FDA budget proposal: New clinical trial pathway; permanent authorization of rare pediatric disease voucher program

The US Food and Drug Administration (FDA) has submitted its budget proposal to Congress, outlining its spending priorities for fiscal year 2027. The budget request totals $7.2 billion, including $3.3 billion in appropriations and $3.9 billion in user fees. This request represents an overall increase of approximately $232 million, or 3.3%, compared to the fiscal year 2026 level.

The budget outlines a set of priorities for FDA Commissioner Marty Makary, including: creating a new clinical trial notification pathway for manufacturers conducting Phase 1 studies in the US; providing the FDA with greater flexibility in appointing advisory committee members and determining how often they should meet; eliminating the interchangeability determination for biosimilars; and permanently authorizing the rare pediatric disease priority review voucher program.

The budget request “will help FDA address its most urgent public health priorities, Make America Healthy Again, and increase America’s global competitiveness,” Makary wrote in the document’s introduction.

The budget proposes the following:

New expedited pathway for investigational drugs

The proposal would create an optional expedited pathway for manufacturers conducting investigational new drug (IND) studies in the US, using existing preclinical data and alternative non-animal-based testing methods.

The pathway would “be particularly important for smaller biotechnology firms that face greater barriers to entry under the current paradigm, which has fueled the increase in early-stage preclinical and Phase 1 activity in China and Australia.”

The agency led by Makary has been advocating adjusted fees for drug developers conducting their Phase 1 clinical trials in the US under the America First fee incentive (RELATED: PDUFA VIII: Negotiations touch on patient experience data, reserve funding, fee waivers, and more, Regulatory Focus, 16 March 2026). 

Permanently authorize the rare pediatric disease voucher program

The proposal would also permanently reauthorize the Rare Pediatric Disease (RPD) Priority Review Voucher (PRV) program. Currently, the program must be reauthorized by Congress every few years.

The program authorizes FDA to award priority review vouchers to sponsors to shorten the review timeline from 10 months to 6 months. Eligible products must contain a new active moiety and be intended to prevent or treat a rare pediatric disease that is serious or life-threatening. The program has historically been reauthorized every four years. It is set to expire again in 2029.

Remove interchangeable designation

The proposal would eliminate the separate statutory standard for determining interchangeability and deem all approved biosimilars interchangeable with their respective reference products. The change would allow pharmacists to substitute biosimilars for brand-name products without a prescriber’s intervention.

The agency and industry members have advocated eliminating the interchangeable designation over the past few years. In 2023, a senior FDA official explained the agency's rationale for proposing to remove interchangeability designations from biosimilar prescriber labeling. The official noted that prescribers often overlook this information when assessing biosimilars (RELATED: Biosimilars: FDA offers rationale for dropping interchangeability designations, Regulatory Focus 30 October 2023).

Advisory committee reform

Since taking office, Makary has shifted from using advisory committees to evaluate issues related to new drug approvals to preferring small expert panels for scientific decisions. The budget proposal aims to give FDA greater leeway to appoint consumer representatives and industry experts to Scientific Advisory Panels. Current law requires the agency to appoint representatives of consumer interests and the drug manufacturing industry to advisory committees. The proposal would also give the agency the ability to determine if and how frequently advisory committees should meet.

DTC advertising, MRAs

The proposal would create new FDA authorities regarding direct-to-consumer (DTC) advertising. The proposal would allow a drug to be deemed misbranded if a DTC drug advertisement lacks fair balance and creates a misleading impression regarding FDA approval.

The budget also proposes to expand the current mutual recognition framework to include bioresearch monitoring. “This proposal would revise FDA’s Mutual Recognition Agreement (MRA) authority under section 809 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) to include authority, if deemed necessary, for FDA to recognize good clinical practice (GCP) or good laboratory practice (GLP) inspection reports from foreign regulatory counterparts that the Agency finds capable of conducting such inspections.”

FDA Budget Request FY2027