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OTC DRUG/FOOD/MEDICAL DEVICE USER FEES WOULD CONTRIBUTE $ 200 MIL. TO FDA BUDGET

This article was originally published in The Tan Sheet

Executive Summary

OTC DRUG/FOOD/MEDICAL DEVICE USER FEES WOULD CONTRIBUTE $ 200 MIL. TO FDA BUDGET for fiscal 1994 under the Clinton Administration's HHS budget request, submitted to Congress on April 8. The proposal calls for FDA to "collect $ 200 mil. in user fees under current authority from the food, medical device and nonprescription drug industries." HHS has not yet apportioned the specific amount of fees to be raised from each of those three industries nor specified what type of activities would be subject to fees, HHS Deputy Assistant Secretary for Budget Dennis Williams said at an April 8 HHS press briefing. The proposed user fees will help fund "base" FDA activities and deficit reduction, according to budget materials. HHS budget documents say the added fees would be collected "under current authority." Williams explained that this refers to a general government-wide authority to impose user fees. However, the House and Senate Appropriations Committees have taken a dim view of this approach in the past. In earlier debates on prescription drug user fees, the Appropriations Committees insisted that they would approve user fee collections only if specific authorizing legislation were enacted. The $ 200 mil. in proposed user fees marks an increase of $ 33 mil. from the $ 167 mil. proposed in the administration's economic plan in February. When President Clinton released his Economic Stimulus package, A Vision of Change for America, he proposed to raise a total of $ 167 mil. in FDA user fees for FY 1994, with all the revenues targeted to deficit reduction. However, congressional sponsors of the prescription drug user fee law apparently persuaded the Office of Management & Budget that user fees raised from drug makers should be handled in accordance with the agreements underlying the passage of that law, which stipulated that the funds be used to enhance, not replace, appropriations for drug-related programs ("The Tan Sheet" March 15, p. 9). The Nonprescription Drug Manufacturers Association has not supported user fees for OTC drug operations beyond Rx-to-OTC switch applications. The 1992 user fee law, which NDMA supported, authorized fees for switches, and NDAs. The association also has been opposed to user fees that are not exclusively dedicated to enhancing FDA operations. Overall, the Clinton Administration is requesting a total FDA budget of $ 929 mil. in fiscal 1994, an 11% increase from FY 1993's agency appropriations of $ 785 mil. However, the portion derived from congressional appropriations would drop by more than $ 100 mil. to $ 670 mil. The remaining $ 259 mil. would come from industry user fees: $ 200 mil. for OTC/food/device user fees and $ 54 mil. from prescription drug user fees under the Prescription Drug User Fee Act of 1992. The remaining $ 5 mil. presumably would come from user fees from a long-standing certification program for insulin and color additives. For 1993, FDA received $ 780 mil. in appropriations and authority to collect $ 5 mil. in user fees from the insulin/color additive certification program. A "revised 1993" budget estimates FDA appropriations at $ 790 mil. and user fees of $ 41 mil. The "revised 1993" figures contained in the Clinton Administration plan include the effects of the President's pending economic stimulus package, certain re-estimates and supplemental budget requests. FDA's drug-related activities would be allocated $ 428 mil. under the Clinton Administration plan, up from $ 383 mil. in the "revised 1993" budget and $ 340 mil. in the current 1993 budget. This figure appears to encompass biologics and veterinary medicine as well as human drugs. Based on requests in previous years when the three activities were noted separately, FDA human drugs-related programs probably account for more than half of the $ 428 mil. request. Funding for three budget categories remains level with the past two years: program management was allotted $ 33 mil., FDA buildings and facilities were appropriated $ 8 mil. and a revolving fund was given $ 5 mil. Those figures actually may represent some belt-tightening in that no inflation update is provided. At the HHS briefing, Williams noted that the department is subject to the 2%-3% government reduction in administrative costs that was proposed in the economic stimulus package. The agency's full-time equivalent staffing positions would be set at 8,834 in FY 1994, a reduction of 171 FTEs (about 2%) from the revised 1993 budget and 339 FTEs (down 3.5%) from the current budget. The Clinton Administration is requesting $ 49 mil. in 1994 for FDA's expenses for office building rentals, up from $ 24 mil. in the two preceding years. In those previous years, rental payments actually exceeded $ 24 mil., but Congress capped FDA's portion at that figure, with the General Services Administration making up the rest. The Clinton Administration has decided to place the full cost of FDA office building rentals within the agency's own budget. The budget request for the federal General Services Administration contains $ 73.9 mil. in FY 1994 for site acquisition and construction costs related to the project to consolidate all of FDA's Washington, D.C.-area buildings into a two-site campus. This adds to $ 200 mil. appropriated for this purpose in FY 1992. Review of possible sites is expected to extend at least the rest of this calendar year ("The Tan Sheet" March 8, In Brief).
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