FDA has long negotiated its brand user fee program with two distinct but closely aligned industry groups: the Pharmaceutical Research and Manufacturers of America and the Biotechnology Industry Organization. Now the agency will be using those same discussion techniques as it develops the generic drug user fee program.

Four large generic firms that are not part of the Generic Pharmaceutical Association have banded together to form the Generic Drug User Fee Coalition. It's the strongest indication yet that, after years of fits and starts, industry and FDA are both fully committed to creating a user fee program for ANDAs, an opportunity that could allow generic firms a chance to shape a number of regulatory priorities. But the new coalition is also a reminder that the generic industry remains fractured, and its effectiveness in policy debates could be questioned for some time to come.

The four members of the Generic Drug User Fee Coalition – Apotex, Hospira, Perrigo, and Teva – have been operating under a memorandum of understanding since the spring and are finalizing a user fee proposal very similar to the one being prepared by GPhA, according to several sources familiar with both proposals.

The two camps have in fact been collaborating fairly closely with each other in the run-up to the Sept. 17 public hearing where the proposals will be unveiled.

Unique Review Issues For Generics

In developing their ideas, the generic groups are struggling with how to fit the unique review dynamics of generics into a user-fee framework that FDA has grown comfortable with in several different brand iterations – prescription drugs, animal drugs and devices. Because of patent challenges by generic firms and scientific petitions by innovator firms, the timing of approval decision on ANDAs often has little to do with the quality of the applications themselves.

That makes it difficult for industry and FDA to set the relatively simple metrics that are used in the other user fee programs. Generic firms don't want to pay fees without some reasonable assurance that they will lead to more predictable approvals, but FDA is hesitant to pledge timelines for a process where a judge's interpretations of bioequivalence issues can sometimes carry as much weight as a chemistry reviewer's.

To address these concerns, FDA's announcement of the Sept. 17 meeting included many potential tiers of fees in its initial concepts of what a generic user fee program might look like (Also see "Generic Drug Fees Could Be Based On Product Complexity" - Pink Sheet, 6 August, 2010.).

GPhA had been focused on ensuring that ANDA user fees could be applied to work in the agency wherever the review bottleneck occurred (Also see "ANDA User Fees: Industry Takes Holistic Approach, Wants Whole New Office" - Pink Sheet, 8 March, 2010.).

But the structural challenges for ANDA reviews extend beyond how user fees monies can best be used to hasten the review of incoming applications. The Office of Generic Drugs also has a mountainous backlog of pending ANDAs – over 2,000 applications at last count.

Consensus in the generics industry appears to be building around the idea that the reviews of pending applications should be handled with a separate fee – ensuring that funds paid as part of new applications will be devoted to their review times, and that FDA will also have the resources it needs to clear the backlog through the additional user fees. It's a different approach than the one settled on by the brand industry when its user fee program got off the ground, but the number of pending ANDAs is much greater (see sidebar: "Application Backlogs: A Historical Perspective").

Beyond The Backlog – Where Else Fees Might Go

Another area where the basic mechanics of the brand and generic user fees may differ is what kind of fees are paid. Some in the generics industry feel that the ongoing establishment fees that are part of PDUFA would be an unnecessary part of GDUFA since the larger volume of the generic applications assures a steadier source of funding than on the brand side.

Also, establishment fees would function more like a tax for generic firms, the argument goes, because it is a commodity business where the same products are sold at lower and lower prices over decades sometimes.

How any generic user fees might be used for post-marketing safety activities also remains an issue that needs clarification.

GPhA Bets (On) Big, Restructures Board

The public meeting on Sept. 17 is the formal kickoff of the development of the generic drug use fee program, but the mechanism probably won't come to fruition until PDUFA is renewed in 2012. Legislation renewing the user fee program is considered "must pass" because of FDA's dire funding straights; since the legislative train must leave the station, the PDUFA renewals attract numerous other bills hoping to hitch a ride, and Congress probably doesn't have the stomach for two rounds of debates on healthcare boarding passes, even if the generics industry and FDA can settle on a user fee program before the brand version comes up for renewal.

That timeline gives GPhA time to regroup as an organization and perhaps emerge as one of the extra ticket holders as the whistle blows on PDUFA V. The generic industry badly wants to revisit the follow-on biologics pathway that was created in last year's healthcare overall bill, but there does not appear to be much hope of scoring anything aside from a marginal victory on that front in 2012.

Following its defeat on FOBs, the departure of Teva and the resignation of CEO Kathleen Jaeger, the association has been re-evaluating its operations (Also see "GPhA After Jaeger: Will Industry Pressures Push Firms Together Or Pull Association Apart? New CEO Must Face Down FOBs" - Pink Sheet, 10 May, 2010.).

GPhA appears to have settled on a new structure that gives greater voice to the larger firms by reducing the board size and limiting full membership to manufacturers. The new structure could be solidified at a board meeting at the end of the month.

Such a move seems designed to attract Teva and other big firms back into the fold. Whether or not the new bylaws can do that, the association with then have to choose a new CEO. The two most obvious templates for an association head are a well-connected political operator or a technocratic operational manager. The association seems like it might be leading towards the former, but GPhA's success in the long-run will be governed more by the leadership abilities rather than the background of the new executive.

Hanging over these decisions is the fact the members of the Generic Drug User Fee Coalition seem to be doing just fine living the association-free lifestyle. Forming the coalition appears to be a more ad-hoc than alternative organizing strategy. The formal coalescence apparently allowed them a seat at the negotiating table since the agency had decided it would not be meeting with individual firms during the user fee negotiations. Even the name of the coalition seems to be communicating that they are not trying to supplant GPhA.

But if a more fractured industry can develop a successful user fee program after failing to achieve its goals on FOBs when the association was larger, it could be a signal to firms inside and outside GPhA that membership does not necessarily have its privileges.

If that is the case, GPhA could end up with the user fee program its wants, but not really get to enjoy it.

By M. Nielsen Hobbs

ANDA User Fee Negotiations: A Big-Firm Coalition Tackles The Big Backlog

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