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S. HRG. 113–448 

ANIMAL DRUG USER FEE AGREEMENTS: 

ADVANCING ANIMAL HEALTH FOR THE PUBLIC 

HEARING 

OF THE

COMMITTEE ON HEALTH, EDUCATION, 

LABOR, AND PENSIONS 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

ON

EXAMINING ANIMAL DRUG USER FEE AGREEMENTS, FOCUSING ON 

ADVANCING ANIMAL HEALTH FOR THE PUBLIC HEALTH 

FEBRUARY 27, 2013 

Printed for the use of the Committee on Health, Education, Labor, and Pensions 

( 

Available via the World Wide Web: http://www.gpo.gov/fdsys/ 
COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS 

TOM HARKIN, Iowa, Chairman 

BARBARA A. MIKULSKI, Maryland 

PATTY MURRAY, Washington 

BERNARD SANDERS (I), Vermont 

ROBERT P. CASEY, JR., Pennsylvania 

KAY R. HAGAN, North Carolina 

AL FRANKEN, Minnesota 

MICHAEL F. BENNET, Colorado 

SHELDON WHITEHOUSE, Rhode Island 

TAMMY BALDWIN, Wisconsin 

CHRISTOPHER S. MURPHY, Connecticut 

ELIZABETH WARREN, Massachusetts 

LAMAR ALEXANDER, Tennessee 

MICHAEL B. ENZI, Wyoming 

RICHARD BURR, North Carolina 

JOHNNY ISAKSON, Georgia 

RAND PAUL, Kentucky 

ORRIN G. HATCH, Utah 

PAT ROBERTS, Kansas 

LISA MURKOWSKI, Alaska 

MARK KIRK, Illinois 

TIM SCOTT, South Carolina 

PAMELA J. SMITH, Staff Director and Chief Counsel 

LAUREN MCFERRAN, Deputy Staff Director 

DAVID P. CLEARY, Republican Staff Director 

(II) 
C O N T E N T S 

STATEMENTS 

WEDNESDAY, FEBRUARY 27, 2013 

Page 

COMMITTEE MEMBERS

Harkin, Hon. Tom, Chairman, Committee on Health, Education, Labor, and 

Pensions, opening statement ............................................................................... 1 

Alexander, Hon. Lamar, a U.S. Senator from the State of Tennessee ................ 9 

Prepared statement .......................................................................................... 10 

Burr, Hon. Richard, a U.S. Senator from the State of North Carolina ............... 11 

Roberts, Hon. Pat, a U.S. Senator from the State of Kansas .............................. 14 

WITNESS—PANEL I 

Dunham, Bernadette M., D.V.M., Ph.D., Director, Center for Veterinary Medicine, Food and Drug Administration, Silver Spring, MD ................................. 2 

Prepared statement .......................................................................................... 4 

WITNESSES—PANEL II 

Carnevale, Richard, A., V.M.D., Vice President, Regulatory, Scientific and 

International Affairs, Animal Health Institute, Washington, DC ................... 16 

Prepared statement .......................................................................................... 18 

Johansson, Jennifer, J.D., Vice Chair, Generic Animal Drug Alliance, Bel 

Air, MD ................................................................................................................. 21 

Prepared statement .......................................................................................... 23 

(III) 

(1) 

ANIMAL DRUG USER FEE AGREEMENTS: 

ADVANCING ANIMAL HEALTH FOR THE 

PUBLIC 

WEDNESDAY, FEBRUARY 27, 2013 

U.S. SENATE, 

COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS, 

Washington, DC. 

The committee met, pursuant to notice, at 10:04 a.m. in room 

SD–430, Dirksen Senate Office Building, Hon. Tom Harkin, chairman of the committee, presiding. 

Present: Senators Harkin, Alexander, Burr, and Roberts. 

OPENING STATEMENT OF SENATOR HARKIN

The CHAIRMAN. The Senate Committee on Health, Education, 

Labor, and Pensions will come to order. 

We have convened this hearing this morning to examine the animal drug and animal generic drug user fee agreements that are 

due to be reauthorized this year. The Animal Drug User Fee Agreement, called ADUFA, and the Animal Generic Drug User Fee 

Agreement, called AGDUFA; we have a lot of ‘‘UFA’s’’ around here. 

These programs mirror the fee programs for human medical products that this committee shepherded through the Senate last Congress as part of the FDA Safety and Innovation Act. 

Both ADUFA and AGDUFA allow FDA to collect user fees from 

sponsors of animal drug and animal generic drug applications, and 

the Agency uses those fees to help fund the review of animal drug 

applications. 

At today’s hearing, we will discuss the history and purpose of 

these agreements between FDA and the animal drug industries 

that it regulates. We will delve into the agreements themselves to 

better understand the revenue that the fees provide and the performance standards that will benefit the industries paying those 

fees. 

We will also learn about the importance of animal drug user fees 

to ensure that both pioneer and generic animal drugs are approved 

in a timely way. A fast, predictable approval of animal drugs, and 

their generic equivalents, benefits both the animals themselves and 

the people who depend on them. 

As was true of the user fees for human medical products, both 

ADUFA and AGDUFA are negotiated between FDA and the industry subject to the fees, and we will hear today from the parties involved in those negotiations. 
2 

On our first panel, we will hear from Dr. Bernadette Dunham, 

the Director of FDA’s Center for Veterinary Medicine. Dr. Dunham 

will discuss the critical role that the ADUFA and AGDUFA fees 

play in helping the Center for Veterinary Medicine ensure that animal drugs are safe and effective, and that they are made available 

as quickly as possible. 

On the second panel, we will hear from the organizations that 

negotiated with FDA to reach these agreements that we are considering. In the negotiations with FDA, the pioneer animal drug industry was primarily represented by the Animal Health Institute. 

We have Dr. Richard Carnevale, AHI’s vice president for Regulatory, Scientific, and International Affairs will discuss the past 

successes of the ADUFA program and the features of the new 

agreement. 

He will be joined on the panel by Ms. Jennifer Johansson, the 

vice chair of the Generic Animal Drug Alliance. This Alliance represented the generic animal drug industry during these negotiations. And Ms. Johansson will talk to us about her industry’s experience with the AGDUFA program and about the new agreement. 

The testimony of today’s witnesses will reflect consensus that the 

animal drug user fee programs are essential to FDA’s timely review of pioneer and generic animal drugs. The agreements were 

carefully negotiated and it is important that we pass them this 

year. 

I will leave the record open at this point for any opening statements by Senator Alexander when Senator Alexander arrives. He 

is just held up a little bit. 

The CHAIRMAN. On our first panel, I would like to then invite to 

take the witness stand, Dr. Bernadette Dunham, the Director of 

the Center for Veterinary Medicine at the Food and Drug Administration. In this position, she works to foster animal and public 

health by ensuring the availability of safe and effective animal 

products. Dr. Dunham has over three decades of experience working in veterinary medicine, both in private practice and academia, 

and with the FDA. 

Welcome to the committee, Dr. Dunham. Your statement will be 

made a part of the record in its entirety. If you could take 5 minutes or so to sum it up, I would appreciate it. 

Welcome. Please proceed. 

STATEMENT OF BERNADETTE M. DUNHAM, D.V.M., Ph.D., DIRECTOR, CENTER FOR VETERINARY MEDICINE, FOOD AND 

DRUG ADMINISTRATION, SILVER SPRING, MD 

Ms. DUNHAM. Thank you. Good morning, Chairman Harkin. 

I am Dr. Bernadette Dunham, Director of the Center for Veterinary Medicine at the Food and Drug Administration. Thank you for 

the opportunity to discuss FDA’s proposals for the reauthorization 

of the Animal Drug User Fee and the Animal Generic Drug User 

Fee Act. 

As you know, these fee programs are designed to expedite access 

to new therapies for food-producing animals and companion animals, and foster innovation in drug development by enabling FDA 

to maintain a stable workforce to provide a predictable and timely 

review process. 
3 

These programs have been highly successful and have enabled 

FDA to eliminate a backlog in applications, dramatically reduce the 

time needed to review animal drug applications and other submissions, improve timely communication with drug sponsors, and 

achieve other efficiencies in the drug-approval process while still 

ensuring the drugs are safe and effective. 

In my testimony today, I will provide the status of FDA’s reauthorization activities. I will also provide some information about 

each program, our achievements to date, and our proposed changes. 

The user fee provisions, of ADUFA II and AGDUFA I, will sunset 

on October 1, 2013 if not reauthorized. Timely reauthorization is 

needed to ensure there is no disruption to these important programs. 

FDA began the reauthorization process with a public meeting 

held on November 7, 2011 and began discussions with stakeholders 

in February 2012. FDA published the negotiated recommendations 

in the Federal Register on December 5, 2012 and posted for public 

comment. Another public meeting, to get input on the recommendations, was held December 18, 2012. The final recommendations 

transmitted to Congress include, for each program, the goals letter 

outlining the performance metrics, the proposed legislative language, and a summary of the public comments. 

FDA considers the timely review of the safety and effectiveness 

of new animal drug applications to be central to the Agency’s mission to protect and promote public health. 

Under the original Animal Drug User Fee Act enacted in 2003, 

the Agency agreed to meet a comprehensive set of performance 

goals established to show significant improvement in the timeliness 

and predictability of the new animal drug review process. 

The additional funding enabled FDA to increase the number of 

review staff by approximately 30 percent. In 2008, before ADUFA 

I expired, Congress passed ADUFA II, which included an extension 

of the program for an additional 5 years. And I am pleased to report that FDA has exceeded all of the performance goals established under ADUFA for each year of this critical program. 

During the first 5 years of the program, the Agency was able to 

dramatically reduce review times from 500 to 180 days, and completely eliminate a backlog of 833 submissions within the first year. 

Due to the current success of the program, FDA and industry agree 

that only minor refinements to the performance goals that ADUFA 

II established were necessary. 

Our recommendations relating to the financial enhancements of 

the program include a new statutory inflation adjuster, a new provision for recovering collection shortfalls, and modification of the 

workload adjuster. To increase revenue stream availability, reduce 

application fee costs, and minimize potential for collection shortfalls, the recommendations also modify the fee revenue distribution. 

FDA’s recommendation to Congress, after consultation with the 

regulated industry, is that the total fee revenue estimate for 2014 

will be $23.6 million, which includes a one-time information technology funding in the amount of $2 million. 

AGDUFA I authorized FDA’s first-ever generic animal drug user 

fee program, and additional funding enabled FDA to increase the 
4 

number of review staff by approximately 45 percent. Furthermore, 

the authorization of AGDUFA I enabled FDA’s assurance that generic animal drug products are safe and effective to provide pet 

owners, ranchers, and farmers with greater access to lower cost 

therapeutic drugs. FDA agreed to meet performance goals and expedite the review of generic applications and submissions without 

compromising the quality of the Agency’s review. 

During the 4 years of AGDUFA I, FDA has exceeded every performance goal every year with one minor exception. We missed a 

performance goal by 1 day for one submission of an investigational 

generic and animal drug in 2009. 

The additional resources provided under AGDUFA I enabled 

FDA to completely eliminate a backlog of 680 submissions in 22 

months. In addition, the Agency has been able to dramatically reduce review times from 700 days to 270 days. 

FDA’s goals for AGDUFA II are to sustain and enhance the core 

programs, operation, and performance while providing predictable 

review times and resources sufficient to keep pace with actual 

costs. FDA and industry agree to shorter review times for certain 

reactivations and resubmissions, and to implement a process for 

timely foreign inspections. 

