Articles Posted in User Fees

Thumbnail image for Thumbnail image for Thumbnail image for FDA.jpegLast week, the U.S. Food and Drug Administration published the Biosimilar Biological Product Reauthorization Performance Goals and Procedures Fiscal Years 2018 Through 2022.  Commonly referred to as the “goals letter” or “commitment letter,” the publication represents discussions among FDA, the regulated industry, and public stakeholders regarding reauthorization of the Biosimilar User Fee Act (“BsUFA”).



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Written by Scot B. Pittman

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BsUFA authorizes FDA to collect user fees for the review of biosimilar biological product applications.  The current legislative authority for biosimilar user fees expires in September 2017, and FDA cannot continue to collect user fees without reauthorization.  Relatedly, on Monday, FDA announced that it will hold an upcoming public meeting to discuss proposals for reauthorization.  The proposals include enhancements to the existing biosimilars user fee program in four key areas: (i) review performance; (ii) meeting management; (iii) guidance development, and (iv) fee/program administration.

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Thumbnail image for dna.jpgOn September 12, FDA’s Center for Drug Evaluation and Research (“CDER”) Director Janet Woodcock, M.D. reported FDA’s biosimilars program will be “under-resourced” until the biosimilars industry develops at a Drug Information Association (“DIA”)/FDA Biosimilars Conference: Guidances, Science, and BsUFA. “This is going to be an under-resourced program for the next few years because that’s how it is … That’ll cause, I think, some struggle, especially with allocation of resources amongst all the important activities that we do at FDA,” Woodcock said. (The Pink Sheet, September 12, 2012.)

Once again, FDA reported that while FDA has the authority to approve biosimilars, FDA still has yet to receive a single biosimilars application, called 351(k) applications, based on their new statutory provision. FDA reported the same numbers that were discussed in two recent conferences discussing biosimilars that we reported on here and here: 11 investigational new drug applications (“INDs”) and 30 pre-IND meetings with the Agency concerning biosimilars. FDA recently did approve Teva’s biosimilar version of Amgen, Inc.’s Neupogen® (filgrastim), but Teva submitted this as a full biologics license application (“BLA”) rather than a biosimilar, because reportedly Teva believed the biosimilar pathway was either infeasible or not ready for commercial approvals yet.

Woodcock speculated that annual product fee payments for sponsors with INDs will likely be the initial source of extra funding that FDA receives, with 351(k) fees to follow only after sponsors start submitting these applications. Under the Biosimilars User Fee Act (“BsUFA”) that will become effective on October 1, 2012 along with other user fees, barring any possible derailment, which we reported here, the development fees are only 10% of the marketing application fees for each year, but the payments will be subtracted from the marketing application fee, once filed. For example, in Fiscal Year 2013, the product development fee for a 351(k) application is $195,880 with 351(k) application fees set at about $1.96 million per application.
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Thumbnail image for Thumbnail image for Thumbnail image for FDA.jpegOn January 2, 2013, barely three months after FDA’s new user fee programs go into effect, certain mandated spending reductions, called sequestration, also may go into effect that could prevent FDA from using the user fees it collects from industry. A Congressional Super Committee failed to find the required $1.2 trillion in cuts over ten years by a November 2011 deadline. The combined effect of lost taxpayer and user fees projected by Maryland-based Alliance for a Stronger FDA, would be an initial $294 million out of a $3.65 billion budget.

The catch comes from a component of FDA’s user fee programs known as the “trigger” that requires a certain baseline of taxpayer funds to go to FDA, so industry user fees supplement rather than fund FDA’s operations. FDA’s projected funding for fiscal year 2013, set at $2.5 billion, would be cut by an across-the-board, 8% cut in federal government, coined as a “fiscal cliff”, imposed to help curb the ever-increasing government debt. While FDA’s cut of about $200 million would not normally hit the trigger to prevent FDA’s use of user fees, Steven Grossman, Deputy Executive Director of the Alliance for a Stronger FDA, told Anna Edney from Bloomberg that the Obama Administration may still sequester FDA’s user fee funds to help with federal spending reduction goals. The exact trigger levels, moreover, are based on formulas that include consumer inflation and past spending, which so far FDA has declined to comment on.

According to Grossman, if this occurs, about $68 million in drug and device user fees and $40 million in tobacco-company payments would be diverted to a U.S. Treasury Department account that would “reduce government because it would reduce what they can do.” Faced with the sudden loss of these funds, drug industry experts have speculated that FDA would be forced to lay off personnel and take other measures to reduce costs.
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Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for drugmoney.jpegOn August 27, FDA published a Federal Register notice announcing the availability of industry guidance for generic drug user fees entitled “Generic Drug User Fee Amendments of 2012: Questions and Answers” and “Self-Identification of Generic Drugs Facilities, Sites, and Organizations.” Simultaneously with this notice, FDA also announced an upcoming public meeting on September 21, 2102 from 9 a.m. to 1 p.m. to discuss FDA’s implementation of the Generic Drug User Fee Amendments of 2012 (“GDUFA”). Finally, on the same day, another related Federal Register Notice issued: “Notice of Opportunity to Withdraw Abbreviated New Drug Applications to Avoid Backlog Fee Obligations.” Below is a snapshot of each of these items taken in turn.

