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Executive Summary

USER FEE DIALOGUE BETWEEN PMA AND FDA will continue in the wake of initial discussions between the agency and the industry group on July 9 and July 15. The Pharmaceutical Manufacturers Association and FDA are seeking common ground on acceptable ways to charge and pay user fees and on how revenues from user fees would be budgeted by the agency. A contingent of industry representatives that included PMA President Gerald Mossinghoff, VP Robert Allnutt and Roche President Irwin Lerner met with Commissioner Kessler and other top agency officials at FDA headquarters July 9. The industry group reviewed its position on user fees; since 1986 it has said that any charges must be additive to appropriations and that revenues must be used solely to speed the approval process. When Kessler asked PMA to develop specific acceptable features of a user fee system, the association agreed to broach the issue with board members. On July 14, the board's Committee on FDA Issues agreed by telephone that the association should try to find areas of agreement with FDA. The following day, Roche VP-Communications Kenneth Berkowitz headed a group of officials from PMA and member companies to agency headquarters to discuss the issue with Kessler. PMA has not taken a formal position on the draft user fee bill being circulated on Capitol Hill. The industry group instead discussed with FDA several general, basic questions regarding agency resource needs and funding requirements. The group told FDA that PMA remains concerned about the shortage of agency funding but needs to know what additional personnel, facility and financial resources FDA requires; how to raise the resources; how to speed the new product approval process; and how to measure whether additional revenues are speeding approvals. FDA is currently facing a budget crunch for fiscal 1992 that led to the announcement on July 7 of an agency hiring freeze (see following T&G) and the threat of continuing budget shortfalls into the next fiscal year. FDA's budget problems are, in part, due to the Administration's yearly fudging of FDA's budget request to Congress by figuring in unauthorized user fee revenues to create the illusion of a bigger FDA budget with smaller appropriations. The House Appropriations Committee responded this year with a 2.5% budget increase of $778 mil. for FDA in fiscal 1993, which is nearly $20 mil. less than the FDA budget included in the Administration's FY 1993 budget request of $797 mil. FDA apparently agrees with industry that user fee revenues should be applied to new product review. Kessler told a July 13 trade press roundtable discussion that FDA must "put those user fees where the industries who will pay those user fees get value that it's in the industries' interest to pay" because the revenues are invested "in those areas that industry wants to support." Specifically, the commissioner said, "just from a bottom-line perspective, it's in the industry's interest to be able to support ...user fees if you can get your product through three months earlier." Kessler suggested that user fees will be attractive if they assure a firm that "you're not going to be confronted with a reviewer who has 50 other applications on his or her desk." Kessler also met with a group of congressional health aides on Capitol Hill on July 8 to discuss draft user fee legislation ("The Pink Sheet" June 15, p. 3). The commissioner told the trade press that he is "open on" the structure of authorizing legislation and whether it should include application, product, facilities and/or import fees. "It will probably end up being a combination" of fees, Kessler said. However, he continued, user fees "have to be additive" to appropriations, and "the bill that was put on the table has dealt with a lot of the technical issues of how to make sure that they're additive." The draft bill provides that much of the revenues generated by user fees would be added to FDA's product review program resources. Drafters of the legislation want to be sure the fees avoid being cast under law as taxes. Therefore, user fees specifically must be collected as an exchange for an FDA service of value to industry. However, a number of provisions in the June draft permit the agency to earmark user fee revenues for FDA's enforcement program.

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