Our recommendations for financial enhancements for AGDUFA 

II include a fixed inflation adjuster of 4 percent each year to 

achieve the proposed revenue levels, and a modification of the 

workload adjuster to ensure that it adequately captures FDA’s 

workload. We also recommend modifying the fee revenue distribution to increase stability of the revenue stream and to reduce application fee costs. 

The total 5-year revenue for AGDUFA I was $27.1 million. The 

proposed total 5-year revenue for AGDUFA II will be $38.1 million, 

which also includes a one-time IT funding of $850,000 for fiscal 

year 2014, the first year planned total of $7.328 million. 

FDA’s ADUFA and AGDUFA legislative proposals represent considerable input from an agreement of stakeholders, the public, and 

the Agency. ADUFA and AGDUFA are widely regarded as extremely successful programs. The recommendations we have submitted for reauthorization of these programs will ensure FDA has 

a stable workforce to provide the predictability and timely review 

process that drug sponsors need in order to foster innovation. They 

will also provide for expedited access to new therapies for food-producing animals and companion animals, while still ensuring the 

drugs are safe and effective. 

Thank you for the opportunity to discuss the ADUFA and 

AGDUFA programs, and I look forward to your questions. 

[The prepared statement of Ms. Dunham follows:] 

PREPARED STATEMENT OF BERNADETTE M. DUNHAM, D.V.M., PH.D. 

INTRODUCTION

Good morning, Chairman Harkin, Ranking Member Alexander, and members of 

the committee. I am Dr. Bernadette Dunham, Director of the Center for Veterinary 

Medicine (CVM) at the Food and Drug Administration (FDA or the Agency), which 

is part of the Department of Health and Human Services (HHS). Thank you for the 

opportunity to discuss FDA’s proposals for the reauthorization of the Animal Drug 

User Fee Act (ADUFA III) and the Animal Generic Drug User Fee Act (AGDUFA II). 
5 

As you know, these fee programs are designed to expedite access to new therapies 

for food-producing animals and companion animals and foster innovation in drug development by enabling FDA to maintain a stable workforce to provide a predictable 

and timely review process. These programs have been highly successful and have 

enabled FDA to eliminate a backlog in applications, dramatically reduce the time 

needed to review animal drug applications and other submissions, improve timely 

communications with drug sponsors, and achieve other efficiencies in the drug approval process, while still ensuring that the drugs are safe and effective. 

In my testimony today, I will provide the status of FDA’s reauthorization activities. I will also provide some information about each program, our achievements to 

date, and our proposed changes. 

STATUS OF FDA’S REAUTHORIZATION ACTIVITIES

The user fee provisions of ADUFA II and AGDUFA I will sunset on October 1, 

2013, if not reauthorized. Timely reauthorization is needed to ensure there is no disruption to these important programs. FDA began the reauthorization process with 

a public meeting held on November 7, 2011. In February 2012, FDA began discussions to get input from our stakeholders to help us develop our recommendations 

for reauthorization. FDA consulted with representatives of patient and consumer advocacy groups, veterinary professionals, scientific and academic experts, and industry associations. FDA then published the negotiated recommendations in the Federal Register (FR) on December 5, 2012, and solicited public comment. We also held 

a second public meeting to get input on the recommendations on December 18, 2012. 

The final recommendations transmitted to Congress include, for each program, the 

goals letter outlining the performance metrics, the proposed legislative language, 

and a summary of public comments. 

ADUFA BACKGROUND

FDA considers the timely review of the safety and effectiveness of new animal 

drug applications (NADA) to be central to the Agency’s mission to protect and promote public health. One way we protect animal and human health is by approving 

safe and effective and properly labeled new animal drugs. Prior to 2004, the timeliness and predictability of the new animal drug review program was a concern. The 

original Animal Drug User Fee Act enacted in 2003 (ADUFA I) authorized FDA to 

collect user fees that were to be dedicated to expediting the review of NADAs in accordance with certain performance goals and to expand and modernize the new animal drug review program. The Agency agreed, under ADUFA I, to meet a comprehensive set of performance goals established to show significant improvement in 

the timeliness and predictability of the new animal drug review process. The implementation of ADUFA I provided a significant funding increase that enabled FDA to 

increase the number of staff dedicated to the review of animal drug applications by 

approximately 30 percent since 2003. 

In 2008, before ADUFA I expired, Congress passed ADUFA II, which included an 

extension of the program for an additional 5 years (fiscal year 2009 to fiscal year 

2013), as well as several enhancements to the program. 

ADUFA ACHIEVEMENTS

I am pleased to report that FDA has exceeded all of the performance goals established under ADUFA for each year of this critical program. Under the performance 

goals of ADUFA, FDA agreed to review and act on submissions within shorter periods of time each successive year. During the first 5 years of this program, the Agency was able to dramatically reduce review times from 500 days to 180 days and completely eliminate a backlog of 833 submissions within the first year. 

With ADUFA II, FDA agreed to further enhance the review process. A key improvement under ADUFA II is the ‘‘end-review amendment’’ (ERA) process that allows FDA reviewers to work with the drug sponsor to amend certain pending submissions. By enhancing communication early in the process, the ERA process allows 

FDA to decrease the number of review cycles, which ultimately leads to a shorter 

time to approval and significant cost-savings for the sponsor. The greatest impact 

of this new tool has been with submissions of investigational new animal drug 

(INAD) studies and study protocols. Greater than 90 percent of ERAs resulted in 

a favorable outcome in the first cycle. 

Also as part of ADUFA II, FDA developed an electronic submission tool, which has 

enabled sponsors to submit applications and submissions electronically, allowing 

FDA reviewers to evaluate the submissions and correspond with sponsors electronically. Electronic submissions have provided substantial cost savings for both FDA 

and animal drug sponsors. Approximately 18 percent of submissions were electronic 
6 

in 2011, the program’s first year, and over 50 percent were electronic in 2012. Submissions are received by FDA in minutes rather than days, and correspondence 

back to sponsors occurs in minutes rather than the several days required for mailing responses. 

Further, FDA and the regulated industry participated in eight joint public workshops on mutually agreed-upon topics. This collaboration enhanced communication 

and transparency on topics critical to the animal drug review process. The workshops discussed in detail the data requirements necessary for drug evaluation and 

explored scientific approaches to challenges in pharmacokinetics, new emerging 

issues relative to antiparasitic resistance, and a novel question-based-review (QbR) 

process for certain reviews. The final two public workshops for fiscal year 2013 will 

address the evaluation of drugs for use in animal production and data quality for 

animal drug submissions from sponsors. 

ADUFA II also enabled FDA to improve the animal drug review and business 

processes by facilitating the timely scheduling and conducting of foreign preapproval inspections. Because of processes developed under ADUFA II, sponsors are 

now able to voluntarily submit an annual facilities list and notification 30 days prior 

to submitting an NADA, a supplemental NADA, or an INAD submission to inform 

FDA that the application or submission includes a foreign manufacturing facility. 

This advance notice gives FDA more time to plan for any necessary foreign inspections, thus helping to reduce costs and prevent delays during the review of an application or submission. 

PROPOSAL FOR ADUFA III

FDA is proposing changes to the performance goals that ADUFA II established to 

further enhance the process for review of animal drug applications. Due to the current success of the program, FDA and industry agreed that only minor refinements 

were necessary. 

The ERA procedure implemented as part of ADUFA II resulted in an increase in 

the number of one-cycle reviews; however, certain challenges associated with the 

process restricted its full utilization. The Agency is proposing, among other changes, 

to further improve the review process by replacing the ERA with shorter review 

times for certain resubmissions and reactivations beginning in fiscal year 2015. To 

allow time for the programming and information management system changes required to make this and other changes, we are proposing to maintain the ADUFA II 

ERA process and associated review performance goals for fiscal year 2014 for most 

applications. 

FDA agrees to maintain the ADUFA II performance goals regarding work queue 

procedures, timely meetings with industry, review of administrative NADAs, and 

pre-approval foreign inspections. To enhance the exchange of scientific information, 

the Agency and industry agree on the need for industry to submit information earlier in development to enable the parties to reach agreement at a pre-submission 

conference or begin the review of study protocols. Additionally, FDA will provide increased flexibility for sponsors to submit scientific data or information concurrent 

with study protocol review. 

Our recommendations relating to the financial enhancements of this program include a new statutory inflation adjuster that accounts for changes in FDA’s costs 

related to payroll compensation and benefits as well as changes in non-payroll costs 

through use of a prescribed methodology that uses the Consumer Price Index as a 

guide. We also recommend modifying the base years for calculating the workload adjuster to ensure that it adequately captures changes in FDA’s workload during 

ADUFA III. 

Additionally, ADUFA III offers the following financial recommendations: 

• A new provision for recovering collection shortfalls to ensure adequate funding 

for the animal drug review process. For example, when FDA sets fees for fiscal year 

2016, it may add to the fee revenue the amount of any shortfall in fees collected 

in fiscal year 2014. This process would follow in subsequent years through the final 

year adjustment. 

• A modified fee revenue distribution to increase revenue stream stability, reduce 

application fee costs, and minimize the potential for collection shortfalls. The proposed distribution will shift from 25 percent for each fee type in ADUFA II to 20 

percent for application fees, 27 percent for product fees, 27 percent for sponsor fees, 

and 26 percent for establishment fees. 

FDA’s recommendation to Congress, after consultation with the regulated industry, is that the total fee revenue estimate for fiscal year 2014 will be $23,600,000, 

which includes one-time Information Technology (IT) funding in the amount of 

$2,000,000. The proposed statutory language specifies annual revenue of 
7 

$21,600,000 for each of fiscal year 2015 through fiscal year 2018; however, this 

amount is subject to a number of possible adjustments, including for inflation, workload, and collection shortfall. 

AGDUFA BACKGROUND

AGDUFA I authorized FDA’s first-ever generic animal drug user fee program. 

AGDUFA I provided a significant funding increase that enabled FDA to increase the 

number of staff dedicated to the new generic animal drug application review process 

by approximately 45 percent. Furthermore, the authorization of AGDUFA I enabled 

FDA’s continued assurance that generic animal drug products are safe and effective 

and provided consumers with greater access to lower-cost therapeutic drugs. 

Under AGDUFA I, FDA agreed to meet performance goals for certain submissions 

over 5 years from fiscal year 2009 through fiscal year 2013. The purpose of establishing these performance goals was to expedite the review of abbreviated new animal drug applications (ANADA) and reactivations, supplemental ANADAs, and generic investigational new animal drug (JINAD) submissions without compromising 

the quality of the Agency’s review. 

AGDUFA ACHIEVEMENTS

AGDUFA I established increasingly stringent review performance goals. In the 4 

years of AGDUFA I review performance evaluated to date (fiscal year 2009 to fiscal 

year 2012), FDA has exceeded every performance goal every year with one minor 

exception. During the program’s first year, the Agency missed the performance goal 

by 1 day for one submission of an investigational generic new animal drug. Most 

importantly, the additional resources provided under AGDUFA I enabled FDA to 

completely eliminate a backlog of 680 submissions in 22 months. In addition, the 

Agency has been able to dramatically reduce review times from 700 days to 270 

days. The timely approval of generic new animal drugs continues to be a critical 

component of animal health because it provides quicker access to additional sources 

of animal drugs at lower cost for ranchers, farmers, and pet owners. 

PROPOSAL FOR AGDUFA II

FDA’s goals for the legislative proposal to reauthorize AGDUFA I are to sustain 

and enhance the core program’s operation and performance while providing predictable review times and resources sufficient to keep pace with actual costs. The Agency is proposing to maintain the AGDUFA I goals regarding work queue procedures, 

timely meetings with industry, review of administrative ANADAs, review of protocols without substantial data, and amendments of similar applications and submissions. 

