Prescription Drug User Fee Rate Exceeds $2 Million per Application

Tens of Millions of Collected User Fee Dollars Remain Out of FDA’s Reach

08.06.13 | By Sascha Haverfield, Ph.D.

Last week, the U.S. Food and Drug Administration (FDA) announced the prescription drug user fee rates for FY2014 –$2.169 million per application requiring clinical data review.  This reflects a significant increase of more than 10 percent over the FY2013 rates – and a twenty-fold increase in the user fees established in the Prescription Drug User Fee Act (PDUFA) of 1992.

Original Intent of PDUFA

The original intent behind the passage of PDUFA was to supplement federal appropriations for FDA in order to ensure that the Agency has the resources needed for timely review of new medicines.  Patients, particularly those with HIV/AIDS, had been growing increasingly frustrated with the backlog of medicines awaiting review – and legislators took notice. 

The most recent reauthorization of PDUFA (PDUFA V), which received an unprecedented level of input from patients and other stakeholders, was signed into law as part of the Food and Drug Administration Safety and Innovation Act in July of last year.  It refocused the program on its original intent of getting safe and effective new medicines to patients in a timely manner while strengthening the Agency’s high safety standards and helping to establish a new approach to regulatory science to ensure that the latest (and best) science is utilized in drug development and review.

Impact of Sequestration

However, sequestration is threatening FDA’s regulatory science initiatives as well as other FDA programs, to the detriment of patients and public health.  Although PDUFA fees cannot, by law, be used for any purpose other than FDA’s human drug review program (and therefore cannot decrease the nation’s deficit), they have been subject to sequestration.  The resulting hiring freeze has prevented FDA from appropriately staffing and advancing the crucial regulatory science initiative as had been negotiated in good faith in PDUFA V.

Legislation has been introduced in both the House and Senate to prevent the sequestration of future FDA user fees, and we are optimistic that such a bill will pass.  This is not a partisan issue, and it benefits all of us to have an appropriately-resourced FDA.

In the meantime, FDA cannot access approximately $40 million of sequestered prescription drug user fees from FY2013, as well as more than $80 million in industry user fees from previous PDUFA authorizations.  This unreachable pot of money would cover the application fees of more new molecular entity (NME) new drug and biologic applications than the FDA will likely receive in the next two years.

Accountability in the Current User Fee System

Biopharmaceutical companies are now funding approximately 60-65% of the cost of human drug review, raising questions about the structure and allocation of user fees, especially given that more than $40 million of FY2013 human drug review user fees remain sequestered to the detriment of patients, public health and regulatory sciences. 

Moreover, FDA should be more transparent about how it spends the user fees it collects.  For many years, the law has required that FDA issue its PDUFA annual financial reports 120 days after the end of the fiscal year.  The FY2011 PDUFA Financial Report, however, was issued in March 2013.  The FY2012 report has yet to be released -even though we are weeks away from the start of FY2014.

PhRMA is fully committed to working constructively with FDA and all stakeholders to ensure that the Agency has a sustainable revenue stream that facilitates the timely review of new medicines without creating an undue burden on innovation.  There is no acceptable alternative for the patients who are waiting for new treatments.

UPDATE: FDA released the FY2012 PDUFA Financial Report on August 6th - more than six months after it was due.

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