19–010

Calendar No. 104

108TH CONGRESS REPORT " SENATE ! 1st Session 108–51

ANIMAL DRUG USER FEE ACT OF 2003

MAY 21, 2003.—Ordered to be printed 

Mr. GREGG, from the Committee on Health, Education, Labor, and 

Pensions, submitted the following 

R E P O R T 

[To accompany S. 313]

The Committee on Health, Education, Labor, and Pensions, to 

which was referred the bill (S. 313) to amend the Federal Food, 

Drug, and Cosmetic Act to establish a program of fees relating to 

animal drugs, having considered the same, reports favorably thereon with amendments and recommends that the bill (as amended) 

do pass.

CONTENTS 

Page 

I. Purpose and summary of legislation ............................................................ 1

II. Committee action ........................................................................................... 2

III. Background and need for legislation ............................................................ 2

IV. Cost estimate .................................................................................................. 4

V. Application of law to the legislative branch ................................................ 6

VI. Regulatory impact statement ........................................................................ 7

VII. Section-by-section analysis ............................................................................ 7

VIII. Changes in existing law ................................................................................ 10 

I. PURPOSE AND SUMMARY OF LEGISLATION

The Animal Drug User Fee Act (ADUFA) of 2003 (S. 313) would 

authorize a program of fees by the Food and Drug Administration 

(FDA) relating to the review of new animal drugs. Under this proposal, the additional revenues generated from fees paid by the animal health industry would be dedicated for use in expediting the 

new animal drug review process, in accordance with performance 

goals that would be developed by FDA in consultation with the industry. This legislation will provide resources to improve the animal drug review process through the hiring of new personnel and 

purchase and maintenance of technological management and inforVerDate Jan 31 2003 05:35 Jun 06, 2003 Jkt 019010 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\SR051.XXX SR051
2

mation systems. The legislation will also increase the animal drug 

review program’s performance capacity and efficiency, aligning it 

with the Government Performance and Results Act and the President’s Management Agenda. The committee intends that the user 

fee levels reflected in this bill will be sufficient to meet the established performance goals that were negotiated by the industry and 

the FDA. 

With the additional revenues, if appropriated by Congress, FDA 

should be able to: (1) eliminate existing backlogs of applications 

within 2 years; (2) over a 5-year period, move toward the goal of 

completing the review of 90 percent of new animal drug applications within 180 days; (3) resolve new and emerging scientific 

issues that affect the ability of FDA’s Center for Veterinary Medicine (CVM) to make approval decisions; and (4) achieve an enhanced and predictable review performance. 

S. 313 will extend the user fee approach to funding FDA animal 

medical product review activities. The legislation will directly benefit individual members of the regulated industries and speed access to new animal drugs for use by veterinarians and owners of 

agricultural stock and pets. The legislation also provides flexibility 

to FDA to adjust fees in appropriate circumstances. 

The committee recognizes the value of implementing the full 5-

year ADUFA program negotiated between the animal health industry and FDA through 2008. The committee also recognizes the 

value of the ADUFA being reauthorized at the same time as other 

FDA user fee programs are reauthorized. The committee anticipates that the animal health industry and FDA will initiate the 

ADUFA reauthorization process and discussions in 2007, to allow 

Congress to concurrently reauthorize all FDA user fee programs in 

2007. 

II. COMMITTEE ACTION

The S. 313, Animal Drug User Fee Act of 2003 was introduced 

on February 5, 2003 and subsequently marked up by the Committee on Health, Education, Labor, and Pensions executive session 

on February 12, 2003. At that time, Senator Gregg offered an 

amendment in the nature of a substitute that changed the initial 

authorization period for the user fee program from 4 to 5 years, 

and that made several technical changes to clarify the language of 

the bill. S. 313 was accepted by unanimous consent and reported 

favorably from the committee by voice vote. 

III. BACKGROUND AND NEED FOR LEGISLATION

Congress, in enacting the Prescription Drug User Fee Act of 

1992, Public Law 102–571 (PDUFA), for human pharmaceuticals, 

required FDA in section 108(a) to conduct a study to evaluate 

whether, and under what conditions, to impose user fees to supplement appropriated funds to improve the process of reviewing applications for new animal drugs under section 512 of the Federal 

Food, Drug, and Cosmetic (FD&C) Act. 

FDA submitted a report to Congress in 1994. The report revealed 

several problems: inadequate review resources, a growing workload, and low quality applications submitted by industry. The combination of problems had slowed the approval process to an unacVerDate Jan 31 2003 05:35 Jun 06, 2003 Jkt 019010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR051.XXX SR051
3

ceptable rate. The report noted that if Congress were to consider 

legislation authorizing the FDA to impose and collect user fees, approximately $11 million would need to be collected annually. 

The problems identified in the report continue to persist. A prolonged decrease in resources in the 1990’s resulted in a slower, less 

predictable animal drug review program. In recent years, while 

funding for CVM programs, in general, has increased significantly, 

most of these increases were earmarked for CVM activities other 

than its animal drug review process. Recent modest increases in 

drug review resources, combined with intense effort on the part of 

review personnel, have resulted in some improvement in review 

times. However, the level of effort needed to accomplish this improvement cannot be maintained over the long term without increased funds. The committee believes that a sustainable, predictable animal drug approval process can only be achieved with the 

additional funds provided by this legislation. Fees collected annually would increase from $5 million in the first year to $10 million 

in the third year and remain steady through the end of the 5-year 

period proposed in the legislation. 

The veterinary pharmaceutical industry, represented by the Animal Health Institute (AHI), believes it is appropriate that the sponsors of applications, who would receive substantial and identifiable 

benefits from improved and predictable review performance, should 

share in financing the costs associated with these program enhancements. AHI and FDA strongly support an animal drug user 

fee program. 

