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FY 2000 PDUFA Financial Report: Appendix D

Table of Contents

Previous Sectoin: Appendix C: Allowable and Excluded Costs for the Process for the Review of Human Drug Applications

 

DEVELOPMENT OF COSTS FOR THE
PROCESS FOR THE REVIEW OF HUMAN DRUG APPLICATIONS

GENERAL METHODOLOGY

The costs associated with the process for the review of human drug applications are based on obligations recorded within FDA's Center for Biologics Evaluation and Research (CBER) and the Center for Drug Evaluation and Research (CDER), Office of Regulatory Affairs (ORA), and the Office of the Commissioner (OC). These organizations correspond to the cost categories presented on the Statement of Costs for the Process for the Review of Human Drug Applications as follows:

Cost Category FDA Organization
   
Costs for the Review of New Drug
Applications (NDA's) and Supplements
CDER
   
Costs for the Review of Biologic License
Applications (BLA's), Product License
Applications (PLA's), Establishment
License Applications (ELA's) and Supplements
CBER
   
Field Inspection and Investigation Costs
ORA
   
Agency General and Administrative Costs
OC

 

The costs were accumulated using a variety of methods including time reporting, management surveys, and detailed interviews. Using the definitions of costs and activities included in the "process for the review of human drug applications" in the Act, a portion of the costs within the four organizations listed above was identified as part of the human drug review process.

CENTER COSTS

Costs are accumulated in CDER and CBER in cost centers corresponding to the organizational components within the centers. Most FDA components involved in the human drug review process perform a mixture of activities--some included in the definition of the process for the review of human drug applications, and some not included. These components fall into three categories: 1) review and laboratory components; 2) indirect review and support components; and 3) user fee excluded components. Costs are accumulated by cost centers. The allocation of costs for the three categories and center-wide expenses are discussed below.

Review and Laboratory Components:
The review and laboratory components, as organized during FY 2000, have the primary responsibility for the review of human drug applications and supplements. Below is a list of these direct review and laboratory components in CDER and CBER.
Review and Laboratory Components
CDER CBER
Office of the Center Director Office of the Center Director
Office of Medical Policy Veterinary Services
Division of Drug Marketing, Advertisement, and Communications Regulations and Policy Staff
Division of Scientific Investigations Quality Assurance Staff
Office of Review Management Office of Biostatistics and Epidemiology
Office of Post Marketing Drug Assessment Biostatistics
Division of Drug Risk Evaluation I Epidemiology
Division of Drug Risk Evaluation II Office of Blood Research and Review
Office of Drug Evaluation I Emerging Transfusion Transmitted Diseases
Neuropharamacological Drug Products Hematology
Oncologic Drug Products Blood Applications
Cardio-Renal Drug Products Office of Therapeutics Research and Review
Office of Drug Evaluation II Cellular and Gene Therapies
Metabolic and Endocrine Drug Products Monoclonal Antibodies
Pulmonary Drug Products Clinical Trial Design and Analysis
Anesthetic, Critical Care and Addiction Drug Products Application Review and Policy
Office of Drug Evaluation III Therapeutic Proteins
Gastro-Intestinal and Coagulation Drug Products Office of Vaccines Research and Review
Reproductive and Urologic Drug Products Bacterial, Parasitic and Allergenic Products
Medical Imaging and Radiopharmaceutical Drug Products Viral Products
Office of Drug Evaluation IV Vaccines and Related Product Applications
Anti-Viral Drug Products Office of Compliance and Biologics Quality
Anti-Infective Drug Products Manufacturing and Product Quality
Special Pathogens and Immunodulatory Drug Products Case Management
Office of Drug Evaluation V Inspections and Surveillance
Anti-Inflammatory, Analgesic, and Ophthalmologic Drug Products
Dermatologic and Dental Drug Products
Over-the-Counter Drug Products
Office of Biostatistics
Quantitative Methods and Research Staff
Division of Biometrics I, II, and III
Office of Pharmaceutical Science
Office of New Drug Chemistry
Microbiology Team
Division of Chemistry I, II, III
Office of Clinical Pharmacology and Biopharmaceutics
Pharmaceutics staff
Division of Pharmaceutical Evaluation I, II, III
Office of Testing and Research
Regulatory Research and Analysis Staff
Laboratory of Clinical Pharmacology
Division of Applied Pharmacology Research
Division of Product Quality Research
Division of Pharmaceutical Analysis

