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69-006

110TH CONGRESS

REPORT

HOUSE OF REPRESENTATIVES

2d Session

110-805

--ANIMAL GENERIC DRUG USER FEE ACT OF 2008

JULY 30, 2008- Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. DINGELL, from the Committee on Energy and Commerce, submitted the following

R E P O R T

[To accompany H.R. 6433]

[Including cost estimate of the Congressional Budget Office]

The Committee on Energy and Commerce, to whom was referred the bill (H.R. 6433) to amend the Federal Food, Drug, and Cosmetic Act to establish a program of fees relating to generic new animal drugs, having considered the same, report favorably thereon with an amendment and recommend that the bill as amended do pass.

CONTENTS Page
Amendment 2
Purpose and Summary 8
Background and Need for Legislation 8
Hearings 9
Committee Consideration 9
Committee Votes 9
Committee Oversight Findings 10
Statement of General Performance Goals and Objectives 10
New Budget Authority, Entitlement Authority, and Tax Expenditures 10
Earmarks and Tax and Tariff Benefits 10
Committee Cost Estimate 10
Congressional Budget Office Estimate 10
Federal Mandates Statement 13
Advisory Committee Statement 13
Constitutional Authority Statement 13
Applicability to Legislative Branch 13
Section-by-Section Analysis of the Legislation 13
Changes in Existing Law Made by the Bill, as Reported 15

AMENDMENT

SECTION 1. SHORT TITLE; REFERENCES.

SEC. 2. FINDINGS.

SEC. 3. FEES RELATING TO ABBREVIATED APPLICATIONS FOR GENERIC NEW ANIMAL DRUGS.

`PART 5--FEES RELATING TO GENERIC NEW ANIMAL DRUGS

`SEC. 741. AUTHORITY TO ASSESS AND USE GENERIC NEW ANIMAL DRUG FEES.

SEC. 4. ACCOUNTABILITY AND REPORTS.

`SEC. 742. REAUTHORIZATION; REPORTING REQUIREMENTS.

SEC. 5. SUNSET DATES.

PURPOSE AND SUMMARY

The purpose of H.R. 6433, the Animal Generic Drug User Fee Act of 2008, is to establish a program of fees for the review of generic animal drug submissions and to improve the timeliness and predictability of the process for generic animal drug submissions.

BACKGROUND AND NEED FOR LEGISLATION

H.R. 6433 would establish a program of fees relating to generic new animal drugs. Using the Animal Drug User Fee Act of 2003 (ADUFA) as a model, the Animal Generic Drug User Fee Act of 2008 (AGDUFA) would provide funding for increased review of generic animal drug submissions, for training and development of staff members, and for refining business processes and developing policies to allow more efficient review of generic animal drug submissions.

In Congressional testimony in June 2008, the Food and Drug Administration (FDA) reported that in fiscal year 2007, the average review time for generic animal drug submissions was 570 days and that there was a backlog of 446 of these submissions, almost double the number in fiscal year (FY) 2000. Section 512(c)(1) of the Federal Food, Drug, and Cosmetic Act (FFDCA) requires FDA to review and act on these submissions within 180 days of submission.

In order to alleviate this backlog, a user fee for generic animal drug submissions is proposed, along with relevant performance goals. Under the AGDUFA user-fee proposal, FDA would agree to meet review performance goals to improve the timeliness and predictability of the animal generic drug review process. These performance goals are intended to achieve progressive yearly improvements, shortening the time for FDA to review and act on submissions with each fiscal year. By the fifth and final year of the proposed user fees, FDA would agree to review and act on 90 percent of the sentinel submission types within specified timeframes. Currently, FDA's review of generic animal drug submissions is funded entirely through appropriations.

The AGDUFA proposal has many similarities to the proposal for ADUFA II (H.R. 6432, the Animal Drug User Fee Amendments of 2008), such as comparable fee triggers, fee-setting requirements, workload adjustments, and reporting requirements. The major differences are that AGDUFA does not allow FDA to collect establishment fees, and FDA may only waive or reduce fees if the drug is intended for a minor use or minor species indication. Also, similar to the ADUFA II proposal, the AGDUFA proposal has fixed annual increases instead of the inflation adjuster used for the original ADUFA.

AGDUFA authorizes the collection of fees for FY 2009 to 2013 in the following amounts: $4,831,000 for FY 2009; $5,106,000 for FY 2010; $5,397,000 for FY 2011; $5,706,000 for FY 2012; and $6,031,000 for FY 2013. Fees are included for abbreviated applications, generic new animal drug products, and generic new animal drug sponsors.