Most of the financial provisions of this act are patterned after 

those of PDUFA, as reauthorized in 2002, and are intended to work 

in a similar fashion. This includes provisions for annual revenue 

amounts, adjustments, and triggers. These provisions have been 

tested and modified over time and are known to provide an efficient and workable financial framework for a drug user fee program. 

User fees collected under this program are to be considered an 

addition to, and not a replacement for, the annual appropriations 

amount designated for CVM through the annual appropriations 

process. This requirement is important for generic animal drug 

manufacturers, whose applications are reviewed by the same office 

at CVM that reviews new animal drug applications. Unlike the 

human generic drug industry, the animal generic drug industry is 

quite small, but it plays an important role in providing cost-effective animal health products. This legislation will not result in a decrease in resources available for generic animal drug review, and 

the committee expects that the pace of generic drug approvals will 

not be affected as a result of its enactment. 

4

IV. COST ESTIMATE

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, May 15, 2003. 

Hon. JUDD GREGG, 

Chairman, Committee on Health, Education, Labor, and Pensions, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 313, the Animal Drug User 

Fee Act of 2003. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Thomas Bradley. 

Sincerely, 

BARRY B. ANDERSON

(For Douglas Holtz-Eakin, Director). 

Enclosure.

S. 313—Animal Drug User Fee Act of 2003

Summary: S. 313 would amend the Federal Food, Drug, and Cosmetic Act to authorize the Food and Drug Administration (FDA) to 

collect fees to cover the cost of expediting the review of new and 

supplemental animal drug applications and investigational animal 

drug submissions. Such fees could be collected and made available 

for obligation only to the extent, and in the amount, provided in 

advance in appropriation acts. 

S. 313 also would require that the Secretary of Health and 

Human Services submit annual performance and fiscal reports related to the animal drug user fee program to the Congressional 

committees of jurisdiction. 

CBO estimates that implementing S. 313 would reduce net outlays by $1 million in 2004 and $4 million over the 2004–2008 period, assuming the necessary authorities are provided in appropriation acts. 

S. 313 contains no intergovernmental mandates as defined in the 

Unfunded Mandates Reform Act (UMRA) and would not affect the 

budgets of state, local, or tribal governments. 

The bill would impose private-sector mandates as defined in 

UMRA on manufacturers of new animal drugs, by requiring them 

to pay fees to the Food and Drug Administration. CBO estimates 

that the direct cost of the mandates would not exceed the annual 

threshold specified in UMRA ($117 million in 2003, adjusted annually for inflation) in any of the first five years that the mandates 

would be effective. 

Estimated cost to the Federal Government: The estimated budgetary impact of S. 313 is shown in the following table and assumes 

enactment of the bill by October 1, 2003. The costs of this legislation fall within budget function 550 (health).

By fiscal year, in millions of dollars—

2003 2004 2005 2006 2007 2008 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION: FOOD AND DRUG ADMINISTRATION

Collection of User Fees: 

Estimated Authorization Level ............................................. 0 ¥5 ¥8 ¥11 ¥11 ¥14

Estimated Outlays ............................................................... 0 ¥5 ¥8 ¥11 ¥11 ¥14

5

By fiscal year, in millions of dollars—

2003 2004 2005 2006 2007 2008 

Spending of User Fees: 

Estimated Authorization Level ............................................. 0 5 8 11 11 11

Estimated Outlays ............................................................... 0 3 7 10 10 11

Administrative Expenses: 

Estimated Authorization Level ............................................. 0 1 (1) (1) (1) 1

Estimated Outlays ............................................................... 0 1 (1) (1) (1) 1

Net Effect on Spending by the Food and Drug Administration: 

Estimated Authorization Level ............................................. 0 1 (1) (1) (1) ¥2

Estimated Outlays ............................................................... 0 ¥1 (1) (1) (1) ¥2

1 Note: = Less than $500,000. 

Basis of estimate 

Estimated authorizations 

S. 313 would establish a new user fee program to help defray 

FDA’s costs of expediting the review process for animal drugs. CBO estimates that implementing the bill would save $1 million in 2004 

and $4 million over the 2004–2008 period. 

User Fees. S. 313 would require FDA to assess and collect application and other user fees from manufacturers of drugs for animals 

to expedite the development of such drugs and the review of new 

and supplemental animal drug applications and investigational 

animal drug submissions. S. 313 would create four types of user 

fees: (1) animal drug application and supplement fees, (2) animal 

drug product fees, (3) animal drug establishment fees, and (4) animal drug sponsor fees. The fees could be refunded, waived, or reduced in certain situations. The aggregate amounts of such fees are 

specified for each fiscal year 2004 through 2008. Each year the 

amounts to be collected would be adjusted further for inflation, 

workload estimates, and other factors, when applicable. CBO assumes FDA would collect the amounts specified in the bill increased by the inflation index for wages and salaries for federal 

workers. In total, we estimate receipts from those fees would 

amount to $48 million over the 2004–2008 period. Such fees could 

be collected and made available for obligation only to the extent, 

and in the amount, provided in advance in appropriation acts. 

Under the bill, those user fees could not be assessed in a given 

year unless appropriations for salaries and expenses of FDA (excluding the amount of user fees appropriated for such fiscal year) 

in that year satisfy a maintenance-of-effort requirement: the 

amount appropriated would have to exceed the amount appropriated for 2003 by the percentage increase since 2003 in the consumer price index for all urban consumers (CPI–U). In addition, 

fees could be collected and made available to defray increases in 

the cost of resources allocated to reviewing animal drug applications only to the extent that the percentage increase in those costs 

(excluding fees) exceeds the costs for fiscal year 2003 adjusted by 

CPI–U. (The bill defines special circumstances under which the 

Secretary would be considered to have met the maintenance-of-effort requirement.) This estimate assumes that these conditions 

would be met. 

