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PBOA: New user fee structure reduces CMO burden

Melissa Fassbender

By Melissa Fassbender

28-Aug-2017
Last updated on 28-Aug-2017 at 21:45 GMT2017-08-28T21:45:32Z

President Trump signed FDARA into law on Friday, August 18. (Image: iStock/seb_ra)
President Trump signed FDARA into law on Friday, August 18. (Image: iStock/seb_ra)

President Trump has signed the FDA Reauthorization Act into law, reauthorizing four user fee agreements and reducing CMO burden, says PBOA.

The US Food and Drug Administration Reauthorization Act (FDARA) was signed into law on Friday, August 18 following two years of negotiation between industry and various stakeholders. Among them, the Pharma and Biopharma Outsourcing Association (PBOA), a non-profit trade association representing the interests of contract manufacturing organizations (CMOs) and contract development and manufacturing organizations (CDMOs).

PBOA President Gil Roth told us "We're glad to play a role not only in the negotiations but in the process of lobbying Congress to advance the user fee package.”

The FDA’s user fee programs help fund various agency activities. With the passage of FDARA, four user fee agreements were renewed, including the Generic Drug User Fee Amendments (GDUFA), which must be reauthorized every five years.

"I'm glad that we were able to bring the CMO/CDMO sector to the table, and to make its voice heard in the GDUFA II negotiations,” added Roth. “I think the new fee structure will be fairer and more equitable, and also reduce barriers for CMOs who want to take on generic customers."

The new fee structure

As Roth explained, the new fee model for GDUFA II reduces the overall portion of the GDUFA collections paid by finished dosage form (FDF) facilities from 56% under GDUFA I to 20%.

In addition, facilities that qualify as CMOs – that is, facilities that are not referenced in an approved ANDA owned by their parent companies or their affiliates – will pay one-third of a full facility fee,” he said. As an example, if the full facility fee were $225,000, a CMO facility would pay $75,000.

So the facility burden overall is reduced under GDUFA II and the pure-play CMO burden is reduced even further,” Roth said.

Additionally, he explained that facility fees will not be collected from sites that aren't referenced in an approved Abbreviated New Drug Application (ANDA).

If a CMO takes on its first ANDA (or if an in-house company files its first ANDA at its own site), it will not be charged a facility fee until that first ANDA is approved,” Roth explained, noting that this makes it an “easier business decision for CMOs that are looking to bring in generic clients.”

Previously, under GDUFA I, a CMO could pay GDUFA fees for several years before the first ANDA in its site was approved. “And there is no guarantee that CMO's generic client would then go to market with the ANDA; market conditions change, after all,” said Roth. "So the new model will create a fairer set of tiers for FDF fees and also provide relief to sites that are entering the generic space."

FDARA by Melissa Fassbender on Scribd

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