|Footnotes for this article are available at the end of this page.
In 1982, Chris de Burgh (of “Lady in Red” fame) sang, “Don’t pay the ferryman, don’t even fix a price until he gets you to the other side,” where the narrator warns the passenger not to pay the ferryman (because a storm approaches). Forty years later, in August 2022, the Food and Drug Administration issued its first revision to its 2016 guidance for industry titled, “Charging for Investigational Drugs Under an IND Questions and Answers.”1 The agency intends that the guidance may help industry understand how it intends to implement its regulation on charging for investigational drugs under an investigational new drug application (“IND”) for the purpose of either clinical trials or expanded access for treatment use. FDA, similar to Chris de Burgh, wants to protect the patient (or passenger). This Bulletin highlights some of the key questions and answers raised in the guidance.
FDA’s regulation on charging for investigational drugs under an IND went into effect on October 13, 2009. The applicable charging regulation, 21 C.F.R. § 312.8, includes the following:
- General criteria for authorizing charging for an investigational drug
- Criteria for charging for an investigation drug in a clinical trial
- Criteria for charging for an investigational drug for an expanded access use
- Criteria for determining what costs can be recovered when charging for an investigational drug
After its implementation, the agency received a number of questions concerning the regulation. As a result, FDA issued a final guidance on the topic in June 2016.2 When finalized, the 2022 guidance will replace the 2016 version. Significant changes to the 2016 version include additional recommendations related to the need for submission of a statement by an independent certified public accountant under certain circumstances, and distribution of the manufacturing, administrative, or monitoring costs from the first year over the expected duration of the expanded access IND or protocol.
Highlights of the Q&A Guidance
- General considerations for clinical trials and expanded access use
- FDA’s regulation permits only the sponsor of the IND to request FDA’s authorization to charge for an investigational drug.
- When the sponsor of an IND is a person or entity other than the investigational drug manufacturer (e.g., a physician), the IND sponsor, not the drug. manufacturer, must obtain FDA’s prior written authorization to charge patients
- Though the regulation does not specify a timeframe for FDA to respond to a request to charge for an investigational drug, FDA intends to respond to charging requests within 30 days of receipt.
- Once FDA authorizes a request to charge, FDA does not decide how or to whom the sponsor may charge; FDA presumes that the sponsor would ordinarily charge a patient directly or would charge a third-party payor if reimbursement is available.
- A sponsor must satisfy all of the requirements below to obtain written authorization from FDA to charge for its own investigation drug in a clinical trial:
- Provide evidence to FDA that the drug has a possible clinical benefit that would provide a significant advantage over available products in the diagnosis, treatment, mitigation, or prevention of a disease or condition.
- Demonstrate 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 or would support a significant change in the labeling of an approved drug (e.g., a new indication, inclusion of comparative safety information).
- Demonstrate that the clinical trial could not be conducted without charging because the cost of the drug is extraordinary to the sponsor.
- A drug cost may be considered “extraordinary” because of manufacturing complexity, scarcity of a natural resource, the large quantity of the drug needed, or some combination of these or other similar circumstances.
- FDA will consider the company’s site and resources when evaluating a request to charge for an investigational drug.
- Provide documentation to support its calculation for cost recovery to show that the calculation meets regulatory requirements.
- The documentation must be accompanied by a statement that an independent certified public accountant has reviewed and approved the calculation.
- Charging may continue for the entire length of the clinical trial unless FDA specifies a shorter duration.
- While a sponsor must obtain prior authorization from FDA to charge for its investigational drugs, including investigational uses of its approved drugs, FDA will not require a sponsor to obtain prior authorization to charge for its own approved drug when that drug is used as concomitant therapy for an approved use and is not part of the clinical trial evaluation (e.g., the approved drug itself is not being evaluated for an investigational use).
- FDA said that when charging might affect the integrity of the clinical data obtained from the trial, the sponsor may seek advice from the appropriate review division in the Center for Drug Evaluation and Research.
- FDA stated that a sponsor of an expanded access IND or protocol must do all of the following to obtain written authorization from FDA to charge for the drug’s expanded access use:
- Provide reasonable assurance to FDA that charging will not interfere with drug development; the assurance must include:
- evidence of sufficient enrollment in any ongoing clinical trials needed for marketing approval to reasonably assure FDA that the trial or trials will be successfully completed as planned;
- evidence of adequate progress in the development of the drug for marketing approval; and
- information submitted under the general investigational plan specifying the drug development milestones the sponsor plans to meet in the next year.
