To tackle the twin issues of generic drug oversight and a backlog of applications, the FDA has proposed a separate generic drug user fee program that has been sent to Congress, where the House Energy & Commerce Committee will hold a series of hearings next month to review three such programs, including a pair for brand-name meds and biosimilars (see this and this).

The move comes after extensive negotiations with the generic industry (see the statement here from the trade group) and follows protracted concerns about the safety of the supply chain, especially in light of the heparin scandal a few years ago (background here).

To fund its efforts, the FDA plans to collect $299 million in user fees annually over a five-year span. The agency insists this will not, however, add to the cost of generic drugs and, in fact, may lower those costs over the long run if development times are subsequently reduced and the ensuing approval process becomes more manageable for drugmakers. The fees would supplement appropriations from Congress. During the first year, though, $50 million of the total fees would be generated by a one-time backlog fee for ANDAs pending on October 1, 2012.

“This program is not expected to add significantly to the cost of generic drugs,” the FDA writes, “given that a reported 3.99 billion retail prescriptions per year were dispensed in the US in 2010, and assuming that 78 percent of these prescriptions were filled by generic drugs, it equates to less than a dime per prescription for the average cost of a prescription filled by a generic drug in the US…” User fees “are expected to provide a measurable return on investment related to predictability of inspection, and review timelines.”

To break it down, the agency expects to receive user-fee funding through approximately 750 abbreviated new drug applications (ANDAs) each year submitted electronically, about 750 prior approval supplements (PASs), another 350 newly referenced drug master files (DMFs) annually and through approximately 2,000 facilities associated with ANDAs, according to the agency proposal.

Specifically, about 70 percent of user fees are forecast to come from facility fees - plants that make or where reviews are pending to make active pharmaceutical ingredients or finished dosage forms for a generic drug application. The other 30 percent would come from application fees. Overall fees will be divided 80 percent to 20 percent between the finished dosage form and API and manufacturers.

And yes, plants located outside the US and its territories will pay a higher price for inspections - between $15,000 to $30,000 more to cover the additional costs. By fiscal year 2015, the agency expects to have hired and trained all the additional staff needed to carry out the inspections and reviews, and commits to acting on 90 percent of all backlogged ANDAs by 2017.

You can read the statutory language here and the performance goals and procedures here.