[Federal Register Volume 64, Number 248 (Tuesday, December 28, 1999)]
[Notices]
[Pages 72669-72673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33685]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration


Establishment of Prescription Drug User Fee Rates for Fiscal Year 
2000

AGENCY: Food and Drug Administration.
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) 2000. 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 
2000 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 (Public Law 102-571), as amended by the FDAMA (Public Law 
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 biologic 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 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 FY 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.
    Each year from FY 1998 through 2002, FDA is required to set 
establishment fees and product fees so that the estimated total fee 
revenue from each of these two categories will equal 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 fee: 
Application fees, establishment fees, and product fees.
    This notice establishes fee rates for FY 2000 for application, 
establishment, and

[[Page 72670]]

product fees. These fees are retroactive to October 1, 1999, and will 
remain in effect through September 30, 2000. For fees already paid on 
applications and supplements submitted on or after October 1, 1999, 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, 1999, the new fee schedule must be used. Invoices 
for establishment and product fees for FY 2000 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) 
(all items; U.S. city average), 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 for safety or effectiveness (other than bioavailability or 
bioequivalence studies) (21 U.S.C. 379h(a)(1)(A) and 379h(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 above are set out in the FDAMA for 
FY 2000 ($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, 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) or the increase in applicable Federal salaries (2.45 percent).
    The adjustment for FY 1999 was 3.68 percent (63 FR 70777 at 70778, 
December 22, 1998). This was the greater of the CPI increase for FY 
1998 (1.49 percent) or the increase in applicable Federal salaries 
(3.68 percent).
    The adjustment for FY 2000 is 4.94 percent. This is the greater of 
the CPI increase for FY 1999 (2.62 percent) or the increase in 
applicable Federal salaries (4.94 percent).
    Compounding these amounts (1.0245 times 1.0368 times 1.0494) yields 
a total compounded inflation increase of 11.47 percent for FY 2000. The 
adjusted application fee rates are computed by adding one to the 
decimal equivalent of this percent (0.1147) and multiplying this amount 
(1.1147) by the FY 2000 statutory application fee rates stated above 
($256,338 for applications requiring clinical data, and $128,169 for 
applications not requiring clinical data or supplements requiring 
clinical data). For FY 2000 the adjusted application fee rates are 
$285,740 for applications requiring clinical data, and $142,870 for 
applications not requiring clinical data or supplements requiring 
clinical data. These amounts must be submitted with all applications 
during FY 2000.

B. Estimate of Total Application Fee Revenue

    Total application fee revenues for FY 2000 will be estimated by 
multiplying the number of fee-paying applications FDA receives in FY 
2000 (from October 1, 1999, through September 30, 2000) 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 FY 2000 application fee revenues. To do 
this FDA first determines its FY 1999 fee-paying full application 
equivalents, and uses that number in a linear regression analysis to 
predict the number of fee-paying full application equivalents expected 
in FY 2000. This is the same technique applied last year.
    In FY 1999, FDA received and filed 119 human drug applications that 
required clinical data for approval, 17 that did not require clinical 
data for approval, and 112 supplements to human drug applications that 
required 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 two. 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, 1999, FDA refused to file, or 
firms withdrew before filing, six applications that required clinical 
data, three applications that did not require clinical data, and four 
supplements requiring clinical data. The full applications refused for 
filing or withdrawn before filing pay one-fourth the full application 
fee and are counted as one-fourth of an application; the applications 
that do not require clinical data and the supplements refused for 
filing or withdrawn before filing pay one-eighth

