Fact Sheet: New User Fees for Generic Drugs Will Enhance Americans’ Access to Less Expensive Drugs and Generate Major Cost Savings
Since 1984, the Food and Drug Administration (FDA) has approved more than 8,000 generic equivalents of brand-name drugs. Generic drugs typically cost 50 to 70 percent less than their brand-name counterparts, resulting in cost savings for American consumers and the nation’s health care system. Last year, approximately 78 percent of the more than three billion new and refilled outpatient prescriptions dispensed in the United States were filled with generics. In the last decade alone, generic drugs have provided more than $931 billion in savings to the nation’s health care system.
With the enactment of the Generic Drug User Fee Amendments of 2012 (GDUFA) on July 9, 2012, as part of the Food and Drug Administration Safety and Innovation Act (Public Law 112-144), for the first time ever, FDA will receive funding from the generic drug industry to ensure Americans have timely access to safe, high-quality, and effective generic drugs.
This legislation comes at a critical time -- the public health success of generic drugs has also created a significant challenge. Due to limited resources, FDA has not been able to keep pace with an increasing number of applications requiring review. There is currently a backlog of more than 2,500 applications for new generic drugs seeking approval. However, with this new legislation, FDA will now have the needed resources and staff to eliminate this backlog and bring generic drugs to the market and into the hands of patients more quickly.
Benefits to Americans:
- Access – GDUFA will expedite the availability of low-cost, high-quality generic drugs by bringing greater predictability and timeliness to the FDA review process. The current median time for review of a new generic drug application is 31 months. With GDUFA, FDA expects to improve review times substantially. The GDUFA review goals will be implemented incrementally over the next 5 years, accelerating the delivery of lower-cost generic products to American consumers and expanding access.
- Quality – GDUFA will help increase the safety and quality of the drugs Americans receive by assuring that foreign and domestic generic drug manufacturing facilities are held to the same consistent, high-quality standards, and are inspected once every two years, using a risk-based approach. Currently, FDA only has resources to conduct inspections of foreign generic drug manufacturers about once every 7 to 13 years.
- Transparency – Under GDUFA, all facilities involved in the manufacture of generic drugs and their ingredients, both domestic and foreign, must be identified. This identification system is critical for enhancing transparency and helping FDA protect Americans in today’s complex global supply environment.
Benefits to Industry:
- GDUFA will deliver greater predictability and timeliness to the review of generic drug applications, slashing review times and saving industry time and money.
- GDUFA, based on an agreement negotiated by FDA and representatives of the generic drug industry, reinvigorates and modernizes the generic drug program, sets performance goals, and holds FDA accountable to Congress through annual reports.
- GDUFA fees are estimated to cost the generic drug industry less than ten cents for the average generic prescription.
- The annual fee total for GDUFA represents only about one half of 1 percent of generic drug sales. This relatively small cost to the industry could be offset by faster review times that bring products to market sooner.
GDUFA Performance Goals and Efficiency Improvements:
- During the five-year period from fiscal year 2013 through 2017, the generic drug industry will provide FDA an inflation-adjusted $299 million each year in user fees, supplementing the Agency’s allotted budget for assessing the safety of generic drugs.
- Application Metrics – By the fifth year of the program, FDA will review and act on 90 percent of complete electronic generic applications within 10 months after the date of submission. Certain amended applications may have different metrics, phased in between three and five years.
- Backlog Metrics – FDA will review and act on 90 percent of the generic applications pending on October 1, 2012 within the next five years.
- Inspection Metrics – FDA will aim to achieve risk-adjusted biennial inspections and parity of inspection coverage between foreign and domestic firms in five years.
- Efficiency Enhancements – FDA has made an immediate commitment to provide timely and complete information to applicants by issuing response letters for all abbreviated new drug applications. Other efficiency enhancements include rolling review, division-level deficiency review, first cycle meetings and a number of regulatory science initiatives.
Regulatory Science – GDUFA will help advance “regulatory science,” a discipline which seeks to create new tools, standards, and approaches for use in assessing the safety, effectiveness, quality, and performance of products. FDA regulatory science initiatives under GDUFA will include:
- Continue development of new bioequivalence methods for orally inhaled, topical dermatological and gastro-intestinal drug products.
- Continue development of science-based recommendations for product development, and post-marketing assessments of generic drug products.
- Identify additional initiatives with input from an industry working group.