Before accounting for costs associated with additional administrative activities not covered by the user fees, CBO estimates that 

establishing the user fee program would reduce net outlays by $2 

6

million in 2004 and $7 million over the 2004–2008 period, assuming appropriation of the necessary amounts. The estimated budget 

authority for collections and spending offset each other exactly 

from 2004 through 2007, while outlays would lag slightly, resulting 

in small savings each year. For fiscal year 2008, the bill would authorize the assessment and collection of up to three months of operating reserves for the review of animal drug applications for the 

first three months of fiscal year 2009. However, the user fee program is authorized only through fiscal year 2008. CBO assumes 

that the amounts available for obligation and spending in fiscal 

year 2008 would not include those special reserve funds collected 

in that year. The difference between the estimated collections and 

spending of the user fees in fiscal year 2008 would result in savings of $3 million for that year, CBO estimates. 

Other Administrative Expenses. Based on the experience with 

similar activities of FDA, CBO assumes that funding for certain administrative activities associated with the new user fee program 

would not be fully covered by the new fees. The bill would require 

that FDA report annually to the Congress on its performance 

under the user fee program and on the fiscal status of the program. 

S. 313 also would require that FDA consult with the Congressional 

committees of jurisdiction and outside experts, including industry 

and consumer groups, and publish its recommendations concerning 

reauthorization of the user fee program. CBO estimates that the 

administrative activities associated with implementing the user fee 

program that are not covered by the user fees would cost about $2 

million over the 2004–2008 period. 

Estimated impact on State, local and tribal governments: S. 313 

contains no intergovernmental mandates as defined in UMRA and 

would not affect the budgets of state, local, or tribal governments. 

Estimated impact on the private sector: Subject to approval in an 

appropriation act, S. 313 would require manufacturers of new 

drugs for animals to pay application fees, product fees, establishment fees, and drug-sponsor fees to FDA. The application fees 

would apply to new or supplemental animal drug applications that 

are submitted after September 1, 2003. The product, establishment 

and drug sponsor fees would apply to manufacturers of new animal 

drug products that have an application pending with FDA after 

September 1, 2003. The duty to pay those fees would be a privatesector mandate under UMRA. CBO estimates that the fees collected over the 2004–2008 period would total $48 million. Those 

amounts would not exceed the annual threshold specified in UMRA 

($117 million in 2003, adjusted annually for inflation) in any of the 

first five years that the mandates would be effective. 

Estimate prepared by: Federal estimate: Julia Christensen; impact on State, local and tribal governments: Leo Lex; impact on the 

private sector: Anna Cook. 

Estimate approved by: Robert A. Sunshine, Assistant Director for 

Budget Analysis.

V. APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

The Animal Drug User Fee Act of 2003 would amend the Federal 

FD&C Act by creating a program authorizing the collection of fees 

to expedite the new animal drug review process at CVM. As such, 

the legislation would not apply to the legislative branch. 

7

VI. REGULATORY IMPACT STATEMENT

The regulatory impact of this legislation will be minimal because 

it authorizes the collection of fees to expedite and improve an existing animal drug review process at CVM. The legislation does not 

affect the substance of this process. This legislation requires the 

FDA to publish a notice of fees annually adjusted for workload and 

inflation as defined in the legislation, 60 days before the start of 

the fiscal year. Prior to consideration of reauthorization, the FDA 

is required to publish in the Federal Register a notice of recommendations for changes to the program, and a 30 day comment 

period is to be provided for written comments on the recommendations. 

VII. SECTION-BY-SECTION ANALYSIS

Section 1. Short title 

Section 1 designates the Short Title and Reference as the ‘‘Animal Drug User Fee Act of 2003,’’ which amends the Federal FD&C 

Act. 

Sec. 2. Findings 

Section 2 declares the findings of Congress related to the authorization of animal drug user fees. In particular, the fees authorized 

will be dedicated toward expediting the animal drug development 

process as set forth in the goals in a letter from the Secretary to 

the authorizing committee chairmen. 

Sec. 3. Fees relating to animal drugs 

Section 4 adds to Chapter VII, Subchapter C of the Federal 

FD&C Act, a new Part 3, ‘‘Fees Relating to Animal Drugs.’’ New Section 739. Subsection (a) provides definitions for the following 11 terms, when used related to animal drug user fees: animal drug application, supplemental animal drug application, animal drug product, animal drug establishment, investigational animal drug submission, animal drug sponsor, final dosage form, process for the review of animal drug applications, costs of resources 

allocated for the process for the review of animal drug applications, 

adjustment factor, and affiliate. These definitions are necessary to 

give effect to the procedures instituted by the authorization of the 

ADUFA. The term ‘‘process for the review of animal drug applications,’’ is a term of art that describes all of the functions related 

to the pre-market review of submissions and applications pertaining to animal drugs. The term is used throughout the document to provide simplicity and consistency in the language referring to the process funded by this legislation. ‘‘Affiliates’’ is also a 

term of art and is intended to include affiliates, partners and parent firms. An abbreviated new animal drug application—an application for approval of a generic animal drug—is not included in the 

term ‘‘animal drug application’’ and is not subject to the user fee 

program. A request to approve a change in a generic animal drug 

application after it has been approved is included in the term ‘‘supplemental animal drug application,’’ and subject to the user fee program if the supplemental approval requires data to demonstrate 

safety or effectiveness. Changes that are subject to user fees under 

the program are limited to those that extend the generic animal 

8

drug beyond the scope of its original approval, such as the addition 

of a new claim, the addition of a new species, a change in the treatment regimen, or a change in the drug’s prescription or over-thecounter status. Changes to an approved generic animal drug that 

