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FDA DRUG USER FEE AGREEMENT MAY BE PROTECTED

This article was originally published in The Tan Sheet

Executive Summary

FDA DRUG USER FEE AGREEMENT MAY BE PROTECTED from a Clinton Administration overhaul under an agreement between key Hill figures and the Office of Management & Budget during the week of March 8. Under its recent budget proposal, the Clinton Administration would have raised fee amounts, expanded the types of products subject to fees and shunted all revenues to the general Treasury for deficit-reduction. However, legislators, including Reps. John Dingell (D-Mich.) and Henry Waxman (D-Calif.) and Sen. Edward Kennedy (D-Mass.), apparently convinced OMB that the FDA user fee law should not be altered from the form stipulated in the authorization bill enacted by Congress last year. Under the law, FDA is authorized to charge brand-name drug makers fees for NDA reviews and for annual product and establishment registrations, and nonprescription drug manufacturers for the review of NDAs for Rx-to-OTC switches. NDA review fees are set at $ 150,000 each in fiscal 1994 and grow to $ 233,000 in 1997 under the legislation. Total program revenues are projected to be $ 54 mil. in 1994 and grow to $ 84 mil. by 1997. The Clinton Administration's budget proposal requested that FDA expand the program to cover all drugs and all medical device products. Although the proposal contains few specifics, it would have raised the fees considerably in order to collect a total of $ 167 mil. in fiscal 1994 and a projected $ 336 mil. by fiscal 1997, for a four-year total of $ 1.05 bil. The most significant difference in the Clinton proposal, however, is that it would earmark all revenues for deficit reduction rather than for enhancement of FDA resources. The apparent agreement between the Hill and the new administration heads off another battle over drug user fees. The Nonprescription Drug Manufacturers Association joined other industry groups in voicing opposition to the administration's plan at its annual meeting in Naples, Fla. NDMA President James Cope declared that the association has "serious problems" with the administration's proposed changes ("The Tan Sheet" March 8, p. 5). FDA also objected to the plan to overhaul the program because it needs the resources. Although the law has been protected from an OMB attack for now, it has yet to be implemented. FDA cannot begin collecting drug user fees until Congress enacts a supplemental appropriations bill for fiscal 1993 outlining the $ 36 mil. ceiling for cumulative fees the agency is authorized to collect this year. (In subsequent years, the limits will be stipulated in standard appropriations bills). FDA had hoped that a supplemental bill would be enacted by Congress by April 1. However, because of the current emphasis in Washington for cutting government programs, no supplemental spending bills are in sight. The House recently passed President Clinton's stimulus package, but, eager to show its restraint, passed it without any add-ons. Because there may be significant pressure for the Senate to do the same, it could prove difficult for FDA's friends on Capitol Hill to use the stimulus package as the vehicle for the supplemental appropriations. Kennedy and Waxman reportedly are contemplating a bill authorizing FDA collection of user fees for medical devices, proceeds from which would be split between the Treasury and the Center for Devices and Radiological Health both to reduce the deficit and to improve the center's premarket review program. The Health Industry Manufacturers Association opposed inclusion in last year's user fee legislation of provisions for medical device fees, even though all revenues would have been earmarked for enhancing CDRH resources. Therefore, the device industry could be expected to oppose this year's proposal vehemently. However, as one Hill staffer said, "the choice is simply ours or OMB's" bill, in which all revenues go to Treasury.
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