Obama budget plan calls for generic drugmaker fees

WASHINGTON (Reuters) - Generic drugmakers would pay the U.S. government $38 million to help speed reviews of their medicines under President Obama's fiscal 2011 budget plan released on Monday.

The Obama administration will ask Congress to pass legislation allowing the Food and Drug Administration to collect the fees. The money would be used to "improve review times and reduce the current backlog of applications," budget documents said.

"Generic drugs play an important role in reducing the cost of and increasing access to pharmaceuticals," they said.

Congress will weigh Obama's budget plan as it drafts the federal budget for fiscal 2011, which starts October 1. His proposal for fiscal 2010 also proposed fees from generic drugmakers, but the measure did not make it through Congress.

Generic drugmakers have supported the idea of paying fees if they are coupled with improvements in the FDA review process. Manufacturers include Teva Pharmaceutical Industries Ltd and Mylan Inc.

The industry "remains open" to a fee and "looks forward to working with the administration to develop a meaningful program with measurable results," Generic Pharmaceutical Association President Kathleen Jaeger said in a statement.

Simply providing more money to the FDA "will not provide any sort of immediate positive impact to generic drug stocks until a material decline in review times begins to emerge, likely a matter of years," Needham & Co analyst Elliot Wilbur said in a note to clients.

But the fee program could be a "strong positive" if it ends tactics used to block generic drug approvals or directs money to clearing products held up by those tactics, Wilbur said.

Obama also proposed a $2 million increase in taxpayer funding for the FDA's generic drug reviews.

The agency's total budget would increase by 23 percent from fiscal 2010 to $4 billion.

New funding would be used in part to help the agency prepare for future applications to sell generic copies of biotechnology medicines, health officials said. Congress is weighing creation of a path for companies to apply for FDA approval of generic biotech medicines as part of the stalled healthcare reform legislation.

The agency also plans to "expand postmarket safety surveillance of medical products," budget documents said.

(Reporting by Lisa Richwine; editing by Gerald E. McCormick, Lisa Von Ahn and Andre Grenon)