FDA User Fees Face Deep Cuts Due to Sequestration
The Food and Drug Administration (FDA) is a federal agency responsible for protecting the public health through the regulation and supervision of a variety of areas, such as our nation’s food supply, tobacco products, vaccines, and cosmetics. Most notably for the Parkinson’s community, FDA is responsible for evaluating new drugs and medical devices before they can be sold. Unfortunately, sequestration, across-the-board spending cuts that began in March 2013, has impacted this critical agency and resulted in more than $209 million in cuts in 2013, including more than $85 million worth of cuts to private funding.
What are FDA User Fees?
It may surprise you to learn that despite being a federal agency, over 35 percent of the FDA’s budget every year is made up of private funding. These private dollars, known as user fees, are paid by companies when they file an application for the FDA to review a new drug or device, and have been used to expedite the drug and medical device review process.
The FDA first began collecting user fees from pharmaceutical companies in 1992 after Congress passed the Prescription Drug User Fee Act (PDUFA) in response to complaints from consumers and companies that drug approvals were taking too long. The user fees have allowed the FDA to substantially improve the speed of the review process, and in exchange for collecting the fees, the agency must meet certain performance benchmarks. FDA’s authority to collect user fees must be reauthorized every five years, most recently in 2012. Fees for prescription drugs totaled over $671 million in Fiscal Year (FY) 2012, covering about 65% of the cost of approving new therapies.
A similar user fee program for medical devices was created by Congress in 2002 by the Medical Device User Fee Act (MDUFA). MDUFA was re-approved by Congress in 2012, and the FDA collected over $68 million in medical device fees in FY 2012.
Impact of Sequestration
Even though FDA user fees are paid directly to the FDA by private companies and not generally a part of regular government spending, they have been subject to sequestration. As previously noted, it’s estimated that sequestration will result in the loss of approximately $85 million in privately funded user fees for the FDA in 2013. If sequestration remains in place, user fees will likely be reduced by $1 billion over the next five years. The loss of industry-supported dollars could have a devastating effect on the development of new, innovative therapies and devices, as well as considerably slow the time it takes for treatments to get to patients.
In response, legislation has been introduced in both the House and Senate to exempt user fees from sequestration. The FDA Safety Over Sequestration Act (H.R. 2725), introduced by Reps. Lance (R-NJ), Eshoo (D-CA), Rogers (R-MI), and Matsui (D-CA) and the FDA User Fee Protection Act (S. 1413), introduced by Sens. Pryor (D-AR), Blunt (R-MO), Coats (R-IN), Franken (D-MN), and Moran (R-KS), would prevent FDA user fees from being cut by sequestration starting FY 2014, which begins October 1, 2013, and beyond.
The pieces of legislation have the backing of key leaders in both parties, and there is hope for passage in early fall. PAN has sent letters of support to the authors of both the House and Senate bills and will continue to work with their offices and outside coalitions to help ensure that the FDA has access to these critical resources.
Date originally posted: September 13, 2013.