[Federal Register Volume 70, Number 146 (Monday, August 1, 2005)]
[Notices]
[Pages 44106-44109]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-15159]



[[Page 44106]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration


Establishment of Prescription Drug User Fee Rates for Fiscal Year 
2006

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) 2006. The Federal 
Food, Drug, and Cosmetic Act (the FD& C Act), as amended by the 
Prescription Drug User Fee Amendments of 2002 (Title 5 of the Public 
Health Security and Bioterrorism Preparedness and Response Act of 2002 
(PHSBPRA or 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 2006 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 revenue levels 
established in the statute, after those amounts have been first 
adjusted for inflation and workload. This notice establishes fee rates 
for FY 2006 for application fees for an application requiring clinical 
data ($767,400), for an application not requiring clinical data or a 
supplement requiring clinical data ($383,700), for establishment fees 
($264,000), and for product fees ($42,130). These fees are effective on 
October 1, 2005, and will remain in effect through September 30, 2006. 
For applications and supplements that are submitted on or after October 
1, 2005, the new fee schedule must be used. Invoices for establishment 
and product fees for FY 2006 will be issued in August 2005, 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

    The FD&C Act, sections 735 and 736 (21 U.S.C. 379g and 379h), 
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 FY 2003 through FY 2007 base revenue amounts for application 
fees, establishment fees, and product fees are established by PDUFA 
III. 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 
revenue 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 2006 for application, 
establishment, and product fees. These fees are effective on October 1, 
2005, and will remain in effect through September 30, 2006.

II. Revenue Amounts for FY 2006, and Adjustments for Inflation and 
Workload

A. Statutory Fee Revenue Amounts

    PDUFA III specifies that the fee revenue amount for FY 2006 for 
application fees is $86,434,000 and for both product and establishment 
fees is $86,433,000, for a total of $259,300,000 from all 3 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 FY after 2003 
shall be adjusted for inflation. The adjustment must reflect the 
greater of the following percentage change: (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 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 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).
    The inflation increase for FY 2005 was 4.42 percent. This was 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, 2004--which was 
3.27 percent) or the increase in pay for the previous FY (2004 in this 
case) for Federal employees stationed in the Washington, DC 
metropolitan area (4.42 percent).
    The inflation adjustment for FY 2006 is 3.71 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, 2005--which was 
2.53 percent) or the increase in pay for FY 2005 for Federal employees 
stationed in the Washington, DC metropolitan area (3.71 percent).
    Compounding these amounts (1.0427 times 1.0442 times 1.0371) yields 
a total compounded inflation adjustment of 12.92 percent for FY 2006.
    The inflation adjustment for each category of fees for FY 2006 is 
the statutory fee amount increased by 12.92 percent, the inflation 
adjuster for FY 2006. The FY 2006 inflation-adjusted revenue amount for 
application fees is $97,601,273 ($86,434,000 times 1.1292). For both 
product and establishment fees the inflation-adjusted revenue amount is 
$97,600,144 ($86,433,000 times 1.1292). The total inflation-adjusted 
fee revenue amount for all three fee categories combined is 
$292,801,561 in FY 2006.

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 Prescription Drug User Fee 
Amendments of 2002, House of Representatives Report number 107-481, 
provides guidance 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

[[Page 44107]]

average number of each of these types of applications over the most 
recent 5-year period that ended June 30, 2005.
    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 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 the table the sum of the 
values in column 5 is added, reflecting a total increase in workload of 
1.43 percent for FY 2006 when compared to the base years.

                                                         Table 1.--Workload Adjuster Calculation
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                                                                                  Summary of Workload Adjustment Calculations
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                  Application Type                      Column 1 5-Year   Column 2 Latest 5-   Column 3 Percent   Column 4 Weighting   Column 5 Weighted
                                                        Avg. Base Years        Year Avg.            Change              Factor             % Change
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NDA's/BLA's                                                        119.6               116.2              -2.8%               41.9%              -1.19%
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Commercial IND's                                                   629.8               641.6               1.9%               41.8%               0.78%
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Efficacy Supps.                                                    159.2               166.0               4.3%                6.0%               0.26%
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Manufacturing Supps.                                             2,100.6             2,422.8              15.3%               10.3%               1.58%
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FY 2006 Workload Adjuster                                                                                                                         1.43%
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    Increasing the inflation-adjusted revenue amount for application 
fees of $97,601,273 by the FY 2005 workload adjuster (1.43 percent) 
results in an increase of $1,395,698, for a total inflation and 
workload adjusted application fee revenue amount of $98,996,971. 
Increasing the inflation-adjusted revenue amount for establishment and 
product fees, each of which is $97,600,144, by the FY 2005 workload 
adjuster (1.43 percent) results in an increase of $1,395,682, for a 
total inflation and workload adjusted application fee revenue amount of 
$98,995,826 for each category. The total FY 2006 inflation and workload 
adjusted fee revenue target for all three fee categories combined is 
$296,988,623.

