In January 2012, the Federal Drug Administration (FDA) submitted its recommendations for three drug-related user fee programs to Congress for authorization. These recommendations are the result of extensive negotiations with various sectors in the pharmaceutical industry.

For the first time, the FDA hopes to have a user fee program for generic drugs as well as for the newly created regulatory category of biosimilar and interchangeable biological products. These two new programs are being modeled on the long-standing program for so-called “pioneer” prescription drugs, which has been in place since 1992. This program – called the Prescription Drug User Fee Act (PDUFA) – must be reauthorized every five years, and the proposed Generic Drug User Fee Act (GDUFA) and the Biosimilar and Interchangeable Products User Fee Act would follow the five-year reauthorization process.

PDUFA presently authorizes three types of user fees: application fees, establishment fees, and product fees. The rates for the current fiscal year for these user fees are approximately $1.84 million (for new drug applications containing clinical data), $520,000 (establishment fee), and $99,000 (product fee). These types of fees will not change under the reauthorization, though the amounts of the fees will be adjusted each year (almost always upward), as they have historically.

For generic drugs, the FDA currently has a huge backlog of abbreviated new drug applications (ANDAs), amounting to some 2,500 applications. The typical review time for a generic drug application is 30 months. In contrast, new drugs that are subject to PDUFA usually are reviewed in about 10 months.

To increase the Agency’s funding and reduce application review times, the generic drug industry has, for the first time, agreed to pay user fees, which are expected to be approximately 10 percent of what the pioneer drug industry pays under PDUFA. In return, the FDA has set a goal of reviewing 90 percent of generic drug applications within 10 months, but only after it clears out the enormous application backlog. The FDA expects the backlog to be cleared by the end of FY 2017, and companies whose applications are stuck in the backlog can “choose” to pay a one-time backlog fee (currently proposed to be around $25,000) to help launch the Generic Drug User Fee Program.

The GDUFA agreement negotiated with the generic industry includes fees for ANDAs, for prior approval supplements (but not other supplements), for manufacturing facilities, and, for the first time, for certain drug master files. Drug master files are discretionary filings but are often used by the industry to provide the FDA with confidential and detailed information about facilities, processes, or articles used in the manufacturing, processing, packaging, and storing human drugs. Applicants can reference such files in their new or generic drug submissions without compromising the confidentiality of their suppliers' facilities or processes. At this point, the GDUFA user fees have not been set because the FDA is still collecting information on the expected number of applications and facilities, information that is necessary in order to calculate the rates for FY 2013.

Biosimilar and interchangeable biological products will be subject to a new abbreviated approval pathway that the FDA is working on implementing following its enactment as part of the Affordable Care Act of 2010. Should Congress authorize this second new user fee program, applications for this category of drug products also will become subject to industry user fees.

If you have any questions about the proposed user fee programs, please do not hesitate to contact us.