Fees-Exceed-the-Costs Waivers Under the Prescription Drug User Fee Act

Administrative guidance, not enacted legislation. This captured publisher edition preserves the listed document and attachments; later developments are not independently consolidated.

Guidance for Industry
Fees-Exceed-the-Costs Waivers
Under the Prescription Drug User Fee Act
U.S. Department of Health and Human Services
Food and Drug Administration
Office of Financial Management
June 1999
User Fees

Guidance for Industry
Fees-Exceed-the-Costs Waivers
Under the Prescription Drug User Fee Act
Additional copies are available from:
Food and Drug Administration
Office of Financial Management and Systems
Office of Financial Management
Accounting Policy and Systems Branch (HFA-120)
5600 Fishers Lane
Rockville, MD 20857
(Tel) 301-827-5088
or
Office of Training and Communications
Division of Communications Management
The Drug Information Branch (HFD-210)
Center for Drug Evaluation and Research (CDER),
Food and Drug Administration
5600 Fishers Lane
Rockville, MD 20857
(Tel) 301-827-4573
http://www.fda.gov/cder/guidance/index.htm
or
Office of Communication, Training and Manufacturers Assistance (HFM-40)
Center for Biologics Evaluation and Research
Food and Drug Administration
1401 Rockville Pike
Rockville, MD 20852-1448
Internet: http://www.fda.gov/cber/guidelines.htm
fax: 1-888-CBERFAX or 301-827-3844
Voice Mail: The Voice Information System at 1-800-835-4709 or 301-827-1800
U.S. Department of Health and Human Services
Food and Drug Administration
Office of Financial Management
June 1999
User Fees

Table of Contents
I. 	INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. 	BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
III. 	PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. 	Developing Standard Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B. 	Applying Standard Costs to the Person Requesting the Waiver . . . . . . . . . . 3
C. 	Determining the Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
D. 	Special Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Attachment 1 — Sample Cost Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

This guidance has been prepared by the Office of Financial Management in the Office of Management and	1
Systems at the Food and Drug Administration, with input from the Center for Drug Evaluation and Research and the
Center for Biologics Evaluation and Research. This guidance represents the Agency’s current thinking on the fees-
exceed-the-costs waiver provision under the Prescription Drug User Fee Act of 1992 as amended by the Food and Drug
Administration Modernization Act of 1997. It does not create or confer any rights for or on any person and does not
operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the requirements of
the applicable statutes, regulations, or both.
GUIDANCE FOR INDUSTRY1
Fees-Exceed-the-Costs Waivers
Under the Prescription Drug User Fee Act
I. INTRODUCTION
This document is intended to provide guidance to industry on the procedures adopted by the Food
and Drug Administration (FDA) to determine eligibility for waivers or refunds of user fees
collected under the Prescription Drug User Fee Act (PDUFA), as amended, on the basis that fees
paid exceed the costs the FDA incurred in reviewing submissions (21 U.S.C. 379h(d)(1)(C)).
This guidance provides substantially the same information as that provided in FDA’s Supplement
to Attachment G, Draft Interim Guidance Document for Waivers of and Reductions in User Fees
(February 1, 1995), but it has been updated to reflect statutory changes effected by the Food and
Drug Administration Modernization Act of 1997 (the Modernization Act).
II. BACKGROUND
As amended, PDUFA modifies the Federal Food, Drug, and Cosmetic Act (the FD&C Act) and
requires FDA to collect user fees from certain applicants. It also authorizes the Agency to grant a
waiver or reduction of fees when the Agency finds that the fees to be paid will exceed “the
anticipated present and future costs incurred by the Secretary in conducting the process for the
review of human drug applications for such person. . . .” (the fees-exceed-the-costs waiver) (21
U.S.C. 379h(d)(1)(C)) [21 U.S.C. 379h(d)(3) prior to the passage of the Modernization Act].
To qualify for consideration of a waiver of fees due on or after October 1, 1997, an applicant
must submit a written request for a fees-exceed-the-cost waiver, refund, or reduction no later than
180 days after the fee is due (21 U.S.C. 379h(I)). Waivers of fees due on or before September
30, 1997, were to have been requested in writing on or before November 21, 1998 (section
103(h) of the Modernization Act).
III. PROCEDURES
A. Developing Standard Costs

