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NDA/ANDA USER FEES ARE JUSTIFIED BY "SPECIAL BENEFITS" TO SPONSORS FROM FDA DRUG REVIEWS, AGENCY MAINTAINS; HOUSE OPPOSES CONCEPT

Executive Summary

An FDA user fee on NDA/ANDA reviews is justified because applicants receive "special benefits" from FDA's drug review activities, the agency maintained in a proposed rule in the Aug. 6 Federal Register. FDA explained that under Title V of the Independent Offices Appropriation Act (IOAA) "a federal agency may charge for the services it provides, when such services confer a special benefit upon an identifiable recipient." FDA noted that the guidelines for IOAA, Circular A-25, state that a charge is only applicable to the recipient of a "special benefit. . . above and beyond those which accrue to the public at large." Noting that the guideline cites the licensing of biologicals as an example where the public is considered the beneficiary, the agency maintained that NDAs, ANDAs, antibiotic applications and supplemental applications meet the legal requirements for user fees. "User charges are appropriate" for drug, antibiotic and supplemental application review, the agency maintained, "because identifiable individuals obtain a special benefit." FDA explained that its approval of applications is necessary for marketing and "this approval is unique to the applicant, providing an economic and business reward to it alone." The user fee proposal by FDA comes as Congress is expressing disfavor with the concept. On July 24, the House passed an agricultural appropriations bill, containing FDA appropriations, which specifically bars FDA from adopting user fees for NDAs and ANDAs. FDA is proposing to recover in full its estimated average review costs per application by charging $126,400 for full applications, $9,900 for abbreviated applications, and $16,400 for supplemental applications, all due at the time of submission. Orphan drugs are exempt from the charges, according to the proposal. For full applications, the agency explained that it derived its cost per application by dividing the estimated number of NDAs submitted per year, 150, into the FY 1986 estimated cost of $18.9 mil. for reviewing those applications. The reviewing cost estimate, FDA explained, includes IND review costs, direct expenses such as salaries and equipment, indirect costs such as rent and a proportionate share of management costs, and consultant and guideline costs. FDA estimated that it would cost $6.9 mil in 1986 to review an approximated 700 abbreviated applications. The proposal also includes two alternative approaches to the computation of user fees which the agency is not proposing but are included for public comment. One alternative would charge a higher fee for applications involving new chemical entities (NCEs) since those applications, the agency stated, "generally involve much more extensive review effort." As an example, the agency stated that it might charge for an NCE at twice the rate of other full applications. Under this approach, abbreviated application fees would be lower for concurrently submitted applications. For example, a parent application might cost ten fold what a concurrently submitted application would cost, FDA stated. As a second alternative, "full applications that are most similar to abbreviated applications in terms of review effort" would be subject to the lower abbreviated application fee. As an example, the agency cited full applications for already marketed products "such as some large volume parenterals." The final rule, according to the proposal, will be effective Oct. 1 or 30 days after publication of the final rule if published after Sept. 1. In addition, the agency is proposing that fees be collected for all applicable applications received as of Aug. 6. Those fees will be due no later than 30 days after the effective date of the final rule, the proposal states.

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