maintain the scope of its original approval, such as a change in the 

methods used in manufacturing, are not included in the term ‘‘supplemental animal drug application.’’ The committee understands 

that CVM’s policy allows for so-called ‘‘hybrids,’’ where a generic 

animal drug applicant submits a request to copy the pioneer animal drug product and, at the same time, a request to make a 

change that differs from the pioneer animal drug product that requires data to demonstrate safety or effectiveness. In such circumstances, the committee intends that only the request for a 

change would be subject to the user fee program, and the request 

for a change would be construed to meet the definition of a ‘‘supplemental animal drug application.’’ Subsection (b) allows fees authorized under ADUFA to be assessed beginning on October 1, 2003. The fees authorized are animal drug application and supplement fees, animal drug product 

fees, animal drug establishment fees, and animal drug sponsor 

fees. Application fees, in general, are due upon submission of the 

application. Fees paid and not refunded for filed applications that 

were not approved or were withdrawn do not have to be paid a second time. If an application is refused for filing, the Secretary must 

refund 75 percent of the fee. If the application is withdrawn, the 

Secretary has sole discretion to refund the fee or any portion of the 

fee. Product, establishment, and sponsor fees are assessed in any 

fiscal year when certain specified criteria are met. Only one such 

fee per product, establishment, or sponsor must be paid each year. 

Transition rules for product, establishment, and sponsor fees related to products under review at the time of implementation of 

this law are specified.

Subsection (c) lists the total fee revenues for fiscal years 2004 

through 2008 for application and supplement fees and for product, 

establishment, and sponsor fees. 

Subsection (d) sets forth adjustments to take into account 

changes in workload and the cost of performing the work. The section provides for inflation, workload, final year and annual fee adjustments. The section also sets forth a limit on the total amount 

of fees charged for any year, not to exceed total costs for that fiscal 

year. 

Subsection (e) sets the rules for the waiver or reduction of fees. 

The waivers and reductions are for those situations in which: (1) 

assessing the fees would be a barrier to innovation; (2) the fees exceed the anticipated costs; (3) the animal drug application or supplemental application is solely to provide for use of an approved 

Type A drug in a Type B medicated feed intended for use in the 

manufacture of Type C free-choice medicated feeds or a Type C 

free-choice medicated feed. (These are supplemental applications 

that occur usually after the Type A medicated article is approved. 

The Type A article can be used for a variety of feeding systems. 

However, when the Type A article is to be used in a ‘‘free-choice’’

feeding system, FDA requires the sponsor do a study to determine 

that the animals do not over eat or under eat the prerequisite 

amount of drug. They file this study as a supplemental new animal 

9

drug application. If FDA did not waive the fee for this specific type 

of application, the sponsor will be charged twice for the same new 

animal drug product.); (4) the waiver or reduction is necessary to 

promote the availability of animal drugs for minor uses or minor 

species; or (5) the sponsor is a small business submitting its first 

animal drug application. Periodically, the Secretary shall publish a 

list of companies certifying they qualify for a small business waiver. 

Subsection (f) states that, due to a failure to pay the required 

fees, the Secretary may consider an application or submission incomplete or discontinue review of an application or submission. 

Subsection (g) states fees may not be assessed for any fiscal year 

after fiscal year 2003 unless appropriations are at least equal to 

the adjusted salaries and expenses for FDA for fiscal year 2003, excluding fees appropriated. If the trigger conditions for collecting 

fees are not met until later in a year, the full year’s fees will still 

be required. 

Subsection (h) authorizes appropriations (adjusted for workload 

and inflation) of $5 million, $8 million, $10 million, $10 million, 

$10 million for fiscal years 2004 through 2008, respectively, in 

amounts consistent with the total fee revenue amounts set forth in 

subsection (c). Such collected fees remain available until expended 

without fiscal year limitation. 

Subsection (i) provides that fees overdue by 30 days shall be 

treated as a claim of the U.S. Government subject to subchapter II 

of Chapter 37 of 31 U.S.C. 

Subsection (j) provides that written requests for waivers must be 

submitted within 180 days after the fee is due to qualify for consideration. 

Subsection (k) states that the legislation may not be construed 

to require the number of full time equivalents in the Department 

of Health and Human Services to be reduced to offset full time 

equivalents under this user fee legislation. 

Subsection (l) requires the FDA, to the extent practicable, to take 

appropriate action to segregate the review of generic animal drug 

applications, which are not under the user fee program, from the 

user fee funded program. It also requires the agency to adopt other 

administrative procedures to ensure that the review times for generic animal drugs do not increase from their current level due to 

activities under the user fee program. 

Sec. 4. Accountability and reports 

In developing recommendations to Congress for goals and plans 

for reauthorization of the legislation, the Secretary is required to 

consult with the authorizing committees, scientific and academic 

experts, veterinary professionals, consumer advocacy groups and 

the regulated industry in developing recommendations. The recommendations are to be published in the Federal Register, and a 

public meeting is to be held and a 30-day comment period is to be 

provided for written comments on the recommendations. 

This section requires an annual Performance Report and an annual Financial Report to be submitted to the authorizing committees by the Secretary. The performance goals are set forth in a separate goals letter referenced in section 2 of the legislation. 

10

Sec. 5. Sunset 

Section 5 provides that the amendments made by section 3 (relating to definitions and to the authority to assess and use drug 

fees) cease to be effective on October 1, 2008. The section further 

provides that section 3, as it relates to annual reports, will cease 

to be effective 120 days after October 1, 2008. The additional 120 

days will allow the animal drug user fee reports for fiscal year 

2008 to be prepared and submitted. 

