On September 17, 2014, the Pharma & Biopharma Outsourcing Association made its official debut in front of FDA at a public hearing to discuss the Generic Drug User Fee Amendments (GDUFA). During an open comments session of the hearing, PBOA President Gil Roth spoke to the panel about our members’ interests in seeing GDUFA’s Facility Fees revised to better reflect the realities of how Contract Manufacturing fits into the drug manufacturing sector. Mr. Roth was supported by two of PBOA’s trustees, Sam Ricchezza (WellSpring) and Tom Thorpe (Afton Scientific).
Below, you can find the transcript of that comment session, courtesy of FDA (you can find transcripts of both sessions under “Related Documents” at this page). –GR
MR. ROTH: Hi. I’m Gil Roth, the President of the Pharma and BioPharma Outsourcing Association. I want to thank you for the opportunity to speak today. I founded the association earlier this year to help organize and represent contract manufacturers and contract development manufacturing organizations, we’ll call them CMOs for the sake of this comment session. This came after 14 years of covering the industry as the editor of Contract Pharma Magazine.
And our main area of interest at this hearing is facility fees for final dosage for manufacturers. I was gratified to hear Mr. Pressman’s presentation earlier about the small business issues related to those fees, and we’re coming from somewhat different directions, but I think we have some of the same goals. Several of our members are interested in a small business exemption under GDUFA as well as perhaps a tiered structure for CMOs as opposed to companies that are manufacturing generics for themselves. It’s a very different business being a contract manufacturer than being a pharma company or a generic company operating under much different margins.
Within the field, we have some companies that might have a single generic client that they do one week of work for per year, and yet they face the same facility fee that a major, major generic facility is going to pay. Not all contracts are made to accommodate that sort of fee being transferred, and it’s a very anecdotal industry, but I have anecdotes of companies that have told me they’re essentially looking to get out of manufacturing generics because these fees make it unprofitable for them as well as for the client company they’re working with.
Now, one of our members has helped — well, a congressman, Representative Robert Hurt, Republican in Virginia, he and Phil Roe in Tennessee have introduced HR-3631, the Small Manufacturer Protection Act, which empowers the Secretary at FDA to issue small business exemptions when GDUFA might create barriers to entry. I believe the threshold for that is companies that are $20 million and smaller, and that bill is currently sitting in the Health Committee.
I’m here because this is our coming out party in a sense. This is the first public appearance the association has made.
MARTHA NGUYEN, JD, OFFICE OF GENERIC DRUG POLICY, OFFICE OF GENERIC DRUGS: Congratulations.
MR. ROTH: Thank you very much. We’re interested in reaching out to FDA in helping to inform them a bit more about how the CMO industry differs from the branded pharma industry, from the generics industry. Like I said, they operate on very different margins. Some of them are carved out of existing pharma companies. In this case, some of them have generic products of their own through other businesses. I should note that the interest in GDUFA does not reflect the entirety of the membership of the PBOA. Some of these companies don’t handle generics at all, some are biologics focused, but still they’re contract manufacturers and they don’t seem to be represented in the way GDUFA was structured in its initial incarnation. We’re hoping going forward with the renewal that we can have some effect and help negotiate some way of differentiating CMOs from pure generic companies under the facility fees going forward, particularly for final dosage form.
And that is essentially all I have to say. We are planning on submitting comments to the docket in the weeks ahead to again try and pave the road here, but if you have any questions, I would love to start a conversation.
MS. NGUYEN: Thank you.
KEITH FLANAGAN, JD, OFFICE OF GENERIC DRUG POLICY, OFFICE OF GENERIC DRUGS: Welcome to the excitement of GDUFA.
MR. ROTH: Thank you very much. (Laughter.)
MS. NGUYEN: It’s always a party.
MR. ROTH: Well, this all began because I was reporting on GDUFA for Contract Pharma Magazine, where I was the editor, and the number of contract manufacturers who said to me, “We don’t know what we’re doing under this. We can’t pass these fees along to our clients,” they were, I don’t want to say blindsided, we knew fees were coming. I don’t think they knew exactly how it would be structured and how they would be implemented. We want to be part of the party, I guess.
MS. NGUYEN: Do you have — can you give me a ballpark estimate on how many players would fit into the under $20 million exemption?
MR. ROTH: Not entirely. It’s an industry that’s dominated by a few very, very large companies and a very large number of small companies, and some of those come and go. If anything, when I was building the membership list for this, I looked over the self-identified facilities list under GDUFA to see which companies I knew which companies didn’t appear to be generic firms of their own, and start figuring out who was a small CMO, who I don’t want to say get caught in the net, but showed up as a self-identified manufacturer of generics.
MS. NGUYEN: So was it a lot?
MR. ROTH: There’s a bunch. I will try and get that information for you.
MS. NGUYEN: Yeah. I just want a feel for what would happen if we were to work on an exemption. I think a presenter earlier had talked about a sliding scale fee structure. You’re talking about an exemption which would be something different. I don’t know if you would also — if you like what we currently do in PDUFA and whether that would be acceptable.
MR. ROTH: And that’s what I was wondering. Under PDUFA, there is both a small business exemption and facility fees are applied directly to the drug filers, not to the individual manufacturing sites. Both of those did not carry through to GDUFA. So we want to see about how that can be implemented.
One of the ideas we had was simply a checkbox of sorts under the self-identified facilities list to ask companies, do you or any of your subsidiaries own any NDAs of your own? If they don’t, it’s a contract manufacturer, it’s not a generic company, and that might be a good way of splitting the pie to separate final dosage form into companies making them for themselves versus ones that are making them for clients.
MS. NGUYEN: Thank you. Other questions from the panel?
DR. UHL: I was just wondering if you could elaborate on your choice of the $20 million.
MR. ROTH: Oh, that’s not my choice. That’s in the small business — that’s in HR-3631.
KATHLEEN (COOK) UHL, MD, ACTING DIRECTOR, OFFICE OF GENERIC DRUGS: Okay. Even that, how was that put? I mean, do you have any knowledge of that, that selection?
MR. ROTH: I don’t know how that number was settled on, but it might be something that’s come up in small business waivers in the past, but I’m afraid I don’t know how they settled on the number.
DR. UHL: Okay. Thank you.