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BUSH ADMINISTRATION's APPROACH TO FDA USER FEES CALLED "ILL- ADVISED" BY EDWARDS COMMITTEE; USER FEES SHOULD NOT SUBSTITUTE FOR "ADEQUATE" APPROPRIATIONS

Executive Summary

The Bush Administration's proposal for user fees in the fiscal 1992 budget as a substitute for "an adequate base of appropriations" is "ill-advised," the Edwards Committee states in its final report released May 15. While the committee "as a whole, takes no position on any specific proposal for augmenting the FDA's funding, we feel strongly that any plan to develop such revenues should supplement -- not substitute for -- an adequate base of appropriations," the report asserts. It points out that the Administration is requesting $ 197 mil. in user fees for 1992 and $ 573 mil. in general Treasury appropriations -- $ 117 mil. less than 1991 appropriations. "We believe this approach, at this time, is ill- advised, and the specific dollar amount of proposed user fees has no basis in fact," the report states. "Moreover, funds generated through alternative sources must be tied to specific improvements in agency functions." The report's language on FDA user fees was one of several changes in the Edwards Committee's final report that did not appear in a draft of the report discussed at the committee's April 11 meeting ("The Pink Sheet" April 15, p. 3). The final report of the Edwards Committee, whose formal name is the Advisory Committee on the Food and Drug Administration, was presented to HHS Secretary Sullivan on May 15 and was the subject of a Senate Labor and Human Resources Committee hearing later that day. Testifying at the hearing, advisory committee Chairman Charles Edwards, MD, suggested that the user fee figure that appeared in the Administration's 1992 budget was determined "by someone who has no understanding of user fees." Edwards clarified that he did not mean to suggest "that down the road a piece . . . you couldn't have user fees, but at least our committee has not seen any formula which allocates" user fees in a fair manner. He noted that "there is no formula today which even remotely comes close to allowing $ 197 mil. to be raised by users." The report urges "serious consideration" of how fees affect large versus small and high-tech versus low-tech firms. Sen. Kennedy (D-Mass.) said the Labor committee would hold a hearing on FDA user fees as soon as the Bush Administration proposes legislation. He remarked at the hearing that linking user fees to FDA improvements "seems to me to make pretty good sense." During the hearing, HHS Secretary Sullivan made an appeal to the Senate committee to support FDA user fee legislation. He urged the senators to "work closely" with the Appropriations Committee to "authorize FDA user fees as appropriate." In recent weeks, interest in user fees on the Hill has shifted from a product approval application-based system of collecting revenues toward a facilities registration concept. House Energy & Commerce Chairman Dingell (D-Mich.) is currently drafting a bill that would set a $ 5,000 limit on annual registration fees per facility (see related story, p. 4). In a press statement on the Edwards Committee report, the FDA Council said it is urging Congress to provide FDA with a "full, directed" appropriation of $ 820 mil. for fiscal 1992, which represents a $ 50 mil. increase over the Administration's budget for the agency including user fees. The FDA Council is recommending that FDA be given $ 40 mil. in order to implement the 12 new laws enacted in Congress last session and $ 10 mil. in additional funding to go toward consolidation of facilities. The final Edwards report retains the committee's recommendation that Congress should enact legislation that would preempt conflicting and additional state requirements for products regulated by FDA. Under such a law, states would be allowed to seek exemption from pre-emption in areas where FDA has acted "based on a convincing local need." In areas where the agency has not acted, a state would have to notify FDA that it plans to act and give the agency a set time limit to respond. The Edwards Committee's final report suggests a 120-day limit for FDA to respond. HHS Secretary Sullivan played down the significance of the committee's recommendation on pre-emption. "I think the concern about pre-emption really is another reflection of the issue of strong leadership for the FDA," Sullivan commented. He added that "we now have in our Commissioner strong leadership." Sullivan pointed out that FDA Commissioner Kessler is "working on a reorganization within the agency to give strong leadership down throughout the agency." The HHS secretary predicted "that as that leadership is exercised and the FDA continues to function more efficiently the issue of pre-emption then really will become less urgent." The Nonprescription Drug Manufacturers Association issued a press release commending the Edwards Committee for "its unanimous support for national uniformity in drug regulation." NDMA President James Cope maintained that "the 102nd Congress should do for drugs what the 101st Congress did for foods." He added that "without such action, FDA decisions are little more than advisory to the 50 states." Cope emphasized that "without pre-emption, many of the other recommendations by the Edwards panel to strengthen the FDA will count for little." NDMA and the Pharmaceutical Manufacturers Association, in a release issued by several industry associations, said that the committee "should have urged that the uniformity be achieved now through administrative action rather than first giving Congress an opportunity to address the matter at some time in its current session." The final report features more prominently the committee's position that FDA's role in approving products is as important as protecting the public health against unsafe products. Unlike the summary of recommendations in the committee's draft report, the final report summary includes the statement: "FDA should develop a flexible range of regulatory pathways, all of which uphold current standards of safety and efficacy, but which reflect the fact that not all drugs, devices, and foods are alike." EDWARDS COMMITTEE's FINAL REPORT RECOMMENDATIONS [Compiled from the committee's report, which was issued May 15.] MISSION AND GOALS 1-1. The FDA must clearly define its overall mission and develop a formal Statement of Purpose. 