ADUFA V Negotiations Meeting Minutes
January 20, 2022, 10AM – 3PM
Section 740A(d)(1)(F) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) requires that FDA consult with representatives of the regulated industry to negotiate recommendations for reauthorization of the Animal Drug User Fee Act (ADUFA) program, ADUFA V. For the ADUFA negotiations, regulated industry is represented by the Animal Health Institute (AHI). FDA’s meetings with AHI, which tentatively are planned to run through February 28, 2022, will satisfy the requirement in section 740A(d)(1)(F) of the FD&C Act.
Matt Lucia, Center for Veterinary Medicine (CVM)
Roxanne Schweitzer, CVM
Tim Schell, CVM
Julie Bailey, CVM
Chuck Andres, CVM
Cassie Ravo, CVM
Lisa Kable, CVM
Petra Garosi, CVM
Steve Fleischer, CVM
Crystal Groesbeck, CVM
Elizabeth Cash, Office of Chief Counsel (OCC)
Alissa Jijon, OCC
Matt Lockeed, Office of Legislation
Rachel Cumberbatch, Animal Health Institute
Grace Gowda, Boehringer-Ingelheim Animal Health
John Hallberg, Zoetis
Gareth Harris, Merck
Alicia Henk, Ceva
Todd Rhodes, Vetoquinol
Kelly Rosenkrans, Elanco
Alan Taylor, Virbac
Kathy Vannatta, Animal Health Institute
Ron Phillips, Animal Health Institute
The meeting began at 10:00 a.m.
Justification of Costs of the ADUFA Program – FDA presentation and group discussion
FDA presented information in response to AHI’s requests to justify and account for the current ADUFA fee funding level and to provide data and insights into the workload and resource utilization under the ADUFA program. In previous meetings, FDA explained the impact of budget erosion, including inflation (e.g. cost of living) and payroll FTE costs (e.g., medical benefits) on the maintenance costs of the ADUFA program. The ADUFA financial report, which FDA is required to publish annually, details how user fee funds are spent by the Agency to support the ADUFA program. For FDA, meeting ADUFA performance goals remains a top priority.
FDA presented two graphs on workload trends from 2008 to the present: 1) a graph depicting the total pioneer drug submission volume, and 2) the workload adjuster submission volume. The data reflect that submission numbers have remained consistent. CVM indicated that to maintain and meet the previously agreed upon ADUFA performance goals in ADUFA V, additional FTEs would not be needed.
FDA shared examples of factors increasing regulatory workload complexity and explained that even though total submission numbers have remained steady, several of the products being developed by industry have required increasingly complex reviews by FDA over time. FDA clarified that the complexity of data will be reflected in the number of review hours, which is reflected in the standard cost. Standard costs have stayed steady or decreased for all technical sections except Human Food Safety, which has increased.
FDA shared a list of additional benefits associated with the new animal drug review program outside of the direct review of new animal drug applications including, but not limited to, external outreach to stakeholders, guidance for industry (GFI) development, quality systems for internal consistency, and activities to help mitigate animal drug shortages.
AHI asked clarifying questions and provided feedback about the presentation. For AHI, performance goals serve as intermediate data points to ensure predictable response times, but do not measure the ADUFA program’s progress towards its congressional intent of expediting the new animal drug development process. Therefore, AHI is seeking to understand how the ADUFA funds are used and the resulting resource capacity (e.g., FTEs by division, percent time spent on reviews) within the center.
AHI questioned why a workload adjuster is needed at all if the workload has been flat since 2008. FDA perceives this adjuster as a safety net against an unforeseen spike in work. When workload decreases the statutory base revenue amount is not adjusted downward, but increases in workload can result in increased fees. AHI reminded that there was a significant increase in fees for ADUFA IV and stated its view that the increase continues to be sufficient to cover any budget erosion.
AHI thanked FDA for the information but reiterated industry’s position that lack of granularity on workload, resource utilization, and FTEs creates an inadequate understanding of where fee income is being spent and what the relationship is to outcomes, a result from the investment. The annual financial report provides dollar amounts of ADUFA funds used for payroll, rent, and shared services. AHI indicated its view that the financial report does not offer granularity on how fees are utilized to support review activities and is therefore insufficient to support funding discussions. AHI stated additional detail continues to be needed before a package is taken to its ratifiers.
Financial Proposals: ADUFA V Cost – FDA presentation and group discussion
FDA summarized the costs of a second package proposal for ADUFA reauthorization, including the base cost, an explanation of how it was determined, and the additional costs for certain proposed ADUFA V enhancements. FDA explained its view that the proposed base funding level is needed to maintain current performance and customer service levels through ADUFA V. The proposed enhancement costs include the cost for a third-party assessment, IT enhancements needed to accompany any proposed new program enhancements, and costs to support additional proposed enhancements. FDA indicated additional FTEs would be needed to support some of the proposed enhancements.
AHI inquired what the user fee amount would be for FY 2023, using the actual ADUFA inflation calculations. AHI and CVM discussed data that showed a consistent workload and an increase in user fees from ADUFA I through ADUFA IV. AHI interpreted this data to show a gap between current fees and workload, stating that based on the data provided, FDA has excess capacity to handle additional work. According to AHI, this excess capacity and inflation adjustments also should help defray the costs that FDA associates with budget erosion.
Financial Proposals: Carryover Cap, Excess Collections – FDA presentation and group discussion
FDA proposed a carryover cap minimum and maximum. In this proposal, the cap does not include the unappropriated amount. The current program allows for a 12-week final year adjustment reserve, which FDA believes is the minimum amount necessary for the orderly shutdown of the program in the event of a funding lapse.
In coordination with the carryover cap, FDA proposed to eliminate the provision to use excess collections to reduce any workload-based or shortfall-based fee increase. FDA also proposed to eliminate the shortfalls provision.
AHI asked clarifying questions about the presentation.
FDA stated that its current proposal represents the cost of maintaining the ADUFA program with its current goals and the added enhancements. FDA requested that AHI consider the proposal further to determine if it is acceptable.
AHI expressed that it would review FDA’s cost justification presentation and provide feedback.
FDA and AHI team members agreed to schedule separate meetings to address questions about import tolerances, ADAA combinations, a third-party assessment, and additional topics as requested by either group.
FDA and AHI agreed to review the list of agreements in an upcoming meeting so that goals letter language can be drafted.
FDA and AHI tentatively agreed to extend negotiations into February and to meet again on February 3, 2022, and February 17, 2022, with a new goal to complete negotiations by the end of February.
The meeting adjourned at 1:00 pm.