[Federal Register Volume 67, Number 11 (Wednesday, January 16, 2002)]
[Notices]
[Pages 2222-2226]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1068]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration


Establishment of Prescription Drug User Fee Rates for Fiscal Year 
2002

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing the rates 
for prescription drug user fees for fiscal year (FY) 2002. The 
Prescription Drug User Fee Act of 1992 (PDUFA), as amended by the Food 
and Drug Administration Modernization Act of 1997 (FDAMA), authorizes 
FDA to collect user fees for certain applications for approval of drug 
and biological products, on establishments where the products are made, 
and on such products. Fees for applications for FY 2002 were set by 
PDUFA, as amended, subject to adjustment for inflation. Total 
application fee revenues fluctuate with the number of fee-paying 
applications FDA receives. Fees for establishments and products are 
calculated so that total revenues from each category will approximate 
FDA's estimate of the revenues to be derived from applications.

FOR FURTHER INFORMATION CONTACT: Frank Claunts, Office of Management 
and Systems (HFA-300), Food and Drug Administration, 5600 Fishers Lane, 
Rockville, MD 20857, 301-827-4427.

SUPPLEMENTARY INFORMATION:

I. Background

    PDUFA (Public Law 102-571), as amended by FDAMA (Public Law 105-

[[Page 2223]]

115), referred to as PDUFA II in this document, establishes three 
different kinds of user fees. Fees are assessed on: (1) Certain types 
of applications and supplements for approval of drug and biological 
products, (2) certain establishments where such products are made, and 
(3) certain products (21 U.S.C. 379h(a)). When certain conditions are 
met, FDA may waive or reduce fees (21 U.S.C. 379h(d)).
    For FY 1998 through 2002, under PDUFA II, the application fee rates 
are set in the statute, but are to be adjusted annually for cumulative 
inflation since FY 1997. Total application fee revenues are structured 
to increase or decrease each year as the number of fee-paying 
applications submitted to FDA increases or decreases.
    Each year from FY 1998 through 2002, FDA is required to set 
establishment fees and product fees so that the estimated total fee 
revenue from each of these two categories will equal the total revenue 
FDA expects to collect from application fees that year. This procedure 
continues the arrangement under which one-third of the total user fee 
revenue is projected to come from each of the three types of fees: 
Application fees, establishment fees, and product fees.
    This notice establishes fee rates for FY 2002 for application, 
establishment, and product fees. These fees are retroactive to October 
1, 2001, and will remain in effect through September 30, 2002. For fees 
already paid on applications and supplements submitted on or after 
October 1, 2001, FDA will bill applicants for the difference between 
fees paid and fees due under the new fee schedule. For applications and 
supplements submitted after January 16, 2002, the new fee schedule must 
be used. Invoices for establishment and product fees for FY 2002 will 
be issued in January 2002, using the new fee schedule.

II. Inflation and Workload Adjustment Process

    PDUFA II provides that fee rates for each FY shall be adjusted by 
notice in the Federal Register. The adjustment must reflect the greater 
of : (1) The total percentage change that occurred during the preceding 
FY in the Consumer Price Index (CPI) (all items; U.S. city average), or 
(2) the total percentage pay change for that FY for Federal employees 
stationed in the Washington, DC metropolitan area. PDUFA II provides 
for this annual adjustment to be cumulative and compounded annually 
after 1997 (see 21 U.S.C. 379h(c)(1)).
    PDUFA II also structures the total application fee revenue to 
increase or decrease each year as the number of fee-paying applications 
submitted to FDA increases or decreases. This provision allows revenues 
to rise or fall as this portion of FDA's workload rises or falls. To 
implement this provision, each year FDA will estimate the number of 
fee-paying applications it anticipates receiving. The number of 
applications estimated will then be multiplied by the inflation-
adjusted statutory application fee. This calculation will produce the 
FDA estimate of total application fee revenues to be received.
    PDUFA II also provides that FDA shall adjust the rates for 
establishment and product fees so that the total revenues from each of 
these categories is projected to equal the revenues FDA expects to 
collect from application fees that year. PDUFA II provides that the new 
fee rates based on these calculations be adjusted within 60 days after 
the end of each FY (21 U.S.C. 379h(c)(2)).

