[Federal Register Volume 62, Number 236 (Tuesday, December 9, 1997)]
[Notices]
[Pages 64849-64851]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32164]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration


Establishment of Prescription Drug User Fee Rates for Fiscal Year 
1998

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing the rates 
for prescription drug user fees for Fiscal Year (FY) 1998. The 
Prescription Drug User Fee Act of 1992 (the PDUFA), as amended by the 
Food and Drug Administration Modernization Act of 1997 (the FDAMA), 
authorizes FDA to collect user fees for certain applications for 
approval of drug and biological products, on establishments where the 
products are made, and on such products. Fees for applications for FY 
1998 were set by the FDAMA, subject to adjustment for inflation. Total 
application fee revenues fluctuate with FDA application review 
workload. Fees for establishments and products are based on the 
revenues to be derived from applications.

FOR FURTHER INFORMATION CONTACT: Michael E. Roosevelt, Office of 
Financial Management (HFA-120), Food and Drug Administration, 5600 
Fishers Lane, Rockville, MD 20857, 301-827-5088.

SUPPLEMENTARY INFORMATION:

I. Background

    The PDUFA (Pub. L. 102-571), as amended by the FDAMA (Pub. L. 105-
115), establishes three different kinds of user fees. Fees are assessed 
on: (1) Certain types of applications and supplements for approval of 
drug and biologic products, (2) certain establishments where such 
products are made, and (3) certain products (21 U.S.C. 379h(a)). When 
certain conditions are met, FDA may waive or reduce fees (21 U.S.C. 
379h(d)). Under the PDUFA, as amended, one-third of the total user fee 
revenue for each FY must come from each of the three types of fees.
    For 1998 through 2002, under the amendments enacted in the FDAMA, 
the total fee revenues and fee rates for application fees are set in 
the statute, but are to be adjusted annually for cumulative inflation 
since 1997. In addition, total application fee revenues are structured 
to increase or decrease each year as the number of applications 
submitted to FDA increases or decreases.
    For 1998 through 2002, FDA is authorized to set fee rates for 
establishment and for product categories each year, so that the total 
fee revenue from each of these two categories will equal the total 
revenue FDA expects to collect from application fees that year. This 
procedure continues the arrangement under which one-third of the total 
user fee revenue comes from each of the three types of fees.
    This notice establishes fee rates for FY 1998 for application, 
establishment, and product fees. These fees are retroactive to October 
1, 1997, and will remain in effect through September 30, 1998. Prior to 
the enactment of the FDAMA, only half of the application fee was due 
upon submission of the application, and the second half was due when 
FDA issued an action letter after review of the application. Beginning 
in FY 1998, the entire application fee is due upon submission of the 
application to FDA. For fees already paid on applications and 
supplements submitted on or after October 1, 1997, FDA will bill 
applicants for the difference between fees paid and fees due under the 
new fee schedules and under the new requirement that application fees 
be paid in full at the time an application is submitted. For 
applications and supplements submitted after December 31, 1997, the new 
fee schedule must be used. Invoices for establishment and product fees 
for FY 1998 will be issued in December 1997, using the new fee 
schedules.

II. Inflation and Workload Adjustment Process

    The PDUFA, as amended by the FDAMA, provides that fee rates for 
each FY shall be adjusted by notice in the Federal Register. The 
adjustment must reflect the greater of : (1) The total percentage 
change that occurred during the preceding FY in the Consumer Price 
Index (the CPI) (all items; U.S. city average), or (2) the total 
percentage pay change for that FY for Federal employees, as adjusted 
for any locality-based payment applicable to employees stationed in the 
District of Columbia. The FDAMA provides for this annual adjustment to 
be cumulative and compounded annually after 1997 (see 21 U.S.C. 
379h(c)).
    The FDAMA also structures the total application fee revenue to 
increase or decrease each year as the number of applications submitted 
to FDA increases or decreases. This provision allows revenues to rise 
or fall as FDA's workload rises or falls. To implement this provision 
each year, FDA will estimate the number of applications it anticipates 
receiving, based on its actual receipts the previous year, and making 
an allowance for waivers and refunds. FDA has made similar estimates 
each year since 1993 under the PDUFA fee setting process. The number of 
applications estimated by this process will then be multiplied by the 
inflation-adjusted statutory application fee. This calculation will 
produce the FDA's estimate of total application fee revenues to be 
received each year.
    The PDUFA also provides that FDA shall adjust the rates for 
establishment and product fees so that the total revenues from each of 
these categories will be equal to the revenues FDA expects to collect 
from application fees that year. The PDUFA, as amended, provides that 
the new fee rates based on these calculations be published within 60 
days after the end of each FY (21 U.S.C. 379h(c)(2)).