A total time reporting study was conducted from July 18, 1993, to November 6, 1993, as part of a contract with Arthur Andersen & Company, to measure the level of user fee related costs for each of the CBER and CDER review components. Over 1,000 staff participated in the 16-week study. The time sheets were designed to capture information on activities based on the definitions for the process for the review of human drug applications in the Act. Using the results of the time reporting study, a user fee related percentage was calculated for each participating division and applied to the total FY 1992 costs for each division to determine its costs for the process for the review of human drug applications.

The results of the 16-week time reporting exercise are representative of the activities during FY's 1992, 1993, and 1994 in CDER, and were used to calculate process costs for CDER each year. The results of the Arthur Andersen & Company 16-week total time reporting study were used to measure CBER's FY 1993 user fee costs. A pre-existing CBER workload measurement procedure, which was validated by the results of the Arthur Andersen study, was used to measure CBER's FY 1992 and FY 1994 user fee costs.

Center Indirect Review and Support Components

Indirect review and support components provide the infrastructure for the review process. In CDER, these components include portions of the Office of the Center Director, Office of Information Technology, the Office of Management, the Office of Training and Communications, the Office of Medical Policy, and the Office of Compliance. In CBER, these components include portions of the Office of the Center Director, Office of Management, Office of Information Technology Management, and the Office of Communications, Training, and Manufacturers Assistance.

In CDER, detailed interviews were conducted with the division directors or their designees for each of the divisions classified as indirect review and support for the human drug review process. The first step of the interviews was to identify the activities in the division and classify these as user fee related or user fee excluded activities based on the definitions in the Act. Then, using information provided by the division directors, the number of full time equivalent (FTE) employees involved in these activities was estimated. With this information, an overall user fee applicable percentage was calculated for each division.

In CBER, the workload measurement procedures were used to measure the level of effort of user fee related activities in the compliance divisions. Most of the Office of the Center Director, Office of Management, Office of Information Technology Management, and the Office of Communications, Training, and Manufacturers Assistance are considered support organizations to CBER, therefore a percent of their time is added to each activity.

User Fee Excluded Components

Based on a review of a component's activities and the definitions in the Act, some organizations within the centers were completely excluded from the calculation of costs related to the process for the review of drug applications. An example of a user fee excluded component is the Office of Generic Drugs in CDER. In CBER, all cost centers perform some PDUFA work, although it can be as little as 5 percent.

Center-wide Expenses

A number of center-wide expenses are collected in central accounts rather than being charged directly to a specific division. These costs include rent, utilities, some computer equipment, facilities repair and maintenance, and extramural and service contracts. Many of these costs could be traced back to the specific division that generated the cost and were assigned the user fee related percentage calculated for the division to which the expenditure related. For the costs that benefited the center as a whole and could not be traced to a specific division, a weighted average user fee percentage was calculated based on the level of user fee related costs to total costs in the center.

CENTER TIME REPORTING ENHANCEMENTS

In May 1995, CDER conducted an internal time reporting study of all CDER units previously surveyed by Arthur Andersen in 1993. This internal study enabled CDER to update user fee percentages on a one-time basis. In FY 1996, CDER implemented quarterly on-line time reporting. These quarterly updates facilitated timely reporting of user fee percentages by the various components of the Center.

In FY 1995, CBER began quarterly collection of actual hours worked reported over a 2-3 consecutive week period. Time was reported for 43 functional activities, by 9 product classes. Research time was reported for specific numbered research projects. These quarterly surveys were used to calculate the percent of CBER staff time expended for PDUFA work in each component for each reporting period. That percentage was then applied to the total quarter's costs of that component to calculate its total expenditures for the process of reviewing human drug applications. By mid-1995, CBER had begun a pilot computer-based reporting system (mirroring the paper submissions), that was accessed through the network (paperless.) By the end of the fiscal year, CBER designed, with the assistance of Arthur Andersen, an on-line reporting system called the "Resource Reporting System", that made it easier for employees to report and provide more data to management.

