FDA: New user fee program to speed generic approval process

It's been long accepted that politics makes strange bedfellows. That's certainly the case with the reauthorization in 2012 of the Prescription Drug User Fee Act.

Leaders in both the branded and generic drug industries praised the reauthorization last June of PDUFA, the 20-year-old system by which research-based pharmaceutical companies help fund the government's expensive review and testing process for new drug applications.

The concept of charging user fees to pharmaceutical manufacturers to help fund the Food and Drug Administration's review and approval process was first established in 1992, and by law Congress must vote to reauthorize the User Fee Act every five years. But now, for the first time since PDUFA was created, the generic industry also is helping to foot the bill.

The law included Generic Drug User Fee Amendments [GDUFA], creating a system of user fees that generic drug companies will pay to the FDA when they apply for approval of a drug. The new user fee system took effect Oct. 1, 2012, and is projected to raise $299 million per year over five years, adjusted for inflation.

GDUFA will help the agency hire extra staff and add other resources to help clear a huge backlog of 2,500 generic drug approval applications awaiting review. The money will supplement what Congress appropriates to the FDA each year, "and will enable the FDA's Office of Generic Drugs to hire the scientific resources needed to provide timely approval of generic medicines," said the Generic Pharmaceutical Association.

GPhA president and CEO Ralph Neas called PDUFA and its GDUFA amendment "the most important pharmaceutical legislation since the 1984 Hatch-Waxman Act," referring to the landmark compromise that unleashed generic competition, while ensuring that "all participants in the U.S. generic drug system, whether U.S.-based or foreign, comply with our country's strict quality standards." And John Castellani, president and CEO of the Pharmaceutical Research and Manufacturers of America, said the law served "the best interests of America's patients."

GDUFA could dramatically speed up the pace of generic approvals, providing a boon to the me-too drug industry and potentially saving health plan payers and patients billions of dollars in coming years. But the new funding also will spur development of bioengineered and biosimilar medicines by providing the FDA "with the resources necessary to help build new scientific and regulatory capabilities … and promote ongoing biopharmaceutical innovation," according to Castellani.

In an address to generic industry leaders at a meeting of the GPhA in 2012, FDA commissioner Margaret Hamburg acknowledged the agency's desperate need for the funding provided by GDUFA. "It's no secret that there's a significant and growing backlog at the FDA of applications for new generic drugs," she said. "Currently, it's about 2,500. And over the last several years, the time it takes to get a generic drug approved has nearly doubled, while the backlog is growing."

"Applications have grown at an astounding rate, reflecting the success of the industry. But resources have not grown at the same rate," Hamburg continued. "Chronic underfunding has left us without the necessary scientific and human resources to evaluate applications as quickly as we … would like. We are seeing applications for more complex products. And applications frequently involve products manufactured outside of the United States."

Indeed, said the FDA's top official, "in our increasingly globalized economy, up to 40% of all drugs Americans take are imported … and up to 80% of the active pharmaceutical ingredients in those drugs come from foreign sources. This certainly complicates our inspection process."

Hamburg cited one Government Accountability Office report, noting that "in the absence of a paradigm shift — including new resources and new ways of doing things — it would take the FDA nine years to inspect all foreign facilities."

"User fees for generic drugs or GDUFA will address our current generic drug review backlog caused by the increase in generic drug applications, their growing complexity and the number of generic drug facilities now located overseas where inspections are more challenging," noted Hamburg. "The added money from user fees will reduce this backlog and eventually ensure that the FDA is able to inspect overseas facilities as often as it does domestic facilities."

The agency predicts that "by the fifth year of the program, the FDA will review and act on 90% of complete electronic generic applications within 10 months after the date of submission." Agency officials predicted that GDUFA fees would "cost the generic drug industry less than 10 cents for the average generic prescription."

"The annual fee total for GDUFA represents only about one half of 1% of generic drug sales," the FDA predicted in a report. "This relatively small cost to the industry could be offset by faster review times that bring products to market sooner."