GDUFA Fees Increased – and Won’t Stop Anytime Soon

While generic drug laws and policy have brought down the cost of Rx drugs for many Americans, recent legislation, such as the Generic Drug User Fee Amendments of 2012 (GDUFA) is reversing that trend and significantly increasing the cost of generic drugs.  GDUFA added about $300 million in user fees extracted from the generic drug industry. The law specified the User Fees would be adjusted for inflation increases and in the early days of FY 2015 (which began Oct 1, 2014), we see continuing dramatic increases in store for Americans purchasing generic drugs.

The FDA commissioner states[1] that the Drug Price Competition and Patent Term Restoration Act of 1984, better known today as the Hatch-Waxman Amendments, has generated more than $1.2 trillion in savings to the health care system.  As usual, FDA does not provide any data to substantiate this claim, or any analysis of the cost savings with GDUFA.  In announcing the passage of GDUFA, FDA stated that the new law was “designed to speed access to safe and effective generic drugs to the public and reduce costs to industry.”  What? An increase in $300,000,000 in fees will reduce costs to industry? I don’t think these people even listen to themselves anymore. The authors of the legislation must have thought the benevolent generic drug industry would just swallow the bitter pill and not pass it along to the market.

Another unforeseen consequence of the new fees is drug shortages. Some generic drugs are manufactured by only one or two firms.  If either – or both – of these facilities is unable to pay the significantly increased fees, or runs into any issues with FDA, then shortages follow.

The FY 2015 generic drug fees became effective on October 1, 2014, and will remain in effect through September 30, 2015. Here’s what they look like: