FDA pushes for generic drug user fees

FDA Commissioner, Dr Margaret Hamburg, has made an appeal for the introduction of generic drug user fees in order to bring new funding to the FDA's Office of Generic Drugs (OGD). Speaking at the Generic Pharmaceutical Association (GPHA)'s Annual Meeting, Dr Hamburg admitted that the backlog of pending applications was not acceptable, acknowledging that it would soon hit the 2,000 mark, and argued that the situation could only be resolved with the introduction of user fees. In its budget request for FY2011, the FDA proposed that introducing generic drug user fees would add just over US$38 million to its coffers. This, the FDA believes, would go a long way to reducing review times. By the end of the first five years following the introduction of user fees, the additional money would enable a complete review and response for an estimated 80% of applications within 12 months of receipt.

The GPhA responded to the plea for a user fee programme by saying it would welcome re-engaging in negotiations over the issue. The GPhA has generally been cool on the proposal, as its latest response shows. This is not really surprising, as the user fee proposal would of course mean hitting generic firms financially, with firms then having to try to either pass the costs on to consumers by raising prices in an already highly competitive market, or else absorbing the costs themselves, leading to reduced margins and profitability on sales. However, a particular sticking point has always been getting value for money, and ensuring that the increased costs will actually lead to faster approval times and a regulatory process that flows smoothly. The branded industry already has a user fee programme in place; in previous years when the idea of generic drug user fees has been mooted, the GPhA and others have responded by pointing out that unlike the branded industry, the generic industry faces other delays in the form of legal challenges from the branded industry. As a result, introducing user fees may not make a difference to approval times, as generic companies will still have to fight time consuming legal battles. The GPhA has said in the past that it would be willing to go down the user fee route if there was certainty that it would lead to reduced delays. This is a concern that Dr Hamburg has picked up on; in her address, she noted that a fee programme would have to include measurable results, something which has certainly been received positively by the GPhA. Of course, what those measurable results may be, and whether the generic industry agrees with them, remains to be seen.

One criticism that has been raised about a user fee programme in general is that it blurs the line between the industry and its regulators, a criticism that has been levelled at the branded industry's user fee programme. If the industry is paying the regulators, the danger will always be that with the money will lead to undue influence, especially if the regulators need to show they can provide value for money. Whether it is possible to safeguard against this is a particularly tricky issue.

The issue of introducing generic user fees is not new, and has been rattling around the federal government for some years. It is as uncertain now as it has ever been whether or not such a programme will be introduced. Of course, the US is currently in the throes of a bitterly divisive battle over reforming the healthcare system as a whole, which has so far resulted in a stalemate with the legislative bills introduced to Congress thus far unlikely to be passed. Given the political atmosphere in Washington at the moment, any attempt at reform may have to be scaled back and introduced in piecemeal fashion. It is quite possible that a user fee programme may get lost in the process.

Ian Platts – Editor, World Generic Markets