VIII. CHANGES IN EXISTING LAW

In compliance with rule XXVI paragraph 12 of the Standing 

Rules of the Senate, the following provides a print of the statute 

or the part or section thereof to be amended or replaced (existing 

law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, existing law in which no change is proposed 

is shown in roman): 

FEDERAL FOOD, DRUG, AND COSMETIC ACT 

* * * * * * * 

ANIMAL DRUG USER FEE ACT OF 2003 

* * * * * * * 

CHAPTER VII—GENERAL AUTHORITY 

Subchapter A—General Administrative Provisions 

* * * * * * * 

Subchapter C—Fees 

PART 1—FREEDOM OF INFORMATION FEES 

* * * * * * *

øPART 3—FEES RELATING TO ANIMAL DRUGS¿

PART 4—FEES RELATING TO ANIMAL DRUGS 

øSEC. 738. DEFINITIONS.¿

ø‘‘For purposes of this subchapter:¿

SEC. 739. AUTHORITY TO ASSESS AND USE ANIMAL DRUG FEES.

(a) DEFINITIONS.—For purposes of this subchapter: 

(1) The term ‘‘animal drug application’’ means an application 

for approval of any new animal drug submitted under section 

512(b)(1). Such term does not include either a new animal drug 

application submitted under section 512(b)(2) or a supplemental 

animal drug application. 

(2) The term ‘‘supplemental animal drug application’’

means—

(A) a request to the Secretary to approve a change in an 

animal drug application which has been approved; or 

11

(B) a request to the Secretary to approve a change to an 

application approved under section 512(c)(2) for which data 

with respect to safety or effectiveness are required. 

(3) The term ‘‘animal drug product’’ means each specific 

strength or potency of a particular active ingredient or ingredients in final dosage form marketed by a particular manufacturer or distributor, which is uniquely identified by the labeler 

code and product code portions of the national drug code, and 

for which an animal drug application or a supplemental animal drug application has been approved. 

(4) The term ‘‘animal drug establishment’’ means a foreign or 

domestic place of business which is at one general physical location consisting of one or more buildings all of which are within 5 miles of each other, at which one or more animal drug 

products are manufactured in final dosage form. 

(5) The term ‘‘investigational animal drug submission’’ means—

(A) the filing of a claim for an investigational exemption 

under section 512(j) for a new animal drug intended to be 

the subject of an animal drug application or a supplemental animal drug application, or 

(B) the submission of information for the purpose of enabling the Secretary to evaluate the safety or effectiveness of 

an animal drug application or supplemental animal drug 

application in the event of their filing. 

(6) The term ‘‘animal drug sponsor’’ means either an applicant named in an animal drug application, except for an approved application for which all subject products have been removed from listing under Section 510, or a person who has submitted an investigational animal drug submission that has not 

been terminated or otherwise rendered inactive by the Secretary. 

(7) The term ‘‘final dosage form’’ means, with respect to an 

animal drug product, a finished dosage form which is approved 

for administration to an animal without substantial further 

manufacturing. Such term includes animal drug products intended for mixing in animal feeds. 

(8) The term ‘‘process for the review of animal drug applications’’ means the following activities of the Secretary with respect to the review of animal drug applications, supplemental 

animal drug applications, and investigational animal drug 

submissions: 

(A) The activities necessary for the review of animal drug 

applications, supplemental animal drug applications, and 

investigational animal drug submissions.

(B) The issuance of action letters which approve animal 

drug applications or supplemental animal drug applications or which set forth in detail the specific deficiencies in 

animal drug applications, supplemental animal drug applications, or investigational animal drug submissions and, 

where appropriate, the actions necessary to place such applications, supplements or submissions in condition for approval. 

(C) The inspection of animal drug establishments and 

other facilities undertaken as part of the Secretary’s review 

of pending animal drug applications, supplemental animal 

12

drug applications, and investigational animal drug submissions. 

(D) Monitoring of research conducted in connection with 

the review of animal drug applications, supplemental animal drug applications, and investigational animal drug 

submissions. 

(E) The development of regulations and policy related to 

the review of animal drug applications, supplemental animal drug applications, and investigational animal drug 

submissions. 

(F) Development of standards for products subject to review. 

(G) Meetings between the agency and the animal drug 

sponsor. 

(H) Review of advertising and labeling prior to approval 

of an animal drug application or supplemental animal 

drug application, but not such activities after an animal 

drug has been approved. 

(9) The term ‘‘costs of resources allocated for the process for 

the review of animal drug applications’’ means the expenses incurred in connection with the process for the review of animal 

drug applications for—

(A) officers and employees of the Food and Drug Administration, contractors of the Food and Drug Administration, 

advisory committees consulted with respect to the review of 

specific animal drug applications, supplemental animal 

drug applications, or investigational animal drug submissions, and costs related to such officers, employees, committees, and contractors, including costs for travel, education, 

and recruitment and other personnel activities, 

(B) management of information, and the acquisition, 

maintenance, and repair of computer resources, 

(C) leasing, maintenance, renovation, and repair of facilities and acquisition, maintenance, and repair of fixtures, 

furniture, scientific equipment, and other necessary materials and supplies, and 

(D) collecting fees under section 739 and accounting for 

resources allocated for the review of animal drug applications, supplemental animal drug applications, and investigational animal drug submissions. 

(10) The term ‘‘adjustment factor’’ applicable to a fiscal year 

refers to the formula set forth in section 735(8) with the base 

or comparator year being 2003. 

(11) The term ‘‘affiliate’’ refers to the definition set forth in 

section 735(9).

