Bloomberg News

Generic-Drug Fee Plan at FDA Caught Up in Budget Impasse

September 21, 2012

Generic-Drug Fee Plan at FDA Caught Up in U.S. Budget Impasse

In addition to speeding reviews, the user fees would let the FDA more frequently inspect plants outside the U.S., which supply 80 percent of the nation’s drug ingredients. Photo: Tomohiro Ohsumi/Bloomberg

A $300 million program to speed U.S. reviews of generic drugs made by Mylan Inc. (MYL:US), Teva Pharmaceutical Industries Ltd. (TEVA:US) and other companies may not start as planned on Oct. 1 because of a budget impasse in Congress.

The industry’s deal with the Food and Drug Administration to pay user fees for the first time was to mimic long-standing arrangements for brand-name drugs and medical devices. The snag for generics is that because their program is new, lawmakers must pass legislation authorizing the FDA to collect the money, Donald Beers, associate chief counsel for drugs at the agency, said today at a meeting in Silver Spring, Maryland.

While Congress has been working on a fix, most lawmakers are preparing to leave Washington this week and not return until after the Nov. 6 elections. The fees were part of legislation passed in June that was meant to help the FDA clear a backlog of 2,700 generic-drug applications and cut review times for copycat medicines to 10 months from an average of almost three years.

“This is an extraordinary law that has enormous consequences,” Ralph Neas, chief executive officer of the Generic Pharmaceutical Association, said in a phone interview. “We cannot allow implementation to be delayed.”

In addition to accelerating reviews, the fees would allow more frequent FDA inspections of factories outside the U.S., which supply 80 percent of the nation’s drug ingredients. Such overseas facilities are inspected once every nine years on average now, compared with every 30 months for domestic plants, a 2010 Government Accountability Office report found.

‘Slower Pace’

While the FDA is prepared to start the program on time, the resources to do so will be harmed if Congress doesn’t act, said Mary Beth Clarke, acting director of the office of executive programs in the FDA’s Center for Drug Evaluation and Research.

“It will proceed, it just will proceed at a slower pace,” Clarke said.

The legislation passed in June would have the companies pay $1.6 billion in fees through 2017, including $300 million in the fiscal year starting Oct. 1.

Without a budget agreement, the FDA can only require the industry to pay $50 million of the $300 million for fiscal 2013, Debbee Keller, a Republican Party spokeswoman for the House Energy and Commerce Committee, said in an e-mail.

‘Taken Aback’

Neas’s group, the lead lobbying organization in Washington for generic-drug makers, has volunteered to pay the FDA fees for 2013 regardless of whether the agency has the authority to collect, as long as there are assurances the money will be used for the negotiated program, Neas said.

“I think officials were taken aback,” he said. “That isn’t something they hear. We think the law is so important, so needed and so many patients, so many consumers, so many Americans will benefit if this law is implemented.”

The FDA can spend the money the manufacturers voluntarily hand over, Christopher Kelly, a spokesman for the agency, said in an e-mail.

The House passed a bill Sept. 19 that changes certain payment deadlines in the generic user fee program so the FDA can collect all of the fees, Keller said. The Senate hasn’t yet taken up the bill.

Kristen Orthman, a spokeswoman for Senate Majority Leader Harry Reid, a Democrat from Nevada, didn’t return a request for comment on the Senate’s plans for the bill.

To contact the reporter on this story: Anna Edney in Washington at aedney@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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Companies Mentioned

  • MYL
    (Mylan Inc/PA)
    • $50.43 USD
    • 0.07
    • 0.14%
  • TEVA
    (Teva Pharmaceutical Industries Ltd)
    • $53.6 USD
    • 0.39
    • 0.73%
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