Generic Drug Review Activities

FDA begins review of a generic drug when a generic drug applicant  submits an Abbreviated New Drug Application (ANDA). 1 for a summary of the  generic drug application review process.) GDUFA Increased Generic Drug Program Resources Significantly, but the Agency Lacks a Plan for Administering Its Carryover User Fees Supported an 85 Percent Increase in Generic Drug Program Obligations, Increasing FDA’s Reliance on Such Fees During the Implementation Period

GDUFA supported an 85 percent increase in total FDA obligations for its  generic drug program in the first 4 years of implementation. Total obligations for FDA’s generic drug program (from both regular  appropriations and generic drug user fee appropriations) increased by  about 85 percent in the 4 years following GDUFA’s implementation, from  about $267 million in fiscal year 2013 to about $494 million in fiscal year  2016. Obligations from generic drug user fees grew in  both absolute terms and as a share of total program obligations, from  about $121 million (45 percent of total obligations) in fiscal year 2013 to  about $373 million (76 percent of total obligations) in fiscal year 2016. Despite the large carryover amounts, FDA has not developed a planning  document on how it will administer its carryover—one that includes a fully  documented analysis of program costs and risks to ensure that its  carryover reflects expected operational needs and probable  contingencies. We have previously found  that when unobligated balances are used as carryover, it is important for  entities to establish a target range for the carryover to ensure user fee  resources are used efficiently and responsibly and that the amounts  carried over into the following year are reasonable to meet program  needs, risks, and probable contingencies. However, agency officials also stated that their internal  management report, which is used to report its user fee cash flows, was  sufficient to analyze the program’s needs. FDA Implemented Various Changes to Improve the Generic Drug Application Process and Made Additional Refinements in Response to Applicant Concerns

FDA has made changes to the generic drug program since the enactment  of GDUFA in order to establish a better-managed drug application review  process. According to FDA officials, the launch  of the platform has provided the following benefits to FDA and to  stakeholders: (1) faster review times, (2) easier collaboration and  communication with industry, (3) improved application review  consistency, and (4) more predictable application review times and target  completion dates due to having all pertinent information regarding an  application in one location that is accessible to all FDA reviewers. Generic Drug Application Review Times Have Decreased, with FDA Meeting Its GDUFA Performance Goals for Fiscal Year 2015

FDA’s review times for generic drug applications have decreased since  the implementation of GDUFA, with FDA surpassing multiple fiscal year  2015 GDUFA performance goals as described in table 4. With respect to ANDA review times, the average time for FDA to  complete the first review cycle decreased from 26 months for ANDAs  submitted in fiscal year 2013 to about 14 months for those submitted in  fiscal year 2015. As of  December 31, 2016, FDA had also acted on 89 percent of all ANDAs  submitted in fiscal year 2015 within 15 months of receipt, exceeding its  GDUFA goal of acting on 60 percent of ANDAs received in fiscal year  2015 within 15 months. Recommendation for Executive Action

To ensure efficient use of generic drug user fees, facilitate oversight and  transparency, and plan for risks, we recommend that the Commissioner  of FDA develop a plan for administering user fee carryover that includes  analyses of program costs and risks and reflects actual operational needs  and contingencies.
Why GAO Did This Study

Nearly 90 percent of prescription drugs dispensed in the United States are generic drugs. According to FDA, an increasing volume of generic drug applications over the past decades stressed its ability to review applications efficiently. GDUFA granted FDA the authority to collect user fees from the generic drug industry to supplement resources for the generic drug program. In return, FDA committed to meeting certain performance goals related to the timely review of generic drug applications and to implementing review process improvements.
GAO was asked to examine FDA's implementation of GDUFA. In this report, GAO (1) examines how user fees supported the generic drug program, (2) describes FDA's improvements to the generic drug application review process, and (3) analyzes changes in generic drug application review times. GAO reviewed laws and regulations; FDA policy, guidance, the GDUFA Commitment Letter, and GDUFA financial reports from fiscal years 2013 through 2016; FDA data on application review times from fiscal years 2012 through 2015; and interviewed officials from FDA, generic drug manufacturers, and trade associations.

What GAO Found

Since the enactment of the Generic Drug User Fee Amendments of 2012 (GDUFA), the Food and Drug Administration's (FDA) reliance on user fees has increased from $121 million in fiscal year 2013 to $373 million in fiscal year 2016, or 45 percent of total program obligations in fiscal year 2013 to 76 percent in fiscal year 2016. FDA carried over $174 million in unobligated user fees at the end of the fourth year of the GDUFA 5-year period. GAO found that although FDA uses an internal management report to track user fee cash flows for internal purposes, it lacks a plan for administering its carryover—one that includes a fully-documented analysis of program costs and risks to ensure that program operations can be sustained in case of unexpected changes in collections or costs. GAO previously found that it is important for entities with carryover to establish appropriate target amounts based on program needs, risks, and contingencies. FDA's approach is inconsistent with best practices for managing federal user fees. Without a carryover plan, FDA lacks reasonable assurance that the size of its carryover is appropriate to ensure the efficient and responsible use of resources.
Dollars in millions
FDA took steps to improve the timeliness and predictability of generic drug application reviews. FDA restructured the generic drug program by building a more robust organizational infrastructure, upgrading information technology systems, and implementing communication reforms. As FDA implemented these changes, it made additional refinements in response to applicants' feedback.
Generic drug application review times have improved under GDUFA. FDA's review time for a new generic drug application (known as an Abbreviated New Drug Application (ANDA)) decreased from 28 months for applications submitted in fiscal year to 2012 to about 14 months for those submitted in fiscal year 2015. FDA also surpassed multiple GDUFA performance goals. For example, FDA committed to reviewing 60 percent of ANDAs submitted in fiscal year 2015 within 15 months of their receipt. GAO found that FDA had taken action on 89 percent of such ANDAs for which it committed to conducting a substantive review by December 31, 2016, thereby surpassing this goal.

What GAO Recommends

GAO recommends that FDA develop a plan for administering user fee carryover that includes analyses of program costs and risks and reflects operational needs and contingencies. HHS agreed with GAO's recommendation.