Before 2012, getting a generic drug approved in the U.S. could take years. Backlogs piled up. Applications sat untouched. Patients waited longer for affordable medicines. That changed with the Generic Drug User Fee Amendments-a law that didn’t just tweak the system, it rebuilt it.
What GDUFA Actually Does
The Generic Drug User Fee Amendments, or GDUFA, is a law that lets the FDA collect fees from companies that make generic drugs. These aren’t taxes. They’re user fees-paid directly by manufacturers to fund the review of their own applications. The money goes straight into the FDA’s generic drug program. That means more staff, faster reviews, and better inspections of drug factories.
Before GDUFA, the FDA had only congressional funding to review thousands of generic drug applications. That wasn’t enough. By 2012, over 3,000 applications were stuck in limbo. The average review time? Nearly three years. GDUFA changed that by giving the FDA the resources it needed to clear the backlog.
The Three Phases of GDUFA
GDUFA isn’t a one-time law. It’s renewed every five years. Each version builds on the last.
GDUFA I (2012-2017) was the foundation. Signed by President Obama in July 2012, it created the first-ever fee structure for generic drug makers. It charged fees for each drug application, for each manufacturing facility, and for each drug ingredient source. Foreign facilities paid $15,000 more than U.S. ones-because inspections overseas cost more. In its first five years, GDUFA I brought in about $300 million a year. The FDA used every dollar to hire reviewers, inspectors, and IT staff.
GDUFA II (2018-2022) fixed problems. Early on, experts noticed something: big companies with dozens of drugs could spread the fees across many products. Small companies, with just one or two, got hit harder. The fees created a barrier for new entrants. So GDUFA II lowered fees for smaller firms and added flexibility. It also introduced the Pre-ANDA Program, letting companies talk to the FDA before submitting a full application. That cut down on rejections and saved time.
GDUFA III (2023-2027) is the most advanced yet. It added new tools like the ANDA Assessment Program, which gives companies a detailed review of their application before submission. It improved how the FDA handles complex generics-like inhalers, injectables, or topical creams-that are harder to copy than plain pills. It also made transparency a priority. Now, the FDA publishes monthly reports showing how many applications are reviewed, how long they take, and how many inspections are completed.
Who Pays and How Much?
Generic drug makers pay four main fees:
- Facility fees: Every factory that makes the drug or its active ingredient must pay. In 2025, a U.S. finished drug facility pays $202,470. A foreign one pays $217,470.
- Application fees: A one-time fee when you submit an ANDA (Abbreviated New Drug Application). In 2025, that’s $1,174,470.
- Drug Master File (DMF) fees: Paid when a supplier’s chemical or manufacturing info is first used in an application.
- Prior Approval Supplement (PAS) fees: Charged every time a company wants to change a process after approval.
These fees aren’t arbitrary. They’re based on actual costs. The FDA tracks how many staff hours go into reviewing each type of application and sets fees accordingly. The agency is legally required to spend every dollar on generic drug activities-nothing else. No salaries for cancer drug reviews. No funding for medical device inspections. Just generics.
Why It Matters for Patients
Nine out of ten prescriptions filled in the U.S. are for generic drugs. That’s over 4 billion prescriptions a year. Generic drugs save Americans an estimated $300 billion annually. But none of that happens without fast, reliable approval.
Before GDUFA, patients waited longer for cheaper versions of brand-name drugs. A new generic for a common blood pressure pill? It might take 24 months to get approved. Today? The FDA aims to review 90% of applications within 10 months. That’s a 50% reduction in wait time.
And it’s not just speed. GDUFA forced better quality. The FDA now inspects over 80% of generic drug factories annually-up from less than 20% before 2012. That means fewer recalls, safer medicines, and more trust in generics.
Who’s Been Left Behind?
Not everyone benefits equally. Smaller companies still struggle with the upfront costs. A single facility fee can run over $200,000. For a startup with one product, that’s a major chunk of capital. Some have exited the market. Others avoid applying altogether.
Foreign manufacturers, especially from India and China, also push back. They make up over 70% of U.S. generic drug production. The $15,000 extra fee for foreign sites feels unfair to them. They argue that inspection costs haven’t risen that much-and that the difference doesn’t reflect reality.