FDA and industry agreed to shorter review times for certain reactivations and resubmissions. The Agency also agreed to increased communication and transparency 

with industry through timely meetings and question-based-review (QbR) for bioequivalence submissions, which are most often used when a sponsor proposes manufacturing a generic version of an approved off-patent product. The QbR incorporates 

the most important scientific and regulatory review questions that focus on critical 

pharmaceutical attributes essential for ensuring generic drug product quality. In addition, FDA further agreed to implement a process for timely foreign inspections as 

provided in ADUFA II. 

Similar to AGDUFA I, our recommendations for financial enhancements for 

AGDUFA II include a fixed inflation adjuster of 4 percent each year to achieve the 

proposed revenue levels. We also recommend modifying the base years for calculating the workload adjuster to ensure that it adequately captures changes in FDA’s 

workload during AGDUFA II. Additionally, the fee revenue distribution has been 

modified from 30 percent for application fees, 35 percent for product fees, and 35 

percent for sponsor fees under AGDUFA I to 25 percent for application fees and 37.5 

percent for both product fees and sponsor fees under AGDUFA II. The purpose of 

changing the fee distribution is to increase the stability of the revenue stream and 

reduce application fee costs. 

The total 5-year revenue for AGDUFA I was $27,100,000. The proposed total 5- 

year revenue for AGDUFA II will be $38,100,000, which also includes one-time IT 

funding in the amount of $850,000 for fiscal year 2014 for a first-year planned total 

of $7,328,000. 

CONCLUSION

FDA’s ADUFA and AGDUFA legislative proposals represent considerable input 

from and agreement of stakeholders, the public, and the Agency. ADUFA and 
8 

AGDUFA are widely regarded as extremely successful programs. The recommendations we have submitted for reauthorization of these programs will ensure FDA has 

a stable workforce to provide the predictable and timely review process that drug 

sponsors need to foster innovation. They also will provide for expedited access to 

new therapies for food-producing animals and companion animals, while still ensuring that the drugs are safe and effective. FDA looks forward to working with you 

and your staff to achieve a timely reauthorization of these important human and 

animal health programs. 

Thank you for the opportunity to discuss the ADUFA and AGDUFA programs. I 

would be happy to answer any questions. 

The CHAIRMAN. Thank you very much, Dr. Dunham. And we will 

start a round of 5 minute questions. 

My first is this: congratulations on reducing the amount of time 

for these applications, cut down in half on both ADUFA and 

AGDUFA. Can you assure us, and the public, that even with this 

reduction in time that safety has not been compromised? 

Ms. DUNHAM. Yes, sir. I can assure you that our reviewers are 

very experienced, and our whole focus is absolutely to do what FDA 

does very well: assure the safety and effectiveness of these drugs 

through critical review, making sure the manufacturing and the labeling of these products is absolutely correct to ensure that safety. 

The CHAIRMAN. But is the reduction in time that is taken due 

to the fact that because of the increased funding through the fees, 

you have been able to hire more staff, and that has enabled you 

to reduce that time, but still maintain the safety factor. Is that correct? 

Ms. DUNHAM. That is correct, sir. 

The CHAIRMAN. The point I’m trying to make is that the increased funding has allowed you to hire the competent staff in 

order to get the job done in a reduced amount of time. 

Ms. DUNHAM. In reduced time and not be able to jeopardize anything on safety and effectiveness when we do the reviews. Yes, sir. 

The CHAIRMAN. If we did not reauthorize ADUFA by October 1 

of this year, and AGDUFA fees if we did not reauthorize these fees, 

briefly tell us what repercussions would that have for FDA and ultimately for animal and public health. 

Ms. DUNHAM. The concern that we would have is that we would 

end up going back to the days that we have mentioned before. We 

would have longer review times. We would lose approximately 

about 100 of the staff that we have had an opportunity to hire 

through the ADUFA program, and that really would set us back. 

I would be very concerned that we would not be able to continue 

providing safe and effective drugs to address the animal health 

needs of the Nation. 

The CHAIRMAN. And last, just briefly again, how do producers of 

food animals benefit from ADUFA and AGDUFA? Briefly, how do 

they benefit from this? 

Ms. DUNHAM. They are going to benefit because part and parcel 

is to make sure we keep all of our animals healthy. And for that, 

to be able to access the safe and effective drugs, work with their 

veterinarians, as well as the generic animal drug side, which still 

allows them access to safe and effective drugs, sometimes at reduced cost, is something that helps them with their entire operation. So ensuring not only the health of the animals, but more importantly, any of the food items from those animals and that is 
9 

their livelihood, of which we have a very important role in protecting public health and animal health. 

The CHAIRMAN. Thank you very much, Dr. Dunham. 

I will now yield to Senator Alexander. 

STATEMENT OF SENATOR ALEXANDER

Senator ALEXANDER. Thanks, Mr. Chairman. 

Just to go back over the point that you made and that the Chairman mentioned. You have reduced—you’ve got a 450-day reduction 

time in the average time you spend reviewing new drugs, and you 

have eliminated the backlog, is that right? 

Ms. DUNHAM. Yes, sir, we have. Over the years that we have 

had, this is our second authorization period of ADUFA and it would 

be, sorry, this is our third; we have had it two times. 

Over the 9 years, we have tremendously accomplished meeting 

all of our performance goals and having reduced that backlog, actually, during the very first authorization of ADUFA, and the same 

happened with AGDUFA, our generic drug fee user program. Once 

we had an opportunity to really get staff onboard, we managed to 

reduce the backlog. 

Senator ALEXANDER. How many applications did you have in 

backlog when there was a backlog? 

Ms. DUNHAM. We had over 700 that we managed to drop with 

that backlog when we had the staff. 

Senator ALEXANDER. Go through the time sequence today. If I 

had an application for approval of a new drug, take me through the 

time sequence, about the average amount of time it might take. 

Ms. DUNHAM. When a sponsor comes to us with their proposal, 

there are a number of aspects that have to be reviewed, and we 

have broken these down into technical sections. Based upon the 

time that it takes the company to come in with each one of these 

sections, that will determine the review time. 

At the very end, when the entire package is ready to review, we 

are now meeting on the ADUFA side the statutory review time of 

180 days. And the time that it takes is all dependent upon the complexity of that particular drug that we are reviewing. 

Senator ALEXANDER. So you are within the 180 day statutory—— 

Ms. DUNHAM. Now we are. We were not before, and that is what 

this ADUFA fee program has enabled us over these years to meet, 

which has been a success story. And it really helps the companies 

because now they are going to have reliable performance goals with 

our steady increased stability of revenue to meet that, and to understand what it takes to get us there. And before that, there were 

a lot of delays and unknowns, and now we have managed to fine 

tune all of that and enhance this. 

Senator ALEXANDER. And the 180 days, is it part of the proposal 

for the reauthorization? 

Ms. DUNHAM. Yes, to sustain those performance review times. 

Senator ALEXANDER. What is the greatest difficulty that applicants have in that period before you get all the documents? Do you 

get complaints about complexity or difficulty of providing that information? And if so, what are you doing about that? 
10 

Ms. DUNHAM. Actually, through the program, we have had an opportunity to work very closely in enhancing communication, working very closely with industry. 

We have had 10 workshops scheduled; we have completed eight 

of them. Whereby you do have an opportunity to really have an exchange back and forth from our reviewers to the industry to fine 

tune some of the complexities that they are addressing in the review that we would like them to work with us on so that we enhance that clarity and expectations, and by doing that, fine tune 

so that everything comes through with a goal of one cycle review. 

And through those dialogs, we have really had a terrific—— 

Senator ALEXANDER. One cycle, you mean, so you don’t have to 

send it back and start over. 

Ms. DUNHAM. Right, exactly, and that is the whole purpose of enhanced communication. So that you are not caught with surprises, 

so we understand expectations. We do a tremendous amount now 

with—— 

Senator ALEXANDER. Do you catch them doing things wrong, or 

do you talk with them ahead of time and say, ‘‘Fill it out this way 

instead of that way,’’? 

Ms. DUNHAM. That is the open dialog so that there is a free exchange that we can go back and forth to understand if we have hit 

an issue or they have had a delay on something. So we know that 

and we can work that time into the plan. 

Senator ALEXANDER. How many pending applications do you 

have or, however you measure, the number of applications that you 

are working on today? 

Ms. DUNHAM. I would have to get back to you to give you that 

exact number. I don’t know off the top of my head. 

Senator ALEXANDER. I am just trying to get an idea of how much 

business you have in a year or how many applications you review 

in a year. 

Ms. DUNHAM. Well, we have managed to basically, even over the 

past 9 years, we have had about 3,600 drugs and supplements be 

approved through ADUFA. And over the last 4 years of the program with AGDUFA, we have had about 500. So in that sense, 

some can be very complex new applications and innovative drugs, 

others can be a lot of supplements that we deal with as well. 

Senator ALEXANDER. Well, Mr. Chairman, based upon what I 

have heard so far, maybe we ought to put them in charge of some 

other parts of the Government as well. 

[Laughter.] 

The CHAIRMAN. I will second that. 

Ms. DUNHAM. Thank you very much. 

[The prepared statement of Senator Alexander follows:] 

PREPARED STATEMENT OF SENATOR ALEXANDER

Mr. Chairman, thank you for holding a hearing today on these 

successful programs. It has been 5 years since the last round of 

animal drug and animal generic drug user fee negotiations, and I 

look forward to hearing about the impact of the fees on animal 

drug approvals. 

Keeping animals healthy is imperative for public health. And as 

we spend this morning learning more about the process and bene-
11 

fits of these two user fee programs I would like to tell a story about 

why the success of these programs is important. 

I know a farmer in East Tennessee who buys calves from local 

livestock markets to raise on grass and grain. He checks on his 

calves two or more times per day. When he detects a calf that is 

not feeling well, he pulls him out of the group into another area 

where he gives him a drug. 

How does this farmer know the calf isn’t feeling well? He says 

it is like how you know your child is not feeling well. He says the 

calf just doesn’t look ‘‘right’’. A calf might have droopy ears or his 

eyes might not be as bright. 

This farmer needs to be able to have access to the proper drug 

in order to get his calves back healthy as quickly as possible. My 

constituent, along with 17,500 other Tennessee beef cattle farmers, 

has been Beef Quality Assurance Certified. This means that they 

have the proper training and knowledge to handle and administer 

animal drug products. This Tennessean wants to do all that he can 

do to produce a safe and wholesome product to feed not only to others, but also to his family. 

Without access to safe and effective animal medicines that are 

also studied for their impact on the food supply, farmers would be 

severely hampered in their ability to help animals that become 

sick. So when we see the results of this program, such as a 450- 

day reduction in the average time the Food and Drug Administration (FDA) spends reviewing new generic animal drugs over the 

last 5 years, and that FDA has eliminated the backlog of 680 applications, that means improved care for animals and faster access to 

animal medicines for this farmer and many like him. Since the animal drug user fees have been in place many new products have 

been approved, including a product to control fever in pigs suffering 

from pneumonia and iron supplements for newborn piglets. 

When discussing the technical details of the FDA and industry 

user fee agreement we need to keep in mind the people affected at 

the end of the process: the farmers and animal owners who use 

these products to keep their animals healthy and our food supply 

safe. We plan to mark up legislation on these agreements soon and 

hope to pass this quickly to ensure the staff at the Center for Veterinary Medicine can continue their good work. These are important agreements that Congress should reauthorize quickly without 

complications that could jeopardize swift passage of the bill. I hope 

that we keep the lessons from our last animal drug and animal generic drug user fee legislation in mind as we work on these important agreements. I thank Chairman Harkin for his leadership, commitment and look forward to learning more about the programs’ 

success from today’s witnesses. 

