Ten Things You Need to Know about the FDA User Fee Reauthorizations

Prescription Drug Fda User Fees

Vito Russo, a New York film critic living with AIDS, was one of 1,000 AIDS activists who occupied the Food and Drug Administration’s (FDA) Rockville, Maryland, headquarters on October 11, 1988, seven years after the AIDS epidemic started to spread across the U.S. They demanded access to and faster approval of the more than 80 drugs being tested to fight HIV and AIDS.1 “I know it takes months to test a drug in Europe . . . I want to know why it takes five to 10 years in this country,” Russo said. “I’m here today because I don’t want my name on a quilt in front of the White House.”*2 Tragically, Russo died of AIDS 25 months later.3

Russo did not die in vain. His protest helped spur the FDA to reduce approval times by prioritizing AIDS drugs and to give all patients with life-threatening and severely debilitating illnesses access to investigational drugs.4 At the time of the FDA occupation, AZT, approved in 1987, was the first and only successful AIDS treatment. And yet, all these changes led to the approval of just two additional AIDS drugs between 1988 and 1992.5 AIDS activists then focused their efforts on providing the FDA with more funding, ensuring the agency had the resources to review and approve safe and effective drugs faster.

In 1992, Congress passed and President George H.W. Bush signed the Prescription Drug User Fee Act (PDUFA), a law that provides the FDA with resources to accelerate the drug review and approval process. Within 5 years, FDA had approved nine new AIDS drugs and subsequently has approved a total of 41 AIDS treatments.6 To maintain such progress with all kinds of drugs, Congress must reauthorize PDUFA, as well as user fee programs for medical devices, generic drugs, and biosimilars, every five years. It must reauthorize these user fee programs by September 30th of this year. The leaders of the key committees have launched this process with a bipartisan, bicameral draft bill.7 This report answers 10 key questions about the User Fee Acts (UFAs) and explains the history behind the UFAs.

Russo was referring to The AIDS Memorial Quilt, which was publicly displayed for the first time on the National Mall in October 1987, one year before the FDA protest. Russo’s name appears on block 01677 of the AIDS Memorial Quilt.

1. What is an UFA?

Pronounced “oofa” (not to be confused with “oofta,” the Norwegian version of the Yiddish “oy vey”), the User Fee Acts or Amendments (UFAs) authorize the collection of user fees from drug and device sponsors to help the FDA fulfill its mission of protecting the public health by ensuring that drugs, vaccines, and other biological products are safe and effective. Rather than simply relying on government funding, this extra private funding helps improve the regulatory review process in order to advance innovation of these products.8

Congress first authorized the collection of user fees to support the agency’s drug review work with the 1992 Prescription Drug User Fee Act.9

PDUFA’s offspring include the Medicare Device User Fee Amendments (MDUFA), the Generic Drug User Fee Amendments (GDUFA), and the Biosimilar User Fee Act (BsUFA).10* Authorization for all four user fee programs expires September 30, 2017.

The UFAs for human drugs and devices generally have four key elements:11

  • 5-year sunset, requiring Congressional action to reauthorize,
  • Fee use restrictions, ensuring that user fee funding is used only for human drug and device approval activities,
  • Congressional appropriations contingency, ensuring user fees supplement rather than replace Congressional appropriations, and
  • Performance goals, negotiated by FDA and industry and designed improve drug and device review times.

Two additional user fee programs, the Animal Drug User Fee Act (ADUFA) and the Animal Generic Drug User Fee Act (AGDUFA) support review of drugs to treat animals.

2. Why have user fees?

Authorization of the first user fees in 1992 was motivated in part by a growing deficit, funding uncertainty, and lengthy drug review timelines. Beginning in 1985, the Reagan Administration proposed user fees in its annual Department of Health and Human Services (HHS) budget requests with the intent to reduce appropriated funds and apply these savings to federal debt reduction.12 Drug manufacturers opposed paying for deficit reduction without any guarantee of improving FDA’s regulatory review process for new drugs, and Congressional Democrats had strong concerns that user fee funding could undermine the independence of the FDA. The impasse over user fees led to an annual game of “appropriations chicken” when, on more than one occasion, FDA employees received letters warning of possible staff layoffs. In the end, the Democratic-controlled Congress routinely rejected the user fees and restored FDA’s appropriated funding. But this annual funding uncertainty contributed to FDA’s frustratingly slow drug review process, leading to a “drug lag” in which other countries reviewed new drugs more quickly, making them available to patients overseas before they were available to Americans.