And while the Pre-ANDA Program helps, it’s not easy to use. Companies need experienced regulatory staff. Many small firms don’t have them. They rely on consultants, which adds cost. The FDA offers free webinars and guidance documents, but navigating the system still takes time and expertise.
The Bigger Picture: Market Consolidation
GDUFA has reshaped the industry. Before 2012, hundreds of companies made generic drugs. Now, the top 10 control more than half the market. Why? Because the fee structure favors scale. Big companies can absorb the costs. They have multiple products to spread fees across. They can afford to hire full-time regulatory teams.
This consolidation means fewer competitors. But it also means more stability. Big players invest in quality control. They’re more likely to pass inspections. They have the resources to adapt when GDUFA changes.
Still, critics worry this reduces innovation. If only a few companies can afford to enter the market, will prices stay low? Will new, complex generics ever get developed? GDUFA III tried to answer that by creating special pathways for complex drugs-but it’s too early to tell if it’s working.
What’s Next? GDUFA IV
GDUFA III expires in September 2027. Negotiations for the next version have already started. Stakeholders are talking about:
- Reducing fees for small businesses
- Adjusting foreign facility fees to match real inspection costs
- Making digital submissions mandatory
- Expanding the Pre-ANDA Program to more drug types
The FDA says it wants GDUFA IV to be more inclusive. More transparency. More support for innovation. Congress has historically supported the program-bipartisan majorities passed all three versions. That gives it strong momentum.
But the debate won’t end. The balance between funding the FDA and keeping the market open to new players is delicate. Patients need affordable drugs. Manufacturers need predictability. The FDA needs resources. GDUFA tries to hold all three together.
Bottom Line
GDUFA isn’t perfect. But it works. Since 2012, the FDA has reviewed over 30,000 generic drug applications. The backlog is gone. Review times are down. Inspections are up. Patients get cheaper drugs faster.
It’s not magic. It’s money-smartly spent. The user fee model turned a broken system into a predictable, efficient one. It’s the reason you can buy a $4 generic version of a brand-name drug at your local pharmacy.
And if GDUFA IV keeps this momentum going, the next decade could bring even more innovation, more competition, and more savings for patients.
What is GDUFA and why was it created?
GDUFA stands for the Generic Drug User Fee Amendments. It was created in 2012 to fix a massive backlog of generic drug applications at the FDA. Before GDUFA, it took years to approve generics because the agency didn’t have enough staff or funding. GDUFA lets the FDA collect fees from drug manufacturers to pay for reviewers, inspectors, and systems-speeding up approvals and ensuring safer, more affordable drugs reach patients faster.
Who pays GDUFA fees?
Generic drug manufacturers pay GDUFA fees. This includes companies that make the finished drug (like pills or injections), as well as those that produce the active ingredients. Both U.S. and foreign facilities pay, but foreign sites pay more to cover higher inspection costs. Every company that wants to submit an ANDA (Abbreviated New Drug Application) must pay the required fees before the FDA will review their application.
How has GDUFA changed the generic drug market?
GDUFA has transformed the market by making approvals faster and more predictable. Review times dropped from nearly three years to under 10 months on average. The FDA now inspects over 80% of manufacturing facilities annually, up from under 20%. But it also led to industry consolidation-now the top 10 companies control over half the market. Smaller firms face higher barriers to entry due to fixed fees, while larger companies benefit from economies of scale.
Are GDUFA fees the same for U.S. and foreign manufacturers?
No. Foreign manufacturing facilities pay $15,000 more than U.S. facilities for both finished drug and active ingredient sites. This reflects the higher cost of inspecting overseas factories-travel, language barriers, and logistics. While the FDA says this is fair, many foreign manufacturers argue the difference is outdated and doesn’t match actual inspection expenses. The fee gap remains a point of contention in GDUFA negotiations.
What happens after GDUFA III expires in 2027?
After September 30, 2027, the FDA will no longer be authorized to collect generic drug user fees unless Congress passes a new law-GDUFA IV. Negotiations for the next version are already underway. Stakeholders are discussing lowering fees for small businesses, adjusting foreign facility charges, requiring digital submissions, and expanding support for complex generics. Without reauthorization, the FDA would lose the funding needed to review applications, which would cause delays and threaten access to affordable drugs.
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