FDA update – March 4, 2011

New User Fees in 2012

The fiscal year (FY) 2012 President’s Budget request for FDA is $4,360,281,000. This represents a total program level increase of $1,076,215,000 above the amount enacted into law for FY 2010. The FDA total program level includes new budget authority, current law user fees, and new proposed user fees.

Several of these new imposed fees will directly affect the medical device industry. There are new fees for the food and pharmaceutical industries as well.

These new proposed user fees includes Reinspection fees, New International Courier User Fees, Recall Fees, Voluntary Qualified Importer Program (VQIP) fees, Food Reinspection fees, Food Export Certification Fees and Generic drug application Fees.

They are discussed below:

A. Generic Drug Application Fees:

  •  FDA will hire additional staff to support the review of abbreviated new drug application (ANDA) for generic drugs and inspections of generic drug manufacturing facilities. In the case of user fees, by the end of the first five years of the Generic Drug User Fee Program, the additional user fees will result in a complete review and response for an estimated 80 percent of applications within 12 months of receipt, other than applications excluded because of exclusivity or challenges. Generic drug user fees will support premarket and postmarket activities to ensure the safety and efficacy of generic drug products.
  •  FDA will hire 6 new investigators with user fees to conduct inspections of generic drug manufacturing facilities. When fully trained, the new investigators will conduct an additional 54 domestic inspections of generic drug manufacturing facilities to support the review process. Based on training requirements, the full performance year for the increase in domestic inspections is FY 2014.
  •  FDA will hire four new staff to conduct generic drug reviews when fully trained, the new staff will be able to conduct 18 additional application reviews per year. FDA expects that the reviewers will be fully trained after 24 months.

B. Reinspection Fee:
The FDA Food Safety Modernization Act, which Congress enacted in December 2010, authorized Reinspection Fees for reinspections of food and feed establishments.

The FDA is proposing to expand the authority to medical product establishments. With this change, medical product establishments will pay the full cost of reinspections and associated follow-up work.

  • FDA will impose the user fee when FDA reinspects facilities due to a failure to meet Good Manufacturing Practices (GMPs) or other important FDA requirements.
  • When FDA identifies violations during an inspection or issues a warning letter following an inspection, FDA conducts follow-up inspections to verify that the problem was corrected. FDA procedures usually require that FDA conduct a follow-up inspection of the firm within six months of issuing a warning letter.
  • FDA will hire 21 new investigators when the new investigators are fully trained, FDA will have the capacity to conduct an estimated 329 domestic medical product reinspections
  • The Reinspection User Fee ensures that facilities that fail to comply with health and safety standards bear the cost of the reinspection. If facilities that fail to comply with FDA regulations do not pay for reinspections, FDA must shift resources from priority public health activities to conduct facility reinspections.
  • The proposed Reinspection User Fee will also extend to FDA food programs.

C. International Courier Fee:

Millions of shipments of FDA regulated commodities, predominantly medical products, enter the United States through express courier facilities. These shipments are often destined for individual consumers or for illegal distribution. Current FDA staffing does not match the growth in import volume. Couriers expects a growth of over 60 percent in shipments during the next year, further taxing FDA resources.

To address the growing volume of imports entering through international couriers, FDA is proposing to pay the cost of these import operations through a new user fee. The user fee resources will support increased import surveillance of FDA-regulated products at express courier hubs.

Funding generated from this user fee program will allow FDA to conduct the following essential import safety activities:

  • Conduct entry reviews
  • Collect samples and conduct physical exams to determine whether a product can be admitted into the United States.
  • Initiate compliance actions to prevent release of unsafe products
  • Establish import controls to prevent future imports of unsafe products from reaching U.S. consumers.

D. Food Reinspection Fees

FDA’s Office of Regulatory Affairs (ORA) conducts postmarket inspections of foods and animal feed facilities to assess their compliance with Good Manufacturing Practice requirements.

Revenue from the Food and Feed Reinspection User Fee will reimburse ORA and other FDA offices for costs required to reinspect firms that fail to comply with FDA regulations designed to protect Americans from unsafe food and feed products.

The new Food and Feed Reinspection User Fee supports FDA efforts to assure the safety and security of the supply of food and feed. Revenue from the user fee will reimburse FDA for costs associated with reinspections of firms that fail to comply with FDA regulations designed to protect Americans from unsafe products.

E. Recall Fees:

  • These funds reimburse FDA for the cost of conducting a mandatory recall of an article of food that is adulterated or misbranded. These mandatory recalls, also knows as Class I recalls, involve circumstances when the use of, or exposure to, an article of food will cause serious adverse health consequences or death to humans or animals.
  • The new Recall User Fee supports public health priorities by providing resources to FDA to conduct and oversee Class I recalls. FDA assesses these fees where the manufacturer or distributer of the recalled product does not voluntarily remove the harmful product from public distribution. These fees support FDA efforts to eliminate the possibility of the product causing serious adverse health consequences or death

F. Voluntary Qualified Importer Program (VQIP):

This user fee supports important public health priorities by providing the FDA the ability to expedite the import of food that meets defined standards. This user fee program will help ensure that foods are safe for consumption thereby allowing FDA to focus other resources on targeting foods that have a higher risk of causing illness or have other public health consequences.

  • Creates partnership between private sector and FDA to identify high and low risk imports.
  • Creates voluntary program to give expedited access to imports that pose no meaningful risk, as determined by FDA, directing greater resources to higher risk products. 
  • Eligibility for Qualified Importer Program shall be determined by nature and risk profile of the food or ingredient, the compliance history of the supplier, the regulatory system of the country-of-origin, and other factors.

G. Food Export Certification Fee:

FDA’s ability to issue certificates in a timely fashion depends on FDA securing the resources necessary to offset the costs associated with issuing export certificates for foods. These user fees will support activities associated with facilitating international trade by FDA issuing export certificates.

  • Section 801 (e) (4)(B) of the Federal Food, Drug, and Cosmetic Act (the Act) authorizes FDA to collect user fees for export certificates for human drugs, animal drugs, and devices. However, this section does not extend to collecting user fees for export certificates for foods and animal feed. FDA expends significant resources annually to issue these certificates, and FDA needs to focus its resources on activities that are central to its public health mission.
  • Currently, FDA resources to support food export-related activities must be diverted from appropriated funds intended to support FDA's public health activities and programs.
  • FDA is now finding it increasingly difficult to strike an appropriate balance between its paramount mission of protecting the health of American consumers through programs to ensure the safety of domestic and imported products, and its emerging role of facilitating the international trade of U.S.-produced foods and feeds by attesting to the safety of these products exported from the United States.

If there are any questions on these new FDA fees please contact us via email at info@mdiconsultants.com and Ref: Increased user fees.