This report may be obtained from the National Technical Information Service; PB Number 94121894; (Tel)2
703-605-6000.
2
To determine eligibility for a fees-exceed-the-costs waiver or reduction, FDA needs to
determine the anticipated present and future costs FDA has incurred or expects to incur in
conducting the process for the review of human drug applications for the person
requesting the waiver. In making this finding, the Secretary may use standard costs (21
U.S.C. 379h(d)(2)) [21 U.S. C. 379h(d) prior to the passage of the Modernization Act].
Standard costs for fiscal year (FY) 1993 were developed by Arthur Andersen & Co
(Arthur Andersen). The report entitled "Standard Costs for the Process for the Review of
Human Drug Applications As Required Under the Prescription User Fee Act" provides an
explanation of how Arthur Andersen derived the costs.2
FDA has developed standard costs for subsequent years using the methodology applied by
Arthur Andersen with updated expenditure and review workload data for each subsequent
year. In determining standard costs, FDA first allocates the full costs of the process for
the review of human drug applications among major types of submissions that require
FDA review, as defined by the FD&C Act. These categories are identified at the left-hand
side of the table below, with the standard costs for FY 1993 through FY 1998 shown for
each submission type.
Estimates Made Pursuant to Section 736(d)(2) of the FD&C Act
Standard Costs (in thousands of dollars)
Submission Type FY93 FY94 FY95 FY96 FY97 FY98
CDER Application
IND $70 $79 $98 $97 $84 $94
NDA with Clinical Data-NME $887 $1,004 $1,243 $1,233 $1,065 $1,194
NDA with Clinical Data-Non-NME $298 $337 $417 $414 $358 $401
NDA w/out Clinical Data $127 $144 $178 $177 $152 $171
Supplement with Clinical Data $151 $171 $212 $210 $181 $203
Supplement w/out Clinical Data $6 $7 $8 $8 $7 $8
CBER Applications
IND $184 $230 $234 $266 $204 $173
BLA $1,118
PLA $1,078 $1,345 $1,369 $1,560 $1,194 $1,016
ELA $177 $221 $225 $256 $196 $167
Supplement with Clinical Data $561 $700 $713 $812 $622 $529
Supplement w/out Clinical Data $34 $42 $43 $49 $38 $32

3
B. Applying Standard Costs to the Person Requesting the Waiver
After receiving a timely submitted fees-exceed-the-costs waiver request, FDA compiles a
complete list of the applicant's submissions pending on or received since September 1,
1992, that meet the definition of human drug application or supplement as contained in
PDUFA (21 U.S.C. 379g(1) and (2)). Submissions not meeting these definitions are not
included in the list. Then FDA assigns a standard cost to each qualifying submission. The
sum of all of these costs represents FDA’s initial estimate of its costs associated with
reviewing applications submitted by the waiver applicant. An example of this calculation
is provided in Attachment 1. (Some special considerations apply to applications (INDs)
pending on September 1, 1992, and to investigational new drug applications submitted
since September 1, 1988. These are explained separately below.)
FDA next identifies affiliates of the person applying for the waiver or reduction of fees,
and makes similar calculations for each of these affiliates. In section 103(h) of the
Modernization Act, Congress confirmed that the term person includes any affiliate of the
party submitting the waiver application.
An affiliate is defined in PDUFA as “a business entity that has a relationship with a second
business entity if, directly or indirectly — (A) one business entity controls, or has the
power to control, the other business entity; or (B) a third party controls, or has the power
to control, both of the business entities” (21 U.S.C. 379g(9)). Accordingly, FDA’s costs
for reviewing applications also include costs of reviewing applications of any entity that
FDA determines was an affiliate of the party submitting the waiver application on or after
September 1, 1992. Although FDA communicates with the waiver applicant about
potential affiliates, the Agency makes an independent determination about who is affiliated
with the waiver applicant. FDA may also seek outside assistance in resolving affiliate
relationship questions.
After completing the affiliates analysis, the Agency totals the costs estimated for the
waiver applicant and for all of its affiliates to estimate its full costs associated with the
review work for the waiver applicant.
C. Determining the Waiver
From its records FDA calculates the total of all user fees (application, product, and
establishment) that have been paid or are payable by the applicant and its affiliates since
September 1, 1992 (excluding fees previously waived or refunded). FDA then compares
the two amounts — total costs versus total fees paid. If total costs exceed fees paid, the
waiver will be denied. If fees paid exceed the costs, then FDA will waive the amount that
exceeds the fees paid, up to the full amount of the waiver that was requested in writing.

