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GDUFA Reauthorization: Time to Make Adjustments

John DiLoretoOne of life’s certainties is that things don’t always go according to plan. SOCMA’s Bulk Pharmaceuticals Task Force (BPTF) and other industry stakeholders worked for several months to negotiate the original Generic Drug User Fee Act (GDUFA). Ideas were shared, resources were estimated, commitments were made, and finally, an act of Congress made it the law.

In the end, the tradeoff was quite simple. The Food and Drug Administration (FDA) would immediately begin to implement certain efficiencies, lay the groundwork for full implementation for the new user fee program, and begin hiring nearly 1,000 new staffers to carry out the program. In exchange, Active Pharmaceutical Ingredient (API) and Finished Dosage Form (FDF) generic drug manufacturers would pay approximately $300 million annually in user fees. The fees would pay FDA for a number of achievable and quantifiable goals, including a reduction in application review times to bring generic drugs to market faster and leveling the playing field for foreign and domestic facility inspections to enhance drug safety globally.

Surveillance Inspections
So how have we done so far? FDA has picked up the pace on inspection of foreign facilities, and for the first time the agency has a handle on the number and location of generic drug manufacturing facilities that need to be inspected. Implementing a risk-based inspection program has led to fewer domestic inspections. Instead, FDA is focusing its resources on foreign facilities with less-than perfect quality programs and those that have rarely, if ever, been inspected. FDA seems to be on the right track with risk-based inspections, but we are still only seeing early results from the new program.

Unfortunately, as a consequence of the reduction in domestic inspections, there have been some delays in the marketing re-authorization for drug products by foreign health authorities that require periodic Good Manufacturing Practices (GMP) certification of the API manufacturer. BPTF is working with FDA staff to address this issue.

Facility Fees While Pending ANDA/PAS Approval
One of the unintended consequences of the user fee program was felt by manufacturers registering a new site for the first time. With businesses currently waiting nearly four years to be approved, it makes it almost impossible for a company to reap any benefits if it must pay an annual facility fee before the first sale is made. At the current average approval time of 46 months, this means FDF manufacturers are spending about $1 million on facility fees with no guarantee of approval. BPTF and other industry stakeholders are looking for ways to revise this policy so it doesn’t stifle innovation or provide an economic disadvantage for expansion.

Excessive User Fees for Bulk Pharmaceutical Ingredient Manufacturers
So your company produces an API blended with one or more excipients that is subsequently converted into a finished dosage form? You just hit the jackpot – and not in a good way! Your company will have to pay both API and FDF facility fees, nearly $320,000 in FY 2015. This just doesn’t seem right, and BPTF is in favor of reducing the fees for manufacturing API/excipient blends.

Facility/Application Fee Split
With a reduction in inspections resulting from implementation of a risk-based program, fewer resources will be required, and a reduction in facility fees seems appropriate. In conjunction with an ever-growing application review period, more resources should be applied to that specific activity. The original estimate of resources needed by FDA for facility inspections and for application reviews may not accurately reflect the required level of effort for each function. The resource estimate for facility inspections may be higher than it should be and too low for timely application reviews. BPTF will continue to review existing data to establish an appropriate resource level for both activities.

Fee Carryover
At the end of Year 2 of GUFA, there was more than $277 million left unspent by FDA. Many industry stakeholders were surprised by the amount, even when taking into account the resources needed by FDA to ramp up hiring in the early stages of the user fee program. Some have suggested that the original baseline of $299 million annually may have been too high of a starting point. In the original negotiations there was little hard data available for informed decisions, but BPTF and other industry stakeholders will be better positioned to assess the appropriate cost of the program with data collected in the first few years of GDUFA.

Small Business Fee Waiver
GDUFA is the only user fee program without any waiver or fee reduction for small businesses. With so much uncertainty regarding the full breadth of the generic drug industry, it was difficult to evaluate the impact of providing relief to small businesses. Because so much of the industry falls within accepted small business definitions, it was felt there would be a large number of businesses receiving waivers, and the universe of fee-paying manufacturers would diminish to a point of having a small number of companies paying very high fees. This time around, BPTF will work with FDA and try to garner support for inclusion of a small business waiver, or exemption, so we don’t have an unintended barrier to business entry and to allow small businesses to remain competitive with their larger counterparts.

Summary
GDUFA has brought about some much-needed change within FDA, but many of the expected benefits have yet to be seen, and there have been some negative unintended consequences. A new set of goals will be established, along with a fresh look at the fee structure, all with an eye toward keeping costs to a minimum while FDA provides faster application reviews and risk-based inspection of foreign and domestic manufacturing facilities.

If you are an API manufacturer, FDF manufacturer, Contract Manufacturing Operation (CMO) or Contract Research Organization (CRO), please let us know what you think. If you are impacted by GDUFA, we’d like to know your concerns and any suggestions you have on how to make the program work for you. Please contact John DiLoreto at jdiloreto@bptf.us.

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