The CHAIRMAN. Thank you. 

Senator Burr. 

STATEMENT OF SENATOR BURR

Senator BURR. Thank you, Mr. Chairman. 

Dr. Dunham, congratulations on not only a great performance, 

but the ability to come up and have industry support for a reauthorization like this. I am curious, off of the Chairman’s points to 

you, how have you been able to accomplish through ADUFA what 
12 

you have, while user fees in other areas of FDA providing additional FTE’s only increased the review time versus decrease the review time? What is different that you have done than the other 

areas at FDA? 

Ms. DUNHAM. That is a very good question. I think we have always struggled to be as expeditious as we can. And this additional 

user fee program just made that opportunity of enhancing the wonderful staff that we have—their dedication is incredible—to be able 

to provide them with the tools they need. And having done that, 

the energy is there, and working with industry so that we are really striving to have this be as clear as we possibly can, to understand the challenges. 

It has been a win across the board, and it is really through the 

availability of the dedicated staff that we have, and the opportune 

program you have provided which really helps us to—— 

Senator BURR. If I understand this reauthorization, there are no 

additional FTE’s being hired. 

Ms. DUNHAM. We are going to continue because we have managed to fine tune the process, and we have now also gone electronic. And I think that is the biggest boost in enhancing our review times now because we can suffice that so quickly electronically back and forth. That has given a tremendous advantage to us 

on obtaining the data and reviewing the data. 

Senator BURR. Part of this agreement requires the industry to 

pay $2 million up front in one-time IT funding. What are the specific goals that you have for that $2 million worth of IT payment? 

And what are the benchmarks that the Agency will use to track the 

success of these goals? 

Ms. DUNHAM. Where we are going to be using the dollars for IT, 

as we have mentioned, moving into electronic submission form, a 

number of the various codes and software coordination of that documentation requires us to work with the IT folks to make those 

changes in the business process. So that when a reviewer receives 

a supplement, you code it in, coordination of the technical sections, 

all of that needed to fine tune now with the business operation. 

We took advantage of requesting and working with the industry 

because now that we are moving electronically, we needed to make 

a few changes, literally, that only IT could handle. And it is more 

or less just fine tuning the business process side of that, and it is 

just changing some of those codes that we have. 

Senator BURR. Dr. Carnevale says in his testimony that increases in regulatory costs and burden are contributing to a declining number of new animal drug approvals. As CVM Director, what 

are you and your staff doing to increase the regulatory certainty 

and predictability of the Agency and to decrease regulatory costs 

and burden, which have had somewhat of a chilling effect on innovation? Or, would you agree with that? 

Ms. DUNHAM. I think any time we are facing challenges of finances that does, and that is really why this user fee program has 

acknowledged how to help our industry come forth with, still, the 

innovative products that we need. By minimizing, potentially, having multiple cycles is a benefit to them, so that you are not going 

to have additional costs; that is a win. 
13 

That enhanced communication that we talked about, so there is 

clarity of what we are striving to obtain, has really minimized it. 

We also have an opportunity for waivers. If we have some small 

businesses that are coming onboard, we have worked through the 

user fee program to acknowledge that and assist them. So anything 

that flags up as a potential barrier to innovation, we put a waiver 

in because we understand how important that is to continue to 

support them. 

On the generic user fee program, we’ve also got a three-tier program. Again, trying to work with our companies, understanding 

where they are. Some of them are not multiple, big applications. 

And I think that fairness, and listening to them, and working 

through that is how we both work together. 

That is another reason why, as you asked originally, what is part 

of our success story? It is really trying to understand that we all 

want to ensure safe and effective drugs, and to understand what 

it takes to have the industry come in the front door, and for us to 

do those reviews and work with them. 

Senator BURR. Part of this agreement deals with conditional approvals, and it is for the Agency to explore in concert with the industry the feasibility of pursuing statutory revisions that may expand that use of conditional approvals. Yet, there is not much specificity in how that is going to happen. Can you sort of explain to 

me what the matrix is that we should look at to see if this is successful or not? 

Ms. DUNHAM. This was actually started with our minor use 

minor species animal drug development program whereby, you can 

imagine, we may not have sufficient numbers and I will give you 

a simple example, going to the zoo animals. 

How many elephants would we have, how many tigers if we want 

to get this drug reviewed for safety and effectiveness? So we may 

be able to get all of the safety done, first and foremost. But the effectiveness, do we have sufficient numbers of those animals? We 

may then allow the company to take a little bit longer to access the 

effectiveness data just because they may not have sufficient numbers. 

Senator BURR. Under a conditional approval? 

Ms. DUNHAM. Under a conditional approval, and so the safety 

has to be there. The only layer of the conditional approval is fine 

tuning the last bit of the effectiveness. And that has been a tremendous asset to help with those products as we have seen them 

coming through for minor species. 

So the scenario was: is there a venue possibly? Could we look at 

that for some areas in our major species? This is just to take a look 

and see, is there any possibility that that could be another way of 

helping to, again, take a look at the cost of the drug review, the 

timing, and some of the more challenging issues, would that work 

or not? 

There is no guarantee, but it has been a very successful program 

on the minor use species side. We thought, they asked. I think it 

is very good that we always try to embrace new ideas and let’s see 

if this is going to work. 

Senator BURR. Great. Thank you. 

Thank you, Mr. Chairman. 
14 

Ms. DUNHAM. Thank you. 

The CHAIRMAN. Senator Roberts. 

STATEMENT OF SENATOR ROBERTS

Senator ROBERTS. Thank you, Mr. Chairman. Thank you for 

holding the hearing. Dr. Dunham, I may nominate you for the 

Freedom Medal; that’s a pretty prestigious award. I don’t know of 

anybody else in the regulatory business—and virtually every agency that we have in the Government today—who has done a better 

job than you in following the law. Mr. Chairman, just let me go 

down the list. 

First, these folks had public hearings. So people came in from the 

antibiotic arena, said what they had to say, made suggestions. 

Then these folks had an Advanced Notice of Proposed Rule Making; 

the acronym for that is ANPRM. I did not know that, A-N-P-R-M. 

I thought it was something that you took. 

[Laughter.] 

Senator ROBERTS. Which, in this case, is probably a commonsense pill to get the cost benefit worked out and really let people 

know. So that was a heads up. 

First you had the hearings. They testified. Then you had a heads 

up on Advanced Notice of Proposed Rule Making. Then you had a 

notice of proposed rulemaking, which we are into right now. So 

after hearing from the public and then giving them an advanced 

notice of what you have in mind, now we have a notice of proposed 

rulemaking and you are getting feedback. Then you go to the final 

rule. OK? And I would tell my colleagues, and I want to thank you, 

that this is the way it is supposed to work. 

That over a period of time that is appropriate that you tell the 

industry, or you ask the industry, ‘‘Is this going to work? Is there 

a better way we can do it? Maybe we can tweak it, maybe not.’’ But 

you have done all that. As opposed to almost virtually every other 

agency that my colleagues and I wrestle with, trying to make some 

kind of a cost-benefit criteria apply, even though we have an Executive order that says that that is the case, it is not happening. 

Classic case is with regards to PPACA or the Affordable Care 

Act, where the rules have gone to OMB and they are final. But 

upon questions, CMS will tell us that, ‘‘Well, we’ve talked to all the 

providers,’’ and that is a long list of providers in terms of health 

care. 

On sub-regulatory guidance, the problem is nobody knows about 

the sub-regulatory guidance. You don’t operate that way. You are 

going out to the people going to be affected and trying to get a better sense in regards to the regulations that you are issuing. That 

is why we have a clean bill. 

And the sub-regulatory guidelines can now be bulletins. Who has 

time to look at bulletins? How do you get a hold of the bulletins 

if you are a small, rural hospital in Kansas, Tennessee, Iowa, wherever, North Carolina? You don’t have time. How do you gain access 

to the bulletins? Well, it is on their Web site. Well, who is going 

to be the bad-news-bearer sitting there at the hospital looking at 

bulletins every day? 

You have Frequently Asked Questions, I love that, FAQ, frequently asked questions. Boy, there’s a bunch of those. And so, 
15 

they get the questions and then they come back and say, ‘‘Here’s 

a bunch of frequently asked questions,’’ but I am not sure that they 

really answer the questions. 

Then you have a Web site, of course, and then you finally have 

guidance documents. So I guess, if you ask guidance on a particular 

item, they will send you a document on their Web site and you’re 

supposed to wade through that. 

You don’t have an ambulance driver, a hospice director, a home 

health care person, a nurse, a doctor, a hospital, everybody that receives Medicare, and I am just picking on that because it is an example. And then you have regs going over to OMB, and I suspect 

that this committee does not know all of the ramifications of those, 

we will. But with the Chairman’s leadership, that is for sure, and 

we are doing the same thing in the finance committee. 

But you, doctor, have done it the right way, and I want to congratulate you for that. 

Ms. DUNHAM. Thank you. 

Senator ROBERTS. Because we need regulatory framework to protect the public, and you are doing that, but you are asking the industry, ‘‘How can we do it in the best possible way?’’ Now that is 

a long speech, but I think you deserve a big pat on the back. 

Mr. Chairman and Ranking Member, thank you for having a 

clean bill, and if we have a clean bill with appropriate comment, 

that is what we are supposed to be doing. So thank you both, and 

thank you, doctor. 

Ms. DUNHAM. Thank you very much. I really appreciate that. 

The CHAIRMAN. Thank you, Senator Roberts. Well, I hope we can 

keep it a clean bill as it weaves its way through that place over 

there in the Capitol called the Senate floor. I hope we can keep it 

clean. 

Dr. Dunham, thank you very much. 

Ms. DUNHAM. Thank you very, very much. 

The CHAIRMAN. We will call our second panel, Dr. Richard 

Carnevale and Dr. Jennifer Johansson. 

Mr. CARNEVALE. Good morning. 

The CHAIRMAN. The second panel of the committee has invited 

Dr. Richard Carnevale, the vice president for Regulatory, Scientific, 

and International Affairs with the Animal Health Institute, an animal pharmaceutical trade association. Dr. Carnevale has worked 

for 35 years in the animal health and food safety industry, and has 

previously held positions with both the FDA and USDA, and holds 

a doctorate in veterinary medicine from the University of Pennsylvania. 

Also Jennifer Johansson, the vice chair of the Generic Animal 

Drug Alliance. In addition to her role with GADA, Ms. Johansson 

is the senior vice president of Putney Generic Veterinary Pharmaceuticals where she leads their regulatory affairs efforts. Ms. 

Johansson has 16 years of experience in the pharmaceutical and 

research industry including physicians in a human specialty pharmaceutical company in private legal practice, and is a laboratory 

researcher at NIH. 

We thank you both for being here. Your statements will be made 

a part of the record in their entirety. We will start with you, Dr. 

Carnevale. Welcome. Please proceed. 
16 

STATEMENT OF RICHARD A. CARNEVALE, V.M.D., VICE PRESIDENT, REGULATORY, SCIENTIFIC AND INTERNATIONAL AFFAIRS, ANIMAL HEALTH INSTITUTE, WASHINGTON, DC 

Mr. CARNEVALE. Good morning. Thank you, Mr. Chairman and 

members of the committee. Thank you for holding this hearing on 

this important piece of legislation, and the opportunity to speak to 

you today about the important human and animal health benefits 

that result from using medicines to keep animals healthy. 

I am Dr. Richard Carnevale. I am a veterinarian by training 

with a degree from the University of Pennsylvania School of Veterinary Medicine. And I am here today on behalf of the Animal 

Health Institute, the trade association that represents companies 

that make medicines for animals. 

