Healthcare Matters

Washington, DC. – The Healthcare Supply Chain Association (HSCA) applauds government and industry action to ensure that the U.S. Food and Drug Administration (FDA) will continue to have access to the resources necessary to approve of safe, effective and affordable generic medicines. The FDA made the announcement October 1, 2012 and will begin collecting generic drug user fees (which have been in a bit of limbo) effective to that date.

HSCA applauds both government and industry for each doing their part to help protect uninterrupted patient access to important treatments,” said HSCA President Curtis Rooney. “Group purchasing organizations are engines of healthcare cost savings and the purchasing partners to America’s 5,000+ hospitals. GPOs are acutely aware of the important role of generic prescriptions drugs in helping to control healthcare spending.”

Earlier this year, Congress authorized two new user fee programs for the generic drug and biosimilar industries. When Congress and the President failed to reach a spending agreement that reflected the new user fee programs, Congress subsequently acted to pass the FDA User Fee Corrections Act, which allowed FDA collection of generic drug user fees to move forward as planned.

Facilities Fees (Below):

What are the FDF and API facility fees for U.S. and foreign manufacturers?

The amount of the FY 2013 facility fees has not yet been determined.  Fees will be determined after the self-identification process (described in the guidance, Self-Identification of Generic Drug Facilities, Sites, and Organizations has been completed, providing FDA information about the number of facilities that will be required to pay user fees.  The facility fees will be published in the Federal Register. Fees for FYs 2014-2017 will be adjusted for inflation and other factors, including the number of facilities that have self-identified each year.  The fees will be published in the Federal Register no later than 60 days before the start of each fiscal year.

When will facility fees be due?

In FY 2013, facility fees will be determined after the self-identification process has been completed. Fees will be due within 45 days after publication of the final facility fee amounts in the Federal Register, or 30 days after the enactment of an appropriations Act providing for the collection and obligation of generic drug user fees, whichever is later.  If enactment of the FY 2013 appropriations Act occurs after publication of the final facility fee amounts, FDA will publish a notice in the Federal Register announcing the FY 2013 fee due dates when the appropriations Act is enacted. Fees for FYs 2014-2017 will be due on the first business day on or after October 1 of each fiscal year, or the first business day after the enactment of an appropriations Act that provides for the collection and obligation of fees.

Who is required to pay facility fees?

Any person that owns a facility that is identified or intended to be identified in at least one generic drug submission that is pending or approved to produce one or more generic drug FDFs and/or APIs is required to pay facility fees.

Does GDUFA make any changes to traditional definitions of API and FDF manufacturers?

For purposes of self-identification and payment of fees, GDUFA defines API and FDF manufacturers somewhat differently from the way these traditional categories of manufacturers have been defined historically.  For example, generic drug manufacturers who mix an API when the substance is unstable or cannot be transported on its own are considered API manufacturers and not FDF manufacturers for self-identification and the payment of GDUFA user fees only.

GDUFA defines an FDF as:

• A drug product in the form in which it will be administered to a patient, such as  a tablet, capsule, solution, or topical application;
• A drug product in a form in which reconstitution is necessary prior to administration  to a patient, such as oral suspensions or lyophilized powders; or
• Any combination of an active pharmaceutical ingredient (as defined in the statute) with another component of a drug product for purposes of production of a drug product (see below A and B).

GDUFA defines an API as:

• (A) a substance, or a mixture when the substance is unstable or cannot be transported on its own, intended to be used as a component of a drug; and to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure or any function of the human body; or

  (B) a substance intended for final crystallization, purification, or salt formation, or any combination of those activities, to become a substance or mixture described above (A).

If a facility manufactures both generic FDFs and APIs, will it incur more than one facility fee?

Yes.  Under GDUFA, such a facility will incur annual FDF and annual API facility fees.

Is there a difference in fees between foreign and domestic generic drug facilities?

Yes.  GDUFA specifies that the amount of the fee for a facility located outside the United States and its territories and possessions shall not be less than $15,000 and not more than $30,000 higher than the amount of the fee for a domestic facility.  The differential amount is designed to reflect the higher costs of inspections funded, in part, through GDUFA. In FY 2013, the cost differential will be set on the basis of the FDA’s estimate of the average direct cost differential between foreign inspections and domestic inspections.  The cost differential will be announced with publication of the facility fees in the Federal Register and will be adjusted in future years.

Do two locations of the same company have to pay separate facility fees?

The answer depends on geography.  If the same company’s two locations manufacture a U.S. generic product and they are in different geographic locations, each has to pay an annual facility fee.  However, separate buildings within close proximity are considered to be at one geographic location or address if the activities in them are closely related to the same business enterprise, if they are under the supervision of the same local management¹, and if they are capable of being inspected by the FDA during a single inspection.  These are the same criteria used to evaluate whether separate FDA Facility Establishment Identifiers (FEIs) are necessary for multiple facilities (see guidance Self-Identification of Generic Drug Facilities, Sites, and Organizations (hyperlink)).  An annual facility fee will be due for each facility assigned a unique FEI.

What is the penalty for failure to pay a facility fee?

There are several consequences for failure to pay a facility fee.  No new generic drug submission referencing the facility will be received until the fee is paid.  In addition, the facility will be placed on a publicly available arrears list if the fee is not fully paid within 20 days of the due date.  And, FDA will notify the ANDA applicant of the facility’s failure to satisfy its user fee obligations.  Furthermore, all FDFs or APIs manufactured in the non-paying facility and all FDFs containing APIs manufactured in such a facility will be deemed misbranded.  This means that it will be a violation of federal law to ship these products in interstate commerce or to import them into the United States.  Such violations can result in prosecution of those responsible, injunctions, or seizures of misbranded products. Products misbranded because of failure to pay facility fees are subject to being denied entry into the United States.

Note:  The fee is an obligation to the U.S. government, and the failure to pay the fee may result in collection activities by the government pursuant to applicable laws.

Footnote:

¹The statute further states that if a business or other entity would meet the definition of a facility but for being under multiple management, the business or entity is deemed to constitute multiple facilities, one per management entity.

Sources: HSCA and FDA

—Tom Finn