GDUFA was signed into law on July 9, 2012 but the obligations arising therein begin on October 1, 2012. We have previously blogged on the genesis of GDUFA, when both the House and Senate passed GDUFA, for some background why and how we got here.

The GDUFA Q&A answers questions about the various types of fees (backlog fee, drug master file fee, generic drug submission fees (including a fee for active pharmaceutical ingredients (“APIs”) not referenced in a drug master file), and facility fees for APIs and finished dosage forms (“FDFs”)), self-identification of facilities, sites, and organizations, review of generic drug submissions, and inspections and compliance. For example, most immediately, backlog fees will be calculated based on the number of pending original abbreviated new drug applications (“ANDAs”) at the start of October 1, 2012. As was mentioned in a recent conference discussing this topic, a recommendation was made for all generic applicants to “clean house” and make sure that they did not pay fees for any pending ANDAs that they were no longer pursuing. FDA explains in this Notice that in accordance with GDUFA, FDA will divide $50 million by the number of pending ANDAs pending on this day to arrive at an individual one-time backlog fee due for each pending ANDA. Applicants wishing to remove pending ANDAs from this list, however, must do so by written notification received by FDA on or before September 28, 2012. Failure to pay the backlog fee is further explained, including a public disclosure of the failure to pay, and FDA will not receive a new ANDA or supplement submitted by that applicant “or affiliate” until the fee is paid. The GDUFA Q&A also explains when the various fees will be collected and the effect of not paying those fees timely. For new ANDAs or supplements, feed need to be paid when due, e.g., for new ANDAs, within 20 calendar days of the date that FDA provides notification that failure to pay will result in the ANDA or supplement not being receive and, therefore, reviewed.
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Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for US_Congress_02.jpgSenate Update: On June 26, the Senate Okayed the reconciled user-fee reauthorization bill that had passed the House last week. Again, there was significant bipartisan support for the legislation, which bill passed by a 92-4 margin. All that remains is President Barack Obama’s signature, which looks certain to occur before the July 4 goal that Congress had set for the passage of this legislation. While the President’s signature will finalize a bill that has been over a year in the making, Thursday’s Supreme Court ruling on the constitutionality of the Patient Protection and Affordable Care Act could have an immediate effect on the user fee bill. Most notably, if the Supreme Court strikes the entire healthcare bill, the status of the biosimilar approval pathway would be in question. This, in turn, could lead to some questions about the $128 million dollars the biosimilars companies are scheduled to pay FDA over the next five years.

On June 20, the House passed a reconciled user-fee reauthorization bill by a more-than-two-thirds-voice vote. Earlier in the week, members from the House and Senate ironed out the details of a reconciled user-fee reauthorization bill for FDA. The House passed its version, the Food and Drug Administration Reform Act (H.R. 5651), earlier this month (last discussed here), and the Senate approved its version (S. 3187) in late May (last discussed here). Both versions contained near identical reauthorized the user fee programs for brand-name drugs and medical devices and created new user-fee programs for biosimilars and generic drugs. There were, however, a number of differences that had to be addressed.

Among the casualties from the reconciled version was an effort to impose stricter controls for potentially abusive prescription drugs. Congress rejected the Senate’s proposal that would have: (1) required patients seeking refills for hydrocodone-combination products to obtain new prescriptions; (2) required a higher level of security for transportation and storage of the drugs; and (3) increased penalties for misusing the drugs. Pharmacists and drug stores opposed these measures, claiming they would make it more difficult from those in pain to get access to their medications and that pharmacies would face expensive administrative obligations under the proposal.
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Thumbnail image for Thumbnail image for Thumbnail image for house of representatives.jpgLast Wednesday, the House of Representatives passed the Food and Drug Administration Reform Act (H.R. 5651), which reauthorizes the user fee programs for brand-name drugs and medical devices and creates new user-fee programs for biosimilars and generic drugs. Like its counterpart in the Senate (previously discussed here), the Bill has significant bipartisan support, which is evidenced by the 387-5 vote.

The user fee provisions of the House version are almost identical to those on the Senate Version. Drug and devices makers will have to pay FDA $6.4 billion over five years to help finance the evaluation and review of their products. Again, brand-name drug companies will pay $4.1 billion, generic drug companies will pay $1.6 billion, device makers will pay $609 million, and biotechnology companies will pay $128 million. In exchange for the user fees, FDA will be required to meet certain performance goals throughout the five years. These performance goals are intended to decrease the average review time for FDA approvals of drugs, devices, and biosimilars.

The House’s Bill also has provisions outside the user-fee arena. Of particular importance, the bill:

  • Provides for increased oversight of medical devices by pushing FDA to institute an electronic monitoring system and requiring post-market studies of certain medical devices.
  • Removes the requirement that every U.S. drug manufacturing facility be inspected every two years and increases FDA’s discretion to inspect more foreign manufacturers.
  • Requires mandatory reporting of potential drug shortages.
  • Increases the maximum penalty for drug counterfeiting from 3 to 20 years in prison.
  • Allows FDA to relax the clinical trial standards for new medicines that address life-threatening diseases.
  • Requires that FDA provide reasons for denying medical implants within thirty days of issuing a rejection.