III. Inflation Adjustment and Estimate of Total Application Fee 
Revenue

    PDUFA II provides that the application fee rates set out in the 
statute be adjusted each year for cumulative inflation since 1997. It 
also provides for total application fee revenues to increase or 
decrease based on increases or decreases in the number of fee-paying 
applications submitted.

A. Inflation Adjustment to Application Fees

    Application fees are assessed at different rates for qualifying 
applications depending on whether the applications require clinical 
data for safety or effectiveness (other than bioavailability or 
bioequivalence studies) (21 U.S.C. 379h(a)(1)(A) and 379h(b)). 
Applications that require clinical data are subject to the full 
application fee. Applications that do not require clinical data and 
supplements that require clinical data are assessed one-half the fee of 
applications that require clinical data. If FDA refuses to file an 
application or supplement, 75 percent of the application fee is 
refunded to the applicant (21 U.S.C. 379h(a)(1)(D)).
    The application fees described above are set out in PDUFA II for FY 
2002 ($258,451 for applications requiring clinical data, and $129,226 
for applications not requiring clinical data or supplements requiring 
clinical data) (21 U.S.C. 379h(b)(1)), but must be adjusted for 
cumulative inflation since 1997. That adjustment each year is to be the 
greater of: (1) The total percentage change that occurred during the 
preceding FY in the CPI, or (2) the total percentage pay change for 
that FY for Federal employees stationed in the Washington, DC 
metropolitan area, as adjusted for any locality-based payment. PDUFA II 
provides for this annual adjustment to be cumulative and compounded 
annually after 1997 (see 21 U.S.C. 379h(c)).
    The adjustment for FY 1998 was 2.45 percent (62 FR 64849, December 
9, 1997). This was the greater of the CPI increase for FY 1997 (2.15 
percent) or the increase in applicable Federal salaries (2.45 percent).
    The adjustment for FY 1999 was 3.68 percent. (63 FR 70777 at 70778, 
December 22, 1998). This was the greater of the CPI increase for FY 
1998 (1.49 percent) or the increase in applicable Federal salaries 
(3.68 percent).
    The adjustment for FY 2000 was 4.94 percent (64 FR 72669 at 72670, 
December 28, 1999). This was the greater of the CPI increase for FY 
1999 (2.62 percent) or the increase in applicable Federal salaries 
(4.94 percent).
    The adjustment for FY 2001 was 3.81 percent (65 FR 79107 at 79108, 
December 18, 2000). This was the greater of the CPI increase for FY 
2000 (2.62 percent) or the increase in applicable Federal salaries 
(3.81 percent).
    The adjustment for FY 2002 is 4.77 percent. This is the greater of 
the CPI increase for FY 2001 (2.65 percent) or the increase in 
applicable Federal salaries (4.77 percent).
    Compounding these amounts (1.0245 times 1.0368 times 1.0494 times 
1.0381 times 1.0477) yields a total compounded inflation increase of 
21.23 percent for FY 2002. The adjusted application fee rates are 
computed by adding one to the decimal equivalent of this percent 
(0.2123) and multiplying this amount (1.2123) by the FY 2002 statutory 
application fee rates stated above ($258,451 for applications requiring 
clinical data, and $129,226 for applications not requiring clinical 
data or supplements requiring clinical data). For FY 2002 the adjusted 
application fee rates are $313,320 for applications requiring clinical 
data, and $156,660 for applications not requiring clinical data or 
supplements requiring clinical data. These amounts must be submitted 
with all applications during FY 2002.

B. Estimate of Total Application Fee Revenue

    Total application fee revenues for FY 2002 will be estimated by 
multiplying the number of fee-paying applications FDA expects to 
receive in FY 2002 (from October 1, 2001, through September 30,

[[Page 2224]]

