Document ID: FDA-2013-N-0007-0008
Agency: fda
Document Type: Notice
Title: Prescription Drug User Fee Rates for Fiscal Year 2014
Posted Date: 2013-08-02T04:00Z

[Federal Register Volume 78, Number 149 (Friday, August 2, 2013)]
[Notices]
[Pages 46980-46984]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-18624]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2013-N-0007]

Prescription Drug User Fee Rates for Fiscal Year 2014

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

[[Page 46981]]

fiscal year (FY) 2014. The Federal Food, Drug, and Cosmetic Act (the 
FD&C Act), as amended by the Prescription Drug User Fee Amendments of 
2012, which was signed by the President on July 9, 2012 (PDUFA V), 
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. Base revenue amounts to be 
generated from PDUFA fees were established by PDUFA V, with provisions 
for certain adjustments. Fee revenue amounts for applications, 
establishments, and products are to be established each year by FDA so 
that one-third of the PDUFA fee revenues FDA collects each year will be 
generated from each of these categories. This document establishes fee 
rates for FY 2014 for application fees for an application requiring 
clinical data ($2,169,100), for an application not requiring clinical 
data or a supplement requiring clinical data ($1,084,550), for 
establishment fees ($554,600), and for product fees ($104,060). These 
fees are effective on October 1, 2013, and will remain in effect 
through September 30, 2014. For applications and supplements that are 
submitted on or after October 1, 2013, the new fee schedule must be 
used. Invoices for establishment and product fees for FY 2014 will be 
issued in August 2013 using the new fee schedule.

FOR FURTHER INFORMATION CONTACT: David Miller, Office of Financial 
Management (HFA-100), Food and Drug Administration, 1350 Piccard Dr., 
PI50, Rm. 210J, Rockville, MD 20850, 301-796-7103.

SUPPLEMENTARY INFORMATION: 

I. Background

    Sections 735 and 736 of the FD&C Act (21 U.S.C. 379g and 379h, 
respectively) establish three different kinds of user fees. Fees are 
assessed on the following: (1) Certain types of applications and 
supplements for approval of drug and biological products; (2) certain 
establishments where such products are made; and (3) certain products 
(section 736(a) of the FD&C Act). When certain conditions are met, FDA 
may waive or reduce fees (section 736(d) of the FD&C Act).
    For FY 2013 through FY 2017, the base revenue amounts for the total 
revenues from all PDUFA fees are established by PDUFA V. The base 
revenue amount for FY 2013, which becomes the base amount for the 
remaining 4 FYs of PDUFA V, is $718,699,000, as published in the 
Federal Register of August 1, 2012 (77 FR 45639). That FY 2013 base 
revenue amount is further adjusted each year after FY 2013 for 
inflation and workload. Fees for applications, establishments, and 
products are to be established each year by FDA so that revenues from 
each category will provide one-third of the total revenue to be 
collected each year.

II. Fee Revenue Amount for FY 2014

    The base revenue amount for FY 2014 is $718,699,000, prior to 
adjustment for inflation and workload (see section 736(c)(1) of the 
FD&C Act).

A. FY 2014 Statutory Fee Revenue Adjustments for Inflation

    PDUFA V specifies that the $718,699,000 is to be further adjusted 
for inflation increases for FY 2014 using 2 separate adjustments--one 
for payroll costs and one for non-pay costs (see section 736(c)(1) of 
the FD&C Act).
    The component of the inflation adjustment for payroll costs shall 
be 1 plus the average annual percent change in the cost of all 
personnel compensation and benefits (PC&B) paid per full-time 
equivalent position (FTE) at FDA for the first 3 of the 4 preceding 
FYs, multiplied by the proportion of PC&B costs to total FDA costs of 
the review of human drug applications for the first 3 of the preceding 
4 FYs (see section 736(c)(1)(B) of the FD&C Act). The data on total 
PC&B paid and numbers of FTE paid, from which the average cost per FTE 
can be derived, are published in FDA's Justification of Estimates for 
Appropriations Committees.
    Table 1 of this document summarizes that actual cost and FTE data 
for the specified FYs, and provides the percent change from the 
previous FY and the average percent change over the first 3 of the 4 
FYs preceding FY 2014. The 3-year average is 2.05 percent.