But it was truly the AIDS crisis that gave birth to PDUFA. AIDS activists fought for faster drug approvals and earlier access to experimental drugs using high-profile protest tactics, such as covering themselves in blood and staging “die-ins” in front of the White House and National Institutes of Health and occupying FDA’s Rockville headquarters.13 These activists clearly demonstrated that “the right drug at the right time could make a real difference when people’s lives were at stake.”14 After years of playing games with FDA funding, Congress finally authorized user fees to ensure FDA had the resources it needed to improve the drug review process to be timelier while still ensuring patient safety.

GDUFA, first authorized by Congress in 2012, had a similar genesis in a frustratingly slow approval process, resulting in a substantial backlog of generic drug approval applications. Over the decades since Congress first authorized an abbreviated new drug application process for generic drugs in the 1984 Hatch-Waxman Act, FDA’s resources did not keep pace with the number of generic drug applications.15 By March 2012, just before passage of GDUFA, FDA had a backlog of more than 2,500 abbreviated new drug applications, and the median time for review of these generic drug applications was 31 months.16 While the brand-name drug application process received funding from PDUFA and received approximately 100 new drug applications per year, the generic drug approval process received no user fee funding and received 800-900 applications per year.

3. What have the UFAs accomplished?

Since Congress first authorized PDUFA in 1992, the average time for approval of a drug has dropped by nearly 60%, and average clinical development time for new drugs has dropped by 10%.17 The result? Earlier access for patients to the more than 1,500 new drugs and biologics approved since 1992.18 Driving these improvements is FDA’s accomplishment in meeting or exceeding nearly all of the 30 performance goals established under PDUFA V.19 For example, the performance and procedural goals focus on aspects of the human drug review process that are critical to ensuring timely access to safe and effective medicines, such as FDA’s commitment to review and act on new drug applications and biologic license applications within specific timeframes.20 Because of all this, the “drug lag” has disappeared. For drugs approved in both the U.S. and Europe, 63.7% were first available in the U.S., a median of 90 days sooner than in Europe.21 And 85.7% of drugs also approved in Canada were first available in the U.S., a median of 355 days sooner.22

While PDUFA’s accomplishments span more than 25 years, the GDUFA and BsUFA programs have also managed to achieve impressive results in just the first five years of implementation. For example, under GDUFA I, FDA committed to take first action on 90% of the 2,866 abbreviated new drug applications and 1,873 prior approval supplements23 that were in process before enactment of GDUFA on October 1, 2012. As of December 31, 2016, FDA had exceeded this goal, taking first action on 95% of these backlogged abbreviated new drug applications and 93% of backlogged prior approval supplements.24 Overall, the FDA met or exceeded all GDUFA I review goals, resulting in a dramatic increase in generic drug review and approval.25 In 2016, FDA set a record with 835 approved or tentatively approved abbreviated new drug applications—the previous high was 619.26 In fact, 25% of all approved generic drugs were approved within the past four years.27 Although a significant backlog in generic applications remains, GDUFA has already expanded access to high-quality, lower-cost generic drugs for all Americans.

Congress first authorized an abbreviated approval pathway for biosimilars in 2010.28 Two years later, BsUFA I began providing FDA with the resources to build the infrastructure required to begin supporting the new biosimilars review and approval program.29 One measure of success for BsUFA I, and an indication of the growth of the biosimilars pathway more generally, is the increase in the number of scheduled BsUFA program meetings, from 30 in FY 2013 to 73 in FY 2016.30 These meetings are one means by which FDA engages with potential biosimilar applicants during the development process. Despite this increase in meetings, FDA’s limited capacity to hire and retain qualified scientific staff has caused FDA to miss performance goals included in BsUFA I for several different types of program meetings.31

4. What is FDA’s drug approval process?

PDUFA’s accomplishments are based on the foundation of a rigorous, 13-step drug approval process to ensure each drug’s safety and efficacy.32 Not only does this process assure the public of each drug’s safety and efficacy, but by providing performance feedback to the drug sponsor at each step, which informs action to be taken in the subsequent step, the approval process is intricately linked to the drug development process. After the initial basic science research to understand a disease and how a drug could impact the course of that disease, drug manufacturers must go through a series of steps to get a drug in the hands of patients. They start with safety, which remains a focal point in all phases of the drug approval process, and proceed to a drug’s efficacy. The FDA’s drug approval process give drug manufacturers a path to approval that allow them make adjustments at every step along the way.