HEARINGS

On June 5, 2008, the Subcommittee on Health held a hearing on `Committee Prints on Administration Legislative Proposals on the Animal Drug User Fee Act Amendments of 2008 and the Animal Generic Drug User Fee Act of 2008.' The Subcommittee received testimony from Bernadette Dunham, D.V.M., Ph.D., Director, Center for Veterinary Medicine, Food and Drug Administration. Dr. Dunham was accompanied by Steven Vaughn, D.V.M., Director, Office of New Animal Drug Evaluation, and David Wardrop, Jr., Director, Office of Management. The Subcommittee also received testimony from Richard A. Carnevale, V.M.D., Vice President of Regulatory, Scientific, and International Affairs, Animal Health Institute; Ms. Stephanie Batliner, Chairperson, Generic Animal Drug Alliance, Director, Pre-Market Regulatory Affairs, IVX Animal Health, Inc.; and Mr. Robert Martin, Executive Director, Pew Commission on Industrial Farm Animal Production.

COMMITTEE CONSIDERATION

On Wednesday, July 9, 2008, the Subcommittee on Health met in open markup session and favorably forwarded H.R. 6433 to the full Committee for consideration, by a voice vote. On Wednesday, July 16, 2008, the full Committee met in open markup session and ordered H.R. 6433 favorably reported to the House, amended, by a voice vote.

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion to report legislation and amendments thereto. No record votes were taken on amendments or in connection with ordering H.R. 6433 reported to the House. A motion by Mr. Dingell to order H.R. 6433 favorably reported to the House, amended, was agreed to by a voice vote.

COMMITTEE OVERSIGHT FINDINGS

Regarding clause 3(c)(1) of rule XIII of the Rules of the House of Representatives, the oversight findings of the Committee regarding H.R. 6433 are reflected in this report.

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

The objectives of H.R. 6433 are to improve the timeliness and predictability of the review process for generic animal drug submissions and to improve the timeliness and predictability of the process for generic animal drug submissions.

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

Regarding compliance with clause 3(c)(2) of rule XIII of the Rules of the House of Representatives, the Committee finds that H.R. 6433 would result in no new or increased budget authority, entitlement authority, or tax expenditures or revenues.

EARMARKS AND TAX AND TARIFF BENEFITS

Regarding compliance with clause 9 of rule XXI of the Rules of the House of Representatives, H.R. 6433 does not contain any congressional earmarks, limited tax benefits, or limited tariff benefits as defined in clause 9(d), 9(e), or 9(f) of rule XXI.

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate on H.R. 6433 prepared by the Director of the Congressional Budget Office pursuant to section 402 of the Congressional Budget Act of 1974.

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House of Representatives, the following is the cost estimate on H.R. 6433 provided by the Congressional Budget Office pursuant to section 402 of the Congressional Budget Act of 1974:

U.S. Congress,

Congressional Budget Office,

Washington, DC, July 28, 2008.

Hon. JOHN D. DINGELL,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 6433, the Animal Generic Drug User Fee Act of 2008.

If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is Julia Christensen.

Sincerely,

Robert A. Sunshine

(For Peter R. Orszag, Director).

Enclosure.

H.R. 6433 Animal Generic Drug User Fee Act of 2008

Summary: H.R. 6433 would amend the Federal Food, Drug, and Cosmetic Act to authorize the Food and Drug Administration (FDA) to collect fees to cover the cost for certain activities to expedite the development and marketing of generic new drugs for use in animals. Fees would supplement appropriated funds to cover FDA's cost associated with reviewing certain marketing applications and investigational submissions for such drugs. Those fees could be collected and made available for obligation only to the extent and in the amounts provided in advance in appropriation acts.

CBO estimates that implementing H.R. 6433 would reduce discretionary outlays, on net, by $1 million over the 2009-2013 period, assuming the necessary authorities are provided in appropriation acts. Enacting the bill would not affect direct spending or revenues.

H.R. 6433 contains no intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA).

The bill's requirement that sponsors of generic new drugs for use in animals to pay certain fees to FDA would be a private-sector mandate as defined in UMRA. However, CBO estimates that the direct cost of complying with this requirement would not exceed the annual thresholds established by UMRA for private-sector mandates ($136 million in 2008, adjusted annually for inflation).

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 6433 is shown in the following table. The costs of this legislation fall within budget function 550 (health). 