- Provide documentation in its charging request submission to show that its calculation of the amount to be charged is consistent with the regulatory requirements; the documentation must be accompanied by a statement that an independent CPA has reviewed and approved the calculation.
- Charging for an investigational drug for expanded access use may continue for one year from the time of FDA authorization unless FDA specifies a shorter period.
- If a sponsor wishes to continue charging beyond the duration of its existing charging authorization, the sponsor must submit a request to FDA for reauthorization.
- The request to continue charging for expanded access must satisfy the same requirements as the initial request for charging authorization.
- The sponsor should note whether there is any new information from the original or previous request.
- The agency must provide written authorization before the sponsor can continue to charge for the investigational drug beyond the period previously authorized.
- FDA recommends that the sponsor submit a request to reauthorize charging at least 60 days prior to the expiration of the existing authorization.
- A sponsor can recover only the direct costs of making a drug available to subjects in a clinical trial, which are the costs that are specifically and exclusively attributable to providing the drug to clinical trial subjects.
- The costs may include those to manufacture the drug (e.g., raw materials, labor, non-reusable supplies) or costs to acquire the drug from another source and direct costs to ship and handle (e.g., store) the drug.
- When charging for individual patient expanded access, a sponsor may recover only its direct costs associated with making the drug available to the patient (excluding administrative costs).
- When charging for an investigational drug used in an intermediate-size patient population expanded access IND or protocol or a treatment IND or protocol, in addition to the direct drug costs, a sponsor may recover (1) the cost of monitoring the expanded access IND or protocol; (2) the cost of complying with IND reporting requirements; and (3) other administrative costs directly associated with the expanded access use.
- The sponsor of an expanded access IND or protocol may recover the cost of the fees the sponsor pays to a third party for administering an intermediate-size patient population expanded access IND or protocol, or a treatment IND or protocol.
- In support of its calculation of recoverable costs, a sponsor must provide documentation showing that its calculation is consistent with the regulatory requirements, describing recovery of direct costs and certain additional costs that may be recovered for intermediate-size patient population expanded access uses or treatment INDs or protocols; the documentation must be accompanied by a statement that an independent CPA has reviewed and approved the calculations.
- If the amount to be charged for a drug is merely the amount charged to the expanded access sponsor by a third party who provides the drug, the sponsor does not need a statement from a CPA and should only provide a copy of the receipt/invoice from the drug provider.
- A sponsor 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 just the first year of the treatment.
- Higher manufacturing costs can also be distributed over the duration of the IND or protocol.
- The sponsor of an expanded access IND or protocol may recover the cost of fees paid to a third party for administering an intermediate-size patient population or treatment IND or protocol, including any profit for the third party that may be included in the fees.
- These fees paid to the third party should be included in the calculation for cost recovery that the sponsor provides in its request to charge.
- The sponsor should disclose to the patients any relationship it may have with the third party.
- A sponsor may recover the direct costs associated with making a drug available, such as at a clinical trial site (e.g., a hospital or clinic), including pharmacy costs (e.g., the cost to reconstitute a drug for infusion), nursing costs (e.g., costs associated with administering a drug and monitoring study subjects), equipment costs (e.g., intravenous administration sets, infusion pumps), and costs for study-related procedures (e.g., chemistry labs, radiographic procedures).
- FDA does not provide any recommendation as to how sponsors should charge for an investigational drug or to whom to charge for the investigational drug once the sponsor receives authorization, though it does suggest two scenarios.
- The guidance offers industry insight as to how sponsors can calculate their cost recovery in association with clinical trials or expanded access use.
- As Chris de Burgh wanted to protect the passenger from the ferryman, FDA wants to ensure that patients in a clinical trial are protected and only charged if the sponsor can justify the rationale and documentation to make it to the other side.
 See https://www.fda.gov/media/161079/download.
 Guidance for Industry Charging for Investigational Drugs Under an IND — Questions and Answers (June 2016) providing recommendations in a question-and-answer format, addressing the most frequently asked questions is available at https://www.fda.gov/media/85682/download.