Our companies share a common mission: we contribute to public 

health by protecting animal health. Animal health products also 

give veterinarians, and livestock, and poultry producers the necessary tools to protect the health and well-being of food-producing 

animals. 

Veterinarians work hard to prevent disease in animals, but it is 

important for them to have medicines available when needed to 

treat a disease or disease threat. The FDA animal drug approval 

process looks much like the human drug approval process. Animal 

drug companies submit data packages to demonstrate safety, efficacy, and the ability to meet the same stringent FDA manufacturing standards. It is a costly process requiring as much as $100 million, and 7 

to 10 years to bring an animal drug to market. The market for animal drugs, however, is nothing like the market for human drugs. 

Our products are used to treat seven different major species of animals and many more minor species. A blockbuster animal drug is 

considered one with sales of around $100 million with the vast majority of animal health products averaging about $1 million or less 

in gross sales. There is no Medicare or Medicaid, and except in rare 

cases, no employer-supported health insurance. The cost of animal 

drugs is primarily borne fully by the animal owner. 

Passage of this legislation will have important benefits. FDACVM benefits by having additional resource needs to meet its mission of protecting public health. Animal health sponsors benefit 

from a stable and predictable review process allowing them to 

make more informed decisions about the investment risks of research and development dollars. 

Veterinarians benefit from having new and innovative medical 

advances available to treat, control, and prevent diseases in their 

patients. And livestock and poultry producers and the veterinarians on whose advice they rely, also have the tools needed to keep 

food animals healthy. 

And pet owners, let’s not forget them, will benefit by having their 

animals live longer and healthier lives, increasing their enjoyment 

of these companions. 

And finally consumers reap the food safety benefits that come as 

a result of the availability of additional tools to keep food animals 

healthy. 

AHI believes that the funding agreed to by the industry over the 

next 5 years is based on an objective assessment of Agency re-
17 

source needs, and will allow the Agency to maintain all current 

standards, and also improve performance in key areas. The agreement calls for approximately $118 million in funding over the 5 

years and uses a variable rather than a fixed inflation factor. 

The financial agreement seeks to reduce the impact that fees 

may have on small businesses and smaller product markets by reducing the total percentage of fees coming from new animal drug 

applications and supplements from 25 percent to 20 percent. This 

agreement also includes a provision for FDA to make up potential 

fee shortfalls that may be experienced by allowing for adjustments 

to levied fees in the out years of the program. 

FDA has consistently met all timeframes for all sentinel submissions identified in the goals letter that was submitted to Congress 

the past two ADUFA’s, and we are confident that the Agency will 

continue to do so over the next 5 fiscal years. 

The new agreement continues all current submission review 

timeframes mandated in ADUFA II. However, the new agreement 

adds important enhancements to the review process. 

Animal drugs generally go through a phased review process, 

which is different from human drugs whereby each specific area 

called technical sections of the new animal drug application are 

submitted and reviewed independently. Once the technical sections 

for safety, efficacy, manufacturing, and environmental impact are 

complete, an administrative NADA is filed referencing those sections, and approval of the product occurs within 60 days. 

If technical sections can be completed more rapidly, it will lead 

to earlier filing of the administrative NADA, and therefore reduce 

overall time to the marketing of safe and effective animal medicines. This will be accomplished under the new agreement by FDA 

agreeing to significantly shorten the review times of the second 

pass submissions that ordinarily are reviewed in the same timeframe as the original or first pass submissions. Now that will occur 

when certain criteria in the goals letter are met. 

Depending on the type of submission, this can result in up to a 

4-month or 120-day decreased review time, which is very important 

and could be critical in moving an important medicine to market 

sooner. The new agreement also commits the Agency to work with 

the industry to examine longer term goals. First, AHI and FDA will 

enter into discussions on how to more broadly extend the conditional approval process currently available for all practical purposes only to minor species to major species applications. 

Second, FDA will enter into a discussion with the animal drug 

and feed industry, and State regulatory authorities overseeing animal feed, to determine how requirements for combination medicated feed approvals might be modified. 

This could have a significant future importance with the advent 

of the FDA proposal to move more antimicrobials used in feed to 

a Veterinary Feed Directive program by allowing veterinarians to 

more efficiently write VFD orders for antibiotics to be mixed into 

feed with other non-VFD drugs. Eliminating the requirement for 

combination feed approvals could pave the way for a smoother implementation of the VFD program, and ensure that antimicrobials 

that are added to feed are being used for therapeutic purposes only 

under the order of a veterinarian. 
18 

Mr. Chairman, CVM has a rigorous science-based approval process that provides to the American public the products necessary to 

protect public health by protecting animal health. Every year, scientists uncover new diseases in animals, some of which potentially 

pose a threat to human health. As more animals are raised to feed 

the planet, and as animals are reared closer to people, we will continue to need new medicines to protect animal and human health. 

The reauthorization of ADUFA will continue to provide the Agency the resources necessary to maintain and improve this approval 

process, provide new and innovative products to allow our pets to 

live longer and healthier lives, and contribute to food safety by 

keeping food animals healthy. 

I urge you to move a clean ADUFA bill in a timely manner so 

this program can continue without interruption. 

Thank you, Mr. Chairman. I would be happy to take questions. 

[The prepared statement of Mr. Carnevale follows:] 

PREPARED STATEMENT OF RICHARD A. CARNEVALE, V.M.D. 

SUMMARY

The Animal Health Institute (AHI) is the trade association representing researchbased companies that make medicines for animals, both companion animals and 

farm animals. 

Passage of the Animal Drug User Fee Act will assist FDA’s Center for Veterinary 

Medicine by providing additional resources to meet its mission of protecting public 

health. Animal health sponsors benefit from a stable and predictable review process, 

allowing them to make more informed decisions about the investment risks of research and development dollars. Veterinarian and animal owners benefit from a 

critical supply of new and innovative medicines to keep animals healthy. Consumers 

reap the food safety benefits that come as a result of the availability of additional 

tools to keep food animals healthy. 

The funding agreement, based on an objective assessment of agency resource 

needs, calls for approximately $118 million in funding over the 5 years, and uses 

a variable rather than fixed inflation factor. The financial agreement seeks to reduce the impact that fees may have on small businesses and smaller product markets by reducing the total percentage of fees coming from new animal drug applications and supplements from 25 percent to 20 percent. The agreement also includes 

a provision for FDA to make up potential fee shortfalls that may be experienced by 

allowing for adjustments to levied fees in the out years of the program. 

The new agreement continues all current submission review timeframes mandated in ADUFA II. One enhancement added by this agreement is to significantly 

shorten the review times of the second pass submissions that ordinarily are reviewed in the same timeframe as the original or first pass submissions, when certain criteria in the goals letter are met. Depending on the type of submission this 

can result in up to a 4-month (120 day) decreased review time and could be critical 

in moving an important animal medicine to the market sooner. 

The new agreement also commits the agency to work with industry to examine 

longer term goals: First, AHI and FDA will enter into discussions on how to more 

broadly extend the conditional approval process currently available only to minor 

species to major species applications. Second, FDA will enter into discussion with 

the animal drug and animal feed industry and State regulatory authorities overseeing animal feed to determine how requirements for combination medicated feed 

approvals might be modified. Eliminating the requirement for combination feed approvals could pave the way for a smoother implementation of the VFD program and 

ensure that antimicrobials added to feed are being used for therapeutic purposes 

only under the order of a veterinarian. 

The reauthorization of ADUFA will continue to provide the agency the resources 

necessary to maintain and improve this approval process, provide new and innovative products to allow our pets to live longer and healthier lives and contribute to 

food safety by keeping food animals healthy. AHI urges Congress to move a clean 

ADUFA bill in a timely manner so this program can continue without interruption. 
19 

Mr. Chairman and members of the committee, thank you for holding this hearing 

on this important piece of legislation, and for the opportunity to speak to you today 

about the important human and animal health benefits that result from using medicines to keep animals healthy. 

I am Dr. Richard Carnevale. I am a veterinarian by training with a degree from 

the University of Pennsylvania and I am here today on behalf of the Animal Health 

Institute (AHI), a trade association that represents companies that make medicines 

for animals. Our companies share a common mission: we contribute to public health 

by protecting animal health. With food animals in more demand from our growing 

global population, the importance of the nexus between animal health and human 

health has never been greater, and is one of the driving forces behind the Center 

for Disease Control’s ‘‘One Health’’ initiative. As companion animals have become 

a more important part of our everyday lives they have moved from the backyard 

into our living rooms and bedrooms, increasing their importance to humans and requiring greater attention to their health needs. As medical breakthroughs from 

human medicine are adapted to animal medicine, our pets are living longer and 

healthier lives. 

Animal health products also give veterinarians, and livestock and poultry producers, the necessary tools to protect the health and well-being of food producing 

animals. More and more evidence demonstrates that a vital first step in producing 

safe meat, milk and eggs is keeping animals healthy. Veterinarians work hard to 

prevent disease in animals, but it is important for them to have medicines available 

when needed to treat a disease or disease threat. 

The statutory standard for FDA approval of animal drugs under the Federal Food, 

Drug and Cosmetic Act is the same as that for human drugs: they must be proven 

to be safe and effective. As a result, the animal drug approval process looks much 

like the human drug approval process: animal drug companies submit data packages to demonstrate safety, efficacy, and the ability to meet the same stringent FDA 

manufacturing standards. It is a costly process, requiring as much as $100 million 

and 7–10 years to bring an animal drug to market. In the case of food animals, the 

standard to ensure that meat, milk, and eggs are safe for human consumption adds 

an additional set of requirements that increases the cost and time to market. 

The market for animal drugs, however, is nothing like the market for human 

drugs. Our products are used to treat seven different major species of animals and 

many more minor species. A blockbuster animal drug will have sales of $100 million, and the vast majority of animal health products have a market size of around 

$1 million. There is no Medicare or Medicaid and, except in rare cases, no employersupported health insurance—the cost of animal drugs is borne in full by the animal 

owner. 

One significant challenge we face in animal health is the declining number of new 

animal drug approvals. The data we collected in preparation for ADUFA III clearly 

showed that while we significantly increased the amount of user fees going to the 

agency in ADUFA II, the workload has substantially declined. There are likely 

many reasons for this, but a big reason is the ever-increasing regulatory cost and 

burden. In a market as fractured as the animal health market, this increased regulatory burden results in fewer live-saving and extending drugs being brought to 

market. We hope Congress will consider ways to incentivize animal health research 

and provide for a regulatory environment that increases the availability of animal 

health products. 

Animal health companies rely on a rigorous, efficient, predictable and sciencebased review process at the Food and Drug Administration’s Center for Veterinary 

Medicine (CVM) to provide these products. That’s why our companies supported the 

first authorization of the Animal Drug User Fee Act 10 years ago. The Animal Drug 

User Fee Act of 2003 (ADUFA I) made it possible for our companies to bolster funding at CVM so that they could meet performance standards to improve the efficiency 

and predictability of the animal drug approval process and ADUFA II, passed in 

2008, continued that progress. 

Passage of this important legislation will have several benefits: 

1. FDA/CVM benefits by having additional resources to meet its mission of protecting public health. 

2. Animal health sponsors benefit from a stable and predictable review process, 

allowing them to make informed decisions about the investment risks of research 

and development dollars. 

3. Veterinarians benefit from having new and innovative medical advances available to treat, control and prevent diseases in their patients. 

4. Livestock and poultry producers, and the veterinarians on whose advice they 

rely, also have the tools needed to keep food animals healthy. 
20 

5. Pet owners benefit by having their animals live longer and healthier lives, increasing their enjoyment of these companions. 

