User fee increases still outpace drug, device approvals

Although FDA drug, biologic, and medical device user fees have netted the agency $7.67 billion from manufacturers in the last quarter century, the drug or device approval process has not kept pace. In an Avalere analysis, fees have measurably increased in the last decade. User fees are increasingly important to the agency’s ability to fund the drug, biologic and device review programs. In some cases these fees account for a larger proportion of the FDA budget than the congressionally appropriated budget. For example, the report noted that user fees account for 68 percent of the FDA’s review budget for prescription drugs, while 58 percent of the review budget for generic drugs comes from user fees. The fees are touted as additional funding sources for the FDA to expedite the overall drug or device approval process.

For fiscal year (FY) 2017, the user fees rates are: $2,038,100 for applications requiring clinical data; $1,019,050 for applications not requiring clinical data or supplements requiring clinical data (one-half the amount of applications requiring clinical data rate); $512,200 for establishments; and $97,750 for products (see FY 2017 user fee rates issued for Rx and animal drugs, biosimilars, Health Law Daily, July 28, 2016).

Yet, Avalere analysis of data from FY 2013 suggests that the approval times are not improving; the standard prescription drug was reviewed and approved in 12 months with priority applications in almost 8 months. According to Avalere, there are significant amounts of unspent funds from the user fee programs, upwards of $300 million, that the FDA could use to “accelerate” product reviews, especially in light of public concern about rising drug costs.

Under the federal Food, Drug & Cosmetic Act (FDC Act) (21 U.S.C. §§379g and 379h), the FDA is authorized to set fees and schedules for these regulated areas. Prescription drug makers must account for three kinds of user fees: (1) product fees that are paid for each product being sold on the market; (2) establishment fees that are paid by all manufacturers annually; and (3) application review fees that are paid for every product application that is submitted. On September 30, 2017, all four FDA user fee programs will expire, including: Prescription Drug User Fee Act (PDUFA), Generic Drug User Fee Act (GDUFA), Medical Device Drug User Fee Act (MDUFA), and Biosimilar User Fee Act (BsUFA).