4
D. Special Considerations
For any submission received after September 1, 1992, the estimated incurred costs will be
100 percent of the standard costs for that category of submission in the fiscal year it was
submitted. By charging 100 percent of these costs, whether or not action on the
application is completed, FDA is complying with the statutory direction to include future
costs in its cost estimation.
1. Submissions (Other Than INDs) Pending on September 1, 1992
For submissions (other than INDs) that were in pending status on September 1,
1992, FDA has adopted the Arthur Andersen assumption that 50 percent of the
work on the submission was completed before September 1, 1992, and the
remaining 50 percent of the work was completed after that date. Therefore, for a
submission received before September 1, 1992, the estimated incurred cost should
be 50 percent of the total FY 1993 standard cost for that category of submission.
An exception to this is old submissions with no recent activity. If a submission
was originally submitted before September 1, 1982, received a not approvable or
approvable letter before September 1, 1987, and has not been amended since that
date, it will not be counted as a pending application for the cost estimate.
If FDA issued a not approvable or approvable letter before September 1, 1992,
and if the sponsor has not amended the application or supplement with a complete
response, the sponsor may withdraw such application or supplement and it will not
be included in the cost calculation. Note, however, if the application is
resubmitted after withdrawal, the resubmission will be reassessed appropriate
application fees under PDUFA, as amended.
2. INDs Pending on September 1, 1992
FDA has adopted the assumption that an average IND review spans 5 years.
For INDs pending on September 1, 1992:
! no costs are allocated if the IND was submitted before
September 1, 1988
! costs are prorated if the IND was submitted after
September 1, 1988, but before September 1, 1992
FDA has prorated the estimated incurred cost on a yearly basis. Thus, the
standard incurred cost allocated to each IND depends on the date it was submitted,
as shown below:

5
Date of IND Submission Years of Cost Applied % of Standard Cost
From 9/1/88 to 9/30/89 1 20% of FY 1993 Standard Cost
From 10/1/89 to 9/30/90 2 40% of FY 1993 Standard Cost
From 10/1/90 to 9/30/91 3 60% of FY 1993 Standard Cost
From 10/1/91 to 9/30/92 4 80% of FY 1993 Standard Cost
From 10/1/92 to Present 5 100% of Standard Cost for
Fiscal Year of Submission
The cost for a withdrawn IND is calculated as a fraction of the standard IND cost for the fiscal
year in which it was submitted. This calculation is based on the assumption that the average IND
review spans 5 years (60 months). The numerator of that fraction is the number of months that
elapsed from receipt of the IND until it was withdrawn, and the denominator is 60. Costs will not
be prorated for IND submissions that are not withdrawn and are at FDA for less than 5 years.

6
Attachment 1 — Sample Cost Calculation
Hypothetical Firm A
Year Submission Type Standard Number of Estimated
Cost Submissions FDA Cost
*pre- Manufacturing Supplement–CDER $6,000 .5 $3,000
1993
1993 Manufacturing Supplement–CDER $6,000 3 $18,000
1993 Manufacturing Supplement–CBER $34,000 1 $34,000
1995 New Drug Application–New Molecular $1,243,000 1 $1,243,000
Entity
1996 Investigational New Drug $266,000 2 $532,000
Application–CBER
1996 Supplement with Clinical Data–CDER $210,000 1 $210,000
1997 Product License Application–CBER $1,194,000 1 $1,194,000
1997 Establishment License $622,000 1 $622,000
Application–CBER
Total $3,856,000
* Submissions (other than INDs) pending on September 1, 1992, are assigned 50 percent of the
1993 standard cost.