Generic Drug User Fees: How FDA Funding Speeds Up Access to Affordable Medications

Every year, Americans fill over 4 billion prescriptions for generic drugs. These pills, capsules, and injections cost a fraction of their brand-name counterparts - often less than $10 a month. But behind every low price tag is a complex, high-stakes system that keeps these drugs moving from factory to pharmacy shelf. At the heart of it? Generic drug user fees.

Why the FDA Needs Fees to Approve Generic Drugs

The U.S. Food and Drug Administration doesn’t get enough money from Congress to review every generic drug application on time. That’s where user fees come in. Since 2012, generic drug makers have paid fees to the FDA to help fund the review process. This isn’t a tax. It’s a pay-for-performance system: the more applications the FDA processes, the faster patients get access to affordable medicines.

Before these fees existed, it took 30 to 36 months on average to get a generic drug approved. Today, thanks to the Generic Drug User Fee Amendments (GDUFA), the FDA aims to review 60% of applications in 15 months or less. That’s a massive shift - and it’s all because the agency now has the resources to hire more scientists, inspectors, and reviewers.

How GDUFA Works: The Four Types of Fees

GDUFA isn’t one flat fee. It’s broken into four categories, each targeting a different part of the drug-making process:

• Application fees: $124,680 per Abbreviated New Drug Application (ANDA) submitted in FY 2023. This covers the cost of reviewing the drug’s safety, effectiveness, and how it compares to the brand-name version.
• Program fees: $385,400 per year for each company with approved generic drugs. This helps fund the overall program - staff, systems, training.
• Facility fees: $25,850 per year for each manufacturing site that makes active ingredients or finished pills. This includes factories in the U.S. and overseas.
• DMF fees: $25,850 per Drug Master File (DMF), which contains detailed information about ingredients or manufacturing processes. This fee is charged when the DMF is first used in an application.

These fees are paid electronically through the FDA’s User Fee System. Deadlines matter: program fees are due April 1, facility fees by October 1, and application fees when you submit your paperwork. Missing a deadline can delay your approval - and your product’s launch.

Why These Fees Are Much Lower Than for Brand-Name Drugs

If you compare GDUFA fees to those for brand-name drugs under PDUFA, the difference is stark. In 2023, a new brand-name drug application cost $3.4 million to submit. A generic application? Just $124,680 - less than 4% of the cost.

That’s not because generic drugs are easier to review. They’re not. The FDA checks the same things: purity, potency, absorption, stability. But there’s a big difference in volume. In 2022, the FDA received 1,128 generic applications. For brand-name drugs? Only 68.

So even though each generic application costs less to review, the total workload is enormous. Without user fees, the FDA simply couldn’t keep up. The fees allow the agency to scale its team to handle the flood of applications - and keep prices low for consumers.

Who Pays? And Who Gets Hurt?

Large companies like Teva, Mylan, and Sandoz handle these fees easily. They have dozens of approved drugs and multiple manufacturing sites. But for small generic manufacturers - the ones making niche or older medications - the fees can be crushing.

One small company with a single facility pays $25,850 in facility fees alone. Add in program fees and application fees, and that’s over $500,000 a year just to stay in the game. For a business with only three approved drugs, that’s 15% of their entire regulatory budget.

The FDA offers a 75% fee reduction for qualifying small businesses. But only 18 of these reductions were approved in 2022. Why? Many small firms don’t know they qualify. Or they’re too overwhelmed to navigate the paperwork. The result? Fewer small players in the market - which means less competition, and sometimes higher prices.

What’s Getting Better - and What’s Still Broken

GDUFA has delivered real wins. Since 2012, the number of generic drugs approved each year has jumped 22%. The FDA now communicates clearer feedback on deficiencies - 90% of review letters are specific and actionable, compared to vague, frustrating responses before GDUFA.

But problems remain. In 2021, only 52% of applications were approved within 15 months - short of the 60% goal. Why? Pandemic delays, more complex applications, and a backlog of 1,500 older applications that predate GDUFA. The FDA has pledged to clear all of those by September 2024. So far, progress is slow.

Another gap? Over-the-counter (OTC) drugs. GDUFA doesn’t cover them. That’s a $117 billion market - think cough syrups, antacids, and allergy pills - with no structured review system. The FDA is considering expanding GDUFA to include OTCs, but no timeline exists yet.

How GDUFA Saves Consumers Money

You don’t pay the fees directly. But you feel their impact every time you pick up a $5 generic prescription instead of a $300 brand-name one. The FTC estimates GDUFA has helped speed up generic entries after patents expire - leading to a 15% increase in timely market competition.

Over the past decade, that’s saved U.S. consumers an estimated $1.7 trillion. That’s not just savings on pills. It’s fewer hospital visits, better chronic disease control, and more people sticking to their meds because they can afford them.

The top 10 generic manufacturers control 60% of the market. But even with that concentration, GDUFA has made it easier for new entrants to compete - as long as they can pay the fees.

What’s Next? GDUFA III and Beyond

GDUFA was renewed in 2022 and runs through 2027. The current version, GDUFA III, includes new tools like the DMF completeness assessment - letting companies get feedback on their ingredient files before submitting a full application. That reduces delays later.

The FDA is also pushing to reduce its backlog by 50% by 2025. And there’s talk of using real-world data - like patient outcomes from electronic health records - to inform post-market safety reviews. But industry groups warn this could add new costs.

One thing’s clear: GDUFA isn’t perfect. But without it, the system would collapse. Generic drugs are the backbone of U.S. healthcare. And user fees are the fuel keeping the approval engine running.