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FDA User Fees Continue To Climb

Agency proposes hefty increase in industry-paid fees to support oversight of food, drugs

by Britt E. Erickson
April 22, 2013 | A version of this story appeared in Volume 91, Issue 16

Under President Barack Obama’s proposed fiscal 2014 budget, the Food & Drug Administration would receive $4.7 billion, an increase of $1.1 billion or 30.9% compared with actual 2012 levels, the year that for procedural reasons the Administration is using as a baseline. Most of the increase—some $1.0 billion of it—would come from industry-paid user fees.

“This is an austere budget,” acknowledges FDA Commissioner Margaret A. Hamburg. “These are tight budget times, and the FDA budget request reflects this reality.” Even so, “Americans will receive life-saving medicines approved as fast as or faster than anywhere in the world, confidence in the medical products they rely on daily, and a food supply that is among the safest in the world,” she says.

User fees have been steadily increasing for many years to help support FDA’s oversight of drugs, foods, and medical devices. In the President’s request, such fees would amount to $2.1 billion or 45% of FDA’s total budget in 2014. That user fee figure represents an increase of 99.7% compared with 2012. In contrast, the part of FDA’s budget that comes from allocated taxpayer funds would increase just 2.0% from 2012, or $51 million, to $2.6 billion.

The proposed budget for 2014 contains several first-ever user fees, including $166 million for food imports, $59 million for food registration and inspections, $19 million for cosmetics, and $15 million for reinspections of medical products. It is unclear whether Congress, which must approve the fees as well as all of the requested appropriations, will support them.

Transforming food safety continues to be a top priority for FDA. The President’s 2014 budget includes $295 million to support such efforts. Of that money, $252 million comes from user fees and $43 million from taxpayer funds. The money will be used to implement the Food Safety Modernization Act, which was signed into law in January 2011. That landmark law requires FDA to build a modern, prevention-based domestic and imported food safety system.

FDA also plans to spend $18 million to construct state-of-the-art laboratories at its headquarters in White Oak, Md. The facilities will allow FDA staff to conduct cutting-edge research to improve oversight of FDA-regulated products.

In addition, FDA will invest $10 million to monitor the risks of products and ingredients manufactured in China. The agency also plans to spend $3.5 million to ensure that Americans have access to drugs and vaccines to counter a chemical, biological, or nuclear attack or a naturally occurring epidemic.

Not everyone is pleased with the President’s proposal. The pharmaceutical industry, in particular, is opposed to one aspect of the budget that would give brand-name biologic manufacturers seven years of exclusivity for their products beginning in 2014. Such manufacturers have 12 years of exclusivity under the current law before generic-like versions of biologics, called biosimilars, can be introduced into the market.

“This budget is bad for patients, bad for innovation, and bad for the economy,” says Matthew Bennett, senior vice president of the Pharmaceutical Research & Manufacturers of America, a trade association that represents the drug industry. “The President’s budget would jeopardize medical advances and economic growth by reducing the incentives to invest in the development of new biologic medicines,” Bennett claims. He adds that the incentives under current law continue to have bipartisan support in Congress.

The President’s 2014 budget request would also authorize the Federal Trade Commission (FTC) to stop pharmaceutical companies from entering into “pay for delay” agreements with manufacturers of generic drugs. Such agreements are used by brand-name drugmakers to stop generics manufacturers from challenging the validity of drug patents in court.

FTC has long been opposed to such agreements, saying they delay the entry of generic drugs into the marketplace. But brand-name and generics manufacturers claim such agreements benefit competition and consumers by averting protracted litigation.

“This interference with settlements of complex legal issues creates an uncertain business environment and can lead to higher costs for consumers,” Bennett notes.

The Generic Pharmaceutical Association, which represents generics manufacturers, asserts that FDA’s justification for such a ban is based on outdated assumptions and faulty methodology. The group claims that a ban on such settlements would “chill generic competition and result in an increased cost, not a savings.”



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