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FDA USER FEES WILL BE ASSESSED FOR NDAs, PLAs SUBMITTED AS OF SEPT. 1, UNDER DRAFT LEGISLATION BY REPS. DINGELL, WAXMAN; MARKUP IS EXPECTED FOR SEPT. 15

Executive Summary

FDA would begin assessing user fees for reviewing applications submitted as of Sept. 1, under a Sept. 10 version of legislation to be introduced by Reps. Dingell (D-Mich.) and Waxman (D-Calif.). The bill would cover any new drug or biologic marketing applications or supplements submitted to FDA "on or after Sept. 1, 1992," the draft states. A markup of the legislation by Waxman's House Energy & Commerce/Health Subcommittee is scheduled for Sept. 15. Dingell's full committee could mark up the proposal as early as Sept. 16. Congressional aides met on Sept. 8 and 9 with FDA Commissioner Kessler and Pharmaceutical Manufacturers Association President Mossinghoff to discuss a Sept. 9 draft. A new draft was prepared on Sept. 10, after changes in payment schedules for application fees and FDA's performance goals were discussed. The Sept. 10 draft would establish application fees in fiscal 1993 of $100,000 for marketing applications requiring clinical safety and efficacy data and fees of $50,000 for supplements and applications not requiring safety and efficacy data. In the four-year 1994-1997, the application/supplement fees would increase to $150,000/$75,000, $208,000/$104,000, $217,000/$108,000 and $233,000/$116,000. Small companies with 500 employees or fewer would be required to pay only half the application fee but the entire supplement fee if they have no other products on the market. The bill also stipulates that FDA may waive or reduce application fees if "necessary to protect the public health" or to remove "a significant barrier to innovation because of limited resources available" to the applicant. In a compromise, the bill indirectly addresses the issue of FDA's performance commitments. In the "findings" section, the bill states that the agency is expected to use the revenues from user fees to improve the approval process pursuant to correspondence from FDA. PMA wanted the legislation to stipulate the increase in rate of new drug approvals made possible by the resources attributable to user fees. The findings section states that "prompt approval" of new drugs "is critical" to improving public health, and that public health "will be served" by increasing the resources FDA can devote to the approval process. The bill continues: "Resources provided by the fees authorized by the amendments made by this act will be dedicated toward expediting the prescription drug approval process as set forth in the goals identified in the letter [drafted Sept. 11] from the commissioner of the FDA" to Congress. The letter will be included in the Energy & Commerce Committee report on the legislation and remain part of the act's legislative history. At an Aug. 10 hearing before Waxman's Health Subcommittee, Kessler testified that user fee resources would help FDA reduce the average review time from 12 months to six months for priority products and from 20 to 12 months for standard products ("The Pink Sheet" Aug. 17, p. 6). FDA is required by the legislation to report to Congress on Nov. 30 of each year on progress in the preceding fiscal year toward meeting the agency's performance goals. Within 120 days after the end of each fiscal year, the agency is required to report on the user fee program and on how FDA spent the revenues the preceding year. The draft establishes a payment schedule under which half the fee is payable upon submission and the remaining half is payable 30 days after FDA issues an "action letter," approving the application or specifying in detail its deficiencies. The payment schedule was added to the bill on Sept. 10 following discussions with industry. The Sept. 9 draft would have required that the entire fee be payable on submission. PMA requested that application fees be payable in three installments of 20%, 40% and 40%. Kessler suggested in testimony at an Aug. 10 hearing before Waxman's House Energy & Commerce/Health Subcommittee that startup firms receiving their first approval should not have to pay application fees until after they have begun marketing a product, and the Industrial Biotechnology Association urged that fees should not be payable from such companies until one year after marketing begins. FDA will refund 75% of the fee for applications not accepted for filing. The agency will waive the fee for second applications, following withdrawals or nonapproval decisions. Annual fees for registering drug products and the manufacturing establishments in which they are made are waived after generic competitor products are marketed. Product fees are $6,000, $9,000, $12,500, $13,000 and $14,000 in fiscal 1993- 1997, respectively, under the measure. Over the same period, the bill would require establishment fees of $60,000, $88,000, $126,000, $131,000 and $138,000. Product fees are "payable at the time of the first such listing of such product in each calendar year," the legislation states. The establishment fees are assessed annually and payable each January for each facility that manufactures at least one single-source prescription drug subject to an approved marketing application. The legislation projects total user fee revenues in fiscal 1993 of $36 mil. -- $12 mil. each from product, establishment and application fees. The total revenues are projected to swell to $54 mil. ($18 mil. from each type of fee) in 1994, $73 mil. ($ 25 mil. from product and establishment fees and $23 mil. from application fees) in 1995, $78 mil. ($26 mil. from each type of fee) in 1996 and $84 mil. ($28 mil. from each fee) in 1997. OTC drugs will not be subject to user fees, although the Nonprescription Drug Manufacturers Association wrote to Congress to express the OTC industry's willingness to participate in the user fee program ("The Pink Sheet" Aug. 31, p. 8). Generic drugs are also exempt from paying for user fees. In a series of meetings over the past three weeks, FDA tried to persuade representatives of the generic industry to accept user fees for ANDAs, but the industry maintains there is little potential benefit as the ANDA backlog has shrunk under the management of Office of Generic Drugs Director Roger Williams, MD. Instead, the industry has obtained FDA's help in lobbying Congress for eleventh-hour amendments to the bill to ensure that generic companies will not be required to pay fees for generic copies marketed under paper NDAs and supplements. The bill suggests that some portion of user fee revenues will be allocated to field activities. Although the legislation stipulates that user fee revenues will be allocated to the drug review process, the definition of that process comprises a number of components, including "the inspection of prescription drug establishments and other facilities undertaken as part of the ...review of pending prescription drug applications and supplements." The definition also includes "monitoring of research conducted in connection with the review of prescription drug applications." The measure also indicates that FDA can spend a portion of resources on infrastructure. The bill states that the agency can allocate user fee revenues to hiring reviewers; contracting for consultants; "management of information, and the acquisition, maintenance and repair of computer resources; leasing, maintenance and repair of facilities and acquisition, maintenance and repair of fixtures, furniture, scientific equipment and other necessary materials and supplies; "and" collection and accounting of user fees. At an Aug. 10 hearing before Waxman's House Health Subcommittee, Upjohn Vice Chairman Mark Novitch, MD, and Genentech VP-Government Affairs David Beier urged that fees not be allocated to "infrastructure."
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