User fees are triggered upon submission of a new drug application to support the intense review and analysis of the application in which FDA staff engage. In addition to user fees, drug sponsors are responsible for the costs of all testing and trials. The box below outlines the standard drug approval process; FDA’s Accelerated Approval and Fast Track programs help to speed the approval process for drugs that treat serious or life-threatening diseases or address an unmet medical need.

FDA Drug Approval Process33
1. Animal Testing to assess toxicity and gather information on safety and efficacy
2. Investigational New Drug Application submission
3. Phase 1 Clinical Trial with 20-80 healthy volunteers focusing on side effects and drug metabolization and excretion
4. Phase 2 Clinical Trial with hundreds of patients focusing on effectiveness in a diseased population
5. Phase 3 Clinical Trial with thousands of patients, gathering more information on safety and efficacy
6. Review Meeting to analyze trial data
7. New Drug Application Application to market a drug in the U.S.
8. Application Review FDA has 60 days to decide whether to file the application
9. Application Filing a review team is assigned to evaluate the application
10. Drug Labeling FDA review to ensure appropriate communication to providers and consumers
11. Facility Inspection
12. Drug Approval
13. Phase 4 Clinical Trials to continue safety and efficacy monitoring

FDA’s processes for reviewing and approving generic and biosimilar drugs are somewhat different than the process outlined above. Rather than demonstrating safety and effectiveness, as drug manufacturers must do in the above process, drug companies must demonstrate their ability to produce a drug that can be appropriately substituted for a brand-name drug, in the case of generics, or demonstrate a high degree of similarity to an approved drug with no clinically meaningful differences in safety and effectiveness, in the case of biosimilars.34

5. What is the role of Congress in the UFA reauthorization process?

The purpose of the UFAs is to provide the FDA with resources to accelerate the availability of safe and effective medicines to patients. In order to improve such an intricate, complex process as drug approval, the current UFA authorizations outline an explicit process the Secretary of the Department of Health and Human Services must undertake in developing recommendations for reauthorization of a new bill. This process is different from reauthorization of other Congressionally authorized programs because of the complex process of drug review and approval as well as the intricate partnership between the drug innovators and government regulators. In past PDUFA reauthorizations, Congress has not changed one word of the terms and conditions negotiated by FDA and the impacted industries.35

Here’s how that process works for PDUFA:

  • First, the Secretary is required to consult with House and Senate committees of jurisdiction, scientific and academic experts, health care professionals, patient and consumer advocates, and the regulated industry in developing recommendations for goals for the reauthorization.36
  • Before engaging in negotiations with the regulated industry, the Secretary must hold a public meeting, provide for a period of public comment on views presented at the meeting, and publish comments received on the FDA website. Discussions with industry are largely confidential, though summary minutes are posted on the FDA website and focus on “desired enhancements in terms of specific aspects of activities in ‘process for the review of human drug.’”37
  • During negotiations with the regulated industry, the Secretary must hold at least monthly meetings with patient and consumer advocacy groups.
  • Following conclusion of negotiations with industry, the Secretary must present reauthorization recommendations to Congressional committees of jurisdiction, publish recommendations in the Federal Register, provide for a period of public comment and hold a public meeting, and revise recommendations as necessary.
  • Finally, not later than January 15, 2017, the Secretary was required to submit revised recommendations to Congress. Minutes of all meetings, and recordings of some meetings, are available on FDA’s PDUFA VI website.38

Requirements surrounding development of reauthorization recommendations for MDUFA, GDUFA, and BsUFA are similarly prescriptive and thorough. Information on the reauthorization process for these programs may also be found on FDA’s website.39

6. What changes are proposed for PDUFA, GDUFA, and BsUFA Reauthorizations?

Reauthorization recommendations for PDUFA VI, GDUFA II, and BsUFA II continue to refine and improve the drug, generic drug, and biosimilar approval process to support the development of safe and effective new treatments while maintaining FDA’s high standards for the regulatory review of medicines. This includes making sure that the agency has the resources, tools, and expertise needed to keep pace with the latest scientific advances in drug development.

