The Hardship of GDUFA Facility Fees

Since the implementation of the Generic Drug User Fee Act (GDUFA), many small facilities have complained about the establishment and facility fees being assessed under the Act.  Unlike the Prescription Drug User Fee Act (PDUFA) where establishment (facility fees) are not due or paid until after the respective new drug application (NDA) is approved, GDUFA requires yearly payments of the facility fee while the abbreviated new drug application (ANDA) is pending.  With median approval times at about 34 months, that may mean that 3 or more facility fees may be due prior to application approval.  At the current rate of $220,152 for domestic facilities and $235,152 for foreign facilities, that could mean close to $700,000 in fees that a facility may have to pay prior to approval of an application that it is named in.

This reality prompted the submission of a February 13, 2013 Citizen Petition (here) submitted on behalf of Square Pharmaceuticals complaining precisely about this issue. The Petitioner requested that, like PDUFA, fees not be assessed until after approval and commercialization and that the firm, because it was small, should be eligible for a small business waiver, among other things.  The Petition requested that FDA revise its regulations to correct this problem.  FDA denied the petition (here), stating that it was not permitted to develop a regulatory position that was contrary to the statutory language.  The FDA went on to explain the negotiation and agreement process on the tenets of GDUFA as are reflected in the goals letter and the general discussions at public meetings and stakeholder meetings relative to this issue and consensus was reached relative to how to impose facility fees and when they would be due.

There is no question that there can be economic hardship for small to mid-size companies at this stage of GDUFA, but as FDA explains in the denial letter cited above: “The possibility of financial hardship for small to mid-size generic drug companies incurred by a requirement to pay GDUFA fees was in fact a concern that was discussed by the pharmaceutical industry and FDA during GDUFA negotiations meetings. FDA and the parties involved agreed that fee waivers and exemptions would not be included. This decision was reached after considering the relatively low amount of expected individual fees compared to the benefits to small and mid-size companies that will result from more efficient review times and inspections.”

While this is no consolation for small companies today, perhaps improved review and approval times will someday make up for this hardship.  The only other option is for new legislation, which is not likely until after this first 5-year cycle of GDUFA is in the bank.