[Federal Register Volume 68, Number 148 (Friday, August 1, 2003)]
[Notices]
[Pages 45249-45252]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-19654]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration


Establishment of Prescription Drug User Fee Rates for Fiscal Year 
2004

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) 2004. 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. Revenue amounts for application fees, establishment fees, and 
product fees for FY 2004 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 2004 for application fees ($573,500 for an application requiring 
clinical data, and $286,750 for an application not requiring clinical 
data or a supplement requiring clinical data), establishment fees 
($226,800), and product fees ($36,080). These fees are effective on 
October 1, 2003, and will remain in effect through September 30, 2004. 
For applications and supplements that are submitted on or after October 
1, 2003, the new fee schedule must be used. Invoices for establishment 
and product fees for FY 2004 will be issued in August 2003, using the 
new fee schedule.

FOR FURTHER INFORMATION CONTACT: Frank Claunts, Office of Management 
and Systems (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 (see 21 U.S.C. 379h(a)). When certain 
conditions are met, FDA may waive or reduce fees (see 21 U.S.C. 
379h(d)).
    For FY 2003 through FY 2007 revenue amounts for application fees, 
establishment fees, and product fees are established by PDUFA III (the 
Prescription Drug User Fee Amendments of 2002, title 5 of the Public 
Health Security and Bioterrorism Preparedness and Response Act of 
2002). 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

[[Page 45250]]

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 2004 for application, 
establishment, and product fees. These fees are effective on October 1, 
2003, and will remain in effect through September 30, 2004.

II. Revenue Amount for FY 2004, and Adjustments for Inflation and 
Workload

A. Statutory Fee Revenue Amounts

    PDUFA III specifies that the fee revenue amount for FY 2004 for 
each category of fees (application, product, and establishment) is 
$77,000,000, before any adjustments are made, for a total of 
$231,000,000 from all three categories of fees (see 21 U.S.C. 379h(b)).

B. Inflation Adjustment to Fee Revenue Amount

    PDUFA III provides that fee revenue amounts for each FY 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 FY for which fees are 
being set, or (2) the total percentage pay change for the previous FY 
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 adjustment for FY 2004 is 4.27 percent. This is the 
greater of the CPI increase during the 12-month period ending June 30 
preceding the FY for which fees are being set (June 30, 2003--which was 
2.11 percent) or the increase in pay for the previous FY (2003 in this 
case) for Federal employees stationed in the Washington, DC, 
metropolitan area (4.27 percent). No compounding is applied to this 
amount because there was no inflation increase applied in FY 2003.
    The inflation-adjusted revenue amount for each category of fees for 
FY 2004 is the statutory fee amount ($77,000,000) increased by 4.27 
percent, the inflation adjuster for FY 2004. The FY 2004 inflation-
adjusted revenue amount is $80,287,900 for each category of fee, for a 
total inflation-adjusted fee revenue amount of $240,863,700 in FY 2004.

C. Workload Adjustment to Inflation Adjusted Fee Revenue Amount

    For each FY 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 the 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, 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, 2003.
    The results of these calculations are presented in the first 2 
columns of table 1 of this document Column 3 reflects the percent 
change in workload over the two 5-year periods. 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 applying data generated in a 2002 KPMG study of 
FDA's drug review workload 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 
the table the sum of the values in column 5 is added, reflecting a 
total change in workload of negative 1.4 percent for FY 2004.

                                     Table 1.--Workload Adjuster Calculation
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                                                    Summary of Workload Adjustment Calculations
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        Application Type           Column 1  5-      Column 2                        Column 4        Column 5
                                  year Avg. Base   Latest 5-year    Column 3  %      Weighting      Weighted %
                                       Years           Avg.           Change          Factor          Change
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New Drug Applications/Biological      119.8           116.6            -2.7%           45.0%           -1.2%
 License Applications
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Commercial Investigational New        629.8           617.8            -1.9%           40.7%           -0.8%
 Drug Exemptions
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Efficacy Supplements                  159.2           164.8             3.5%            5.7%            0.2%
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Manufacturing Supplements            2100.6          2193.0             4.4%            8.7%            0.4%
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FY 2004 Workload Adjuster                                                                              -1.4%
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    PDUFA III specifies that the workload adjuster may not result in 
fees that are less than the inflation-adjusted revenue amount. For this 
reason, the workload adjustment will not be applied in FY 2004, and the 
inflation-adjusted revenue amount for each category of fees for FY 2004 
($80,287,900) becomes the revenue target for fees in FY 2004, for a 
total inflation-adjusted fee revenue target in FY 2004 of $240,863,700 
for fees from all three categories.

