[Federal Register: August 2, 2004 (Volume 69, Number 147)]
[Notices]
[Page 46165-46168]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02au04-55]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
Establishment of Prescription Drug User Fee Rates for Fiscal Year
2005
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) 2005. The Federal
Food, Drug, and Cosmetic Act (the Act), as amended by the Prescription
Drug User Fee Amendments of 2002 (PDUFA III), 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 for application fees, establishment
fees, and product fees for FY 2005 were established by PDUFA III. Fees
for applications, establishments, and products are to be established
each year by FDA so that revenues from each category will approximate
the levels established in the statute, after those amounts have been
first adjusted for inflation and workload. This notice establishes fee
rates for FY 2005 for application fees ($672,000 for an application
requiring clinical data, and $336,000 for an application not requiring
clinical data or a supplement requiring clinical data), establishment
fees ($262,200), and product fees ($41,710). These fees are effective
on October 1, 2004, and will remain in effect through September 30,
2005. For applications and supplements that are submitted on or after
October 1, 2004, the new fee schedule must be used. Invoices for
establishment and product fees for FY 2005 will be issued in August
2004, using the new fee schedule.
FOR FURTHER INFORMATION CONTACT: Frank Claunts, Office of Management
(HFA-20), Food and Drug Administration, 5600 Fishers Lane, Rockville,
MD 20857, 301-827-4427.
SUPPLEMENTARY INFORMATION:
I. Background
Sections 735 and 736 of the act (21 U.S.C. 379g and h), establish
three different kinds of user fees. Fees are assessed on: (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 (21 U.S.C. 379h(a)). When certain
conditions are met, FDA may waive or reduce fees (21 U.S.C. 379h(d)).
For FY 2003 through 2007 base revenue amounts for application fees,
establishment fees, and product fees are established by PDUFA III
(title 5 of the Public Health Security and Bioterrorism Preparedness
and Response Act of 2002). Base revenue amounts established for years
after FY 2003 are subject to adjustment 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
approximate the levels established in the statute, after those amounts
have been first adjusted for inflation and workload. The revenue levels
established by PDUFA III continue the arrangement under which one-third
of the total user fee revenue is projected to come from each of the
three types of fees: Application fees, establishment fees, and product
fees.
This notice establishes fee rates for FY 2005 for application,
establishment, and product fees. These fees are effective on October 1,
2004, and will remain in effect through September 30, 2005.
II. Revenue Amount for FY 2005, and Adjustments for Inflation and
Workload
A. Statutory Fee Revenue Amounts
PDUFA III specifies that the fee revenue amount for fiscal year
2005 for each category of fees (application, product, and
establishment) is $84,000,000, for a total of $252,000,000 from all
three categories of fees (21 U.S.C. 379h(b), before any adjustments are
made.
B. Inflation Adjustment to Fee Revenue Amount
PDUFA III provides that fee revenue amounts for each fiscal year
after 2003 shall be adjusted for inflation. The adjustment must reflect
the greater of: (1) The total percentage change that occurred in the
consumer price index (CPI) (all items; U.S. city average) during the
12-month period ending June 30 preceding the fiscal year for which fees
are being set, or (2) the total percentage pay change for the previous
fiscal year for Federal employees stationed in the Washington, DC,
metropolitan area. PDUFA III provides for this annual adjustment to be
cumulative and compounded annually after FY 2003 (see 21 U.S.C.
379h(c)(1)).
The inflation increase for FY 2004 was 4.27 percent. This was the
greater of the CPI increase during the 12-month period ending June 30
preceding the fiscal year for which fees are being set (June 30, 2003--
which was 2.11 percent) or the increase in pay for the previous fiscal
year (2003 in this case) for Federal employees stationed in the
Washington, DC, metropolitan area (4.27 percent).
The inflation increase for FY 2005 is 4.42 percent. This is the
greater of the CPI increase during the 12-month period ending June 30
preceding the fiscal year for which fees are being set (June 30, 2004--
which was 3.27 percent) or the increase in pay for the previous fiscal
year (2004 in this case) for Federal employees stationed in the
Washington, DC, metropolitan area (4.42 percent).
