) of 
the proposed rule provided that a sponsor that wishes to charge for its 
investigational drug, including investigational use of its

[[Page 40880]]

approved drug, must demonstrate that the data to be obtained from the 
clinical trial would be essential to establishing that the drug is safe 
or effective 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).
    (Comment 20) One comment stated that the criterion to show that 
data obtained from the clinical trial are essential to show safety or 
effectiveness or make a significant labeling change would make it 
unreasonably difficult for a sponsor to obtain authorization to charge 
because it would require a sponsor to show that all other trial 
components of the development program have been identified and 
marketing approval could not be obtained without completion of the 
trial for which charging is requested. The comment recommended that, 
instead, the criterion should be that the study is a phase 2 or 3 
protocol that was not put on hold by FDA (Sec.  312.42) or the trial 
was agreed to by FDA through the special protocol assessment process 
(see FDA guidance for industry entitled ``Special Protocol Assessment'' 
(May 2002)). Another comment stated that this criterion is vague and 
overly broad because, arguably, all clinical trials conducted in a drug 
development program would be essential to show safety and 
effectiveness.
    (Response) FDA does not agree that this provision is too 
restrictive. The phrase ``essential to establishing that the drug is 
effective or safe for the purpose of obtaining initial approval of a 
drug'' is intended to limit charging--whether in comparative trials, 
trials of a new use of an approved drug, or other trials--to those 
trials that will generate effectiveness or safety data on the endpoint 
or endpoints intended to establish safety or effectiveness (e.g., 
clinical outcome on the disease of interest), trials that would provide 
direct corroborative support for such trials, and trials that were 
necessary prerequisites to the major safety and effectiveness trials 
(e.g., essential to refining the study design). Such trials would 
include later phase (e.g., phase 2 and 3) controlled clinical trials 
evaluating the clinical endpoints that would establish safety and 
effectiveness (e.g., trials designed to demonstrate the drug's the 
potential clinical advantage), but could also include important 
clinical pharmacology studies (e.g., thorough QT prolongation studies, 
drug-drug interaction studies), safety studies, and other types of 
studies that would provide essential corroboration for the data from 
the major safety and effectiveness trials, or aid in the design of 
those trials.
    FDA does agree that its determination, pursuant to a special 
protocol assessment, that a phase 3 study design and protocol are 
adequate to provide effectiveness data that would support approval of a 
marketing application would, in most cases, mean that the clinical 
trial is essential to establishing that the drug is effective or safe 
for the purpose of obtaining initial approval of the drug.
    FDA does not agree that this provision is overly broad. FDA 
acknowledges that the trials conducted as part of a clinical 
development program typically build on one another. However, it is very 
unlikely that all such trials would be considered essential because 
they provide the data on the endpoints that establish safety and 
effectiveness, essential corroboration for those data, or are essential 
prerequisites to the major safety and effectiveness studies (e.g., 
because they enable the design to be refined so that the data will 
support approval).
    c. Extraordinary cost. Section 312.8(b)(1)(iii) of the proposed 
rule provided that a sponsor that wishes to charge for its 
investigational drug, including investigational use of its approved 
drug, must demonstrate that the cl