[Federal Register Volume 63, Number 245 (Tuesday, December 22, 1998)]
[Notices]
[Pages 70777-70781]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33831]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
Establishment of Prescription Drug User Fee Rates for Fiscal Year
1999
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) 1999. 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
1999 were set by the FDAMA, subject to adjustment for inflation. Total
application fee revenues fluctuate with the number of fee-paying
applications FDA receives. Fees for establishments and products are
calculated so that total revenues from each category will approximate
FDA's estimate of 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 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 1998 through 2002, under the amendments enacted in the FDAMA,
the application fee rates are set in the statute, but are to be
adjusted annually for cumulative inflation since 1997. Total
application fee revenues are structured to increase or decrease each
year as the number of fee-paying applications submitted to FDA
increases or decreases (workload adjustment).
For 1998 through 2002, FDA is required to set fee rates for
establishment and product categories each year, so that the total fee
revenue from each of these two categories are projected to be equal to
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 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 1999 for application,
establishment, and product fees. These fees are retroactive to October
1, 1998, and will remain in effect through September 30, 1999. For fees
already paid on applications and supplements submitted on or after
[[Page 70778]]
October 1, 1998, FDA will bill applicants for the difference between
fees paid and fees due under the new fee schedule. For applications and
supplements submitted after December 31, 1998, the new fee schedule
must be used. Invoices for establishment and product fees for FY 1999
will be issued in December 1999, 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
(CPI), or (2) the total percentage pay change for that FY for Federal
employees stationed in the Washington, DC metropolitan area. The FDAMA
provides for this annual adjustment to be cumulative and compounded
annually after 1997 (see 21 U.S.C. 379h(c)(1)).
The FDAMA also structures the total application fee revenue to
increase or decrease each year as the number of fee-paying applications
submitted to FDA increases or decreases. This provision allows revenues
to rise or fall as this portion of FDA's workload rises or falls. To
implement this provision each year, FDA will estimate the number of
fee-paying applications it anticipates receiving. The number of
applications estimated will then be multiplied by the inflation-
adjusted statutory application fee. This calculation will produce the
FDA estimate of total application fee revenues to be received.
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 is projected to equal the revenues FDA expects to
collect from application fees that year. The FDAMA provides that the
new fee rates based on these calculations be adjusted within 60 days
after the end of each FY (21 U.S.C. 379h(c)(2)).
III. Inflation Adjustment and Estimate of Total Application Fee
Revenue
The FDAMA provides that the application fee rates set out in the
statute be adjusted each year for cumulative inflation since 1997. It
also provides for total application fee revenues to increase or
decrease based on increases or decreases in the number of fee-paying
applications submitted.
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 (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 previously are set out in the FDAMA
for 1999 ($256,338 for applications requiring clinical data, and
$128,169 for applications not requiring clinical data or supplements
requiring clinical data) (21 U.S.C. 379h(b)(1)), but must be adjusted
for cumulative inflation since 1997. That adjustment each year is to be
the greater of: (1) The total percentage change that occurred during
the preceding FY in 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 adjustment for FY 1998 was 2.45 percent (62 FR 64849, December
9, 1997). This was the greater of the CPI increase for FY 1997 (2.15
percent) and the increase in applicable Federal salaries (2.45
percent).
The adjustment for FY 1999 is 3.68 percent. This is the greater of
the CPI increase for FY 1998 (1.49 percent) and the increase in
applicable Federal salaries (3.68 percent).
Compounding these amounts (1.0245 times 1.0368) yields a total
compounded inflation of 6.22 percent for FY 1999. The adjusted
application fee rates are computed by applying the inflation percentage
for FY 1999 (106.22 percent) to the FY 1999 statutory application fee
rates stated previously. For FY 1999 the adjusted application fee rates
are $272,282 for applications requiring clinical data, and $136,141 for
applications not requiring clinical data or supplements requiring
clinical data. These amounts must be submitted with all applications
during FY 1999.
B. Estimate of Total Application Fee Revenue
Total application fee revenues for 1999 will be determined by the
number of fee-paying applications FDA receives in FY 1999 (from October
1, 1998, through September 30, 1999) 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 projected
to be equal to total revenues FDA collects from application fees, FDA
must first estimate its total 1999 application fee revenues. To do this
FDA has traditionally calculated the number of full application fees
FDA received in the preceding fiscal year, made an allowance for
waivers and exemptions, and used that figure as a basis for estimating
the next year's application volume.
For FY 1998, FDA received and filed 101 human drug applications
that require clinical data for approval, 23 that did not require
clinical data for approval, and 93 supplements to human drug
applications that require clinical data for approval. 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 that may be subject
to full application fees.
In addition, as of September 30, 1998, FDA assessed fees for three
applications 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 subject to fees in FY
1998 was 160, before any exemptions, waivers or reductions. Under the
FDAMA, FDA may waive fees for certain small businesses submitting their
first application and certain orphan products are exempted from
application fees. In addition, the FDAMA excludes from fees bulk
biological products that are further manufactured, and provides
[[Page 70779]]
exceptions for certain supplements for pediatric indications. In FY
1998 waivers or exemptions applied to 41.5 equivalents of full
applications. Therefore, based solely on 1998 data, FDA estimates that
approximately 118.5 (160 minus 41.5) equivalent applications that
require clinical data will qualify for fees in FY 1999, after allowing
for exemptions, waivers, or reductions.
This estimate based on the data from 1998 alone predicts a
substantial drop in applications, and represents a substantial
departure from FDA experience over the past 5 years. Over that period
the estimated number of fee-paying applications increased fairly
consistently at a rate of about 7 percent each year, as set out in
Table 1 of this document.
Table 1.
