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CBO Releases Cost Estimate for User Fee Bill

Posted 19 June 2017 | By Michael Mezher 

CBO Releases Cost Estimate for User Fee Bill

The Congressional Budget Office (CBO) on Thursday released its cost estimate for the Senate's bill to reauthorize the US Food and Drug Administration's (FDA) user fee programs, saying the agency will need $1.2 billion in appropriations from 2018-2022 to implement changes brought on by the bill.

The estimate is based on the version of the FDA Reauthorization Act of 2017 that was advanced by the Senate Committee on Health, Education, Labor & Pensions in May. Notably, the bill is not in line with President Donald Trump's FY2018 budget proposal, which calls for more than $1 billion in new user fees in 2018 to make up for cuts to the agency's appropriations under the President's proposal.

In total, CBO says it expects FDA to collect roughly $9 billion in fees—$8 billion for drugs and $1 billion for devices—between 2018 and 2022, based on the fee level set in the senate bill.

However, the bill requires FDA to implement a number of changes to its existing programs, reauthorizes certain grants and requires the Government Accountability Office (GAO) to compile reports on FDA activities that are not covered by user fees.

These unfunded provisions total up to $1.2 billion over the course of the 2018-2022 period, though CBO says the bill will have only a minor impact on the deficit, adding $15 million over the next decade.

For changes to FDA's generic drugs program, CBO estimates the agency will need to hire some 500 additional full-time-equivalent (FTE) positions and require $14 million per year for IT expenses, amounting to an increase in costs of $566 million over the five-year period.

CBO attributes the bulk of that increase, $385 million, to provisions that would expand FDA's program for expediting generic drug reviews, $102 million to cover the cost of developing a list generic drugs with three of fewer competitors on the market and $69 million for re-inspecting generic drug manufacturing facilities.

For medical devices, CBO says the reauthorization bill would increase FDA's costs by $243 million and require at least 200 additional FTEs to implement changes to the agency's procedures. This includes $152 million to revamp the agency's processes for inspecting foreign and domestic device makers, $32 million to change how FDA receives and evaluates certain data from device manufacturers and $20 million to facilitate increased communication between the agency and device makers on export certificates.

The reauthorization bill also includes a number of changes to FDA's programs for pediatric drugs and devices that CBO says will add up to $136 million over the five-year period. The bulk of that spending, $102 million, will go to reauthorize a National Institutes of Health (NIH) grant program for funding pediatric studies and $28 million will go to FDA to provide technical assistance to pediatric device makers and reauthorize a program for demonstration grants to improve pediatric device availability.

Other provisions, including reauthorizing FDA's Orphan Products Grants program, providing guidance on demonstrating bioequivalence for complex drugs and reauthorizing the Critical Path program cost FDA $294 million and require the addition of 40 FTEs.



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