How Much Money Do Drug Companies Pay the FDA?

The Prescription Drug User Fee Act became a law in 1992. PDUFA (or as most people say, padoofa) allows the FDA to collect fees from pharmaceutical companies filing new drug applications. A new drug application, or NDA, is the process by which the FDA reviews new drugs. Updated performance goals, which have been part of PDUFA from the start, for 2013 through 2017 were issued this past September.

PDUFA was mainly created as a response to complaints among consumers, the pharmaceutical industry and the FDA that drug approvals were taking too long. The FDA said that without more money, there would never be enough staff support to churn out approvals at a rate that met with public and industry approval, and that met the needs of patients awaiting better treatments. In that light, the arrangement seems reasonable: drug companies are private, for-profit businesses that require regulatory approval of products they want to bring to market, so it seems right that they should have to pay for the time a government agency has to spend reviewing the compound.

On the other hand, another point of view holds that PDUFA spells not just padoofa, but also trouble, because its puts the FDA in the pockets of the drug industry. In the same way that doctors are accused of subjecting themselves to bias when they receive consulting or speaker fees from a drug company, so has the FDA been accused of kowtowing to the pharmaceutical industry, approving drugs that maybe shouldn’t be approved for one reason or another, and allowing the committees assembled to review NDAs to be stacked with conflicts of interest.

All of the information about what fees are paid to the FDA is public information. But few people who have tried to navigate through the FDA’s labyrinthine website have lived to tell the tale. So, apropos of nothing, here are some of the relevant numbers.

In FY 2012, the fee for filing an NDA that requires clinical data is $1,841,500. For an application that does not require clinical data, the fee is $920,750.

The most recent year for which the payment amounts are available is 2010. In FY 2010, the total amount paid to the FDA for application fees was $172,238,150. Establishment fees (another, smaller component of PDUFA) totaled $183,328,513. Product fees (yet another, still smaller component) came to $173,709,880. (Fun task: See if you can make heads or tails of the definitions on establishment fees and product fees at this FAQ on PDUFA) That brings the grand total of PDUFA fees collected in FY 2010 to $529,276,543.

According to the FDA, this total almost covered all of the expenses associated with NDA reviews, which are: personnel compensation and benefits; travel and transportation; rent; communications; contract services; equipment and supplies; and other. In FY 2010, that total came to $573,258,400. (In 2009, the total was $512,051,400. You can see the two breakdowns here.)

Interestingly, the total number of NDAs filed in 2010 was 86, the lowest number in the past five years. However, the number of priority NDAs — applications for more urgently needed drugs, such as those to treat rare diseases with highly limited treatment options — remained steady. Approval times for priority applications was about 9 months in 2009, the most recent year with meaningful data. In 2010, the percentage of approvals made during the first cycle of review decreased for the third straight year, which might indicate a more stringent review process. (According to the FDA, about 80% of all filed applications will eventually be approved.)

In one sense, it could be said that if the branch of the FDA involved in reviewing NDAs has its budget mainly covered by PDUFA fees, rather than taxpayer dollars, the turn that part of the agency is almost like a private company. At the same time, it would seem weird if taxpayers were covering the NDA expense and then being charged again for drug purchases. Yet another tangled web woven.

FDA image from Flickr, Creative Commons License, by marcospozo

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