FDA Proposes Generic Drug User Fee

Over the past several months, the Food and Drug Administration (FDA) has experienced a significant backlog of generic drug applications, more than 2,000. As a result, with federal agency budgets under significant pressure and resources already slim, FDA recently announced that the generic drug industry should prepare for user fees. 

According to Peter Beckerman, a senior policy advisor in the FDA Office of the Commissioner, the FDA is preparing to launch formal user-fee negotiations with generic-drug makers by the end of the month, and agency officials are taking a hard line with industry in the build up. 

Beckerman told generic-drug makers that while there will be a “significant fairness factor” in imposing the fees, the generic industry should not be exempt from a program that both brand drug and medical-device makers are already a part of. 

Last week, FDA Commissioner Margaret Hamburg echoed these comments in her keynote address at the annual conference of the Generic Pharmaceutical Association (GPhA). In her statement, Hamburg “urged the industry to work with her agency as it develops user fees that will ensure generics can quickly be reviewed and approved for sale.” The user fees would enable generic and biosimilar drugmakers to directly pay the agency instead of relying on annual Congressional appropriations. 

Hamburg herself admitted that FDA’s “resources are already stretched too thin,” and that “looking ahead, its clear FDA will not be able to make ends meet with our current resourcing, and more approvals will be delayed because of a lack of inspectional resources.” 

Consequently, President Obama last week submitted a $4.4 Billion FDA Budget Request for fiscal year 2012, a 33 percent increase over the agency’s fiscal 2010 budget. The President’s proposed budget for 2012 contains $40 million in anticipated revenues from the new fees, which are still being negotiated. It is still uncertain whether this budget will be adopted however. 

Presently, the FDA is being funded on a continuing resolution that expires in early March. However, H.R. 1, the continuing resolution proposed last Friday, would provide the FDA with $3.3 billion in funding for the remainder of fiscal 2011. Including money already received by the agency this fiscal year, that funding would amount to $220 million in cuts to the agency — a drop that experts have predicted could lead to layoffs and limited hiring by the FDA in the future.  

Heather Bresch, president of generic-drug maker Mylan Inc., agreed with Hamburg’s comments and told the Wall Street Journal that generic companies “are willing to step up and pay fees to give the FDA the resources that are necessary.” Other executives at the annual GPha conference who expressed similar agreement included executives from Watson PharmaceuticalsInc.,  Momenta Pharmaceuticals Inc., Actavis Inc. and NovartisAG’s Sandoz unit. 

The FDA plans to meet with industry representatives on the subject later this month. It is likely that any changes will take 12 to 24 months to complete and will likely require the involvement of Congress. 

Ultimately, as Hamburg pointed out, “uncertainty and delays are costly to consumers, costly to industry and hurtful to the public’s health,” and that “without generic use fees, we simply cannot achieve for the public what we otherwise could.”