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 this massive access to affordable medicine is a quiet but powerful system: the Generic Drug User Fee Amendments, or GDUFA. This isn’t just a bureaucratic program-it’s the financial engine that keeps the FDA’s generic drug review process moving. Without it, many life-saving generics would still be stuck in multi-year review backlogs.

How GDUFA Keeps Generic Drugs Moving

Before 2012, the FDA didn’t have enough money to review generic drug applications quickly. Companies submitted their Abbreviated New Drug Applications (ANDAs), and then waited-sometimes over three years-for approval. That delay meant patients couldn’t get cheaper versions of medicines, even after patents expired. In 2012, Congress passed GDUFA to fix this. It let the FDA collect fees directly from generic drug manufacturers to fund the review process. This wasn’t a tax. It was a targeted investment: industry pays, and the FDA delivers faster approvals.

Today, GDUFA funds about 75% of the FDA’s Office of Generic Drugs budget. That money pays for scientists, reviewers, inspectors, and digital systems that track applications. In return, the FDA commits to clear timelines: 60% of original ANDAs must be reviewed within 15 months. In FY 2021, before pandemic delays, the FDA met 97% of its first-cycle review goals. That’s a huge leap from the 30- to 36-month waits of the past.

The Four Types of Fees That Keep the System Running

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

• Application fees: $124,680 per ANDA submission in FY 2023. This covers the cost of reviewing the entire application, from chemistry to bioequivalence data.
• Program fees: $385,400 per year for every company with an approved generic drug. This supports the overall infrastructure-the staff, systems, and oversight that keep the program running.
• Facility fees: $25,850 per manufacturing site. If a factory makes active ingredients or finished pills for a generic drug, it pays this fee. The FDA inspects these sites to ensure quality and safety.
• DMF fees: $25,850 per Drug Master File (DMF). These are technical dossiers that detail how active pharmaceutical ingredients are made. The fee applies when a DMF is first referenced in an ANDA or when the holder requests a completeness check.

These fees are not optional. If a company skips payment, the FDA won’t process their application. But the system is designed to be fair: a facility doesn’t pay if it’s only mentioned in a pending or tentatively approved application. And if a company owns multiple facilities, each one incurs its own fee.

Why GDUFA Fees Are Much Lower Than Brand-Name Drug Fees

The contrast between GDUFA and PDUFA-the user fee program for brand-name drugs-is stark. In FY 2023, a new drug application under PDUFA cost $3.4 million. GDUFA’s application fee? Just $124,680. That’s less than 4% of the price. Why the difference?

It’s not because generic reviews are easier. They’re not. The FDA still needs to prove a generic drug is bioequivalent, stable, and safe. But there are more generic applications. In 2022, the FDA received 1,128 ANDAs versus just 68 new drug applications. The lower fee reflects volume and scale. It’s a volume-based model: charge less per application, but collect from hundreds of companies.

This structure keeps generics affordable. If fees were as high as brand-name drug fees, the cost of generics would skyrocket-and so would healthcare spending. GDUFA’s low fees help maintain competition in the generic market, which is critical for keeping prices down.

Who Pays the Most? Small Manufacturers vs. Big Pharma

Not all companies feel the same burden. Large manufacturers like Teva, Sandoz, and Mylan have multiple approved drugs and many manufacturing sites. They pay more in total, but the fee per product is low. For a small company with one approved drug and one facility, the math is tougher.

A small firm with one approved generic drug pays:

• $124,680 for the application fee
• $385,400 for the program fee
• $25,850 for the facility fee

That’s over $535,000 in fees just to keep one product on the market. For some small businesses, that’s 15% or more of their entire annual regulatory budget. The Generic Pharmaceutical Association has pointed out that 75% of small generic firms operate only one facility, making the facility fee disproportionately heavy.

The FDA offers a 75% fee reduction for qualifying small businesses-but only 18 such reductions were approved in FY 2022. That suggests many small companies either don’t know about the program or find the paperwork too complex. The FDA has webinars and help desks, but the learning curve for new regulatory staff is 3 to 6 months. For a small team, that’s a lot of time lost.

What GDUFA Has Achieved-And Where It Still Falls Short

The results speak for themselves. Since GDUFA began, generic drug approvals have increased by 22% per year. The median approval time dropped from 36 months to under 12 months. Over the past decade, timely generic entries have saved consumers an estimated $1.7 trillion.

But problems remain. As of 2022, about 1,500 ANDAs submitted before GDUFA were still pending. The FDA has committed to clearing all of them by September 2024. That’s a tall order. Also, the 60% review goal within 15 months wasn’t met in FY 2021-only 52% were approved on time. Pandemic delays and more complex applications contributed to that gap.

Another gap? Over-the-counter (OTC) drugs. GDUFA doesn’t cover them. That’s a $117 billion market. OTC monograph drugs-like antacids, cough syrups, and topical creams-still rely on outdated, slow review systems. The Congressional Research Service estimates that bringing OTCs under GDUFA could generate $150-200 million in new fees and speed up access to safer, standardized products.

How Companies Navigate the System

Paying GDUFA fees isn’t as simple as writing a check. Companies must submit payments through the FDA’s electronic user fee system (EUF). Deadlines matter:

• Program fees: Due April 1 each year
• Facility fees: Due October 1
• Application and DMF fees: Due at time of submission

Complications arise when companies acquire new facilities or merge with others. The FDA defines affiliations strictly: if one company controls more than 50% of another, they’re considered affiliated. That affects who pays what. In FY 2022, 147 companies requested reconsideration of their facility fee assessments-often because they didn’t understand how ownership changes impacted liability.

Communication has improved, too. Before GDUFA, deficiency letters were vague: “Insufficient data.” Now, thanks to GDUFA’s performance goals, 90% of feedback is specific and actionable. Teva’s regulatory team noted this change as a major win. But for smaller firms, the system still feels opaque. One RAPS forum user said, “I spent three months just figuring out if I owed a DMF fee.”

The Bigger Picture: Why This Matters to Patients

This isn’t just about FDA budgets or corporate fees. It’s about whether a diabetic can afford insulin, whether a heart patient can get their blood thinner, or whether a parent can buy their child’s asthma inhaler without choosing between medication and groceries.

The top 10 generic manufacturers control 60% of the market. That leaves 40% to hundreds of smaller players. When GDUFA works well, more companies enter the market. More competition means lower prices. When it falters-due to delays, fees, or unclear rules-fewer companies apply, and prices rise.

The FDA’s 2023 Drug Competition Action Plan explicitly ties GDUFA to fighting market shortages and monopolies. One in five generic drug markets has only one or two suppliers. That’s dangerous. GDUFA’s faster reviews help new competitors enter before monopolies form.

What’s Next for GDUFA?

GDUFA III runs through 2027. Negotiations for GDUFA IV are already underway. Early discussions include:

• Expanding coverage to OTC monograph drugs
• Using real-world evidence to monitor generic drug safety after approval
• Streamlining fee structures for small businesses
• Improving transparency around affiliated company fee calculations

The Congressional Budget Office projects GDUFA will be reauthorized again in 2032. Why? Because it works. For every $1 the government spends on generic drug review, industry pays $1.20 in fees. That’s a strong return on investment. The system isn’t perfect, but it’s the best tool we have to ensure that when a brand-name drug’s patent expires, a cheaper version isn’t stuck in a bureaucratic queue for years.