Appendix C: Allowable and Excluded Costs for the Process for the Review of Human Drug Applications
ALLOWABLE AND EXCLUDED COSTS FOR THE PROCESS
FOR THE REVIEW OF HUMAN DRUG APPLICATIONS
Over 96 percent of amounts FDA obligates (contractually promises to pay) each year are expended within two years. Therefore, obligations represent an accurate measure of costs and are the basis of the costs reported in this document.
PDUFA, as amended, and the related House of Representatives Reports 102-895 and 107-481 (House Reports), define the process for the review of human drug applications and the costs that may be included in that process. Using these definitions, the further refinements described below, and the methodologies described in this report, FDA identified those activities that were applicable to the process for the review of human drug applications.
User Fee Related Costs
Section 735(6) of the Act defines in general terms the activities necessary for the review of human drug applications (the "human drug review process"). In summary, costs related to the following process activities have been attributed to the process for the review of human drug applications:
- All investigational new drug (IND) review activities, including amendments;
- All review activities for NDAs, BLAs, including supplements and amendments;
- Regulation and policy development activities related to the review of human drug applications;
- Development of product standards for products subject to review and evaluation;
- Meetings between FDA and the sponsor of a covered application or supplement;
- Review of labeling prior to approval of a covered application or supplement and the review of the initial pre-launch advertising;
- Review of post-marketing studies and clinical trials that have been agreed to by sponsors as a condition for approval;
- Inspections of facilities undertaken as part of the review of pending applications or supplements;
- Lot release activities for covered biological products;
- Assay development and validation to ensure batch-to-batch consistency and reliability for covered biological products;
- Monitoring of clinical and other research conducted in connection with the review of human drug applications;
- User Fee Act implementation activities;
- Research related to the human drug review process; and
- Postmarket safety activities with respect to drugs approved under human drug applications or supplements, including the following activities: collecting, developing, and reviewing safety information on approved drugs, including adverse event reports; developing and using improved adverse event data-collection systems, including information technology systems; developing and using improved analytical tools to assess potential safety problems, including access to external data bases; implementing and enforcing Section 505(o) (relating to postapproval studies and clinical trials and labeling changes) and Section 505(p) (relating to risk evaluation and mitigation strategies); and carrying out section 505(k)(5) (relating to adverse event reports and postmarket safety activities).
All user fee related costs represented by the above activities are collectively referred to in this report as costs for the process for the review of human drug applications.
Section 735(7) of the Act defines the "costs of resources allocated for the process for the review of human drug applications" as the expenses incurred in connection with this process for:
(A) officers and employees of the FDA, contractors of the FDA, advisory committees, and costs related to such officers, employees, committees and contracts;
(B) management of information, and the acquisition, maintenance, and repair of computer resources;
(C) leasing, maintenance, renovation, and repair of facilities and acquisition, maintenance, and repair of fixtures, furniture, scientific equipment, and other necessary materials and supplies; and
(D) collecting user fees under Section 736 of the Act and accounting for resources allocated for the review of human drug applications and supplements.
User Fee Excluded Costs
The Act excludes costs related to the following:
- Generic drugs
- Over-the-counter drugs not associated with an NDA or NDA supplement
- Large volume parenteral drug products approved before September 1, 1992
- Allergenic extract products
- Whole blood or a blood component for transfusion
- In vitro diagnostic biologic products
- Certain drugs derived from bovine blood
Excluded Process Activities
- Enforcement policy development not related to Sections 505(o) and (p) of the Act
- Post-approval compliance activities not related to the enforcement of Sections 505(o) and (p) of the Act
- Advertising review activities once marketing of the product has begun
- Inspections unrelated to the review of covered applications, unless undertaken for the enforcement of Sections 505(o) and (p) of the Act
- Research unrelated to the human drug review process
These inclusions and exclusions required accounting for a newly created subset of FDA activities after the fact. It was necessary to develop and implement a methodology that would allow the agency retrospectively to capture the FY 1992 costs for the newly defined "process for the review of human drug applications," and apply that same methodology for future years. In 1995, Arthur Andersen & Company independently reviewed FDA procedures for doing this and found the methodologies reasonable.