Our GDUFA Cup Runneth Over! FDA Sets Several FY 2013 User Fee Rates

By Kurt R. Karst – 

A lot has been happening at FDA over the past two months – and in particular in recent weeks – as the Agency works diligently to implement the Generic Drug User Fee Amendments of 2012 (“GDUFA”).  There have been various notices published in the Federal Register, draft guidance documents published, meetings planned, and policies and procedures updated.  We won’t get into all of those documents here, but note in particular new guidance on stability testing of drug substances and drug products intended to bring generic drug requirements in line with International Conference on Harmonisation stability recommendations, and a new Manual of Policies and Procedures to help reviewers in the Office of Generic Drugs determine whether an amendment to a pending ANDA should be categorized as major or minor.  Under the GDUFA Performance Goals and Procedures, amendments can affect the goal date for action on an application.

GDUFA was enacted in July as Title III of the FDA Safety and Innovation Act (“FDASIA”), and went into effect on on October 1, 2012 – the start of Fiscal Year (“FY”) 2013 (see our FDASIA summary and analysis here).  Shortly after the start of FY 2013, the FDA User Fee Corrections Act of 2012 was signed into law to enable collection of FY 2013 GDUFA user fees without enactment of an appropriations act (see our previous post here).  GDUFA establishes several types of user fees that together will generate $299 million in funding for FDA in FY 2013, and adjusted annually thereafter.  Application fees include an original ANDA fee and a Prior Approval Supplement (“PAS”) fee, which is one half of the ANDA fee, and a Type II Drug Master File (“DMF”) “first reference fee.”  An application containing information concerning the manufacture of an Active Pharmaceutical Ingredient (“API”) at a facility by means other than reference to a Type II DMF, must pay, in addition to an application fee, a special “API fee” (also referred to as the “(a)(3)(F) fee”) if “a fee in the amount equal to the [Type II DMF] fee . . . has not been previously paid with respect to such information.”  An annual facility fee must be paid by both Finished Dosage Form (“FDF”) and API  manufacturers.  There is a fee differential of not less than $15,000 and not more than $30,000 for foreign FDF and API facilities, which is intended to reflect the added costs of foreign inspections conducted by FDA.  Finally, there is a one-time ANDA backlog fee that will be assessed in FY 2013 for ANDAs pending on October 1, 2012.  Under GDUFA, an ANDA that is “pending” on October 1, 2012, is an application “that has not received a tentative approval prior to that date.”  That fee is calculated by dividing $50 million by the number of ANDAs in the backlog.

FDA has initiated the process for the Agency to calculate the FY 2013 facility fee rates, which FDA will publish by January 13, 2013.  In draft guidance and other documents published on FDA’s website (here and here), FDA lays out the so-called self-identification process by which the Agency will obtain an accurate inventory of facilities, sites, and organizations involved in the manufacture of generic drugs for purposes of setting annual facility fee user fee rates and targeting inspections.  FDA recently noted in a Federal Register notice that for FY 2013, identification information must be submitted by December 3, 2012.  For subsequent FYs, identification information must be submitted, updated, or reconfirmed on or before June 1 of the preceding FY.  Failure to pay a facility fee within 20 calendar days of the due date will result in the several consequences, including that all FDF or API products manufactured at the facility and all FDFs containing APIs manufactured at the facility will be deemed misbranded.

The remaining GDUFA user fees are addressed in a pair of Federal Register notices published on October 25, 2012.  In one notice FDA addresses the original ANDA fee, PAS fee, and Type II DMF fee.  In a second notice, FDA addresses the ANDA backlog fee.

Based on an estimation of 1,160 full application equivalents that will be submitted in FY 2013, and by dividing that number into $59,760,000, which is the fee revenue amount to be generated from application fees in FY 2013 under GDUFA, FDA establishes an original ANDA application fee of $51,520 per ANDA (rounded to the nearest $10).  The PAS fee, which is equal to half of the ANDA fee, is $25,760.  Payment of the application fee is due on the later of the date of submission of an ANDA or PAS, or 30 days after October 25, 2012.  Applications submitted since October 1, 2012 and prior to October 25, 2012 are subject to fees and sponsors will be required to pay.  Failure to pay the application fee within 20 calendar days of the due date will result in the application not being received by FDA until the fee is paid.  (Of course, ANDA receipt date is particularly important when 180-day generic drug exclusivity is at stake.)

With respect to the “(a)(3)(F) fee” (i.e., the special “API fee”) for those ANDAs that include information about the production of APIs other than by reference to a DMF, FDA comments in the notice that the Agency “considers this additional fee to be unlikely to be assessed often.”  The “(a)(3)(F) fee” rate ia set by statute at an amount equal to the DMF fee.

FDA establishes the FY 2013 Type II DMF fee, which is a one-time fee for each individual DMF.  Based on an estimation of 700 DMFs that will be referenced by an initial letter of reference in FY 2013, and by dividing that number into $14,940,000, which is the fee revenue amount to be generated from DMFs in FY 2013 under GDUFA, FDA establishes a Type II DMF fee of $21,340 for FY 2013 (rounded to the nearest $10).  In separate draft guidance published earlier this month, FDA provides recommendations for information that should be included in TYPE II DMFs to facilitate an initial completeness assessment required by GDUFA.  Payment of the Type II DMF fee is due on the later of the date on which the first generic drug submission is submitted that references the associated DMF, or 30 days after October 25, 2012.  Failure to pay the Type II DMF fee within 20 calendar days of the due date results in the Type II API DMF not being deemed available for reference, and an affected ANDA will not be received unless the fee has been paid within 20 calendar days of FDA notification of the failure to pay the fee.

Moving on to the one-time ANDA backlog fee, FDA calculates the fee to be $17,434.  This amount is calculated based on dividing $50,000,000, which is the fee revenue amount to be generated from the backlog fee under GDUFA, by 2,868 pending ANDAs.  Payment of the backlog fee is due no later than 30 days after October 25, 2012.  Failure to pay the backlog fee will result in placing the ANDA sponsor on a public arrears list, such that no new ANDAs or supplements will be received (submitted by the applicant or its affiliates).

Over the past several months, FDA has taken pains to make sure that the ANDA backlog is accurate and implored ANDA sponsors to withdraw any pending ANDAs they are no longer interested in to avoid assessment of the backlog fee.  A reduced ANDA backlog means a slightly higher fee for each pending ANDA, but also reduces FDA’s review burden.  Under GDUFA, FDA agreed to review and act on 90% of all ANDAs, ANDA amendments, and ANDA PASs pending on October 1, 2012 by the end of FY 2017. 

Although FDA probably quietly hoped there would be a mass withdrawal of pending ANDAs, that did not happen.  In fact, only a few ANDAs were withdrawn.  Moreover, there was an increase in the number of last minute ANDA submissions.  There were 159 ANDAs submitted to FDA in September alone (and a total of 1,103 over the past 12-month period).  That left FDA with a an ANDA backlog of 2,933 ANDAs at the end of FY 2012, as shown in the table below. 

The 2,933 figure does not jibe with the figure of 2,868 pending ANDAs identified in the Agency’s Federal Register notice on the ANDA backlog fee.  It is off by 65 ANDAs.  We understand that’s because for GDUFA ANDA backlog purposes FDA excluded from the 2,933 figure certain ANDAs, such as those subject to FDA’s Application Integrity Policy.

FDA’s user fee notices provide information on payment options and procedures.  Additional information is available on FDA’s website (here).  Completion of the new GDUFA Cover Sheet will generate a user fee payment identification number that will facilitate payment.