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 
FY (see 21 U.S.C. 379h(c)(4)). The fees are to be established so that 
they will generate

[[Page 45251]]

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 2004 is $80,287,900, 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 FY 2007, FDA will estimate the total number of 
fee-paying full application equivalents (FAEs) it expects to receive 
the next FY by averaging the number of fee-paying FAEs received in the 
five most recent fiscal years. This use of the rolling average of the 
five 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 2004, the 5-year rolling average for the most recent 5 years will 
be based on actual counts of fee-paying FAEs received for fiscal years 
1999 through 2003. For FY 2003, 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 of this document shows, in column 1, the total number of 
each type of FAE received in the first 9 months of FY 2003, whether 
fees were paid or not. Column 2 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, 2003. Column 4 
estimates the 12-month total fee-paying FAEs for FY 2003 based on the 
applications received through June 30, 2003. 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 2003 FAEs Received through June 30, 2003 and Projected Through September 30, 2003
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                                                                   Column 2 Fee                    Column 4 12-
                                                  Column 1 Total     Exempt or    Column 3 Total       Month
              Application or Action                FAEs Received    Waived FAEs     Fee Paying    Projection for
                                                   Through June    Through June    FAEs Through     Fee Paying
                                                     30, 2003        30, 2003      June 30, 2003       FAEs
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Applications Requiring Clinical Data                   65.0            17.0            48.0            64.0
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Applications Not Requiring Clinical Data                6.5             0.5             6.0             8.0
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Supplements Requiring Clinical Data                    40.0             6.0            34.0            45.3
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Withdrawn or Refused to File                            0.0             0.0             0.0             0.0
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Total                                                 111.5            23.5            88.0           117.3
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    In the first 9 months of FY 2003 FDA received 111.5 FAEs, of which 
88 were fee-paying. Based on data from the last 7 FYs, on average, 25 
percent of the applications submitted each year come in the final 3 
months. Dividing 88 by 3 and multiplying by 4, extrapolates the amount 
to the full 12 months of the FY and projects the number of fee-paying 
FAEs in FY 2003 at 117.3.
    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 1999, FY 2000, FY 2001, 
and FY 2002 respectively were 5.3, 12.5, 19, and 4.5. Since fees on 
these supplements will be paid for pediatric applications submitted in 
FY 2004, the number of pediatric supplement FAEs exempted from fees 
each year from FY 1999 through FY 2002 (the years in the table when 
fees were exempted) are added to the total of fee-paying FAEs received 
each year.
    As table 3 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 2003, is 
140.0 FAEs. FDA will set fees for FY 2004 based on this estimate as the 
number of full application equivalents that will pay fees.

                                          Table 3.--FAEs 5-Year Average
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                                                                                                        5-year
                  Year                       1999        2000        2001        2002        2003        Avg.
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Fee-Paying FAEs                             118.7       153.0       107.6       127.6       117.3       131.8
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Exempt Pediatric Supplement FAEs              5.3        12.5        19.0         4.5         0.0         8.2
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Total                                       158.3       165.9       126.6       132.1       117.3       140.0
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    The FY 2004 application fee is estimated by dividing the estimated 
number of full applications that will pay fees, 140, into the fee 
revenue amount to be derived from application fees in FY 2004, 
$80,287,900. The result, rounded to the nearest one hundred dollars, is 
a fee of $573,500 per full application requiring clinical data, and

[[Page 45252]]

$286,750 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 (see 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 2004 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 2003, the establishment fee was based on an 
estimate that 354 establishments would be subject to and would pay 
fees. By the end of FY 2003, 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 
2003, for a net of 354 fee-paying establishments. FDA will use this 
number, 354, for its FY 2004 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 ($80,287,900) by the estimated 354 
establishments, for an establishment fee rate for FY 2004 of $226,800 
(rounded to the nearest one hundred dollars).

B. Product Fees

    At the beginning of FY 2003, the product fee was based on an 
estimate that 2,293 products would be subject to and pay product fees. 
By the end of FY 2003, 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 waivers 
and reductions made, FDA estimates that 2,225 products will qualify for 
product fees in FY 2003, after allowing for waivers and reductions, and 
will use this number for its FY 2004 estimate. Accordingly, the FY 2004 
product fee rate is determined by dividing the adjusted total fee 
revenue to be derived from product fees ($80,287,900) by the estimated 
2,225 products for a FY 2004 product fee of $36,080 (rounded to the 
nearest ten dollars).

VI. Fee Schedule for FY 2004

    The fee rates for FY 2004 are set out in table 4 of this document:

                                                    Table 4.
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                     FEE CATEGORY                                        FEE RATES FOR FY 2004
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APPLICATIONS                                           .........................................................
  Requiring clinical data                                                                              $573,500
  Not requiring clinical data                                                                          $286,750
  Supplements requiring clinical data                                                                  $286,750
ESTABLISHMENTS                                                                                         $226,800
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PRODUCTS                                                                                                $36,080
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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 submitted after September 30, 2003. Payment must be made 
in U.S. currency by check, bank draft, or U.S. postal money order 
payable to the order of the Food and Drug Administration. Please 
include the user fee identification (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 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 on the enclosed check. The tax ID number of the FDA is 530 
19 6965.

B. Establishment and Product Fees

    By August 31, 2003, FDA will issue invoices for establishment and 
product fees for FY 2004 under the new Fee Schedule. Payment will be 
due on October 1, 2003. FDA will issue invoices in October 2004 for any 
products and establishments subject to fees for FY 2004 that qualify 
for fees after the August 2003 billing.

    Dated: July 29, 2003.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. 03-19654 Filed 7-31-03; 8:45 am]
BILLING CODE 4160-01-S