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FDA FY 1994 BUDGET OF $924 MIL. WOULD INCLUDE $175 MIL. IN USER FEES

This article was originally published in The Gray Sheet

Executive Summary

FDA FY 1994 BUDGET OF $924 MIL. WOULD INCLUDE $175 MIL. IN USER FEES from FDA-regulated industries other than the prescription drug industry, according to an FDA/agriculture budget measure (H.R. 2493) approved by the Senate Appropriations Committee July 20. The FDA budget was passed by the committee without change from the version reported out by the Agriculture Subcommittee on July 19. Consideration of the Agriculture/FDA appropriations bill on the floor of the Senate is slated to begin on July 26. In addition to passing in the Senate, the measure must be reconciled with the corresponding House bill in conference before it can be signed into law. The House legislation, passed June 29, does not provide for user fees beyond the $54 mil. authorized under the Prescription Drug User Fee Act of 1992 ("The Gray Sheet" July 5, p. 9). The $924.3 mil. total budget that would be provided to FDA under the Senate committee-passed measure matches the sum requested by President Clinton and approved by the House. The House measure, however, reaches the figure primarily through appropriations. Unlike the House bill, which appropriates the full budget amount of $924.3 mil. except for $54 mil. in prescription drug user fees, the Senate measure follows the approach taken in the President's budget request by specifying the collection of additional user fees and cutting the amount appropriated by the agency. Dale Bumpers (D-Ark.), chairman of the Senate Appropriations agriculture subcommittee, emphasized to subcommittee members at the July 19 markup that "we are $175 mil. apart from the House for openers when we go to conference. That is a very big gap to close." The total amount of actual appropriations to FDA under the Senate measure is $695.3 mil., compared to $870.3 mil. under the House version. The President's budget request, which included $200 mil. in user fees from products other than prescription drugs, appropriated a total of $670.3 mil. Because total FDA appropriations in FY 1993 were $780 mil., not including $36 mil. in prescription drug user fees, it appears that about half of the additional user fee revenues would be used for general deficit reduction rather than an expansion of FDA's activities. The Senate bill does not identify the source of the additional $175 mil. in user fees. The Clinton Administration's budget proposal sought fees from the medical devices, OTC drug, and food industries. The bill report does specify that small businesses would be exempt from user fees. The Senate appropriations report notes that the committee "is determined that FDA user fees not burden small companies regulated by that agency" and that these companies therefore "shall be exempt from such fees." The committee also instructs FDA to provide a report before "implementing user fees on FDA-regulated companies not subject to the Prescription Drug User Fee Act." The report should include FDA's "assessment of the regulatory and paperwork burden, possible disincentives for firms which bring new products to FDA for approval, potential [price increases] to consumers, the number of firms which would be subject to these fees, and the level of such fees from companies in each sector of the regulated industries." Although Congress traditionally has taken a dim view of attempts to include unauthorized user fees in appropriations bills, Bumpers explained at the July 19 budget markup that the subcommittee was at its limit for allocating discretionary funds. Bumpers, who in the past had called the President's budget request for FDA "very suspect" because of the unauthorized user fees, defended the inclusion of the additional user fees in the agriculture bill: "While I don't like making this recommendation, fiscal restraints require it." At the July 20 full committee markup, agriculture subcommittee Ranking Republican Thad Cochran (Miss.) noted that there were "concerns" regarding the spending bill's user fee provisions. "Unfortunately the subcommittee could not find the savings to avoid the recommendation [for $175 mil. in additional user fees] being included in the bill because the allocation for discretionary spending was $200 mil. less than received by our House counterparts," he said. "I hope that we can revisit this situation in the conference, however." The Health Industry Manufacturers Association sent a letter to Senate Appropriations Committee members on July 20 in an unsuccessful attempt to have the $175 mil. in user fees removed from the budget measure. "We urge you to delete the provision in H.R. 2493 which authorizes general purpose user fees." HIMA says it "opposes user fees because of FDA's current difficulties in managing the product approval process in a reasonable and predictable manner." The association's statement reflects its recent change in user fee policy. In late June, HIMA softened its categorical opposition to user fees, saying it would consider negotiating user fee proposals if FDA follows suggestions for