FY 2004 PDUFA Financial Report

Appendix C

Allowable and Excluded Costs for the Process for the Review of Human Drug Applications

PDUFA and the related House of Representatives Reports 102-895 and 107-481 ("House Reports"), defines the process for the review of human drug applications and the costs that may be included in that process. Using these definitions (and further refinements identified below) and the methodologies described in this report, the Agency identified those activities that were applicable to the process for the review of human drug applications.

Over 96 percent of amounts obligated are expended within two years. Therefore, obligations represent an accurate measure of costs.

User Fee Related Costs

Section 735(6) of the Act defines in general terms the activities necessary for the review of human drug applications (the "human drug review process"). In summary, costs related to the following process activities have been attributed to the process for the review of human drug applications:

All investigational new drug (IND) review activities, including amendments
All review activities for new drug applications (NDAs), biologic license applications (BLAs), and product license applications (PLAs), including supplements and amendments and biologic establishment license applications (ELAs) and amendments
Regulation and policy development activities related to the review of human drug applications
Development of product standards for products subject to review and evaluation
Meetings between the Agency and the sponsor of a covered application or supplement
Review of labeling prior to approval of a covered application or supplement and the review of the initial pre-launch advertising
Review of post-marketing studies that have been agreed to by sponsors as a condition for approval
Inspections of facilities undertaken as part of the review of pending applications or supplements
Lot release activities for covered biological products
Assay development and validation to ensure batch-to-batch consistency and reliability for covered biological products
Monitoring of clinical and other research conducted in connection with the review of human drug applications
User Fee Act implementation activities
Research related to the human drug review process--although under PDUFA II FDA agreed to phase out research supported by fee revenues, and
In the case of drugs approved after October 1, 2002, under human drug applications or supplements: collecting, developing, and reviewing safety information on the drugs, including adverse event reports, during a period of time after approval of such applications or supplements, not to exceed three years--added under PDUFA III.

All user-fee related costs represented by the above activities are collectively referred to in this report as costs for the process for the review of human drug applications.

Section 735(7) of the Act defines the "costs of resources allocated for the process for the review of human drug applications" as the expenses incurred in connection with this process for:

officers and employees of the FDA, contractors of the FDA, advisory committees, and costs related to such officers, employees, committees and contracts;
management of information, and the acquisition, maintenance, and repair of computer resources;
leasing, maintenance, renovation, and repair of facilities and acquisition, maintenance, and repair of fixtures, furniture, scientific equipment, and other necessary materials and supplies; and
collecting user fees under section 736 of the Act and accounting for resources allocated for the review of human drug applications and supplements.

User Fee Excluded Costs

The User Fee Act excludes costs related to the following:

Excluded Products

Generic drugs
Over-the-counter drugs not associated with an NDA or NDA supplement
Large volume parenterals approved before 9/1/92
Allergenic extract products
Whole blood or a blood component for transfusion
In vitro diagnostic biologic products
Certain drugs derived from bovine blood

Excluded Process Activities

Enforcement policy development
Post-approval compliance activities
Advertising review activities once marketing of the product has begun
Inspections unrelated to the review of covered applications
Research unrelated to the human drug review process

These inclusions and exclusions required accounting for a newly created subset of FDA activities after the fact. It was necessary to develop and implement a methodology that would allow the Agency retrospectively to capture the FY 1992 costs for the newly defined "process for the review of human drug applications," and apply that same methodology for future years. In 1995, Arthur Andersen & Company independently reviewed FDA procedures in doing this and found the methodologies reasonable.

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