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USER FEE "HYBRID SYSTEM" CONCEPT REAFFIRMED BY HHS IG

Executive Summary

USER FEE "HYBRID SYSTEM" CONCEPT REAFFIRMED BY HHS IG (Inspector General) in a Feb. 14 final report on FDA activities presented to Assistant Secretary for Health James Mason. Contending that "user fees, properly structured, could help alleviate staffing and resource difficulties in other areas of FDA," the IG report proposes that "a hybrid system of annual registration charges and processing fees for applications and inspections might be most workable." The IG report states that "FDA user fees represent a legitimate method of recovering regulatory costs," noting that other federal agency user fee systems "have met with some success." The statement reaffirms the conclusions of an IG report on the implementation of user fees released in July 1990 ("The Pink Sheet" July 16, 1990, p. 13). FDA must "identify resource needs, delegating authorities to the states where appropriate and relying on user fees to supplement budget authority and augment resources where necessary," the IG maintains. The document, entitled "OIG Oversight of FDA Activities: A Summary Report," condenses observations and recommendations made in twelve separate IG reports issued between August 1989 and August 1991. The report identifies the five areas that FDA management must address, including: restoring the integrity of FDA's product approval process; vigorously detecting and investigating potential fraud and abuse; invigorating the agency's inspections of manufacturing and processing facilities; ensuring that FDA can respond to individuals and businesses out of compliance with the FD&C Act; and creating and using reliable data management systems. The IG report lends its support to the effort to push through an FDA enforcement bill. The report urges FDA to obtain the necessary enforcement authorities, such as embargo, subpoena, and civil monetary penalties to encourage compliance. With its background in investigations and prosecutions, the IG recommends that FDA should "develop a full-scale criminal investigative capability with trained, experienced investigators." Investigators from the IG's office are still conducting an audit "to determine what actions FDA has taken to rectify problems [the IG] identified in the ANDA review process and plan future follow-ups in other product review areas," the report states. In the enforcement area, the report restates observations made in a previous report to Rep. Dingell's House Oversight/Investigations Subcommittee about inadequacies in two FDA district offices, in Denver and Orlando. The report notes that Denver district inspectors failed to identify fraud during generic firm inspections because they lacked the requisite training. The Orlando district office's lack of resources to investigate violations of the Prescription Drug Marketing Act was also of considerable concern to the IG. Another area emphasized in the report is that of drug promotions. It notes that "many are testing FDA's commitment and vigilance in regulating their promotional activities by calling their activities 'exchanges in scientific information.'" The report notes that "these types of practices deserve continued attention by FDA and the OIG." FDA is in the process of finalizing its concept paper for educational symposia and drug promotions with considerable resistance from physicians groups and industry.

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