              Table 1--FDA Personnel Compensation and Benefits (PC&B) Each Year and Percent Change
----------------------------------------------------------------------------------------------------------------
             Fiscal year                     2010               2011               2012          3-Year average
----------------------------------------------------------------------------------------------------------------
Total PC&B..........................     $1,634,108,000     $1,761,655,000     $1,824,703,000  .................
Total FTE...........................             12,526             13,331             13,382  .................
PC&B per FTE........................           $130,457           $132,147           $136,355  .................
Percent Change from Previous Year...              1.67%              1.30%              3.18%              2.05%
----------------------------------------------------------------------------------------------------------------

    The statute specifies that this 2.05 percent should be multiplied 
by the proportion of PC&B for the review of human drug applications. 
Table 2 of this document shows the amount of PC&B and the total amount 
obligated for the process for the review of human drug applications for 
the same 3 FYs.

    Table 2--PC&B as a Percent of Fee Revenues Spent on the Process for the Review of Human Drug Applications
----------------------------------------------------------------------------------------------------------------
             Fiscal year                     2010               2011               2012          3-Year average
----------------------------------------------------------------------------------------------------------------
Total PC&B..........................       $573,603,582       $596,627,595       $592,642,252  .................
Total Costs.........................       $931,845,581     $1,025,621,707     $1,032,419,218  .................
PC&B Percent........................                62%                58%                57%                59%
----------------------------------------------------------------------------------------------------------------

    The payroll adjustment is 2.05 percent multiplied by 59 percent (or 
1.21 percent).
    The statute specifies that the portion of the inflation adjustment 
for non-payroll costs for FY 2014 is the average annual percent change 
that occurred in the Consumer Price Index (CPI) for urban consumers 
(Washington-Baltimore, DC-MD-VA-WV; not seasonally adjusted; all items; 
annual

[[Page 46982]]

index) for the first 3 of the preceding 4 years of available data 
multiplied by the proportion of all costs of the process for the review 
of human drug applications other than PC&B (see section 736(c)(1)(C) of 
the FD&C Act). Table 3 of this document provides the summary data for 
the percent change in the specified CPI for the Baltimore-Washington 
area. The data is published by the Bureau of Labor Statistics and can 
be found on their Web site at http://data.bls.gov/cgi-bin/surveymost?cu 
by checking the box marked ``Washington-Baltimore All Items, November 
1996=100--CUURA311SA0'' and then clicking on the ``Retrieve Data'' 
button.

               Table 3--Annual and 3-Year Average Percent Change in Baltimore-Washington Area CPI
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                Year                         2010               2011               2012          3-Year average
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Annual CPI..........................            142.218            146.975            150.212  .................
Annual Percent Change...............              1.72%              3.34%              2.20%              2.42%
----------------------------------------------------------------------------------------------------------------

    To calculate the inflation adjustment for non-pay costs, we 
multiply the 2.42 percent by the proportion of costs of the process for 
the review of human drug applications obligated for costs other than 
PC&B. Since 59 percent was obligated for PC&B as shown in table 2 of 
this document, 41 percent is the portion of costs other than PC&B (100 
percent minus 59 percent equals 41 percent). The non-payroll adjustment 
is 2.42 percent times 41 percent, or 0.99 percent.
    To complete the inflation adjustment, we add the payroll component 
(1.21 percent) to the non-pay component (0.99 percent), for a total 
inflation adjustment of 2.20 percent (rounded), and then add one, 
making 1.0220. We then multiply the amount base revenue amount for FY 
2014 ($718,669,000) by 1.0220, yielding an inflation adjusted amount of 
$734,479,718.