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                                             By fiscal year, in millions of dollars--                               


                                                                                 2009 2010 2011 2012 2013 2009-2013 


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CHANGES IN SPENDING SUBJECT TO APPROPRIATION                                                                        


Food and Drug Administration (FDA):                                                                                 


Collection of User Fees:                                                                                            


Estimated Authorization Level                                                      -5   -5   -5   -6   -8       -29 


Estimated Outlays                                                                  -5   -5   -5   -6   -8       -29 


Spending of User Fees:                                                                                              


Estimated Authorization Level                                                       5    5    5    6    8        29 


Estimated Outlays                                                                   3    6    6    6    6        27 


Administrative Expenses:                                                                                            


Estimated Authorization Level                                                       *    *    *    *    *         1 


Estimated Outlays                                                                   *    *    *    *    *         1 


-2                                                                                  1    *    *   -1   -1         1 


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Basis of estimate: For this estimate, CBO assumes that H.R. 6433 will be enacted near the start of fiscal year 2009, that the full amounts authorized will be collected and appropriated for each year, and that outlays will follow historical patterns for similar activities. Assuming appropriation action consistent with the bill, CBO estimates that implementing H.R. 6433 would reduce discretionary outlays, on net, by $1 million over the 2009-2013 period, primarily because the spending of authorized fees slightly lags behind their collection.

User fees for generic new drugs for use in animals

H.R. 6433 would establish a new user fee program to help defray FDA's costs of expediting and improving the regulatory review process for generic new drugs for use in animals. It would require FDA to assess and collect application and other user fees from manufacturers of generic new drugs for use in animals to expedite the development of such drugs and the review of new and supplemental abbreviated applications and investigational submissions for such products.

The bill would create three categories of user fees: (1) abbreviated application fees, (2) fees on generic new drug products for animals, and (3) fees on sponsors of generic new drugs for animals. The aggregate amounts of such fees are specified for each of fiscal years 2009 through 2013. Each year, the amounts to be collected could be adjusted further for workload estimates, when applicable. For fiscal year 2013, the bill also would authorize the assessment and collection of up to three months of operating reserves for the first three months of fiscal year 2014.

Fees authorized by H.R. 6433 could be collected and made available for obligation only to the extent and in the amounts provided in advance in appropriation acts. In total, we estimate that aggregate collections from fees authorized by the bill would amount to $29 million over the 2009-2013 period, assuming the necessary appropriation action.

Under the bill, user fees could not be assessed in a given year unless appropriations for salaries and expenses of FDA (excluding the amount of user fees appropriated for such fiscal year) in that year satisfy a maintenance-of-effort requirement. The user fees could be assessed if the amount appropriated exceeded the amount appropriated for 2003 increased by an adjustment factor that reflects the percentage increase in the consumer price index for all urban consumers. In addition, fees could be collected and made available to defray increases in the cost of resources allocated to reviewing abbreviated applications for generic new drugs for use in animals only to the extent that the percentage increase in those costs (excluding fees) exceeds the costs for fiscal year 2003 adjusted by the adjustment factor. This estimate assumes that such conditions would be met.

Before accounting for costs associated with additional administrative activities not covered by the user fees, CBO estimates that establishing the user fee program would reduce discretionary outlays, on net, by $2 million over the 2009-2013 period, assuming appropriation action consistent with the bill. The estimated authorization levels for collections and spending offset each other exactly from 2009 through 2013; however, spending of authorized fees lags somewhat behind their collection, thereby generating net savings over the period. In addition, the amounts available for obligation and spending for fiscal year 2013 would not include special reserve funds collected in that year. That difference would result in savings of almost $2 million for fiscal year 2013, CBO estimates.

Other administrative expenses

Funding for certain administrative activities associated with the new user fee program would not be fully covered by fees. The bill would require that FDA report annually to the Congress on its performance under the user fee program and on the fiscal status of the program. H.R. 6433 would require that FDA consult with the Congressional committees of jurisdiction and outside experts, including industry and consumer groups, and publish its recommendations concerning reauthorization of the user fee program on a specified schedule. CBO estimates that the administrative activities associated with implementing the user fee program that are not covered by the user fees would cost less than $500,000 annually.

Estimated impact on state, local, and tribal governments: H.R. 6433 contains no intergovernmental mandates as defined in UMRA.

Estimated impact on the private sector: H.R. 6433 would establish a user fee program at FDA for sponsors of generic drugs intended for use in animals. The imposition of application, product, and sponsor fees that private entities would pay to FDA would be considered a private-sector mandate as defined in UMRA. CBO estimates that the fees collected over the 2009-2013 period would total $29 million. Those amounts would not exceed the annual threshold specified in UMRA ($136 million in 2008, adjusted annually for inflation) in any of the five years that the mandates would be effective.

Estimate prepared by: Federal Costs: Julia Christensen; Impact on State, Local, and Tribal Governments: Lisa Ramirez-Branum; Impact on the Private Sector: Paul Jacobs.

