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The FDA instituted a new program in 2013, to charge API and finish drug product facilities who manufacture generic drugs an annual fee of $247,717 for finished drug product facilities and $41,926 for API facilities within the US.  These annual fees are assessed for as long as the company produces these commercial products.  The fees must be paid prior to the approval of the drug product and if they are not paid then the application will be denied.

The legislation (Generic Drug User Fee Act) was passed in 2012 to speed up access to safe and effective generic drugs to the public and reduce costs to industry. The law requires industry to pay user fees to supplement the costs of reviewing generic drug applications and inspecting facilities. The revenue is being touted as allowing the Agency to reduce the time for pending applications, reducing the average time required to review generic drug applications for safety, and increase risk-based inspections.

If the facility does not keep current on the annual fees, the FDA places the facility on a public arrears list, denies any on-going submissions, and the products produced will be deemed misbranded.  The later violation could result in prosecution, denied entry into US, injunctions and seizures.  It is assumed that debtor imprisonment is still valid when it comes to the FDA.

Fees are due October 1st and if a company has more than one site that produces these materials, they will be subject to paying fees for both facilities.   If a manufacturer produces both the API and the finished dosage form then they will be required to pay both fees annually.

This is a large expense for the CMO’s and the generic sponsor.  The result will place additional fees on generic providers.  The availability of generic products may ultimately be impacted as well as their overall cost in the marketplace.  This type of fee structure is not uncommon and was instituted from the success that was seen with the PDUFA (Prescription Drug User Fee Act) program.

GDUFA was designed to build on the success of the Prescription Drug User Fee Act (PDUFA), which has been in effect for the past 20 years.  The fees with PDUFA are typically paid for by the drug sponsor.  They are also assessed per drug versus the facility.  There is much more work required by FDA in the review and monitoring of the trials and the facilities that are chosen to ultimately manufacture the drug product.  Additionally, the cost of a new drug is typically much higher than that being offered in the generic world.  The primary difference is not so much the cost, with PDUFA being much higher than GDUFA, but the fees being directed to the place of manufacture versus with the drug sponsor.

The best way to handle these re-occurring fees is to get a number of generic product customers and divide the annual cost across all parties.  This reduces the fee that each experiences.  This has not been a common practice by many CMO’s, as cross-client interactions are typically not supported due to confidentiality.  This may be the only way for generic companies, seeking approval or manufacture, to reduce the burden of this annual fee.

 

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