Compounding these amounts (1.0427 times 1.0442) yields a total
compounded inflation adjustment of 8.88 percent for FY 2005.
The inflation adjustment for each category of fees for FY 2005 is
the statutory fee amount ($84,000,000) increased by 8.88 percent, the
inflation adjuster for FY 2005. The FY 2005 inflation-adjusted revenue
amount is $91,459,200 for each category of fee, for a total inflation-
adjusted fee revenue amount of $274,377,600 in FY 2005.
C. Workload Adjustment to Inflation Adjusted Fee Revenue Amount
For each fiscal year beginning in FY 2004, PDUFA III provides that
fee revenue amounts, after they have been adjusted for inflation, shall
be further adjusted to reflect changes in workload for the process for
the review of human drug applications (see 21 U.S.C. 379h(c)(2)).
The conference report accompanying PDUFA III, House of
Representatives report number 107-481, provides additional instructions
on how the workload adjustment provision of PDUFA III is to be
implemented. Following that guidance, FDA calculated the average number
each of the four types of applications specified in the workload
adjustment provision (human drug applications, commercial
investigational new drug applications (INDs), efficacy supplements, and
manufacturing supplements) received over the 5-year period that ended
on June 30, 2002 (base years), and the average number of each of these
types of applications over the most recent 5-year period that ended
June 30, 2004.
The results of these calculations are presented in the first 2
columns of table 1 of this document. Table 1, column 3 of this
document, reflects the percent
[[Page 46166]]
change in workload over the two 5-year periods and column 4 shows the
weighting factor for each type of application, reflecting how much of
the total FDA drug review workload was accounted for by each type of
application in the table during the most recent 5 years. This weighting
factor was developed by averaging data generated in a 2002 KPMG study
of FDA's drug review workload and data from FDA's time reporting
systems to submission data for the most recent 5-year period. Column 5
of table 1 of this document, is the weighted percent change in each
category of workload, and 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 1 of this document, the
sum of the values in column 5 is added, reflecting a total change in
workload of 1.47 percent for FY 2005.
Table 1.--Workload Adjuster Calculation
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Summary of Workload Adjustment Calculations
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Application Type Column 15- Column Column Column Column
year Average 2Latest 5-year 3Percent 4Weighting 5Weighted %
Base Years Average Change Factor Change
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New drug application/biological 119.6 120.4 0.7% 42.5% 0.28%
licence application
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Commercial INDs 629.8 626.6 -0.5% 41.7% -0.21%
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Efficacy supplements 159.2 166.8 4.8% 5.9% 0.28%
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Manufacturing supplements 2100.6 2336.8 11.2% 9.9% 1.12%
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FY 2005 workload adjuster .............. .............. .............. .............. 1.47%
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Increasing the inflation-adjusted revenue amount of $91,459,200 for
each category of fee by the FY 2005 workload adjuster (1.47 percent)
results in an increase of $1,344,450, for a total inflation and
workload adjusted revenue amount for each fee category of $92,803,650.
The total FY 2005 inflation and workload adjusted fee revenue target
for all three fee categories combined is $278,410,950.
III. Application Fee Calculations
PDUFA III provides that the rates for application, product, and
establishment fees be established 60 days before the beginning of each
fiscal year (21 U.S.C. 379h(c)(4)). The fees are to be established so
that they will generate the fee revenue amounts specified in the
statute, as adjusted for inflation and workload.
A. Application Fee Revenues and Application Fees
The application fee revenue amount that PDUFA III established for
FY 2005 is $92,803,650, as calculated in the previous section.
Application fees will be set to generate this amount.
B. Estimate of Number of Fee-Paying Applications and Establishment of
Application Fees
For FY 2003 through 2007, FDA will estimate the total number of
fee-paying full application equivalents (FAEs) it expects to receive
the next fiscal year by averaging the number of fee-paying FAEs
received in the 5 most recent fiscal years. This use of the rolling
average of the 5 most recent fiscal years is the same method that was
applied in making the workload adjustment.
