I’m sure you’ve heard this question and answer before – “Q: Would you like your pizza sliced into six or eight pieces?” “A: Only six pieces, please. I could never eat eight!” Well, the GDUFA IV negotiations and the subject of reallocation of GDUFA fees seem to be asking the same question. The entire pizza will cost X dollars, but the size of the pieces of the pie might change, and that is if the generic industry is lucky!
If you think the situation is complicated, you’re right! The FDA and industry have finished their general negotiation meetings and now the outcome of the negotiations will be outlined in the final commitment letter. As it stands now, costs will likely shift from application fees to program fees. There will be an increase in the foreign inspection fee, and there will there be likely some one-time “domestic” ANDA application fee waivers included in the GDUFA IV program. What will be the right balance? Will there be sufficient revenue to run the program, and will the generics industry be happy with the final outcome?
There was some talk during the negotiations about lowering application fees and possibly even lowering overall fees, and then along came the FDA’s announced hiring spree targeting the addition of about 3,000 professional staff. Remember that the FDA lost about 3,500 staff through the DOGE scourge and additional senior staff exiting, resulting in what has described by myself and others as a major brain drain. Now, with the new hiring spree in full swing, how does it play into the economics of the concluded GDUFA user fee negotiations or, for that matter, into the other UFA negotiations?
The generic drug program has other obstacles that may factor into the future viability of the changes to the fee structure and may have unintended long-term consequences. We’ve seen what I believe to be a significant drop in ANDA submissions over the past couple of years. Since ANDA application fees comprise a large portion of the fee pool, as the number of ANDAs submitted to the Agency decreases, the fee per application will dramatically rise. Along with the proposed increase in hiring back to almost pre-DOGE levels, the number of employees hired back into each of the UFA programs will place a not-yet-factored strain on the amount of revenue generated to support each program entity.
In an article titled “Would lowering ANDA costs boost domestic generic drug production?” published in Healthcare Brew (here), author Maia Anderson discussed what it would take to bring domestic manufacturing back to the U.S. and wrote, “Mark Cuban recently told Healthcare Brew the cost of the application drugmakers must submit to the FDA for permission to manufacture a generic drug—called Abbreviated New Drug Applications, or ANDAs—’kills the economics’ for companies like his online pharmacy Cost Plus Drugs. For FY 2026, the FDA charges drugmakers $358,247 to submit an ANDA.” While others interviewed for the article suggested that current fees likely would not have a chilling impact on domestic applicants, with the razor-thin margins of today’s generic products, if the fees continue to rise, Mark Cuban’s view may be more widely shared.
Remember, the current UFA negotiations will impact fees that won’t be calculated or go into effect until FY 2028. What we think we’re paying for in today’s negotiation will certainly be a far cry from what we will have to pay then, especially if staffing increases significantly to the prior level for the generics program and especially if the number of ANDA submissions continues to decline.