III. Inflation and Workload Adjustment for Application Fees and 
Total Application Fee Revenue

    The FDAMA provides that the application fee rates set out in the 
statute be adjusted each year for cumulative inflation. It also 
provides for total application fee revenues to increase or decrease, 
based on increases or decreases in FDA's application review workload.

A. Inflation Adjustment to Application Fees

    Application fees are assessed at different rates for qualifying 
applications depending on whether the applications require clinical 
data on safety or effectiveness (other than bioavailability or 
bioequivalence studies) (21 U.S.C. 379h(a)(1)(A), and 379(h)(b)). 
Applications that require clinical data are subject to the full 
application fee. Applications that do not require clinical data and 
supplements that require clinical data are assessed one-half the fee of 
applications that require clinical data. If FDA refuses to file an 
application or supplement, 75 percent of the application fee is 
refunded to the applicant (21 U.S.C. 379h(a)(1)(D)).
    The application fees described above are set out in the FDAMA for 
1998 ($250,704 for applications requiring clinical data, and $125,352 
for applications not requiring clinical data or supplements requiring 
clinical data) (21 U.S.C. 379h(b)(1)), but must be adjusted for 
inflation. For FY 1997, the total increase in the CPI was 2.15 percent, 
whereas the increase in applicable Federal salaries for FY 1998 is 2.45 
percent. The higher of these, 2.45 percent, is to be used for computing 
the inflation adjustment for FY 1998. Since

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1998 is the first year after 1997, the base year from which inflation 
accumulates and is compounded, there is no cumulative, compounded 
inflation from previous years to be added to this percentage for FY 
1998. The adjusted application fee rates are computed by applying the 
inflation percentage for FY 1998 (102.45 percent) to the FY 1998 
statutory application fee rates stated above. For FY 1998 the adjusted 
application fee rates are $256,846 for applications requiring clinical 
data, and $128,423 for applications not requiring clinical data or 
supplements requiring clinical data. These amounts must be submitted 
with all applications during FY 1998.

B. Workload Adjustment and Total Application Fee Revenue

    Total application fee revenues for 1998 will be determined by the 
number of applications FDA receives from October 1, 1997, through 
September 30, 1998, multiplied by the fee rates calculated in the 
preceding paragraph. Before fees can be set for establishment and 
product fee categories, each of which are to equal total revenues FDA 
collects from application fees, FDA must estimate its total 1998 
application fee revenues. To do this, FDA calculates the number of full 
application fees FDA received in 1997 and uses that figure as a basis 
for estimating 1998 application volume.
    For FY 1997, FDA received, filed, and assessed fees for 118 
applications that require clinical data, 19 applications that did not 
require clinical data, and 127 supplements that require clinical data. 
Because applications that do not require clinical data and supplements 
that require clinical data are assessed only one-half the full fee, the 
equivalent number of these applications subject to the full fee is 
determined by summing these categories and dividing by 2. This amount 
is then added to the number of applications that require clinical data 
to arrive at the equivalent number of applications subject to full 
application fees.
    In addition, as of September 30, 1997, FDA assessed fees for one 
application that required clinical data, one application that did not 
require clinical data, and one supplement, all of which were refused 
filing or withdrawn before filing. After refunds, the full application 
paid one-fourth the full application fee and is counted as one-fourth 
of an application, and the application that did not require clinical 
data and the supplement each paid one-eighth of the full application 
fee and are each counted as one-eighth of an application.
    Using this methodology, the approximate equivalent number of 
applications that required clinical data and were assessed fees in FY 
1997 was 192, before any further decisions were made on requests for 
waivers or reductions. Under the FDAMA small businesses will receive a 
full waiver for their first application (rather than waiver of half the 
fee as was the case under the PDUFA). In addition, the FDAMA excludes 
from fees bulk biological products that are further manufactured, and 
provides new exceptions for certain orphan product applications and 
certain supplements for pediatric indications. Because of these 
changes, in FY 1998 FDA estimates that approximately 40 fewer 
equivalents of full applications will generate fees, or fees for them 
will be subject to waivers or reductions. This number is a substantial 
increase over the estimate that FDA would waive or reduce 16 
equivalents of full fee applications made 1 year ago when fees for 1997 
were established. Therefore, FDA estimates that approximately 152 
equivalent applications that require clinical data will qualify for 
fees in FY 1998, after allowing for possible waivers or reductions.
    The following calculations summarize the determination of FY 1998 
application estimates, based on 1997 data:
<bullet> 118 applications that require clinical data, + (19<divide>2) 
applications that do not require clinical data, + (127<divide>2) 
supplements that require clinical data, + (1<divide>4) applications 
that require clinical data and which FDA refuses to file or the sponsor 
withdraws before filing + (2<divide>8) supplements which FDA refuses to 
file or the sponsor withdraws before filing minus 40 waivers, 
reductions or exceptions = 152 (the estimated number of ``full fee'' 
applications for FY 1998 based on FY 1997 experience, and rounded up).
    The total FY 1998 application fee revenue is estimated by 
multiplying the adjusted application fee rate ($256,846) by the 
equivalent number of applications projected to qualify for fees in FY 
1998 (152), for a total estimated application fee revenue in 1998 of 
$39,040,592. This is the amount of revenue that FDA is also expected to 
derive from establishment fees and from product fees.

