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

Every year, Americans fill over 4 billion prescriptions for generic drugs. These are the same medicines as brand-name pills, but cost up to 85% less. Behind the scenes, a quiet but powerful system keeps these drugs flowing: the Generic Drug User Fee Amendments, or GDUFA. Without it, many of these life-saving medications would still be sitting on a shelf, waiting years for approval.

Why the FDA Needs Money to Approve Generic Drugs

Before 2012, the FDA’s generic drug office was underfunded and overwhelmed. Applications piled up. Some took over three years just to get reviewed. Companies didn’t know what the FDA wanted. Delays meant patients waited longer for cheaper drugs. The system wasn’t broken-it was starved.

Congress fixed that by letting the FDA collect fees directly from generic drug makers. This isn’t a tax. It’s a user fee. If you want the FDA to review your drug application, you pay for the service. That money goes straight into the Office of Generic Drugs. Today, about 75% of its budget comes from these fees. The rest is from Congress. This model gives the FDA predictable funding so it can hire reviewers, upgrade systems, and meet deadlines.

How GDUFA Works: The Four Fees

GDUFA doesn’t charge one flat fee. It has four types, each tied to a different part of the process:

• Application fee: $124,680 per Abbreviated New Drug Application (ANDA). This is what you pay when you submit your generic drug for approval. It covers the cost of reviewing your data, chemistry, and manufacturing.
• Program fee: $385,400 per year for any company with an approved generic drug. This pays for the overall program-staff, training, oversight.
• Facility fee: $25,850 per manufacturing site that makes the active ingredient or finished pill. If your drug is made in a factory, that factory pays this fee. Even if it’s not your own facility, if it’s listed in your application, you’re responsible.
• DMF fee: $25,850 for each Drug Master File (DMF) that’s referenced. These are technical dossiers on ingredients like active pharmaceutical ingredients (API). You pay when you first use a DMF in your application.

These fees are adjusted every year based on inflation. The FDA publishes exact numbers in its annual guidance. Payments are made through an online system called EUF. Miss a deadline? Your application won’t be reviewed until you pay.

Speeding Up Approval: The 15-Month Goal

One of GDUFA’s biggest wins is time. Before 2012, the average review took 30 to 36 months. Now, the goal is to finish 60% of original ANDA applications within 15 months. The FDA tracks this closely. In 2021, they hit 52%-close, but not quite there. Pandemic delays and more complex applications pushed it back.

But even that 52% is a huge leap. In 2022, the FDA received 1,128 generic drug applications. That’s over 16 times more than the number of brand-name drug applications. Without GDUFA, that volume would have crushed the system. Now, companies get clearer feedback. Deficiency letters-those lists of changes the FDA wants-are more specific. One Teva manager said in 2023 that 90% of these letters now include actionable steps, not vague comments.

Who Pays? And Who Gets Left Behind?

Big companies like Teva, Sandoz, and Mylan can handle these fees. They have hundreds of approved drugs. But small manufacturers? It’s harder.

Imagine a small company with one facility and only two approved generics. Their facility fee alone is $25,850. Their program fee is another $385,400. That’s over $400,000 just to stay in the game. For a small firm, that’s 15% of their entire regulatory budget. Some have to delay expansions or skip new applications.

The FDA knows this. There’s a 75% fee reduction for small businesses that meet certain criteria-fewer than 500 employees, no more than three approved drugs. But in 2022, only 18 small companies used it. Why? Many don’t know it exists. Others think the paperwork is too messy. The FDA offers webinars and help desks, but the learning curve is still 3 to 6 months for new staff.

What GDUFA Doesn’t Cover

GDUFA only applies to prescription generics. It doesn’t touch over-the-counter (OTC) drugs-things like pain relievers, antacids, or allergy meds sold without a prescription. That’s a $117 billion market. These drugs follow older, slower rules called monographs. There’s no user fee system. No deadlines. No funding boost. Experts say bringing OTC drugs under GDUFA could generate $150-200 million a year and fix a broken system.

Right now, if you want to make a new generic antacid, you’re stuck in a bureaucratic maze. No one’s paying for faster review. Patients wait. Companies can’t innovate. It’s a blind spot in an otherwise strong program.

The Real Impact: More Drugs, Lower Prices

The numbers tell the real story. Since GDUFA started, generic drug approvals have jumped 22% annually. The FTC says GDUFA helped speed up generic entry after brand-name patents expired-by 15%. That’s saved consumers $1.7 trillion in the last decade.

Generic drugs make up 90% of all prescriptions in the U.S. But they cost only 23% of the total drug spending. That’s because GDUFA keeps the pipeline full. When a drug goes generic, prices drop fast. Sometimes by 90% in the first year. That’s not luck. That’s policy.

And it’s working. The Congressional Budget Office says GDUFA pays for itself. For every dollar the FDA spends on generic reviews, $1.20 comes in from user fees. That’s a win for taxpayers. It’s also a win for patients who need affordable medicines.

What’s Next? GDUFA III and Beyond

GDUFA was renewed in 2022 and runs through 2027. This version, called GDUFA III, added new tools:

• DMF completeness assessments-now you can get feedback on your ingredient file before submitting your full drug application.
• Clearer inspection schedules: finished drug sites get checked every two years, API sites every three.
• A plan to eliminate all pre-2012 backlog applications by September 2024.

Future talks are already starting for GDUFA IV. One idea: using real-world data from pharmacies and electronic health records to monitor generic drug safety after they’re on the market. But industry groups warn that could add cost and complexity. The FDA is listening.

One thing’s clear: GDUFA isn’t perfect. But it’s the best system we have. It turned a broken, slow process into a predictable, faster one. It didn’t just help companies-it helped patients. And as long as the fees keep flowing, more affordable drugs will keep reaching shelves.