1-2. At regular intervals, the FDA must develop and make public, a statement of program priorities that reflects health and safety demands and a realistic assessment of Agency resources. These priorities must make clear what the FDA can and cannot do, and why. They should be developed in consultation with the Secretary of HHS and the Congress. (NEW LINE) (NEW LINE)1-3. The FDA must apply the principles embodied in its Statement of Purpose and program priorities to its daily operations. Specifically, the FDA must ensure that, at a minimum, its spending, policy, planning, budget, and enforcement activities all conform, fully and consistently, to stated priority areas. 1-4. The FDA must recognize that approval of useful and safe new products can be as important to the public health as preventing the marketing of harmful or ineffective products. Specifically, the FDA should develop a flexible range of regulatory pathways, all of which uphold current standards of safety and efficacy, but which reflect the fact that not all drugs, devices, and goods are alike. LEGISLATION AND APPROPRIATIONS 2-1. Congress and the Administration must consider the full resource implications of all new legislation affecting the FDA and must allow for ways to delay or make discretionary the implementation of lower priority programs. 2-2. The FDA Commissioner and the Secretary of HHS must exert stronger leadership with the Congress to address the imbalance between the FDA's statutory responsibilities and its appropriated resources. 2-3. A new environment of consultation and collaboration between the Commissioner and the Congress must be built. STATUS AND AUTHORITY 3-1. The Secretary of HHS should redelegate to the Commissioner authority to issue regulations implementing all of the laws that the FDA administers. Multiple review levels within the FDA itself should be reduced. 3-2. The FDA Commissioner should be delegated the maximum authority allowed by law to manage the daily operations of the Agency, including authority to appoint senior personnel, manage facilities, and procure equipment. The FDA Revitalization Act of 1990, which grants the Agency broader authorities, should be implemented to the fullest extent possible. 3-3. FDA should be removed from the Public Health Service and the Commissioner should report directly to the Secretary of HHS. 3-4. If the FDA is not removed from PHS, and its authority to issue regulations restored, the Congress should consider establishing the FDA as a free- standing agency. ENFORCEMENT POLICIES & PRACTICES 4-1. Congress should consider ways to streamline, expand, and modernize the range of available enforcement tools. 4-2. The FDA must enhance priority setting in enforcement and identify areas where it lacks resources to enforce adequately. More effective strategies are needed to improve the efficiency of compliance programs, including those for low-priority areas. The FDA must develop clear and precise regulatory guidance as an essential mechanism for promoting voluntary compliance. (NEW LINE) (NEW LINE)4-3. The FDA must separate the enforcement policy and implementation functions of its enforcement operations. (NEW LINE) (NEW LINE)4-4. The Secretary should revisit the role of the HHS Office of Inspector General, recognizing the conflict between providing assistance to the FDA in investigations of the FD&C Act and having responsibility for Agency oversight. MANAGEMENT SYSTEMS 5-1. The Commissioner must clarify the roles of the Agency's organizational components and their senior managers. In addition, there must be clear standards of performance and accountability for the FDA's managers, as well as appropriate rewards for those who meet their objectives. 5-2. The FDA must develop better ways to cultivate the capabilities of its managers, including scientists who assume managerial responsibilities. (NEW LINE) (NEW LINE)5-3. The FDA must develop adequate management information systems. These systems must organize useful information in a meaningful format and respond to the needs of the end users including policymakers, managers, and operational personnel. (NEW LINE) (NEW LINE)5-4. The FDA should engage an outside firm to study the Agency's management information systems needs. RESOURCES 6-1. The FDA must begin now to correct the most urgent of its facilities needs, particularly for food and veterinary medicine laboratories and field operations. The Agency cannot wait for a consolidated facility to address its most urgent needs. 6-2. The Commissioner must have full authority and adequate funding to develop better and more consolidated facilities, including the use of innovative lease-purchase strategies. The Commissioner should consider appointing an independent facilities manager to help develop short- and long-range facilities plans. 6-3. The Commissioner must be empowered, to the limits of statutory authority, to manage the FDA's scientific and technical personnel, and to improve FDA's access to scientific expertise including advisory committee appointments. 6-4. The FDA must plan to developing a more diverse workforce and must plan appropriate education and training for that workforce. (NEW LINE) (NEW LINE)6-5. In an era of rapid technological advancement, the FDA must reaffirm its commitment to research as an integral component of its activities. The FDA's intramural and extramural research projects must be linked to the Agency's primary functions. 6-6. The NCTR's research program must be targeted to the regulatory needs of the Agency. If this cannot be done, the NCTR should no longer be funded by the FDA. STATE AND INTERNATIONAL REGULATION 7-1. Congress should enact legislation that preempts additional and conflicting state requirements for all products subject to FDA jurisdiction. States should be permitted to seek an exemption from preemption in areas where the FDA has acted, based on a convincing local need. In areas where the FDA has not acted, a state would be required to notify the Agency that it intends to act and give the Agency 120 days to respond. States should, in addition, be allowed to petition for the adoption or amendment of national standards. 7-2. If Congress has not enacted such legislation by the end of the 102nd Congress, the FDA should issue a preemption regulation that accomplishes the same goals. (NEW LINE) (NEW LINE)7-3. The FDA needs to be more aggressive in ensuring that the increased volume of imported foods, drugs, and devices meets health and safety standards prior to entering the country. FDA should work with other nations to encourage the implementation of uniform standards and systems here and abroad. 7-4. The FDA must strengthen its efforts at harmonizing international regulatory standards, particularly with major trading partners.
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