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 (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 2006 is $98,996,971, as calculated in section II.C of this document. 
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 FAE's that FDA will receive 
in FY 2006, the 5-year rolling average for the most recent 5 years will 
be based on actual counts of fee-paying FAEs received for FY 2001 
through 2005. For FY 2005, 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 2005, 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, 2005. Column 4 
estimates the 12-month total fee-paying FAEs for FY 2005 based on the 
applications received through June 30, 2005. 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 2005 Full Application Equivalents Received through June 30, 2005, and Projected Through September
                                                    30, 2005
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                                  Column 1 Total    Column 2 Fee  Exempt  Column 3 Total Fee
     Application or Action      Received Through6/  or Waived Through 6/   Paying Through 6/   Column 4 12-Month
                                      30/2005              30/2005              30/2005           Projection
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Applications Requiring                       70.0                   23.0              47.0                  62.7
 Clinical Data
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Applications Not Requiring                    4                      0.0               4                     5.3
 Clinical Data
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[[Page 44108]]

 
Supplements Requiring Clinical               45                      5.0              40                    53.3
 Data
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Withdrawn or Refused to File                  0.25                   0.0               0.25                  0.3
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Total                                       119.25                  28.0              91.25                121.6
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    In the first 9 months of FY 2005 FDA received 119.25 FAE's, of 
which 91.25 were fee-paying. Based on data from the last 7 fiscal 
years, on average, 25 percent of the applications submitted each year 
come in the final 3 months. Dividing 91.25 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 2005 at 121.6.
    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 2006 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 2001 and FY 2002 respectively were 19 
and 4.5. Since fees on these supplements are paid for pediatric 
applications submitted in FY 2003 and beyond, the number of pediatric 
supplement FAEs exempted from fees each in both FY 2001 and 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 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 
2005, is 129 FAEs. FDA will set fees for FY 2006 based on this estimate 
as the number of full application equivalents that will pay fees.

                       Table 3.--Fee-Paying Full Application Equivalent--Five Year Average
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         Year                2001           2002           2003           2004           2005       5-Year Avg.
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Fee-Paying FAEs                 107.6          127.6          119.5          145.1          121.6          124.3
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Exempt Pediatric                 19.0            4.5            0.0            0.0            0.0            4.7
 Supplement FAEs
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Total                           126.6          132.1          119.5          145.1          121.6          129.0
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    The FY 2006 application fee is estimated by dividing the average 
number of full applications that paid fees over the latest 5 years, 
129, into the fee revenue amount to be derived from application fees in 
FY 2006, $98,996,971. The result, rounded to the nearest one hundred 
dollars, is a fee of $767,400 per full application requiring clinical 
data, and $383,700 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 FY 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 2006 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 2005, the establishment fee was based on an 
estimate that 354 establishments would be subject to and would pay 
fees. By the end of FY 2005, FDA estimates that 400 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 
2005, for a net of 375 fee-paying establishments. FDA will use this 
same number again, 375, for its FY 2006 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 ($98,995,826) by the 
estimated 375 establishments, for an establishment fee rate for FY 2006 
of $264,000 (rounded to the nearest $100).

B. Product Fees

    At the beginning of FY 2005, 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 2005, FDA estimates that 2,390 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 40 waivers 
and reductions granted, FDA estimates that 2,350 products will qualify 
for product fees in FY 2005, after allowing for waivers and reductions, 
and will use this number for its FY 2006

[[Page 44109]]

estimate. Accordingly, the FY 2006 product fee rate is determined by 
dividing the adjusted total fee revenue to be derived from product fees 
($98,995,826) by the estimated 2,350 products for a FY 2006 product fee 
of $42,130 (rounded to the nearest $10).

VI. Fee Schedule for FY 2006

    The fee rates for FY 2006 are set out in table 4 of this document.

                       Table 4.--FY 2006 Fee Rates
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              FEE CATEGORY                     FEE RATES FOR FY 2006
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Applications
------------------------------------------------------------------------
  Requiring clinical data                 $767,400
  Not requiring clinical data             $383,700
  Supplements requiring clinical data     $383,700
Establishments                            $264,000
Products                                  $42,130
------------------------------------------------------------------------

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, 2005. 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 ID number on your check. Your payment can be 
mailed to: Food and Drug Administration, P.O. Box 360909, Mellon Client 
Service Center--rm. 670, 500 Ross St., Pittsburgh, PA 15251-6909.
    If checks are to be sent by a courier, 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 identification number of the 
Food and Drug Administration is 530 19 6965.

B. Establishment and Product Fees

    By August 31, 2005, FDA will issue invoices for establishment and 
product fees for FY 2006 under the new Fee Schedule. Payment will be 
due on October 1, 2005. FDA will issue invoices in October 2006 for any 
products and establishments subject to fees for FY 2006 that qualify 
for fees after the August 2005 billing.

    Dated: July 26, 2005.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. 05-15159 Filed 7-29-05; 8:45 am]
BILLING CODE 4160-01-S