Prescription Drug User Fee Act

The Prescription Drug User Fee Act (PDUFA) was a law passed by the United States Congress in 1992 which allowed the Food and Drug Administration (FDA) to collect fees from drug manufacturers to fund the new drug approval process. The Act provided that the FDA was entitled to collect a substantial application fee from drug manufacturers at the time a New Drug Application (NDA) or Biologics License Application (BLA) was submitted, with those funds designated for use only in Center for Drug Evaluation and Research (CDER) or Center for Biologics Evaluation and Research (CBER) drug approval activities. In order to continue collecting such fees, the FDA is required to meet certain performance benchmarks, primarily related to the speed of certain activities within the NDA review process. The Prescription Drug User Fee Act (PDUFA) was a law passed by the United States Congress in 1992 which allowed the Food and Drug Administration (FDA) to collect fees from drug manufacturers to fund the new drug approval process. The Act provided that the FDA was entitled to collect a substantial application fee from drug manufacturers at the time a New Drug Application (NDA) or Biologics License Application (BLA) was submitted, with those funds designated for use only in Center for Drug Evaluation and Research (CDER) or Center for Biologics Evaluation and Research (CBER) drug approval activities. In order to continue collecting such fees, the FDA is required to meet certain performance benchmarks, primarily related to the speed of certain activities within the NDA review process. The move towards imposing user fees to pay for the regulatory review of new medicines was the result of dissatisfaction among consumers, industry, and the FDA. All three groups felt that drug approvals were taking far too long. Pharmaceutical companies had to wait to begin to recoup the costs of research and development. The FDA estimated that a delay of one month in a review’s completion cost its sponsor $10 million. The FDA argued that it needed additional staff to end its back-log of drugs awaiting approval for market. The FDA had not received sufficient appropriations from Congress to hire them. For decades the FDA had asked for permission to implement user fees and the pharmaceutical industry generally opposed them, fearing that the funds would not be used to speed drug review. The 1992 law became possible when the FDA and industry agreed on setting target completion times for reviews and the promise these fees would supplement federal appropriations instead of replacing them. The length of the drug approval process fell under severe scrutiny during the early years of the AIDS epidemic. In the late 1980s, ACT-UP and other HIV activist organizations accused the FDA of unnecessarily delaying the approval of medications to fight HIV and opportunistic infections, and staged large protests, such as a confrontational October 11, 1988 action at the FDA headquarters which resulted in roughly 180 arrests. In August 1990, Louis Lasagna, then chairman of a presidential advisory panel on drug approval, estimated that thousands of lives were lost each year due to delays in approval and marketing of drugs for cancer and AIDS. Partly in response to these criticisms, the FDA introduced expedited approval of drugs for life-threatening diseases and expanded pre-approval access to drugs for patients with limited treatment options. All of the initial drugs approved for the treatment of HIV/AIDS were approved through accelerated approval mechanisms. For example, a 'treatment IND' was issued for the first HIV drug, AZT, in 1985, and approval was granted 2 years later, in 1987. AIDS activists, desperate for new treatments, were outraged at the cost of those first drugs and the slow pace of drug development. These activists bombarded the government and drug companies with complaints and public protests. The activists won a major victory in 1989, when Burroughs Wellcome implemented a 20% price cut on AZT, then still the only treatment for HIV. Even after this price concession, the 12-pill-per-day AZT regimen cost patients $6,400 a year. AIDS activists expressed their anger by trashing booths at medical conventions and continuing vocal public protests. Gradually, drug companies established relationships with AIDS activists and the two sides came together to improve clinical trials. By August 1991, relations had warmed up so much that ACT-UP founder Larry Kramer wrote Bristol-Myers Squibb chief Richard Gelb a letter of congratulations on the imminent approval of Videx. AIDS groups fought for the reauthorization of the Orphan Drug Act and the passage of the Prescription Drug User Fee Act in 1992. The Prescription Drug User Fee Act (PDUFA) was first enacted in 1992. PDUFA gives the Food and Drug Administration (FDA) a revenue source, fees paid by pharmaceutical companies seeking the approval of new drugs, to supplement but not replace direct appropriations from Congress. PDUFA was passed in order to shorten the length of time from a manufacturer’s submission of a New Drug Application or a Biologics License Application to an FDA decision approval or licensure. Congress created three kinds of user fees via PDUFA and required that they each make up one-third of the total fees collected. These include application review fees paid by the sponsor for each drug or biologic application submitted, establishment fees paid by manufacturers annually for each of its facilities, and product fees paid annually for each product on the market covered by PDUFA. For 1993, the application review fee was about $100,000. The law provided exemptions and waivers for applications from small businesses, drugs aimed at orphan diseases, or unmet public health needs. In order to avoid listing specific performance goals in statutory language Congress stated in the bill’s “Findings” that, '3) the fees authorized by this title will be dedicated toward expediting the review of human drug applications as set forth in the goals identified in the letters of September 14, 1992, and September 21, 1992, from the Commissioner of Food and Drugs to the Chairman of the Energy and Commerce Committee of the House of Representatives and the Chairman of the Labor and Human Resources Committee of the Senate, as set forth at 138 Cong. Rec. H9099-H9100 (daily ed. September 22, 1992).' In its 1997 reauthorization of PDUFA, Congress enacted stricter performance goals, required increased transparency in the drug review process, and tried to facilitate better communication between drug makers and patient advocacy groups. Congress expanded the scope of the legislation to include the investigational phases of a new drug’s development. PDUFA II was passed as Title I of the Food and Drug Administration Modernization Act. When Congress was debating the legislation that implemented PDUFA II Rep. Billy Tauzin, who later became head of PhRMA and one of those leading the call for a further streamlined review process, told a story of how a family friend had to travel to Mexico to obtain drugs that helped him overcome prostate cancer. 'We continue to have problems with the fact that approved medicines in other countries can't get approved here. But what I particularly can't understand at all are situations where you have people suffering terminal illnesses, and they can't get the experimental drugs that might save their lives.'