User Fee Waivers: What is an Affiliate? New Guidance Issued

Under the current PDUFA regulations, a small business can request a waiver of the normal review fees for an NDA if it is the first NDA submitted by the small business. The definition of a small business is fewer than 500 employees. In determining the 500 employee limit FDA also considers the affiliates of the applicant. A major issue for small business is the definition of “affiliate”.

Per FDC Act § 735(11) , “affiliate” means “a business entity that has a relationship with a second business entity if, directly or indirectly — (A) one business entity controls, or has the power to control, the other business entity; or (B) a third party controls, or has power to control, both of the business entities”  (emphasis added).

A recent suit was brought by Winston Labs against the FDA. The case revolved around whether the affiliate was current or could include former affiliates. In essence, Winston Labs focused on the present tense of the words “has” and “controls” while FDA wants the words to include past tense meanings. An analysis of this case is at the FDALaw Blog . Thus, so far, the courts have held Winston Labs’ view — that only current affiliates need be considered.

FDA and industry are discussing (recent meeting minutes) the definition of affiliate in the context of PDUFA V Reauthorization meetings. FDA would like to incorporate language that would provide for current and past affiliates. Industry is concerned that the FDA interpretation would not work with the iterations of funding that many small businesses go through; industry wants the current PDUFA language to be retained. Further discussions are planned.

Meanwhile, FDA posted a guidance on PDUFA user fee waivers and reductions today (March 11, 2011). The guidance simply quoted the legal definition of an affiliate and spelled out how it relies on the Small Business Administration to determine the affiliates of a company.