FDA did not see the drop in fee-paying applications it predicted in FY 2011, but the figure continues to decrease, which could point to a large increase in application fees in coming years.

The charge for an application requiring clinical data will be about $1.959 million in FY 2013, an increase of about $117,000 from the $1.842 million charged in FY 2012. FDA published the new fees Aug. 1 in the Federal Register.

But the number of submissions continues to decrease, a trend that likely will force sponsors to keep paying more for a review.

The number of fee-paying full application equivalents, a figure that takes into account applications and supplements filed and reviewed, as well as those rejected and withdrawn, decreased to 108.25 in FY 2011, the most recent full year of data. It was down 8.6% from FY 2010, when 118.4 FAEs were received.

The numbers are important because they help set the fee amounts paid for application reviews each year.

Fee-Paying Full Application Equivalents

Full application requiring clinical data: 1 FAE
Supplement requiring clinical data: 1/2 FAE
Application not requiring clinical data: 1/2 FAE
Application that is withdrawn or refused for filing: 1/4 FAE if entire fee paid initially, 1/8 FAE if half of fee paid initially

Luckily for sponsors, the actual FY 2011 number was better than FDA estimated. Last year, before FY 2011 ended, the agency projected the total would be 102.5 FAEs, about six less than it received Also see "NDA, BLA Submissions Expected To Fall Again in FY 2011" - Pink Sheet, 1 August, 2011..

The latest figure continues a declining trend in submissions. Totals during the last few years had been among the lowest posted since 1994 Also see "FDA Expects Sharp Drop In Drug Applications This Year" - Pink Sheet, 4 August, 2010..

Three-Year FAE Average Will Be Used In PDUFA V

After peaking at 140 and 140.3 FAEs in FY 2008 and FY 2009, respectively, submissions have declined rapidly.

Decreases after sharp rises in FAE volume are not uncommon in the last several years. After FDA received 165.9 FAEs in FY 2000, the figure dropped to 126.6 the following year. Sponsors followed FY 2004, when 145.1 FAEs went to FDA, by sending 121.5 the next year.

The peak years help keep the rolling average up and fees down. But under the fifth cycle of the Prescription Drug User Fee Act, sponsors likely will lose the dollars saved quicker.

The agency and industry decided to change the formula used to calculate application fees when PDUFA V goes into effect Oct. 1. No longer is the fee determined using a five-year FAE average, including an estimate of the total expected in the current fiscal year.

The agency now will use the average of the three most recently completed fiscal years. That number is divided by the total application revenue to get the application cost.

In the FY 2013 fee notice, the three-year FAE average was 122.3. Figures for fiscal years 2009, 2010 and 2011 were used, since FY 2012 has not completed.

It was the 2009 figure – 140.3 – that pushed the average higher and, by extension, the application fee lower. When FDA moves to set the fee rate for FY 2014, the FY 2009 number will not be used in the average (see chart below).

That means unless sponsors send a dramatically higher number of submissions in FY 2013, application fees could increase significantly.

Using only the FY 2010 and FY 2011 FAE figures gives an average of 113.3 and would yield a $2.114 million fee for an application requiring clinical data in FY 2013. That is nearly 8% higher than the actual FY 2013 amount.

Increases in the total revenue that must come from application filings also are helping push fee levels higher. In FY 2013, $239.556 million must come from application fees, according to the notice. That is about 2% more than the FY 2012 figure, which was $234.057 million.

Increasing PDUFA fees also would mean increasing fees for biosimilars. FDA likewise published the first fee schedule for the new program in the Aug. 1 Federal Register Also see "FDA Sets Biosimilar Application Fees, But Is Silent On Volume Projections" - Pink Sheet, 31 July, 2012..

While the decreasing submission figures could be considered more evidence of a dwindling drug development pipeline, FDA continues to increase its approval numbers.

The agency approved nearly as many novel drugs in the first half of 2012 as in the first half of 2011, which ended up producing a record number of approvals Also see "Settling In To The “New Normal”: Midway Through 2012, Another Banner Year For Drug Approvals Is Within Reach" - Pink Sheet, 1 July, 2012..

Product Fee Drops, But Establishment Fee Rises

In addition to the cost of an application requiring clinical data, all other PDUFA fees are set to increase in FY 2013, except one.

The product fee will decrease .5%, from $98,970 in FY 2012 to $98,380. FDA said in the notice that 2,435 products are expected to be paying the fee in the upcoming fiscal year, which is 70 more than estimated at the beginning of FY 2012.

Establishment fees will increase in the coming year despite the number of eligible facilities also increasing. FDA estimated that after waivers and reductions are granted, there will be 455 establishments paying the fee in FY 2013. That is a five-facility increase from the FY 2012 estimate used. The agency also assumed the same number of facilities receiving a waiver or orphan drug exemption as the previous year – 25.

It appears the increase in overall revenue to come from facility fees may have forced the fee to rise even though more facilities will be paying. The FY 2013 fee will be $526,500 per facility, compared to $520,100 per facility in FY 2012.

Fees for applications not requiring clinical data and supplements with clinical data will increase at the same rate as full applications requiring clinical data. They were set at $979,400 for FY 2013, or half the cost of an application requiring clinical data.

The new fee schedule will be the first under PDUFA V, which was enacted July 9 when President Obama signed the FDA Safety and Innovation Act into law.

The bill also reauthorized the medical device user fee and created the biosimilar user fee as well as a new fee for generic drugs ([A#00120716007]).

FDA Workload Metrics: A Rolling History

FDA calculates user fee application costs using the average of the number of submissions received, called fee-paying full application equivalents, during the three most recently completed fiscal years. The average is divided by the total amount required to come from application revenue to determine the fee for the upcoming fiscal year.

Three-Year Averages for Fee-Paying Full Application Equivalents

Fee-Paying Full Application Equivalents Received by Year 1998-2011

Source: FDA data published in the Federal Register

FDA Sees Another Submission Decrease In FY 2011, Increases Application Fees

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