Emerging discussions on the creation of a user fee program for generic drug review place FDA in the awkward position of potentially being seen as an arbiter of drug prices - at least indirectly.

Faced with government-wide appropriations constraints, FDA is looking to industry to help fund the increasing volume of generic drug reviews. The response from the Generic Pharmaceutical Association - that any fee program needs to be accompanied by legal reforms to speed ANDA approval - will likely set up an argument about what obligations the government has to ensure market access for generic drugs.

Generic firms appear to be trying to frame the issue as a reflection of the Bush Administration's commitment to affordable medicine, especially in the context of the Medicare drug benefit.

As with reimportation, the agency runs the risk of having a policy and resource decision painted as politically motivated.

The issue of user fees has been discussed on and off for years, but it appears to have gained more urgency following the fiscal year 2007 budget proposal and a front-page Washington Post article on Feb. 4 about resources for ANDA review that the agency felt presented the Office of Generic Drugs in an unfavorable light.

FDA made its formal case for generic user fees in a carefully worded speech delivered Feb. 17 by FDA Deputy Commissioner for Medical & Scientific Affairs Scott Gottlieb at GPhA's annual meeting in Boca Raton, Fla.

At the association's fall technical conference, Center for Drug Evaluation & Research Director Steven Galson also suggested that user fees would need to be considered (¹ Also see "Generic User Fees Must Be Considered Due To Ballooning ANDAs – FDA’s Galson" - Pink Sheet, 31 October, 2005., p. 17).

Gottlieb's speech included some pointed remarks for his hosts.

"We always value this relationship very much, we value [GPhA President Kathleen Jaeger's] counsel very much," Gottlieb emphasized.

In past years, "I think we were able to do some important things together, to get some important programs and initiatives started," he said.

"And I think on behalf of [Acting FDA Commissioner Andrew von Eschenbach] and everyone at FDA, I'd like to say to you today that FDA is very interested in trying to reignite that relationship that we had over the past several years, going on some shared goals."

However, "I reject the recent criticism of our budget at FDA, and by that I mean those who call into question our commitment to the generic approval process," he said.

"The fact is since FY 2001, the budget of the Office of Generic Drugs has doubled and during this time the number of full-time personnel has increased from the 142 to the present level of 201."

Different Numbers, Different Goals

While FDA is emphasizing the vast historical improvements to funding and performance in the office, GPhA is focusing its comments on the burgeoning review backlog and the limited budget proposed for FY 2007 (² Also see "Generic Drug Reviews Take A Hit In FDA 2007 Budget Request" - Pink Sheet, 13 February, 2006., p. 7).

Gottlieb outlined several goals that FDA would work on with additional user fee resources, most notably "perhaps committing to complete action within four months" for first-time generics without patent protection (see chart: " ³ How FDA Would Spend It ").

In response, GPhA said it would consider supporting user fees if the Bush Administration "would guarantee legislative and other changes that the industry believes would speed its products to market."

The changes being sought would presumably be similar to those outlined in the recently introduced "Lower PRICED Drugs Act" (see chart: " ⁴ GPhA Wish List ").

Petitioning About Petitions

Among the issues of most concern to GPhA are citizen petitions, which the association believes often hold up generic approvals at the last minute.

The agency is making several administrative changes to expedite its handling of citizen petitions, though it appears unlikely to decouple petition review from the ANDA review process.

[Editor's note: In-depth coverage of FDA's efforts to speed review of citizen petitions will appear in the March 6 edition of "The Pink Sheet."]

Gottlieb explained that FDA feels obligated to review petitions before approving ANDAs in order to ensure it considers all scientific information and to create a complete administrative record in case it is sued after the approval.

"Now whether the agency is willing to bear additional legal risk and not have as complete a response developed...that's another process issue and another policy decision," Gottlieb said.

Even after responding to citizen petitions, FDA is facing a lawsuit from GlaxoSmithKline after the agency approved a generic of Flonase on Feb. 22 (see ⁵ Also see "FDA Approves Generic Of GSK Flonase But Launch Halted By Restraining Order" - Pink Sheet, 27 February, 2006.).

The Flonase generic, the first-ever nasal suspension deemed bioequivalent by FDA, also resulted in another milestone event - what appears to be the first-ever FDA press conference about an ANDA approval.

The event gave the agency a chance to highlight "a very significant approval for the Office of Generic Drugs and for the country."

"We believe that this approval will have a large impact on the economics of medical care," OGD Director Gary Buehler said.

$18,750 per ANDA?

GPhA's press release in response to Gottlieb's call for user fees stated that "a modest investment in OGD -such as $15 mil. - would help to make more affordable medicines available to consumers and public and private health care purchasers, who would save billions of dollars."

GPhA has been quite successful in getting additional appropriations for the Office of Generic Drugs, though the constrained fiscal climate and the potential earmark reforms stemming from the Jack Abramoff lobbying scandal suggest that a dramatic reversal of the proposed budget on the Hill appears difficult.

Even if OGD were to receive a sizable budget increase this year, the debate could be wrapped into the renewal of the brand user fee program slated for 2007.

While the association is obviously eyeing appropriation mechanisms to provide the additional funds, were the $15 mil. to be generated by user fees, it could result in a fee of $18,750 per application, based on 800 ANDA submissions in a year.

FDA received 766 original ANDAs in FY 2005, and it is projecting that submissions will continue to grow, albeit at a slower rate in FY 2006.

The $18,750 figure is a fraction of the fees paid by new drug applicants, but it is more significant when compared to the relatively low development costs that ANDA sponsors incur for routine bioequivalence testing.

Sign Of A Mature Industry

While the debate creates uncertainty and will demand considerable attention from GPhA, the issue is in large part a demonstration of the generic industry's success. Companies have grown and the market is attractive enough to draw in new entrants which are flooding the FDA with submissions.

User fees have been one of the issues that had traditionally been a source of division within the generic drug industry, and they were part of the delay in the merger of the three original generic associations into GPhA (⁶ Also see "NAPM/GhPA Merger Likely Ends Generic User Fees Push In 107th" - Pink Sheet, 5 February, 2001., p. 26).

FDA Faces Pricing Pressure As Generic Drug User Fee Debate Begins

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