In estimating the number of fee-paying FAEs that FDA will receive
in FY 2005, the 5-year rolling average for the most recent 5 years will
be based on actual counts of fee-paying FAEs received for FYs 2000
through 2004. For FY 2004, FDA is estimating the number of fee-paying
FAEs for the full year based on the actual count for the first 9 months
and estimating the number for the final 3 months.
Table 2, column 1 of this document, shows the total number of each
type of FAE received in the first 9 months of FY 2004, whether fees
were paid or not. Table 2, column 2 of this document shows the number
of FAEs for which fees were waived or exempted during this period, and
column 3 shows the number of fee-paying FAEs received through June 30,
2004. Column 4 estimates the 12-month total fee-paying FAEs for FY 2004
based on the applications received through June 30, 2004. All of the
counts are in FAEs. A full application requiring clinical data counts
as one FAE. An application not requiring clinical data counts 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 it initially paid a full application fee, or one-eighth of an FAE if
it initially paid one-half of the full application fee amount.
Table 2.--FY 2004 FAEs Received through June 30, 2004, and Projected Through September 30, 2004
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Column 1Total Column 2Fee Column 3Total
Received Exempt or Fee Paying Column 412
Application or Action Through June Waived Through Through June Month
30, 2004 June 30, 2004 30, 2004 Projection
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Applications requiring clinical data 78.0 24.0 54.0 72.0
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Applications not requiring clinical data 11.5 4.0 7.5 10.0
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Supplements requiring clinical data 53.5 5.0 48.5 64.7
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[[Page 46167]]
Withdrawn or refused to file 0.25 0.0 0.25 0.3
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Total 143.25 33.0 110.25 147.0
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In the first 9 months of FY 2004 FDA received 143.25 FAEs, of which
110.25 were fee-paying. Based on data from the last seven FYs, on
average, 25 percent of the applications submitted each year come in the
final 3 months. Dividing 110.25 by 3 and multiplying by 4 extrapolates
the amount to the full 12 months of the fiscal year and projects the
number of fee-paying FAEs in FY 2004 at 147.
All pediatric supplements, which had been exempt from fees prior to
January 4, 2002, were required to pay fees effective January 4, 2002.
This is the result of section 5 of the Best Pharmaceuticals for
Children Act that repealed the fee exemption for pediatric supplements
effective January 4, 2002. Thus, in estimating FY 2004 fee-paying
receipts, we must add all the pediatric supplements that were
previously exempt from fees prior to January 4, 2002. The exempted
number of FAEs for pediatric supplements for FY 2000, FY 2001, and FY
2002, respectively, were 12.5, 19, and 4.5. Since fees on these
supplements are paid for pediatric applications submitted in FY 2004
and beyond, the number of pediatric supplement FAEs exempted from fees
each year from FY 2000 through 2002 (the years in table 3 of this
document when fees were exempted) are added to the total of fee-paying
FAEs received each year.
As table 3 of this document shows, the average number of fee-paying
FAEs received annually in the most recent 5-year period, assuming all
pediatric supplements had paid fees, and including our estimate for FY
2004, is 138.1 FAEs. FDA will set fees for FY 2005 based on this
estimate as the number of FAEs that will pay fees.
Table 3.--Fee-Paying FAE--5-Year Average
Year 2000 2001 2002 2003 2004 5-year
Average
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Fee-paying FAEs 153.0 107.6 127.6 119.5 147.0 130.9
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Exempt pediatric supplement 12.5 19.0 4.5 0.0 0.0 7.2
FAEs
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Total 165.9 126.6 132.1 119.5 147.0 138.1
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The FY 2005 application fee is estimated by dividing the average
number of full applications that paid fees over the latest 5 years,
138.1, into the fee revenue amount to be derived from application fees
in FY 2005, $92,803,650. The result, rounded to the nearest one hundred
dollars, is a fee of $672,000 per full application requiring clinical
data, and $336,000 per application not requiring clinical data or per
supplement requiring clinical data.
