User fees could net $48 million for FDA

June 9, 2003

A draft bill to bolster the Food and Drug Administration's 1993budget through user fees is nearing completion by the House Energyand Commerce Committee. The bill is expected to be introducedand on the docket for discussion by the committee in June. The

A draft bill to bolster the Food and Drug Administration's 1993budget through user fees is nearing completion by the House Energyand Commerce Committee. The bill is expected to be introducedand on the docket for discussion by the committee in June.

The wild card is whether this bill will include fees for premarketapproval and 510(k) applications. The Bush administration andthe FDA favor levying these fees in addition to facility and productregistration fees. The Health Industry Manufacturers Associationcontends such fees represent a tax on innovation.

While it is rumored that committee chairman John Dingell (D-MI)opposes application fees, the bill has been developed in consultationwith the Bush administration, said Tom Long, senior legislativecounsel for HIMA.

"I've heard both types of fees mentioned in the contextof the bill, and it may include a combination," Long said."It's not clear how cooperative the committee will be withthe administration."

If the FDA has its way, new product reviews, inspections andregistrations will be subject to fees. The agency has developeda proposal that estimates $48.8 million in user fees would becollected from device manufacturers.

A total of about $200 million would be collected from all users,including biotechnology, foods, and human and animal drugs. Thatsum would contribute to the FDA's 1993 budget of $791 million.

Under the FDA's plan, about $122 million of the budget wouldbe allocated to the Center for Devices and Radiological Health.The allocation is a $5 million increase over the CDRH's 1992 budget.

Although proposals to levy fees have been dashed in the past,FDA Commissioner David Kessler maintains that user fees are longoverdue. At a March appropriations committee meeting, he notedthat device manufacturers reap increasing benefits from FDA approvalof new products and should pay into the system.

HIMA is opposed to user fees for several reasons. The industryis concerned that fees collected for the FDA may not end up inthe agency's coffers. Rep. Neal Smith (D-IA) has also raised thatconcern, noting that fee revenues for governmental agencies aresometimes deposited in the general treasury after the first yearof implementation. HIMA would like assurances the money will goto the FDA, if not the CDRH.

"We'd also like to see some mechanism in the bill thatspeaks to how the money will be used," he said. "Anyproposal should require that at least part of it go toward speedingapproval of applications."

The association has other problems with user fee proposals.For example, fees should not be used as a substitute for congressionallyappropriated funds, Long said. Nor should fees be so large thatthey can't be met by small manufacturers.

"Two-thirds of our members are small manufacturers,"he said. "The bill has to be structured so it is not a burdenfor those companies."

Dingell's committee appears determined to move the bill quickly,and could take action on it before the July 4 recess, Long said.The bill is in its final stages, making the rounds of House andSenate staff. Long expects it will be introduced shortly.

"Until we see the final version of this bill, we won'tknow what our strategy will be," he said.