Understanding the nuts and bolts of the reauthorization process for PDUFA VIII

Background on PDUFA

• There are few programs as important to the FDA as the Prescription Drug User Fee program, more commonly referred to by its acronym, PDUFA. The program, which was first signed into law in 1992 under the Prescription Drug User Fee Act, is at its core a quid-pro-quo style program intended to bolster FDA resources. Because Congress does not provide FDA with enough funding to support all required activities, the FDA was historically unable to hire enough staff to efficiently review drug products. This, in turn, hurt pharmaceutical and biopharmaceutical companies, who had drug reviews linger, preventing them from reaching the market and making efficient use of their patent exclusivities.
• The PDUFA program changed this dynamic in an important way. It requires companies submitting most applications for approval to pay a fee, and to also pay an annual fee to support the FDA’s routine and ongoing regulatory activities. In return for this funding, FDA is able to hire staff to facilitate more efficient and rapid reviews of drug products. This, in turn, helps offset the costs of the PDUFA program by giving companies faster access to the market, giving them a larger return on their drug development investments.
• While industry’s funding of FDA does not guarantee a favorable review of a drug, FDA is required to meet (with some exceptions) standard timelines and performance criteria for reviews, meetings and other regulatory activities. For example, a standard review of a new drug product takes 10 months from the time a product is accepted for review by the FDA, while a “priority” review takes just 6 months.
• But funding also supports reform initiatives, such as new pilot programs. Each PDUFA program typically includes a handful of such reforms, including investments in scientific and technological upgrades, pilot programs intended to benefit specific areas, and new ways of communicating (such as new types of meetings).
• Over time, the amount of funding the FDA receives under the PDUFA program has increased substantially. When the PDUFA program was first created, FDA was authorized to collect $36 million in fees in its first year. By 2023, Congress had authorized FDA to collect $1.15 billion in annual funding under the PDUFA program – or about 17% of the agency’s total budget for that year. However, that figure did not take into account other adjustments, and FDA actually collected $1.22 billion in FY2023. [For a complete explanation of how PDUFA funding works, please see this Congressional Research Service report and this FDA Financial Report to Congress for FY 2023.]

Understanding how PDUFA is reauthorized

• The PDUFA program is reauthorized in a rather unusual way – at least as compared to most federal programs. Instead of legislators negotiating the finer details of what is needed, the FDA instead directly negotiates with select members of the pharmaceutical industry, most often selected through representative trade associations.
• This negotiation results in a document called a “Goals Letter” (also known as a “Commitment Letter”) describing the specific performance goals and activities that FDA will undertake in return for its funding. This document is extensive and specific. For example, the Goals Letter outlining the 6^th reauthorization of PDUFA (known as PDUFA VII, covering the 2023-2027 period) is 71 pages and covers many areas, including specific hiring goals for staff, review performance metrics and timelines, guidance documents FDA commits to releasing, new pilot programs, and reforms to more than a dozen regulatory program areas.
• While the negotiations take place between FDA and industry, the ensuing agreement must then be voted on by Congress, typically as part of a broader reform package reauthorizing several user fee programs. The full legislation statutorily sets the user fee funding amounts, as well as the formulas used to determine application, registration and other fees that must be paid to the FDA.
• The PDUFA program (like similar user fee programs) is only valid for a five-year period, typically starting at the beginning of the government’s fiscal year (October 1). As such, it must be renewed regularly.

The process of renewing a user fee program is long and complex.

• Under federal law, the FDA must begin its official reauthorization process with a call for “public input on the reauthorization,” followed by a public meeting and a 30-day comment period. All of this must take place before the agency is permitted to begin its negotiations with industry. This meeting typically takes place about two years prior to the reauthorization of the program, but FDA will generally hold two of these meetings – a public-input focused meeting and the second “kickoff” meeting.
• The PDUFA kickoff meeting generally consists of two parts: Presentations from FDA and industry regarding the PDUFA program, its financing, its performance and accomplishments, and initial priorities for the next PDUFA reauthorization; and presentations from public (i.e., non-industry) stakeholder groups that submitted comments to FDA’s public docket.
• After the initial public meeting, FDA is also required to “hold discussions with representatives of patient and consumer advocacy groups” at least once every month. The intent of this meeting is “to continue discussions of their views on the reauthorization and their suggestions for changes.” As of the last cycle, registered public stakeholders included approximately 75 organizations, including disease-specific advocacy groups, regulatory-focused research initiatives, good governance groups, and even some smaller associations (that are not involved in the negotiations). Groups interested in participating in the process should look out for a “Request for Notification of Stakeholder Intention to Participate” notice released in the Federal Register about 2 months prior to the kickoff meeting.
• The negotiation process over the text of the Goals Letter and funding levels takes place over a period of several months. For example, the last PDUFA negotiating process lasted from September 2020 through February 2021. Negotiations are split into different committees and subgroups, with the industry Steering Committee acting as the leader, and subgroups focusing on specific areas such as finance, premarket activities, postmarket activities, manufacturing, and information technology.
• Industry negotiators generally include top regulatory staff from the Pharmaceutical Research and Manufacturers Association (PhRMA) and the Biotechnology Innovation Organization (BIO), as well as negotiators from member companies. The FDA is typically represented by high-level policy staff and leaders within FDA’s Center for Drug Evaluation and Research (CDER) and Center for Biologics Evaluation and Research (CBER).
• The key date for PDUFA negotiators is January 15, 2027 – the legally required date for FDA to transmit its user fee recommendations to Congress. While in practice the FDA sometimes misses this date (as it did for the medical device user fee program, MDUFA, during the most recent negotiations), the PDUFA program is generally delivered on time. However, even before this date, FDA is required to “provide regular updates on negotiations” to the Senate’s Health, Education, Labor and Pensions (HELP) Committee and the House Committee on Energy and Commerce (E&C).

