ADUFA V Negotiations Meeting Minutes
May 12, 2022, 3PM – 5PM
Format: Virtual

Purpose

Section 740A(d)(1)(F) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) requires that FDA consult with representatives of the regulated industry to negotiate recommendations for reauthorization of the Animal Drug User Fee Act (ADUFA) program, ADUFA V. For the ADUFA negotiations, regulated industry is represented by the Animal Health Institute (AHI). FDA’s meetings with AHI, which tentatively were planned to run through February 28, 2022, and reached an impasse at this meeting, will satisfy the requirement in section 740A(d)(1)(F) of the FD&C Act. The overall purpose of this meeting was for AHI to present a counterproposal and for FDA and AHI to discuss the proposals and develop a strategy for concluding negotiations.

Participants

FDA

Matt Lucia, Center for Veterinary Medicine (CVM)
Roxanne Schweitzer, CVM
Tim Schell, CVM
Julie Bailey, CVM
Chuck Andres, CVM
Cassie Ravo, CVM
Steve Fleischer, CVM
Elizabeth Cash, Office of Chief Counsel (OCC)

AHI

Rachel Cumberbatch, Animal Health Institute
Grace Gowda, Boehringer-Ingelheim Animal Health
Mary Hagler, Dechra
Gareth Harris, Merck
Alicia Henk, Ceva
Todd Rhodes, Vetoquinol
Kelly Rosenkrans, Elanco
Alan Taylor, Virbac
John Hallberg, Zoetis
Kathy Vannatta, Animal Health Institute
Ron Phillips, Animal Health Institute

The meeting began at 3:05 PM. 

Discussion

AHI provided a presentation that asked for clarification on aspects of certain ADUFA V programmatic enhancements, provided feedback on the financial proposals, and provided a funding proposal.  AHI and CVM previously agreed to waive the ground rules to provide materials prior to the meeting.

Programmatic Enhancements:

• FDA and AHI continued discussion on CVM reporting of first pass favorable outcomes for E submissions (protocols) and P submissions (technical sections). FDA committed to providing feedback to AHI’s proposal.
• AHI provided comments on FDA’s proposed goals letter language for exploring metrics related to time in Agency/time in industry.  FDA committed to providing feedback on AHI’s alternate language.
• Regarding the H submission/raw data program enhancement: FDA and AHI discussed AHI’s proposal for a pilot for H submissions of raw data and documents supporting an effectiveness protocol, as well as the process used to develop eSubmitter templates, and how industry would have the opportunity to provide feedback on those templates. They also discussed the proposed timing of the roll-out for the effectiveness study eSubmitter templates. FDA stated that they believe it is critical to establish consistent expectations of what raw data are needed in general, through the development of guidance for industry (GFI), and to develop the eSubmitter template to present the raw data in a uniform way for review staff. Based on the totality of work FDA is committing to for the ADUVA V enhancements, and the need for the GFI to publish first, FDA stated that the template information for effectiveness raw data cannot be developed on a more accelerated timeline.  FDA indicated that the benefit of the H submission for raw data for both FDA and industry is that both parties will have agreement at the protocol stage on which raw data should be included in the final study report, rather than risk additional data requests after the study is completed and before the sponsor submits the study for FDA review.  AHI expressed that they did not want a question based review (QbR) template and stated industry’s experience with QbR has not been positive.  AHI’s position is that any effort to break apart the raw data will increase human error and unnecessarily complicate the process and does not meet the goal of the effort to decrease the amount of raw data submitted.  CVM explained their intention for the H submission is that it would be a list of the raw data that the sponsor intends for submission with the final study report.  
• FDA and AHI continued discussions on an educational conference for animal drug stakeholders, including how FDA personnel would participate in such a conference.

FTEs:

AHI asked FDA why additional FTEs were needed to support the proposed ADUFA V enhancements and where in CVM/ONADE the FTEs would be placed. FDA amended their proposal to indicate 4 FTEs were needed and explained the FTEs would be used to support the anticipated increase in submission volume resulting from the H submission for raw data, reduced timeframes associated with creation of the response letter in advance of the pre-submission conference, and creation of the 5-year Financial Plan. 

Carryover:

AHI presented their understanding of carryover, their carryover minimum and maximum proposal, and their proposed base funding for the first year of ADUFA V. AHI provided clarifying points on the proposals and their rationale. FDA did not have any questions on what industry presented. FDA and AHI have reached a tentative agreement on the carryover cap proposal.

Program Cost: 

AHI revisited past financial data to state that target ADUFA revenue is consistently greater than program costs.  AHI stated that program cost is reflected in the program’s obligation not the target revenue.  The most recent program obligations reported in the financial reports (2019-2021) have been $26.7M, $30.7M and $29.4M respectively.  It is AHI’s perception that total obligation for the ADUFA program does not support increases above the current inflation adjusted base.  AHI’s position is that the current financial data indicates that the current base is too high.  AHI stated there is a historical precedence for the target revenue incorporates maintenance cost of the program and enhancements and claimed this leads to excess capacity. AHI noted that several ADUFA IV enhancements are complete, yet the cost for those is built into the current base.  AHI also explained their perception that there is adequate FTE capacity and pointed to flat sentinel submission over the life of the program simultaneous to increasing FTEs.  

On inflation, AHI stated that the ADUFA program has an inflation adjuster that is comprised of two parts—personnel costs and non-personnel costs.  AHI’s position is that the portion of the personnel costs will increase not only due to the higher cost per FTE for CVM but also for the large influx of new higher cost FTEs from the other user fee programs starting in FY23.  The non-personnel inflation costs are guided by the CPI, which as noted is at a 40-year high and will be reflected in the annual inflation percentages.  AHI’s position is that increasing the base amount, and then having it subjected to the current inflation rate over the next five years will have a cumulative impact on the ADUFA funding.  AHI pointed out that the ADUFA inflation rates have outpaced the programs financial needs.  AHI does not agree with FDA’s justification that program expenditures will increase by over double the inflation rate for the next two years, which would be needed to reach FDA’s proposed starting base.  AHI claimed that given the already high carryover balance being realized in ADUFA IV, this will further erode the financial integrity of the program and reduce the accountability on resources.  

Next Steps

FDA summarized the state of the user fee negotiations, as follows:

• FDA indicated that they have worked with AHI to respond to concerns. FDA and AHI have reached tentative agreement on most of the program enhancements and included them in the program without adding to the base cost. 
• AHI indicated that carryover was an issue, so FDA agreed to a carryover cap and a plan to spend the current carryover. FDA agreed to metrics reporting and a third-party assessment. 
• The result of the negotiations to date is a cost-neutral program that remains the lowest percent industry funded user fee program in FDA. In return, FDA requested sufficient funding to support the base cost for the ADUFA program, after factoring in a 4% inflation rate for the remaining two years of ADUFA IV. 

AHI indicated that their ratifiers will not support FDA’s requested base funding because AHI does not agree with FDA’s justification for the need and there is not transparency for where the fund will be used or an expected outcome from the investment. 

FDA indicated that their ratifiers will not support a program that has a base funding at a level lower than its cost. 

CVM stated, and AHI agreed, that given the disagreement the negotiations were at an impasse. The next steps would be to follow up with the ratifiers.

The meeting adjourned at 5:04 PM.