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2018 Changes in the User Fee Program for Prescription Drugs Under PDUFA VI

By Juliati Rahajeng, Ph.D., Scientist at Cato Research

The Food and Drug Administration Reauthorization Act (FDARA) was signed into law by the President on August 18, 2017. The law comprises the reauthorization of the Prescription Drug User Fee Act (PDUFA), which gives the Food and Drug Administration (FDA) the resources to sustain a predictable and efficient review process for human drugs and biologics. The current PDUFA (PDUFA VI), which includes the Fiscal Years 2018-2022, generated a new user fee program that contains some significant changes from the one authorized under the PDUFA V. A new FDA guidance document that describes the new fee structure and the type of fees for which industry is responsible was published in May 2018.1

Prior to 1992, the pharmaceutical industry, consumers, and the FDA were frustrated with the FDA’s lengthy and unpredictable review process of New Drug Applications (NDAs) and Biologics License Applications (BLAs). The increasing length of the review process led to the delay for patients in accessing the new drugs and for manufacturers in recovering their development costs. In the late 1980s, the reported median time for review process of an NDA was 29 months.2 During the PDUFA I consideration, a one-month delay in a review process roughly cost a manufacturer an average of $10 million.3 The FDA argued that it needed to hire additional scientists for a more efficient and predictable review process of the incoming and backlogged drug applications.

The PDUFA law was passed by Congress in 1992. PDUFA I authorized the FDA to collect fees to accelerate the review process of NDA and BLA without compromising product safety and efficacy.4, 5 Based on PDUFA I, the review of priority applications for new drugs, which demonstrated significant improvement in the treatment, diagnosis, or prevention of a disease, was six months, whereas review of standard applications was 12 months. Since the implementation of PDUFA I, patients have faster access to new drugs and the pharmaceutical industry can expect a predictable review process.

PDUFA is reauthorized by Congress every five years. PDUFA II broadened the scope of the user fee program by incorporating activities related to the preclinical and clinical phases of a new drug’s development and by increasing FDA communications with the industry and consumer groups.5 Under PDUFA II, the goal of the standard review is to complete 90% of the NDAs and BLAs within 10 months of receipt.6 PDUFA III widened the scope of activities by incorporating a three-year postapproval period.5 PDUFA IV removed the three-year limitation on postapproval activities and focused on new courses of action regarding the postapproval lifetime of a product.4

PDUFA V and PDUFA VI maintained the scope of activities of PDUFA IV.1, 5 Under PDUFA V, FDA was authorized to collect human drug application fees and application supplement requiring clinical data fees, prescription drug establishment fees, and prescription drug product fees.1 However, under PDUFA VI, a new user fee structure was created. PDUFA VI removed the prescription drug product and drug establishment fees and added a human prescription drug program fee, which provides 80% of the total fee revenue for the FDA. Although the establishment fee has been eliminated, the establishment registration and drug listing requirements (described below) are still in effect. The human drug application fee, which provides 20% of the total fee revenue, remains, whereas the supplemental application fee is eliminated.1, 5 Additionally, PDUFA VI removes a provision under which the applicant could apply for a waiver or refund of user fees, in which the fee will exceed the anticipated costs incurred in reviewing submissions (also known as “the fees-exceed-costs waiver”).1

Under PDUFA VI, a human drug application for which safety and efficacy clinical data (other than bioavailability or bioequivalence studies) are required for approval is assessed a full application fee, whereas an application not requiring clinical data for approval is assessed one-half of a full fee.1 The application fees are due when the application is submitted. Without the submission of the appropriate fee, a human drug application will be deemed as incomplete and the Health and Human Services Secretary will not accept the application for filing until all fees have been paid. The two exceptions to the application fee are orphan drug-designated applications, and resubmissions of previously filed applications that were reviewed but not approved. A full fee is assessed on a resubmitted application that was rejected for filing or withdrawn before a filing action. If an application is refused for filing or withdrawn without a waiver before filing, 75% of the application fee will be refunded. However, if an application is withdrawn after it is filed, the fee or a portion of the fee may be refunded if no significant work was performed.

