The U.S. Food and Drug Administration recently decided to increase user fees for fiscal year 2024.
On July 28, the FDA finalized and announced user fees for new drugs (specialty drugs), generics, biosimilars, and medical devices, increasing the first three. The FDA will apply these fees from October through September 2024.
Notably, user fees for new drug applications exceeded $4 million for the first time. In 2024, the fee for a new drug application will be $4,048,695 (about 5.4 billion won), 24.9 percent from this year. Generic (ANDA) and medical device (PMA) fees will stand at $252,453 (300 million won) and $483,560 (600 million won), up 4.9 percent and 9.5 percent from 2023.
The FDA's decision to raise user fees is far from the Korean situation.
According to the “Regulations on fees for approving medical products,” which specifies the Ministry of Food and Drug Safety (MFDS)'s approval fees, the fee for a new drug approval review for a biologic drug (biopharmaceutical product) is 803,000 won if the review is submitted electronically. For orphan drug approval, the fee is 4.41 million won based on an electronic application.
The MFDS raised the fee in 2020 for the last time. In October 2020, the administrative rule was amended to raise the fee for biopharmaceutical new drug approval from 6,177,850 won to the current level. In 2021, an additional 10 percent fee was added for electronic submission of applications, but the fee remains the same. MFDS’ fees have remained unchanged for several years compared to the FDA.
This is too wide a difference, even considering the differences in the two agencies’ scale and staff sizes.
The main reason is the different criteria and entities that set the fees. The FDA adjusts the fees it collects from companies each year by considering inflation, the number of applications, and that of manufacturing facilities. The cut in the FDA's 2024 biosimilar license fee was due to the planned carryover of about $20 million in operating expenses from this year.
In other words, the FDA determines fees according to its needs each year, raising fees if more clinical data will likely be reviewed than in previous years, requiring more staff and money. In the case of medical devices, fees vary depending on whether the device is de novo or not.
On the other hand, MFDS’ approval fee is determined by the Ministry of Economy and Finance. The increase is also made within the inflation rate.
The problem is that excessively low approval fees compared to foreign regulators can hinder the competitiveness of the domestic biopharmaceutical industry. The MFDS has been criticized for inefficiencies caused by low fees. If the fees are too low, applications are inevitably made discriminately, taking more time for the review process.
Industry insiders also point out that the low fees for approval review compared to overseas regulators have led to a steady stream of requests for approval review “just for test.” There are also criticisms that global pharmaceutical companies supplement their data after receiving a review from MFDS and reflect it in the next submission. In other words, they use MFDS's approval review as a consulting service.
For this reason, domestic experts call for an increase in user fees.
One might think Korean biopharmaceutical companies oppose increasing user fees to save expenses, but the reality is the opposite.
Domestic companies acknowledge that MFDS’s fees are too low compared to the FDA's, expressing willingness to pay higher fees to get their products reviewed more quickly.
An industry executive from a mid-sized pharmaceutical company said that the FDA's fees are higher, but the results are faster, and they are free to hire specialized personnel.
Another regulatory affair (RA) expert also said that if MFDS could increase its fees, like the FDA, to shorten the review period and expand the number of specialized personnel, the industry would welcome it.
Of course, this is contingent on the MFDS’s increased fees leading to hiring more specialized staff. The industry executive pointed out that the problem facing all medical product companies, including pharmaceuticals and medical device makers, is the lack of domestic inspectors. Reiterating his welcome for a fee increase if it would increase the number of reviewers, the executive suggested that, like the FDA, grants fee reduction benefits for smaller makers.
Almost all related parties cite user fee hikes and strengthened review capabilities as essential tasks, paying close attention to how the government responds to such calls.