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Executive Summary

FDA REGISTRATION FEE ESTIMATED AT $ 1,300 PER FACILITY in a July 6 memo circulated to Senate Labor Committee majority staffers. Elaborating on a proposal floated the week before to use a broad-based facility fee in lieu of product registration fees to make up for an appropriations shortfall in the FDA area, the July 6 plan attempts to quantify the size of the fee and the amount that could be raised through registration fees. "We have estimated the annual per facility registration fee to be $ 1,300," the memo states, adding that the Congressional Budget Office has been asked to confirm the figure. The memo was prepared by Kennedy staffer Stephen Keith, MD. A major change in the registration fee proposal from product license fees would be the cost shifting to the food industry. According to a breakdown of FDA-regulated facilities in the U.S. by industry, the food industry would pay a substantial majority of the fees, based on its 63,000 facilities. Manufacturers of human drugs would be next, with 14,100 facilities and the medical device industry would pay almost as much as human pharmaceuticals, based on 12,900 facilities. Radiological product firms and cosmetics companies operate 3,400 and 1,700 facilities, respectively. The registration fee proposal would generate $ 100 mil. Using a $ 1,300 per facility fee, pharmaceutical companies would contribute $ 18.3 mil. The Senate Labor Committee is shooting for a magic number of $ 70 mil. from either cuts or new revenues for the appropriations under its jurisdiction. Under the registration proposal, $ 60 mil. would be allocated to meet the $ 70 mil. budget savings target. The remaining $ 10 mil. in savings will come from student loan programs, the memo states. From the remaining $ 40 mil. expected from the program, $ 30 mil. would be used to "fund the new programs to be authorized under Senator Hatch's bill, S 845 [FDA revitalization], in the reconciliation package," according to the memo. The revised memo outlines a much less ambitious plan for consolidating FDA's operations, allocating $ 5 mil. to "plan and design a consolidated FDA facility." Hatch was originally calling for $ 50 mil. for the planning, land acquisition and construction of a unified facility or campus. Another change in the proposal is the allocation of $ 5 mil. for "an assessment of FDA's management and administrative function and structure." In fiscal 1991 and 1992, the memo states, funds from the registration fees would "be used to supplement appropriations for the entire agency." The Grocery Manufacturers Association and other food groups predictably are not happy with the high percentage of the costs that segment would bear. The memo notes that they are "vehemently opposed." The memo maintains that committee staff have met with "several drug company representatives, many of whom indicated their support for a user fee" that conformed to several stipulations. Among them were the conditions that proceeds would be: "directed to FDA for high priority needs, and not funneled to the general treasury;" and "in addition to annual appropriations, 'guaranteed' not to be reduced below a floor of the total FY 89 FDA appropriation." The Labor Committee is also "considering" the inclusion of a major new element in the funding plan -- a three-year authority to establish a "Low Income AIDS Treatment Assistance Program." The program would provide assistance for "treatments that have been determined to prolong life or prevent serious deterioration of health" for low-income patients with AIDS. To be administered by the Health Resources and Services Administration, the program would involve distribution of matching grants to states and would provide $ 30 mil. each fiscal year from 1990 to 1992. If the committee decides to try funding the AIDS program through the registration fee, the individual facility fee would rise to $ 1,680. The low-income assistance program for AIDS patients is a particular concern of Kennedy's. Earlier this year, HHS extended the AIDS drug block grant to states by $ 5 mil. following written requests from Senators Kennedy (D-Mass) and Hatch (R-Utah) ("The Pink Sheet" April 10, T&G-4). States may use the additional funds until Sept. 30, the end of this fiscal year. A majority of the funds go toward payments for Burroughs Wellcome's Retrovir.

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