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Executive Summary

FDA's USER FEE PROPOSAL WOULD AUTHORIZE INVENTORY OR SALES VOLUME FEES as one of four types of charges contemplated by a recent draft of the legislation. The Bush Administration's legislative proposal states that "fees to be assessed may include . . . assessments against regulated entities based on value of inventory or sales." Other user charges authorized for FDA under the proposal include premarket review fees, charges for establishment inspections, registration fees for regulated products or establishments and inventory or sales volume assessments. The proposal was first drafted June 26 and sent to Capitol Hill with an Aug. 21 cover letter from HHS Secretary Sullivan. The House Energy & Commerce Committee received the proposal on Sept. 11. Sullivan's letter notes that the proposal would authorize FDA to charge fees for any one "or any combination of" the functions described in the bill. The secretary said the proposal would provide "flexibility" as to the type of user fees that could be assessed by FDA. Such charges "could include fees for premarket approvals of products, fees for inspections of establishments regulated by FDA, registration fees for regulated products or establishments, assessments on inventory or sales volume, or any combination of these." Sullivan noted that the "fees could be collected only to the extent permitted in appropriations acts." He added that "fees collected would be deposited in FDA's appropriations account, and would remain available until expended (subject to annual appropriations) for the costs of carrying out FDA's responsibilities." Rep. Dingell (D-Mich.) is drafting his own user fee bill, which could be introduced later this year. One provision the Energy and Commerce Committee chairman is developing would assure that fees collected from drug companies would be earmarked for drug review and other related agency functions, while fees collected from medical device, cosmetic and food firms would be devoted to agency functions connected to those respective businesses. Sullivan's letter emphasizes the importance of user fee legislation to the adequate funding of FDA programs. "The many new tasks that the Congress in recent years has assigned to FDA, and the need for a heightened level of surveillance of regulated industries, as demonstrated by the recent generic drug scandals, require a commitment of increased resources to FDA," the letter states. The Bush Administration proposed collecting $ 198 mil. in fees in its budget request to supplement fiscal 1992 appropriations for FDA. Sullivan indicated that charging businesses for such purposes as inspections is appropriate in light of the benefits derived from FDA regulation. "The industries regulated by FDA derive valuable benefits from FDA activities, including increased consumer confidence in their products and significant protection from liability," he said. Perhaps anticipating one industry complaint that new costs of business will hurt U.S. industry's international competitiveness, Sullivan said: "FDA's reputation also improves the competitive position of American firms in overseas markets."

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