B. FY 2014 Statutory Fee Revenue Adjustments for Workload

    Title I of the Food and Drug Administration Safety and Innovation 
Act (FDASIA) (Pub. L. 112-144) specifies that after the $718,699,000 
has been adjusted for inflation, the inflation adjusted amount 
($734,479,718) shall be further adjusted for workload (see section 
736(c)(2) of the FD&C Act). Title I also requires an independent 
accounting or consulting firm to review the adequacy of the adjustment 
for workload in FY 2013 and FY 2015 and publish the results of those 
reviews (see section 103(c)(2) of FDASIA). The reports must evaluate 
whether the adjustment reasonably represents actual changes in workload 
volume and complexity of human drug review and present recommendations 
to discontinue, retain, or modify any elements of the adjustment. After 
review of the reports and receipt of public comments, FDA may adopt 
appropriate changes to the workload adjustment methodology. FDA 
contracted with an independent consulting firm in FY 2013 to conduct 
the first required assessment of the workload adjuster. This assessment 
examined the performance of the workload adjuster and its ability to 
effectively measure changes in workload volume and complexity during 
the FY 2009-2013 period. The report is available online at http://www.fda.gov/downloads/ForIndustry/UserFees/PrescriptionDrugUserFee/UCM350567.pdf. The report found that the current methodology reasonably 
represents workload volume associated with the human drug review 
process. However, the report concluded that the methodology is flawed 
with respect to measuring workload complexity, known as the adjustment 
for changes in review activities (``Complexity Factor''), because it 
does not represent the total amount of work per submission. The report 
further notes that work complexity increased substantially during the 
evaluation period, but the Complexity Factor produced negative 
adjustments to the overall Workload Adjuster, indicating that human 
drug review became less complex over this period. Accordingly, the 
report recommends that FDA consider removing the current Complexity 
Factor. The report also found that the statute's use of 5-year rolling 
averages to measure changes in workload against the base years was not 
as sensitive to recent trends as 3-year rolling averages would be. 
After reviewing the report, FDA is removing the Complexity Factor from 
the workload adjustment methodology and adopting 3-year averages to 
measure changes in workload volume, rather than the 5-year averages 
used in prior adjustments. This is consistent with the use of 3-year 
averages for inflation adjustment calculations as called for under 
PDUFA V (section 736(c)(1) of the FD&C Act). The public comment 
received on the report indicated that changes to the workload adjuster 
methodology should be considered in the context of other aspects of the 
PDUFA financial model, including standard costs and time reporting in 
the human drug review process. FDA agrees with this point and will 
consider multiple aspects of the PDUFA financial model as the Agency 
investigates alternative methods to more accurately account for work 
complexity in the workload adjuster.
    The statute specifies that changes FDA adopts are effective the 
first FY after FDA adopts the changes and each subsequent FY. Since FDA 
is adopting the changes in FY 2013, the changes are effective for FY 
2014 fees.
    To calculate the FY 2014 adjustment factor, FDA calculated the 
average number of each of the four types of applications specified in 
the workload adjustment provision: (1) Human drug applications; (2) 
active commercial investigational new drug applications (INDs) 
(applications that have at least one submission during the previous 12 
months); (3) efficacy supplements; and (4) manufacturing supplements 
received over the 3-year period that ended on June 30, 2012 (base 
years), and the average number of each of these types of applications 
over the most recent 3 year period that ended June 30, 2013.
    The calculations are summarized in table 4 of this document. The 3-
year averages for each application category are provided in column 1 
(``3-Year Average Base Years 2010-2012'') and column 2 (``3-Year 
Average 2011-2013'').
    Column 3 of table 4 of this document reflects the percent change in 
workload from column 1 to column 2. Column 4 of table 4 of this 
document shows the weighting factor for each type of application, 
estimating how much of the total FDA drug review workload was accounted 
for by each type of application in the table during the most recent 3 
years. Column 5 of table 4 of this document is the weighted percent 
change in each category of workload. This was derived by multiplying 
the weighting factor in each line in column 4 by the percent change 
from the base years in column 3. At the bottom right of table 4 of this 
document is the sum of the values in column 5 that are added, 
reflecting an increase in workload of 3.07 percent for FY 2014 when 
compared to the base years.

[[Page 46983]]

                                                   Table 4--Workload Adjuster Calculation for FY 2014
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                     Application type                           Column 1           Column 2           Column 3           Column 4           Column 5
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                                                             3-year average                        Percent change
                                                            base years 2010-    3-year average      (Column 1 to     Weighting factor   Weighted percent
                                                                  2012            2011-2013          Column 2)          (percent)            change
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New Drug Applications/Biologics License Applications.....              124.4              131.0               5.39               38.6               2.08
Active Commercial INDs...................................             6830.0             6965.0               1.98               41.4               0.82
Efficacy Supplements.....................................              136.3              140.3               2.93                9.3               0.27
Manufacturing Supplements................................             2548.3             2524.7              -0.93               10.7              -0.10
                                                          ----------------------------------------------------------------------------------------------
    FY 2014 Workload Adjuster............................  .................  .................  .................  .................               3.07
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The FY 2014 workload adjustment in the last line of Table 4 of this 
document is 3.07 percent.
    Table 5 of this document shows the calculation of the revenue 
amount for FY 2014. The $718,669,000 subject to adjustment on the first 
line is multiplied by the inflation adjustment factor of 1.0220, 
resulting in the inflation adjusted amount on the third line, 
$734,479,718. That amount is then multiplied by one plus the workload 
adjustment of 3.07 percent, resulting in the inflation and workload 
adjusted amount of $757,028,000 on the fifth line, rounded to the 
nearest thousand dollars.