All three sets of recommendations share some common elements, including:

  • Refining and modernizing approval processes to reduce complexity, increase flexibility, and generally improve the efficiency and effectiveness of review processes.40 For example, the FDA will launch a third-party evaluation of their communication practices during drug development in order to provide more productive feedback to the applicant. With respect to GDUFA and BsUFA reauthorizations, the FDA will let applicants know about a problem in the application when the FDA discovers it instead of waiting until the end of the review, which would otherwise require the applicant to start over with a new review cycle.
  • Clarifying regulatory expectations before and during product development. Using various tools, including public workshops, guidance, and voluntary pilot programs, the recommendations aim to improve communication between FDA and industry on a wide range of topics. Some of the issues FDA will address include the use of science-based approaches for incorporating the patient perspective in drug development, using real-world evidence to contribute to safety and effectiveness assessments, and the use of innovative clinical trial design.41
  • Investing resources in the hiring and retention of qualified scientific and medical staff. To promote the long-term stability of FDA’s drug review and approval programs, the recommendations direct resources to enhance hiring and workforce management strategies.42 This is a particular area of focus in PDUFA and BsUFA recommendations, and slightly less so in GDUFA recommendations, as FDA hired more than 1,000 new staff during GDUFA I.
  • Modifying user fee structures to improve financial stability and predictability for both FDA and industry.43 The new structure would shift from a reliance on complex, separate fees paid before approval and toward a greater reliance on ongoing bundled fees paid after approval.

Reauthorization recommendations for each individual user fee program also contain elements addressing unique aspects of each program. For example, PDUFA VI recommendations work to enhance FDA’s Breakthrough Therapy Program by providing resources in support of the development and availability of breakthrough medicines for patients with serious and life-threatening diseases. PDUFA VI also focuses support on efforts to advance the development and approval of medicines for rare diseases, including pediatric rare diseases. PDUFA VI also aims to continuing strengthening FDA’s drug safety system by enhancing existing tools and technology related to the post-marketing safety of approved drugs, including providing additional resources dedicated to expanding the capabilities of the agency’s Sentinel system.

As mentioned above, BsUFA II recommendations include a modified fee structure, both to improve stability and predictability, but also based on BsUFA program costs. Given uncertainty about program size and costs when BsUFA I was developed, user fees were based on the PDUFA program.44 BsUFA II builds on lessons learned during BsUFA I, and allows for a limited modification of the total fee amount before fees are established for FY 2018. BsUFA II recommendations also propose a new application review model for new molecular entity new drug applications and original biological licensing applications, aimed at increasing first-cycle review approvals in order to improve patient access to biosimilars.45

GDUFA II recommendations include a focus on increasing the effectiveness and transparency of generic drug review and approval processes to reduce the need for multiple review cycles, as mentioned above, and to get lower-cost generic drugs to patients sooner.46 For example, the FDA will establish a communication plan with a drug sponsor before the sponsor submits an application for complex products.47 GDUFA II would continue FDA’s efforts to reduce the pre-GDUFA backlog of abbreviated new drug applications and supplements by requiring the FDA to establish a date for action on all pending abbreviated new drug applications (ANDA), which had been submitted before such dates were assigned under GDUFA I. Applications that were not previously assigned a goal date or that were assigned a date that was missed will receive a goal date not later than July 31, 2018. Or, as David R. Gaugh, Senior V.P. of Sciences and Regulatory Affairs at the Association for Accessible Medicines, said, there should be no-ANDA left behind.48

7. How have previous UFA reauthorizations fared in Congress?

Past reauthorizations of all four user fee programs have received very strong, bipartisan support, and Congress has not changed one word of the terms and conditions negotiated by FDA and the impacted industries.49 PDUFA and MDUFA were most recently reauthorized, and BsUFA and GDUFA were originally authorized, as part of the Food and Drug Administration Safety and Innovation Act (FDASIA, P.L. 112-144), which garnered strong bipartisan support, passing the House by voice vote and the Senate 92 – 4.50 Original authorizing legislation and subsequent reauthorizations of PDUFA and MDUFA also experienced similar strong bipartisan support.

Legislation51 Year House Senate
PDUFA I (P.L. 102-571) 1992 Unanimous Consent Voice Vote
PDUFA II (P.L. 105-115) 1997 Voice Vote Voice Vote
PDUFA III (P.L. 107-188) 2002 425-1 98-0
MDUFA I (P.L. 107-250) 2002 Unanimous Consent Unanimous Consent
PDUFA IV (P.L. 110-85) 2007 405-7 Unanimous Consent
PDUFA V, MDUFA II, BSUFA I, GDUFA I (P.L. 112-144) 2012 Voice Vote 92-4

8. Why do the UFAs enjoy such bipartisan support?

Both Democrats and Republicans want Americans to have access to safe and effective drugs and devices. Thorough, timely review of new drugs, generics, biosimilars, and devices is critical for patients seeking access to safe, effective therapies. User fee funding is critical to keeping the FDA staffed appropriately, helping the agency improve review and approval processes to support the economic benefits that new drug and device development contribute to the U.S. job creation and economic development.

