With pharmaceutical companies all vying to be get their drug on the market, the Food and Drug Administration (FDA) approval process can, unfortunately, be as much about science and data as it is about politics and making sure all paperwork is in order. In addition, recent removals of drugs (such as Vioxx) from the market have led the FDA to be more attentive and sift through even more data before approving a drug. The goal, ultimately, is to determine if a new drug is safe, is an improvement over previous drugs, or if, in the case of a generic, it is as effective as the brand name drug.

To accomplish this complex approval process, the FDA has decided it needs to hire new people and put clinical trial results through a rigorous and stringent evaluation process. To pay for this, about two decades ago, the FDA started collecting fees from companies seeking to have their drugs approved. The Prescription Drug User Fee Act (PDUFA) was passed in 1992 and gave the FDA the ability to hire more people and expand their review operation.

The original expansion increased the FDA drug reviewer staff by 77 percent and reduced the time a non-priority drug goes through the approval process from 27 months to 14 months. In 2008, the fee for new drugs was $1,178,000 for a full new drug application including clinical trials. But this fee only applies to brand name drug makers who spend hundreds of millions of dollars on drug development, not copycat generics drug makers who only need to prove safety and that their drug is the same as the brand name one. Generic drug makers, to this point, had been exempt from the charges.

However, even though the fees bring in $707 million a year to the FDA, it only covers a quarter of the operating budget of the organization. Also, it only covers 65 percent of the drug approval process.

Now, the FDA is increasing the fees charged to companies who hope to get generic drugs approved. These are the same drugs that have already been approved, yet have lost their patent protection, so other companies can produce the drug and sell it for cheaper. The new abbreviated new drug application (ANDA) will now be $64,000 for each application, beginning in October.

Many news organizations are stating that this is outrageous and an egregious increase. But the truth is that $64,000 is not that much money for a company to get their drug approved for the market. It is less than the salary of a single pharmaceutical drug rep, and companies make millions off of generics.

The companies mostly affected are Indian drug makers who specialize in generics such as Ranbaxy Laboratories, Cipla, Dr. Reddy's and Lupin. 

"We do not think that the decision to hike GDUFA fees will have an impact on product filings made by large Indian companies operating in the U.S.,” Glenn Saldanha, Chairman and Managing Director of Glenmark Pharmaceuticals told the Times of India.  “Our plans to file 18 to 20 ANDAs in the U.S. this year also remain unchanged. However, the increase in GDUFA fees will make smaller companies to strategically think about their product filings in the US."

With the increase of drug applications, specifically from generics makers who want a piece of the pie, it makes sense that the FDA needs more staff to evaluate the drugs. But the burden must shift a little to the generics makers; it makes no sense for brand name companies who spent billions developing the drugs to foot most of the bill for generics approvals.

Additionally, with the increase in FDA staff, generics will be approved faster and the U.S. government will spend less public funds on the approval process. The Congressional Budget Office projects that the fees will reduce federal spending by $311 million over 10 years, mostly by helping generic drugs reach the market faster. That would slash federal drug expenditures for Medicare and insurance companies across the country, in addition to individuals.

So, the generics companies can complain about having to spend a few thousand more on their drug approval process, but in the end their drugs will get to the market faster and they are sure to make up the difference easily.