6. Consumers reap the food safety benefits that come as a result of the availability 

of additional tools to keep food animals healthy. 

AHI believes that the funding agreed to by the industry over the next 5 years is 

based on an objective assessment of agency resource needs and will allow the agency 

to maintain all current standards and also improve performance in key areas. The 

agreement calls for approximately $118 million in funding over the 5 years, depending on inflation. The funding agreement going forward differs from the funding provided over the last 5 years. AHI has agreed to an annual fee level adjusted by a 

variable rather than the fixed annual inflation factor utilized in ADUFA II. The 

variable rate will be more closely aligned with actual cost increases that FDA might 

realize from year to year. 

The financial agreement seeks to reduce the impact that fees may have on small 

businesses and smaller product markets by reducing the total percentage of fees 

coming from new animal drug applications and supplements from 25 percent to 20 

percent. This should result in a substantial reduction in an individual application 

fee in fiscal year 2014 and beyond. The 5 percent reduction is then distributed 

among the three remaining fee areas—sponsor, product and establishment. Since 

smaller companies have fewer products and facilities, they are hit hardest by the 

application fee. The agreement also includes a provision for FDA to make up potential fee shortfalls that may be experienced by allowing for adjustments to levied fees 

in the out years of the program. 

FDA has consistently met timeframes for all sentinel submissions identified in the 

goals letter submitted to Congress and we are confident that the agency will continue to do so over the next 5 fiscal years. The new agreement continues all current 

submission review timeframes mandated in ADUFA II. However, the new agreement adds important enhancements to the review process. 

The process for reviewing and approving animal drugs has evolved over the years 

and is somewhat different than that for human medicines. Animal drugs generally 

go through a phased review process whereby each specific area called technical sections of the new animal drug application is submitted and reviewed independently. 

Once the technical sections for safety, efficacy, manufacturing, and environmental 

impact are complete an administrative NADA is filed referencing those sections and 

approval of the product occurs within 60 days. 

If technical sections can be completed more rapidly it will lead to earlier filing 

of the administrative NADA and, therefore, reduce overall time to market of safe 

and effective animal medicines. This will be accomplished under the new agreement 

by FDA agreeing to significantly shorten the review times of the second pass submissions that ordinarily are reviewed in the same timeframe as the original or first 

pass submissions, when certain criteria in the goals letter are met. Depending on 

the type of submission this can result in up to a 4-month (120 day) decreased review 

time and could be critical in moving an important animal medicine to the market 

sooner. 

The new agreement also commits the agency to work with industry to examine 

longer term goals. 

AHI and FDA will enter into discussions on how to more broadly extend the conditional approval process currently available only to minor species to major species 

applications. The Minor Use/ Minor Species Act of 2004 provided a new mechanism 

for the approval of animal drugs. For minor species or minor uses, a sponsor can 

submit an application to FDA allowing the firm to market the product while continuing to collect effectiveness data to satisfy the ‘‘substantial evidence’’ requirement 

under the FD&C Act, as long as enough data has been submitted to allow the agency to determine there is a ‘‘reasonable expectation’’ of efficacy before it goes on the 

market. Of course, the application must still meet all requirements for animal, 

human, and environmental safety, manufacturing quality, and be properly labeled 

prior to marketing. The conditional approval lasts for 5 years after which time the 

product is fully approved or withdrawn from the market if the sponsor fails to demonstrate substantial evidence. 

AHI believes that a strong case can be made to extend this provision to certain 

drugs proposed for major species other than those specifically for minor use. This 

allows earlier marketing of important products that can be studied and thoroughly 

tested for effectiveness because the sponsor is adding revenue to fund such studies. 

The data gathered under a conditional approval will be much more robust and allow 

the agency to have better confidence in the safety and effectiveness of the product 

before it issues final approval. The advantage to FDA is that it can easily terminate 

the marketing of a product if the sponsor fails to complete the data commitment. 
21 

There is no increased risk to animal for public health since safety will be assured 

prior to marketing. Additionally, conditional approvals are currently in place at 

USDA, which regulates animal vaccines and at EPA, which regulates flea and tick 

products for animals. Conditional approvals could be one mechanism to address the 

current decline in animal drug submissions and bring much-needed new product development to the market for major species. 

The other policy issue that will be discussed under the new agreement will be the 

issue of combination medicated feed new animal drug approvals. It is common practice in the field to combine two or more drugs in a medicated feed being given to 

cattle, pigs, or poultry. For the past 40-plus years FDA has required that two or 

more approved drugs added to an animal feed must first also be approved by the 

agency before they can be mixed concurrently. There is a long history of FDA requiring this and dates back to a policy first established in the 1960s that considered 

animal feeds containing an animal drug to be a finished drug formulation. A producer or feed manufacturer can only combine approved animal drugs in feed if an 

application for that combination has been approved by FDA. Therefore, an animal 

drug sponsor obtaining an approval for a drug to be added to animal feed is responsible for filing additional new animal drug applications providing for the concurrent 

mixing in the feed of the newly approved drug with other approved drugs. These 

are essentially administrative NADA’s that simply reference the approvals of the 

other products but still require submission of some limited data and new labeling. 

This has been an onerous requirement since it can significantly delay the ability 

of a sponsor to market a new product because the sponsor may not submit the other 

application for review and approval by FDA until the new drug is first approved. 

Some relief was realized in 1996 at the passage of the Animal Drug Availability Act, 

which lessened the requirements for the approval of these combination applications, 

but did not eliminate the need to submit an NADA for these combinations. Experience has shown since the ADAA that few problems can be identified by the mixing 

of two or more approved drugs concurrently in the feed in the way of interference 

with the active ingredients or with changes to animal safety or human food residues. 

FDA has agreed to enter into discussion with the animal drug and animal feed 

industry and State regulatory authorities overseeing animal feed manufacturers 

over the next 3 years to determine how these requirements might be modified. This 

could have significant future importance with the advent of the FDA proposal to 

move more antimicrobials used in feed to a Veterinary Feed Directive program by 

allowing for veterinarians to more efficiently write VFD orders for antibiotics to be 

mixed into feed with other non-VFD drugs. Eliminating the requirement for combination feed approvals could pave the way for a smoother implementation of the 

VFD program and ensure that antimicrobials added to feed are being used for therapeutic purposes only under the order of a veterinarian. 

Mr. Chairman, CVM has a rigorous, science-based approval process that provides 

to the American public the products necessary to protect public health by protecting 

animal health. Every year scientists uncover new diseases in animals, some of 

which potentially pose a threat to human health. As more animals are raised to feed 

the planet and as animals are reared closer to people, we will continue to need new 

medicines to protect animal and human health. 

The reauthorization of ADUFA will continue to provide the agency the resources 

necessary to maintain and improve this approval process, provide new and innovative products to allow our pets to live longer and healthier lives and contribute to 

food safety by keeping food animals healthy. I urge you to move a clean ADUFA 

bill in a timely manner so this program can continue without interruption. 

Again, thank you for holding this hearing and I would be happy to answer any 

questions. 

The CHAIRMAN. Thank you, Dr. Carnevale. 

Now, Ms. Johansson, welcome. Please proceed. 

STATEMENT OF JENNIFER JOHANSSON, J.D., VICE CHAIR, 

GENERIC ANIMAL DRUG ALLIANCE, BEL AIR, MD 

Ms. JOHANSSON. Good morning. I am Jennifer Spokes Johansson, 

and I serve as the vice chair of the Generic Animal Drug Alliance, 

or GADA. 

The GADA is an independent professional trade organization 

that represents the interests of generic animal drug companies. 
22 

Our members are focused on the development, FDA approval, and 

marketing of high quality generic drugs for livestock and pets. 

I would like to thank the committee for inviting me to testify 

today on behalf of GADA in support of the reauthorization of 

AGDUFA, the Animal Generic Drug User Fee Act. 

Just like with human drugs, generic animal drugs provide significant benefits to the public by providing cost-effective alternatives to their pioneer drug counterparts. Lower cost generic animal drug options help contribute to the safety of the Nation’s food 

supply, the treatment of diseases in animals that can be transmitted to humans, and the ability of pet owners to provide care to 

their pet family members. 

However, the potential cost savings to consumers from generic 

animal drugs cannot be achieved without broad availability of such 

drugs. Therefore, it is critical that the CVM review and approval 

process for generic drugs is both efficient and predictable. 

AGDUFA was a successful first step in achieving these goals. 

Prior to the implementation of AGDUFA, a single CVM review of 

a generic application could take longer than 2 years. In most cases, 

multiple review cycles are needed, so if an application required 

three review cycles, it could take more than 6 years for that application to receive approval. 

In the time it took to get the application approved, the entire 

market for the generic drug could change, making it no longer costeffective to market the drug. This created a disincentive for companies to pursue generic animal drug approvals and denied the public 

cost-effective generics to treat their livestock and pets. 

During the time of AGDUFA, CVM eliminated the application 

backlog and reduced the review time goal for a single review of an 

application to the current 270 days. In addition, CVM implemented 

several process enhancements and increased communications with 

industry. 

While user fees are a significant cost to a small industry, we believe the fees have not created too much of an impediment to pursuing generic animal drug applications. In fact, we believe user 

fees serve as a desired gating mechanism to ensure sponsors are 

serious about their intent to pursue applications to approval. Furthermore, we believe the shorter review times and predictability of 

the review timeline are helping contribute to the growth of our industry. This growth is evidenced by the significant increase in our 

GADA membership, as well as an increase in the number of application sponsors paying user fees. 

AGDUFA II, as agreed upon, will continue the shortened application review times from AGDUFA. While GADA would like CVM to 

achieve the statutory 180-day review times, the additional fees for 

CVM to obtain the resources needed to reach that goal are not a 

viable option for the generics industry. 

The animal generics industry is comprised of small companies 

and product markets that are much smaller than those for human 

drugs. Therefore, we believe it is important that the review of generic drug applications be primarily funded by congressional appropriations. For this to be achieved, appropriations must continue at 

a level that enables FDA to meet its public health mission, and the 
23 

important public policy goal of providing generic drug options for 

farmers and pet owners. 

Financially, we believe AGDUFA II strikes a balance between 

the much-needed revenue stream for CVM and the realities of a 

small, but growing, generics industry. However, another important 

industry goal for AGDUFA II was to implement additional review 

process enhancements that recognize high quality submissions and 

shorten overall time to approval. 

The proposed AGDUFA II enhancements will make the approval 

process easier to navigate, will help generic companies better meet 

CVM’s approval expectations, and should help reduce the number 

of review cycles. We expect this will enable more generic products 

to come to market sooner. 

In conclusion, it is extremely important to the generic animal 

drug industry that AGDUFA be reauthorized. Without timely reauthorization of AGDUFA, we likely will return to the pre-AGDUFA 

days when lengthy application reviews served as a disincentive to 

companies pursuing generic animal drugs. Reauthorization of 

AGDUFA is critical to continuing to make the pursuit of generic 

animal drug approvals viable and to continuing to increase the 

number of safe and effective generic animal drugs on the market. 

Thank you. 

[The prepared statement of Ms. Johansson follows:] 

PREPARED STATEMENT OF JENNIFER JOHANSSON, J.D. 

SUMMARY

GADA is an independent professional trade organization that represents the interests of generic animal drug companies. Our members are focused on the development, FDA approval, and marketing of high quality generic drugs for livestock and 

pets. 