The FDA provides a waiver or a reduction for one or more user fees assessed under section 736(a) of the Food, Drug, and Cosmetic (FD&C) Act when the waiver or reduction is required to protect the public health, the fee would present a major hurdle to innovation, or the applicant is a small business submitting its first human drug application.1 To receive any waiver, reduction, or refund, an applicant must submit a written request to the Secretary no later than 180 days after the fee is due.

A human drug application (or any pending application filed after 01 September 1992) is assessed for the annual prescription drug program fee for each prescription drug product that is identified in the application approved as of 01 October of the fiscal year.1 The prescription drug program fee, which is subjected to the original NDA or BLA holder, is determined by each prescription drug product identified in an NDA or BLA. However, a single approved application of multiple drug products may not be assessed for more than five prescription drug program fees for a fiscal year. A prescription drug product is not subject to a program fee if the product falls under one of the conditions in section 505(j)(7) of the FD&C Act (current generic drug) with a potency defined in terms of per 100 milliliters. A prescription drug product is also not subject to the program fee if the product is

  • the same as another product approved under sections 505(b) or 505(j) of the FD&C Act and that other product is not in the list of discontinued products described in section 505(j)(7) of the FD&C Act.
  • an abbreviated application filed under section 507 of the FD&C Act (a Drug Development Tool such as a biomarker or clinical outcomes assessment), or
  • an abbreviated new drug application (generic) approved prior to the execution of the Drug Price Competition and Patent Term Restoration Act of 1984.

Prescription drug products eligible for the program fee are on the list of products detailed in section 505(j)(7)(A) of the FD&C Act (often known as the “Orange Book”), or on the list of products with applications approved under section 351(a) of the Public Health Service Act that is generated and maintained by the Secretary.1 Drugs are added to the Orange Book on the day they are approved and not on the date when the next Orange Book is published. If a drug or a biologic is in the discontinued section of the Orange Book or Biologics List on the date fees are assessed, a drug or a biologic product is not subject to a prescription drug fee program for a fiscal year.

The FDA will send a notification to applicants with respect to their prescription drug products in preparation for determining the program fees before the program fees due date.1 Therefore, applicants will have the opportunity to review the notice and inform the Agency of any changes regarding the status of their drug products. Based on the information available to the FDA, it issues invoices for the program fees around the end of September. For each fiscal year, payments for the program fees are due either on or after 01 October, or on the first business day after the authorization of an appropriations Act issuing the collection and obligation of fees for the fiscal year, whichever occurs later.

In summary, the FDA is authorized to collect human drug application fees at the time the application is submitted and then annually the prescription drug program fees are collected  after the application is approved for certain prescription drug products under PDUFA VI. In addition, PDUFA VI removed fees for application supplement, establishment fees, and the “fees-exceed-costs waiver” that were previously authorized.1

References:

  1. Food and Drug Administration (FDA), Assessing User Fees Under the Prescription Drug User Fee Amendments of 2017: Guidance for Industry. May 2018.
  2. Food and Drug Administration (FDA), Third Annual Performance Report: Prescription Drug User Fee Act of 1991, Fiscal Year 1995 Report to Congress (01 December 1995).
  3. Hilts PJ, “Plan to Speed Approval of Drugs: Makers Would Pay Fees to U.S.” The New York Times. 11 August 1992.
  4. Sections 735 and 736 of the FD&C Act.
  5. Congressional Research Service, Prescription Drug User Fee Act (PDUFA): 2017 Reauthorization as PDUFA VI. 16 March 2018.
  6. Food and Drug Administration (FDA), Prescription Drug User Fee Act II (PDUFA II): Five-Year Plan – Fiscal Year 2000 Update. July 2000.

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2018 Changes in the User Fee Program for Prescription Drugs Under PDUFA VI

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