Posted 26 February 2015
By Alexander Gaffney, RAC
New legislation introduced in Congress would exempt nearly half of the US Food and Drug Administration's (FDA) budget from austerity measures meant to help balance the federal budget.
The bill, the FDA Safety Over Sequestration (FDA SOS) Act would specifically exempt FDA's user fees from the effects of future budget sequestration.
The user fees, which come from the pharmaceutical and medical device industries, are meant to help fund FDA's regulatory activities, and have been a key source of the agency's funding since they were first introduced in the Prescription Drug User Fee Act (PDUFA) of 1992.
The fees, which are charged for product applications, facility inspections and manufacturer registrations, are supposed to support FDA's hiring of new regulatory staff. In return, FDA has pledged to review (though not necessarily approve) products more quickly.
FDA has become increasingly dependent on user fees in recent years. Since 1992, when FDA only relied on user fee funding for new pharmaceutical product reviews, it has enacted new user fee programs for medical devices, animal drugs, generic pharmaceuticals, biosimilars, generic animal drugs and its tobacco programs.
If FDA's proposed 2015 budget is enacted, it would receive just shy of 42% of its total funding from user fees—$1.855 billion of its $4.44 billion proposed budget.
Fixing a Problem
The problem, as Regulatory Focus has previously reported, is that under the Budget Control Act of 2011, FDA's user fees were subject to sequestration measures. In plain terms: FDA was forced to give back more than $100 million in funding to the US Treasury. While the agency eventually regained access to much of this money, it was unable to touch it for months, putting product reviews and its regulatory staff in fiscal jeopardy.
Now new legislation wants to make sure FDA's user fees are never again held hostage by Congress.
The FDA SOS Act, introduced on 25 February 2015 by Reps. Leonard Lance (R-NJ) and Anna Eschoo (D-CA), would specifically shield FDA's user fees from the effects of any future budget sequestration.
“Passage of this important bipartisan legislation is vital to protecting the FDA’s access to industry user fees. These resources will help ensure that millions of Americans will continue to benefit from medicines and medical devices that are safe and effective,” said Lance in a press statement. “Too many life-saving innovations and therapies are needlessly compromised by the short-sighted decision to sequester these funds.”
"We must protect this program from the sequester and allow the FDA to fulfill its critical public health mission,” Lance concluded.
Strong Industry Support
Industry groups AdvaMed and the Biotechnology Industry Organization (BIO) immediately came out in support of the law.
“We have long maintained that user fees paid by industry to FDA should not be treated under sequestration the same way as taxpayer dollars," said AdvaMed, a medical device trade group, in a statement. "By exempting FDA user fees from the sequester, the FDA SOS Act restores the agreement negotiated by [FDA, industry and Congress] and ensures FDA will be able to use all the funds paid by industry to improve its review process. That is a win-win-win for FDA, the industry and the millions of American patients who will benefit from more timely access to innovative medical technologies."
“It makes no sense to subject private company-paid FDA user fees to sequestration," said BIO in a separate press statement. "These fees constitute a substantial portion of the FDA’s budget, without which the FDA would lack the resources necessary to keep pace with ongoing scientific advances.”
BIO also noted that the Treasury was not permitted to use the user fees to pay down the deficit. "Rather, the only real effect is that the FDA would not be able to access all fees, thus negatively impacting the ability of the FDA to fulfill its mission of ensuring patient access to safe and effective new drugs and biologics," it said.
The bill's passage remains uncertain. While an identically titled bill was introduced in 2013, it was not approved. The legislation could have a better chance at passage now that both the House and Senate are considering FDA reform legislation, however.