Generic animal drugs provide significant benefits to the public by providing costeffective alternatives to pioneer animal drugs, just like the benefits that human generic drugs provide to patients and payers. Lower cost generic options help increase 

access to much-needed therapies for animals and contribute to the safety of the Nation’s food supply, the ability of pet owners to provide care to their beloved pet family members, and the treatment of diseases in animals that can be transmitted to 

humans. The potential cost savings to consumers with generic animal drugs cannot 

be achieved without broad availability of such drugs. Therefore, it is crucial that we 

continue to explore ways to get generic animal drugs to market by providing an efficient CVM review process for approving generic animal drugs. 

AGDUFA successfully reduced ANADA review cycle times, which improved the efficiency and predictability of the generic review process. Under AGDUFA, CVM 

eliminated the review backlog and reduced the review time for a single review of 

an ANADA from 700 days or more to the current 270-day goal. In addition, CVM 

implemented multiple process enhancements and CVM-industry communications increased, including with the addition of quarterly CVM-industry meetings. While 

user fees are a significant cost to a small industry, we believe the fees have not created too much of an impediment to pursuing generic animal drug applications. In 

fact, we believe user fees serve as a necessary gating mechanism to ensure sponsors 

are serious about their intent to pursue applications to approval. Furthermore, the 

shorter review times and predictability of the review timeline help contribute to 

growth of our industry and to growing employment, including in areas of the country with fewer industries to create jobs. 

AGDUFA II as agreed upon will continue the shorter ANADA review times and 

introduce additional important review process enhancements. The proposed legislation strikes a balance between a robust revenue stream for CVM and the realities 

of a small but growing generics industry. We expect this will enable more generic 

products to come to market sooner and create incentives for more development by 

generic companies, as well as more innovation by pioneer companies. Thus, reauthorization of AGDUFA is crucial to continuing to make the pursuit of generic animal drug approvals viable, to promoting a healthy generics industry, and to con-
24 

1Generic Pharmaceutical Association Report, ‘‘Saving $1 Trillion Over 10 Years: Generic Drug 

Savings in the U.S. (Fourth Annual Edition, 2012).’’ 

tinuing to increase the number of generic animal drugs on the market, bringing safe 

and effective cost-effective drug alternatives to our Nation’s farmers and pet owners. 

GENERIC ANIMAL DRUG ALLIANCE, 

BEL AIR, MD 21015, 

February 25, 2013. 

U.S. Senate, 

Committee on Health, Education, Labor, and Pensions, 

Washington, DC 20510–6300. 

DEAR HONORABLE MEMBERS: Thank you for the opportunity to provide testimony 

to the U.S. Senate Committee on Health, Education, Labor, and Pensions on behalf 

of the Generic Animal Drug Alliance (‘‘GADA’’) in support of reauthorization of the 

Animal Generic Drug User Fee Act of 2008 (‘‘AGDUFA’’ and ‘‘AGDUFA II’’). GADA 

is an independent professional trade organization that represents the interests of 

generic animal drug companies. Our members are focused on the development, FDA 

approval, and marketing of high quality generic drugs for livestock and pets. We 

seek to provide more options to ranchers, farmers, and pet owners for affordable 

medical care for animals. 

GADA is the only trade organization that represents the interests of generic animal drug companies in the United States. We represent the majority of sponsors 

who hold investigational files for Abbreviated New Animal Drug Applications 

(‘‘ANADAs’’) and ANADAs pending approval by FDA’s Center for Veterinary Medicine (‘‘CVM’’). Our member companies also hold more than half of the currently approved ANADAs. 

GENERIC ANIMAL DRUGS ARE AN IMPORTANT ALTERNATIVE TO PIONEER ANIMAL DRUGS

Generic animal drugs provide significant benefits to the public by providing costeffective alternatives to pioneer animal drugs, just like the benefits that human generic drugs provide to patients and payers. Lower cost generic options help increase 

access to much-needed therapies for animals and contribute to the safety of the Nation’s food supply, the ability of pet owners to provide care to their beloved pet family members, and the treatment of diseases in animals that can be transmitted to 

humans. 

Generic animal drugs are demonstrated safe and effective and go through a rigorous CVM approval process. They must meet the same high quality standards as 

pioneer animal drugs and are manufactured in FDA-inspected facilities, just like 

human drugs. However, generic animal drug options are not nearly as prevalent as 

their human generic counterparts. For example, a survey conducted by one of our 

member companies of Animal Drugs@FDA showed that only 7 percent of CVM approved drugs for dogs and cats have a CVM approved generic equivalent. 

The potential cost savings to consumers from generic animal drugs cannot be 

achieved without broad availability of such drugs. Human generic drugs have demonstrated the value of generic alternatives to the public; in 2011 alone, human generic drugs saved consumers and the Nation’s health care system $192 billion.1 Furthermore, greater availability of generic animal drugs means that veterinarians and 

consumers can make animal care decisions focused on medical reasons without having to forego treatments due to costs that are often higher than what human patients pay for drug treatment. Therefore, it is crucial that we continue to explore 

ways to get generic animal drugs to market by providing an efficient CVM review 

process for approving generic animal drugs. 

AGDUFA I SUCCESSFULLY REDUCED ANADA REVIEW CYCLE TIMES

To encourage a robust generic animal drug industry that provides options for the 

health of livestock and pets, the ANADA approval process must be efficient and predictable. Prior to the implementation of AGDUFA, companies wishing to pursue generic animal drug applications had no certainty as to how long a single CVM review 

of their application would take, other than that it might take longer than 2 years. 

In most cases, the first review yields deficiencies and multiple review cycles are required. For each additional review the application goes to the back of the queue for 

another lengthy review cycle. In the time it took to get an application approved, the 

entire market for a generic drug could change, making it no longer cost-effective to 
25 

market the drug and denying the public cost-effective generics to treat their livestock and pets. 

An unpredictable application review timeline can prove fatal to the generic animal 

drug industry. Generic animal drug companies tend to be smaller and have fewer 

resources than their pioneer company counterparts. In the pre-AGDUFA environment, it was difficult for companies to survive and there was extreme disincentive 

for new companies to pursue approval of generic animal drugs. 

GADA believes AGDUFA was a success in improving the efficiency and predictability of the generic review process. Since enactment of AGDUFA, CVM eliminated 

the review backlog and reduced the review time for a single review of an ANADA 

from 700 days or more to the current 270 day goal. In addition, CVM implemented 

multiple process enhancements and CVM-industry communications increased, including the addition of quarterly CVM-industry meetings. 

The establishment of review time goals created a more predictable review timeline 

that allows sponsors to plan for product review, approval, and launch. This helps 

generic animal drug options get to market more efficiently. The shorter review times 

also apply to post-approval manufacturing change reviews, making it easier for 

manufacturers to improve and modernize their manufacturing processes. Protocol 

reviews under investigational files also have reduced review times, which help 

shorten the development time prior to seeking drug approval. 

While we believe AGDUFA introduced improvements to the ANADA review process, immediately after the implementation of AGDUFA the number of ANADA submissions and reactivations significantly decreased. GADA believes this apparent decrease may be because more sponsors are pursuing ANADAs through a phased approval process and those numbers are not reflected in the number of ANADAs submitted. Also, we believe the addition of user fees created a gating mechanism to ensure that sponsors only submit ANADAs if they are serious about pursuing high 

quality, approvable ANADAs for products that they will bring to market. 

While we also saw a significant decrease in the number of generic drugs that are 

drug listed with FDA, we believe this is due to sponsors ‘‘cleaning up’’ their drug 

listings so as not to list products they do not market. Furthermore, we believe sponsors reduced their redundant private labels, as maintaining multiple private labels 

for the same product is a common practice in the animal drug industry. Thus, the 

reduction in the number of listed drugs does not reflect a reduction in the number 

of product alternatives on the market. 

Since the implementation of AGDUFA, we also have seen indications that applications are on the rise and our industry is growing. During the term of AGDUFA 

there was an increase in the number of investigational study submissions and in 

the number of generic animal drug sponsors. As the only industry association for 

generic animal drugs, we have seen our membership increase by 53 percent since 

the passage of AGDUFA, including with some new sponsors planning to develop generic animal drugs and submit ANADAs. 

During the term of AGDUFA, we have also seen new companies form to pursue 

generic animal drugs and already-established companies in the fields of new animal 

drugs and human drugs enter the generic animal drug industry. Thus, while user 

fees are a significant cost to a small industry, we believe the fees have not created 

a significant impediment to pursuing generic animal drug applications. Instead, we 

believe the shorter review times and predictability of the review timeline help contribute to growth of our industry and to growing employment, including in areas of 

the country with fewer industries to create jobs. 

AGDUFA II WILL CONTINUE SHORTER ANADA REVIEW TIMES AND INTRODUCE MORE

REVIEW PROCESS ENHANCEMENTS

Entering into AGDUFA II negotiations, the generic animal drug industry had 

three primary goals: (1) keep user fee costs from increasing beyond the generic industry’s ability to pay; (2) keep review times at least as good as in Year 5 of 

AGDUFA, and (3) implement more process enhancements to help reduce overall 

time to approval of drug applications. 

The agreed upon AGDUFA II proposed legislation includes 5-year industry fees of 

$38,100,000 and strikes a balance between a robust revenue stream for CVM and 

the realities of a small but growing generics industry. The agreed upon increase in 

fees from AGDUFA I are to account for inflation and estimated reductions in congressional appropriations. 

GADA recognizes that user fees are intended to supplement congressional appropriations. The generic animal drug industry is comprised of small companies and 

the product markets are smaller than for human drugs. Therefore, we believe it is 

important that the review of drug applications be primarily funded via congressional 
26 

appropriations and that appropriations continue at a level that enables FDA to meet 

its public health mission and the important public policy goal of providing generic 

drug options for farmers and pet owners. 

Since the number of ANADA submissions each year is less predictable than the 

number of marketed products and application sponsors, under AGDUFA II the application fee will contribute a smaller percentage of total revenue than in AGDUFA 

I. This will provide more predictability to the amount of funding collected by CVM, 

which benefits both CVM and industry. This will also help keep the application fee 

as a gating mechanism to ensure submission of high quality applications, while 

helping prevent the application fee from becoming too high and serving as a significant disincentive for companies to submit applications. In exchange, the product fee 

and sponsor fee, which are primarily paid by established sponsors with products on 

the market and are therefore more predictable, will contribute an increased percentage of fees to the total user fee revenue. 

GADA was not concerned predominantly with reducing the review times for single 

review cycles because the current 270-day review goal is a marked improvement 

over pre-AGDUFA timelines. While GADA would like CVM to achieve the statutory 

180-day review times, the industry recognizes that the additional fees for CVM to 

obtain the resources needed to reach such goal are not a viable option for the 

generics industry. Therefore, the industry believes that maintaining the existing 

timelines is an acceptable compromise while the industry grows and becomes further established. 

An important industry goal for AGDUFA II was implementing substantial process 

enhancements that will reward high quality submissions. The enhancements will 

make the approval process easier to navigate for new and established sponsors, and 

will help reduce the overall time to approval, thus allowing more safe and effective 

generic products to reach the market sooner. For example, one enhancement allows 

for a second, shortened review cycle of 90 or 190 days, as opposed to 270 days, when 

deficiencies are not substantial. 

Another enhancement, the two-phased Chemistry, Manufacturing, and Controls 

(‘‘CMC’’) technical section process, enables sponsors to submit certain parts of their 

CMC section to an investigational file before the entire section is complete, thereby 

receiving earlier CVM feedback and avoiding deficiencies later in the review process 

that can delay approval. A third enhancement allows sponsors making significant 

post-approval changes to their application that receive non-substantial deficiencies 

to their supplement to implement their changes 30 days after submitting their deficiency responses, rather than waiting for another 270-day review cycle. 