IV. Fee Calculations for Establishment, and Product Fees

A. Establishment Fees

    The FY 1997 establishment fee was based on an estimate of 250 
establishments subject to fees. In FY 1997, 263 establishments 
qualified for fees before any decisions on requests for waivers or 
reductions were made. Under the FDAMA, the basis for assessment of 
establishment fees is amended. The responsibility for the fee is placed 
on the applicant whose product is manufactured at the facility, and not 
on the owner of the facility. Contract manufacturing establishments 
will now be subject to fees, to be paid by the applicant whose product 
is manufactured at that establishment. FDA believes this will subject 
additional establishments to fees, and estimates that approximately 275 
establishments will qualify for fees in FY 1998 after allowing for 
possible waivers or reductions. Thus, the number 275 is used in setting 
the new establishment fee rate. The fee per establishment is determined 
by dividing the adjusted total fee revenue to be derived from 
establishments ($39,040,592), by the estimated 275 establishments, for 
an establishment fee rate for FY 1998 of $141,966 (rounded to the 
nearest dollar).

B. Product Fees

    The FY 1997 product fee was based on an estimate that 2,200 
products would be subject to product fees in FY 1997. For FY 1997, 
2,267 products qualified for fees before any decisions on requests for 
waivers or reductions were made. FDA estimates that only 2,100 products 
will qualify for product fees in FY 1998, after allowing for the fact 
that about 140 antibiotic products and 11 products manufactured by 
state governments that paid fees in 1997 will no longer be subject to 
fees in 1998 under the FDAMA, and for the fact that an additional 17 
large volume parenteral products that were subject to fees in 1997 are 
now regulated as generic drugs and will not be subject to fees in 1998. 
Accordingly, the FY 1998 product fee rate is determined by dividing the 
adjusted total fee revenue to be derived from product fees 
($39,040,592) by the estimated 2,100 products for a product fee rate of 
$18,591 (rounded to the nearest dollar).

V. Adjusted Fee Schedules for FY 1998

    The fee rates for FY 1998 are set out in the following table:

                                                                        
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                                                       Fee rates for FY 
                    Fee category                             1997       
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Applications                                                            
  Requiring clinical data...........................   $256,846         
  Not requiring clinical data.......................   $128,423         

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  Supplements requiring clinical data...............   $128,423         
Establishments......................................   $141,966         
Products............................................    $18,591         
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VI. Implementation of Adjusted Fee Schedule

A. Application Fees

    Any application or supplement subject to fees under the PDUFA that 
is submitted after December 31, 1997, must be accompanied by the 
appropriate application fee established in the new fee schedule. FDA 
will bill applicants who submitted application fees between October 1, 
1997, and December 31, 1997, based on the adjusted rate schedule.

B. Establishment and Product Fees

    By December 31, 1997, FDA will issue invoices for establishments 
and product fees for FY 1998 under the new fee schedules. Payment will 
be due by January 31, 1998. FDA will issue invoices in October 1998 for 
any products and establishments subject to fees for FY 1998 that 
qualify for fees after the December 1997 billing.

    Dated: December 3, 1997.
William K. Hubbard,
Associate Commissioner for Policy Coordination.
[FR Doc. 97-32164 Filed 12-8-97; 8:45 am]
BILLING CODE 4160-01-F