Guidance for Industry

Animal Drug User Fees:

Fees Exceed Costs Waiver/Reduction

Final Guidance

This guidance explains the procedures FDA expects to use to evaluate waiver requsts under the fees exceed costs waiver/reduction provision.

Comments and suggestions regarding the document should be submitted to Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD  20852. Submit electronic comments to http://www.fda.gov/dockets/ecomments.   All comments should be identified with the Docket No. 2006D-0301. 

For questions regarding this guidance document, contact Dave Newkirk, 7500 Standish Place, Rockville, MD  20855, Room E302, 301-827-6967, David.Newkirk@fda.hhs.gov. 

Additional copies of this guidance may be requested from the Communications Staff (HFV-12), Center for Veterinary Medicine, Food and Drug Administration, 7519 Standish Place, Rockville, MD 20855, and may be viewed on the Internet at http://www.fda.gov/cvm.

TABLE OF CONTENTS

I.     Introduction. 3

II.    Standard Costs. 3

A.    Standard Costs Calculation. 4

B.    Anticipated Costs. 5

C.    Applying Standard Costs to the Person Applying for the Waiver 5

D.    Waiver Determination. 5

E.     Special Considerations. 6

GUIDANCE FOR INDUSTRY

Animal Drug User Fees: Fees Exceed Costs Waiver/Reduction[1]

I.          Introduction

Enacted on November 18, 2003, the Animal Drug User Fee Act (ADUFA) (Public Law 108-130) amended the Federal Food, Drug, and Cosmetic Act (the FD&C Act) and requires the FDA to assess and collect user fees for certain applications, products, establishments, and sponsors.  It also requires the Agency to grant a waiver from or a reduction of those fees in certain circumstances.

FDA issued Guidance for Industry #170 to provide guidance on the types of fees the Food and Drug Administration (FDA) is authorized to collect under ADUFA and how to request waivers and reductions from these fees.  This guidance further explains the procedures FDA expects to use to evaluate waiver requests under the fees exceed costs waiver provision.  Procedures may be updated in the future to reflect changes in Agency processes or changes in the law.

Please note that you must submit a written request to the Agency for a waiver or reduction, including under the fees exceed costs waiver provision, no later than 180 days after the fee is due (section 740(i) of FD&C Act).  See Guidance #170 Section V for additional information about the procedures and timing for requesting fee waivers and reductions. 

FDA’s guidance documents, including this guidance, do not establish legally enforceable responsibilities.  Instead, guidance describe the Agency’s current thinking on a topic and should be viewed only as recommendations, unless specific regulatory or statutory requirements are cited.  The use of the word “should” in Agency guidances means that something is suggested or recommended, but not required.

II.        Standard Costs

To determine eligibility for a fee waiver or reduction under section 740(d)(1)(B) of the FD&C Act,  FDA must determine the anticipated present and future costs in conducting the process for the review of animal drug applications for the person requesting the waiver.  The term “process for the review of animal drug applications” is defined in section 739(8) of the FD&C Act, and includes activities related to the review of animal drug applications, supplemental animal drug applications, and investigational animal drug submissions.  In determining whether the requestor qualifies for a fees exceed costs waiver or reduction, FDA intends to compare the fees paid with the actual and anticipated costs from September 1, 2003 through September 30 of the year for which the request is made.  Section 740(d)(2) of the FD&C Act states that in making this finding the Secretary may use standard costs.

Standard costs for various components of the animal drug review process for each fiscal year are developed by FDA.

A.        Standard Costs Calculation

FDA developed standard costs to represent anticipated present and future costs to complete a review of an application or phased review of an application. Three general categories of review of animal drug applications/submissions exist:  Investigational New Animal Drug Submission, New Animal Drug Application, and Supplemental New Animal Drug Application.  FDA’s cost analysis, however, clearly showed great variation within these categories in certain cases.  Therefore, standard costs per unit were developed for eight categories.  These eight categories are outlined below:

 * Administrative NADA – this includes NADAs with minor review work. 

B.        Anticipated Costs

Investigational New Animal Drug Submissions (INADs) - INAD submissions included in each of the sub-processes above represent technical sections that normally would be completed prior to the submission of an NADA.  When the sponsor submits an investigational animal drug submission after September 1, 2003, FDA intends to anticipate that all required technical sections will be submitted in the future as well as the NADA, thus the standard costs is the total costs for review of all the technical sections expected to be submitted and the NADA itself.  For information on what constitutes an “investigational animal drug submission,” please refer to Guidance for Industry #173, Animal Drug Sponsor Fees under the Animal Drug User Fee Act (ADUFA). 

