Fast Track: FDA User Fees: Do Faster Review Times Justify the Financial Burden?

The Food and Drug Administration (FDA) recently began requiring applicants to pay significant user fees when filing applications in connection with new medical devices and biologics. Such user fees have long been required for drug-related applications, and now also are required for applications related to devices and biologics. In theory, user fees enable FDA to speed up application review time, but at what cost? User fees impose a significant financial burden on many Wisconsin companies that produce regulated products, and the fees actually may not improve overall efficiency.

User fees provide the FDA with resources to hire additional reviewers in order to accelerate application reviews. However, FDA’s review of applications is only a small component in the lengthy product approval process. Many other actions, by both FDA and applicants, profoundly affect product approval time. Typically, the Agency requires a sponsor to submit several applications in sequence. Sponsors first submit applications for a series of clinical trials, and later, applications summarizing clinical evidence of safety and effectiveness. The weeks FDA spends reviewing any of these applications pales in comparison to the months, or even years, a sponsor may spend responding to FDA concerns, requests for additional clinical and non-clinical data, and facility inspections. Thus, improving efficiency in reviewing applications does not necessarily speed up the overall product approval process.

User fees may, in fact, be creating new problems. Large businesses can readily afford the substantial fees for filing applications with FDA, but to smaller firms, these fees are a sizeable burden. Consider, for example, that user fees can cost a sponsor of a new drug over $500,000 for a single application, and the fees associated with new medical devices and biologics can exceed $150,000. The strain on smaller businesses is significant, and an unintended consequence of user fees may be to weaken innovative start-up companies. Moreover, user fees have created a two-tiered review system, where FDA reviews fee-based applications preferentially. Although not every application requires a user fee (and smaller businesses should become familiar with these exceptions), FDA reviews fee-based applications first, before moving to applications that are exempt. Thus, user fees may not only be putting small companies at a competitive disadvantage, they may provide a disincentive for FDA to review important, but not fee-based, applications efficiently.

There is no doubt that the number of reviewers at FDA affects review times, however, there also is much other inefficiency within the agency. Recently, the directors of each of FDA’s Centers lamented that the Agency’s information management is woefully inadequate. Information is hoarded locally, and generally not shared across organizational lines. This may be because sharing information does not advance one’s career at FDA, whereas personal knowledge does. There are many other sources of inefficiency as well, including Congress’ addition of responsibilities to the Agency without providing more financial support. Although most businesses in FDA-regulated industries would welcome quicker product approvals, user fees alone will not solve the major inefficiencies at the Agency. Stay tuned to learn about Commissioner McClellan’s initiatives to make FDA more efficient.

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Dr. Waxler and Mr. Gross are members of LaFollette Godfrey & Kahn’s FDA Consulting Practice. Mr. Gross is an attorney whose practice focuses on FDA law and the business and legal aspects of biotechnology. Dr. Waxler is a regulatory affairs specialist and former FDA regulator. Dr. Waxler provides periodic insights on the FDA to the Wisconsin Technology Network.

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