Answers to the Most Frequently Asked Questions about the Previous Answers to the Most Frequently Asked Questions about Charging for Investigational Drugs

FDA recently published a Draft Guidance entitled “Charging for Investigational Drugs under an Investigational New Drug Application: Questions and Answers” (the Draft Guidance). This Draft Guidance, when finalized, will replace the Final Guidance issued just six years ago (the 2016 Guidance). As the new Federal Register notice explains, FDA issued the 2016 Guidance in question and answer format to respond to the most frequently asked questions about charging for investigational drugs provided under an IND for either clinical trials or expanded access for treatment use under 21 CFR section 312.8

Changes from the 2016 Guidance

What’s new in the new Draft Guidance? Not all that much.  The 2022 Draft Guidance keeps all the same 20 questions with minimal tweaks to wording and added just three new questions and answers.  The new Q & As (Q21, Q22, and Q23) all concern charging in the context of expanded access.  Below we outline the Draft Guidance and highlight the new information in the 2022 Draft Guidance.

The Draft Guidance covers charging in a clinical trial or in one of the expanded access settings and the differences between them. However, many provisions are broadly applicable in both settings. For example, the Draft Guidance includes answers to general questions about the intended timeframe for response to charging requests (30 days), who should request FDA’s authorization to charge (the IND sponsor), and whom the sponsor may charge with this authorization (not FDA’s business). For this last question, FDA explains that it anticipates the sponsor would charge the patient directly or would charge a payor if reimbursement were available, but clearly states that FDA has no authority in this arena.  FDA has added language to the Answer that covers this topic (A3), stating that sponsors should ensure that charging for drugs in a clinical trial or through expanded access does not create barriers to access “that may exacerbate disparities in clinical trial participants or expanded use patients.”

Authorization for Charging in the Clinical Trial Context

The Draft Guidance continues to list the regulatory requirements to obtain authorization for charging in a clinical trial setting: (1) evidence that the drug has a potential clinical benefit that would provide a significant advantage over available products; (2) the data to be obtained from the trial would be essential to establishing that the drug is safe or effective for the purpose of initial approval or a significant change in labeling; and, (3) the trial could not be conducted without charging because the cost of the drug is “extraordinary” to that particular sponsor.

The Draft Guidance also notes that if the sponsor is evaluating an unapproved use of its approved drug, it is still required to obtain authorization; however, if a sponsor is not the marketing entity and must purchase an approved drug, it is not required to obtain authorization to charge for the drug (limitations on the amount that can be charged still apply even when authorization is not required). Additionally, authorization is not required for a sponsor to charge for the use of its own approved drug as concomitant therapy in a clinical trial intended to evaluate another drug when the concomitant therapy is not part of the clinical trial evaluation, as this is not an investigational use of the approved drug. Finally, the Draft Guidance notes that charging may continue for the duration of the clinical trial unless FDA specifies otherwise.

Authorization for Charging in the Expanded Access Context

The requirements described in the Draft Guidance for authorization to charge in an expanded access setting reflect the particular concerns that arise in the expanded access context.  Specifically, reasonable assurance that charging will not interfere with drug development is needed, and for a treatment IND or treatment protocol under 21 CFR § 320. The reasonable assurance must include (1) evidence of sufficient enrollment in ongoing clinical trials (to reasonably assure FDA that those trials will be completed as planned); (2) evidence of “adequate progress” in the development of the drug for marketing approval; and, (3) information about drug development milestones the sponsor plans to meet in the next year.

Charging may continue for 1 year from authorization unless FDA specifies a shorter period. The Agency may reauthorize upon request for additional periods if the requirements continue to be satisfied.

Cost Calculations

The Draft Guidance explains that the regulation is intended to allow a sponsor to recover direct costs specifically and exclusively incurred in making a drug available. The cost calculation submitted in the request must be accompanied by a statement that an independent certified public accountant (CPA) has reviewed and approved the calculations. The Draft Guidance adds a clarification that the independent CPA “must be qualified to make the required determinations”.

When the amount to be charged is simply the amount charged to the expanded access sponsor by a third party such that there is no calculation to be made, the sponsor does not need to submit the CPA statement, but should submit a copy of the receipt or invoice from the source to justify the amount to be charged.

Although a sponsor of an individual patient expanded access trial may only recover direct costs associated with making the drug available, a sponsor of an intermediate-size patient population expanded access IND, or a treatment IND may also recover administrative costs directly associated with the expanded access use. These additional costs may include fees paid to a third party for administration, including any profit that may be included in the fees.

Two of the new questions added in the Draft Guidance (Q22 and Q23) address the fact that monitoring and other administrative “startup” costs, and manufacturing costs are often higher in the first year compared to subsequent years. These new Q & As explain that some sponsors may amortize costs.  Specifically, sponsors of an intermediate or treatment IND or protocol  can take this approach for monitoring and other administrative startup costs, and sponsors of an expanded access IND or protocol may do so for the costs of manufacturing. In these cases, the sponsor can distribute the additional costs to reduce the per patient cost difference between patients treated earlier and patients treated later. Such a cost amortization plan should be done in accordance with standard accounting practices and this must be reviewed and approved by an independent CPA. In these situations, sponsors must still submit requests to reauthorize charging to continue after the expiration of the initial authorization period.

Finally, the Draft Guidance adds the new recommendation that if a sponsor of an intermediate-size patient population expanded access IND or treatment IND seeks to recover fees paid to a third party, it should disclose the relationship with the third party to patients, and notes that under the regulations governing informed consent, this information  also must be included in the informed consent document.