improving device center operations made in a recent House Energy and Commerce oversight subcommittee report ("The Gray Sheet" July 5, p. 10). House Energy and Commerce Committee Chairman John Dingell (D-Mich.), who also has reservations about device center operations, nevertheless appears ready to sit down at the FDA user fee negotiating table. At a July 20 HIMA meeting in Arlington, Virginia, oversight subcommittee staffer Claudia Beville said device user fees may be "a political inevitability." She added that "over the course of the next six weeks or so," subcommittee staffers "are going to be having various meetings within Congress and also within FDA" to discuss user fees. She urged industry "to take the time to identify the most critical issues that you think need to be addressed as far as what you want to get out of the agency if you are going to be paying user fees." Some of the impetus for device user fees has come from the increasing number of manufacturers who have been lobbying their Congressional representatives in favor of user fee legislation, according to Hill staffers. However, if device user fees were proposed, the device industry likely would push for authorizing legislation that would require that user fee funds be spent on device review activities rather than deficit reduction. In its budget report, the Senate Committee says it "has been concerned about the inability of FDA to approve safe and effective...medical devices promptly." One concern is that "advances in new technology, which can save lives or ameliorate suffering, have not been available to the American patient population due to the regulatory logjam in the approval process." The committee notes that "many device manufacturers are moving their developmental activities abroad in order to avoid delays created by inappropriate approaches to regulation." Committee concern over slow approval of important new devices may be muted by the device center's recent expansion of its program to expedite review of breakthrough technologies. The Center for Devices and Radiological Health also is taking a number of other steps to improve device evaluation efficiency (see related stories, pp. 1 and 3). The new initiatives are "a first step in addressing" the backlog problem, according to the committee. "It is critical that" CDRH Director Bruce Burlington "be given full support in implementing these reforms and that additional steps be taken to streamline or eliminate requirements in the approval process which create inordinate delays in getting products to people and do not contribute to ensuring safety and effectiveness." The committee says it will "closely monitor this situation" and "hopes to see an increased number of device approvals and shortened timetables for product reviews." The Senate panel also voices concern that "FDA has not made adequate progress in implementing the Mammography Quality Standards Act" of 1992. The law requires FDA to establish standards for mammography equipment, facilities and personnel and certify all U.S. mammography facilities by Oct. 1, 1994. However, "FDA will not meet" the deadline, the committee says. The agency is directed to "use its 1994 MQSA appropriation" of $10 mil. "to expedite the implementation of MQSA and to provide adequate staff to carry out the provisions of the law." The committee also "requests a progress report on implementation of the program...no later than" Nov. 1, 1993. Over the past several weeks, FDA has been lobbying key members of Congress, including Sens. Barbara Mikulski (D- Md.) and Nancy Kassebaum (R-Kan.), to amend MQSA. The agency is asking Congress to extend the effective date and, in the interim, to allow the agency to issue provisional certificates based on third-party mammography standards ("The Gray Sheet" May 31, p. 17). In a July 20 letter to Mikulski, 22 health professional and women's groups voice opposition to a delay in implementing MQSA. "Notwithstanding our facilitation efforts," the groups state, "we are advised that the agency is discussing the possibility of statutory and other substantive changes to the Act that would delay final implementation of the law. We do not think this is necessary." The groups add: "Any plans for implementation and proposed statutory changes should not move forward without the consensus" of the MQSA advisory committee. FDA facility consolidation received a boost from agriculture subcommittee member Sen. Tom. Harkin (D-Iowa) at the subcommittee markup. FDA "is one of the most important agencies; it affects people's lives all over this country," Harkin contended. "I've never been able to understand why its [physical plant] is spread all over." Harkin expressed his hope that the consolidation project would go forward "sometime in the very near future." Funding for the FDA consolidation project in the amount of $73.9 mil. for the General Services Administration is included in a Treasury/Postal Service FY 1994 funding bill that passed the Senate Appropriations committee July 22. The full House also included $73.9 mil. for the project in the appropriations bill it passed June 22.

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