Estimate approved by: Keith J. Fontenot; Deputy Assistant Director for Health and Human Resources, Budget Analysis Division.

FEDERAL MANDATES STATEMENT


The Committee adopts as its own the estimate of Federal mandates regarding H.R. 6433 prepared by the Director of the Congressional Budget Office pursuant to section 423 of the Unfunded Mandates Reform Act.

ADVISORY COMMITTEE STATEMENT


No advisory committees within the meaning of section 5(b) of the Federal Advisory Committee Act would be created by H.R. 6433.

CONSTITUTIONAL AUTHORITY STATEMENT


Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House of Representatives, the Committee finds that the Constitutional authority for H.R. 6433 is provided in Article I, section 8, clause 3, which grants Congress the power to regulate commerce with foreign nations, among the several States, and with the Indian Tribes.

APPLICABILITY TO LEGISLATIVE BRANCH


The Committee finds that H.R. 6433 does not relate to the terms and conditions of employment or access to public services or accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act of 1995.

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION


Section 1. Short title

This section establishes the short title of the legislation as the `Animal Generic Drug User Fee Act of 2008'.

Section 2. Findings

This section presents findings of Congress that making additional funds available through user fees for the review of abbreviated applications for generic new animal drugs would serve animal and public health by facilitating prompt review of safe and effective animal drugs.

These congressional findings also state that user fees authorized under the legislation will be used to expedite the process for generic drug development and for reviewing abbreviated applications for generic new animal drugs.

Section 3. Fees relating to abbreviated applications for generic new animal drugs

This section would amend the Federal Food, Drug, and Cosmetic Act (FFDCA) to add authority for the FDA to collect user fees for abbreviated applications, including: applicable definitions for the various types of abbreviated applications and submissions, as well as other terms to be used in the user-fee program; provision for abbreviated application, product, and sponsor fees; the total fee revenues to be collected for each fee type for fiscal years 2009 through 2013 with adjustments (used as the basis for determining fee amounts); provision for fee waivers or reductions and collection of unpaid fees; the annual user-fee trigger requires, exclusive of user-fee appropriations, that FDA salaries and expenses appropriations for such fiscal year equal or exceed such appropriations for fiscal year 2003 multiplied by the applicable adjustment factor; provisions governing the crediting and availability of fees; and authorization of appropriations for fees for each of fiscal years 2009 through 2013.

Section 4. Accountability and reports

This section states that the Secretary of Health and Human Services (HHS) shall consult with the Committee on Energy and Commerce and the Committee on Health, Education, Labor, and Pensions (HELP), scientific and academic experts, veterinary professionals, representatives of patient and consumer advocacy groups, and the regulated industry in developing recommendations to present to Congress regarding goals for abbreviated applications for generic new animal drugs after fiscal year 2013 and for reauthorizing the user fee program.

This section requires the Secretary of HHS to submit a performance report and fiscal report to the Committee on Energy and Commerce and the Committee on HELP each fiscal year. The performance report will discuss the progress of FDA in achieving the goals of the user-fee program as identified in a letter from the Secretary of HHS to Congress. The fiscal report will also discuss the implementation of the authority to collect user fees and FDA's use of such fees during that year. These reports shall be made publicly available through FDA's Web site.

The Secretary is further directed to develop the reauthorization proposal for AGDUFA in consultation with its stakeholders, including representatives from consumer advocacy and patient groups, veterinary professionals, and the regulated industry.

Section 5. Sunset

This section states that authority for user fees will expire October 1, 2013, and that the reporting provisions will expire 120 days after that date.

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED




FEDERAL FOOD, DRUG, AND COSMETIC ACT


* * * * * * *

CHAPTER VII--GENERAL AUTHORITY


* * * * * * *

SUBCHAPTER C--FEES


* * * * * * *

PART 5--FEES RELATING TO GENERIC NEW ANIMAL DRUGS


SEC. 741. AUTHORITY TO ASSESS AND USE GENERIC NEW ANIMAL DRUG FEES.












































































































































































SEC. 742. REAUTHORIZATION; REPORTING REQUIREMENTS.
























































SUBCHAPTER D--INFORMATION AND EDUCATION


SEC.  [Struck out->][ 741. ][<-Struck out]  745. INFORMATION SYSTEM.




* * * * * * *

SEC.  [Struck out->][ 742. ][<-Struck out]  746. EDUCATION.




* * * * * * *

SUBCHAPTER E--ENVIRONMENTAL IMPACT REVIEW


SEC.  [Struck out->][ 746. ][<-Struck out]  749. ENVIRONMENTAL IMPACT.




* * * * * * *