ø‘‘SEC. 739. AUTHORITY TO ASSESS AND USE ANIMAL DRUG FEES.¿

ø(a)¿ (b) TYPES OF FEES.—Beginning in fiscal year 2004, the Secretary shall assess and collect fees in accordance with this section 

as follows:

(1) ANIMAL DRUG APPLICATION AND SUPPLEMENT FEE.—

(A) IN GENERAL.—Each person that submits, on or after 

September 1, 2003, an animal drug application or a supplemental animal drug application shall be subject to a fee 

as follows:

13

(i) A fee established in subsection ø(b)¿ (c) for an animal drug application; and 

(ii) A fee established in subsection ø(b)¿ (c) for a supplemental animal drug application for which safety or 

effectiveness data are required, in an amount that is 

equal to 50 percent of the amount of the fee under 

clause (i).

(B) PAYMENT.—The fee required by subparagraph (A) 

shall be due upon submission of the animal drug application or supplemental animal drug application. 

(C) EXCEPTION FOR PREVIOUSLY FILED APPLICATION OR

SUPPLEMENT.—If an animal drug application or a supplemental animal drug application was submitted by a person 

that paid the fee for such application or supplement, was 

accepted for filing, and was not approved or was withdrawn (without a waiver or refund), the submission of an 

animal drug application or a supplemental animal drug 

application for the same product by the same person (or the 

person’s licensee, assignee, or successor) shall not be subject 

to a fee under subparagraph (A). 

(D) REFUND OF FEE IF APPLICATION REFUSED FOR FIL- ING.—The Secretary shall refund 75 percent of the fee paid 

under subparagraph (B) for any animal drug application 

or supplemental animal drug application which is refused 

for filing. 

(E) REFUND OF FEE IF APPLICATION WITHDRAWN.—If an 

animal drug application or a supplemental animal drug 

application is withdrawn after the application or supplement was filed, the Secretary may refund the fee or portion 

of the fee paid under subparagraph B if no substantial 

work was performed on the application or supplement after 

the application or supplement was filed. The Secretary 

shall have the sole discretion to refund the fee under this 

paragraph. A determination by the Secretary concerning a 

refund under this paragraph shall not be reviewable.

(2) ANIMAL DRUG PRODUCT FEE.—Each person— (A) who is named as the applicant in an animal drug application or supplemental animal drug application for an 

animal drug product which has been submitted for listing 

under Section 510, and 

(B) who, after September 1, 2003, had pending before the 

Secretary an animal drug application or supplemental animal drug application;

shall pay for each such animal drug product the annual fee established in subsection ø(b)¿ (c). Such fee shall be payable for 

the fiscal year in which the animal drug product is first submitted for listing under Section 510, or is submitted for relisting under section 510 if the animal drug product has been 

withdrawn from listing and relisted. After such fee is paid for 

that fiscal year, such fee shall be payable on or before January 

31 of each year. Such fee shall be paid only once for each animal drug product for a fiscal year in which the fee is payable.

(3) ANIMAL DRUG ESTABLISHMENT FEE.—Each person—

(A) who owns or operates, directly or through an affiliate, 

an animal drug establishment, and 

14

(B) who is named as the applicant in an animal drug application or supplemental animal drug application for an 

animal drug product which has been submitted for listing 

under Section 510, and 

(C) who, after September 1, 2003, had pending before the 

Secretary an animal drug application or supplemental animal drug application,

shall be assessed an annual fee established in subsection ø(b)¿

(c) for each animal drug establishment listed in its approved 

animal drug application as an establishment that manufactures the animal drug product named in the application. The 

annual establishment fee shall be assessed in each fiscal year 

in which the animal drug product named in the application is 

assessed a fee under paragraph (2) unless the animal drug establishment listed in the application does not engage in the 

manufacture of the animal drug product during the fiscal year. 

The fee shall be paid on or before January 31 of each year. The 

establishment shall be assessed only one fee per fiscal year 

under this section, provided, however, that where a single establishment manufactures both animal drug products and prescription drug products, as defined in section 735(3), such establishment shall be assessed both the animal drug establishment fee and the prescription drug establishment fee, as set 

forth in section 736(a)(2), within a single fiscal year.

(4) ANIMAL DRUG SPONSOR FEE.—Each person—

(A) who meets the definition of an animal drug sponsor 

within a fiscal year; and 

(B) who, after September 1, 2003, had pending before the 

Secretary an animal drug application, a supplemental animal drug application, or an investigational animal drug 

submission,

shall be assessed an annual fee established under subsection 

ø(b)¿ (c). The fee shall be paid on or before January 31 of each 

year. Each animal drug sponsor shall pay only one such fee 

each fiscal year. 

ø(b)¿ (c) FEE AMOUNTS.—Except as provided in subsection 

ø(a)(1)¿ (b)(1) and subsections ø(c), (d), (f), and (g),¿ (d), (e), (g), and 

(h), the fees required under subsection ø(a)¿ (b) shall be established 

to generate fee revenue amounts as follows: 

(1) TOTAL FEE REVENUES FOR APPLICATION AND SUPPLEMENT

FEES.—The total fee revenues to be collected in animal drug application fees under subsection ø(a)(1)(A)(i)¿ (b)(1)(A)(i) and 

supplemental animal drug application fees under subsection 

ø(a)(1)(A)(ii)¿ (b)(1)(A)(ii) shall be $1,250,000 in fiscal year 

2004, $2,000,000 in fiscal year 2005, and $2,500,000 in fiscal 

years 2006 and 2007. 

(2) TOTAL FEE REVENUES FOR PRODUCT FEES.—The total fee 

revenues to be collected in product fees under subsection 

ø(a)(2)¿ (b)(2) shall be $1,250,000 in fiscal year 2004, 

$2,000,000 in fiscal year 2005, and $2,500,000 in fiscal years 

2006 and 2007. 