     Table 5--PDUFA Revenue Amount for FY 2014, Summary Calculation
------------------------------------------------------------------------
 
------------------------------------------------------------------------
FY 2013 Revenue Amount and Base Subsequent FYs as           $718,669,000
 published in the Federal Register of August 1, 2012
 (77 FR 45639) (rounded to nearest thousand dollars).
Inflation Adjustment Factor for FY 2014 (1 plus 2.20              1.0220
 percent)............................................
Inflation Adjusted Amount............................       $734,479,718
Workload Adjustment Factor for FY 2013 (1 plus 3.07               1.0307
 percent)............................................
                                                      ------------------
    Inflation and Workload Adjusted Amount (rounded         $757,028,000
     to nearest thousand dollars)....................
------------------------------------------------------------------------

    PDUFA specifies that one-third of the total fee revenue is to be 
derived from application fees, one-third from establishment fees, and 
one-third from product fees (see section 736(b)(2) of the FD&C Act). 
Accordingly, one third of the total revenue amount ($757,028,000), or a 
total of $252,342,667, is the amount of fee revenue that will be 
derived from each of these fee categories: Application Fees, 
Establishment Fees, and Product Fees.

III. Application Fee Calculations

A. Application Fee Revenues and Application Fees

    Application fees will be set to generate one-third of the total fee 
revenue amount, or $252,342,667 in FY 2014, as calculated previously in 
this document.

B. Estimate of the Number of Fee-Paying Applications and the 
Establishment of Application Fees

    For FY 2013 through FY 2017, FDA will estimate the total number of 
fee-paying full application equivalents (FAEs) it expects to receive 
the next FY by averaging the number of fee-paying FAEs received in the 
three most recently completed FYs. This will avoid having FDA try to 
estimate the number it expects to receive in the current FY.
    In estimating the number of fee-paying FAEs, a full application 
requiring clinical data counts as one FAE. An application not requiring 
clinical data counts as one-half an FAE, as does a supplement requiring 
clinical data. An application that is withdrawn, or refused for filing, 
counts as one-fourth of an FAE if the applicant initially paid a full 
application fee, or one-eighth of an FAE if the applicant initially 
paid one-half of the full application fee amount.
    As table 6 of this document shows, the average number of fee-paying 
FAEs received annually in the most recent 3-year period is 116.333 
FAEs. FDA will set fees for FY 2014 based on this estimate as the 
number of full application equivalents that will pay fees.

                                     Table 6--Fee-Paying FAE 3-Year Average
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                     FY                             2010             2011             2012        3-year average
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Fee-Paying FAEs.............................         118.375          108.250          122.375          116.333
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    The FY 2014 application fee is estimated by dividing the average 
number of full applications that paid fees over the latest 3 years, 
116.333, into the fee revenue amount to be derived from application 
fees in FY 2014, $252,342,667. The result, rounded to the nearest $100, 
is a fee of $2,169,100 per full application requiring clinical data, 
and $1,084,550 per application not requiring clinical data or per 
supplement requiring clinical data.

IV. Fee Calculations for Establishment and Product Fees

A. Establishment Fees

    At the beginning of FY 2013, the establishment fee was based on an 
estimate that 455 establishments would be subject to and would pay 
fees. By the

[[Page 46984]]

end of FY 2013, FDA estimates that 490 establishments will have been 
billed for establishment fees, before all decisions on requests for 
waivers or reductions are made. FDA estimates that a total of 20 
establishment fee waivers or reductions will be made for FY 2013. In 
addition, FDA estimates that another 15 full establishment fees will be 
exempted this year based on the orphan drug exemption in section 736(k) 
of the FD&C Act. Subtracting 35 establishments (20 waivers, plus the 
estimated 15 establishments under the orphan exemption) from 490 leaves 
a net of 455 fee-paying establishments. FDA will use 455 for its FY 
2014 estimate of establishments paying fees, after taking waivers and 
reductions into account. The fee per establishment is determined by 
dividing the adjusted total fee revenue to be derived from 
establishments ($252,342,667) by the estimated 455 establishments, for 
an establishment fee rate for FY 2014 of $554,600 (rounded to the 
nearest $100).