These and other improvements introduce efficiencies to the ANADA review process and help generic drug company sponsors better meet CVM’s approval expectations. It is our hope that these enhancements, along with the current 270-day single 

cycle review timelines, will help reduce the number of review cycles and shorten the 

overall time to approval for ANADAs to get generic animal drug options to market 

sooner. 

REAUTHORIZATION OF AGDUFA SUPPORTS A HEALTHY GENERICS INDUSTRY TO GET

MORE GENERIC ANIMAL DRUGS TO THE MARKET SOONER

It is extremely important to the generic animal drug industry that AGDUFA be 

reauthorized. Prior to its original implementation the industry feared it would not 

survive, as review times dragged out and few drugs and companies made it to the 

end of the approval process. Furthermore, there were few incentives for new companies to pursue generic animal drugs and thus, the industry could only be sustained, 

and the benefits of cost-saving, high-quality generic drugs for livestock and pets realized, if the few existing companies remained. 

AGDUFA has introduced shorter, predictable timelines for ANADA reviews, making it easier for companies to pursue generic animal drug applications. Furthermore, 

it has brought review process improvements and efficiencies. AGDUFA II will continue these shortened review timelines and bring more process enhancements that 

will help reduce the overall time to approval. We expect that this will enable more 

generic products to come to market sooner and incentivize more development by generic companies, as well as more innovation by pioneer companies. Thus, reauthorization of AGDUFA is crucial to continuing to make the pursuit of generic animal 

drug approvals viable, to promoting a healthy generics industry, and to continuing 
27 

to increase the number of generic animal drugs on the market, bringing safe and 

effective cost-effective drug alternatives to our Nation’s farmers and pet owners. 

Sincerely, 

THE GENERIC ANIMAL DRUG ALLIANCE, 

Generic Animal Drug Alliance Member Companies: AgriLabs, Ltd., St. Joseph, 

MO; AmPharmCo, Inc., Fort Worth, TX; Aratana Therapeutics, Inc., Kansas City, 

MO; Argenta Limited, Metuchen, NJ; Bimeda North America, Inc., Oakbrook 

Terrace, IL; Ceva Animal Health, Inc., Lenexa, KS; First Priority, Inc., Elgin, IL; 

GDL International, St. Joseph, MO; Herschel J. Gaddy & Associates, St. Joseph, 

MO; Lloyd, Inc., Shenandoah, IA; Med-Pharmex, Inc., Pomona, CA; Norbrook, 

Inc., Lenexa, KS; Nutramax Laboratories, Inc., Edgewood, MD; Pegasus 

Laboratories, Inc., Pensacola, FL; Pharmgate, LLC, Ramsey, NJ; Piedmont Animal 

Health, Greensboro, NC; Putney, Inc., Portland, ME; Rochem International, Inc., 

Ronkonkoma, NY; Sparhawk Laboratories, Inc., Lenexa, KS; Teva Animal Health, 

a wholly owned subsidiary of Bayer HealthCare, LLC, St. Joseph, MO; Vetoquinol 

USA Inc., Fort Worth, TX; VetPharm, Inc., East Rochester, NY; World Gen LLC, 

Paramus, NJ. 

The CHAIRMAN. Thank you very much, Ms. Johansson. 

We will now start a 5-minute round of questions. Dr. Carnevale, 

I will start with you. 

Again, just for the record, if ADUFA were not reauthorized, what 

do you think would be the impact on animal health? How would 

it affect ranchers, farmers, and pet owners if we did not reauthorize it by October 1? 

Mr. CARNEVALE. Well, Senator, clearly FDA would have to lose 

a number of resources that they have now, a number of staff that 

they have hired on to do those reviews faster. So clearly, the review 

times would slip back, as Dr. Dunham had mentioned earlier, back 

to what they had been before. 

The process will slow down even more than it is now, and it is 

a very rigorous review process, and we understand that we are always working to try to shorten that time. Without those resources, 

those times will just dramatically increase. 

And as far as farmers and ranchers, there are very few drugs 

that are approved now. It is very difficult to get a drug through the 

process and when it does go through, it is very important to those 

farmers and ranchers. So unfortunately, this will probably decrease 

an incentive to develop those drugs if the process is taking longer 

than it does today. 

The CHAIRMAN. Thank you. 

Ms. Johansson, again for the record, tell me what role do generic 

drugs for animals play in animal health? How do they help ranchers, farmers, and pet owners? 

Ms. JOHANSSON. Generic drugs give alternative to the brand 

drugs or the pioneer drugs that are equivalent. They are equivalent 

in safety and effectiveness and quality, but they are lower cost options. So this provides a cost benefit for farmers, for pet owners, 

for ranchers. And often may enable a treatment that a pet owner 

or a rancher could not afford in the first place. 

The CHAIRMAN. The same question I asked of Dr. Carnevale— 

what would be the effect if AGDUFA were not reauthorized? What 

would be the impact on ranchers, farmers, and pet owners if it 

were not reauthorized in time? 

Ms. JOHANSSON. Right. As Dr. Carnevale mentioned, FDA would 

have to reduce their staffing and then they would not be able to 

review the applications in a timely manner. This would mean that 
28 

less options, whether it be pioneer drugs or generic drugs, would 

be available to ranchers, farmers, and pet owners. 

In the generics industry, we just had our first AGDFUA legislation 5 years ago. So just 5 years ago, we really were in that world 

where it was taking 700 days or more for a review. And it was not 

incentivizing companies to pursue those generic drug options. 

The CHAIRMAN. Thank you both very much. 

I will yield to Senator Alexander. 

Senator ALEXANDER. Mr. Carnevale, give us a little historical 

perspective on the importance of animal health to human health. 

My memory of history is that, throughout world history and in our 

country, many epidemics have been spread by unhealthy animals. 

In the early days of, what, North America, the arrival of the Europeans with animals kind of led to small pox. It wiped out whole 

populations. Is that where all of this begins, this concern about the 

relationship of healthy animals to healthy people? 

Mr. CARNEVALE. Yes, well fortunately, we don’t have outbreaks 

like small pox any longer, but clearly, there is a nexus between 

animal and human health. Diseases are spread, as we all know, between animals and humans. And the fact is, the healthier that we 

can keep our animals, the healthier we can keep humans, particularly with the food supply. 

It has been shown that animals that are not healthy that might 

go to slaughter with some clinical disease, the meat from those animals may be more tainted with bacteria than those animals that 

are kept healthy. 

There is a long history of maintaining that animal health 

through vaccines. Vaccines are very important as well as animal 

drugs. Both of those go hand in hand to keep our food animals 

healthy, so that they don’t spread those diseases to humans. 

Of course, there have been other measures besides the use of 

technologies. There has been the way we have raised animals with 

good biosecurity techniques to keep them from being infected by 

pathogenic organisms that could transfer to humans. But the whole 

arena of agriculture, including the use of the technologies we are 

talking about here, has improved to maintain that separation of 

animal disease from human disease. 

Senator ALEXANDER. We don’t have to go back very far to find 

the time, maybe it was the 1930’s, that say when there were almost no, well, there wasn’t the pharmaceutical industry really. 

There were almost no drugs for human health. How far back do we 

have to go to find the development of drugs for animal health? 

Mr. CARNEVALE. I would say probably in the 1950s is when we 

really—— 

Senator ALEXANDER. Not before then? 

Mr. CARNEVALE. Probably not before then, I mean, I think there 

were probably remedies out there. There was no organized drug 

business, but I think probably in the 1950s, antibiotics started to 

become used in animals, and so, it is a fairly new industry. 

Senator ALEXANDER. Ms. Johansson, you mentioned the 270-day 

timeline, and it sounded like what you were saying was that it was 

too expensive to aim for 180-day timeline, to try to take that 700 

day period and get it down to 180. Is that right? That would just 

cost too much in user fees to do that, was that the consensus? 
29 

Ms. JOHANSSON. Well, to take the 270-day time period. 

Senator ALEXANDER. Yes. 

Ms. JOHANSSON. And bring it down to 180 days. 

Senator ALEXANDER. Yes. 

Ms. JOHANSSON. Right, would cost too much in user fees. 

Senator ALEXANDER. Yes. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Alexander. 

Senator Roberts. 

Senator ROBERTS. Thank you, Mr. Chairman. I have a very general question, and the answer to it is yes, if I can find it here. 

Dr. Carnevale, I have been getting feedback, all of us who are 

privileged to represent agriculture States and the animal drug community, that while there may be some minor tweaks or changes to 

the user fee programs that various folks would recommend generally, that my impression is that you support a clean bill, and we 

have a clean bill. And as the Chairman indicated, we hope that we 

can be successful on the Senate floor, and that we would have your 

support. Is that correct? 

Mr. CARNEVALE. That’s correct, Senator. 

Senator ROBERTS. All right. Let me veer off into another concern 

that I have that also involves a thank you to you and all of the veterinary associations from all of our States. 

As a former member of the Intelligence Committee and I was 

chairman for a while, I was always worried about a possible attack 

on our food supply, and obviously, that deals with the animal industry. And we had several exercises and in one, I was privileged— 

if that is the proper word for it—to play the role of the president. 

I emphasize that there wasn’t anybody else in town, so they had 

to get somebody, but I think it was because of my experience on 

the agriculture committee and on the intelligence committee. 

We went under attack—this was an exercise—and there have 

been numerous exercises like this. Following those exercises, and 

I won’t go into any detail, but some very difficult, we went through 

what would happen in regards to an attack like hoof and mouth, 

and what would happen to the animal industry, and it was pretty 

bad. 

That was some years ago. I think we have a much better understanding of that. That threat still exists. It could be easy to do by 

any terrorist group, but the veterinarians in Kansas, at least, and 

this comes down to county level, have done an excellent job of 

doing training to be first responders if anything like that would 

happen. And they know the criteria that they are supposed to follow and they have repeatedly gone to meetings statewide and even 

national meetings on this subject. 

I just want to thank your Center for what you have been doing, 

and I hope you have been doing in regards to any possible threat 

to our food supply. And the fact that one of the first responders is 

your local veterinarian, who also, by the way, has a lot of trust 

wherever that person may be practicing. 

Do you have any comment? 

Mr. CARNEVALE. No. Thank you for that. I think our industry has 

been very forward-looking in trying to provide the vaccines that are 

needed for those kinds of threats and I know that is at the top of 

their mind. 
30 

Ever since 9/11, as you said, we have been going through those 

exercises. And I would only say that we are very fortunate in this 

country to have as safe a food supply as we do, and I think people 

take it for granted because those threats, as well as common 

threats from bacteria and viruses that do not come from terrorism, 

are also a threat to the food supply. And I think the farmers, the 

ranchers, the veterinarians, the animal drug industry all do a marvelous job of keeping our food supply safe. 

But those threats are there and you are right. We have been very 

lucky, but I think we have also prepared very well, and I think our 

industry has helped with those preparations in trying to make sure 

the vaccines for those viral diseases that could come from terrorism 

are out there and ready to be used if necessary. So thank you for 

that, Senator. 

Senator ROBERTS. I appreciate that. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Senator Roberts. 

Thank you all very much. Thank you, Dr. Carnevale. Thank you, 

Ms. Johansson for your involvement in this effort. Hopefully, as 

you have heard from all of us and we have heard from you, we 

hope to keep this a clean bill and get it moved expeditiously 

through the Senate, and hopefully the same thing will happen on 

the House side. Thank you all very much. 

The record will remain open for 10 days for further submissions 

by other Senators. 

The CHAIRMAN. And with that, the committee will stand adjourned. 

Thank you. 

[Whereupon, at 10:58 a.m., the hearing was adjourned.] 

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