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Congressional Committees Propose Restructuring of User Fees in Draft Language

The draft language reauthorizes FDA’s authority to assess user fees and proposes fee restructuring and increases.

On April 14, the health committees for both the US Senate and the US House of Representatives released a discussion draft of legislation to reauthorize the Food and Drug Administration’s (FDA’s) user fee agreements.[1] The draft language restructures the various fee programs, establishing new fees and eliminating others, while also likely increasing overall fee obligations. The committees are seeking comments from stakeholders by April 28, 2017.

Legislation Summary

FDA’s authority to assess user fees is due to expire in September 2017. The draft language proposed by the congressional health committees would reauthorize FDA’s authority to assess user fees for another five years. Highlights of the draft language include the following:[2]

For Fees Relating to New Drug Application (NDA) and Biologic License Application (BLA) Products

  • The elimination of supplemental application fees.

  • The elimination of establishment fees.

  • The establishment of an annual program fee, which will replace product fees, for approved NDA and BLA products. Program fees will be assessed on a per-product basis. Sponsors, however, will not be assessed more than five program fees for a fiscal year.

For Fees Relating to Generic Drug Products

  • The elimination of fees for prior approval supplements.

  • The establishment of annual generic drug applicant program fees for sponsors with approved Abbreviated New Drug Application (ANDA) products. A single fee will be assessed for a company and its affiliates based on the number of approved ANDAs owned by such company and its affiliates.

  • Finished dosage form contract manufacturing facilities will only be required to pay one-third of the amount of the facility fee that a facility owned by a product sponsor would be required to pay.

  • Facilities will only be required to pay facility fees if the facility manufactures approved generic drug products.

  • If a facility manufactures both finished dosage forms and active pharmaceutical ingredients, that facility will be required to pay only the fee for finished dosage forms.

For Fees Relating to Biosimilar Products

  • The elimination of supplemental application fees.

  • The elimination of establishment fees.

  • The establishment of annual biosimilar biological product program fees for approved biosimilar products. Sponsors, however, will not be assessed more than five program fees for a fiscal year.[3]

For Fees Relating to Medical Devices

  • The establishment of a new fee for de novo reclassification requests, which will be set at a rate of 30% of the premarket approval (PMA) application fee ($88,200 for FY 2018). There will be a reduced fee for small businesses (25% of the above standard rate).

  • An increase in the rate for 510(k) premarket notification fees. The 510(k) fee is currently set at 2.0% of the PMA fee, but will increase to 3.4% of the PMA fee. The small business fee for 510(k)s will be reduced to 25% of this standard rate (currently set at 50% of the standard rate).

  • The reauthorization of the third-party review program for specified Class I and Class II device types.

  • The addition of a requirement that device presubmissions and submissions be submitted solely in electronic format beginning October 1, 2021, and a requirement that FDA issue a guidance document for such electronic submissions by January 1, 2021.

Interested persons can submit comments by April 28, 2017.

Key Takeaways

Congress is trying to move quickly to reauthorize FDA’s user fee authority as the current bills will expire on September 30. In a Senate Committee on Health, Education, Labor & Pensions press release, senators and representatives from both parties reiterated the importance of timely reauthorization of the user fee statutes for FDA, patients and their families, and industry.

Specifically for prescription drugs, biologics, generic drugs, and biosimilar products, the proposed restructured fees appear to consolidate many ancillary fees. While companies may have fewer fees that will need to be paid, their overall fee obligations will likely increase as the revenue that FDA is authorized to collect is also increasing. This increased fee obligation will be spread across fewer fee categories, which, for some fee classes, will likely result in larger invoices.

The restructuring of the user fee programs will also potentially impact existing and new contractual arrangements among companies in the life sciences industry, such as joint ventures, licensing, and contract manufacturing and supply arrangements. Accordingly, if the draft language is passed, companies should assess their current and new contractual arrangements to accommodate the new fee structure and levels.


[1] US Senate Committee on Health, Education, Labor & Pension, “Senate, House Health Committee Leaders Release Discussion Draft of FDA User Fees Reauthorization” (Apr. 14, 2017).

[2] Senate Legislative Counsel, FDA Reauthorization Act of 2017 (last visited Apr. 17, 2017).

[3] Based on the allocation of biosimilar fees in the draft legislation, it appears that the drafters may have intended to also eliminate biosimilar product fees. The text of the draft legislation, however, currently leaves these fees intact.

 

Copyright © 2017 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

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About this Author

Kathleen M. Sanzo regulatory and compliance FDA law attorney Morgan Lewis Law Fi
Partner

Kathleen M. Sanzo centers her practice on regulatory and compliance issues connected to products regulated by the Food and Drug Administration (FDA). She leads and counsels clients on matters relating to prescription, OTC drug and biotechnology products clinical testing; food, dietary supplement, and cosmetic product manufacture, approval, marketing, and distribution; device promotion and labeling issues; food, drug, and device compliance matters; and all consumer product issues regulated by the Consumer Product Safety Commission and state enforcement agencies.

As...

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Michele L. Buenafe, FDA Healthcare Practice, Morgan Lewis Law firm
Associate

Michele L. Buenafe is an associate in Morgan Lewis's FDA and Healthcare Practice. Her practice focuses on FDA regulatory, compliance, and enforcement issues pertaining to medical devices and pharmaceuticals. As part of her practice, Ms. Buenafe regularly advises clients on issues related to the development, manufacturing, and marketing of medical devices, pharmaceuticals, biologics, and combination products; labeling and advertising; post-market requirements; and compliance with FDA's bioterrorism regulations. In addition, Ms. Buenafe has assisted clients in navigating the state regulatory requirements (including licensure requirements) applicable to drug and device manufacturers and distributors, pharmacies, DME suppliers, and healthcare providers. Ms. Buenafe also has experience advising clients on the regulatory requirements and emerging legal issues related to health information technology.

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