Two additional things to keep in mind about the PDUFA reauthorization process:

• First, the primary goal of PDUFA is to set fees and understand what FDA commits to doing in return for receiving those fees. While some stakeholders will sometimes argue that the PDUFA reauthorization should address a specific policy issue, the FDA has made it clear that it is generally not interested in having those discussions within the context of PDUFA. Or, as the FDA succinctly said during the PDUFA VII kickoff meeting in September 2021: “PDUFA reauthorization discussions are limited to issues of fee payment and review process enhancement—and cannot address regulatory policy.” And even when the PDUFA goals letter does call for the release of a guidance document (i.e., a regulatory policy), it is generally within the context of a document that could affect the submission of applications to the agency.
• Second, the entire program must be signed off on by Congress for it to take effect. While legislators aren’t involved in the negotiations, they are responsible for reviewing and approving the final agreement. For example, during the most recent process to reauthorize PDUFA, Congress held hearings in early 2022 to review the program. Notably, efforts to reauthorize PDUFA (and other user fee programs) are generally included as part of major FDA-focused reforms bills like the FDA Safety and Innovation Act (FDASIA) of 2012 and the FDA Reauthorization Act (FDARA) of 2017. Unlike the Goals Letter, the reform legislation will typically propose changes in regulatory policy that go beyond the scope of PDUFA. However, because of the size and complexity of the user fee bills – and because its passage often coincides with the passage of annual funding bills – legislation to reauthorize PDUFA is sometimes passed with just days to spare. [See Figure below]

Legislative vehicles by which PDUFA was passed and the dates they became law

What should stakeholders be thinking about now?

• We are just a year away from the start of the PDUFA negotiations. We expect that FDA will likely have an initial meeting with public stakeholders in summer 2025 and then hold a formal kickoff meeting in September 2025. This means that stakeholders have 12 months to develop a cohesive vision for what PDUFA VIII should include. AgencyIQ has learned that the industry groups PhRMA and BIO are already engaged in this process with their members and have circulated early stage draft proposals for comment.
• Keep an eye on the overall reauthorization timeline. There are many important dates to be aware of in the PDUFA reauthorization cycle. While not all of these are written in statute, and therefore are not exact, it’s easy to lose sight of the fact that most of the PDUFA negotiations actually take place almost two years before Congress will vote on reauthorization legislation. [See chart below].

An overview of the expected timeline for PDUFA VIII

• Building a coalition takes time: If there’s a common theme that we have seen in past PDUFA agreements, it is that industry spends considerable time finding consensus before negotiating with the FDA, whereas most non-industry stakeholders tend to offer independent requests to the FDA that may even be out of the scope of the program. If non-industry stakeholders want to influence the next PDUFA process, they may wish to spend the next year building a coalition to support a narrower set of requests that are within the legislative scope of the PDUFA program.
• Keep an eye on Congress: As noted above, the scope of PDUFA only allows certain provisions to be included. If stakeholders (including life sciences companies) have grander proposals affecting regulatory policy, they should consider working closely with legislators to design stand-alone legislation to accomplish those aims. Often times, the user fee programs are packaged together as part of a broader reform bill (e.g., FDASIA, FDARA) consisting of many of those same stand-alone bills. And because the reauthorization process takes so long – there a Congressional election in the midst of user fee negotiations in 2026 – there is plenty of time to work with legislators as well.

To contact the author of this analysis, please contact Alexander Gaffney ( agaffney@agencyiq.com).
To contact the editor of this analysis, please contact Jason Wermers ( jwermers@agencyiq.com)