B. Product Fees

    At the beginning of FY 2013, the product fee was based on an 
estimate that 2,435 products would be subject to and would pay product 
fees. By the end of FY 2013, FDA estimates that 2,510 products will 
have been billed for product fees, before all decisions on requests for 
waivers, reductions, or exemptions are made. FDA assumes that there 
will be 45 waivers and reductions granted. In addition, FDA estimates 
that another 40 product fees will be exempted this year based on the 
orphan drug exemption in section 736(k) of the FD&C Act. FDA estimates 
that 2,425 products will qualify for product fees in FY 2013, after 
allowing for waivers and reductions, including the orphan drug 
products, and will use this number for its FY 2014 estimate. The FY 
2014 product fee rate is determined by dividing the adjusted total fee 
revenue to be derived from product fees ($252,342,667) by the estimated 
2,425 products for a FY 2014 product fee of $104,060 (rounded to the 
nearest $10).

V. Fee Schedule for FY 2014

    The fee rates for FY 2014 are set out in table 7 of this document:

                    Table 7--Fee Schedule for FY 2014
------------------------------------------------------------------------
                                                        Fee rates for FY
                     Fee category                             2014
------------------------------------------------------------------------
Applications:
    Requiring clinical data..........................         $2,169,100
    Not requiring clinical data......................          1,084,550
    Supplements requiring clinical data..............          1,084,550
Establishments.......................................            554,600
Products.............................................            104,060
------------------------------------------------------------------------

VI. Fee Payment Options and Procedures

A. Application Fees

    The appropriate application fee established in the new fee schedule 
must be paid for any application or supplement subject to fees under 
PDUFA that is received after September 30, 2013. Payment must be made 
in U.S. currency by check, bank draft, or U.S. postal money order 
payable to the order of the Food and Drug Administration. Please 
include the user fee identification (ID) number on your check, bank 
draft, or postal money order. Your payment can be mailed to: Food and 
Drug Administration, P.O. Box 979107, St. Louis, MO 63197-9000.
    If checks are to be sent by a courier that requests a street 
address, the courier can deliver the checks to: U.S. Bank, Attention: 
Government Lockbox 979107, 1005 Convention Plaza, St. Louis, MO 63101. 
(Note: This U.S. Bank address is for courier delivery only. Contact the 
U.S. Bank at 314-418-4013 if you have any questions concerning courier 
delivery.)
    Please make sure that the FDA post office box number (P.O. Box 
979107) is written on the check, bank draft, or postal money order.
    Wire transfer payment may also be used. Please reference your 
unique user fee ID number when completing your transfer. The 
originating financial institution may charge a wire transfer fee. 
Please ask your financial institution about the fee and add it to your 
payment to ensure that your fee is fully paid. The account information 
is as follows: New York Federal Reserve Bank, U.S. Department of the 
Treasury, TREAS NYC, 33 Liberty St., New York, NY 10045, Acct. No.: 
75060099, Routing No.: 021030004, SWIFT: FRNYUS33, Beneficiary: FDA, 
1350 Piccard Drive, Rockville, MD.
    Application fees can also be paid online with an electronic check 
(ACH). FDA has partnered with the U.S. Department of the Treasury to 
use Pay.gov, a Web-based payment application, for online electronic 
payment. The Pay.gov feature is available on the FDA Web site after the 
user fee ID number is generated.
    The tax identification number of FDA is 53-0196965.

B. Establishment and Product Fees

    FDA will issue invoices for establishment and product fees for FY 
2014 under the new fee schedule in August 2013. Payment will be due on 
October 1, 2013. FDA will issue invoices in November 2014 for any 
products and establishments subject to fees for FY 2014 that qualify 
for fee assessments after the August 2013 billing.

    Dated: July 29, 2013.
Leslie Kux,
Assistant Commissioner for Policy.
[FR Doc. 2013-18624 Filed 8-1-13; 8:45 am]
BILLING CODE 4160-01-P