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Could Sequestration Derail Generic Drug User Fee Program?

With sequestration looming, SOCMA’s Bulk Pharmaceuticals Task Force is concerned the program it worked years to bring about – Generic Drug User Fees (GDUFA) – could be derailed by budget cuts set to take effect March 1. GDUFA was signed into law by President Obama in July and took effect in October.

Through GDUFA, the generic drug industry has voluntarily agreed to pay about $1.5 billion over the course of five years in return for a faster and more predictable review of generic drug applications. This would help reduce drug shortages and bring less costly generic drugs to market faster.

BPTF is a key industry stakeholder that negotiated with the Food and Drug Administration (FDA) on the terms of GDUFA, which would improve the safety of the drug supply chain by requiring inspection of all foreign and domestic drug production facilities. BPTF has also long advocated for increased resources for the FDA to conduct more inspections of foreign drug ingredient manufacturers and help level the playing field for domestic drug producers.

But if sequestration goes into effect and diminishes the amount of money FDA could apply to the program as required by law, it would prevent the agency from collecting user fees. And this wouldn’t help anyone because the industry wants to see the GDUFA program succeed.

With the lack of funds the FDA had to conduct inspections prior to passage of GDUFA, a cut in the agency’s resources would effectively delay the review of drug applications and inspection and result in a program that’s running on fumes.

According to a recent article in The Pink Sheet, budget cuts to FDA could threaten travel and personnel, but the affect it would have on user fee triggers would likely be more damaging. Triggers are a key element of the user fee program, setting a baseline of taxpayer funds to ensure that industry payments supplement congressional appropriations. “If the trigger amounts are not met in FY 2013, FDA would lose the ability to collect $299 million in GDUFA fees...” the article said.

“Without the new fee revenue, FDA would likely be unable to hire the additional application reviewers and facility inspectors needed to meet the GDUFA review goals,” The Pink Sheet reported.

BPTF doesn’t want to see the significant strides that were made to ensure that our drug supply is less susceptible to sub-par drugs from facilities with lax quality compliance standards take a step backward. We urge Congress and the President to work together and come to a solution that will ensure that our drug supply is safe for future generations.

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