(3) TOTAL FEE REVENUES FOR ESTABLISHMENT FEES.—The 

total fee revenues to be collected in establishment fees under 

subsection ø(a)(3)¿ (b)(3) shall be $1,250,000 in fiscal year 

15

2004, $2,000,000 in fiscal year 2005, and $2,500,000 in fiscal 

years 2006 and 2007. 

(4) TOTAL FEE REVENUES FOR SPONSOR FEES.—The total fee 

revenues to be collected in sponsor fees under subsection 

ø(a)(4)¿ (b)(4) shall be $1,250,000 in fiscal year 2004, $2,000,000 in fiscal year 2005, and $2,500,000 in fiscal years 

2006 and 2007. 

ø(c)¿ (d) ADJUSTMENTS.— (1) INFLATION ADJUSTMENT.—The fees and total fee revenues 

established in subsection ø(b)¿ (c) shall be adjusted by the Secretary by notice, published in the Federal Register, for a fiscal 

year according to the formula set forth in section 736(c)(1).

(2) WORKLOAD ADJUSTMENT.—After the fee revenues are adjusted for inflation in accordance with subparagraph (1), the fee 

revenues shall be further adjusted each fiscal year after fiscal 

year 2004 to reflect changes in review workload. With respect to 

such adjustment: 

(A) This adjustment shall be determined by the Secretary 

based on a weighted average of the change in the total 

number of animal drug applications, supplemental animal 

drug applications for which data with respect to safety or 

effectiveness are required, manufacturing supplemental 

animal drug applications, investigational animal drug 

study submissions, and investigational animal drug protocol submissions submitted to the Secretary. The Secretary 

shall publish in the Federal Register the fees resulting from 

this adjustment and the supporting methodologies.

(B) Under no circumstances shall this workload adjustment result in fee revenues for a fiscal year that are less 

than the fee revenues for that fiscal year established in subsection ø(b),¿ (c), as adjusted for inflation under subparagraph ø(c)(1)¿ (d)(1).

(3) FINAL YEAR ADJUSTMENT.—For fiscal year 2007, the Secretary may further increase the fees to provide for up to 3 

months of operating reserves of carryover user fees for the process for the review of animal drug applications for the first 3 

months of fiscal year 2008. If the Food and Drug Administration has carryover balances for the process for the review of animal drug applications in excess of 3 months of such operating 

reserves, then this adjustment will not be made. If this adjustment is necessary, then the rationale for the amount of the increase shall be contained in the annual notice setting fees for 

fiscal year 2007.

(4) ANNUAL FEE SETTING.—The Secretary shall establish, 60 

days before the start of each fiscal year that begins after September 30, 2003, for that fiscal year, animal drug application 

fees, supplemental animal drug application fees, animal drug 

sponsor fees, animal drug establishment fees, and animal drug 

product fees based on the revenue amounts established under 

subsection ø(b)¿ (c) and the adjustments provided under this 

subsection.

(5) LIMIT.—The total amount of fees charged, as adjusted 

under this subsection, for a fiscal year may not exceed the total 

costs for such fiscal year for the resources allocated for the process for the review of animal drug applications.

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ø(d)¿ (e) FEE WAIVER OR REDUCTION.— (1) IN GENERAL.—The Secretary shall grant a waiver from or 

a reduction of 1 or more fees assessed under subsection ø(a)¿ (b) 

where the Secretary finds that— (A) the assessment of the fee would present a significant 

barrier to innovation because of limited resources available 

to such person or other circumstances, 

(B) the fees to be paid by such person will exceed the anticipated present and future costs incurred by the Secretary 

in conducting the process for the review of animal drug applications for such person,

(C) the animal drug application or supplemental animal 

drug application is intended solely to provide for use of the 

animal drug in— (i) a Type B medicated feed (as defined in section 

558.3(b)(3) of title 21, Code of Federal Regulations (or 

any successor regulation)) intended for use in the manufacture of Type C free-choice medicated feeds, or 

(ii) a Type C free-choice medicated feed (as defined 

in section 558.3(b)(4) of title 21, Code of Federal Regulations (or any successor regulation)), 

(D) the animal drug application or supplemental animal 

drug application is intended solely to provide for a minor 

use or minor species indication, or 

(E) the sponsor involved is a small business submitting 

its first animal drug application to the Secretary for review. 

(2) USE OF STANDARD COSTS.—In making the finding in paragraph (1)(B), the Secretary may use standard costs. 

(3) RULES FOR SMALL BUSINESSES.— (A) DEFINITION.—In paragraph (1)(D), the term ‘‘small 

business’’ means an entity that has fewer than 500 employees, including employees of affiliates. 

(B) WAIVER OF APPLICATION FEE.—The Secretary shall 

waive under paragraph (1)(D) the application fee for the 

first animal drug application that a small business or its 

affiliate submits to the Secretary for review. After a small 

business or its affiliate is granted such a waiver, the small 

business or its affiliate shall pay application fees for all 

subsequent animal drug applications and supplemental 

animal drug applications for which safety or effectiveness 

data are required in the same manner as an entity that 

does not qualify as a small business. 

(C) CERTIFICATION.—The Secretary shall require any person who applies for a waiver under paragraph (1)(D) to certify their qualification for the waiver. The Secretary shall 

periodically publish in the Federal Register a list of persons 

making such certifications.

ø(e)¿ (f) EFFECT OF FAILURE TO PAY FEES.—An animal drug application or supplemental animal drug application submitted by a 

person subject to fees under subsection ø(a)¿ (b) shall be considered 

incomplete and shall not be accepted for filing by the Secretary until 

all fees owed by such person have been paid. An investigational animal drug submission under section 738(5)(B) that is submitted by 

a person subject to fees under subsection ø(a)¿ (b) shall be considVerDate Jan 31 2003 05:35 Jun 06, 2003 Jkt 019010 PO 00000 Frm 00016 Fmt 6659 Sfmt 6602 E:\HR\OC\SR051.XXX SR051
17

ered incomplete and shall not be accepted for review by the Secretary until all fees owed by such person have been paid. The Secretary may discontinue review of any animal drug application, supplemental animal drug application or investigational animal drug 

submission from a person if such person has not submitted for payment all fees owed under this section by 30 days after the date upon 

which they are due. 

