FDA and industry are making final corrections to the generic drug user fee agreement and expect to forward it to the Department of Health and Human Services for internal clearance in two weeks.

Both sides have reached substantial agreement on a number of subjects that will be part of the new program. During an Aug. 25 stakeholder update meeting, FDA lead negotiator Peter Beckerman said the goals letter, which will outline the performance commitments, is in the final stages and "down to punctuation."

Beckerman, senior policy advisor in the agency's Office of Policy, said the deadline is to ensure the GDUFA agreement is forwarded to Capitol Hill in January along with reauthorizations for the Prescription Drug User Fee Act and Medical Device User Fee and Modernization Act as well as a new biosimilar user fee program.

FDA wants to have the commitment letter and draft legislation establishing the program completed by Sept. 9, when it will be sent to HHS and later the White House Office of Management and Budget. Minutes of an Aug. 11 negotiating session indicated both sides were attempting to meet the goal.

Representatives continued negotiations Aug. 18, and beyond that there was one additional face-to-face session scheduled, but more meetings were still possible according to the minutes of the Aug. 11 session. The Aug. 18 minutes have not yet been released.

Backlog Fee An Incentive For Some Sponsors To Withdraw Abandoned Applications

In the first year, $50 million of the total program revenue will come from a one-time fee for all applications currently in the backlog, the queue of pending applications that prompted the shift to a user fee system. Beckerman said the backlog fee will serve several purposes, including creating program revenue quickly so hiring and ramp-up activities can begin.

It also will be an incentive for sponsors to withdraw applications if they do not intend to market the product. But Beckerman also said ANDA holders that do not pay the backlog fee will not automatically have their applications withdrawn.

"We did not want to get into a situation where failure to pay a fee was going to contribute to a drug shortage if we already put work into an application," he said. "And so we are not anticipating that if someone fails to pay a user fee for an application in the backlog that we will stop working on that application or that it will be withdrawn."

FDA negotiator Russell Wesdyk, scientific coordinator for the Office of Pharmaceutical Science, would not say whether priority will be given to fee-paying backlog applications, but did say the program has been designed to ensure there is an incentive to pay the fee.

"There are significant penalties associated with non-payment such that industry is convinced, as are we, that anyone who should pay a fee will pay a fee," Wesdyk said. "It's very much in the sponsor's best interest to pay a fee."

During the Aug. 11 negotiating session, industry and FDA discussed the "impact of non-payment of fees," including whether an arrears list should be allowed, whether FDA can choose to not review new applications until fees are paid, and if the agency can deem products misbranded if they were made at facilities that did not pay a fee. The minutes did not indicate whether the issue was resolved.

FDA initially was hesitant about creating a separate fee for applications in the backlog because they wanted a simple program design. Officials feared creating too many fees could make the program difficult to administer (Also see "ANDA User Fees: Negotiators Close To Agreement, But Backlog Is Sticking Point" - Pink Sheet, 13 June, 2011.).

Beckerman said the agency did not violate its simplicity premise and the fee will be easy to calculate in the first year.

"I don't view it as overly complex," he said. "This is not one where I think we have that concern."

The agency also intends to adhere to its original goal to not separate the backlog from new applications. It also remains committed to a "first-in, first-reviewed" policy as well as to reducing the backlog to a "steady state" by the end of the first five-year program cycle.

Facility Fee Revenue Expected To Be Stable

The program is expected to generate $299 million annually with an annual inflation adjustment after the first year. No workload adjustment was included. Active pharmaceutical ingredient manufacturers will pay 20% of the total and finished dosage manufacturers will pay 80%, in part to ensure API manufacturers are not funding application reviews (Also see "FDA, Industry Reach Agreement On Major Portions Of Generic User Fee Program" - Pink Sheet, 10 August, 2011.).

About 70% of the revenue will come from facility fees charged to manufacturers and the remaining will come from application fees, agency officials said during the stakeholder meeting.

Fee amounts have not yet been determined because the agency does not know how many manufacturing facilities will be charged, Wesdyk said. Application fees are expected to be more variable, but both are going to be lower than those charged as part of the PDUFA program, he said.

"Once we have a good handle on facility numbers ... generally you don't see a lot of variation in that number, so that will be a fairly stable fee because that will be a fairly stable source," he said.

Industry Proposes Facility Fee Control Trigger

Industry offered another tweak during the Aug. 11 negotiation in an effort to keep facility fees at specific levels. Representatives suggested a trigger be included stating any facility fee revenue beyond the annual total revenue amount could be paid in "incremental additional 'spillover' fees" from ANDA, prior approval supplement and type II drug master file fee payments, according to the minutes.

FDA was concerned the plan could delay fee calculation and collection or cause the under- or over-collection of funds. Industry was expected to bring more details about the idea to the Aug. 18 negotiating session.

A fee refund policy also was discussed, including a 75% application fee refund for ANDAs and prior approval supplements that the agency refused to receive. FDA offered to refund 75% of DMF fees for those never referenced after five years. There will be no facility fee or backlog fee refunds, according to the minutes.

-Derrick Gingery (d.gingery@elsevier.com)

ANDA User Fee Agreement Expected To Be Finished in Early September

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