Generic Drug User Fees: How FDA Funding Speeds Up Generic Medicine Approvals

Every year, Americans fill over 4 billion prescriptions for generic drugs. These pills, tablets, and injections are just as safe and effective as their brand-name counterparts-but cost up to 85% less. Behind this affordability is a quiet but powerful system called the Generic Drug User Fee Amendments (GDUFA). Without it, getting a generic drug to market could take three years or more. Today, thanks to GDUFA, most approvals happen in under a year.

How GDUFA Keeps Generic Drugs Moving

Before 2012, the FDA’s generic drug review process was broken. Applications piled up. Companies waited years just to get feedback. Some applications sat untouched for over 30 months. Patients missed out on cheaper medicines. The FDA was underfunded, understaffed, and overwhelmed.

Congress fixed this with GDUFA. Instead of relying only on taxpayer money, the FDA started collecting fees directly from generic drug makers. These aren’t fines. They’re payments for a service: timely, predictable, and transparent reviews. In return, the FDA commits to clear deadlines and better communication.

Today, about 75% of the budget for the FDA’s Office of Generic Drugs comes from these fees. That means more reviewers, better technology, and fewer delays. In FY 2022, the FDA received 1,128 applications for generic drugs. Without GDUFA, most would still be waiting.

The Four Types of Fees

Not all fees are the same. GDUFA has four distinct categories, each targeting a different part of the drug development process:

• Application fees: Paid each time a company submits an Abbreviated New Drug Application (ANDA). In FY 2023, this was $124,680 per application.
• Program fees: An annual charge for any company with an approved generic drug. For FY 2023, it was $385,400 per company.
• Facility fees: Charged when a manufacturing site is listed in an approved application. The fee was $25,850 per facility in FY 2023.
• Drug Master File (DMF) fees: Paid when a company submits technical data about active ingredients. Also $25,850 per DMF when first referenced.

These fees are not tied to approval. Paying doesn’t guarantee a green light. The FDA still tests for safety, quality, and bioequivalence. But paying does guarantee a review timeline.

Why Fees Are So Much Lower Than for Brand Drugs

Compare GDUFA to PDUFA-the system for brand-name drugs. In 2023, a single new drug application cost $3.4 million. That’s nearly 28 times higher than the generic fee.

Why the difference? Brand-name drugs are new. They require years of clinical trials, complex data, and high-risk reviews. Generic drugs are copies. They don’t need new clinical studies. They just need to prove they work the same way as the original.

But volume matters. While the FDA got only 68 new drug applications in 2022, it received over 1,100 generic ones. Lower fees make sense when you’re handling hundreds of similar applications. It’s like a fast-food line vs. a five-star restaurant. The process is simpler, but there are far more customers.

What GDUFA Actually Delivers

GDUFA isn’t just about money. It’s about performance. The FDA sets clear goals-and reports on them every year.

• Review 60% of original ANDAs within 15 months
• Communicate 90% of first-cycle deficiencies within 10 months
• Inspect finished drug facilities every 2 years
• Inspect active ingredient facilities every 3 years

In 2021, the FDA hit 97% of its first-cycle review goals. Communication improved dramatically. Before GDUFA, deficiency letters were vague: “Insufficient data.” Now, they say: “Your dissolution profile at pH 6.8 doesn’t match the reference drug. Run test 3 again.”

That clarity saves companies months. One small manufacturer told the FDA they cut their approval time from 28 months to 11 after switching to GDUFA-compliant submissions.

The Hidden Costs for Small Companies

Not everyone wins under GDUFA. Small manufacturers struggle with the facility fee. If your company runs one factory and has three approved drugs, you pay $25,850 per year just for that one site-even if you’re making 50,000 pills a month.

The Generic Pharmaceutical Association says 75% of small generic makers operate only one facility. For them, the fee can eat up 10-15% of their entire regulatory budget. Some delay expansions. Others skip new product lines.

The FDA offers a 75% fee reduction for qualifying small businesses. But only 18 companies used it in 2022. Why? Many don’t know they qualify. Others find the paperwork too complex. The FDA’s helpdesk is open Monday to Friday, but getting answers can take weeks.

What GDUFA Doesn’t Cover

There’s a gap. GDUFA only covers prescription generics. It doesn’t touch over-the-counter (OTC) drugs-like pain relievers, antacids, or allergy meds. These are regulated under older, outdated monograph rules. There’s no user fee system. No deadlines. No funding boost.

The OTC market is worth $117 billion a year. Yet, companies wait years to update labels or add new ingredients. The FDA has started talking about bringing OTC drugs under GDUFA, but no law exists yet. Until then, this huge part of the market stays stuck in the 1970s.

Impact on Patients and Prices

The real test of GDUFA isn’t how many applications get approved-it’s how many people get cheaper medicine faster.

Since GDUFA started, generic drug approvals have jumped 22% per year. More generics mean more competition. More competition means lower prices. Over the past decade, GDUFA has helped save U.S. consumers an estimated $1.7 trillion.

The FTC found that since GDUFA, generic drugs enter the market 15% faster after brand-name patents expire. That means patients get savings sooner. In 2023, a generic version of a popular heart drug hit shelves 11 months after patent loss-down from 28 months in 2011.

But challenges remain. One in five generic markets still have only one or two suppliers. That means no price competition. The FDA’s 2023 Drug Competition Action Plan aims to fix this by speeding up reviews for these “single-source” generics.

What’s Next for GDUFA?

GDUFA III runs through 2027. The FDA has already started planning GDUFA IV. Key ideas under discussion:

• Expanding GDUFA to cover OTC monograph drugs
• Using real-world data (like pharmacy records) to monitor generic drug safety after approval
• Streamlining fees for affiliated companies (e.g., parent companies with multiple subsidiaries)
• Improving the fee reduction program for small businesses

Industry surveys show 68% of generic drug companies see GDUFA as a net positive. But 22% still worry about affordability. The FDA knows this. Their 2023 report says they’re working on clearer fee calculators and better training tools.

For now, GDUFA works. It’s not perfect. But it’s the reason you can buy a 30-day supply of generic metformin for $4 instead of $300. It’s why your mom’s blood pressure pill costs less than a cup of coffee. And it’s why the FDA can still approve over 1,000 generic drugs a year-without waiting another decade.