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Executive Summary

FDA's user fee plan for fiscal 1993 translates into "ballpark" projections of a $150,000 fee per NDA, $8,500 per ANDA and $120,000 per biologic product licensing application. Additionally, the agency's fee would be $5,500 for NDA supplements and $500 for ANDA supplements. The per-application fee estimates are described as a "very rough" breakdown used in developing the Bush Administration's user fee proposals and as covering only a "fraction" of FDA's application review expenses. FDA's budget plan calls for raising $69.1 mil. in user fees from activities related to regulation of human drugs and $12.1 mil. from biologics, according to the 1993 "Justification of Appropriations" document that FDA provided to Congress. In addition to product application reviews, the revenues would be raised from a mix of fees for facility registration, annual product listings, and import assessments ("The Pink Sheet" Feb. 3, p. 12). Perhaps as a result of this multi-fee approach, FDA appears to be considering a lower fee per NDA than in previous years. In 1989, FDA told Congress that, assuming all NDAs were subject to the same fee, the amount would be $300,000 per NDA ("The Pink Sheet" Feb. 5, 1990, p. 10). The agency last year estimated that if the entire cost of NDA reviews was raised through user fees on original filings, the fee per filing would be about $760,000 ("The Pink Sheet" Feb. 18, 1991, T&G-2). The Bush Administration is proposing a $791 mil. budget for FDA in FY 1993, with a total of $200 mil. to be raised from user fees on human drugs, biologics, medical devices ($48.8 mil.), animal drugs ($5.4 mil.) and foods ($64.6 mil.). User fee revenues would fund about a third of the total $244 mil. budget for human drugs activities and about 12% of the $98.6 mil. biologics budget proposed for fiscal year 1993. At a March 24 House Appropriations/Agriculture Subcommittee hearing on FDA's FY 1993 budget request, FDA Commissioner Kessler said: "It's time to look at the user fee question very seriously. And I think in talking to some of the staff and members of the authorizing committees, talking to people in the regulated industry, I think people are recognizing that the time has arrived [for user fees]." He added that the "long-term prospects for the agency are really hanging in the balance." As part of the rationale for user fees, the commissioner asserted that "the Administration continues to believe, and so do I, that the regulated industry benefits from FDA's work. They enjoy increased consumer confidence in their products, significant protection from liability and an improved competitive position in foreign markets" as a result of FDA's regulatory requirements. The House subcommittee traditionally has objected to inclusion of user fees in FDA's budget before they are authorized in statute, but Reps. Myers (R-Ind.) and McHugh (D-N.Y.) said they do not oppose the concept of user fees. However, practical difficulties were raised. For example, McHugh asked how quickly FDA could develop implementing regulations assuming user-fee legislation were enacted. McHugh, who chaired the hearing in the absence of Rep. Whitten (D-Miss.), noted that the subcommittee probably will begin drafting an FDA appropriations bill in May. Kessler indicated that FDA could move quickly by noting that the agency was able to issue several hundred pages of nutrition labeling rules last fall despite a tight timetable. "Sure, it's going to take time," he added, "but we need to begin; we need to be able to get the process going, and that's what we're asking." Rep. Smith (D-Iowa) questioned whether user-fee revenues would be dedicated to FDA. Other agencies have found that they are credited with fee revenues in the first year of implementation, but the fees are subsequently absorbed into the general treasury, Smith said. When Myers suggested using a trust fund to ensure that FDA benefits from the fees, Smith replied that a trust fund would have to be approved by the Ways and Means Committee and that panel generally opposes using trust funds for agency operational expenses.

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