2002) by the fee rates calculated in the preceding paragraph. Before 
fees can be set for establishment and product fee categories, each of 
which are projected to be equal to total revenues FDA collects from 
application fees, FDA must first estimate its total FY 2002 application 
fee revenues. To do this FDA first determines its FY 2001 fee-paying 
full application equivalents, and uses that number in a linear 
regression analysis to predict the number of fee-paying full 
application equivalents expected in FY 2002. This is the same technique 
applied in each of the previous 3 fiscal years.
    In FY 2001, FDA received and filed 95 human drug applications that 
require clinical data for approval, 16 that did not require clinical 
data for approval, and 126 supplements to human drug applications that 
required clinical data for approval. Because applications that do not 
require clinical data and supplements that require clinical data are 
assessed only one-half the full fee, the equivalent number of these 
applications subject to the full fee is determined by summing these 
categories and dividing by 2. This amount is then added to the number 
of applications that require clinical data to arrive at the equivalent 
number of applications that may be subject to full application fees.
    In addition, as of September 30, 2000, FDA refused to file, or 
firms withdrew before filing, 2 applications that required clinical 
data, and 5 applications that either did not require clinical data or 
that were supplements requiring clinical data. The full applications 
refused for filing or withdrawn before filing pay one-fourth the full 
application fee and are counted as one-fourth of an application; the 
applications that do not require clinical data and the supplements 
refused for filing or withdrawn before filing pay one-eighth of the 
full application fee and are each counted as one-eighth of an 
application.
    Using this methodology, the number of full application equivalent 
(FAE) submissions that were received for review in FY 2001 was 167.125, 
before any exemptions, waivers or reductions. Under PDUFA II, FDA 
waives application fees for certain small businesses submitting their 
first application and for certain orphan products. Certain application 
supplements for pediatric indications are also exempt from fees. In 
addition, PDUFA II provides a number of other grounds for waivers 
(public health necessity, preventing significant barriers to 
innovation, and fees exceed the cost). In FY 2001 waivers or exemptions 
were applied to 59 FAE submissions (14.5 for orphan products, 12 for 
small businesses, 19 for pediatric supplements, and 13.5 miscellaneous 
exemptions/waivers). Therefore, for FY 2001, FDA estimates that it 
received 108.125 (167.125 minus 59) FAE submissions that will pay fees, 
after allowing for exemptions, waivers and reductions.
    Next a linear regression line based on the adjusted number of fee-
paying FAE submissions since 1993, and including our FY 2001 total of 
FAEs, must be drawn to project the number of FAEs in FY 2002.
    In FY 2002, however, additional applications will have to pay fees. 
All pediatric supplements will be required to pay fees effective 
January 4, 2002 (for three-fourths of FY 2002). This is the result of 
section 5 of the Best Pharmaceuticals for Children Act. It repealed the 
fee exemption for pediatric supplements effective January 4, 2002. 
Thus, the regression line projecting FY 2002 fee-paying receipts must 
be drawn to reflect this change. In FY 1998, 8 full fees were exempted 
for pediatric supplements; the numbers for FY 1999, FY 2000, and FY 
2001 respectively were 5.25, 12.5, and 19. Since fees on these 
supplements will only be paid for three-fourths of FY 2002 (January 1 
through September 30, 2002), three-fourths of the number of pediatric 
supplements waived each year from FY 1998 through FY 2001 (the only 
years when fees were waived) will be added to the total of fee-paying 
FAEs received each year.
    A linear regression line based on this adjusted number of fee-
paying FAE submissions since 1993, and including our adjusted FY 2001 
total of 122.375 FAEs (108.125 fee-paying FAEs and three-fourths of the 
19 pediatric supplements that were exempted in FY 2001), projects the 
receipt of 158.3 fee-paying FAEs in FY 2002, as reflected in table 1 of 
this document and the graph below.

                                                                        Table 1.
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                Fiscal Year                    1993       1994       1995       1996       1997       1998       1999       2000       2001       2002
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Fee-paying FAEs                                 101.0      108.9      112.5      136.3      161.5      124.5      154.6      162.9      122.4
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Regression Line                                 110.3      115.6      121.0      126.3      131.6      137.0      142.3      147.6      152.9      158.3
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[[Page 2225]]

[GRAPHIC] [TIFF OMITTED] TN16JA02.000

    The total FY 2002 application fee revenue is estimated by 
multiplying the adjusted application fee rate ($313,320) by the number 
of applications projected to qualify for fees in FY 2002 (158.3), for a 
total estimated application fee revenue in FY 2001 of $49,598,556. This 
is the amount of revenue that FDA is also expected to derive both from 
establishment fees and from product fees.

