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Rx-TO-OTC SWITCHES WOULD BE DISCOURAGED BY FDA USER FEES, P-A's O'KEEFE TELLS HOUSE BUDGET HEARING; IBA NOTES DETERRENT EFFECT ON SMALL BUSINESS

Executive Summary

Rx-to-OTC switches would be discouraged by the imposition of user fees on new drug applications, Proprietary Association Senior VP and General Counsel Daniel O'Keefe maintains at an April 13 hearing before the House agriculture appropriations subcommittee. "A tax imposed on companies considering use of the NDA system to request FDA to switch a drug from prescription to nonprescription status obviously would discourage that approach by making it more expensive," O'Keefe told the subcommittee. P-A appeared on a panel of four health care industry witnesses. All four, including PMA, the Industrial Biotechnology Association, the Health Industry Manufacturers Association and P-A, strongly opposed the Bush Administration's proposal that $ 100 mil. of the FDA FY 1990 budget be derived from user fees. "Since competition is so keen in the OTC industry," O'Keefe continued, "any additional entry costs in the form of a user fee on a New Drug Application would make it particularly difficult for smaller OTC companies to engage in switch. The result would be an unfair burden on smaller businesses." Industrial Biotechnology Association (IBA) President Richard Godown emphasized the detrimental effect user fees would have on small businesses. "Any proposal to offset budget cuts by adding a user fee would negatively impact on future research and development by increasing new drug development costs," he asserted. At an April 4 Senate Appropriations/Agriculture Subcommittee hearing on the agency's budget, Sen. Bumpers (D-Ark.) noted that he was considering a hearing on the impact of user fees on small businesses. He expressed particular concern for the plight of small medical device manufacturers ("The Pink Sheet" April 10, p. 3). Pharmaceutical Manufacturers Association (PMA) President Mossinghoff opposed user fees, in part, because of the belief that the revenues would not be credited to the relevant operations at the agency affecting the industry paying the fee. Mossinghoff asserted that user fee revenues would not be applied to the relevant FDA programs "even if required authorizing legislation is enacted to permit the crediting of receipts to FDA, rather than allowing the receipts to be deposited in general revenues at the Treasury, as required under federal user-fee policy." The HHS proposed legislation on user fees mandates that at least a portion of user fee revenues collected will be returned to FDA. Rep. Dingell (D-Mich.) appeared later that day to press for more resources at FDA. The chairman of the House Energy & Commerce Committee stated that "I am here because of my deep concern that the current situation at the Food and Drug Administration is untenable. The situation at FDA, if it is allowed to continue, will threaten the health and safety of our citizens and the competitiveness of our producers and pharmaceutical manufacturers.
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