FDA eyes generic user fees as funding option

April 5, 2011

Both the Food and Drug Administration and officials from a number of generic drug companies indicate they are in active talks on creating user fees to be paid by that industry to give the agency more resources to speed generics to the market, carry out inspections and other functions.

The Food and Drug Administration and officials from a number of generic drug companies indicate that they are in active talks about creation of user fees to be paid by the industry to give FDA more resources to speed generics to market, carry out inspections, and perform other functions.

Discussions about user fees have been going on for some months and included an FDA public meeting last fall.

FDA Commissioner Margaret Hamburg warned the Generic Pharmaceutical Association at its meeting in February that more resources are needed to keep the median review time for generic applications from increasing, saying, “We do not want to find ourselves in a situation in which FDA is unable to ensure that generic versions of drugs are ready to be distributed to American consumers on the first day that they may legally be marketed.”

The agency has been getting 800 to 900 applications for “abbreviated new drug applications” (ANDAs or generic drug applications) for the last several years, compared to approximately 100 applications for new drugs. According to FDA officials, there is now a backlog of 2,000 of the generic applications.

FDA currently collects user fees on a number of products it regulates, including new prescription drugs and medical devices.

The agency has argued that generic drug applications, despite the fact they are not for new drugs, can become complicated and expensive to review. Generic companies often buy their active pharmaceutical ingredient (API) from another company, which must submit separate data to be reviewed. In many cases both facilities need to be inspected by FDA, and the API makers are often located overseas, says the agency.

It also argued that resource constraints have not allowed it to do all the surveillance inspections of facilities it would like, saying that more frequent inspections might negate the need for some pre-approval inspections.

At the meeting on generic user fees last fall, FDA noted that any user-fee program would have to be okayed by Congress, which would also dictate how much FDA could spend in user fees each year.

Among the questions the agency has put before the public are how the fees should be structured, including whether they should be based on applications, inspections, or other factors; whether companies should pay more for applications for more complex drugs; whether FDA should undertake particular goals for its performance in generics review; and whether generic user fees should support post-marketing safety efforts.

At a session featuring 6 generic company leaders at the GPhA February meeting, Doug Boothe, CEO of the generics firm Actavis, Inc., said that the association was in general agreement that some sort of user-fee system should be based on “applications as well as registrations and sites to enable not just the review process, but to also support the agency as we continue to become global. Of course, we continue to get more complicated. But it’s a tough conversation, because part of me personally says, ‘Why user fees at all for generics when we are providing the most value and the most potential cost savings?’”

Heather Bresch, president of Mylan Inc., told the session that for too long “We were talking about just speed,” in terms of the backlog and obtaining faster review of applications.

People now realize, she said, that “if we can have the proper inspections and proper databases and know where products are being manufactured,” it will relieve the backlog and allow FDA to have the resources to ensure that products get to market quickly and that drugs dispensed in the United States meet 1 quality standard.

At FDA’s meeting on the issue last fall, the Academy of Managed Care Pharmacy also supported user fees, because FDA needs more resources to determine “in a timely manner a drug or biologic’s safety and efficacy” and to support post-market risk management, and in light of the fact Congress is not likely to appropriate more money through usual funding channels.

Commenting on another matter, Commissioner Hamburg cautioned the industry that recent surveys indicate nearly half of consumers have concerns about generic drug quality, saying, “The reality is, the differences between generic and innovator drugs are usually no greater than differences between batches of innovator drugs. You know this and I know this. But unfortunately, much of the public does not, so we must continue to educate them about generic products.”