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FDA DEVICE/OTC DRUG/FOODS PROPOSED USER FEES OF $200 MIL. TARGETED TO DEFICIT REDUCTION, "BASE" FDA ACTIVITIES; TOTAL FEES OF $259 MIL. SOUGHT IN FY 1994

This article was originally published in The Gray Sheet

Executive Summary

FDA would collect $200 mil. in user fees from the medical device, non-prescription drug and foods industries under the Clinton Administration's fiscal year 1994 budget request, released April 8. HHS has not yet broken out the amounts of fees to be collected from each of the three industries, HHS Deputy Assistant Secretary for Budget Dennis Williams stated at an April 8 budget press conference. The bulk of the funding likely will come from devices and foods, as FDA's regulatory activities in the OTC pharmaceuticals area are limited. The department also has not determined which FDA activities, such as inspections and application reviews, will be subject to user fees. The $200 mil. in fees will be used for deficit reduction and "base" FDA activities, according to agency staffers. The allocation of device and other user fees to deficit reduction corresponds with proposals made in Clinton's economic stimulus package released in February ("The Gray Sheet" Feb. 22, p. 1). Under that plan, at least a portion of the $167 mil. in projected FY 1994 user fees would have gone to deficit reduction. The administration is invoking the "generic user fee authority" of the executive branch in requesting the fees, Williams stated. However, the House and Senate Appropriations Committees, which will now take up consideration of the budget request, have taken a dim view of past attempts to collect FDA user fees without authorizing legislation. In earlier debates on prescription drug fees, the Appropriations Committees insisted that they would approve user fee collections only if specific authorizing legislation were enacted. Overall, the FDA budget for the coming year would rise 12% to $929 mil. However, the portion derived from congressional appropriations would drop by more than $100 mil. to $670 mil. Based on "revised estimates" setting fiscal 1993 appropriations at $790 mil., $120 mil. will be trimmed from FDA appropriations in the coming year under the budget request. The administration wants to make up the difference between total budget and appropriations requests by collecting a total of $259 mil. in user fees from all FDA-regulated industries. In addition to user fees from device, OTC drug and foods industries, the administration expects to reap $54 mil. from the prescription drug industry under authority of 1992 legislation. An additional $5 mil. will come from a long-standing certification program for insulin and color additives. In accordance with the Prescription Drug User Fee Act of 1992, fees collected from the prescription pharmaceutical industry will be devoted to FDA's drug program. Although President Clinton's economic stimulus package would have targeted these fees to deficit reduction, congressional sponsors of the 1992 law apparently persuaded the Office of Management and Budget that user fees raised from prescription drug makers should be handled in congruence with the agreements underlying passage of that law. The $259 mil. in user fees would represent an increase of $218 mil. over the $41 mil. in prescription drug and certification fees expected for fiscal 1993. Of the $218 mil., $98 mil. would go to increasing the total FDA budget and $120 mil. would make up for reduced appropriations. Because prescription drug user fees will be used to enhance FDA drug review operations, fees to make up for the appropriations reduction would have to be drawn entirely from the remaining industries.

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