[[Page 72671]]

of the full application fee and are each counted as one-eighth of an 
application.
    Using this methodology, the number of full application equivalents 
that were submitted for review in FY 1999 was 186, before any 
exemptions, waivers or reductions. Under the FDAMA, FDA waives fees for 
certain small businesses submitting their first application and certain 
orphan products, and certain supplements for pediatric indications are 
exempted from application fees. In addition, the FDAMA provides a 
number of other grounds for waivers (public health necessity, 
preventing significant barriers to innovation, and fees exceed the 
cost). In FY 1999, waivers or exemptions were applied to 35 full 
application equivalents (thirteen for orphan products, seven for small 
businesses, five for pediatric supplements, and ten miscellaneous 
exemptions/waivers). Therefore, for FY 1999, FDA estimates that it 
received the equivalent of 151 (186 minus 35) full application 
equivalents that will pay fees, after allowing for exemptions, waivers 
and reductions.
    A linear regression line based on the adjusted number of fee-paying 
full application equivalent submissions since 1993, and including our 
FY 1999 total of 151 fee-paying full application equivalents, projects 
the receipt of 158 fee-paying full application equivalent submissions 
in FY 2000, as reflected in Table 1 of this document and the graph 
below.

                                                    Table 1.
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  Fiscal Year       1993         1994        1995        1996        1997        1998        1999        2000
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Adjusted fee-   101.0        108.9        112.5       136.3       161.5       118.5       150.9
 paying FAE's
Regression      103.7        111.5        119.3       127.1       134.9       142.6       150.4       158.2
 line
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[GRAPHIC] [TIFF OMITTED] TN28DE99.023




[[Page 72673]]


    The total FY 2000 application fee revenue is estimated by 
multiplying the adjusted application fee rate ($285,740) by the 
equivalent number of applications projected to qualify for fees in FY 
2000 (158), for a total estimated application fee revenue in FY 2000 of 
$45,146,920. 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 1999, the establishment fee was based on an 
estimate of 318 establishments subject to fees. For FY 1999, 343 
establishments qualified for and were billed for establishment fees, 
before all decisions on requests for waivers or reductions were made. 
FDA estimates that a total of 25 establishment fee waivers will be 
granted in FY1999, for a net of 318 fee-paying establishments, and will 
use this number again for its FY 2000 estimate of 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 ($45,146,920), by the estimated 318 establishments, 
for an establishment fee rate for FY 2000 of $141,971 (rounded to the 
nearest dollar).

B. Product Fees

    At the beginning of FY 1999, the product fee was based on an 
estimate that 2,224 products would be subject to product fees. By the 
end of FY 1999, 2,317 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 2,262 products will qualify for product fees in FY 1999, 
after allowing for waivers and exemptions, and will use this number for 
its FY 2000 estimate. Accordingly, the FY 2000 product fee rate is 
determined by dividing the adjusted total fee revenue to be derived 
from product fees ($45,146,920) by the estimated 2,262 products for a 
product fee rate of $19,959 (rounded to the nearest dollar).

V. Adjusted Fee Schedules for FY 2000

    The fee rates for FY 2000 are set out in Table 2 of this document:

                                Table 2.
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            Fee Category                    Fee Rates for FY 2000
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Applications:
  Requiring clinical data            $285,740
  Not requiring clinical data        $142,870
  Supplements requiring clinical     $142,870
   data
  Establishments                     $141,971
  Products                           $19,959
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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, 1999, must be accompanied by the 
appropriate application fee established in the new fee schedule. 
Payment must be made in U.S. 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, the courier can deliver the checks 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 (PO Box 360909) is on the 
enclosed check.
    FDA will bill applicants who submitted application fees from 
October 1 to December 31, 1999, for the difference between the amount 
they submitted and the amount specified in the Adjusted Fee Schedule 
for FY 2000.

B. Establishment and Product Fees

    By December 31, 1999, FDA will issue invoices for establishment and 
product fees for FY 2000 under the new Adjusted Fee Schedule. Payment 
will be due by January 31, 2000. FDA will issue invoices in October 
2000 for any products and establishments subject to fees for FY 2000 
that qualify for fees after the December 1999 billing.

    Dated: December 21, 1999.
William K. Hubbard,
Senior Associate Commissioner for Policy, Planning, and Legislation.
[FR Doc. 99-33685 Filed 12-22-99; 5:00 pm]
BILLING CODE 4160-01-F