C.        Applying Standard Costs to the Person Applying for the Waiver

After receiving a timely-submitted fees exceed costs waiver request, which is due no later than 180 days after the fee is due, FDA compiles a complete list of the submissions pending on or received since September 1, 2003 that meet the definition of “animal drug application”, ‘investigational animal drug submission” or “supplemental new animal drug application” as contained in the Act.  Applications/submissions not meeting this definition are not included in the list.  Then FDA assigns a standard cost to each qualifying submission.  FDA intends to include costs for reviewing applications submitted by affiliates of the waiver requestor (see Guidance #170, section IV.B.).  As explained in the previous section, if FDA receives an INAD submission, it intends to use this as a basis for anticipating that other required components have been/will be submitted, culminating in the submission of a new animal drug application for either a food-producing or a non-food-producing animal.  The sum of all of these standard costs for each separate INAD/NADA represent FDA’s estimate of its cost associated with reviewing applications submitted by the waiver requestor and its affiliates.  An example of this calculation is provided in Attachment 1 (Some special considerations apply to applications pending [received prior to September 1, 2003] on September 1, 2003, and to investigational new drug submissions submitted prior to September 1, 2003.  These are explained separately below.)

As stated in Guidance #170, section IV.B. a request for a fee waiver or reduction on the basis of fees exceeding costs should include a list of affiliates, as defined in section 735(9) of the FD&C Act.   Without this affiliate information a firm’s request for a waiver of fees under the fees exceeds the costs provision of the Animal Drug User Fee Act will likely be denied because we will not have complete information in order to process the request.

 The Act defines affiliate to mean “a business entity that has a relationship with a second business entity if, directly or indirectly – (A) one business entity controls, or has the power to control, the other business entity; or (B) a third party controls, or has the power to control, both of the business entities.”  See section 735(9) of the FD&C Act. 

D.        Waiver Determination

From its records FDA will calculate the total of all ADUFA fees (application, product, sponsor, establishment) paid or payable by the applicant and by each of its affiliates, since the beginning of ADUFA on September 1, 2003 (excluding fees previously waived or refunded).  If the anticipated present and future costs exceed total fees paid, then the waiver request will be denied.  See section 740(d)(1)(B) of the FD&C Act.  If fees paid exceed the anticipated present and future costs, then FDA intends to refund the amount of fees paid in excess of standard costs.   If a waiver or reduction is also requested under other provisions of ADUFA, then FDA intends to evaluate the other waiver or reduction requests first.  Only if it denies the other waiver or reduction requests would the Agency review the fees exceed costs request. 

E.        Special Considerations

For any submission received after September 1, 2003, the estimated incurred costs associated with the submission will be 100 percent of the standard costs for that category of submission in the fiscal year it was submitted. By applying 100% of these costs, whether or not action on the application is completed, FDA is complying with the statutory direction to include “future costs” in its cost estimation.

For submissions submitted prior to September 1, 2003, some review may still be on-going on or after September 1, 2003.  Based on CVM’s estimates of the average length of various review processes, fractional standard costs have been developed to represent the portion of the review still going on after September 1, 2003. The following table shows the percent of standard costs that FDA intends to apply to each submission sub-process, based on the year the initial submission was received:

For INAD Human Food Safety (HFS), FDA has adopted the assumption that an average INAD HFS review spans 8 years; for INAD Safety and Efficacy (S&E) submission (whether Food or Non-Food (NF)), FDA has adopted the assumption that on average the review span is 3 years; for INAD Manufacturing (Mfg) FDA has adopted the assumption that on average the review span is 2 years; and for INAD Environmental, NADA’s, and Supplementals FDA has adopted the assumption that the average span for review is 1 year.  For submissions submitted prior to these time spans no costs are allocated. 

In addition, as discussed above, for INAD submissions FDA assumes that the remaining required technical sections and the NADA itself will be submitted in the future and thus will incur the full costs of them.  For example, under this guidance if prior to September 1, 2003 a firm has submitted for a food animal approval the INAD Food Animal S&E and INAD Manufacturing technical sections, FDA will apply the pro-rata charge based on the year those submissions were received (see chart above).  However, FDA also assumes that the remaining required technical sections – INAD Environmental,  INAD Human Food Safety and NADA original submission – will be submitted in the future thus they would be applied the full costs of those technical sections.  (See example in Attachment 1)

See Attachment 1 – Sample Cost Calculation Hypothetical Firm A

ADUFA Fees Exceed Cost Summary

(In thousands)

INAD-Human Food Safety

INAD-Safety and Efficacy Food Animals

INAD-Safety and Efficacy Non Food Animals

INAD-Environmental

INAD-Manufacturing

Administrative NADA (this includes NADA’s with minor review work)

Supplement-Safety and Efficacy

Supplement-Other

Fees Paid

Total ADUFA

In the above example, if the total of all fees paid by Firm A and its affiliates exceeded $599,930 then FDA would refund the amount of fees paid in excess of $599,930.  Since in this example the fees paid by Firm A are less than the total cost, Firm's A waiver request will be denied. 

The standard costs for each year are published on CVM's web page.