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Thumbnail image for Thumbnail image for Capitol Building.bmpOn May 24, the Senate passed the FDA Safety and Innovation Act (S.3187), which reauthorizes the user fee programs for brand-name drugs and medical devices and creates new user-fee programs for biosimilars and generic drugs. The Bill (previously discussed here), sponsored by Sens. Mike Enzi (R-Wyo.) and Tom Harkin (D-Iowa), passed by a 96-1 vote. The sole dissent came from Sen. Bernard Sanders (I-Ver.), who said that the Bill did “far too little” to address the high prices Americans pay for prescription drugs.”

In terms of user fees, the Bill will require drug and devices makers to pay FDA $6.4 billion over five years to help finance the evaluation and review of their products. Specifically, brand-name drug companies will pay $4.1 billion, generic drug companies will pay $1.6 billion, device makers will pay $609 million, and biotechnology companies will pay $128 million. In exchange for the user fees, FDA will be required to meet certain performance goals throughout the five years. These performance goals are intended to decrease the average review time for FDA approvals of drugs, devices, and biosimilars.

User fee agreements are not the only topic addressed in the now-passed Bill. The Bill contains provisions addressing:

  • Increased inspection of foreign drug manufacturing facilities and the ability for U.S. border agents to turn away drugs from companies that have denied or delayed FDA inspections.
  • Mandatory reporting of potential drug shortages.
  • Protection of confidential information received from foreign government agencies relating to drug inspections.
  • Independent assessment and evaluation of FDA’s review of drug and biologic applications.

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Thumbnail image for Thumbnail image for Capitol Building.bmpTwo versions of an FDA reform Bill, which includes FDA user fee reauthorizations, are quickly passing through the House and Senate. Last week, the House Energy and Commerce Committee unanimously passed H.R. 5651, with support from both sides of the aisle. Earlier that week, S. 2516 was placed on the Senate Legislative Calendar after an 11-1 approval in the Senate’s Health, Education, Labor, and Pension Committee. Lawmakers believe that the final Bill will be ready for President Obama’s signature by Independence Day.

In contrast to the heated negotiations between the industry and FDA over the amount of the fees and the FDA’s review requirements (last discussed here), both versions of the Bill appear to have significant support. Democrat and ranking member of the House Energy and Commerce Committee, Frank Pallone, praised the Bill calling it “a consensus product that we should all be proud of.” Rep. Brian Bilbray, R-Cal. echoed those sentiments noting, “Bipartisanship is breaking out in this committee.”

Despite the unanimous vote, a few members of the Committee believe the Bill lacks some important provisions. For example, Rep. Joe Barton, R-Tex., proposed an amendment that would see FDA’s user fees cut by 20% if the agency failed to meet at least 90% of its user-fee linked performance goals in the preceding year. Rep. Barton withdrew that amendment during the full Committee markup but explained that the aim of the proposed amendment was to encourage FDA to meet its goals and not to cut its user fees. Another provision missing from the Bill that cleared the Committee is one that would have given FDA the power to deny a 510(k) submission that relied on a predicate medical device that had undergone a safety recall. Originally proposed by Rep. Edward Markey, D-Mass, this proposal was not raised during the Committee meeting.
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by Scot B. Pittman

Thumbnail image for One dollar.jpgAs previously reported here, FDA and medical device industry reached a tentative user fee agreement earlier this month. The tentative agreement calls for $595 million to be paid to FDA in exchange for a number of performance goals and other measures meant to provide a faster, more streamlined review process. The proposed agreement has not yet been submitted to Congress (FDA expects to submit the proposal by mid-March.), but that did not stop the House Energy and Commerce Health Subcommittee from discussing the proposal at its February 15 device user fee reauthorization hearing.

A central concern with a number of the representatives was the magnitude of the increase in user fees. The proposed agreement calls for the medical device user fees to roughly double over the life of the five-year agreement. Jeffrey E. Shuren, M.D., J.D., Director of FDA’s Center for Devices and Radiological Health (“CDRH”), defended the increased fees. According to Shuren, CDRH is in desperate need of additional funding to increase its review staff and improve the review process. Shuren also stressed that the increased user fees for small firms would not increase as significantly as the overall user fees. For example, a 510(k) submission fee for a small firm (those having annual revenues of $100 million or less) would start at $2000 in 2012 and top out at $2600 in 2017. A summary of some of the other fees include:

  • Roughly $220,000 for a Pre-Market Application (“PMA”) or Biologics License Application (“BLA”) in 2012; small firms would pay roughly $55,000. These figures rise to roughly $268,000 and $67,000, respectively, in 2017.
  • Larger firms would pay around $4,000 for a 510(k) submission in 2012 and around $5,400 in 2017.
  • In 2012, the device registration fee (a fee paid by all registered device makers and reprocessors) will be a little over $2,000, but it will grow to almost $4,000 by 2017.

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