Beginning in FY 1996, the CBER time reporting system was enhanced to collect on-line time reports for all employees for a two week period each quarter of the year. The enhanced system reports time for 70 possible functional activities, by 10 product classes.

In November 1997, CDER initiated an on-line time reporting survey of each employee within the Center. This new survey captures the expenditure of time on PDUFA-related activities and all other CDER mission-oriented activities for a two-week period during each quarter, just as is done in CBER.

CENTER RESEARCH COVERED BY THE PRESCRIPTION DRUG USER FEE ACT

The research activities described in this section were included when FDA originally calculated base costs for the process for the review of human drug applications for FY 1992. Under PDUFA, from FY 1993 through FY 1997 both appropriated funds and user fee revenues were used to fund research activities supporting the drug review process, just as was the case with all other PDUFA activities. During informal discussions that led to the extension of PDUFA, FDA agreed to phase out the use of fee revenues to support these research costs. The phase-out is to be completed by FY 2002. After the phase-out of fee revenues supporting this research, FDA expects the remaining research to continue to be supported by appropriated funds, just as it was prior to FY 1993.

The FDA performs research to determine the risks and benefits of pharmaceutical agents and to set appropriate standards and methods for analysis. These activities include research on specific products or product classes that are approved or under review. Research is carried out in biomedical areas to develop expertise necessary to address new technologies, issues and emerging areas, develop and validate testing methodologies, and to establish drug and biologic standards. All of these activities are fundamental to the evaluation of human drugs and biological products. Research activities that directly support the process for the review of drug and biologic applications are described below.

Laboratory activities that are included in the drug review process also include activities necessary for the analysis and release of individual lots of biologic products (under section 351 of the Public Health Service Act) and development and validation of assays to ensure batch-to-batch consistency and reliability.

FDA defined research activities associated with the review of new drugs and biologics such as research to: (1) facilitate review of clinical and product testing, (2) support policy development, (3) validate assays, and (4) develop standards. These research activities are focused on approved products or product classes, or products or product classes under review or investigation.

Laboratory activities not considered a part of the process for the review of human drug application as defined in PDUFA include laboratory work associated with generic drugs, over-the-counter monographs, allergenic extracts, in-vitro diagnostics, whole blood or blood components, or large volume parenterals approved prior to September 1, 1992.

Types of Research

User fee related research is categorized based on its impact on the drug approval process:

Review of the Manufacturing Process
The evaluation of new biological and drug products requires a careful review of the manufacturing process. The process of manufacture can potentially result in subtle changes in the product characteristics that could affect safety and efficacy of the product. This review is especially critical in the evaluation of new products manufactured using new technologies.

Development and Validation of Test Methodologies
Standards for testing must be set for each drug or biologic product in order to ensure its identity, purity, and potency prior to approval. Frequently, test methods are developed and validated in FDA laboratories. These tests are used for biologic lot release and for characterizing qualification lots of products submitted for approval.

Safety and Toxicity
New drugs and biological products are evaluated for safety and toxicity. Frequently, a product will represent a new class whose toxicity profile is not well established. In these cases, it may be necessary for FDA to conduct studies to gain information in order to establish policy and safety standards for similar products in the new class.

Pharmacology
The pharmacology of drugs and biological products must be understood in order to evaluate potential toxicities and measures of potency. In some cases a detailed understanding of the mechanisms of action, metabolism, distribution, and excretion is critical to establish tests for potency and to better understand toxicity. It may also be necessary for pharmacodynamic endpoints to establish appropriate product dosing and to develop in-vivo and in-vitro standards for evaluating manufacturing changes.

