The Food and Drug Administration Safety and Innovation Act (FDASIA) was recently signed into law by President Obama. The act has been in the works since 2004. It is seen as a strategy to level the playing field by applying a different lower-fee structure to domestic manufacturers and enforcing the same FDA inspection schedule for international facilities.

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GENERICS HOW GDUFA COULD KILL YOUR US BUSINESS PLAN - GENERICS
by David Rice
T
he Food and Drug Administration Safety and
Innovation Act (FDASIA) was recently signed
into law by President Obama. This bill represents
an impressive effort by a US Congress that is often
seen as being plagued by partisan politics. Surprisingly, the
Administration did not laud the effort, but rather the President
unceremoniously signed the bill without fanfare or acclamation.
From the perspective of the generic drug industry, the legislation
was historic due to the inclusion of the Generic Drug User Fees
Act (GDUFA) and a focus on drug safety through increased
inspection of all participants in the US drug system. These
components have long been discussed, but a framework could
not previously be settled upon by the USFDA and the generic
drug industry. An overwhelming 2700 backlogged generic
drug applications now require a faster and more predictable
review. A process that once took up to 31 months can now be
accomplished in 10.
The act has been in the works since 2004. It is seen as a strategy
to level the playing field by applying a different lower-fee
structure to domestic manufacturers and enforcing the same
FDA inspection schedule for international facilities. The FDA
is also moving from a pre-approval approach to one of continual
surveillance; a mechanism intended to prevent the quality issues
that have plagued the industry of late.
GDUFA has been called “possibly the biggest step since Hatch-
Waxman”. With this law, the FDA is expected to collect an
annual $299 million; 80% coming from finished doses, and the
other 20% from API manufactures1. These fees are intended to
help the FDA ensure that participants in the US generic drug
system comply with US quality standards and to increase the
likelihood that American consumers get timely access to low-
cost, high-quality generic drugs.
The legislation also allows for more transparency in this process.
Identification of facilities involved in the manufacturing
of generic drugs and the improvement of the FDA’s
communications and feedback with the industry are two
effective efforts to expedite product access.
The drug supply-chain safety provisions addressed a hole in US
law that required facilities in the US to be inspected by USFDA
every two years, while not requiring the facilities outside the
US to do the same. Without a mandate, the USFDA was only
inspecting foreign facilities, on average, once every nine years.
The new legislation provides foreign and domestic parity of
inspections that are to be issued bi-annually using a risk-based
approach.
This was certainly an important legislative chapter for the
generic industry in the US, but now the industry faces the next
phase of FDASIA: regulatory framework and implementation.
For the majority of generic manufacturers API companies and
others within the generic pharmaceutical chain the continued
efforts will be worth watching, not only as FDASIA is finalized,
but as other issues like Quality by Design, track-and-trace
and drug shortage solutions are debated.
1 Actual fees depend on the number of companies requesting action. $299 million
will be spread across companies on the federal register. Experts believe that fees
could be up to three times higher. For example, FDA estimates 750 ANDA reviews
per year, whilst there are currently 290 active ANDA’s. Many companies will not file
now once fees are calculated into the business case.
2 Generic Pharmaceutical Association, “New Study Finds Use of Generic Prescription Drugs Saved Consumers and the U.S. Health Care System $931 Billion Over
Past 10 Years,” news release, Sept 21, 2011, http://www.gphaonline.org/sites/default/files/Savings%20Report%20Press%20Release%20Sep21%2011.pdf.
Sources: “Generic Drug User Fee Act Program Performance Goals and Procedures”, U.S. Food and Drug Administration, 2012, http://www.fda.gov/downloads/
ForIndustry/UserFees/GenericDrugUserFees/UCM282505.pdf.
“GenericDrugUserFeeAmendmentsof2012”,U.S.FoodandDrugAdministration,2012,http://www.fda.gov/downloads/ForIndustry/UserFees/GenericDrugUserFees/
UCM287735.pdf.
The most significant legal step since Hatch-Waxman
How GDUFA Could Kill
Your US Business Plan
Why GDUFA Matters
The Generic Pharmaceutical Association (GPhA) and IMS
Health recently released an independent analysis showing the
financial impact of the US generic drug industry. Over the past ten
years they have saved the US healthcare system an average of $931
billion, a saving of about $3 billion a week.2 This analysis clearly
shows the benefits of the generics industry for consumers and the
nation’s healthcare system. The FDA had not anticipated this mass
adoption of generics and has been crushed under the weight of the
growing industry; it is grossly underfunded and this has caused
severe delays in bringing new products (and consumer savings) to
the market.
How might GDUFA affect your business now and in the future?
There are two key elements that should be considered:
1) The fees to be paid and how to build them into your commercial
strategy
• It is possible that an ANDA review could cost up to $300,000
• How do you recover this unplanned cost?
• What impact might this cost have on your ability to invest in
more products?
• Do you have available cash flow to pay for existing ANDAs in
the backlog?
2) The timetable for reviews and inspections
• Over the next 5 years, the ANDA review time will be reduced
to 10 months
• Revenue might come earlier, but unforeseen competitors might
also enter the field
• Do you have the resources to capitalize on the reduced timeframe?
FDASIA and GDUFA are significant steps for the generic industry
and US consumers. The system puts generics in line with NCEs,
who have had the PDUFA (Prescription Drug User Fee Act) since
1992. It allows expediency for the availability of generic drugs,
greater predictability in the ANDA review times, and a scheme
available for biosimilars and medical devices. Now is the time to
start thinking about how they will affect your business, both now
and in the future.
David Rice; Executive Director at the Generic Federation. For more
information about Gen Fed, please visit the website at: www.genericfederation.
com or email memberships@genericfederation.com.
Additional comments from Asa Cox, CEO of Generic Pharma 2.0.
An FDA ANDA review
could cost up to $300,000
under GDUFA
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