WASHINGTON — The generic drug industry and the Food and Drug Administration have reached tentative agreement to establish a user fee program in which companies would pay as much as $299 million initially to hasten drug approvals and increase the frequency of FDA inspections of foreign drug plants.

Since discussions between the industry and the FDA were ongoing at presstime, a spokesman for the Generic Pharmaceutical Association (GPhA) said the trade group would decline comment until a deal was finalized.

He confirmed, however, that this is the same program that the industry and the FDA have discussed for several years but that the actual negotiations were separate from talks that ultimately did not work out the last time around. These negotiations began in late February of this year.

Such a program, which would require congressional approval, would be similar to programs in place for the makers of brand name drugs.

Under the agreement, which could be finalized within weeks, generic drug companies would pay $299 million in annual fees to underwrite inspections of foreign manufacturing plants every two years — the same timetable that is required of domestic plants.

In turn, the generics industry would obtain quicker approvals for new products.

At its current pace the FDA would need more than 13 years to inspect every foreign drug plant exporting to the United States. Some overseas plants have never been inspected.

FDA Commissioner Margaret Hamburg has applauded the generic drug fee proposals.
Congress has never given the agency sufficient funds to inspect foreign plants, and for years the generic drug industry staved off proposals to pay inspection fees.

According to FDA minutes of discussions about the generic drug user fee act (GDUFA) program, meetings were held in mid-July and late July and involved the FDA, GPhA and several other groups. The minutes describe how GPhA had initially proposed escalating the fees each year starting in the first year and then fully funding the program beginning in the third year, when the FDA would report specific percentage performance goals.

“However, following subsequent discussion in which FDA explained the agency’s need for full funding each year of the program in order to build the necessary staff and resources to deliver on the aggressive performance metrics to which FDA had agreed, FDA and industry agreed to fully fund the program at $299 million plus standard inflation adjuster each year starting in year one,” according to the meeting minutes.

In the first year a “certain amount” of the total will be derived from a onetime fee collected from each pending application in the backlog.

The minutes indicate that it “remains an assumption” that congressional appropriations that now fund the generics program will not be significantly reduced and that the FDA will include an inflation adjuster to allow it to continue to meet payroll and general costs as the program proceeds.

“GPhA acknowledged that the GDUFA program will be a welcome paradigm shift for the industry, with goals for timely application reviews and parity of inspections of foreign and domestic establishments. The industry is pleased that the program has the potential to add more certainty to the review and inspection processes,” the agency minutes say.

“The potential impact on revenue and profitability from reduction in review time could be significant and may result in savings for businesses of all sizes, expedite availability of generic drugs and achieve a risk-based biennial GMP (good manufacturing practices) inspection program for both foreign and domestic facilities.”