Clinical
The study of drugs and biological products in human subjects is an important component of FDA research. Many important questions related to the optimal use of a given drug in human subjects or patients may not be part of the standard drug development process. However, such data would facilitate optimal use of the product. Further, some of these research questions impact on regulatory review policy for the product class being studied. Examples of such research include the study of drugs in special populations (e.g. women, the elderly, patients with renal or hepatic impairment), evaluation of drug interactions and the development of pharmacokinetic/pharmacodynamic correlations, or safety of combination vaccines.

CENTER TIME REPORTING RESULTS FOR FY 2000

The time reporting systems operated by CBER and CDER indicated the 63 percent of all time spent in CBER and 77 percent of all time spent in CDER in FY 2000 was dedicated to the process for the review of human drug applications as defined in PDUFA.

FIELD INSPECTION AND INVESTIGATION COSTS

All field inspection and investigation costs are incurred by FDA's Office of Regulatory Affairs (ORA). ORA costs are incurred in both district offices (the "field") and headquarters support offices. In FY 2000 the Agency began tracking accumulated ORA costs through the use of the Field Accomplishment and Compliance Tracking System [FACTS]. FACTS is a time and activity tracking system which captures time in a variety of categories, including pre-approval inspections of manufacturing facilities, investigations of clinical studies, and analytical testing of samples--which are included in the process for the review of human drug applications.

Total direct hours reported in FACTS are used to calculate the total number of staff-years required by ORA to perform these activities. In addition to the direct time, an allocation of support time is also included to represent the work done by the ORA administrative and management personnel. The Agency then applies the total number of user fee related staff years to the average salary cost in ORA to arrive at ORA user fee related salary costs. The final step is to allocate ORA obligations for operations and rent to the human drug review process based upon the ratio of user fee related staff years to total ORA staff years. The following table summarizes the calculation for the FY's 1999 and 2000, respectively.

FOOD AND DRUG ADMINISTRATION
OFFICE OF REGULATORY AFFAIRS
COSTS OF THE PROCESS FOR THE REVIEW OF HUMAN DRUG APPLICATIONS

as of September 30, 1999 and 2000
Cost Component FY 1999 FY 2000
     
Staff Years Utilized 168 180
ORA Average Salary & Benefits $66,990 $71,658
Salary and Benefits $11,254,272 $12,898,513
Operations and Rent $6,498,879 $9,023,989
Total $17,753,151 $21,922,502

The ORA costs for the process for the review of human drug applications described above include total process costs, including costs paid from appropriations and costs paid from fee revenues.

AGENCY GENERAL AND ADMINISTRATIVE COSTS

The Agency general and administrative costs are incurred in the FDA's Office of the Commissioner (OC). OC is comprised of the following offices:

  • Immediate Office of the Commissioner
  • Office of the Senior Associate Commissioner
  • Office of Policy, Planning and Legislation
  • Office of International and Constituent Relations
  • Office of Management and Systems

The OC costs applicable to the process for the review of human drugs were calculated using a method prescribed by the Division of Cost Determination Management, Office of Finance, Office of the Secretary, Department of Health and Human Services. The method uses the percentage derived by dividing total Office of the Commissioner costs by the total salary obligations of the Agency, excluding the Office of the Commissioner. That percentage is then multiplied by the total salaries (excluding benefits) applicable to the process for the review of human drugs in CDER, CBER, and ORA to arrive at the total General and Administrative Costs.

Using this process, $24,552,117 and $25,534,938 in general and administrative obligations were dedicated to the human drug review process in FY's 1999 and 2000, respectively. These are total costs, including funds supplied both from appropriations and from fees. The Agency general and administrative costs, as a percent of total costs, has continued to decrease, largely due to the Commissioner's reorganization that moved a number of functions out of the Office of the Commissioner and into the centers in FY's 1999 and 2000. As a result, in FY 2000 general and administrative obligations accounted for only 8.1 percent of the total FY 2000 cost of the process for the review of human drug applications-compared to 8.7 percent in FY 1999 and 10.4 percent in FY 1998. This means that the percent of process costs devoted to overhead since 1998 has been reduced by 22% in the last two years

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