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Year Estimated Number of Fee-Paying Full Application Equivalents
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1993....................................................................... 116
1994....................................................................... 124
1995....................................................................... 131
1996....................................................................... 141
1997....................................................................... 169
1998....................................................................... 118.5
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Since the volume of fee-paying applications FDA received in 1998
represents such a substantial departure from the trend experienced over
the previous 5 years, and since sharp changes produce disruptive
volatility in both fees and revenues, FDA reexamined the process to be
used in estimating the next year's application volume. FDA considered
several different approaches (continuation of current method, using a
2- or 3-year rolling average, and linear regression) and chose the
linear regression projection method as the best alternative for this
estimate.
Linear regression is well suited to situations like this where
there are several years of historical data, the potential exists for
shifts from year-to-year, and there is no obvious causative rationale
to reasonably predict the year-to-year fluctuations. It also provides a
damping effect on year-to-year fee and revenue fluctuations and allows
for more stability in both fee levels paid by industry and in agency
resource planning. Under this approach, the analysis takes into account
the number of fee-paying PDUFA submissions each year since PDUFA began
in 1993, adjusts those numbers conservatively to reflect additional
exemptions/waivers that would have been granted between 1993 and 1997
if the current law governing exemptions and waivers had been in effect
then, and fits the best line to those data points. The extension of
that line to the next year estimates the number of submissions for that
year. Beginning now for FY 1999, FDA will make this annual estimate
based on a linear regression analysis of data on all fee-paying full
application equivalent submissions from 1993 through the latest year
(1998 in this case).
This will mean that our estimated number of applications will be
higher in 1998 than it would have been under our previous estimating
method. It will also mean that in future years, if there is a sudden
rise in application volume, the regression analysis process will dampen
the effect of such year-to-year increases as well. We believe that this
is a fair and reasonable approach, and that it will insulate fees and
revenues from significant fluctuations that may occur in any single
year.
Using this approach, a linear regression line based on the adjusted
number of fee-paying full application equivalent submissions since 1993
projects the receipt of 150 fee-paying full application equivalent
submissions in 1999, as reflected in Table 2 and the graphic of this
document.
Table 2.
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Year 1993 1994 1995 1996 1997 1998 1999
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Adjusted Fee-Paying Full Application
Equivalents 101.0 108.9 112.5 136.3 161.5 118.5
Regression Line 103.9 111.6 119.3 127.0 134.6 142.3 150.0
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The total FY 1999 application fee revenue is estimated by
multiplying the adjusted application fee rate ($272,282) by the
equivalent number of applications projected to qualify for fees in FY
1999 (150), for a total estimated application fee revenue in 1999 of
$40,842,300. This is the amount of revenue that FDA is also expected to
derive both from establishment fees and from product fees.
IV. Fee Calculations for Establishment and Product Fees
A. Establishment Fees
At the beginning of FY 1998 the establishment fee was based on an
estimate of 275 establishments subject to fees. By the end of FY 1998,
343 establishments qualified for and were billed for establishment
fees, before all decisions on requests for waivers or reductions were
made. We estimate that a total of 25 establishment fee waivers will be
granted in 1998, for a net of 318 fee-paying establishments. In FY 1999
fees will be based on an estimate of 318 establishments paying fees
after taking waivers into account. The fee per establishment is
determined by dividing the adjusted total fee revenue to be derived
from establishments ($40,842,300), by the estimated 318 establishments,
for an establishment fee rate for FY 1999 of $128,435 (rounded to the
nearest dollar).
B. Product Fees
At the beginning of FY 1998 the product fee was based on an
estimate that 2,100 products would be subject to product fees. By the
end of FY 1998, 2,279 products qualified and were billed for product
fees before all decisions on requests for waivers or reductions were
made. Assuming that there will be about 55 waivers granted, FDA
estimates that 2,224 products will qualify for product fees in FY 1999,
after allowing for waivers and exemptions. Accordingly, the FY 1999
product fee rate is determined by dividing the adjusted total fee
revenue to be derived from product fees ($40,842,300) by the estimated
2,224 products for a product fee rate of $18,364 (rounded to the
nearest dollar).
V. Adjusted Fee Schedules for FY 1999
The fee rates for FY 1999 are set out in Table 3 of this document.
Table 3.
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Fee Category Fee Rates For FY 1999
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Applications
Requiring clinical data.............................................................. $272,282
Not requiring clinical data.......................................................... $136,141
Supplements requiring clinical data.................................................. $136,141
Establishments......................................................................... $128,435
Products............................................................................... $18,364
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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, 1998, must be accompanied by the
appropriate application fee established in the new fee schedule.
Payment must be made in United States currency by check, bank draft, or
U.S. postal money order payable to the order of the U.S. Food and Drug
Administration. Please include the user fee ID number on your check.
Your check 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, they can be sent to: Mellon Bank, Three Mellon Bank Center,
27th Floor (FDA 360909), Pittsburgh, PA 15259-0001. (Note: This Mellon
Bank Address is for courier delivery only.) Please make sure that the
FDA P.O. Box number (P.O. Box 360909) is on the enclosed check.
FDA will bill applicants who submitted application fees between
October 1, 1998, and December 31, 1998, based on the adjusted rate
schedule.
B. Establishment and Product Fees
By December 31, 1998, FDA will issue invoices for establishments
and product fees for FY 1999 under the new fee schedules. Payment will
be due by January 31, 1999. FDA will issue invoices in October 1999 for
any products and establishments subject to fees for FY 1999 that
qualify for fees after the December 1998 billing.
Dated: December 15, 1998.
William K. Hubbard,
Associate Commissioner for Policy Coordination.
[FR Doc. 98-33831 Filed 12-21-98; 8:45 am]
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