IV. Adjustment for Excess Collections in Previous Years
Under the provisions of PDUFA, as amended, if the agency collects
more fees than were provided for in appropriations in any year after
1997, FDA is required to reduce its anticipated fee collections in a
subsequent year by that amount (21 U.S.C. 379h(g)(4)). In FY 1998,
Congress appropriated a total of $117,122,000 to FDA in PDUFA fee
revenue. To date, collections for FY 1998 total $117,737,470--a total
of $615,470 in excess of the appropriation limit. This is the only
fiscal year since 1997 in which FDA has collected more in PDUFA fees
than Congress appropriated.
FDA also has some requests for waivers or reductions of FY 1998
fees that have been decided but that are pending appeals. For this
reason, FDA is not reducing its FY 2005 fees to offset excess
collections at this time. An offset will be considered in a future
year, if FDA still has collections in excess of appropriations for FY
1998 after the pending appeals for FY 1998 waivers and reductions have
been resolved.
V. Fee Calculations for Establishment and Product Fees
A. Establishment Fees
At the beginning of FY 2004, the establishment fee was based on an
estimate that 354 establishments would be subject to and would pay
fees. By the end of FY 2004, FDA estimates that 379 establishments will
have been billed for establishment fees, before all decisions on
requests for waivers or reductions are made. FDA again estimates that a
total of 25 establishment fee waivers or reductions will be made for FY
2004, for a net of 354 fee-paying establishments. FDA will use this
same number again, 354, for its FY 2005 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 ($92,803,650) by the
estimated 354 establishments, for an establishment fee rate for FY 2005
of $262,200 (rounded to the nearest one hundred dollars).
B. Product Fees
At the beginning of FY 2004, the product fee was based on an
estimate that 2,225 products would be subject to and pay product fees.
By the end of FY 2004, FDA estimates that 2,260 products will have been
billed for product fees, before all decisions on requests for waivers
or reductions are made. Assuming that there will be about 35
[[Page 46168]]
waivers and reductions granted, FDA estimates that 2,225 products will
qualify for product fees in FY 2004, after allowing for waivers and
reductions, and will use this number for its FY 2005 estimate.
Accordingly, the FY 2005 product fee rate is determined by dividing the
adjusted total fee revenue to be derived from product fees
($92,803,650) by the estimated 2,225 products for a FY 2005 product fee
of $41,710 (rounded to the nearest ten dollars).
VI. Fee Schedule for FY 2005
The fee rates for FY 2005 are set out in table 4 of this document:
Table 4.
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Fee Category Fee Rates for FY 2005
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Applications .............................
Requiring clinical data $672,000
Not requiring clinical data $336,000
Supplements requiring clinical data $336,000
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Establishments $262,200
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Products $41,710
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VII. Implementation of Adjusted Fee Schedule
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, 2004. Payment must be made
in U.S. currency by check, bank draft, or U.S. postal money order
payable to the Food and Drug Administration. Please include the user
fee identification (ID) number on your check. Your payment can be
mailed to: Food and Drug Administration, P.O. Box 360909, Pittsburgh,
PA 15251-6909
If checks are to be sent by a courier that requests a street
address, the courier can deliver the checks to: Food and Drug
Administration (360909), Mellon Client Service Center, rm. 670, 500
Ross St., Pittsburgh, PA 15262-0001. (Note: This Mellon Bank address is
for courier delivery only.)
Please make sure that the FDA post office box number (P.O. Box
360909) is written on the check. The tax ID number of the FDA is 530 19
6965.
B. Establishment and Product Fees
By August 31, 2004, FDA will issue invoices for establishment and
product fees for FY 2005 under the new fee schedule. Payment will be
due on October 1, 2004. FDA will issue invoices in October 2005 for any
products and
establishments subject to fees for FY 2005 that qualify for fees after
the August 2004 billing.
Dated: July 27, 2004.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. 04-17442 Filed 7-30-04; 8:45 am]
BILLING CODE 4160-01-S