Introduction
The Prescription Drug User Fee Act of 2017 (PDUFA VI) authorizes the U.S. Food and Drug Administration (FDA) to assess fees (PDUFA fees) when applicants submit new drug applications (NDAs). PDUFA fees are substantial. For example, the PDUFA fee for an NDA requiring clinical data will be $2,942,965 in 2020. In some situations, PDUFA fees can be waived, reduced, or refunded.
The FDA recently published a final guidance on PDUFA waivers, reductions, and refunds. The FDA’s final guidance is of significant interest to companies developing drugs (including biologics), and companies planning on submitting NDAs for drug candidates having an orphan drug designation. Here, we highlight key provisions of the FDA’s final guidance and additional relevant law regarding PDUFA fees.
Payment of PDUFA fees
As a practical note, the FDA’s credit card limit is $24,999.99. Thus, payments to the FDA cannot be made over this limit. The FDA’s preferred payment method is payment online using an electronic check (ACH). PDUFA payments are due upon submission of an NDA.
NDA Submission Is Incomplete Without PDUFA Fee Payment (When Required)
By law, an NDA which also requires payment of a PDUFA fee is considered incomplete. The FDA will not accept an NDA until the PDUFA fee has been paid.
No PDUFA Fee Payment upon NDA Resubmission
If an NDA for which a PDUFA fee was paid was accepted for filing, and was not approved or was withdrawn (without a PDUFA fee waiver), a PDUFA fee payment is not required upon subsequent submission of the NDA for the same drug product by the same person or their licensee, assignee, or successor.
Exemption for Orphan Designated Drugs
Under the Federal Food, Drug, and Cosmetic Act, or FDCA, section 736(a)(1)(F), an NDA for an orphan drug designated product is not subject to a PDUFA fee unless the NDA includes an indication for other than a rare disease or condition. Applicants should notify the FDA that they are claiming the orphan exemption when submitting Form FDA 3397. The final guidance recites that, in the rare instance where an NDA applicant receives its orphan drug designation after paying the PDUFA fee, the applicant must submit a written request for a refund no later than 180 calendar days after such fee was due.
Additionally, it is worth noting that to qualify for the orphan fee exemption, an applicant must have less than $50 million in gross worldwide revenue during the year preceding the orphan designation request. Thus, some companies which have previous revenue sources (e.g., companies selling diagnostic tests, over-the-counter or OTC drugs, HCT/Ps, research tools, or other prescription drugs) should carefully consider whether they qualify for the exemption and include this determination in their drug development budget.
Waiver or Reduction for a Small Business Submitting Its First NDA
The final guidance describes for situations where PDUFA fees may be waived or reduced, including: 1) to protect the public health; 2) where the PDUFA fee would present a significant barrier to innovation because of limited financial resources; and 3) a small business submitting its first NDA. PDUFA fee waivers and reductions to protect the public health, and where the PDUFA fee would present a significant barrier to innovation because of limited financial resources, are less commonly granted. This is in large part because the FDA will generally not grant PDUFA fee waivers or reductions under 1) and 2) to companies, including their affiliates, who have financial resources of more $20 million in working capital.
In contrast, some small businesses (submitting their first NDA) being granted PDUFA fee waivers or reductions are slightly more common. To qualify for a waiver, a small business applicant must:
- Employ fewer than 500 employees, including affiliates;
- Not have a drug product that has been previously approved under an NDA and introduced or delivered for introduction into interstate commerce; and
- Be submitting its first human drug application, including its affiliates.
In coming to a waiver or reduction determination, the FDA will make a detailed analysis to determine if a company’s affiliates would disqualify the company for a waiver or reduction. Along these lines, the final guidance defines an affiliate as “a business entity that has a relationship with a second business entity if, directly or indirectly, (A) one business entity controls, or has power to control, the other business entity; or (B) a third party controls, or has the power to control, both of the business entities.”
In essence, the small business waiver gives small pharmaceutical companies—who otherwise would not be able to afford to submit an NDA—a one-time waiver or reduction of the PDUFA fee. At this stage—following submission of an NDA with a granted waiver of the PDUFA fee but before FDA approval of the NDA—a small pharmaceutical company may be acquired by a larger pharmaceutical company. In this circumstance, timing of the transfer of ownership of the waiver or reduction and the NDA may determine if the waiver or reduction remains in force, and it may be useful to flag this when appropriate in a regulatory diligence.
Waivers and Reductions
To qualify for a fee waiver or reduction, the final guidance notes an applicant must submit a written request to the FDA no later than 180 calendar days after the fee is due.
Refunds
If an NDA is refused for filing or withdrawn before filing, and the PDUFA fee was paid, then by statute 75 percent of the PDUFA fee must be refunded. In other instances, under FDCA section 736(a)(1)(G), if a filed NDA is withdrawn, the FDA—at its sole discretion—may refund a PDUFA fee, or a portion thereof, if no substantial work was performed on the NDA after the NDA was filed. The FDA’s determinations are not eligible for review.
Appeals
If the FDA denies, in full or in part, a request for a PDUFA fee waiver or reduction, applicants may appeal. A written request for reconsideration should be filed within 30 calendar days of issuance of the FDA’s denial decision.
Conclusion
PDUFA fees are significant. As part of good drug development practices, pharmaceutical companies should seek PDUFA fee exemptions, waivers, reductions, and refunds where appropriate.
Charles Andres contributed to the preparation of this WSGR alert.
