FDA Says New System for Calculating Biosimilar Fees Is Reliable

New prediction methodology for calculating biosimilar application fees will help the FDA cover its costs and respond quickly to changes in demand, officials said at a public meeting.
Tony Hagen
June 26, 2020
In an update on progress made on changing the methodology for calculating biosimilar drug review fees, the FDA said a new system would enable it to better plan for variation in workloads and have the resources available to do an effective job.

Officials reported this week that overall revenue collections for biosimilars were short of revenue targets in fiscal year 2019 by 9%, and fee-paying applications from biosimilar developers were 22% lower than anticipated.

Officials said they have reduced their work commitments to ensure that they have enough biosimilar program funding to carry through the end of fiscal year 2022. “The volatility of the program requires the need to maintain a higher” balance than other programs, officials said during the slide presentation.

How the New System Works

FDA financial experts and consultants convened in the virtual meeting to explain elements of the program that would overcome past limitations that affected their response to applications for review of human drugs including biosimilars.

Broader and more effective use of resource capacity planning (CPA) would allow the FDA “to identify the resources needed before they are needed,” help with revenue adjustment, hiring plans, and financial forecasting, officials said.

A chief problem with the way the agency was budgeting for future needs was its reliance on 3-year historical averages, which officials described as “a lagging indicator” that could not provide a picture of upcoming needs.

They said in the future, CPA would be based on a forward-looking system that adjusts for likely increases, converts drug application submission activity into estimates of likely resource demand, and provides for the timely availability of funding and other resources for hiring and training of needed staff.

“We can actually have a more optimal level of staffing at the time that we need the staffing to deliver on our review timelines and public health mission,” said Josh Barton, director of the Resource Capacity Planning Team in the Office of Program and Strategic Analysis at the Center for Drug Evaluation and Research.

Officials added that the revised system would take into account the unique complexities that each project brings with it. This complexity adjustment would enable the agency to determine how much additional time would be required to complete an application review.

They described the new plan as “accurate, adaptable, and defensible.”

Although the FDA has described its prior system of calculating resource needs as inadequate, the agency has been exceptionally challenged this year with the advent of the new coronavirus (COVID-19), a public health crisis that has changed priorities at the FDA and placed additional stress on the handling of routine functions, such as biosimilar reviews and approvals.

The public comment period on the FDA's user fee calculation methodology closed in May. The Pharmaceutical Research and Manufacturers of America trade organization called for broader clarity and disclosure on resource allocation within the agency.

In the public meeting on Monday, FDA officials expressed faith in the revised system of resource need determination and said such changes are overdue. Having the ability to see what lies ahead is crucial, Barton said. “We really need to get ahead of the curve and understand what’s happening in the industry and how that is likely to translate into regulatory submissions and work for the agency over roughly 2 to 3 years."

The FDA had net PDUFA collections of $1.015 billion in fiscal year 2019. That same year, Biosimilar User Fee Act (BsUFA) collections amounted to $35 million. Previously, CPA has been applied only to Prescription Drug User Fee Act (PDUFA) money, but on an interim basis only. CPA was not used for BsUFA revenues. That changes under the new arrangement.

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