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 medications make up 90% of all prescriptions but cost just 23% of what brand-name drugs do. Behind that affordability is a quiet but powerful system called GDUFA - the Generic Drug User Fee Amendments. Without it, getting a cheap version of your blood pressure pill, asthma inhaler, or antibiotic could take years. And in some cases, it might never happen.

Why the FDA Needs Money to Approve Generic Drugs

The FDA doesn’t get enough money from Congress to review every generic drug application quickly. That’s where user fees come in. Since 2012, generic drug makers have paid fees directly to the FDA to help fund the review process. These aren’t fines. They’re not bribes. They’re payments for a service: a faster, more predictable review of their applications.

Before GDUFA, the average time to approve a generic drug was 30 to 36 months. Many applications sat in limbo for years. Companies didn’t know what the FDA wanted. Regulators were overwhelmed. Patients waited. GDUFA changed that.

Now, the FDA aims to review 60% of original generic drug applications - called ANDAs - within 15 months. That’s a massive drop. And it’s working. In 2021, 97% of the FDA’s first-cycle review goals were met. That means if a company submits a complete application, they get clear feedback within 10 months, not 2 years.

How the Fees Work: Four Types, One System

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

• Application fees: $124,680 per ANDA submission in FY 2023. This covers the cost of reviewing the drug’s safety, effectiveness, and manufacturing details.
• Program fees: $385,400 per year for every company with an approved generic drug. This helps fund the entire generic drug program, not just one application.
• Facility fees: $25,850 per manufacturing site that makes either the active ingredient or the final pill. If your company uses a factory in India or Ohio, you pay this fee.
• DMF fees: $25,850 per Drug Master File - a document that details how the active ingredient is made. You pay this when you first link your application to a DMF.

These fees are paid electronically through the FDA’s system. Deadlines matter. Program fees are due April 1. Facility fees are due October 1. Miss a deadline, and your application can be delayed - or even rejected.

Here’s the catch: if your company owns multiple facilities, you pay each one. If you’re a small business with just one factory, that $25,850 fee can eat up 15% of your annual regulatory budget. That’s why some small manufacturers say GDUFA is unfair - even if it’s working for big players.

Big Companies Win, Small Ones Struggle

The top 10 generic drug makers control 60% of the U.S. market. Teva, Sandoz, Mylan - these giants pay millions in fees every year. But they also have teams of lawyers, regulators, and compliance experts who know exactly how to navigate the system.

Small companies? They often have one or two approved drugs. One facility. One regulatory person juggling everything. For them, the facility fee isn’t just a cost - it’s a barrier to growth. In 2022, only 18 small businesses applied for the 75% fee reduction the FDA offers. That’s a tiny number. Why? Many don’t even know it exists.

The FDA says it’s there. They have calculators, webinars, and a helpdesk open Monday through Friday. But if you’re a startup in Iowa or a family-owned lab in Texas, finding that help isn’t easy. And time? Time is money. If you’re waiting six months to understand a fee notice, you’re losing sales.

How GDUFA Compares to Brand-Name Drug Fees

It’s not just about generics. There’s also PDUFA - the Prescription Drug User Fee Act - which funds reviews for new brand-name drugs. In 2023, the fee for one new drug application was over $3.4 million. That’s 27 times more than the generic fee.

Why the huge gap? Brand-name drugs require years of clinical trials. Generic drugs don’t. They just need to prove they’re the same as the brand. So the FDA charges less. But here’s the twist: the FDA reviews over 1,100 generic applications a year. Only about 70 new brand-name drugs. That means GDUFA staff are handling 15 times more applications - for a fraction of the money.

Yet, the system works. Because the fees are predictable, the FDA can hire more reviewers, upgrade software, and train staff. Before GDUFA, there was no budget for that. Now, they can respond to applications faster, give clearer feedback, and even inspect factories before a drug hits the market.

What’s Still Broken

GDUFA isn’t perfect. There’s still a backlog. About 1,500 generic drug applications from before 2012 are still sitting in the FDA’s system. The agency says it will clear them all by September 2024. But that’s a big if.

And what about over-the-counter (OTC) drugs? Things like antacids, cough syrups, and allergy pills. These are generic too. But GDUFA doesn’t cover them. The OTC market is worth $117 billion a year. No user fees. No review timeline. No accountability. That’s a gap. Congress is talking about fixing it - maybe in GDUFA IV, which starts in 2027.

Another issue? Some markets still have only one or two suppliers. Even with faster approvals, if only one company makes a drug, prices stay high. The FDA knows this. That’s why they launched the Drug Competition Action Plan - to use GDUFA as a tool to bring more generics to the market.

Real Impact: Savings and Access

The numbers tell the real story. Over the last decade, GDUFA has helped bring generics to market faster. That’s saved U.S. consumers $1.7 trillion. That’s more than the entire GDP of Norway.

Patients get their meds sooner. Pharmacies stock them. Insurance companies pay less. And hospitals save millions. A study from the Duke-Margolis Center found generic approvals jumped 22% after GDUFA started. That’s not just a number - it’s a mother getting her child’s asthma inhaler without a co-pay. It’s a senior choosing between insulin and groceries.

Even the FDA admits the system works. In a 2022 survey, 85% of industry respondents said GDUFA improved transparency. That’s huge. Before, companies got vague letters: “Your application is incomplete.” Now, they get: “Your dissolution test failed at 30 minutes. Use a different buffer.” That’s progress.

What’s Next for GDUFA

GDUFA III runs through 2027. But the next version - GDUFA IV - is already being discussed. Ideas include:

• Expanding coverage to OTC drugs - potentially bringing in $150-200 million more in fees.
• Using real-world data from pharmacies and insurance claims to monitor generic drug safety after approval.
• Automating parts of the review process with AI to cut down manual work.

Industry feedback is mixed. Big companies like Teva support these changes. Small ones worry about cost. The FDA says it’s listening. But change moves slowly. And in the world of drug approvals, slow can mean patients waiting.

For now, GDUFA remains the engine behind America’s affordable drug supply. It’s not perfect. It’s not fair to everyone. But it’s the only system we have that actually works.