User Fees to Fund Faster Reviews : Part 2

by Food and Drug Administration (FDA)

(Page 2 of 2)

The idea of FDA user fees resurfaced beginning in 1982 but failed to gain significant support. In 1992, things changed.

As budget proceedings for FY 1993 began, FDA Commissioner David A. Kessler, M.D., testified before Congress that the user fee issue was one of critical importance to FDA's future and that it should be considered "very seriously." FDA worked with the pharmaceutical industry to create performance goals and determine what fees would be needed to reach those goals. Though earlier fee suggestions encompassed numerous FDA-regulated products, the final proposal included only prescription drugs and certain biologics. (Biologics exempted were whole blood products or blood components for transfusion, some human therapies made from bovine blood products, allergenic extract products, and in vitro diagnostics. Large-volume parenterals and generic drugs also were excluded.)

FDA and Congress then drafted legislation that said user fees would be used strictly to augment regular funds, which could not fall below the previous year's level. The drafts did not incorporate goals for improved performance, such as reducing drug application review times, an issue important to industry.

The PhRMA said it would support legislation only if fees:

• supplemented existing FDA appropriations
• were fully dedicated to reviewing new drugs and biologics
• were reasonable
• were based on a long-term government commitment to improving the drug review process.

By Aug. 10, 1992, FDA and industry had reached a consensus. A bill emerged from committee on Sept. 15 that included the PhRMA provisions. The House passed an early version of the User Fee Act on Sept. 22. On Oct. 5, the House passed H.R. 6181, which became the Prescription Drug User Fee Act of 1992. The Senate passed the bill Oct. 7, and President George Bush signed it into law Oct. 29.

Fee Structure

Before FDA can collect any fees, Congress must appropriate the anticipated user fee revenue annually. For FY 1995, Congress enacted the necessary user fee appropriation and President Clinton signed it on Sept. 30, 1994.

The law provides for three categories of user fees:

• fees for drug and biologic applications and supplements
• annual establishment fees
• annual product fees.

All application and supplemental fees are paid 50 percent at the time of submission and 50 percent upon receipt of an FDA "action letter." (Action letters indicate either approval or deficiencies that must be corrected for approval.)

Some drug approval applications require more resources than others to review. The fee structure takes into account the application's complexity based on whether or not clinical data are included. It makes no distinction based on application size.

The other two components of the fee structure — the annual establishment and product user fees — are set fees charged to the 200 drug establishments that manufacture drugs covered by the user fee law and on some 2,000 drug products in commercial distribution. The Prescription Drug User Fee Act defines an establishment as a business that makes at least one prescription drug product at one location (buildings within five miles of each other). A prescription drug product is defined as a specific strength or potency of a prescription drug, in final dosage form, that has an approved human drug application.

Under the law, fees will increase each year. By FY 1997, FDA should collect $28 million per category, making total revenue for that year $84 million.

Waivers and Reductions

The law provides for waivers and fee reductions if:

• the waiver is necessary to protect the public health
• the fee presents a "significant barrier" to innovation
• the fee exceeds FDA's cost of the review process
• the fee would be inequitable because the product is similar to certain generic drugs that are not part of the user fees program.

Businesses with fewer than 500 employees and without another prescription product on the market will be charged half the application fee, which will be due one year after submission.

FDA officials say if the current drug and biologic user fee program goes well, the agency might seek congressional authorization to expand it to medical devices and other areas.

About the Author

www.fda.gov
FDA is A United States government body that oversees medical devices, including contact lenses, intraocular lenses, excimer lasers and eyedrops. In the US, these products must be approved by the FDA before they can be marketed.