During the 2012 reauthorization, then-Congressman John Dingell (D-MI) wrote, “A chronically underfunded agency, like the FDA, cannot successfully oversee our drug supply’s safety without a stable funding source that will allow the agency to hire the staff it needs to conduct inspections overseas or to monitor pharmaceuticals that are entering our country. The reauthorization of the Prescription Drug User Fee Act, which expires in October, offers an opportunity to remedy these problems.”52

Then-Energy and Commerce Committee Chair Fred Upton (R-MI) called the 2012 reauthorization “essential in getting new treatments to patients and creating American jobs” while then-Health Subcommittee Chair Joe Pitts (R-PA) stated the reauthorization ensures “that FDA has the resources and reforms needed to speed new drugs, devices, and treatments to those who are ill,” making the process “more transparent, more consistent, and more predictable.”53

9. What was the genesis of the FDA in the first place?

Upton Sinclair’s The Jungle, published in February 1906, described in vivid detail the unsanitary, disgusting conditions in the meat packing industry.54 Following the public outcry over the dire state of the nation’s meat supply, Congress finally passed the first comprehensive consumer protection law in 1906, the Food and Drugs Act, establishing the predecessor to the FDA, the Bureau of Chemistry within the Department of Agriculture.55 Though this law represented progress, it contained several loopholes that prohibited FDA from removing ineffective and, much worse, dangerous drugs from the marketplace.56 A tipping point arrived in 1937, when a Tennessee drug company marketed “Elixir Sulfanilamide” to pediatric patients.57 This untested product was actually “a highly toxic chemical analogue of antifreeze” that killed more than 100 people, including children. In the wake of the public outcry, Congress finally gave some teeth to the 1906 law in the 1938 Food, Drug, and Cosmetic Act.58 This law required premarket approval of all new drugs, mandating that manufacturers prove a drug’s safety to FDA before it could be marketed.59 The law also required prescription drug labelling to ensure safe use and brought medical devices under FDA authority.60

The Thalidomide crisis in 1961-1962 again spurred Congress to grant FDA greater authority over drugs.61 FDA was widely praised for not approving Thalidomide, which was available in Europe and Canada to treat nausea in pregnancy and caused thousands of babies to be born with phocomelia, a rare birth defect.62 The resulting Drug Amendments of 1962 required drug manufacturers to also prove their product’s efficacy, in addition to safety, and required the FDA to review the efficacy of all drugs introduced since 1938. Following the 1962 law, the FDA began reviewing applications for new drugs and biologic licenses to determine if the benefits outweigh known risks and if quality can be assured in the drug manufacturing process.63 These new responsibilities launched the FDA into its current role in reviewing and approving new drug and biologic license applications.64 In addition, once a drug is on the market, the FDA monitors its performance.65

10. What happens if the UFAs get hung up?

Without the authority to collect user fees, which expires September 30, 2017, the FDA will be unable to meet its payroll obligations and will begin to lay off staff and start slowing or stopping drug and device review processes.66 Current U.S. Office of Personnel Management policy requires federal agencies to provide employees at least 60 days written notice prior to a reduction in force action.67 Layoffs would affect 5,890 full-time equivalent employees working for the brand-name and generic user fee programs based on the most recently reported hiring levels.68 An additional 1,790 full-time equivalent employees would be affected in the medical device and biosimilar programs.69 Because user fees account for 43% of FDA’s total program level (as of FY2016), reauthorization of the user fee programs is considered “must pass” legislation.70

This year’s reauthorization is potentially more complicated than prior reauthorizations, as it is the first to be negotiated by one Administration (Obama’s) but presented for signature to another (Trump’s). Indeed, the Trump Administration has flagged its interest in the level of user fees in its budget blueprint.71 However, the Administration has not signaled an interest in reopening negotiations on the UFAs, which would severely delay the Congressional process. The substance of PDUFA, GDUFA, and BsUFA reauthorizations is generally noncontroversial and, with regard to PDUFA, Congress has typically not changed one word of the terms and conditions negotiated by FDA and the industry.72 This means that unrelated policy issues are the real danger to missing the reauthorization deadline. While it is tempting to use “must pass” legislation as a vehicle for other policy issues, Congress must remain focused on the timely reauthorization of FDA’s authority to collect user fees that help it fulfill its mission of protecting the public health by ensuring that drugs, vaccines, and other biological products are safe and effective and accelerating innovation of these products. Passage of the 21st Century Cures Act last year, which included policies that otherwise might have been included in the user fee legislation, should help Congress keep the reauthorization focused on the user fee programs. Other policy issues related to FDA and the products it regulates must be considered separately.

End Notes