IV. Adjustment for Excess Collections in Previous Years

    Under the provisions of PDUFA II, if the agency collects more fees 
than were provided for in appropriations in any year after 1997, FDA is 
required to reduce its anticipated fee collections in a subsequent year 
by that amount (21 U.S.C. 379h(g)(4)).
    In FY 1998, Congress appropriated a total of $117,122,000 to FDA in 
PDUFA II fee revenue. To date, collections for FY 1998 total 
$117,737,470---a total of $615,470 in excess of the appropriation 
limit. This is the only fiscal year since 1997 in which FDA has 
collected more

[[Page 2226]]

in PDUFA II fees than Congress appropriated.
    FDA also has requests for waivers or reductions of FY 1998 fees 
pending. For this reason FDA is not reducing its FY 2002 fees to offset 
excess collections at this time. An offset will be considered in a 
future year, if FDA still has collections in excess of appropriations 
for FY 1998 after the pending requests for FY 1998 waivers and 
reductions have been resolved.

V. Fee Calculations for Establishment and Product Fees

A. Establishment Fees

    At the beginning of FY 2001, the establishment fee was based on an 
estimate of 347 establishments subject to fees. For FY 2001, 379 
establishments qualified for and were billed for establishment fees, 
before all decisions on requests for waivers or reductions were made. 
FDA estimates that a total of 25 establishment fee waivers or 
reductions will be made for FY 2001, for a net of 354 fee-paying 
establishments, and will use this number for its FY 2002 estimate of 
establishments paying fees, after taking waivers and reductions into 
account. The fee per establishment is determined by dividing the 
adjusted total fee revenue to be derived from establishments 
($49,598,556), by the estimated 354 establishments, for an 
establishment fee rate for FY 2002 of $140,109 (rounded to the nearest 
dollar).

B. Product Fees

    At the beginning of FY 2001, the product fee was based on an 
estimate that 2,314 products would be subject to product fees. By the 
end of FY 2001, 2,348 products qualified and were billed for product 
fees before all decisions on requests for waivers or reductions were 
made. Assuming that there will be about 55 waivers and reductions made, 
FDA estimates that 2,293 products will qualify for product fees in FY 
2002, after allowing for waivers and reductions, and will use this 
number for its FY 2002 estimate. Accordingly, the FY 2002 product fee 
rate is determined by dividing the adjusted total fee revenue to be 
derived from product fees ($49,598,556) by the estimated 2,293 products 
for a product fee rate of $21,630 (rounded to the nearest dollar).

VI. Adjusted Fee Schedule for FY 2002

    The fee rates for FY 2002 are set out in table 2 of this document:

                                Table 2.
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               Fee Category                    Fee Rates for FY 2002
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Applications.............................
  Requiring clinical data................                      $313,320
  Not requiring clinical data............                      $156,660
  Supplements requiring clinical data....                      $156,660
Establishments...........................                      $140,109
Products.................................                       $21,630
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VII. Implementation of Adjusted Fee Schedule

A. Application Fees

    Any application or supplement subject to fees under PDUFA II that 
is submitted after January 16, 2002, must be accompanied by the 
appropriate application fee established in the new fee schedule. 
Payment must be made in U.S. currency by check, bank draft, or U.S. 
postal money order payable to the order of the Food and Drug 
Administration. Please include the user fee ID number on your check. 
Your check can be mailed to: Food and Drug Administration, P.O. Box 
360909, Pittsburgh, PA 15251-6909.
    If checks are to be sent by a courier that requests a street 
address, the courier can deliver the checks to: Food and Drug 
Administration (360909), Mellon Client Service Center, rm. 670, 500 
Ross St., Pittsburgh, PA 15262-0001. (Note: This Mellon Bank Address is 
for courier delivery only.)
    Please make sure that the FDA P.O. Box number (P.O. Box 360909) is 
on the enclosed check.
    FDA will bill applicants who submitted lower application fees from 
October 1 to January 16, 2002, for the difference between the amount 
they submitted and the amount specified in the Adjusted Fee Schedule 
for FY 2002.

B. Establishment and Product Fees

    By [insert date of publication in the Federal Register], FDA will 
issue invoices for establishment and product fees for FY 2002 under the 
new Adjusted Fee Schedule. Payment will be due by January 31, 2002. FDA 
will issue invoices for any products and establishments subject to fees 
for FY 2002 that qualify for fees after the January 2002 billing.

    Dated: January 10, 2002.
Margaret M. Dotzel,
Associate Commissioner for Policy.
[FR Doc. 02-1068 Filed 1-11-02; 2:57 pm]
BILLING CODE 4160-01-S