Budget Bill Passes House, Leaving FDA User Fees to Languish

Posted 14 September 2012 | By Alexander Gaffney, RAC 

A budget bill passed in the US House of Representatives would, in its current form, deprive the US Food and Drug Administration (FDA) of tens of millions of dollars in funding promised to it in legislation passed earlier this year.

The bill, also known as a continuing resolution (CR), would fund the government at fiscal year 2012 levels, essentially keeping in place the exact same budget that existed last year. The bill passed the House on 13 September in a 329-91 vote.

For some agencies, this continuation of funding may offer a sense of stability in light of an uncertain funding situation.

FDA Faces Scaled-Back User Fee Program for Devices and Drugs…

For FDA, though, this could mean the loss of tens of millions of dollars in anticipated user fees, said Stephen Grossman, deputy executive director of the Alliance for a Stronger FDA, to Regulatory Focus.

"There are two anomalies in the continuing resolution that concern FDA," said Grossman. "One is the increased user fee level from FY 2012 to 2013, because we're transferring out of one cycle of user fees to a new cycle."

Under the FDA Safety and Innovation Act of 2012, FDA is able to collect additional amounts of user fees for prescription drug and medical device products. Though the programs establishing these user fees have existed for years, FDASIA increases the fees collected from industry.

The catch, explains Grossman, is that these fees aren't reflected in the 2012 budget on which the CR is based.

Though FDA might be able to collect these fees, it won't be able to spend them because they're not in the budget, explained Grossman.

…and the Total Loss of the Generic and Biosimilars User Fee Programs

But even more important for some parts of industry is the second anomaly, he said. FDASIA, in addition to increasing user fees for medical devices and branded pharmaceuticals, also established new programs for generic drugs and generic biologic products, also known as biosimilars.

"Since they didn't exist in FY2012, there's literally nothing to continue," said Grossman.

Under normal circumstances, said Grossman, these sorts of anomalies would be fixed before passing the continuing resolution-part of what he called a "clean CR" bill. But partisan bickering and gridlock seem to have taken these options off the table for the time being, making it possible that FDA's user fees will be locked up through March 2013.

How Long Will it Last?

Another problem could be the remainder of the 2013 budget cycle. By the time legislators are able to get back to the budget, they will already be planning for the 2014 budget to come out-potentially under a new president. These legislators may be wary of continuing to fight for a 2013 budget and could instead opt to pass another CR to close out the year.

The good news, said Grossman, is that there are numerous opportunities to reconstitute user fees even if Congress does not act to do so in the current CR bill. "They have so much cleanup work to do: the sequester, the Bush tax cuts, and another CR bill to cover the remainder of 2013."

"There are too many variables," to say with any certainty exactly what will happen, Grossman concluded.

Still, the disruption could throw a wrench into FDA's plans to get its new user fee programs up and running. "Every dollar you don't have hurts," Grossman said. FDA has already started overhauling its internal processes to get its staff ready for the start of the program, shifting staff, reorganizing offices, planning and expending monetary resources. The gap in expected funding could, then, leave FDA with more duties and fewer resources with which to perform them.


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