Most new laws affecting drug manufacturing have unintended consequences, but the Generic Drug User Fee Act (GDUFA), which was enacted as part of the Food and Drug Administration Safety and Innovation Act (FDASIA), has provided contract manufacturers with dramatic unexpected issues.

The law is part of a series of user fee statutes that began with the Prescription Drug User Fee Act (PDUFA) in 1992, which was followed by programs for other products including veterinary drugs, medical devices, and most recently a biosimilar program that was part of the Affordable Care Act (a.k.a. “Obamacare”). The overwhelming support in Congress for GDUFA was demonstrated when a technicality in a continuing resolution was corrected for GDUFA, but not made for the biosimilar program.

FDASIA was signed by President Obama on July 9, 2012, and GDUFA was swiftly implemented.  A provision of the law, unique to user fees, was the establishment of a “backlog” fee of $17,434 that had to be paid for all generic drug applications pending at FDA in order for their review to continue. Previous user fee programs grandfathered applications previously submitted but considered as backlog cohort with a specific review goal.

FDA also required a first submission of “self-identification” by December 3, 2012. That included facilities that are required to pay fees, such as active pharmaceutical ingredient (API) facilities and finished dosage form (FD) facilities, but also covered other categories, such as “Bioequivalence (BE)/bioavailability (BA) sites that are identified in a generic drug submission and conduct clinical BE/BA testing, bioanalytical testing of samples collected from clinical BE/BA testing, and/or in vitro BE testing.” These sites are not currently subject to DFUFA facility fees; one can only speculate the reasons for this requirement, but an obvious possibility is that these sitesmay become targets for facility fees in the future.

Other fees were established and increased in the current fiscal year as follows:

	FY 2013	FY 2014
DMF Fee:	$21,340	$31,460
ANDA Fee:	$51,520	$63,860
PAS Fee:	$25,760	$31,930
Domestic FDF facility:	$175,389	$220,152
Foreign FDF facility:	$190,389	$235,152
Domestic API facility:	$26,458	$34,515
Foreign API facility:	$41,458	$49,515

Foreign facility fee differential: $15,000

An early consequence was the inclusion on an arrears list and bills received from FDA to firms that did not believe they were subject to these provisions since they were not involved in active operations subject to fees. In some cases, FDA had been informed that the location was a “potential” site to be used in an ANDA, although the sponsor had not contracted for the actual use of the facility.  This caught many firms by surprise since they were unaware they had been identified by a potential customer and were very unhappy to be billed for the privilege.

FDA’s intent to enforce these provisions was shown in a Warning Letter issued to C.P.M. Contract Pharma GMBH & Co. in Feldkirchen-Westerham, Germany on September 17, 2013. In addition to placing the firm on the publicly available arrears list, the letter noted:

“Failure to correct these violations promptly may result in regulatory action, including but not limited to seizure or injunction without further notice. Your facility may also be placed on import alert such that any drug the facility manufactures will be refused admission into the United States.”

Generic manufacturers have also seen an increase of FDA inspections, particularly overseas, funded by GDUFA. These have been followed by compliance actions, including Warning Letters and Import Alerts.

Finally, an unintended problem facing those subject to GDUFA (as well as the other user fees) is that the Office of Management and Budget has determined that the user fees collected from sponsors are subject to the same sequestration rules that cut FDA appropriations. So industry is now paying fees that are not available to the agency, which must still try and meet the goals agreed to in negotiations with industry. The user fee programs are popular with both parties, and it is hoped that a legislative fix will emerge.

All of the user fee programs have included a “sunset” provision that requires reenactment every five years. Contract manufacturers and others that may not have been active participants in the negotiations on GDUFA would be wise to participate when the process for renewal begins. CP

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Mark Elengold
FDA Strategies

Mark Elengold is president of FDA Strategies LLC. He served as the Deputy Director of the FDA’s Center for Biologics Evaluation and Research until his retirement in 2005, after 34 years of service at the Agency. He is an expert and frequent speaker on regulatory and compliance activities, Good Manufacturing Practices (GMPs), and FDA application review procedures, including electronic submissions. He can be reached at [email protected].