ø(f)¿ (g) ASSESSMENT OF FEES.—

(1) LIMITATION.—Fees may not be assessed under subsection 

(a) for a fiscal year beginning after fiscal year 2003 unless appropriations for salaries and expenses of the Food and Drug 

Administration for such fiscal year (excluding the amount of 

fees appropriated for such fiscal year) are equal to or greater 

than the amount of appropriations for the salaries and expenses 

of the Food and Drug Administration for the fiscal year 2003 

(excluding the amount of fees appropriated for such fiscal year) 

multiplied by the adjustment factor applicable to the fiscal year 

involved. 

(2) AUTHORITY.—If the Secretary does not assess fees under 

subsection ø(a)¿ (b) during any portion of a fiscal year because 

of paragraph (1) and if at a later date in such fiscal year the 

Secretary may assess such fees, the Secretary may assess and 

collect such fees, without any modification in the rate, for animal drug applications, supplemental animal drug applications, 

investigational animal drug submissions, sponsors, animal 

drug establishments and animal drug products at any time in 

such fiscal year notwithstanding the provisions of subsection (a) 

relating to the date fees are to be paid. 

ø(g)¿ (h) CREDITING AND AVAILABILITY OF FEES.—

(1) IN GENERAL.—Fees authorized under subsection ø(a)¿ (b) 

shall be collected and available for obligation only to the extent 

and in the amount provided in advance in appropriations Acts. 

Such fees are authorized to be appropriated to remain available 

until expended. Such sums as may be necessary may be transferred from the Food and Drug Administration salaries and expenses appropriation account without fiscal year limitation to 

such appropriation account for salary and expenses with such 

fiscal year limitation. The sums transferred shall be available 

solely for the process for the review of animal drug applications.

(2) COLLECTIONS AND APPROPRIATION ACTS.—

(A) IN GENERAL.—The fees authorized by this section—

(i) shall be retained in each fiscal year in an amount 

not to exceed the amount specified in appropriation 

Acts, or otherwise made available for obligation for 

such fiscal year, and 

(ii) shall only be collected and available to defray increases in the costs of the resources allocated for the 

process for the review of animal drug applications (including increases in such costs for an additional number of full-time equivalent positions in the Department 

of Health and Human Services to be engaged in such 

process) over such costs, excluding costs paid from fees 

collected under this section, for fiscal year 2003 multiplied by the adjustment factor. 

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(B) COMPLIANCE.—The Secretary shall be considered to 

have met the requirements of subparagraph (A)(ii) in any 

fiscal year if the costs funded by appropriations and allocated for the process for the review of animal drug applications—

(i) are not more than 3 percent below the level specified in subparagraph (A)(ii); or 

(ii)(I) are more than 3 percent below the level specified in subparagraph (A)(ii), and fees assessed for the 

fiscal year following the subsequent fiscal year are decreased by the amount in excess of 3 percent by which 

such costs fell below the level specified in subparagraph (A)(ii); and 

(II) such costs are not more than 5 percent below the 

level specified in subparagraph (A)(ii). 

(3) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated for fees under this section— (A) $5,000,000 for fiscal year 2004; 

(B) $8,000,000 for fiscal year 2005; 

(C) $10,000,000 for fiscal year 2006; and 

(D) $10,000,000 for fiscal year 2007; as adjusted to reflect 

adjustments in the total fee revenues made under this section and changes in the total amounts collected by animal 

drug application fees, supplemental animal drug application fees, animal drug sponsor fees, animal drug establishment fees, and animal drug product fees. 

(4) OFFSET.—Any amount of fees collected for a fiscal year 

under this section that exceeds the amount of fees specified in 

appropriations Acts for such fiscal year shall be credited to the 

appropriation account of the Food and Drug Administration as 

provided in paragraph (1), and shall be subtracted from the 

amount of fees that would otherwise be authorized to be collected under this section pursuant to appropriation Acts for a 

subsequent fiscal year.

ø(h)¿ (i) COLLECTION OF UNPAID FEES.—In any case where the 

Secretary does not receive payment of a fee assessed under subsection ø(a)¿ (b) within 30 days after it is due, such fee shall be 

treated as a claim of the United States Government subject to subchapter II of chapter 37 of title 31, United States Code. 

ø(i)¿ (j) WRITTEN REQUESTS FOR WAIVERS, REDUCTIONS, AND REFUNDS.—To qualify for consideration for a waiver or reduction 

under subsection ø(d),¿ (e), or for a refund of any fee collected in 

accordance with subsection ø(a),¿ (b), a person shall submit to the 

Secretary a written request for such waiver, reduction, or refund not 

later than 180 days after such fee is due. 

ø(j)¿ (k) CONSTRUCTION.—This section may not be construed to require that the number of full-time equivalent positions in the Department of Health and Human Services, for officers, employees, 

and advisory committees not engaged in the process of the review 

of animal drug applications, be reduced to offset the number of officers, employees, and advisory committees so engaged. 

ø(k)¿ (l) ADMINISTRATIVE PROCEDURE.—The Secretary shall— (1) to the extent practicable, segregate the review of abbreviated new animal drug applications from the process for the 

review of animal drug applications, and 

19

(2) adopt other administrative procedures to ensure that review times of abbreviated new animal drug applications do not 

increase from their current level due to activities under the user 

fee program. 

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